G.R. No.

L-57757 August 31, 1987

PHILIPPINE NATIONAL BANK, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, PRAGMACIO VITUG AND MAXIMO
VITUG, respondents.

GANCAYCO, J.:

Does the presumption of conjugality of properties acquired by the spouses during coverture provided
for in Article 160 of the Civil Code apply to property covered by a Torrens certificate of title in the
name of the widow? This is the issue posed in this petition to review on certiorari of the decision of
the Court of Appeals in CA-G.R. No. 60903 which is an action for reconveyance and damages. *

On November 28, 1952, Donata Montemayor, through her son, Salvador M. Vitug, mortgaged to the
Philippine National Bank (PNB) several parcels of land covered by Transfer Certificate of Title (TCT)
No. 2289 — Pampanga to guarantee the loan granted by the PNB to Salvador Jaramilla and Pedro
Bacani in the amount of P40,900.00 which was duly registered in the Office of the Register of Deeds
of Pampanga. 1

On December 1, 1963, Donata Montemayor also mortgaged in favor of PNB certain properties covered by TCT Nos. 2887 and 2888-
Pampanga to guarantee the payment of the loan account of her son Salvador Vitug in the amount of P35,200.00, which mortgage was duly
registered in the Register of Deeds of Pampanga. 2

The above-mentioned Transfer Certificates of Titles covering said properties were all in the name of
Donata Montemayor, of legal age, Filipino, widow and a resident of Lubao, Pampanga at the time
they were mortgaged to PNB   and were free from all hens and encumbrances. 
3 4

Salvador Vitug failed to pay his account so the bank foreclosed the mortgaged properties covered by
TCT Nos. 2887 and 2888. They were sold at public auction on May 20, 1968 in which the PNB was
the highest bidder. The titles thereto were thereafter consolidated in the name of PNB.

Likewise, Salvador Jaramilla and Pedro Bacani failed to settle their accounts with the PNB so the
latter foreclosed the properties covered by TCT No. 2889 which were sold at public auction and
likewise PNB was the buyer thereof. On August 30, 1968, a certificate of sale was issued by the
Register of Deeds covering said properties in favor of the PNB. When the title of the PNB was
consolidated a new title was issued in its name.  5

On September 2, 1969, the PNB sold the properties covered by TCT Nos. 2887 and 2888 —
Pampanga to Jesus M. Vitug, Anunciacion V. de Guzman, Prudencia V. Fajardo, Salvador Vitug and
Aurora V. Gutierrez in those names the corresponding titles were issued.  6

During the lifetime of Clodualdo Vitug he married two times. His first wife was Gervacia Flores with
whom he had 3 children, namely, Victor, Lucina and Julio all surnamed Vitug. Victor now dead is
survived by his 5 children: Leonardo, Juan, Candida Francisco and Donaciano, an surnamed Vitug.
Juan Vitug is also dead and is survived by his only daughter Florencia Vitug.

The second wife of Clodualdo Vitug was Donata Montemayor with whom he had 8 children, namely,
Pragmacio, Maximo, Jesus, Salvador, Prudencio and Anunciacion, all surnamed Vitug, the late
Enrique Vitug represented by his wife Natalia Laquian, and the late Francisco Vitug who is survived
by 11 children, namely, Antonio, Francisco, Aurora, Pedro, Honorio, Corazon, Anselmo, Benigno,
Eligio Jesus and Luz.

Clodualdo Vitug died intestate on May 20, 1929 so his estate was settled and distributed in Special
Proceeding No. 422 in the Court of First Instance of Pampanga wherein Donata Montemayor was
the Administratrix. 7

Meanwhile, on May 12,1958, Donata Montemayor executed a contract of lease of Lot No. 24, which
is covered by TCT No. 2887-R in favor of her children Pragmacio and Maximo both surnamed Vitug.
This lease was extended on August 31, 1963. By virtue of a general power of attorney executed by
Donata Montemayor on Sept. 19, 1966 in favor of Pragmacio Vitug, the latter executed a contract of
lease on Sept. 19, 1967 of the said lot in favor of Maximo Vitug. 8

On March 21, 1970 Pragmacio Vitug and Maximo Vitug filed an action for partition and
reconveyance with damages in the Court of First Instance of Pampanga against Marcelo Mendiola,
special administrator of the intestate estate of Donata Montemayor who died earlier, Jesus Vitug,
Sr., Salvador, Natalia, Prudencia, Anunciacion, all surnamed Vitug, Antonio, Francisco, Aurora,
Pedro, Honorio, Corazon, Anselmo, Benigno, Eligio Jesus and Luz, all surnamed Fajardo and the
PNB.

The subject of the action is 30 parcels of land which they claim to be the conjugal property of the
spouses Donata Montemayor and Clodualdo Vitug of which they claim a share of 2/11 of 1/2 thereof.
They assailed the mortgage to the PNB and the public auction of the properties as null and void.
They invoked the case of Vitug vs. Montemayor, L-5297 decided by this Court on Oct. 20, 1953
which is an action for partition and liquidation of the said 30 parcels of land wherein the properties
were found to be conjugal in nature.

In a decision of Sept. 15, 1975, the lower court dismissed the complaint with costs against the
plaintiffs and ordered them to pay attorney's fees of P5,000.00 to the defendant's counsel. Plaintiffs
then interposed an appeal to the Court of Appeals, wherein in due course a decision was rendered
on May 20, 1981, the dispositive part of which reads as follows:

WHEREFORE, in the light of the foregoing, the decision appealed from is hereby
reversed and set aside, and another one entered in accordance with the tenor of the
prayer of appellant's complaint with the modification that the sale at public auction of
the 22 parcels be considered valid with respect to the 1/2 thereof. No costs.

