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G.R. No. 151967 - JOSEFINA C. FRANCISCO v. MASTER IRON WORKS & CONSTRUCTION CORPORATION, ET AL.

G.R. No. 151967 - JOSEFINA C. FRANCISCO v. MASTER IRON WORKS & CONSTRUCTION CORPORATION, ET AL.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

[G.R. NO. 151967 : February 16, 2005]

JOSEFINA C. FRANCISCO, Petitioner, v. MASTER IRON WORKS & CONSTRUCTION CORPORATION and ROBERTO V. ALEJO, Sheriff IV, Regional Trial Court of Makati City, Branch 142, Respondents.

D E C I S I O N

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. No. CV No. 59045, which reversed and set aside the Decision2 of the Regional Trial Court (RTC) of Parañaque, Metro Manila, Branch 260, in Civil Case No. 94-2260 and the Resolution of the CA denying the petitioner's motion for reconsideration of the said decision.

Josefina Castillo was only 24 years old when she and Eduardo G. Francisco were married on January 15, 1983.3 Eduardo was then employed as the vice president in a private corporation. A little more than a year and seven months thereafter, or on August 31, 1984, the Imus Rural Bank, Inc. (Imus Bank) executed a deed of absolute sale for P320,000.00 in favor of Josefina Castillo Francisco, married to Eduardo Francisco, covering two parcels of residential land with a house thereon located at St. Martin de Porres Street, San Antonio Valley I, Sucat, Parañaque, Metro Manila. One of the lots was covered by Transfer Certificate of Title (TCT) No. 36519, with an area of 342 square meters, while the other lot, with an area of 360 square meters, was covered by TCT No. 36518.4 The purchase price of the property was paid to the Bank via Check No. 002334 in the amount of P320,000.00 drawn and issued by the Commercial Bank of Manila, for which the Imus Bank issued Official Receipt No. 121408 on August 31, 1984.5 On the basis of the said deed of sale, TCT Nos. 36518 and 36519 were cancelled and, on September 4, 1984, the Register of Deeds issued TCT Nos. 87976 (60550) and 87977 (60551) in the name of "Josefina Castillo Francisco married to Eduardo G. Francisco."6

On February 15, 1985, the Register of Deeds made of record Entry No. 85-18003 at the dorsal portion of the said titles. This referred to an Affidavit of Waiver executed by Eduardo where he declared that before his marriage to Josefina, the latter purchased two parcels of land, including the house constructed thereon, with her own savings, and that he was waiving whatever claims he had over the property.7 On January 13, 1986, Josefina mortgaged the said property to Leonila Cando for a loan of P157,000.00.8 It appears that Eduardo affixed his marital conformity to the deed.9

On June 11, 1990, Eduardo, who was then the General Manager and President of Reach Out Trading International, bought 7,500 bags of cement worth P768,750.00 from Master Iron Works & Construction Corporation (MIWCC) but failed to pay for the same. On November 27, 1990, MIWCC filed a complaint against him in the RTC of Makati City for the return of the said commodities, or the value thereof in the amount of P768,750.00. The case was docketed as Civil Case No. 90-3251. On January 8, 1992, the trial court rendered judgment in favor of MIWCC and against Eduardo. The fallo of the decision reads:

Accordingly, the Court renders judgment in favor of the plaintiff Master Iron Works And Construction Corporation against the defendant [Eduardo] Francisco ordering the latter as follows:

1. To replace to plaintiff 7,500 bags at 50 kilos/bag of Portland cement or, in the alternative, to pay the plaintiff the amount of P768,750.00;

