Case Digest for Article 91 of the Family Code: Munoz v. Ramirez and Carlos

FRANCISCO MUÑOZ, JR., Petitioner, v. ERLINDA RAMIREZ and ELISEO CARLOS,

Respondents

G.R. No. 156125, 25 August 2010

FACTS:

The residential lot in the subject property was registered in the name of Erlinda Ramirez, married to Eliseo Carlos (respondents). On 6 April 1989, Eliseo, a Bureau of Internal Revenue employee, mortgaged said lot, with Erlinda’s consent, to the GSIS to secure a P136,500.00 housing loan, payable within twenty (20) years, through monthly salary deductions of P1,687.66. The respondents then constructed a thirty-six (36)-square meter, two-story residential house on the lot. On 14 July 1993, the title to the subject property was transferred to the petitioner by virtue of a Deed of Absolute Sale, dated 30 April 1992, executed by Erlinda, for herself and as attorney-in-fact of Eliseo, for a stated consideration of P602,000.00.

On 24 September 1993, the respondents filed a complaint with the RTC for the nullification of the deed of absolute sale, claiming that there was no sale but only a mortgage transaction, and the documents transferring the title to the petitioner’s name were falsified. The respondents presented the results of the scientific examination conducted by the National Bureau of Investigation of Eliseo’s purported signatures in the Special Power of Attorney dated 29 April 1992 and the Affidavit of waiver of rights dated 29 April 1992, showing that they were forgeries. The petitioner, on the other hand, introduced evidence on the paraphernal nature of the subject property since it was registered in Erlinda’s name.

The RTC ruled for petitioner finding that the property is paraphernal and consequently, the NBI finding that Eliseo’s signatures in the special power of attorney and in the affidavit were forgeries was immaterial because Eliseo’s consent to the sale was not necessary. The CA reversed and held that pursuant to the second paragraph of Article 158 of the Civil Code and Calimlim-Canullas v. Hon. Fortun, the subject property, originally Erlinda’s exclusive paraphernal property, became conjugal property when it was used as collateral for a housing loan that was paid through conjugal funds – Eliseo’s monthly salary deductions.

ISSUE:

Whether the subject property is paraphernal orconjugal

HELD:

The property is paraphernal property of Erlinda.

As a general rule, 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. In the present case, clear evidence that Erlinda inherited the residential lot from her father has sufficiently rebutted this presumption of conjugal ownership pursuant to Articles 92and 109 of the Family Code. The residential lot, therefore, is Erlinda’s exclusive paraphernal property.

Moreover, we cannot subscribe to the CA’s misplaced reliance on Article 158 of the Civil Code and Calimlim-Canullas. As the respondents were married during the effectivity of the Civil Code, its provisions on conjugal partnership of gains (Articles 142 to 189) should have governed their property relations. However, with the enactment of the Family Code on 3 August 1989, the Civil Code provisions on conjugal partnership of gains, including Article 158, have been superseded by those found in the Family Code (Articles 105 to 133).

Article 120 of the Family Code, which supersedes Article 158 of the Civil Code, provides the solution in determining the ownership of the improvements that are made on the separate property of the spouses, at the expense of the partnership or through the acts or efforts of either or both spouses. Applying the said provision to the present case, we find that Eliseo paid a portion only of the GSIS loan through monthly salary deductions. From 6 April 1989 to 30 April 1992, Eliseo paid about P60,755.76, not the entire amount of the GSIS housing loan plus interest, since the petitioner advanced the P176,445.27 paid by Erlinda to cancel the mortgage in 1992. Considering the P136,500.00 amount of the GSIS housing loan, it is fairly reasonable to assume that the value of the residential lot is considerably more than theP60,755.76 amount paid by Eliseo through monthly salary deductions. Thus, the subject property remained the exclusive paraphernal property of Erlinda at the time she contracted with the petitioner; the written consent of Eliseo to the transaction was not necessary. The NBI finding that Eliseo’s signatures in the special power of attorney and affidavit were forgeries was immaterial.

Nonetheless, the RTC and the CA apparently failed to consider the real nature of the contract between the parties (where the SC found that the contract is an equitable mortgage and not one of sale).