Hence the herein petition for certiorari filed by the PNB raising the following assignments of error:

THE RESPONDENT COURT OF APPEALS ERRED IN APPLYING TO THE CASE

AT BAR THE RULING OF THIS HONORABLE SUPREME COURT IN FLORENCIA
VITUG VS. DONATA MONTEMAYOR, ET AL., 91 PHIL. 286 (1953) BECAUSE:

A. BETWEEN A PROVISION OF A SPECIAL LAW AND THE

JUDICIAL INTERPRETATION AND/OR APPLICATION OF A
PROVISION OF A GENERAL LAW, THE FORMER PREVAILS.

B. THE DOCTRINE OF STARE DECISIS IS NOT A MECHANICAL

FORMULA OF ADHERENCE.
 C. PNB WAS NOT A PARTY, AND HAD NO KNOWLEDGE OF THE
ABOVECITED CASE.

D. SIMILARLY, PRAGMACIO VITUG AND MAXIMO VITUG WERE

NOT PARTIES IN SAID CASE.

II

THE RESPONDENT COURT OF APPEALS ERRED IN NOT RECOGNIZING THE

CONCLUSIVENESS OF THE CERTIFICATE, OF TITLE, AS PROVIDED IN ACT
496, AS AMENDED (THE LAND REGISTRATION).

III

THE RESPONDENT COURT OF APPEALS ERRED IN IGNORING THE

CONCLUSIVENESS OF OWNERSHIP OF DONATA MONTEMAYOR OVER THE
PROPERTIES WHICH WERE REGISTERED EXCLUSIVELY IN HER NAME WHEN
PRIVATE RESPONDENTS (PRAGMACIO VITUG AND MAXIMO VITUG), AS
LESSEES, ENTERED INTO A CONTRACT OF LEASE WITH DONATA
MONTEMAYOR AS THE OWNER-LESSOR.

IV

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT PNB

WAS A MORTGAGEE IN BAD FAITH.

The petition is impressed with merit.

When the subject properties were mortgaged to the PNB they were registered in the name of Donata
Montemayor, widow. Relying on the torrens certificate of title covering said properties the mortgage
loan applications of Donata were granted by the PNB and the mortgages were duly constituted and
registered in the office of the Register of Deeds.

In processing the loan applications of Donata Montemayor, the PNB had the right to rely on what
appears in the certificates of title and no more. On its face the properties are owned by Donata
Montemayor, a widow. The PNB had no reason to doubt nor question the status of said registered
owner and her ownership thereof. Indeed, there are no liens and encumbrances covering the same.

The well-known rule in this jurisdiction is that a person dealing with a registered land has a right to
rely upon the face of the torrens certificate of title and to dispense with the need of inquiring further,
except when the party concerned has actual knowledge of facts and circumstances that would impel
a reasonably cautious man make such inquiry.  9

A torrens title concludes all controversy over ownership of the land covered by a final degree of
registration. 10 Once the title is registered the owner may rest assured without the necessity of stepping into the portals of the court or
sitting in the mirador de su casa to avoid the possibility of losing his land. 11

Article 160 of the Civil Code provides as follows:

 Art. 160. All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or to the
wife.

The presumption applies to property acquired during the lifetime of the husband and wife. In this
case, it appears on the face of the title that the properties were acquired by Donata Montemayor
when she was already a widow. When the property is registered in the name of a spouse only and
there is no showing as to when the property was acquired by said spouse, this is an indication that
the property belongs exclusively to said spouse. 12 And this presumption under Article 160 of the Civil Code cannot
prevail when the title is in the name of only one spouse and the rights of innocent third parties are involved. 13

The PNB had a reason to rely on what appears on the certificates of title of the properties mortgaged. For all legal purposes, the PNB is a
mortgagee in goodfaith for at the time the mortgages covering said properties were constituted the PNB was not aware to any flaw of the title
of the mortgagor. 14

True it is that in the earlier cases decided by this Court, namely Vitug VS. Montemayor decided on May 15, 1952, which is an action for
recovery of possession of a share in said parcels of land, 15 and in the subsequent action for partition between the same parties decided on
Oct. 20, 1953, 16 this court found the 30 parcels of land in question to be conjugal in nature and awarded the corresponding share to the
property of Florencia Vitug, an heir of the late Clodualdo Vitug from the first marriage. In said cases this Court affirmed the decision of the
lower court. In the dispositive part of the decision of the trial court it made the observation that "but from the conduct of Clodualdo Vitug and
Donata Montemayor during the existence of their marital life, the inference is clear that Clodualdo had the unequivocal intention of
transmitting the full ownership of the 30 parcels of land to his wife Donata Montemayor, thus considering the 1/2 of the funds of the conjugal
property so advanced for the purchase of said parcels of land as reimbursible to the estate of Clodualdo Vitug on his death. 17 That must be
the reason why the property was registered in the name of Donata Montemayor as widow after the death of Clodualdo Vitug. 18

At any rate, although actions for recovery of real property and for partition are real actions, however, they are actions in personam that bind
only the particular individuals who are parties thereto. 19 The PNB not being a party in said cases is not bound by the said decisions. Nor
does it appear that the PNB was aware of the said decisions when it extended the above describe mortgage loans. Indeed, if the PNB knew
of the conjugal nature of said properties it would not have approved the mortgage applications covering said properties of Donata
Montemayor without requiring the consent of all the other heirs or co-owners thereof. Moreover, when said properties were sold at public
auction, the PNB was a purchaser for value in good faith. So its right thereto is beyond question. 20