2. In either case, to pay liquidated damages by way of interest at 12% per annum from June 21, 1990 until fully paid;

3. To pay P50,000.00 as actual damages; andcralawlibrary

4. To pay attorney's fees of P153,750.00 and litigation expenses of P20,000.00.

SO ORDERED.10

The decision in Civil Case No. 90-3251 became final and executory and, on June 7, 1994, the court issued a writ of execution.11 On June 14, 1994, Sheriff Roberto Alejo sold at a public auction one stainless, owner-type jeep for P10,000.00 to MIWCC.12 Sheriff Alejo issued a Notice of Levy on Execution/Attachment over the lots covered by TCT No. 87976 (60550) and 87977 (60551) for the recovery of the balance of the amount due under the decision of the trial court in Civil Case No. 90-3251.13 On June 24, 1994, the sale of the property at a public auction was set to August 5, 1994.14

On July 3, 1994, Josefina executed an Affidavit of Third Party Claim15 over the two parcels of land in which she claimed that they were her paraphernal property, and that her husband Eduardo had no proprietary right or interest over them as evidenced by his affidavit of waiver, a copy of which she attached to her affidavit. She, likewise, requested Sheriff Alejo to cause the cancellation of the notice of levy on execution/attachment earlier issued by him.

On July 7, 1994, Josefina filed the said Affidavit of Third Party Claim in the trial court and served a copy thereof to the sheriff. MIWCC then submitted an indemnity bond16 in the amount of P1,361,500.00 issued by the Prudential Guarantee and Assurance, Inc. The sale at public auction proceeded. MIWCC made a bid for the property for the price of P1,350,000.00.17

On July 28, 1994, Josefina filed a Complaint against MIWCC and Sheriff Alejo in the RTC of Parañaque for damages with a prayer for a writ of preliminary injunction or temporary restraining order, docketed as Civil Case No. 94-2260. She alleged then that she was the sole owner of the property levied on execution by Sheriff Alejo in Civil Case No. 90-3251; hence, the levy on execution of the property was null and void. She reiterated that her husband, the defendant in Civil Case No. 90-3251, had no right or proprietary interest over the said property as evidenced by his affidavit of waiver annotated at the dorsal portion of the said title. Josefina prayed that the court issue a temporary restraining order/writ of preliminary injunction to enjoin MIWCC from causing the sale of the said property at public auction. Considering that no temporary restraining order had as yet been issued by the trial court, the sheriff sold the subject property at public auction to MIWCC for P1,350,000.00 on August 5, 1994.18 However, upon the failure of MIWCC to remit the sheriff's commission on the sale, the latter did not execute a sheriff's certificate of sale over the property. The RTC of Parañaque, thereafter, issued a temporary restraining order19 on August 16, 1994.

When Josefina learned of the said sale at public auction, she filed an amended complaint impleading MIWCC, with the following prayer:

WHEREFORE, premises considered, it is most respectfully prayed to this Honorable Court that, after hearing, judgment be rendered in favor of the plaintiff and against the defendants and the same be in the following tenor:

1. Ordering the defendants, jointly and severally, to pay the plaintiff the following amounts:

A. The sum of P50,000.00 representing as actual damages;

B. The sum of P200,000.00 representing as moral damages;

C. The sum of P50,000.00 or such amount which this Honorable Court deems just as exemplary damages;

D. The sum of P60,000.00 as and for attorney's fees.

2. Declaring the levying and sale at public auction of the plaintiff's properties null and void;

3. To issue writ of preliminary injunction and makes it permanent;

4. Order the cancellation of whatever entries appearing at the titles as a result of the enforcement of the writ of execution issued in Civil Case No. 90-3251.

Plaintiff further prays for such other reliefs as may be just under the premises.20

In its answer to the complaint, MIWCC cited Article 116 of the Family Code of the Philippines and averred that the property was the conjugal property of Josefina and her husband Eduardo, who purchased the same on August 31, 1984 after their marriage on January 14, 1983. MIWCC asserted that Eduardo executed the affidavit of waiver to evade the satisfaction of the decision in Civil Case No. 90-3251 and to place the property beyond the reach of creditors; hence, the said affidavit was null and void.

