Francisco vs. Spouses Gonzales

A court may execute a money judgment only against properties unquestionably belonging to the judgment debtor; a conjugal property cannot be levied to satisfy a wife's personal obligation absent proof that the obligation redounded to the benefit of the conjugal partnership or family.

Petitioners Cleodia U. Francisco and Ceamantha U. Francisco are the minor children of Cleodualdo M. Francisco and Michele Uriarte Francisco. Cleodualdo and Michele were married on June 12, 1986, prior to the effectivity of the Family Code on August 3, 1988, so their property relations are governed by the Civil Code on conjugal partnership of gains. The property at the center of the dispute is a house and lot at 410 Taal St., Ayala Alabang Village, Muntinlupa City, covered by Transfer Certificate of Title No. 167907 in the name of Cleodualdo M. Francisco, married to Michele U. Francisco. Respondents Spouses Jorge C. Gonzales and Purificacion W. Gonzales are the judgment creditors in an unlawful detainer case against Michele and George Zoltan Matrai.

Petitioners Cleodia U. Francisco and Ceamantha U. Francisco are the minor children of Cleodualdo M. Francisco and Michele Uriarte Francisco. In Civil Case No. 93-2289 for Declaration of Nullity of Marriage before the RTC of Makati, Branch 144, a Partial Decision dated November 29, 2000 approved the Compromise Agreement entered into by the estranged couple. The Compromise Agreement provided that title and ownership of the conjugal property—a house and lot at 410 Taal St., Ayala Alabang Village, Muntinlupa City, with an area of 414 square meters and covered by Transfer Certificate of Title No. 167907 in the name of Cleodualdo M. Francisco, married to Michele U. Francisco—shall be transferred by way of a deed of donation to Cleodia and Ceamantha as co-owners when they reach nineteen and eighteen years old, respectively, subject to conditions, including Cleodualdo's retention of usufructuary rights until he reaches sixty-five years old.

Meanwhile, respondents Spouses Jorge C. Gonzales and Purificacion W. Gonzales filed a case for Unlawful Detainer with Preliminary Attachment against George Zoltan Matrai and Michele. The MeTC of Muntinlupa City, Branch 80, rendered a Decision dated May 10, 2001 ordering Matrai and Michele to vacate the premises leased to them at 264 Lanka Drive, Ayala Alabang Village, Muntinlupa City, and to pay back rentals, unpaid telephone bills, and attorney's fees. Pending appeal with the RTC of Muntinlupa, Branch 256, an order was issued granting respondents' prayer for execution of the MeTC Decision. A notice of sale by execution was then issued by the sheriff covering the real property under TCT No. T-167907 in the name of Cleodualdo M. Francisco, married to Michele U. Francisco.

When petitioners' grandmother learned of the scheduled auction, she, as guardian-in-fact of petitioners, filed with the RTC an Affidavit of Third Party Claim and a Very Urgent Motion to Stop Sale by Execution. The RTC denied the motion in its Order dated June 4, 2003, and denied petitioners' motion for reconsideration in its Order dated July 31, 2003. Petitioners then filed a petition for certiorari with the CA. While the CA case was pending, the RTC issued an Order dated July 8, 2005 granting respondents' petition for the issuance of a new certificate of title, and an Order dated February 13, 2006 granting respondents' motion for the issuance of a writ of possession. On April 30, 2007, the CA dismissed the petition and affirmed the RTC Orders dated June 4, 2003 and July 31, 2003.

Even prior to the issuance of the Notice of Levy on Execution on November 28, 2001, the title already bore an annotation: Entry No. 23341-42/T-167907 – Nullification of Marriage, by order of the RTC, NCR, Branch 144, Makati City dated July 4, 2001, which became final and executory on October 18, 2001, declaring the marriage contract between Michelle Uriarte and Cleodualdo M. Francisco, Jr. null and void ab initio and providing that title of ownership of the conjugal property shall be transferred by way of a Deed of Donation to Cleodia Michaela U. Francisco and Ceamantha Maica U. Francisco as co-owners when they reach nineteen and eighteen years old, with Cleodualdo retaining usufructuary rights over the property until he reaches sixty-five years old. The date of the instrument was October 18, 2001, and the date of inscription was October 22, 2001.

The Court found that Michele, who was then already living separately from Cleodualdo, rented the house in Lanka Drive for her and Matrai's own benefit; when they entered into the lease agreement, Michele and Matrai purported themselves to be husband and wife. Respondents alleged that the lease of the property in Lanka Drive redounded to the benefit of the family and that petitioners lived with Michele on the leased property, but the Court found these bare allegations insufficient to support the conclusion that the judgment debt against Michele and Matrai redounded to the benefit of the family of Michele and Cleodualdo and petitioners.