Pragmacio and Maximo Vitug are now estopped from questioning the title of Donata Montemayor to
the said properties. They never raised the conjugal nature of the property nor took issue as to the
ownership of their mother, Donata Montemayor, over the same. Indeed private respondents were
among the defendants in said two cases wherein in their answers to the complaint they asserted that
the properties in question are paraphernal properties belonging exclusively to Donata Montemayor
and are not conjugal in nature.   Thus they leased the properties from their mother Donata
21

Montemayor for many years knowing her to be the owner. They were in possession of the property
for a long time and they knew that the same were mortgaged by their mother to the PNB and
thereafter were sold at public auction, but they did not do anything.   It is only after 17 years that
22

they remembered to assert their rights. Certainly, they are guilty of laches.  23

Moreover, as correctly held by the lower court. Pragmacio and Maximo Vitug as occupants and
lessees of the property in question cannot now dispute the ownership of their mother over the same
who was their lessor.  24

WHEREFORE, the subject decision of the respondent Court of Appeals is hereby REVERSED and
set aside and another decision is hereby rendered DISMISSING the complaint and ordering private
respondents to pay attomey's fees and expenses of litigation to petitioner PNB in the amount of
P20,000.00 and the costs of the suit.

SO ORDERED.
G.R. No. 188289               August 20, 2014

DAVID A. NOVERAS, Petitioner,
vs.
LETICIA T. NOVERAS, Respondent.

DECISION

PEREZ, J.:

Before the Court is a petition for review assailing the 9 May 2008 Decision  of the Court of Appeals in
1

CA-G.R .. CV No. 88686, which affirmed in part the 8 December 2006 Decision  of the Regional Trial
2

Court (RTC) of Baler, Aurora, Branch 96.

The factual antecedents are as follow:

David A. Noveras (David) and Leticia T. Noveras (Leticia) were married on 3 December 1988 in
Quezon City, Philippines. They resided in California, United States of America (USA) where they
eventually acquired American citizenship. They then begot two children, namely: Jerome T.

Noveras, who was born on 4 November 1990 and JenaT. Noveras, born on 2 May 1993. David was
engaged in courier service business while Leticia worked as a nurse in San Francisco, California.

During the marriage, they acquired the following properties in the Philippines and in the USA:

PHILIPPINES

PROPERTY FAIR MARKET VALUE

House and Lot with an area of 150 sq. m. ₱1,693,125.00

located at 1085 Norma Street, Sampaloc,
Manila (Sampaloc property)
Agricultural land with an area of 20,742 sq. ₱400,000.00
m. located at Laboy, Dipaculao, Aurora
A parcel of land with an area of 2.5 hectares ₱490,000.00
located at Maria Aurora, Aurora
3
A parcel of land with an area of 175 sq.m. ₱175,000.00
located at Sabang Baler, Aurora
3-has. coconut plantation in San Joaquin ₱750,000.00
Maria Aurora, Aurora

USA
 PROPERTY FAIR MARKET VALUE

House and Lot at 1155 Hanover Street, Daly

City, California
$550,000.00
(unpaid debt of $285,000.00)
Furniture and furnishings $3,000

Jewelries (ring and watch) $9,000

2000 Nissan Frontier 4x4 pickup truck $13,770.00

Bank of America Checking Account $8,000

Bank of America Cash Deposit

Life Insurance (Cash Value) $100,000.00

4
Retirement, pension, profit-sharing, annuities $56,228.00

The Sampaloc property used to beowned by David’s parents. The parties herein secured a loan from
a bank and mortgaged the property. When said property was about to be foreclosed, the couple paid
a total of ₱1.5 Million for the redemption of the same.

Due to business reverses, David left the USA and returned to the Philippines in 2001. In December
2002,Leticia executed a Special Power of Attorney (SPA) authorizing David to sell the Sampaloc
property for ₱2.2 Million. According to Leticia, sometime in September 2003, David abandoned his
family and lived with Estrellita Martinez in Aurora province. Leticia claimed that David agreed toand
executed a Joint Affidavit with Leticia in the presence of David’s father, Atty. Isaias Noveras, on 3
December 2003 stating that: 1) the ₱1.1Million proceeds from the sale of the Sampaloc property
shall be paid to and collected by Leticia; 2) that David shall return and pay to Leticia ₱750,000.00,
which is equivalent to half of the amount of the redemption price of the Sampaloc property; and 3)
that David shall renounce and forfeit all his rights and interest in the conjugal and real properties
situated in the Philippines.  David was able to collect ₱1,790,000.00 from the sale of the Sampaloc
5

property, leaving an unpaid balance of ₱410,000.00.

Upon learning that David had an extra-marital affair, Leticia filed a petition for divorce with the
Superior Court of California, County of San Mateo, USA. The California court granted the divorce on
24 June 2005 and judgment was duly entered on 29 June 2005.  The California court granted to
6

Leticia the custody of her two children, as well as all the couple’s properties in the USA. 7

On 8 August 2005, Leticia filed a petition for Judicial Separation of Conjugal Property before the
RTC of Baler, Aurora. She relied on the 3 December 2003 Joint Affidavit and David’s failure to
comply with his obligation under the same. She prayed for: 1) the power to administer all conjugal
properties in the Philippines; 2) David and his partner to cease and desist from selling the subject
conjugal properties; 3) the declaration that all conjugal properties be forfeited in favor of her children;
4) David to remit half of the purchase price as share of Leticia from the sale of the Sampaloc
property; and 5) the payment of₱50,000.00 and ₱100,000.00 litigation expenses. 8
In his Answer, David stated that a judgment for the dissolution of their marriage was entered on 29
June 2005 by the Superior Court of California, County of San Mateo. He demanded that the conjugal
partnership properties, which also include the USA properties, be liquidated and that all expenses of
liquidation, including attorney’s fees of both parties be charged against the conjugal partnership. 9

The RTC of Baler, Aurora simplified the issues as follow:

1. Whether or not respondent David A. Noveras committed acts of abandonment and marital
infidelity which can result intothe forfeiture of the parties’ properties in favor of the petitioner
and their two (2) children.