Before she could commence presenting her evidence, Josefina filed a petition to annul her marriage to Eduardo in the RTC of Parañaque, Metro Manila, on the ground that when they were married on January 15, 1983, Eduardo was already married to one Carmelita Carpio. The case was docketed as Civil Case No. 95-0169.

Josefina and Carmelita testified in Civil Case No. 95-0169. Josefina declared that during her marriage to Eduardo, she acquired the property covered by TCT Nos. 87976 (60550) and 87977 (60551), through the help of her sisters and brother, and that Eduardo had no participation whatsoever in the said acquisition. She added that Eduardo had five children, namely, Mary Jane, Dianne, Mary Grace Jo, Mark Joseph and Mary Cecille, all surnamed Francisco.

On September 9, 1996, the RTC of Parañaque rendered judgment21 in Civil Case No. 95-0169, declaring the marriage between Josefina and Eduardo as null and void for being bigamous.

In the meantime, Josefina testified in Civil Case No. 94-2260, declaring, inter alia, that she was able to purchase the property from the Bank when she was still single with her mother's financial assistance; she was then engaged in recruitment when Eduardo executed an affidavit of waiver; she learned that he was previously married when they already had two children; nevertheless, she continued cohabiting with him and had three more children by him; and because of Eduardo's first marriage, she decided to have him execute the affidavit of waiver.

Eduardo testified that when his wife bought the property in 1984, he was in Davao City and had no knowledge of the said purchases; he came to know of the purchase only when Josefina informed him a week after his arrival from Davao;22 Josefina's sister, Lolita Castillo, told him that she would collect from him the money his wife borrowed from her and their mother to buy the property;23 when he told Lolita that he had no money, she said that she would no longer collect from him, on the condition that he would have no participation over the property,24 which angered Eduardo;25 when Josefina purchased the property, he had a gross monthly income of P10,000.00 and gave P5,000.00 to Josefina for the support of his family;26 Josefina decided that he execute the affidavit of waiver because her mother and sister gave the property to her.27

On December 20, 1997, the trial court rendered judgment finding the levy on the subject property and the sale thereof at public auction to be null and void. The fallo of the decision reads:

WHEREFORE, PREMISES CONSIDERED, THIS COURT finds the Levying and sale at public auction of the plaintiff's properties null and void.

The court orders the defendants to, jointly and severally, pay plaintiff the following amounts:

A. The sum of P50,000.00 as actual damages;

b. The sum of P50,000.00 representing as moral damages;

c. The sum of P50,000.00 as exemplary damages;

d. The sum of P60,000.00 as and for attorney's fees.

The court orders the cancellation of whatever entries appearing at the Titles as a result of the enforcement of the writ of execution issued in Civil Case No. 90-3251.

SO ORDERED.28

The trial court held that the property levied by Sheriff Alejo was the sole and exclusive property of Josefina, applying Articles 144, 160, 175 and 485 of the New Civil Code. The trial court also held that MIWCC failed to prove that Eduardo Francisco contributed to the acquisition of the property.

MIWCC appealed the decision to the CA in which it alleged that:

I. THE TRIAL COURT ERRED IN RULING THAT THE REAL ESTATE PROPERTIES SUBJECT OF THE AUCTION SALE ARE PARAPHERNAL PROPERTIES OWNED BY PLAINTIFF-APPELLEE JOSEFINA FRANCISCO;

II. THE TRIAL COURT ERRED IN ALLOWING THE RECEPTION OF REBUTTAL EVIDENCE WITH REGARD TO THE ANNULMENT OF PLAINTIFF-APPELLEE'S MARRIAGE WITH EDUARDO FRANCISCO;

III. THE TRIAL COURT ERRED IN RULING THAT THE LEVY ON EXECUTION OF PLAINTIFF-APPELLEE'S PROPERTIES SUBJECT OF THE PRESENT CONTROVERSY IS NULL AND VOID;

IV. THE TRIAL COURT ERRED IN ORDERING DEFENDANT-APPELLANT TO PAY DAMAGES TO PLAINTIFF-APPELLEE FOR ALLEGED IMPROPER LEVY ON EXECUTION.29

The CA rendered judgment setting aside and reversing the decision of the RTC on September 20, 2001. The fallo of the decision reads:

WHEREFORE, premises considered, the Decision, dated 20 December 1997, of the Regional Trial Court of Parañaque, Branch 260, is hereby REVERSED and SETASIDE and a new one entered dismissing Civil Case No. 94-0126.