• Ownership Under Final Partial Decision: Petitioners argued that they are the rightful owners of the property because the Partial Decision issued by the RTC of Makati in Civil Case No. 93-2289 had already become final.
• Waiver by Parents: Petitioners argued that their parents already waived in their favor their rights over the property.
• Obligation Did Not Redound to Family: Petitioners argued that the adjudged obligation of Michele in the ejectment case did not redound to the benefit of the family.
• Nature of Michele's Obligation: Petitioners argued that Michele's obligation is a joint obligation between her and Matrai, not joint and solidary.

• Benefit to Family: Respondents alleged that the lease of the property in Lanka Drive redounded to the benefit of the family.
• Petitioners' Residence: Respondents alleged that petitioners lived with Michele on the leased property.
• Execution and Possession: Respondents sought execution of the MeTC Decision, issuance of a new certificate of title, and issuance of a writ of possession.

• Levy on Property Not Owned by Judgment Debtor: Whether the RTC properly proceeded with the execution, levy, and sale of the subject property to satisfy the judgment debt against Michele and Matrai when the property was registered in the name of Cleodualdo, married to Michele, and was subject to a Compromise Agreement.
• Conjugal Liability for Michele's Obligation: Whether the conjugal property may be held answerable for Michele's personal obligation arising from the unlawful detainer case, or whether that obligation redounded to the benefit of the conjugal partnership or family.
• Effect of Compromise Agreement and Annotation: Whether the Compromise Agreement and the annotation on TCT No. 167907 effectively transferred ownership to petitioners, preventing the levy and execution sale.

• Levy on Property Not Owned by Judgment Debtor: No. The power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone; the property was not shown to belong solely to Michele or Matrai.
• Conjugal Liability for Michele's Obligation: No. A wife may bind the conjugal partnership only in specified circumstances, none of which was present; the unlawful detainer obligation did not redound to the benefit of the family.
• Effect of Compromise Agreement and Annotation: Yes. Both Michele and Cleodualdo waived title and ownership in favor of petitioners under the Compromise Agreement; the annotation should have prevented the RTC and sheriff from proceeding with execution.

• Levy on Property Not Owned by Judgment Debtor: It was grave error for the RTC to proceed with the execution, levy, and sale of the subject property. The power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone, in this case to those belonging to Michele and Matrai. One man's goods shall not be sold for another man's debts. TCT No. 167907 is in the name of "Cleodualdo M. Francisco, married to Michele U. Francisco." On its face, the title shows that the registered owner is not Matrai and Michele but Cleodualdo, married to Michele, and this describes the civil status of Cleodualdo at the time the property was acquired. Cleodualdo and Michele were married on June 12, 1986, prior to the effectivity of the Family Code on August 3, 1988; their property relations are governed by the Civil Code on conjugal partnership of gains. The CA acknowledged that ownership of the subject property is conjugal in nature but ruled that since Michele's obligation was not proven to be a personal debt, it must be inferred that it is conjugal and redounded to the benefit of the family. The Court disagreed. A sheriff is not authorized to attach or levy on property not belonging to the judgment debtor, and even incurs liability if he wrongfully levies upon the property of a third person. The trial court's competence to identify and secure properties held by the judgment debtor for the satisfaction of a money judgment is premised on the properties being unquestionably owned by the judgment debtor and not exempt by law from execution.

• Conjugal Liability for Michele's Obligation: A wife may bind the conjugal partnership only when she purchases things necessary for the support of the family, or when she borrows money for that purpose upon her husband's failure to deliver the needed sum; when administration of the conjugal partnership is transferred to the wife by the courts or by the husband; or when the wife gives moderate donations for charity. Failure to establish any of these circumstances means that the conjugal asset may not be bound to answer for the wife's personal obligation. None of these circumstances was present because the liability incurred by Michele arose from a judgment rendered in an unlawful detainer case against her and her partner Matrai. Respondents alleged that the lease of the property in Lanka Drive redounded to the benefit of the family, but by no stretch of one's imagination can it be concluded that the debt or obligation was incurred for the benefit of the conjugal partnership or that some advantage accrued to the welfare of the family. In BA Finance Corporation vs. Court of Appeals, the Court ruled that the petitioner could not enforce the obligation contracted by Augusto Yulo against his conjugal properties with respondent Lily Yulo because it was not established that the obligation contracted by the husband redounded to the benefit of the conjugal partnership under Article 161 of the Civil Code. Similarly, Michele, who was then already living separately from Cleodualdo, rented the house in Lanka Drive for her and Matrai's own benefit; when they entered into the lease agreement, Michele and Matrai purported themselves to be husband and wife. Respondents' bare allegation that petitioners lived with Michele on the leased property is not sufficient to support the conclusion that the judgment debt against Michele and Matrai in the ejectment suit redounded to the benefit of the family. In Homeowners Savings and Loan Bank vs. Dailo, the Court stated that he who asserts, not he who denies, must prove; a sweeping conclusion that a loan redounded to the benefit of the family, without adequate proof, does not persuade. To hold the property in Taal St. liable for the obligations of Michele and Matrai would go against the spirit and avowed objective of the Civil Code to give the utmost concern for the solidarity and well-being of the family as a unit.

