G.R. No.

, 124 SCRA 154

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
DECISION
July 31, 1983
G.R. No. , ,
vs.
,.
, J.:
Questioned in these consolidated petitions for review on certiorari is
the decision of the Court of Appeals, now Intermediate Appellate
Court, reversing the decision of the Court of First Instance of Rizal,
Quezon City Branch. The dispositive portion of the appellate decision
reads:
WHEREFORE, (a) the judgment appealed from is hereby reversed;
(b) the deed of sale executed by appellee Julia de Reyes on March 3,
1961 in favor of appellees Efren V. Mendoza and Inocencia R.
Mendoza, covering lots 5 and 6, Block No. 132 of Subdivision Plan
Psd. 14841, situated at Retiro Street, Quezon City, is hereby
declared null and void with respect to one- half share of appellant
therein; (c) the Register of Deeds of Quezon City is hereby directed
to cancel TCT Nos. 5611 0 and 56111, now covering said lots, and to
issue, in lieu thereof, certificates of title in favor of appellant
Ponciano S. Reyes for one-half (1/2) pro-indiviso and the spouses
Efren V. Mendoza and Inocencia Mendoza for one-half (1/2) also proindiviso; (d) the appellees Mendozas are hereby ordered to pay unto
the appellant the accrued rentals of style properties in litigation due

to the share corresponding to said appellant, at the rate of P350.00

a month from March 3, 1961 until the finality of this decision, with
legal interest thereon; and (e) said appellees are likewise ordered to
pay unto the appellant the amount of THREE THOUSAND (P3,000.00)
PESOS as attorney's fees, plus the costs in both instances.
This case originated with the filing of a complaint by Ponciano S.
Reyes with the Court of First Instance of Rizal docketed as Civil Case
No. Q-6905, for the annulment of a deed of sale of two parcels of
land with their improvements, executed by his wife, Julia R. De
Reyes as vendor and the spouses Efren V. Mendoza and Inocencia R.
De Mendoza, as vendees. Ponciano S. Reyes averred that said
properties were conjugal properties of himself and his wife and that
she had sold them to petitioners "all by herself" and without his
knowledge or consent.
Petitioners Efren V. Mendoza and Inocencia R. De Mendoza alleged in
their answer that the properties were paraphernal properties of Julia
R. de Reyes and that they had purchased the same in good faith and
for adequate consideration. In a separate answer, petitioner Julia R.
De Reyes, supported the spouses Mendozas' contentions.
In its decision, the Court of First Instance of Rizal dismissed the
complaint and declared the properties in question exclusive and
paraphernal properties of petitioner Julia R. De Reyes. It ruled that
she could validly dispose of the same without the consent of her
husband and that the Mendozas are innocent purchasers.
As earlier stated, the Court of Appeals reversed the decision of the
court a quo.
The petitioners filed separate petitions for review on certiorari. Efren
V. Mendoza and Inocencia R. De Mendoza raised the following
assignments of errors:

I
THE COURT OF APPEALS ERRED NOT MERELY IN GIVING CREDENCE,
BUT IN FACT IN CONSIDERING AT ALL, PROOF OF THE ALLEGED
CONJUGAL CHARACTER OF THE PROPERTIES l-, QUESTION, AND IN
NOT INVOKING THE DOCTRINE -E OF ESTOPPEL TO RULE OUT ANY
AND ALL SUCH PROOF ALTOGETHER.
II
THE COURT OF APPEALS ERRED IN FINDING PETITIONERS GUILTY OF
BAD FAITH IN PURCHASING THE PROPERTIES LITIGATED FOR
WITHOUT EVIDENCE OF SUCH FACT BEING PRESENTED AND, ON THE
STRENGTH MERELY OF A SIMPLE PRESUMPTION UNWARRANTEDLY
DRAWN FROM ONE OF ITS OWN OBSCURE AND HARDLY
AUTHORITATIVE RULINGS, AND AGAINST ABUNDANT, POSITIVE AND
UNCONTRADICTED PROOF OF GOOD FAITH.
III
THE COURT OF APPEALS ERRED UPON EQUITABLE GROUNDS IN, IN
EFFECT, GIVING JUDICIAL FLAT To THE UNJUST ENRICHMENT OR
BENEFIT OF ONE PERSON AT THE EXPENSE OF ANOTHER OR
OTHERS.
On the other hand, Julia R. De Reyes made the following
assignments of errors in her petition for review.
THE COURT OF APPEALS ERRED IN DECLARING THAT THE
PROPERTIES IN QUESTION ARE THE CONJUGAL PROPERTIES OF THE
RESPONDENT PONCIANO S. REYES AND THE PETITIONER IN SPITE OF
THE CATEGORICAL JUDICIAL DECLARATION AND ADMISSION BY SAID
RESPONDENT THAT THE SAID PROPERTIES ARE THE EXCLUSIVE AND
PARAPHERNAL PROPERTIES OF HIS WIFE, THE PETITIONER HEREIN.

