ELENITA M. DEWARA, REPRESENTED BY HER ATTORNEY-IN-FACT, FERDINAND MAGALLANES, PETITIONER, VS. SPOUSES RONNIE AND GINA LAMELA AND STENILE ALVERO, RESPONDENTS.

WHEREFORE, judgment is hereby rendered in favor of the [petitioner] and against the [respondents]:

1. The levy on execution on Lot No. 234-C of the Bacolod
   Cadastre covered by TCT No. 80054 in the name of [petitioner] Elenita M.
   Dewara, the public auction of the property, and the consolidation of
   the title and issuance of new TCT No. 167403 in the name of [respondent]
   Ronnie Lamela, are hereby declared null and void;
2. The Register of Deeds of Bacolod City is ordered to
   cancel TCT No. 167403 in the name of [respondent] Ronnie Lamela and TCT
   No. 80054 be reinstated or a new one issued in the name of [petitioner]
   Elenita M. Dewara;
3. There is no pronouncement on damages with cost de officio.

SO ORDERED.^[14]

The RTC declared that said property was paraphernal in nature. It
arrived at this conclusion by tracing how Elenita acquired the subject
property. Based on the documentary evidence submitted, Elenita’s
grandfather, Exequiel Magallanes, originally owned Lot No. 234-C. Upon
his demise, his children, Jesus (Elenita’s father), Salud, and
Concepcion, inherited the property, each entitled to a share equal to
one-third (1/3) of the total area of the land. They were issued a new
title (TCT No. T-17541) for the property. On July 6, 1966, petitioner’s
aunt, Salud, executed a waiver of rights duly registered with the Office
of the Register of Deeds under Entry No. 76392, thereby waiving her
rights and participation over her 1/3 share of the property in favor of
her siblings, Jesus and Concepcion. The two siblings then became the
owners of the property, each owning one-half (1/2) of the property.
Jesus subsequently sold his share to his daughter, Elenita, for the sum
of Five Thousand Pesos (P5,000.00), based on the deed of sale dated
March 26, 1975. The deed of sale was duly registered with the Register
of Deeds under Entry No. 76393. Concepcion also sold her share to her
niece, Elenita, for the sum of Ten Thousand Pesos (P10,000.00), based on
the deed of sale dated April 29, 1975, which was duly registered with
the Register of Deeds under Entry No. 76394. By virtue of the sale
transactions, TCT No. T-17541 was cancelled and a new title, TCT No.
T-80054, was issued in the name of Elenita.^[15]

The RTC gave credence to the testimony of Elenita on the
circumstances surrounding the sale of the property. First, it was sold
to her by her father and her aunt so that the family would remain on the
lot. Second, the minimal and inadequate consideration for the 1,440 sq m
property was for the purpose of helping her expand her capital in her
business at the time. Thus, the sale was essentially a donation and was
therefore gratuitous in character.^[16]

Having declared that the property was the paraphernal property of
Elenita, the RTC ruled that the civil liability of Eduardo, which was
personal to him, could not be charged to the exclusive property of his
wife.^[17]

On appeal, the CA reversed the decision of the RTC. The dispositive portion of the Decision reads:

WHEREFORE, in view of all the foregoing, the instant appeal is GRANTED.
The assailed decision of the Regional Trial Court of Bacolod City,
Branch 54, dated September 2, 1999, in Civil Case No. 93-7942 is hereby REVERSED and SET ASIDE, and a new Decision is entered DISMISSING
the complaint for lack of merit. Let a copy of this Decision be
furnished to the Office of the Register of Deeds of Bacolod City, Negros
Occidental [which] is hereby ordered to cancel Transfer
Certificate of Title No. T-80054 or any transfer certificate of title
covering Lot No. 234-C issued in the name of Elenita M. Dewara, and reinstate Transfer Certificate of Title No. 167403 or issue a new transfer certificate of title covering Lot No. 234-C in the name of Ronnie Lamela. No pronouncement as to costs.

SO ORDERED.^[18]

In reversing the decision of the RTC, the CA elucidated that the
gross inadequacy of the price alone does not affect a contract of sale,
except that it may indicate a defect in the consent, or that the parties
really intended a donation or some other act or contract. Except for
the assertions of Elenita, there was nothing in the records that would
indicate a defect in Jesus and Concepcion Magallanes’ consent to the
sale.^[19] The CA ruled that
Elenita and Eduardo acquired the property by onerous title during their
marriage through their common fund. Thus, it belonged to the conjugal
partnership of gains and might be levied upon to answer for civil
liabilities adjudged against Eduardo.^[20]

Hence, this petition.

The Issue

The sole issue for resolution is whether the subject property is
the paraphernal/exclusive property of Elenita or the conjugal property
of spouses Elenita and Eduardo.

The answer to this question will define whether the property may be
subject to levy and execution sale to answer for the civil liability
adjudged against Eduardo in the criminal case for serious physical
injuries, which judgment had already attained finality.

