Abing vs. Waeyan

Under Article 147 of the Family Code, property acquired by a man and a woman living exclusively with each other as husband and wife without the benefit of marriage is presumed, absent proof to the contrary, to have been obtained through their joint efforts and is owned by them in equal shares under the rules on co-ownership; consequently, a co-owner may not be ejected from the common property merely because the other co-owner claims exclusive ownership. An unsigned Memorandum of Agreement may bind the parties where one party performs it, but breach of an obligation to pay a share gives rise only to an action for sum of money or rescission, not ejectment.

John Abing and Juliet Waeyan cohabited as husband and wife without the benefit of marriage from 1986 to 1995 and acquired properties during that period. Because they were not married, their property relations were governed by Article 147 of the Family Code and the rules on co-ownership, not the Civil Code provisions on conjugal partnership. The dispute concerns an annex structure housing a sari-sari store that was built during their cohabitation.

Sometime in 1986, John Abing and Juliet Waeyan met and fell in love. They eventually cohabited as husband and wife without the benefit of marriage. Together they bought a 2-storey residential house from Benjamin Macua, which was erected on a lot owned by Alejandro Diño on Aurora Street, Mankayan, Benguet. The tax declaration for the house was transferred in Juliet’s name.

On December 2, 1991, Juliet left for overseas employment in Korea. She sent money to John, who deposited the same in their joint bank account. In 1992, the original 2-storey residential house underwent renovation. A new structure housing a sari-sari store was annexed to it. This new structure and the sari-sari store are the properties involved in the case. In 1994, Juliet returned from Korea and continued to live with John. She managed the sari-sari store while John worked as a mine employee of Lepanto Consolidated Mining, Inc.

In 1995, the relationship between John and Juliet turned from bad to worse. They decided to partition their properties. On October 7, 1995, they executed a Memorandum of Agreement. The document was left unsigned by the parties, although it was signed by the witnesses. Under the unsigned agreement, John would leave the couple’s dwelling, with Juliet paying him P428,870.00 representing his share in all their properties. On the same date, Juliet paid John P232,397.66 as partial payment of his share. The balance of P196,472.34 was to be paid by Juliet in twelve monthly installments beginning November 1995.

Juliet failed to pay the balance. Because of this, John demanded that she vacate the annex structure housing the sari-sari store. Juliet refused, prompting John to file an ejectment suit against her before the MTC of Mankayan, Benguet. In his complaint, John alleged that he alone spent for the construction of the annex structure using his own funds and money he borrowed from his relatives. He added that the tax declaration for the structure was under his name. On this premise, he claimed exclusive ownership of the structure and the right to eject Juliet upon her failure to pay the agreed balance under the Memorandum of Agreement. In her answer, Juliet countered that their original house was renovated through their common funds and that the subject structure was merely an attachment or extension of their original residential house, hence it pertained to both of them in common.

The MTC found that the money used in the construction of the structure in question solely came from John. The CA, however, departed from that finding and found that John’s evidence failed to establish that he alone spent for the construction of the annex structure. The CA found that the structure pertained to both parties and that Juliet possessed it as a co-owner. It also observed that John’s cause of action, if any, should have been for a sum of money because he claimed that Juliet still owed him payment for the extension.

• Validity of the Unsigned Memorandum of Agreement: Petitioner argued that the CA erred in not giving effect to the parties’ Memorandum of Agreement, which should have been binding between them even though it was unsigned by both.
• Ownership of the Annex Structure: Petitioner maintained that the CA erred in holding that the subject premises—the annex structure housing the sari-sari store—was owned by the two of them in common. He claimed exclusive ownership because he alone spent for its construction with his own funds and money borrowed from relatives, and because the tax declaration was in his name.
• Ejectment and Partition: Petitioner argued that the CA erred in ruling that the parties should settle their common properties in a separate action for partition even as the community character of the subject premises had not been proven. He insisted that ejectment was proper because Juliet failed to pay the balance of his share under the Memorandum of Agreement.

• Common Ownership: Respondent countered that their original house was renovated through their common funds and that the subject structure was merely an attachment or extension of their original residential house, hence it pertained to both of them in common.