2. Whether or not the Court has jurisdiction over the properties in California, U.S.A. and the
same can be included in the judicial separation prayed for.

3. Whether or not the "Joint Affidavit" x x x executed by petitioner Leticia T. Noveras and
respondent David A. Noveras will amount to a waiver or forfeiture of the latter’s property
rights over their conjugal properties.

4. Whether or not Leticia T. Noveras isentitled to reimbursement of onehalf of the ₱2.2

[M]illion sales proceeds of their property in Sampaloc, Manila and one-half of the ₱1.5
[M]illion used to redeem the property of Atty. Isaias Noveras, including interests and charges.

5. How the absolute community properties should be distributed.

6. Whether or not the attorney’s feesand litigation expenses of the parties were chargeable
against their conjugal properties.

Corollary to the aboveis the issue of:

Whether or not the two common children of the parties are entitled to support and presumptive
legitimes.
10

On 8 December 2006, the RTC rendered judgment as follows:

1. The absolute community of property of the parties is hereby declared DISSOLVED;

2. The net assets of the absolute community of property ofthe parties in the Philippines are
hereby ordered to be awarded to respondent David A. Noveras only, with the properties in
the United States of America remaining in the sole ownership of petitioner Leticia Noveras
a.k.a. Leticia Tacbiana pursuant to the divorce decree issuedby the Superior Court of
California, County of San Mateo, United States of America, dissolving the marriage of the
parties as of June 24, 2005. The titles presently covering said properties shall be cancelled
and new titles be issued in the name of the party to whom said properties are awarded;

3. One-half of the properties awarded to respondent David A. Noveras in the preceding

paragraph are hereby given to Jerome and Jena, his two minor children with petitioner
LeticiaNoveras a.k.a. Leticia Tacbiana as their presumptive legitimes and said legitimes must
be annotated on the titles covering the said properties.Their share in the income from these
properties shall be remitted to them annually by the respondent within the first half of
January of each year, starting January 2008;
 4. One-half of the properties in the United States of America awarded to petitioner Leticia
Noveras a.k.a. Leticia Tacbiana in paragraph 2 are hereby given to Jerome and Jena, her
two minor children with respondent David A. Noveras as their presumptive legitimes and said
legitimes must be annotated on the titles/documents covering the said properties. Their
share in the income from these properties, if any, shall be remitted to them annually by the
petitioner within the first half of January of each year, starting January 2008;

5. For the support of their two (2) minor children, Jerome and Jena, respondent David A.
Noveras shall give them US$100.00 as monthly allowance in addition to their income from
their presumptive legitimes, while petitioner Leticia Tacbiana shall take care of their food,
clothing, education and other needs while they are in her custody in the USA. The monthly
allowance due from the respondent shall be increased in the future as the needs of the
children require and his financial capacity can afford;

6. Of the unpaid amount of ₱410,000.00 on the purchase price of the Sampaloc property, the
Paringit Spouses are hereby ordered to pay ₱5,000.00 to respondent David A. Noveras and
₱405,000.00 to the two children. The share of the respondent may be paid to him directly but
the share of the two children shall be deposited with a local bank in Baler, Aurora, in a joint
account tobe taken out in their names, withdrawal from which shall only be made by them or
by their representative duly authorized with a Special Power of Attorney. Such
payment/deposit shall be made withinthe period of thirty (30) days after receipt of a copy of
this Decision, with the passbook of the joint account to be submitted to the custody of the
Clerk of Court of this Court within the same period. Said passbook can be withdrawn from
the Clerk of Court only by the children or their attorney-in-fact; and

7. The litigation expenses and attorney’s fees incurred by the parties shall be shouldered by
them individually. 11

The trial court recognized that since the parties are US citizens, the laws that cover their legal and
personalstatus are those of the USA. With respect to their marriage, the parties are divorced by
virtue of the decree of dissolution of their marriage issued by the Superior Court of California, County
of San Mateo on 24June 2005. Under their law, the parties’ marriage had already been dissolved.
Thus, the trial court considered the petition filed by Leticia as one for liquidation of the absolute
community of property regime with the determination of the legitimes, support and custody of the
children, instead of an action for judicial separation of conjugal property.

With respect to their property relations, the trial court first classified their property regime as absolute
community of property because they did not execute any marriage settlement before the
solemnization of their marriage pursuant to Article 75 of the Family Code. Then, the trial court ruled
that in accordance with the doctrine of processual presumption, Philippine law should apply because
the court cannot take judicial notice of the US law since the parties did not submit any proof of their
national law. The trial court held that as the instant petition does not fall under the provisions of the
law for the grant of judicial separation of properties, the absolute community properties cannot
beforfeited in favor of Leticia and her children. Moreover, the trial court observed that Leticia failed to
prove abandonment and infidelity with preponderant evidence.