The Ruling of the Court

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.^[21] Registration in the name of the husband or the wife alone does not destroy this presumption.^[22]
The separation-in-fact between the husband and the wife without
judicial approval shall not affect the conjugal partnership. The lot
retains its conjugal nature.^[23]
Moreover, the presumption of conjugal ownership applies even when the
manner in which the property was acquired does not appear. The use of
the conjugal funds is not an essential requirement for the presumption
to arise.^[24]

There is no dispute that the subject property was acquired by
spouses Elenita and Eduardo during their marriage. It is also undisputed
that their marital relations are governed by the conjugal partnership
of gains, since they were married before the enactment of the Family
Code and they did not execute any prenuptial agreement as to their
property relations. Thus, the legal presumption of the conjugal nature
of the property applies to the lot in question. The presumption that the
property is conjugal property may be rebutted only by strong, clear,
categorical, and convincing evidence—there must be strict proof of the
exclusive ownership of one of the spouses, and the burden of proof rests
upon the party asserting it.^[25]

Aside from the assertions of Elenita that the sale of the property
by her father and her aunt was in the nature of a donation because of
the alleged gross disparity between the actual value of the property and
the monetary consideration for the sale, there is no other evidence
that would convince this Court of the paraphernal character of the
property. Elenita proffered no evidence of the market value or assessed
value of the subject property in 1975. Thus, we agree with the CA that
Elenita has not sufficiently proven that the prices involved in the
sales in question were so inadequate for the Court to reach a conclusion
that the transfers were in the nature of a donation rather than a sale.

Furthermore, gross inadequacy of the price does not affect a
contract of sale, except as it may indicate a defect in the consent, or
that the parties really intended a donation or some other act or
contract.^[26] The records are
bereft of proof that the consent of petitioner’s father and her aunt
were vitiated or that, in reality, they intended the sale to be a
donation or some other contract. Inadequacy of the price per se will not
rule out the transaction as one of sale; the price must be grossly
inadequate or shocking to the conscience, such that the mind would
revolt at it and such that a reasonable man would neither directly nor
indirectly consent to it.^[27]

However, even after having declared that Lot No. 234-C is the
conjugal property of spouses Elenita and Eduardo, it does not
necessarily follow that it may automatically be levied upon in an
execution to answer for debts, obligations, fines, or indemnities of one
of the spouses. Before debts and obligations may be charged against the
conjugal partnership, it must be shown that the same were contracted
for, or the debts and obligations should have redounded to, the benefit
of the conjugal partnership. Fines and pecuniary indemnities imposed
upon the husband or the wife, as a rule, may not be charged to the
partnership. However, if the spouse who is bound should have no
exclusive property or if the property should be insufficient, the fines
and indemnities may be enforced upon the partnership assets only after
the responsibilities enumerated in Article 161 of the Civil Code have
been covered.

In this case, it is just and proper that Ronnie be compensated for
the serious physical injuries he suffered. It should be remembered that
even though the vehicle that hit Ronnie was registered in the name of
Elenita, she was not made a party in the said criminal case. Thus, she
may not be compelled to answer for Eduardo’s liability. Nevertheless,
their conjugal partnership property may be held accountable for it since
Eduardo has no property in his name. The payment of indemnity adjudged
by the RTC of Bacolod City in Criminal Case No. 7155 in favor of Ronnie
may be enforced against the partnership assets of spouses Elenita and
Eduardo after the responsibilities enumerated under Article 161 of the
Civil Code have been covered. This remedy is provided for under Article
163 of the Civil Code, viz.:

Art. 163. The payment of debts contracted by the husband or the
wife before the marriage shall not be charged to the conjugal
partnership.

Neither shall the fines and pecuniary indemnities imposed upon them be charged to the partnership.

However, the payment of debts contracted by the husband or the wife before the marriage, and that of fines
and indemnities imposed upon them, may be enforced against the
partnership assets after the responsibilities enumerated in Article 161
have been covered, if the spouse who is bound should have no exclusive property or if it should be insufficient;
but at the time of the liquidation of the partnership such spouse shall
be charged for what has been paid for the purposes above-mentioned.^[28]

Article 161 of the Civil Code enumerates the obligations which the conjugal partnership may be held answerable, viz.:

Art. 161. The conjugal partnership shall be liable for:

(1) All debts and obligations contracted by the husband for the
benefit of the conjugal partnership, and those contracted by the wife,
also for the same purpose, in the cases where she may legally bind the
partnership;

(2) Arrears or income due, during the marriage, from obligations
which constitute a charge upon property of either spouse or of the
partnership;

(3) Minor repairs or for mere preservation made during the
marriage upon the separate property of either the husband or the wife;
major repairs shall not be charged to the partnership;

(4) Major or minor repairs upon the conjugal partnership property;

(5) The maintenance of the family and the education of the children
of both the husband and wife, and of legitimate children of one of the
spouses;

(6) Expenses to permit the spouses to complete a professional, vocational or other course.

The enumeration above-listed should first be complied with before
the conjugal partnership may be held to answer for the liability
adjudged against Eduardo.

Finally, the indemnity imposed against Eduardo shall earn an
interest at the rate of twelve percent per annum, in accordance with our
ruling in Eastern Shipping Lines, Inc. v. Court of Appeals.^[29]

WHEREFORE, in view of the foregoing, the Decision dated
November 6, 2006 and the Resolution dated July 10, 2007 of the Court of
Appeals in CA-G.R. CV No. 64936 are hereby ANNULLED and SET ASIDE. The decision dated September 2, 1999 of the Regional Trial Court of Bacolod City in Civil Case No. 93-7942 is hereby REINSTATED WITH MODIFICATION
that the conjugal properties of spouses Elenita Dewara and Eduardo
Dewara shall be held to answer for the judgment of Seventy-Two Thousand
Five Hundred Ninety-Eight Pesos and Seventy Centavos (P72,598.70), plus
an interest rate of twelve (12) percent per annum from the date of
finality of the decision of the Regional Trial Court of Bacolod City in
Criminal Case No. 7155, after complying with the provisions of Article
161 of the Civil Code.

SO ORDERED.

Carpio (Chairperson), Peralta, Abad, and Mendoza, JJ., concur.