Imani vs. Metropolitan Bank & Trust Company

A spouse who is a party to the case is not a stranger and may challenge the execution of conjugal property before the executing court, but the conjugal presumption applies only when the party invoking it first proves that the property was acquired during the marriage; registration in the debtor-spouse’s name as “married to” another does not satisfy that burden.

Petitioner Evangeline D. Imani was one of the sureties under a Continuing Suretyship Agreement in favor of Metrobank for CPDTI’s indebtedness, up to ₱6,000,000.00. The property at the center of the dispute was registered in petitioner’s name as “Evangelina Dazo-Imani married to Sina Imani,” and the case turns on whether it is conjugal property beyond the reach of execution for her surety liability.

On August 28, 1981, Evangeline D. Imani signed a Continuing Suretyship Agreement in favor of Metrobank, with Cesar P. Dazo, Nieves Dazo, Benedicto C. Dazo, Cynthia C. Dazo, Doroteo Fundales, Jr., and Nicolas Ponce as co-sureties. Under the agreement, the sureties bound themselves to pay whatever indebtedness C.P. Dazo Tannery, Inc. (CPDTI) incurred, but not exceeding ₱6,000,000.00. CPDTI later obtained loans of ₱100,000.00 and ₱63,825.45, evidenced by promissory notes signed by Cesar and Nieves Dazo. CPDTI defaulted, and Metrobank made several demands for payment upon CPDTI, but no payment followed. Metrobank then filed a collection suit against CPDTI and its sureties, including petitioner, docketed as Civil Case No. 15717.

After due proceedings, the RTC rendered a decision in favor of Metrobank, ordering CPDTI, Cesar P. Dazo, Nieves Dazo, Benedicto C. Dazo, Evangeline D. Imani, Cynthia C. Dazo, Doroteo Fundales, Jr., and Nicolas Ponce to pay ₱175,451.48 under the First Cause of Action plus stipulated interest, penalty charges, and bank charges from March 1, 1984; ₱92,158.85 under the Second Cause of Action plus stipulated interest, penalty charges, and bank charges from February 24, 1985; 10% of the total amount due under both causes of action; and costs of suit and litigation expenses. The defendants appealed to the CA, but the CA dismissed the appeal in a September 29, 1997 Resolution, and an Entry of Judgment followed on October 22, 1997. Metrobank then moved for execution, which the RTC granted on December 7, 1999. A writ of execution was issued, and the sheriff levied on the property covered by TCT No. T-27957 P(M), registered in petitioner’s name. A public auction was conducted, and the property was awarded to Metrobank as the highest bidder.

Metrobank undertook to consolidate the title in its name and filed a Manifestation and Motion asking that spouses Sina and Evangeline Imani be directed to surrender the owner’s copy of TCT No. T-27957 P(M) for cancellation. Petitioner opposed the motion and filed a Comment with Urgent Motion to Cancel and Nullify the Levy on Execution, the Auction Sale, and Certificate of Sale over TCT No. T-27957 P(M). She argued that the property belonged to the conjugal partnership and could not be held answerable for CPDTI’s liabilities to Metrobank, nor be the subject of levy on execution or public auction. On June 20, 2005, the RTC denied Metrobank’s motion and granted petitioner’s motion, explaining that petitioner incurred the obligation by executing the Continuing Suretyship Agreement, that the loan proceeds were not intended for her, that it could not be presumed that the proceeds redounded to the benefit of her family, and that there was no showing that she had authority to dispose of or encumber the conjugal properties or had been conferred power of administration over them. The RTC nullified the levy on execution and the public auction sale and cancelled the certificate of sale.

Metrobank filed a motion for reconsideration. Petitioner opposed it, asserting that the property belonged to the conjugal partnership, and attached an Affidavit executed by Crisanto Origen, the former owner of the property, attesting that spouses Sina and Evangeline Imani were the vendees of the subject property, as well as photocopies of checks allegedly issued by Sina Imani as payment for the property. Despite the opposition, the RTC issued an Order dated August 15, 2005, setting aside its June 20, 2005 Order, ordering Evangelina Dazo-Imani to surrender TCT No. T-27957 P(M) to the Register of Deeds of Meycauayan, Bulacan for cancellation, and reinstating the levy on execution, the auction sale, and the certificate of sale. On petitioner’s motion for reconsideration, however, the RTC issued an Order dated November 22, 2005, reinstating its June 20, 2005 Order; it relied on Crisanto Origen’s affidavit and declared the levied property conjugal, which could not be held answerable for petitioner’s personal liability.