The trial court however ruled that Leticia is not entitled to the reimbursements she is praying for
considering that she already acquired all of the properties in the USA. Relying still on the principle of
equity, the Court also adjudicated the Philippine properties to David, subject to the payment of the
children’s presumptive legitimes. The trial court held that under Article 89 of the Family Code, the
waiver or renunciation made by David of his property rights in the Joint Affidavit is void.
On appeal, the Court of Appeals modified the trial court’s Decision by directing the equal division of
the Philippine properties between the spouses. Moreover with respect to the common children’s
presumptive legitime, the appellate court ordered both spouses to each pay their children the
amount of ₱520,000.00, thus:

WHEREFORE, the instant appeal is PARTLY GRANTED. Numbers 2, 4 and 6 of the

assailedDecision dated December 8, 2006 of Branch 96, RTC of Baler, Aurora Province, in Civil
Case No. 828 are hereby MODIFIED to read as follows:

2. The net assets of the absolute community of property of the parties in the Philippines are
hereby divided equally between petitioner Leticia Noveras a.k.a. Leticia Tacbiana (sic) and
respondent David A. Noveras;

xxx

4. One-half of the properties awarded to petitioner Leticia Tacbiana (sic) in paragraph 2 shall
pertain to her minor children, Jerome and Jena, as their presumptive legitimes which shall be
annotated on the titles/documents covering the said properties. Their share in the income
therefrom, if any, shall be remitted to them by petitioner annually within the first half of
January, starting 2008;

xxx

6. Respondent David A. Noveras and petitioner Leticia Tacbiana (sic) are each ordered to
pay the amount of₱520,000.00 to their two children, Jerome and Jena, as their presumptive
legitimes from the sale of the Sampaloc property inclusive of the receivables therefrom,
which shall be deposited to a local bank of Baler, Aurora, under a joint account in the latter’s
names. The payment/deposit shall be made within a period of thirty (30) days from receipt
ofa copy of this Decision and the corresponding passbook entrusted to the custody ofthe
Clerk of Court a quowithin the same period, withdrawable only by the children or their
attorney-in-fact.

A number 8 is hereby added, which shall read as follows:

8. Respondent David A. Noveras is hereby ordered to pay petitioner Leticia Tacbiana (sic)
the amount of ₱1,040,000.00 representing her share in the proceeds from the sale of the
Sampaloc property.

The last paragraph shall read as follows:

Send a copy of this Decision to the local civil registry of Baler, Aurora; the local civil registry of
Quezon City; the Civil RegistrarGeneral, National Statistics Office, Vibal Building, Times Street
corner EDSA, Quezon City; the Office of the Registry of Deeds for the Province of Aurora; and to the
children, Jerome Noveras and Jena Noveras.

The rest of the Decision is AFFIRMED. 12

In the present petition, David insists that the Court of Appeals should have recognized the California
Judgment which awarded the Philippine properties to him because said judgment was part of the
pleading presented and offered in evidence before the trial court. David argues that allowing Leticia
to share in the Philippine properties is tantamount to unjust enrichment in favor of Leticia considering
that the latter was already granted all US properties by the California court.

In summary and review, the basic facts are: David and Leticia are US citizens who own properties in
the USA and in the Philippines. Leticia obtained a decree of divorce from the Superior Court of
California in June 2005 wherein the court awarded all the properties in the USA to Leticia. With
respect to their properties in the Philippines, Leticiafiled a petition for judicial separation ofconjugal
properties.

At the outset, the trial court erred in recognizing the divorce decree which severed the bond of
marriage between the parties. In Corpuz v. Sto. Tomas,  we stated that:
13

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that our
courts do not take judicial notice of foreign judgments and laws. Justice Herrera explained that, as a
rule, "no sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of
another country." This means that the foreign judgment and its authenticity must beproven as facts
under our rules on evidence, together with the alien’s applicable national law to show the effect of
the judgment on the alien himself or herself. The recognition may be made in an action instituted
specifically for the purpose or in another action where a party invokes the foreign decree as an
integral aspect of his claim or defense. 14

The requirements of presenting the foreign divorce decree and the national law of the foreigner must
comply with our Rules of Evidence. Specifically, for Philippine courts to recognize a foreign judgment
relating to the status of a marriage, a copy of the foreign judgment may be admitted in evidence and
proven as a fact under Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b) of the
Rules of Court. 15

Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal
may be proved by: (1) an official publication thereof or (2) a copy attested by the officer having the
legal custody thereof. Such official publication or copy must beaccompanied, if the record is not kept
in the Philippines, with a certificate that the attesting officer has the legal custody thereof. The
certificate may be issued by any of the authorized Philippine embassy or consular officials stationed
in the foreign country in which the record is kept, and authenticated by the seal of his office. The
attestation must state, in substance, that the copy is a correct copy of the original, or a specific part
thereof, asthe case may be, and must be under the official seal of the attesting officer.

Section 25 of the same Rule states that whenever a copy of a document or record is attested for the
purpose of evidence, the attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be. The attestation must be under the official seal
of the attesting officer, if there be any, or if hebe the clerk of a court having a seal, under the seal of
such court.

Based on the records, only the divorce decree was presented in evidence. The required certificates
to prove its authenticity, as well as the pertinent California law on divorce were not presented.

It may be noted that in Bayot v. Court of Appeals,  we relaxed the requirement on certification where
16

we held that "[petitioner therein] was clearly an American citizenwhen she secured the divorce and
that divorce is recognized and allowed in any of the States of the Union, the presentation of a copy
of foreign divorce decree duly authenticatedby the foreign court issuing said decree is, as here,
sufficient." In this case however, it appears that there is no seal from the office where the divorce
decree was obtained.
Even if we apply the doctrine of processual presumption  as the lower courts did with respect to the
17

property regime of the parties, the recognition of divorce is entirely a different matter because, to
begin with, divorce is not recognized between Filipino citizens in the Philippines. Absent a valid
recognition of the divorce decree, it follows that the parties are still legally married in the Philippines.
The trial court thus erred in proceeding directly to liquidation.