THE COURT OF APPEALS ERRED IN HAVING DECIDED THE CASE NOT

IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS ON
THE MATTER IN THE SENSE, PARTICULARLY, THAT THE ACT AND
DECLARATION OF A PARTY AGAINST HIS INTERESTS CAN NOT BE
CONTRADICTED BY HIM, AND IN SO DOING THE DECISION
AMOUNTED TO SANCTIONING A PERJURED TESTIMONY.
On the first issue regarding the alleged paraphernal character of the
disputed properties, we find that the records sustain the findings of
the Court of Appeals
The fact are:
xxx xxx xxx
... Ponciano Reyes and Julia de Reyes-to be herein referred to as
Ponciano and Julia alone for brevity-were married in 1915. The
properties in question consisting of Lots 5 and 6, Block No. 132,
situated at Retiro Street, Quezon City-plus the buildings erected
thereon, were bought from J. M. Tuason & Co., represented by
Gregorio Araneta, Inc. to be herein mentioned as "Araneta"February, 1947 on installment basis. (Testimony of Julia, t.s.n., p. 74,
February 15, 1963). The first installment on Lot No. 5 was P69.96
and on Lot No. 6 was P102.00 (Exh. 'H' and uncontradicted
testimony of Ponciano, t.s.n., p. 4, July 20, 1964).
The spouses were always in arrears in the payment of the
installments to Araneta due to lack of money (t.s.n., pp. 5-7, July 20,
1964) so they had to borrow money from the Rehabilitation Finance
Corporation-herein after referred to as RFC for short. Thus, on
November 26, 1948, they jointly obtained a loan of P12,000.00 from
the RFC for the following exclusive purposes only: 'to complete the
construction of one-storey residential building on 9th Street, La
Loma Quezon City; and to pay the balance of the price of the lot

offered as security' which is Lot 5, (Deed of Mortgage, Exh. 'A') l').

Out of this loan, the amount of P5,292.00 was paid to Araneta as
price of Lot 5. The corresponding deed of absolute sale thereof was
executed by Araneta on November 27, 1948 (Exh. 'A'). On October
2, 1952, the spouses secured an additional loan of P8,000.00 from
the RFC 'to pay the balance of the lot herein offered (Lot No. 6) as
additional security, and to defray the expenses incurred in the
repairs of the building' as the deed of mortgage so recites (Exh. 'Bl'). From the amount of this loan, the sum of P7,719.60, as price of
Lot No. 6, was paid and the deed of absolute sale was forthwith
executed by Araneta (Exh. 'B'). In the deed of sale, the vendee
named is 'Julia de Reyes'. Her signatures appear over the caption
vendee and those of Ponciano under the phrase: 'with my marital
consent.
As a result of these sales, Transfer Certificates of Title Nos. 8550
(Exh. 'F') and 19998 (Exh. 'G') were issued for Lots 5 and 6,
respectively, by the Register of Deeds of Quezon City, in the name
of "JULIA REYES married to PONCIANO REYES." The mortgage
contracts (Exhs. 'A-1' and 'B-1') executed by the spouses in favor of
the RFC were duly registered and annotated on the said transfer
Certificates of Title (Exhs. 'F' and 'G').
As promised to the RFC, the spouses built a house and later
a camarin on the two lots. The camarin was leased as a school
building to the Quezon City Elementary School of La Loma for the
period of two years (1950-51) at P500.00 a month. When the school
was transferred to another place, the camarin was leased on
December 10, 1952 to Mr. and Mrs. Mendoza, appellees, for ten
years at P600.00 a month for the first year and P700.00 for the
remaining nine years. The contract of lease was signed by Julia as
lessor, with the marital consent of Ponciano. The camarin was

converted into a movie house and used as such by the lessees.