• Ownership of the Annex Structure: Whether the annex structure housing the sari-sari store pertains exclusively to petitioner John Abing or is owned in common by him and respondent Juliet Waeyan.
• Ejectment Against a Co-Owner: Whether Juliet Waeyan may be ejected from the subject structure as a co-owner.
• Effect of the Unsigned Memorandum of Agreement: Whether the unsigned Memorandum of Agreement is binding between the parties.
• Remedy for Breach of the Agreement: Whether Juliet Waeyan’s failure to pay the balance of John Abing’s share under the Memorandum of Agreement gives rise to ejectment or only to an action for a sum of money or rescission.

• Ownership of the Annex Structure: No. The annex structure is owned in common by John Abing and Juliet Waeyan, not exclusively by John. Under Article 147 of the Family Code, property acquired during their cohabitation is presumed, absent proof to the contrary, to have been obtained through their joint efforts and owned in equal shares.
• Ejectment Against a Co-Owner: No. Juliet Waeyan, as a co-owner, may not be ejected from the common property. Although a co-owner may bring ejectment against a co-owner who takes exclusive possession and asserts exclusive ownership, no exclusive ownership was established, and Juliet possessed the property as a co-owner.
• Effect of the Unsigned Memorandum of Agreement: Yes. The unsigned Memorandum of Agreement is binding between the parties. Juliet’s payment of P232,397.66 pursuant to it and the signatures of the witnesses show that the parties performed and recognized the agreement.
• Remedy for Breach of the Agreement: No. Juliet Waeyan’s failure to pay the balance gives rise only to an action for a sum of money or for rescission of the agreement, not ejectment.

• Ownership of the Annex Structure: The Court noted that the parties cohabited without marriage from 1986 to 1995 and that Juliet worked in Korea in December 1991, sending money to John for deposit in their joint account; she was still in Korea when the annex structure was constructed in 1992. John’s claim that he alone funded the construction through his own funds and borrowed money was unsupported. He did not state how much he spent, did not name the relatives from whom he borrowed, and did not present those relatives. The only supporting affidavit was from Manuel Macaraeg, who stated that John borrowed P30,000.00 from him in 1990, two years before the structure was constructed, making it doubtful that the amount went into the construction. John’s tax declaration did not prove ownership; tax declarations are at best indicia of a claim of ownership, and payment of taxes is not proof of ownership. Under Article 147 of the Family Code, absent proof to the contrary, property acquired by common-law spouses during cohabitation is presumed obtained through their joint efforts and owned in equal shares under co-ownership. The presumption was not rebutted, so the structure was co-owned.
• Ejectment Against a Co-Owner: Under Article 487 of the Civil Code, any co-owner may bring an action in ejectment. However, this remedy against a co-owner lies where the defendant co-owner takes exclusive possession and asserts exclusive ownership of the common property. Here, evidence was totally wanting to establish either John’s or Juliet’s exclusive ownership. Juliet did not obtain possession by virtue of a contract, express or implied, or through intimidation, threat, strategy, or stealth. She possessed the structure and sari-sari store as a co-owner, and as such was equally entitled to enjoy its possession and ownership. The CA correctly ruled that she could not be ejected.
• Effect of the Unsigned Memorandum of Agreement: The CA erred in ruling that the unsigned Memorandum of Agreement had no binding effect. Although the parties did not sign it, the witnesses did. More importantly, Juliet paid John P232,397.66 as initial payment for his share in their common properties, with the balance of P196,472.34 payable in twelve monthly installments beginning November 1995. This payment was in fulfillment of what the parties had agreed upon under the Memorandum of Agreement. The fact that the parties left it unsigned did not adversely affect its binding force or effect between them.
• Remedy for Breach of the Agreement: Juliet’s failure to pay the balance of John’s share did not justify ejectment. As correctly held by the CA, such failure could at best give rise to an action for a sum of money against Juliet or for rescission of the agreement. Ejectment was not the proper remedy.