SO ORDERED.30

The CA ruled that the property was presumed to be the conjugal property of Eduardo and Josefina, and that the latter failed to rebut such presumption. It also held that the affidavit of waiver executed by Eduardo was contrary to Article 146 of the New Civil Code and, as such, had no force and effect. Josefina filed a motion for reconsideration of the decision, which was, likewise, denied by the CA.

Josefina, now the petitioner, filed the present Petition for Review , alleging that:

A. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THERE EXISTS A CONJUGAL PARTNERSHIP BETWEEN PETITIONER AND EDUARDO FRANCISCO;

B. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE SUBJECT PROPERTIES WERE NOT PARAPHERNAL PROPERTIES OF PETITIONER;

C. THE HONORABLE COURT OF APPEALS ERRED IN DISTURBING THE FINDINGS OF FACTS AND CONCLUSION BY THE TRIAL COURT IN ITS DECISION OF DECEMBER 20, 1997, THE SAME BEING IN ACCORDANCE WITH LAW AND JURISPRUDENCE.31

The threshold issues for resolution are as follows: (a) whether or not the subject property is the conjugal property of Josefina Castillo and Eduardo Francisco; and (b) whether or not the subject properties may be held to answer for the personal obligations of Eduardo.

We shall deal with the issues simultaneously as they are closely related.

The petitioner asserts that inasmuch as her marriage to Eduardo is void ab initio, there is no occasion that would give rise to a regime of conjugal partnership of gains. The petitioner adds that to rule otherwise would render moot and irrelevant the provisions on the regime of special co-ownership under Articles 147 and 148 of the Family Code of the Philippines, in relation to Article 144 of the New Civil Code.

The petitioner avers that since Article 148 of the Family Code governs their property relationship, the respondents must adduce evidence to show that Eduardo actually contributed to the acquisition of the subject properties. The petitioner asserts that she purchased the property before her marriage to Eduardo with her own money without any contribution from him; hence, the subject property is her paraphernal property.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

Consequently, such property is not liable for the debts of Eduardo to private respondent MIWCC.

The respondents, on the other hand, contend that the appellate court was correct in ruling that the properties are conjugal in nature because there is nothing in the records to support the petitioner's uncorroborated claim that the funds she used to purchase the subject properties were her personal funds or came from her mother and sister. The respondents point out that if, as claimed by the petitioner, the subject properties were, indeed, not conjugal in nature, then, there was no need for her to obtain marital (Eduardo's) consent when she mortgaged the properties to two different parties sometime in the first quarter of 1986, or after Eduardo executed the affidavit of waiver.

We note that the only questions raised in this case are questions of facts. Under Rule 45 of the Rules of Court, only questions of law may be raised in and resolved by the Court. The Court may, however, determine and resolve questions of facts in cases where the findings of facts of the trial court and those of the CA are inconsistent, where highly meritorious circumstances are present, and where it is necessary to give substantial justice to the parties. In the present action, the findings of facts and the conclusions of the trial court and those of the CA are opposite. There is thus an imperative need for the Court to delve into and resolve the factual issues, in tandem with the questions of law raised by the parties.

The petition has no merit.

