Muller v Muller

Facts: Petitioner Elena Buenaventura Muller and respondent Helmut Muller were married in Hamburg,
Germany. The couple resided in Germany at a house owned by respondent's parents but decided to move
and reside permanently in the Philippines in 1992. By this time, respondent had inherited the house in
Germany from his parents which he sold and used the proceeds for the purchase of a parcel of land in
Antipolo, Rizal at the cost of P528,000.00 and the construction of a house amounting to P2,300,000.00.
The Antipolo property was registered in the name of petitioner.

Due to incompatibilities and respondent's alleged womanizing, drinking, and maltreatment, the
spouses eventually separated. Respondent filed a petition for separation of properties before the Quezon
City RTC. The trial court rendered a decision which terminated the regime of absolute community of
property between the petitioner and respondent. It also decreed the separation of properties between them
and ordered the equal partition of personal properties located within the country, excluding those acquired
by gratuitous title during the marriage. With regard to the Antipolo property, the court held that it was
acquired using paraphernal funds of the respondent. However, it ruled that respondent cannot recover his
funds because the property was purchased in violation of Section 7, Article XII of the Constitution.

The respondent elevated the case before the CA which reversed and modified the decision of the
RTC. It held that respondent merely prayed for reimbursement for the purchase of the Antipolo property,
and not acquisition or transfer of ownership to him. It ordered the respondent to REIMBURSE the petitioner
the amount of P528,000.00 for the acquisition of the land and the amount of P2,300,000.00 for the
construction of the house situated in Antipolo, Rizal.

Issue: WON respondent is entitled to reimbursement

Held: NO. Sec. 7, Art. XII states that “in cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold
lands of the public domain”. In the case, respondent was an alien. Aliens, whether individuals or
corporations, are disqualified from acquiring lands of the public domain. Hence, they are also disqualified
from acquiring private lands. The primary purpose of the constitutional provision is the conservation of the
national patrimony.

He was aware of the constitutional prohibition and expressly admitted his knowledge thereof to
this Court. He declared that he had the Antipolo property titled in the name of petitioner because of the
said prohibition. His attempt at subsequently asserting or claiming a right on the said property cannot be
sustained. With this, the Supreme Court ruled that respondent cannot seek reimbursement on the ground
of equity. It has been held that equity as a rule will follow the law and will not permit that to be done
indirectly which, because of public policy, cannot be done directly.

Ayala Investment and Development Corp. v Court of Appeals & Spouses Ching

Facts: Philippine Blooming Mills (PBM) obtained a P50,300,000.00 loan from petitioner Ayala Investment
and Development Corporation (AIDC). As added security for the credit line extended to PBM, respondent
Alfredo Ching, Executive Vice President of PBM, executed security agreements making himself jointly and
severally answerable with PBM's indebtedness to AIDC. PBM failed to pay the loan hence the filing of
complaint against PBM and Ching was instituted. The RTC rendered judgment ordering PBM and Ching to
jointly and severally pay AIDC the principal amount with interests. Pending the appeal of the judgment,
RTC issued writ of execution. Thereafter, Magsajo, appointed deputy sheriff, caused the issuance and
service upon respondent spouses of the notice of sheriff sale on 3 of their conjugal properties on May 1982.
Respondent spouses filed injunction against petitioners on the ground that subject loan did not redound to
the benefit of the said conjugal partnership. CA issued a TRP enjoining lower court from enforcing its order
paving way for the scheduled auction sale of respondent spouses conjugal properties. A certificate of sale
was issued to AIDC, being the only bidder and was registered on July 1982.

Issue: WON the debts anfd obligations contracted by the husband alone is considered “for the
benefit of the conjugal partnership” and therefore chargeable against the conjugal properties

Held: NO. The loan procured from AIDC was for the advancement and benefit of PBM and not for the
benefit of the conjugal partnership of Ching. Furthermore, AIDC failed to prove that Ching contracted the
debt for the benefit of the conjugal partnership of gains. PBM has a personality distinct and separate from
the family of Ching despite the fact that they happened to be stockholders of said corporate entity. Clearly,
the debt was a corporate debt and right of recourse to Ching as surety is only to the extent of his corporate
stockholdings. It does not extend to the conjugal partnership of gains of the family of Ching. From
jurisprudential rulings of this Court, , if the money or services are given to another person or entity, and
the husband acted only as a surety or guarantor, that contract cannot, by itself, alone be categorized as
falling within the context of "obligations for the benefit of the conjugal partnership." The contract of loan
or services is clearly for the benefit of the principal debtor and not for the surety or his family. Ching only
signed as a surety for the loan contracted with AIDC in behalf of PBM. Signing as a surety is certainly not
an exercise of an industry or profession, it is not embarking in a business. Hence, the conjugal partnership
should not be made liable for the surety agreement which was clearly for the benefit of PBM.

Quiao v Quiao

Facts: Rita C. Quiao (Rita) filed a complaint for legal separation against petitioner Brigido B. Quiao
(Brigido). RTC rendered a decision declaring the legal separation thereby awarding the custody of their
3 minor children in favor of Rita and all remaining properties shall be divided equally between the spouses
subject to the respective legitimes of the children and the payment of the unpaid conjugal liabilities.
Brigido’s share, however, of the net profits earned by the conjugal partnership is forfeited in favor of
the common children because Brigido is the offending spouse. After more than nine months from the
promulgation of the Decision, the petitioner filed before the RTC a Motion for Clarification, asking the RTC
to define the term "Net Profits Earned."