Metrobank assailed the November 22, 2005 Order in the CA through a petition for certiorari, ascribing grave abuse of discretion to the RTC for annulling the levy and auction sale and cancelling the certificate of sale. On July 3, 2008, the CA rendered a Decision reversing the RTC and declaring the levy on execution, the public auction sale, and the certificate of sale valid and legal. Petitioner filed a motion for reconsideration, which the CA denied on March 3, 2009. Petitioner then elevated the matter to the SC through the present recourse.

• Procedural Remedy: Petitioner argued that the CA erred in ruling that she committed a procedural gaffe; the conjugal nature of the property could be adjudicated by the executing court, and it was error for the CA to require a separate action to vindicate her claim.
• Conjugal Character: Petitioner argued that the CA erred in reversing the RTC’s finding of fact that the property is conjugal in nature based on mere speculation and conjecture.
• Multiplicity of Suits: Petitioner argued that the CA’s suggestion to vindicate the rights of Sina Imani and the conjugal partnership in a separate action under Section 16, Rule 39 encourages multiplicity of suits and violates the policy of the Rules for expedient and inexpensive disposition of actions.
• Road Right of Way: Petitioner argued that the property in question, being a road right of way, is not subject to execution under Section 50, second paragraph, of PD No. 1529.

• Procedural Remedy: Whether the CA erred in holding that petitioner committed a procedural gaffe by seeking annulment of the levy, auction sale, and certificate of sale in the executing court instead of filing a terceria or a separate action under Section 16, Rule 39.
• Conjugal Character: Whether the CA erred in reversing the RTC’s finding that the levied property is conjugal and therefore not answerable for petitioner’s surety liability.
• Road Right of Way: Whether the property, being a road right of way, is exempt from execution under Section 50, second paragraph, of PD No. 1529.

• Procedural Remedy: Yes. The CA erred; petitioner, as a party to the case, was not a stranger and could challenge the levy and sale before the executing court, which had plenary jurisdiction over execution.
• Conjugal Character: No. Petitioner failed to prove that the property was acquired during the marriage, so the conjugal presumption did not operate; the affidavit was hearsay, the checks were photocopies, and the title did not establish coverture.
• Road Right of Way: No. The argument was raised for the first time in the petition and is barred by estoppel.

• Procedural Remedy: The CA ruled that petitioner should have filed a terceria or separate action under Section 16, Rule 39. The SC disagreed. Under Ong vs. Tating, when the sheriff seizes property of a third person in which the judgment debtor holds no right or interest, the supervisory power of the court that authorized execution may be invoked by the third person; the court may release the property but cannot pass upon title with finality. If the claim is made by a party to the action, not a stranger, relief must be sought from the executing court. Petitioner was a party to Civil Case No. 15717, and the RTC had plenary jurisdiction over execution, including power to quash writs and control the sheriff. Mariano vs. Court of Appeals and Spouses Ching vs. Court of Appeals held that the husband of a judgment debtor is not a “stranger” to the case against his wife; a separate action is inappropriate when conjugal property is executed. Thus, the RTC could act on petitioner’s motion, and the CA erred in declaring a procedural gaffe.
• Conjugal Character: Article 160 of the New Civil Code presumes all property of the marriage conjugal unless proved exclusive, but the party invoking the presumption must first prove that the property was acquired during the marriage; proof of acquisition during coverture is a condition sine qua non. Francisco vs. CA. The time of acquisition is material. Petitioner relied on Origen’s affidavit and photocopies of checks. The affidavit was hearsay because Origen was not presented in the RTC to affirm its veracity and be cross-examined; under Alba vs. Court of Appeals, affidavits whose affiants are not presented must be rejected. The photocopies of checks had no probative value and were inadmissible under Concepcion vs. Atty. Fandiño, Jr. and Intestate Estate of the Late Don Mariano San Pedro y Esteban vs. Court of Appeals. The certificate of title in the name of Evangelina Dazo-Imani married to Sina Imani did not prove acquisition during coverture; registration does not confer title but merely confirms an existing one. Petitioner failed to substantiate her claim, so the CA correctly disregarded the evidence and upheld the execution.
• Road Right of Way: The road-right-of-way argument was raised for the first time in the petition. Issues raised for the first time on appeal and not raised in the lower court are barred by estoppel; points of law, theories, issues, and arguments not brought to the trial court ought not be considered by a reviewing court. To consider them would violate fair play, justice, and due process. Madrid vs. Mapoy. Thus, the SC did not reach the merits.