As a general rule, any modification in the marriage settlements must be made before the celebration
of marriage. An exception to this rule is allowed provided that the modification isjudicially approved
and refers only to the instances provided in Articles 66,67, 128, 135 and 136 of the Family Code. 18

Leticia anchored the filing of the instant petition for judicial separation of property on paragraphs 4
and 6 of Article 135 of the Family Code, to wit:

Art. 135. Any of the following shall be considered sufficient cause for judicial separation of property:

(1) That the spouse of the petitioner has been sentenced to a penalty which carries with it
civil interdiction;

(2) That the spouse of the petitioner has been judicially declared an absentee;

(3) That loss of parental authority ofthe spouse of petitioner has been decreed by the court;

(4) That the spouse of the petitioner has abandoned the latter or failed to comply with his or
her obligations to the family as provided for in Article 101;

(5) That the spouse granted the power of administration in the marriage settlements has
abused that power; and

(6) That at the time of the petition, the spouses have been separated in fact for at least one
year and reconciliation is highly improbable.

In the cases provided for in Numbers (1), (2), and (3), the presentation of the final judgment against
the guiltyor absent spouse shall be enough basis for the grant of the decree ofjudicial separation of
property. (Emphasis supplied).

The trial court had categorically ruled that there was no abandonment in this case to necessitate
judicial separation of properties under paragraph 4 of Article 135 of the Family Code. The trial court
ratiocinated:

Moreover, abandonment, under Article 101 of the Family Code quoted above, must be for a valid
cause and the spouse is deemed to have abandoned the other when he/she has left the conjugal
dwelling without intention of returning. The intention of not returning is prima facie presumed if the
allegedly [sic] abandoning spouse failed to give any information as to his or her whereabouts within
the period of three months from such abandonment.

In the instant case, the petitioner knows that the respondent has returned to and stayed at his
hometown in Maria Aurora, Philippines, as she even went several times to visit him there after the
alleged abandonment. Also, the respondent has been going back to the USA to visit her and their
children until the relations between them worsened. The last visit of said respondent was in October
2004 when he and the petitioner discussed the filing by the latter of a petition for dissolution of
marriage with the California court. Such turn for the worse of their relationship and the filing of the
saidpetition can also be considered as valid causes for the respondent to stay in the Philippines. 19

Separation in fact for one year as a ground to grant a judicial separation of property was not tackled
in the trial court’s decision because, the trial court erroneously treated the petition as liquidation of
the absolute community of properties.

The records of this case are replete with evidence that Leticia and David had indeed separated for
more than a year and that reconciliation is highly improbable. First, while actual abandonment had
not been proven, it is undisputed that the spouses had been living separately since 2003 when
David decided to go back to the Philippines to set up his own business. Second, Leticia heard from
her friends that David has been cohabiting with Estrellita Martinez, who represented herself as
Estrellita Noveras. Editha Apolonio, who worked in the hospital where David was once confined,
testified that she saw the name of Estrellita listed as the wife of David in the Consent for Operation
form.  Third and more significantly, they had filed for divorce and it was granted by the California
20

court in June 2005.

Having established that Leticia and David had actually separated for at least one year, the petition
for judicial separation of absolute community of property should be granted.

The grant of the judicial separation of the absolute community property automatically dissolves the
absolute community regime, as stated in the 4th paragraph of Article 99 ofthe Family Code, thus:

Art. 99. The absolute community terminates:

(1) Upon the death of either spouse;

(2) When there is a decree of legal separation;

(3) When the marriage is annulled or declared void; or

(4) In case of judicial separation of property during the marriage under Articles 134 to 138.
(Emphasis supplied).

Under Article 102 of the same Code, liquidation follows the dissolution of the absolute community
regime and the following procedure should apply:

Art. 102. Upon dissolution of the absolute community regime, the following procedure shall apply:

(1) An inventory shall be prepared, listing separately all the properties of the absolute
community and the exclusive properties of each spouse.

(2) The debts and obligations of the absolute community shall be paid out of its assets. In
case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid
balance with their separate properties in accordance with the provisions of the second
paragraph of Article 94.

(3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered
to each of them.
 (4) The net remainder of the properties of the absolute community shall constitute its net
assets, which shall be divided equally between husband and wife, unless a different
proportion or division was agreed upon in the marriage settlements, or unless there has
been a voluntary waiver of such share provided in this Code. For purposes of computing the
net profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2),the said
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.

(5) The presumptive legitimes of the common children shall be delivered upon partition, in
accordance with Article 51.

(6) Unless otherwise agreed upon by the parties, in the partition of the properties, the
conjugal dwelling and the lot on which it is situated shall be adjudicated tothe spouse with
whom the majority of the common children choose to remain. Children below the age of
seven years are deemed to have chosen the mother, unless the court has decided
otherwise. In case there is no such majority, the court shall decide, taking into consideration
the best interests of said children. At the risk of being repetitious, we will not remand the
case to the trial court. Instead, we shall adopt the modifications made by the Court of
Appeals on the trial court’s Decision with respect to liquidation.

We agree with the appellate court that the Philippine courts did not acquire jurisdiction over the
California properties of David and Leticia. Indeed, Article 16 of the Civil Code clearly states that real
property as well as personal property is subject to the law of the country where it is situated. Thus,
liquidation shall only be limited to the Philippine properties.