• Effect of Compromise Agreement and Annotation: In justifying the levy against the property, the RTC went over the Compromise Agreement as embodied in the Partial Decision dated November 29, 2000. The RTC ruled that there was no effective transfer of ownership to the siblings Cleodia and Ceamantha Francisco and, in the same breath, ruled that Michele is now the owner of the property inasmuch as Cleodualdo already waived his rights over the property. The Compromise Agreement must not be read piecemeal but in its entirety. It provided that both Cleodualdo and Michele voluntarily agreed to set forth their obligations, rights, and responsibilities, and that title and ownership of the conjugal property consisting of a house and lot located in Ayala Alabang, Muntinlupa, Metro Manila shall be transferred by way of a deed of donation to Cleodia and Ceamantha, as co-owners, when they reach nineteen and eighteen years old, respectively, subject to conditions, including Cleodualdo's retention of usufructuary rights until he reaches the age of sixty-five. From the foregoing, it is clear that both Michele and Cleodualdo have waived their title to and ownership of the house and lot in Taal St. in favor of petitioners. The property should not have been levied and sold at execution sale, for lack of legal basis. Moreover, even prior to the issuance of the Notice of Levy on Execution on November 28, 2001, there was already annotated on the title Entry No. 23341-42/T-167907 – Nullification of Marriage, by order of the RTC, NCR, Branch 144, Makati City dated July 4, 2001, which became final and executory on October 18, 2001, declaring the marriage contract between Michelle Uriarte and Cleodualdo M. Francisco, Jr. null and void ab initio and providing that title of ownership of the conjugal property shall be transferred by way of a Deed of Donation to Cleodia Michaela U. Francisco and Ceamantha Maica U. Francisco as co-owners when they reach nineteen and eighteen years old, with Cleodualdo retaining usufructuary rights over the property until he reaches sixty-five years old. The date of the instrument was October 18, 2001, and the date of inscription was October 22, 2001. This annotation should have put the RTC and the sheriff on guard, and they should not have proceeded with the execution of the judgment debt of Michele and Matrai.

• Execution limited to properties unquestionably belonging to judgment debtor — The power of a court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone, and not exempt by law from execution. A sheriff has no authority to attach or levy on property not belonging to the judgment debtor and may incur liability for wrongfully levying on a third person's property. Applied: the property was registered in the name of Cleodualdo, married to Michele, and was conjugal; it was not shown to belong solely to Michele and Matrai, so the levy and sale were invalid.

• Conjugal partnership liability for a wife's personal obligation — Under the Civil Code on conjugal partnership of gains, a wife may bind the conjugal partnership only when she purchases things necessary for family support, borrows money for that purpose upon the husband's failure to deliver the needed sum, when administration is transferred to her by the courts or by the husband, or when she gives moderate donations for charity. Absent any of these circumstances, the conjugal asset may not answer for the wife's personal obligation. Applied: Michele's liability arose from an unlawful detainer judgment against her and Matrai, and none of the circumstances was present.

• Obligation must redound to benefit of conjugal partnership — For a conjugal property to be held liable for an obligation, it must be established that the obligation redounded to the benefit of the conjugal partnership or family. Bare allegation is insufficient; he who asserts must prove. Applied: respondents' allegation that the Lanka Drive lease redounded to the family's benefit and that petitioners lived with Michele was not supported by adequate proof, so the conjugal property could not be held liable.

• Compromise agreement must be read in its entirety — A compromise agreement must not be read piecemeal but in its entirety. Applied: reading the Compromise Agreement as a whole showed that both Michele and Cleodualdo waived title and ownership in favor of petitioners, contrary to the RTC's ruling that no effective transfer occurred and that Michele became owner.