• Conjugal presumption requires proof of acquisition during marriage — All property of the marriage is presumed conjugal, but the party invoking the presumption must first prove that the property was acquired during the marriage. Proof of acquisition during coverture is a condition sine qua non; the presumption does not operate when there is no showing of when the property was acquired. In this case, petitioner failed to prove the time of acquisition, so the levied property was not established as conjugal.
• Spouse of judgment debtor is not a stranger — A spouse of a judgment debtor cannot be deemed a “stranger” to the case prosecuted and adjudged against the other spouse, so the spouse cannot file a separate and independent action to annul execution of conjugal property; the proper remedy is to raise the matter in the executing court. The SC applied this to petitioner, who was a party to the collection case and could challenge the execution before the RTC.
• Executing court’s supervisory power over the sheriff — The court that authorized execution may invoke its supervisory power over the sheriff when the sheriff seizes property of a third person in which the judgment debtor holds no right or interest. The court may order release of the property after summary hearing, but it cannot pass upon title with finality; it only determines whether the sheriff acted rightly or wrongly. The SC used this to uphold the RTC’s authority to act on petitioner’s motion.
• Terceria is for third-party claimants, not parties — Section 16, Rule 39 allows a third-party claimant or stranger to file an affidavit of title and a separate action, but a party to the case must seek relief from the executing court. The SC held petitioner was not a stranger and could file a motion in the RTC.
• Hearsay affidavit — Unless the affiant is placed on the witness stand to testify on the affidavit, the affidavit must be rejected as hearsay. The SC applied this to Crisanto Origen’s affidavit because he was not presented in the RTC.
• Photocopy has no probative value — A photocopy of a document has no probative value and is inadmissible in evidence. The SC applied this to the photocopies of checks allegedly issued by Sina Imani.
• Registration does not confer title — Registration does not confer title but merely confirms one already existing. The SC held that the certificate of title in petitioner’s name as “married to” Sina Imani did not prove that the property was acquired during the marriage.
• Issues raised first time on appeal barred — Points of law, theories, issues, and arguments not brought to the attention of the trial court cannot be raised for the first time on appeal; to consider them would violate fair play, justice, and due process. The SC applied this to the road-right-of-way argument.

• “When the sheriff thus seizes property of a third person in which the judgment debtor holds no right or interest, and so incurs in error, the supervisory power of the Court which has authorized execution may be invoked by the third person.” — The SC used this passage to explain the executing court’s supervisory power over the sheriff and the limits of that power.
• “Proof of acquisition during the coverture is a condition sine qua non to the operation of the presumption in favor of the conjugal partnership.” — The SC made this the condition for applying the conjugal presumption, which petitioner failed to satisfy.
• “The basic rule of evidence is that unless the affiants themselves are placed on the witness stand to testify on their affidavits, such affidavits must be rejected for being hearsay.” — The SC applied this to reject Crisanto Origen’s affidavit because he was not presented in the RTC.
• “It is well settled that issues raised for the first time on appeal and not raised in the proceedings in the lower court are barred by estoppel.” — The SC used this to bar petitioner’s road-right-of-way argument, which was raised only in the petition.

• Ong vs. Tating, 233 Phil. 261 (1987) — Relied on for the executing court’s supervisory power over the sheriff and for the rule that a party to the case, unlike a stranger, must seek relief from the executing court.
• Mariano vs. Court of Appeals, 255 Phil. 766 (1989) — Relied on for the rule that the husband of a judgment debtor is not a “stranger” to the case against his wife.
• Spouses Ching vs. Court of Appeals, 446 Phil. 121 (2003) — Followed and explained; a spouse is not a stranger when conjugal property is executed, so a separate annulment action is inappropriate.
• Francisco vs. CA, 359 Phil. 519 (1998) — Relied on for the rule that the conjugal presumption requires proof that the property was acquired during the marriage.
• Alba vs. Court of Appeals, 503 Phil. 451 (2005) — Cited for the rule that an affidavit whose affiant is not presented is hearsay and must be rejected.
• Concepcion vs. Atty. Fandiño, Jr., 389 Phil. 474 (2000) — Cited for the rule that a photocopy of a document has no probative value and is inadmissible.
• Intestate Estate of the Late Don Mariano San Pedro y Esteban vs. Court of Appeals, 265 SCRA 733 (1996) — Cited with Concepcion for the no-probative-value rule on photocopies.
• Madrid vs. Mapoy, G.R. No. 150887, August 14, 2009, 596 SCRA 14 — Cited for the rule that issues, theories, and arguments not raised below cannot be raised for the first time on appeal.

• Section 16, Rule 39, Rules of Court — The CA invoked the terceria/third-party claim remedy, but the SC held it was not the proper route for petitioner, who was a party to the case; the executing court could act on her motion.
• Article 160, New Civil Code — Provides that all property of the marriage is presumed conjugal unless proved exclusive; the SC applied it only after requiring proof that the property was acquired during coverture.
• Section 50, second paragraph, PD No. 1529 — Petitioner invoked it to claim the road-right-of-way property was exempt from execution; the SC did not reach the merits because the argument was raised first on appeal.