MILAGROS JOAQUINO A.K.A. MILAGROS J. REYES, PETITIONER, VS. LOURDES REYES, MERCEDES, MANUEL, MIRIAM AND RODOLFO JR. — ALL SURNAMED REYES, RESPONDENTS.

Joaquino versus Reyes

The Case

This is a petition for review brought by Milagros Joaquino, also known as Milagros Reyes, against Lourdes Reyes and her four children, all surnamed Reyes. The widow and legitimate children of the late Rodolfo Reyes sued to recover a house and lot in BF Homes, Parañaque, registered in the petitioner's name, claiming it was bought with conjugal funds. The case matters because it settles two rules every examinee must carry: property acquired by a husband with his salaries during a subsisting marriage is conjugal even if titled in the name of his common-law wife, and the filiation of that wife's children cannot be adjudicated in an ordinary action for recovery of property.

Procedural History

The respondents filed a complaint for reconveyance and damages before the Court of First Instance of Rizal. The case was eventually heard by the Regional Trial Court of Pasay City, Branch 111, which ruled in favor of the respondents, declaring the property conjugal and ordering its surrender. The petitioner appealed to the Court of Appeals. The appellate court affirmed the trial court's factual findings but modified the decision, holding that the trial court should not have resolved the filiation and successional rights of the petitioner's children, since those matters belong in a probate or special proceeding. The Court of Appeals denied the petitioner's motion for reconsideration. Hence, this petition for review under Rule 45 of the Rules of Court.

Facts

Rodolfo Reyes was legally married to Lourdes Reyes on January 3, 1947, and they had four children: Mercedes, Manuel, Miriam and Rodolfo Jr. While that marriage subsisted, Rodolfo lived for about nineteen years with Milagros Joaquino, with whom he had three children. Rodolfo worked as Vice President and Comptroller of Warner Barnes and Company, earning a monthly salary of 15,000 pesos, and upon retirement on September 30, 1980, he received a lump sum of 315,011 pesos and 79 centavos.

In 1979, during the common-law relationship, a house and lot at Baghdad Street, BF Homes, Parañaque, was purchased. The deed of sale was executed in favor of Milagros, and the title was issued in her name alone. To finance the 140,000-peso purchase price, Milagros executed a special power of attorney in favor of Rodolfo, who obtained a mortgage loan from Commonwealth Insurance Company. Rodolfo paid the monthly amortizations and the premiums on a Philam Life insurance policy taken as additional security. After his death on September 12, 1981, the balance of the loan was paid by Philam Life as insurer.

Lourdes died on February 2, 1993, during the pendency of the case. Milagros insisted she bought the property with her own exclusive funds and had the financial capacity to do so. The trial court and the Court of Appeals both found that she had no sufficient proof of this, and that the property had been paid out of Rodolfo's salaries and earnings, which were conjugal funds.

Issues

• Whether or not the house and lot on Baghdad Street is conjugal partnership property of the late spouses Rodolfo and Lourdes Reyes.
• Whether or not the filiation and successional rights of the petitioner's children may be adjudicated in this ordinary civil action for reconveyance and damages.

Applicable Provisions

Article 153 of the Civil Code provides:

(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; (2) That which is obtained by the industry, or work, or as salary of the spouses, or of either of them; (3) The fruits, rents or interests received or due during the marriage, coming from the common property or from the exclusive property of each spouse.

This defines the salaries and earnings that paid for the disputed property as conjugal in character.

Article 148 of the Family Code provides:

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 evidence 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 which 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.

This governs the property relations of a common-law couple where one party is burdened by a legal impediment to marriage.

Article 87 of the Family Code provides:

Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The prohibition shall also apply to persons living together as husband and wife without a valid marriage.

This voids the transfer of the property to the petitioner as a donation by a man living in concubinage.

Article 1456 of the Civil Code provides:

If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

This makes the petitioner a mere trustee of the property for the benefit of the lawful wife and compulsory heirs.

Ruling

On the first issue, the Court held that the property is conjugal. The applicable law is the Civil Code, since the marriage was celebrated in 1947. The property was acquired during the marriage, raising the presumption that it is conjugal. The respondents established that the loan which paid for the property was itself paid from Rodolfo's salaries and earnings, which were conjugal funds. The petitioner failed to prove her financial capacity or any actual contribution; her affidavits and certification were hearsay and had no probative value. The purchase and registration in her name amounted to a donation, void under Article 739 of the Civil Code as made between persons guilty of concubinage. The Court stressed that a Torrens title cannot be used to deprive another of ownership, and that the petitioner holds the property in an implied trust for the respondents.

On the second issue, the Court held that the filiation of the petitioner's children cannot be ruled upon in this action. Matters of filiation and heirship must be ventilated in a proper probate or special proceeding instituted for the purpose. The issue was not pleaded in the complaint or in the petitioner's answers, so due process barred its resolution. The Court also rejected the invocation of Articles 19 and 21 of the Civil Code, as the filiation was never established and the issue was raised for the first time on appeal.

Doctrine

First, property acquired during a subsisting marriage is presumed conjugal, and property bought with the husband's salaries and earnings is conjugal even if registered in the name of his common-law wife. Second, the registration of such property in the paramour's name is a void donation and creates an implied trust under Article 1456 of the Civil Code in favor of the lawful spouse and compulsory heirs. Third, the filiation and successional rights of illegitimate children must be settled in a probate or special proceeding, not in an ordinary civil action for recovery of property.

Disposition

The petition was denied, and the decision and resolution of the Court of Appeals were affirmed, with costs against the petitioner.

Remember This

Memorize this line: property acquired with the salaries and earnings of a husband belongs to his conjugal partnership with the legal spouse, even if registered in the paramour's name. Examiners use this case to test the conjugal presumption, the void donation between persons in concubinage, the implied trust exception to the conclusiveness of a Torrens title, and the rule that filiation is tried in a special proceeding, not in an action for reconveyance.