We affirm the modification madeby the Court of Appeals with respect to the share of the spouses in
the absolutecommunity properties in the Philippines, as well as the payment of their children’s
presumptive legitimes, which the appellate court explained in this wise:

Leticia and David shall likewise have an equal share in the proceeds of the Sampaloc
property.  While both claimed to have contributed to the redemption of the Noveras property, absent
1âwphi1

a clear showing where their contributions came from, the same is presumed to have come from the
community property. Thus, Leticia is not entitled to reimbursement of half of the redemption money.

David's allegation that he used part of the proceeds from the sale of the Sampaloc property for the
benefit of the absolute community cannot be given full credence. Only the amount of ₱120,000.00
incurred in going to and from the U.S.A. may be charged thereto. Election expenses in the amount of
₱300,000.00 when he ran as municipal councilor cannot be allowed in the absence of receipts or at
least the Statement of Contributions and Expenditures required under Section 14 of Republic Act
No. 7166 duly received by the Commission on Elections. Likewise, expenses incurred to settle the
criminal case of his personal driver is not deductible as the same had not benefited the family. In
sum, Leticia and David shall share equally in the proceeds of the sale net of the amount of
₱120,000.00 or in the respective amounts of ₱1,040,000.00.

xxxx

Under the first paragraph of Article 888 of the Civil Code, "(t)he legitime of legitimate children and
descendants consists of one-half or the hereditary estate of the father and of the mother." The
children arc therefore entitled to half of the share of each spouse in the net assets of the absolute
community, which shall be annotated on the titles/documents covering the same, as well as to their
respective shares in the net proceeds from the sale of the Sampaloc property including the
receivables from Sps. Paringit in the amount of ₱410,000.00. Consequently, David and Leticia
should each pay them the amount of ₱520,000.00 as their presumptive legitimes therefrom. 21

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA G.R.
CV No. 88686 is AFFIRMED.

SO ORDERED.

.R. Nos. 78583-4 March 26, 1990

BENIGNO TODA, JR., petitioner,

vs.
COURT OF APPEALS and ROSE MARIE TUASON-TODA, respondents.

G.R. Nos.78696-7 March 26,1990

ROSE MARIE TUASON-TODA, petitioner,

vs.
BENIGNO TODA, JR., respondent.

Bautista, Picazo, Buyco, Tan & Fider for Benigno Toda, Jr. Belo, Abiera & Associates for
petitioner Rose Marie Tuason Toda.

REGALADO, J.:

These consolidated cases seek a review of the decision of the Court of Appeals promulgated
on January 29,1987   in CA-G.R. CV Nos. 06675 and 07936, the dispositive portion of which
1

reads:

WHEREFORE, judgment is hereby rendered:

1. Ordering the payment of the cash dividends declared on July 1, 1981

amounting to P2,191.62 and those declared on July 25, 1981 amounting to
P40,196.12 to Rose Marie Toda as her separate property. The cash dividends
declared on April 25, 1981 amounting to P37,196.30 (sic) are hereby
adjudicated to Benigno Toda, Jr. as his share in the conjugal partnership
assets; the portion of the order dated November 2, 1981 with respect to the
payment of the amount of P360,095.12 to Rose Marie T. Toda is set aside;

2. Ordering the payment of the amount of P4,1623,982.24 to Rose Marie Toda

representing the balance of P15, 749,135.32 obligated to be paid as estate
taxes by Benigno Toda, Jr.;
 3. Setting aside the order of the lower court dated June 2, 1982 directing
Benigno Toda, Jr. to pay interest and non-payment penalty of 18% and 5%,
respectively; and

4. Setting aside the order of the lower court directing the annotation of lien on
the property of Benigno Toda, Jr.

SO ORDERED.

Benigno Toda, Jr. (Benigno for brevity) and Rose Marie Tuason-Toda (Rose Marie for brevity)
were married on June 9, 1951 and were blessed with two children. Individual differences and
the alleged infidelity of Benigno, however, marred the conjugal union thereby prompting
Rose Marie to file on December 18, 1979 in the former Court of First Instance of Rizal,   as 2

Civil Case No. 35566, a petition for termination of conjugal partnership for alleged
mismanagement and dissipation of conjugal funds against Benigno.

After hearings were held, the parties in order to avoid further "disagreeable proceedings,"
filed on April 1, 1981 a joint petition forjudicial approval of dissolution of conjugal partnership
under Article 191 of the Civil Code, docketed as Special Proceeding No. 9478,   which was
3

consolidated with the aforesaid civil case. This petition which was signed by the parties on
March 30, 1981, embodied a compromise agreement allocating to the spouses their
respective shares in the conjugal partnership assets and dismissing with prejudice the said
Civil Case No. 35566, CA-G.R. No. 11123-SP of the Court of Appeals and G.R. No. 56121 of
this Court. The said petition and the compromise agreement therein were approved by the
trial court in its order of June 9, 1981. 
4

Thereafter, several orders were issued by the lower court pertaining to the interpretation and
implementation of the compromise agreement, as follows:

1. Order, dated November 20, 1981, ordering Benigno, inter alia, to pay Rose Marie
the cash dividends on the shares declared on April 25, 1981 amounting to
P37,126.30; that declared on July 25, 1981 amounting to P40,196.12; that declared
on July 1, 1981, given on September 25, 1981 amounting to P2,191.62; and the
payment of P360,095.12 to Rose Marie which is the balance of P2 million paid on
April 4, 1981; 5

2. Order, dated June 2, 1982, ordering Benigno to pay Rose Marie interest at 18%
per annum on the amounts required to be paid in the order of November 20,1981, as
well as 5% non-payment penalty should the said order of November 20,1981 be
sustained on appeal;  6