(Exh. 'G').
In spite of the good rentals they had been receiving for the building,
the spouses failed to pay seasonably their obligations to the RFC so,
as late as November 28, 1958, they had to ask for an extension of 5
years from the Development Bank of the Philippines or DBP, as
successor of the RFC, for the payment of an outstanding balance of
P7,876.13 (Exh. 'D').
On March 3, 1961, while Ponciano was absent attending his farm in
Arayat, Pampanga, Julia sold absolutely the lots in question,
together with their improvements to appellees Mendozas for the
sum of P80,000.00 without the knowledge and consent of Ponciano
(Exh. 'I'-Mendoza). At the same time the spouses were living
separately and were not in speaking terms. By virtue of such sale,
Transfer Certificates of Title Nos. 561 10 and 56111 were
subsequently issued in the name of the Mendozas.
The applicable provision of law is Article 153 of the Civil Code which
provides:
ART. 153. The following are conjugal partnership property:
(1) That which is acquired by onerous title during the marriage at
the expense of the common fund, whether the acquisition be for the
partnership, or for only one of the spouses;
xxx xxx xxx
The presumption found in Article 160 of the Civil Code must also be
overcome by one who contends that the disputed property is
paraphernal Article 160 provides:

ART. 160. All property of the marriage is presumed to belong to the

conjugal partnership, unless it be proved that it pertains exclusively
to the husband or to the wife.
The presumption is a strong one. As stated in Camia de Reyes v.
Reyes de Ilano (63 Phil. 629, 639), "it is sufficient to prove that the
property was acquired during the marriage in order that the same
may be deemed conjugal property." And in Laluan v. Malpaya (65
SCRA 494, 504) we stated, "proof of acquisition of the property in
dispute during the marriage suffices to render the statutory
presumption operative."
There is no question that the disputed property was acquired by
onerous title during the marriage. But were the funds used to buy
the lot and build the improvements at the expense of the common
fund?
The records show that the funds came from loans obtained by the
spouses from the Rehabilitation Finance Corporation. Under Article
161 of the Civil Code, all debts and obligations contracted by the
husband and the wife for the benefit of the conjugal partnership are
liabilities of the partnership.
As stated in Castillo, Jr. vs. Pasco (1 1 SCRA 102, 107):
... The position thus taken by appellants is meritorous, for the reason
that the deeds show the loans to have been made by Dr. Nicanor
Jacinto and by Gabriel and Purificacion Gonzales, to both spouses
Marcelo Castillo and Macaria Pasco, as joint borrowers. The loans
thus became obligations of the conjugal partnership of both debtor
spouses and the money loaned is logically conjugal property.
Citing Palanca v. Smith Bell & Co. (9 Phil. 13 1) interpreting Par. 3,
Article 1401 of the old Civil Code, the Court in Castillo v. Pasco
stated:

If money borrowed by the husband alone on the security of his wife's

property is conjugal in character, a fortiori should it be conjugal
when borrowed by both spouses. The reason obviously is that the
loan becomes an obligation of the conjugal partnership which is the
one primarily bound for its repayment.
To rebut the presumption and the evidence of the conjugal character
of the property, the petitioners have only the testimony of Julia de
Reyes to offer.
Mrs. Reyes testified that she bought the two parcels of land on
installment basis and that the first payment of a little less than
P2,000.00 came from her personal funds: The receipt issued by
Araneta, however, shows that the first installment on one lot was
only P69.96 and on the other lot, P102.00. Mrs. Reyes also testified
that she paid the entire purchase price and the construction of the
buildings from her personal funds and money borrowed from the
Philippine National Bank. The mortgage contracts, however, show
that the properties were paid out of the loan from RFC.
As a matter of fact, Mrs. Reyes' testimony about a loan from Mrs.
Rosa Borja, the sale of a lot in Cabiao, Nueva Ecija given by her
mother, and the loan from PNB only emphasize the conjugal nature
of the disputed properties because she stated that these sums were
also used to put up their gravel and sand business, a poultry farm,
and a banana plantation plus a jeepney transportation line although
according to her, every business venture handled by her husband
failed. The two were establishing businesses and buying properties
together as husband and wife, in happier times.
The Court of Appeals ruled upon the testimony of Julia De Reyes as
follows:

Julia's testimony that she had sold her Cabiao property to Rosa Borja
is not supported by the deed of sale (Exh. 'I') which shows that the
property was sold to Encarnacion Goco and Mariano Robles. Again,
her claim that said Cabiao property was donated to her by her
mother is negated by the deeds of sale (Exhs. 'J' and 'K') which show
that said property was donated to her and her two brothers, Pablo
and Jose del Rosario, who afterwards sold their participation thereof
to the spouses, Ponciano and Julia.
Her claim of exclusive ownership is further belied by the Income Tax
Returns (Exhs. 'N' to 'N'- 3') which she herself prepared and filed in
behalf of the conjugal partnership wherein she made the statement
that the rentals paid by her co-appellees were income of the
conjugal partnership; and by the Income Tax Returns (Exhs. 'O' to '04') also filed by her for the conjugal partnership, were she made to
appear the properties in question as capital assets of the conjugal
partnership. It should be noted that Julia did not care to deny the
truth of said statements. Neither did she endeavor to offer any
explanation for such damaging averments.
Petitioners also raised the issue of estoppel in their assignments of
errors. They alleged:
Even so, petitioners would have small legal cause to dispute the
respondent Court's giving credence to the husband's pretensions did
there not also exist in the record plain and indisputable evidence
that he had on a former occasion both solemnly confirmed the
paraphernal character of the very properties now in question and
disclaimed the existence of any conjugal partnership funds or
properties of himself and his wife. (Petitioner's Brief, L-31616, p. 7).
It turns out that in 1948, Ponciano Reyes was sued in the then
Municipal Court of Manila for ejectment from a leased hotel that he

was then operating. Judgment was rendered against Reyes in favor

of the lessors, the brothers named Gocheco Having failed in a bid to
garnish the rentals of the disputed buildings because the municipal
court stated that it had no jurisdiction to decide the paraphernal or
conjugal nature of the properties, the Gocheco brothers filed Civil
Case No. 24772 for revival of judgment with the Court of First
Instance of Manila.
It was in this latter case where Mr. Reyes stated in his special
defenses that he and his wife never had any kind of fund which
could be called conjugal partnership funds, that they acted
independently from one another whenever either one engaged in
any business, andThat the herein plaintiff has not limited his action in the present
case against defendant Ponciano S. Reyes as he did in the original
case above-mentioned, that is, Civil Case No. 7524 of the Manila
Municipal Court which the instant case derived from, but has
included the defendant's wife Julia Reyes, with the only intended
purpose and design of going over and against the paraphernal
properties of said Julia Reyes. (par. 4, Special Defenses, Answer,
Exh. II; Petitioner's Brief, L-31618, pp. 9-10).
Article 1437 of the Civil Code on estoppel involving immovable
property provides:
Art. 1437. When in a contract between third persons concerning
immovable property, one of them is misled by a person with respect
to the ownership or real right over the real estate, the latter is
precluded from asserting his legal title or interest therein, provided
all these requisites are present:
(1) There must be fraudulent representation or wrongful
concealment of facts known to the party estopped;

(2) The party precluded must intend that the other should act upon
the facts as misrepresented;
(3) The party misled must have been unaware of the true facts; and
(4) The party defrauded must have acted in accordance with the
representation.
The principle of estoppel rests on the rule that whenever a party
has, by his declaration, act or omission, intentionally and
deliberately led the other to believe a particular thing true and to
act, upon such belief he cannot, in any litigation arising out of such
declaration, act or omission, be permitted to falsify it. (Sotto v.
Teves, 86 SCRA 154.)
Estoppel can only be invoked between the person making the
misrepresentation and the person to whom it was addressed. It is
essential that the latter shag have relied upon the misrepresentation
and had been influenced and misled thereby.
There is no showing that the respondent had intentionally and
deliberately led the petitioners Mendozas to believe what was
contained in the pleading, "Exh. 11", and to make them act upon it.
As observed by the respondent, they were not even a party in the
case where the said pleadin was filed. Neither is there any assertion
by the Mendozas that the said pleading was shown to them or that
they happened to see it or to have any knowledge about it before
they purchased the properties in question. The alleged
representation was never addressed to the petitioners, much less
made with the intention that they would act upon it. Moreover, there
is no specific and clear reference to the disputed lots as paraphernal
in the cited answer. The petitioners cannot invoke estoppel in these
petitions.