• Article 147 Family Code presumption of co-ownership — When a man and a woman capacitated to marry each other live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries are owned by them in equal shares, and property acquired by both through their work or industry is governed by the rules on co-ownership. In the absence of proof to the contrary, properties acquired while they lived together are presumed to have been obtained by their joint efforts, work, or industry and are owned by them in equal shares. A party who did not participate in the acquisition by the other is deemed to have contributed jointly if the former’s efforts consisted in the care and maintenance of the family and household. In this case, the parties cohabited without marriage from 1986 to 1995; the annex structure was constructed during that period; John failed to prove exclusive funding; thus the structure was presumed co-owned in equal shares, and Juliet could not be ejected.
• Tax declaration as evidence of ownership — Tax declarations do not prove ownership; they are at best indicia of a claim of ownership. Payment of taxes is not proof of ownership, any more than it indicates possession in the concept of an owner. Tax receipts or declarations of ownership for taxation purposes are not evidence of ownership or of the right to possess realty when unsupported by other effective proofs. The Court applied this to reject John’s reliance on the tax declaration in his name over the annex structure.
• Ejectment between co-owners — Under Article 487 of the Civil Code, any co-owner may bring an action in ejectment. This remedy is available against a co-owner who takes exclusive possession and asserts exclusive ownership of the common property. Where no exclusive ownership is established and the defendant possesses the property as a co-owner, ejectment does not lie. The Court applied this to hold that Juliet, as co-owner, could not be ejected by John.
• Binding effect of an unsigned agreement through performance — An agreement left unsigned by the parties may still bind them where one party performs obligations under it and the other accepts performance. The Court applied this to the Memorandum of Agreement: although unsigned by John and Juliet, it was signed by witnesses, and Juliet paid P232,397.66 as initial payment of John’s share, with the balance payable in installments, thereby giving the agreement binding effect between them.
• Remedy for breach of an agreement to pay a share — Failure to pay the balance of a co-owner’s share under a partition or settlement agreement gives rise at best to an action for a sum of money or for rescission of the agreement, not to ejectment. The Court applied this to hold that John’s remedy for Juliet’s nonpayment was not ejectment.

• "The law is clear. In the absence, as here, of proofs to the contrary, any property acquired by common-law spouses during their period of cohabitation is presumed to have been obtained thru their joint efforts and is owned by them in equal shares." — This is the Court’s ratio on the property regime of common-law spouses, applying Article 147 of the Family Code to the annex structure.
• "Being herself a co-owner of the structure in question, Juliet, as correctly ruled by the CA, may not be ejected therefrom." — This states the core ruling on ejectment: a co-owner cannot be ejected from common property absent proof of exclusive ownership by the plaintiff.
• "Hence, the irrelevant circumstances that the Agreement was left unsigned by Juliet and John cannot adversely affect its binding force or effect between them, as evidently, Juliet's initial payment of P232,397.66 to John was in fulfillment of what the parties had agreed upon thereunder." — This is the Court’s holding that the unsigned Memorandum of Agreement was binding because of Juliet’s partial performance.
• "However, and as correctly held by the CA, Juliet's failure to pay John the balance of the latter's share in their common properties could at best give rise to an action for a sum of money against Juliet, or for rescission of the said agreement and not for ejectment." — This defines the proper remedy for breach of the agreement to pay a share, distinguishing it from ejectment.

• Francisco vs. Court of Appeals, G.R. No. 118749, April 25, 2003, 401 SCRA 594 — Cited as the exception to the general rule that the Supreme Court does not review factual findings, allowing review because the three lower courts had conflicting factual findings.
• Municipality of Antipolo vs. Zapata, G.R. No. L-65334, December 26, 1984, 133 SCRA 820 — Cited for the rule that tax declarations do not prove ownership but are at best indicia of claims of ownership.
• Arambulo vs. CA, G.R. No. 120166, August 3, 1998, 293 SCRA 567 — Cited for the rule that payment of taxes is not proof of ownership, any more than indicating possession in the concept of an owner.
• Cruz vs. Miguel, G.R. No. 144103, August 31, 2005, 468 SCRA 506 — Cited for the rule that tax receipts or declarations of ownership for taxation purposes are not evidence of ownership or of the right to possess realty when unsupported by other effective proofs.

• Article 147, Family Code — Provides that when a man and a woman capacitated to marry each other live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries are owned by them in equal shares, and property acquired by both through their work or industry is governed by the rules on co-ownership. In the absence of proof to the contrary, properties acquired while they lived together are presumed obtained through their joint efforts and owned in equal shares. The Court applied this to hold that the annex structure was co-owned by John and Juliet.
• Article 487, Civil Code — Provides that any one of the co-owners may bring an action in ejectment. The Court explained that this remedy is available against a co-owner who takes exclusive possession and asserts exclusive ownership of the common property, but not where no exclusive ownership is established and the defendant possesses the property as a co-owner.
• Rule 45, Rules of Court — Governs appeals by petition for review on certiorari. John Abing invoked this Rule in seeking to set aside the Court of Appeals’ decision.

Justices Puno (Chairperson), Sandoval-Gutierrez, Corona, and Azcuna concurred.