The petitioner failed to prove that she acquired the property with her personal funds before her cohabitation with Eduardo and that she is the sole owner of the property. The evidence on record shows that the Imus Bank executed a deed of absolute sale over the property to the petitioner on August 31, 1984 and titles over the property were, thereafter, issued to the latter as vendee on September 4, 1984 after her marriage to Eduardo on January 15, 1983.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

We agree with the petitioner that Article 144 of the New Civil Code does not apply in the present case. This Court in Tumlos v. Fernandez 32 held that Article 144 of the New Civil Code applies only to a relationship between a man and a woman who are not incapacitated to marry each other, or to one in which the marriage of the parties is void from the very beginning. It does not apply to a cohabitation that is adulterous or amounts to concubinage, for it would be absurd to create a co-ownership where there exists a prior conjugal partnership or absolute community between the man and his lawful wife. In this case, the petitioner admitted that when she and Eduardo cohabited, the latter was incapacitated to marry her.

Article 148 of the Family Code of the Philippines, on which the petitioner anchors her claims, provides as follows:

Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit.

If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her share shall be forfeited in the manner provided in the last paragraph of the preceding Article.

The foregoing rules on forfeiture shall, likewise, apply even if both parties are in bad faith.

Indeed, the Family Code has filled the hiatus in Article 144 of the New Civil Code by expressly regulating in Article 148 the property relations of couples living in a state of adultery or concubinage. Under Article 256 of the Family Code, the law can be applied retroactively if it does not prejudice vested or acquired rights. The petitioner failed to prove that she had any vested right over the property in question.33

Since the subject property was acquired during the subsistence of the marriage of Eduardo and Carmelita, under normal circumstances, the same should be presumed to be conjugal property.34 Article 105 of the Family Code of the Philippines provides that the Code shall apply to conjugal partnership established before the code took effect, without prejudice to vested rights already acquired under the New Civil Code or other laws.35 Thus, even if Eduardo and Carmelita were married before the effectivity of the Family Code of the Philippines, the property still cannot be considered conjugal property because there can only be but one valid existing marriage at any given time.36 Article 148 of the Family Code also debilitates against the petitioner's claim since, according to the said article, a co-ownership may ensue in case of cohabitation where, for instance, one party has a pre-existing valid marriage provided that the parents prove their actual joint contribution of money, property or industry and only to the extent of their proportionate interest thereon.37

We agree with the findings of the appellate court that the petitioner failed to adduce preponderance of evidence that she contributed money, property or industry in the acquisition of the subject property and, hence, is not a co-owner of the property:

First of all, other than plaintiff-appellee's bare testimony, there is nothing in the record to support her claim that the funds she used to purchase the subject properties came from her mother and sister. She did not, for instance, present the testimonies of her mother and sister who could have corroborated her claim. Furthermore, in her Affidavit of Third-Party Claim (Exh. "C"), she stated that the subject properties "are my own paraphernal properties, including the improvements thereon, as such are the fruits of my own exclusive efforts '," clearly implying that she used her own money and contradicting her later claim that the funds were provided by her mother and sister. She also stated in her affidavit that she acquired the subject properties before her marriage to Eduardo Francisco on 15 January 1983, a claim later belied by the presentation of the Deed of Absolute Sale clearly indicating that she bought the properties from Imus Rural Bank on 31 August 1984, or one year and seven months after her marriage (Exh. "D"). In the face of all these contradictions, plaintiff-appellee's uncorroborated testimony that she acquired the subject properties with funds provided by her mother and sister should not have been given any weight by the lower court.

It is to be noted that plaintiff-appellee got married at the age of 23. At that age, it is doubtful if she had enough funds of her own to purchase the subject properties as she claimed in her Affidavit of Third Party Claim. Confronted with this reality, she later claimed that the funds were provided by her mother and sister, clearly an afterthought in a desperate effort to shield the subject properties from appellant Master Iron as judgment creditor.38

