Buado vs. Court of Appeals

A spouse not party to the suit is considered a "third party" entitled to file an independent action to protect conjugal property from execution for the other spouse's personal obligation, provided the obligation did not redound to the benefit of the conjugal partnership.

Spouses Roberto and Venus Buado filed a complaint for damages against Erlinda Nicol arising from criminal slander. The Regional Trial Court (RTC) of Bacoor, Cavite, Branch 19, rendered judgment in favor of the Buados, which became final and executory on March 5, 1992. A writ of execution was issued, and, finding Erlinda's personal properties insufficient, the deputy sheriff levied upon a parcel of real property. The property was sold at public auction to the Buados. Romulo Nicol, Erlinda's husband, subsequently filed a complaint for annulment of the certificate of sale and damages in the RTC of Imus, Cavite, Branch 21, asserting that the levied property was conjugal and should not answer for his wife's personal debt.

• The Judgment Debt: Spouses Buado sued Erlinda Nicol for damages stemming from slander. On April 6, 1987, RTC Branch 19 ordered Erlinda to pay ₱30,000.00 as moral damages, ₱5,000.00 as attorney's fees and litigation expenses, ₱5,000.00 as exemplary damages, and costs. The decision was affirmed by the Court of Appeals and the Supreme Court, becoming final and executory on March 5, 1992.
• The Levy and Execution Sale: On October 14, 1992, the trial court issued a writ of execution commanding the sheriff to collect ₱40,000.00 from Erlinda's personal properties, or from her real properties if personal assets were insufficient. Finding personal property insufficient, the sheriff levied upon real property covered by TCT No. T-125322. A third-party claim was filed by Arnulfo Fulo prior to the auction, prompting the Buados to post a sheriff’s indemnity bond. On January 28, 1993, the property—valued by respondent at ₱500,000.00—was sold at auction to the Buados for ₱51,685.00 to satisfy the ₱40,000.00 debt.
• The Annulment Suit: On February 2, 1994, Romulo Nicol, Erlinda's husband, filed a complaint for annulment of the certificate of sale and damages with preliminary injunction in RTC Imus, Branch 21. He alleged that the Buados connived to levy his conjugal property without exhausting Erlinda's personal properties, that publication of the sale was defective, and that the property was sold at a grossly inadequate price for a purely personal obligation of his wife.

• Jurisdiction over Execution Incidents: Petitioners argued that Branch 19, which issued the writ of execution, retained exclusive jurisdiction over the judgment and all incidents of its execution, citing De Leon v. Salvador.
• Third-Party Status of the Husband: Petitioners insisted that Romulo Nicol, as the husband of the judgment debtor, was not the "third party" contemplated under Section 16, Rule 39 of the Rules of Court, thereby precluding the necessity of a separate action.
• Conjugal Liability for Personal Debts: Petitioners asserted that the wife's obligation redounded to the benefit of the conjugal partnership, making the husband liable for the tort committed by his wife and justifying the levy on conjugal assets.

• Validity of the Appellate Ruling: Respondent merely averred that the Court of Appeals' decision was supported by substantial evidence and in accord with law and jurisprudence.

• Propriety of Certiorari: Whether a petition for certiorari under Rule 65 is the proper remedy to question the Court of Appeals' decision remanding the case.
• Third-Party Status: Whether the husband of the judgment debtor, whose conjugal property is subject to execution for the wife's personal obligation, is considered a "stranger" or "third party" authorized to file an independent action.
• Conjugal Liability: Whether the wife's civil liability arising from the crime of slander redounded to the benefit of the conjugal partnership, thereby making it chargeable against conjugal assets.

• Propriety of Certiorari: The petition for certiorari was dismissed. The error attributed to the Court of Appeals was one of judgment, not of jurisdiction; the proper remedy was a petition for review, not certiorari.
• Third-Party Status: A spouse not party to the suit is deemed a stranger to the action if the judgment obligation of the other spouse did not redound to the benefit of the conjugal partnership. Such a spouse is justified in bringing an independent action to vindicate ownership over the conjugal property, properly vesting jurisdiction in a court other than the one that issued the writ.
• Conjugal Liability: The wife's civil liability arising from the crime of slander is a personal obligation that cannot be charged to the conjugal partnership. Under Article 122 of the Family Code, personal debts and pecuniary indemnities are not chargeable to the conjugal partnership unless they redounded to the benefit of the family. The conjugal partnership of gains, unlike the absolute community regime, has no duty to make advance payments for the debtor-spouse's personal liabilities. No benefit was shown to have accrued to the partnership from the slander.

• Third-Party Claim and Independent Action — Under Section 16, Rule 39 of the Rules of Court, a third-party claimant may vindicate their claim to the property in a separate action, distinct from the action in which the judgment is being enforced, without needing to file a claim in the court that issued the writ. This remedy is available only to strangers to the case.
• Spouse as a Third Party in Execution — The determination of whether a spouse is a "stranger" to the suit for purposes of filing a third-party claim depends on the character of the property and whether the obligation redounded to the benefit of the conjugal partnership. If the obligation redounded to the benefit of the family, the spouse is not a stranger. If it did not, the spouse is a stranger entitled to file an independent action.
• Liability of the Conjugal Partnership of Gains for Personal Debts — Under Article 122 of the Family Code, personal debts contracted by a spouse, including fines and pecuniary indemnities imposed upon them, are not chargeable to the conjugal partnership except insofar as they redounded to the benefit of the family. Unlike the absolute community regime, the conjugal partnership of gains has no duty to make advance payments for the debtor-spouse's personal liabilities.

• "In determining whether the husband is a stranger to the suit, the character of the property must be taken into account... the husband of the judgment debtor cannot be deemed a 'stranger' to the case prosecuted and adjudged against his wife for an obligation that has redounded to the benefit of the conjugal partnership."
• "Unlike in the system of absolute community where liabilities incurred by either spouse by reason of a crime or quasi-delict is chargeable to the absolute community of property, in the absence or insufficiency of the exclusive property of the debtor-spouse, the same advantage is not accorded in the system of conjugal partnership of gains."
• "Parenthetically, by no stretch of imagination can it be concluded that the civil obligation arising from the crime of slander committed by Erlinda redounded to the benefit of the conjugal partnership."

• De Leon v. Salvador — Cited by petitioners to argue that the court issuing the writ retains exclusive jurisdiction over execution incidents; not applied because respondent, as a third party, is entitled to a separate action in a competent court.
• Mariano v. Court of Appeals — Held that a husband is not a "stranger" to a case against his wife if the obligation redounded to the benefit of the conjugal partnership. Applied as the controlling test to determine third-party status.
• Naguit v. Court of Appeals; Sy v. Discaya — Held that a spouse is a stranger to an action and justified in bringing an independent action to vindicate rights over exclusive or paraphernal property. Applied by analogy to conjugal property levied for a personal debt.
• Guadalupe v. Tronco — Held that conjugal property cannot be levied upon to enforce a judgment for support, which is a personal obligation of the husband. Applied to reinforce that conjugal property is not liable for personal debts of a spouse.

• Section 16, Rule 39 of the Rules of Court — Governs proceedings where property is claimed by a third person. Applied to establish that a third-party claimant has the right to vindicate their claim to the property in a separate action, without needing to file the claim in the court that issued the writ of execution.
• Article 122 of the Family Code — Provides that personal debts contracted by a spouse, as well as fines and indemnities imposed upon them, shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family. Applied to rule that the wife's civil liability for slander did not bind the conjugal property.

Conchita Carpio Morales (Acting Chairperson), Presbitero J. Velasco, Jr., Teresita Leonardo-De Castro, Arturo D. Brion