LUPO ATIENZA, PETITIONER, VS. YOLANDA DE CASTRO, RESPONDENT.

Atienza versus De Castro

The Case

This is a petition for review on certiorari brought by Lupo Atienza against Yolanda de Castro, arising from an action for judicial partition of a parcel of land in Bel-Air Subdivision, Makati City. Lupo claimed that the property, though titled in Yolanda's name alone, was acquired during their extramarital cohabitation using his exclusive funds, and so should be partitioned between them as co-owners. The case matters because it settles which property regime governs couples who live together without the capacity to marry each other, and it reminds every litigant that co-ownership under that regime must be proven by actual contribution, not presumed from the mere fact of cohabitation.

Procedural History

Lupo commenced the action for judicial partition before the Regional Trial Court of Makati City, Branch 61. In a decision rendered in December 2000, the trial court ruled for Lupo, declaring the property owned in common by the parties share and share alike and ordering its partition between them in equal shares. Yolanda appealed to the Court of Appeals, which in a decision dated April 29, 2005 reversed and set aside the trial court's ruling and declared the property exclusively owned by Yolanda. Lupo moved for reconsideration, but the Court of Appeals denied his motion in a resolution dated September 16, 2005. Lupo then elevated the matter to the Supreme Court by petition for review on certiorari.

Facts

Sometime in 1983, Lupo Atienza, then the President and General Manager of Enrico Shipping Corporation and Eurasian Maritime Corporation, hired Yolanda de Castro as accountant for the two corporations. In the course of time their relationship became intimate, and despite Lupo being a married man, he and Yolanda lived together in consortium beginning the later part of 1983. Two children were born out of their union, but after the birth of their second child the relationship turned sour until they parted ways.

In 1987, a parcel of land with improvements in Bel-Air Subdivision, Makati City, covered by a transfer certificate of title, was acquired. The title was placed in Yolanda's name. Lupo later claimed that the property was bought with his exclusive funds and that the title was transferred to Yolanda without his knowledge and consent, and that he raised no objection because their affair was then still thriving. Yolanda, for her part, insisted that she bought the property for 2,600,000 pesos using her own savings and earnings as a businesswoman.

On May 28, 1992, Lupo filed a complaint for judicial partition, alleging that the property was acquired during his union with Yolanda as common-law husband and wife and was therefore co-owned by them. He demanded his share after their separation, upon learning that Yolanda had allowed her new live-in partner to live in the property.

Issues

• Whether or not the property relations of the parties, who lived together though Lupo was validly married to another woman, are governed by Article 148 of the Family Code even though their cohabitation and the acquisition of the property occurred before the Family Code took effect.
• Whether or not Lupo, as the party asserting co-ownership, discharged the burden of proving his actual contribution to the purchase of the disputed property.
• Whether or not the Court of Appeals committed a reversible error in declaring the property exclusively owned by Yolanda.

Applicable Provisions

Article 148 of the Family Code provides:

Article 148. In cases of cohabitation not falling under Article 147, 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.

This is the governing regime because Lupo was capacitated to marry another woman, so the parties' union falls outside Article 147 and co-ownership arises only from proven actual joint contribution.

Article 144 of the Civil Code, which Lupo invoked, provides:

Article 144. When a man and a woman live together as husband and wife, but they are not married, or their marriage is void from the beginning, the property acquired by either or both of them through their work or industry or their wages and salaries shall be governed by the rules on co-ownership.

The Court held that Article 148 of the Family Code was intended precisely to fill the hiatus left by this provision, and so Article 148 governs even if the cohabitation and the acquisition occurred before the Family Code took effect.

Article 484 of the Civil Code, also invoked by Lupo, provides:

Article 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. In default of contracts, or of special provisions, co-ownership shall be governed by the provisions of this Title.

The Court rejected Lupo's reliance on this general rule, because Article 148 supplies the special provision that governs the property relations of couples who are not capacitated to marry each other.

Ruling

On the first issue, the Court held that Article 148 of the Family Code governs. It is not disputed that the parties were not capacitated to marry each other because Lupo was validly married to another woman at the time of his cohabitation with Yolanda. Although the cohabitation commenced in 1983, before the Family Code took effect, Article 148 applies because it was intended precisely to fill the hiatus in Article 144 of the Civil Code. Before Article 148 was enacted, there was no provision governing the property relations of couples living in a state of adultery or concubinage. Hence, even if the cohabitation or the acquisition of the property occurred before the Family Code took effect, Article 148 governs.

On the second issue, the Court held that Lupo failed to discharge the burden of proof. Under Article 148, only properties acquired by both parties through their actual joint contribution of money, property, or industry are owned in common in proportion to their respective contributions, and proof of actual contribution is required. The Court reminded that the burden of proof rests upon the party who asserts an affirmative issue, that contentions must be proved by competent evidence, and that reliance must be had on the strength of the party's own evidence and not upon the weakness of the opponent's defense. Lupo's claim contradicted duly written instruments, namely the contract to sell, the deed of assignment of redemption, and the deed of transfer, all entered into between Yolanda and the vendor to the exclusion of Lupo. His voluminous records of the corporations' dollar accounts failed to prove his actual contribution, and the fact that Yolanda had limited access to corporate funds and had withdrawn money for the corporations did not prove that the money she used in buying the property came from those withdrawals.

On the third issue, the Court held that the Court of Appeals committed no reversible error. The trial court had erred in resting its disquisition on the apparent financial capacity of the parties, concluding without evidence that Yolanda had taken advantage of Lupo. In contrast, Yolanda presented preponderant evidence of her sole ownership, showing that she derived the funds from her earnings as an accountant and as a businesswoman engaged in foreign currency trading, money lending, and jewelry retail, supported by her clientele, promissory notes, bank account statements, and bank transactions. There can be no co-ownership where the respondent sufficiently established that she used her own funds to purchase the property.

Doctrine

The property regime of a man and a woman who live together without the capacity to marry each other, as where one of them is validly married to another, is the regime of limited co-ownership under Article 148 of the Family Code. Under this regime, only properties acquired by both parties through their actual joint contribution of money, property, or industry are owned in common in proportion to their respective contributions, and proof of actual contribution is required. Co-ownership extends only to the extent of the proven actual contribution, and absent proof of the extent thereof, the contributions and corresponding shares are presumed equal. Article 148 applies even if the cohabitation or the acquisition of the property occurred before the Family Code took effect, because it was intended to fill the hiatus in Article 144 of the Civil Code. Finally, he who alleges a fact has the burden of proving it, and a mere allegation is not evidence; the plaintiff must prevail on the strength of his own evidence, not on the weakness of the defendant's defense.

Disposition

The Supreme Court denied the petition and affirmed the decision and resolution of the Court of Appeals, with costs against Lupo Atienza, leaving the disputed property exclusively owned by Yolanda de Castro.

Remember This

Memorize this line: under Article 148 of the Family Code, co-ownership between parties not capacitated to marry each other arises only from proven actual joint contribution, and proof of that contribution is required. Examiners use this case to test the distinction between Articles 147 and 148 of the Family Code, the retroactive application of Article 148 to unions formed before the Family Code, and the burden of proof in actions for judicial partition grounded on an alleged co-ownership.