Aside from her bare claims, the petitioner offered nothing to prove her allegation that she borrowed the amount of P320,000.00 from her mother and her sister, which she paid to the Imus Bank on August 31, 1984 to purchase the subject property. The petitioner even failed to divulge the name of her mother and the sources of her income, if any, and that of her sister. When she testified in Civil Case No. 95-0169, the petitioner declared that she borrowed part of the purchase price of the property from her brother,39 but failed to divulge the latter's name, let alone reveal how much money she borrowed and when. The petitioner even failed to adduce any evidence to prove that her mother and sister had P320,000.00 in 1984, which, considering the times, was then quite a substantial amount. Moreover, the petitioner's third-party-claim affidavit stating that the properties "are the fruits of my own exclusive effort before I married Eduardo Francisco" belies her testimony in the trial court and in Civil Case No. 95-0169.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

We note that, as gleaned from the receipt issued by the Imus Bank, the payment for the subject property was drawn via Check No. 002334 and issued by the Commercial Bank of Manila in the amount of P320,000.00.40 The petitioner failed to testify against whose account the check was drawn and issued, and whether the said account was owned by her and/or Eduardo Francisco or her mother, sister or brother. She even failed to testify whether the check was a manager's check and, if so, whose money was used to purchase the same.

We also agree with the findings of the CA that the affidavit of waiver executed by Eduardo on February 15, 1985, stating that the property is owned by the petitioner, is barren of probative weight. We are convinced that he executed the said affidavit in anticipation of claims by third parties against him and hold the property liable for the said claims. First, the petitioner failed to prove that she had any savings before her cohabitation with Eduardo. Second, despite Eduardo's affidavit of waiver, he nevertheless affixed his marital conformity to the real estate mortgage executed by the petitioner over the property in favor of Leonila on January 13, 1986.41 Third, the petitioner testified that she borrowed the funds for the purchase of the property from her mother and sister.42 Fourth, the petitioner testified that Eduardo executed the affidavit of waiver because she discovered that he had a first marriage.43 Lastly, Eduardo belied the petitioner's testimony when he testified that he executed the affidavit of waiver because his mother-in-law and sister-in-law had given the property to the petitioner.44

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision of the Court of Appeals reversing the decision of the Regional Trial Court is AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Endnotes:


1 Penned by Associate Justice Wenceslao I. Agnir, Jr. (retired), with Associate Justices Salvador J. Valdez, Jr. and Mariano C. Del Castillo, concurring.

2 Penned by Judge Helen Bautista-Ricafort.

3 TSN, 24 January 1995, pp. 13-14. (Exhibit "H")

4 Exhibit "D."

5 Exhibit "E."

6 Records, pp. 149, 151. (Exhibits "A" and "B")

7 Dorsal portion of TCT Nos. 87976 and 87977.

8 Records, pp. 236-239. (Exhibits "13" to "13-D")

9 Id. at 238. (Exhibit "13-D")

10 Id. at 221.

11 Id. at 222. (Exhibit "2")

12 Id. at 45.

13 Id. at 223. (Exhibit "3")

14 Id. at 224. (Exhibit "4")

15 Id. at 153.

16 Id. at 227. (Exhibit "6")

17 Id. at 229. (Exhibit "8")

18 Id. at 56.

19 Id. at 19.

20 Id. at 32.

21 Id. at 287-289.

22 TSN, 11 July 1995, p. 15.

23 Id. at 10-12.

24 TSN, 14 July 1995, p. 14.

25 TSN, 11 July 1995, pp. 19-20.

26 Id. at 31.

27 Id. at 29-32.

28 CA Rollo, pp. 41-42.

29 Id. at 21.

30 Rollo, pp. 39-40.

31 Id. at 13.

32 330 SCRA 718 (2000).

33 Id. at 733.

34 Art. 116. All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.

35 Villanueva v. Court of Appeals, G.R. No. 143286, April 14, 2004.

36 Tumlos v. Fernandez, supra.

37 Ibid; Malang v. Moson, 338 SCRA 393 (2000).

38 Rollo, pp. 34-35.

39 Exhibit "G-1."

40 Exhibit "E."

41 Exhibit "13-D."

42 TSN, 11 July 1995, pp. 11-12.

43 TSN, 30 May 1995, pp. 8-9.

44 TSN, 11 July 1995, pp. 29-30.

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