RTC held that the phrase “NET PROFIT EARNED” denotes “the remainder of the properties of the
parties after deducting the separate properties of each [of the] spouse and the debts.” It further held that
after determining the remainder of the properties, it shall be forfeited in favor of the common children
because the offending spouse does not have any right to any share of the net profits earned, pursuant to
Articles 63, No. (2) and 43, No. (2) of the Family Code.

The petitioner claims that the court a quo is wrong when it applied Article 129 of the Family Code,
instead of Article 102. He confusingly argues that Article 102 applies because there is no other provision
under the Family Code which defines net profits earned subject of forfeiture as a result of legal separation.

Issues: (A) WON Art 102 on dissolution of absolute community or Art 129
on dissolution of conjugal partnership of gains is applicable in this case

(B) The meaning of “net profits”

Held: (A) Art. 129 will govern. Since the spouses were married prior to the promulgation of the current
family code, the default rule is that In the absence of marriage settlements, or when the same are void,
the system of relative community or conjugal partnership of gains as established in this Code, shall govern
the property relations between husband and wife. Further, since at the time of the dissolution of the
spouses’ marriage the operative law is already the Family Code, the same applies in the instant case and
the applicable law in so far as the liquidation of the conjugal partnership assets and liabilities is concerned
is Article 129 of the Family Code in relation to Article 63(2) of the Family Code.

(B) As to the definition of "net profits," we cannot but refer to Article 102 (4) of the Family Code,
since it expressly provides that for purposes of computing the net profits subject to forfeiture under Article
43, No. (2) and Article 63, No. (2), Article 102 (4) applies. In this provision, net profits "shall be the increase
in value between the market value of the community property at the time of the celebration of the marriage
and the market value at the time of its dissolution."

Ruiz v Court of Appeals

Facts: Petitioner Corazon G. Ruiz is engaged in the business of buying and selling jewelry. She obtained
loans from private respondent Consuelo Torres on different occasions amounting to P750,000 . The loans
were consolidated under one (1) promissory note and was secured by a real estate mortgage and a lot
registered in the name of petitioner. Thereafter, petitioner obtained three (3) more loans from private
respondent, and it was secured by three promissory notes in the amount of 100,000 each. These combined
loans of P300,000.00 were secured by P571,000.00 worth of jewelry pledged by petitioner to private
respondent. Petitioner paid the stipulated 3% monthly interest on the P750,000.00 loan, amounting to
P270,000.00. After that, petitioner was unable to make interest payments as she had difficulties collecting
from her clients in her jewelry business.

Due to petitioner’s failure to pay the principal loan as well as the interest payment, private
respondent demanded payment not only of the P750,000.00 loan, but also of the P300,000.00 loan. When
petitioner failed to pay, private respondent sought the extra-judicial foreclosure of the aforementioned real
estate mortgage. On Sept. 5, 1996, acting clerk of court and ex-officio sheriffs issued a notice of sale of
petitioner’s lot but one (1) day before the scheduled sale, petitioner filed a complaint with a prayer for the
issuance of TRO to enjoin the sheriff from proceeding with the foreclosure sale. The trial court granted the
prayer for TRO and ordered the Clerk of court and the Ex-Officio sheriffs to desist with the foreclosure sale
of the subject property. It held that the real estate mortgage is unenforceable because of the lack of the
participation and signature of petitioner's husband. It noted that although the subject real estate mortgage
stated that petitioner was "attorney-in-fact for herself and her husband," the Special Power of Attorney
was never presented in court during the trial. The Court of Appeals ruled otherwise, it ruled that the real
estate mortgage is valid despite the non-participation of petitioner's husband in its execution because the
land on which it was constituted is paraphernal property of petitioner-wife. Consequently, she may
encumber the lot without the consent of her husband. It allowed its foreclosure since the loan it secured
was not paid.

Issue: WON the real property covered by the subject deed of mortgage is paraphernal property
of petitioner

Held: YES. The property subject of the mortgage is registered in the name of "Corazon G. Ruiz, of legal
age, married to Rogelio Ruiz, Filipinos." Thus, title is registered in the name of Corazon alone because the
phrase "married to Rogelio Ruiz" is merely descriptive of the civil status of Corazon and should not be
construed to mean that her husband is also a registered owner. Furthermore, registration of the property
in the name of "Corazon G. Ruiz, of legal age, married to Rogelio Ruiz" is not proof that such property was
acquired during the marriage, and thus, is presumed to be conjugal. The property could have been acquired
by Corazon while she was still single, and registered only after her marriage to Rogelio Ruiz. Acquisition of
title and registration thereof are two different acts. The presumption under Article 116 of the Family Code
that properties acquired during the marriage are presumed to be conjugal cannot apply in the instant case.
Before such presumption can apply, it must first be established that the property was in fact acquired
during the marriage. In other words, proof of acquisition during the marriage is a condition sine qua non
for the operation of the presumption in favor of conjugal ownership. No such proof was offered nor
presented in the case at bar. Thus, on the basis alone of the certificate of title, it cannot be presumed that
said property was acquired during the marriage and that it is conjugal property. Since there is no showing
as to when the property in question was acquired, the fact that the title is in the name of the wife alone is
determinative of its nature as paraphernal, i.e., belonging exclusively to said spouse. The only import of
the title is that Corazon is the owner of said property, the same having been registered in her name alone,
and that she is married to Rogelio Ruiz.