• One man's goods shall not be sold for another man's debts — A judgment creditor may not satisfy a debt from property belonging to a person who is not the judgment debtor. Applied: the property was not solely owned by Michele and Matrai, so it could not be sold for their debt.

• "The power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone, in the present case to those belonging to Michele and Matrai. One man's goods shall not be sold for another man's debts." — This passage states the ratio decidendi on the proper scope of execution and the invalidity of levying on property not solely owned by the judgment debtors.

• "A wife may bind the conjugal partnership only when she purchases things necessary for the support of the family, or when she borrows money for that purpose upon her husband's failure to deliver the needed sum; when administration of the conjugal partnership is transferred to the wife by the courts or by the husband; or when the wife gives moderate donations for charity. Failure to establish any of these circumstances means that the conjugal asset may not be bound to answer for the wife's personal obligation." — This passage defines the limited circumstances under which a wife may bind the conjugal partnership and is the controlling formulation applied to Michele's unlawful detainer liability.

• "From the foregoing, it is clear that both Michele and Cleodualdo have waived their title to and ownership of the house and lot in Taal St. in favor of petitioners. The property should not have been levied and sold at execution sale, for lack of legal basis." — This passage concludes that the Compromise Agreement transferred ownership to petitioners and that the execution sale lacked legal basis.

• "This annotation should have put the RTC and the sheriff on guard, and they should not have proceeded with the execution of the judgment debt of Michele and Matrai." — This passage underscores the effect of the annotated nullification and donation provision on the title, which should have prevented the RTC and sheriff from proceeding with execution.

• Go vs. Yamane, G.R. No. 160762, May 3, 2006, 489 SCRA 107, 124 — Cited for the rule that the power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone; also cited in connection with the circumstances under which a wife may bind the conjugal partnership.
• Yao vs. Perello, 460 Phil. 658, 662 (2003) — Cited for the maxim that one man's goods shall not be sold for another man's debts.
• Heirs of Nicolas Jugalbot vs. Court of Appeals, G.R. No. 170346, March 12, 2007, 518 SCRA 202; Pisueña vs. Heirs of Petra Unating, 372 Phil. 267 (1999); Estonina vs. Court of Appeals, G.R. No. 111547, January 27, 1997, 266 SCRA 627 — Cited for the proposition that a title in the name of a married person describes the civil status of the registered owner at the time the property was acquired.
• Abesamis vs. Court of Appeals, 413 Phil. 646 (2001) — Cited for the rule that the trial court's competence to identify and secure properties held by the judgment debtor for the satisfaction of a money judgment is premised on the properties being unquestionably owned by the judgment debtor.
• Johnson & Johnson (Phils.), Inc. vs. Court of Appeals, G.R. No. 102692, September 23, 1996, 262 SCRA 298 — Cited for the rule that a sheriff is not authorized to attach or levy on property not belonging to the judgment debtor.
• BA Finance Corporation vs. Court of Appeals, No. L-61464, May 28, 1988, 161 SCRA 608 — Cited for the rule that an obligation contracted by the husband cannot be enforced against conjugal properties if it is not established that the obligation redounded to the benefit of the conjugal partnership under Article 161 of the Civil Code; applied by analogy to Michele's obligation.
• Homeowners Savings and Loan Bank vs. Dailo, G.R. No. 153802, March 11, 2005, 453 SCRA 283, 292 — Cited for the burden of proof rule that he who asserts, not he who denies, must prove; a bare allegation that a loan redounded to the benefit of the family is insufficient.
• Luzon Surety Co., Inc. vs. Garcia, 140 Phil. 509 (1969) — Cited for the spirit and avowed objective of the Civil Code to give the utmost concern for the solidarity and well-being of the family as a unit.

• Rule 45, Rules of Court — The petition for review on certiorari was filed under Rule 45, assailing the Court of Appeals Decision dated April 30, 2007.
• Civil Code on conjugal partnership of gains — Because Cleodualdo and Michele were married on June 12, 1986, prior to the effectivity of the Family Code on August 3, 1988, their property relations are governed by the Civil Code on conjugal partnership of gains. The Court applied this regime to determine whether the conjugal property could answer for Michele's obligation.
• Article 161, Civil Code — Cited in BA Finance Corporation vs. Court of Appeals for the requirement that an obligation must be shown to have redounded to the benefit of the conjugal partnership before conjugal property may be held liable. The Court relied on this principle in rejecting respondents' claim.

Consuelo Ynares-Santiago (Chairperson), Minita V. Chico-Nazario, Antonio Eduardo B. Nachura, and Ruben T. Reyes concurred.