May the Mendoza spouses be considered buyers in good faith?

The proof that the petitioners in L-31618 are purchasers in good
faith comes from the testimony of Mrs. Inocencia Mendoza herself.
Mrs. Mendoza testified that Mrs. Julia R. De Reyes assured her that
the properties were paraphernal that her lawyer verified the titles
being in the name of Mrs. Julia R. De Reyes, and that she never dealt
with Mr. Ponciano Reyes when she and her husband were still
renting the properties they later purchased. On cross-examination,
Mrs. Mendoza admitted that she learned of the RFC mortgage when
the lots were about to be purchased.
Property acquired during a marriage is presumed to be conjugal and
the fact that the land is later registered in the name of only one of
the spouses does not destroy its conjugal nature. (Bucoy v. Paulino,
23 SCRA 249). Section 46 of P.D. 1529, the Property Registration
Decree, reiterates the proviso in Section 70 of the former Land
Registration Act that registration cannot be construed to relieve
registered land or the owners thereof from any rights incident to the
relation of husband and wife. (See also: Marigsa v. Macabuntoc 17
Phil. 107, 109; Romero de Pratts v. Menzi & Co., Inc., 53 Phil. 51, 54;
Padilla v. Padilla, 74 Phil. 377, 382-384; Vitug v. Montemayor, 91
Phil. 286, 290, 291, citing Guinguing v. Abuton, 48 Phil. 144; Sideco
v. Aznar, 92 Phil. 952, 961-962, citing Flores v. Flores, 48 Phil. 288;
Guinoo v. Court of Appeals, 97 Phil. 235, 238; Silos v. Ramos, 97 Phil.
263, 270, citing Commonwealth v. Sandiko 72 Phil. 258, 260; and
Alvarez v. Espiritu, 14 SCRA 893).
If the fact that property acquired during marriage was registered in
the name of the husband alone does not affect its conjugal nature,
neither does registration in the name of the wife. Any person who
buys land registered in the married name of the wife is put on notice
about its conjugal nature.

The mortgage contracts (Exhs. "A-1 " and "B-1 ") executed by the
spouses Ponciano S. Reyes and Julia Reyes in favor of RFC were duly
registered in the Registry of Deeds of Quezon City and seasonably
annotated on transfer certificates of title Nos. 8550 (Exh. "F") and
19998 (Exh. "G"), which were issued in the name of Julia Reyes
"married to Ponciano Reyes". Their dates of inscription were
November 29, 1948 and October 11, 1952, respectively. On
December 10, 1952, the lots and the building were leased by Julia,
with the marital consent of Ponciano to the petitioners Mendozas
The contract of lease was registered in the Registry of Deeds and
was annotated in the transfer certificates of title on May 5, 1952. At
that time, the RFC mortgages were already noted at the back of the
transfer certificates of title. The petitioners, therefore, are
unquestionably charged with notice of the existence and contents of
said mortgages, their joint execution by the spouses Ponciano Reyes
and Julia Reyes and the application of the loans to the payment to
Araneta of the purchase price of the lots in question.
Furthermore, the consent of the Ponciano Reyes to the mere lease of
the properties was demanded by the Mendozas allegedly for their
own protection, yet when it came to the deed of sale which entailed
a greater transfer of rights such consent was not required.
The final argument refers to the alleged unjust enrichment by
Ponciano Reyes if the deed of sale is nullified This petitioners admit
that the benefit including that represented by one-half of the
purchase price, accrued not to the respondent but to his wife. Since
Mr. Reyes did not receive any part of the proceeds of the sale and
his wife has been aligning herself with the Mendoza couple, there
could be no unjust enrichment as alleged. The assignments of errors
have no merit.

WHEREFORE, the petitions for review on certiorari are hereby

DENIED for lack of merit. The judgment of the Court of Appeals is
affirmed.
SO ORDERED.
Teehankee, Actg. C.J., Melencio-Herrera, Plana, Vasquez and Relova,
JJ., concur.