3. Order, dated December 9, 1982, denying Benigno's motion to inhibit Judge

Rizalina Bonifacio Vera from hearing the case;  7

4. Order, dated March 1, 1983, ordering the annotation of a lien on certain properties
of Benigno as security for any and all amounts that he may finally be ordered to pay
to Rose Marie under the compromise agreement;   and 8

5. Order, dated March 14, 1983, ordering Benigno to pay Rose Marie the amount of
P4,623,929.24, with interest and penalties thereon
at the rates stipulated in the compromise agreement from date of at the rates stipulated in the
compromise agreement from date of demand by Rose Marie.  9

The compromise agreement which, as earlier stated, was incorporated in the petition for dissolution
of the conjugal partnership and was approved by the court below, contains the following stipulaitons:

xxx xxx xxx

4. For the best interest of each of them, petitioners have agreed to dissolve their
conjugal partnership and to partition the assets thereof, under the following terms
and conditions — this document, a pleading, being intended by them to embody and
evidence their agreement;

(a) Petitioners as the parties hereto agree upon the dissolution of their conjugal
partnership during the marriage and further agree to obtain judicial approval of their
said agreement as provided by Article 191 of the Civil Code.

(b) The following shall be adjudicated to petitioner Rose Marie Tuason-Toda:

(1) Forty Million Peson (P40,000,000.00) to be paid as follows:

(a) Petitioner Benigno Toda, Jr. shall assume the

payment of the estate taxes, interest and penalties
thereon, pertaining to the estate of petitioner Rose
Marie Tuason Toda's late brother Manuel Tuason, Jr.
in the sum of P15,749,135.32 as of March 31, 1981
— all interest and penalty charges after March 31,
1981 to be the responsibility of petitioner Benigno
Toda, Jr.

(b) P2,000,000.00 to be paid within 30 days after

signing of this agreement.

(c) The balance shall be paid within six (6) months

after date of signing of this agreement. If not paid
when due, the balance shall bear interest at 18% per
annum until paid and there shall be a 5% non-
payment penalty. The proceeds from any sale of or
loss with respect to, Rubicon's shares in Philippine Air
Lines, Inc., shares of Cibeles Insurance Corporation
or Hermana Mayor shall be applied when received
against the aforesaid balance, except to the extent
such proceeds are used to satisfy any other obligation
under this agreement.

(2) All shares of stock in San Nguel Corporation registered solely in

the name of petitioner Rose Marie Tuason Toda whether stock
dividends or stocks acquired on pre-emptive rights including those
acquired in the names of both petitioners Benigno Toda, Jr. and Rose
Marie Tuason Toda (whetherjointly or alternately 'and/or'), free from
all liens and encumbrances.
(3) All shares of stock in San Miguel Corporation acquired whether as
stock dividends of or on pre-emptive zighta pertaining to the shares
of stock in said corporation of petitioner Rose Marie Tuason Toda's
brother the late Manuel Tuason, Jr. (of course, the original shares of
the latter pertain to petitioner Rose Marie Tuason Toda also), free
from all liens and encumbrances except for the estate tax lien.
Petitioner Rose Marie Tuason Toda hereby grants petitioner Benigno
Toda, Jr. an irrevocable proxy, for three years through the 1983
stockholders' meeting whether annual or special to elect directors for
all shares of stock she owns directly or indirectly including those from
the late Manuel Tuason, Jr. in San Miguel Corporation.

(4) The Banaba Forbes Park conjugal dwelling and its contents free
from all liens and encumbrances except that petitioner Benigno Toda,
Jr. shall remove therefrom his personal effects including furniture and
appliances in his study room and T.V. room and, from the family
rooin, all antiques, rugs, paintings of Old Fort Manila, books and
mementos. Petitioner Benigno Toda, Jr. commits that no servant now
living in the Tolentino street apartments shall be evicted.

(5) The San Francisco apartment at Apartment 905, No. 1750 Taylor
Street, San Francisco, California, U.SA., and its contents, free from
all liens and encumbrances, except that petitioner Benigno Toda, Jr.
shall remove therefrom his personal effects.

(6) The artifacts already removed by petitioner Rose Marie Tuason

Toda from the Madrid Apartment at No. 4 San Pedro de Valdivia. She
shall return to it its silver ware, china ware, paintings and etchings.
She may retain the three fans encased in glass and may remove her
clothes, perfumes and toiletries, the Sansa painting ofa shell
dedicated to her, the painting of the Madonna and tapestry hanging in
her bedroom, 5 Persian rugs, 1 writing desk and chair and the 2
lamps thereon and 1 lamp on the night table, and the statuette given
her by Hagedorn.

(7) Jewelry.

(8) Motor vehicles registered in her name.

(9) Within forty-five (45) days from signing of this agreement, One
Million Pesos (Pl,000,000.00) as attorneys' fees — petitioner Rose
Marie Tuason Toda agreeing to hold petitioner Benigno Toda, Jr.
harmless from any claim fo attorneys' fees and expenses that may be
filed against the conjugal partnership or herself for services rendered
to her in the prosecution of her claims against said conjugal
partnership or against petitioner Benigno Toda, Jr. or to secure her
paraphernal estate.

(10) Two shares with two lots in Valley Golf & Country Club.

(11) One share in Club Puerta de Hierro in Madrid, Spain if there is

one registered in petitioner Rose Marie Tuason Toda's name.
 (12) Share in Montemar Beach Club in Bagac, Bataan — petitioner
Rose Marie Tuason Toda agreeing to assume the balance of the
acquisition cost thereof.

(c) All other properties of the conjugal partnership of whatever and wherever located
shall be adjudicated to petitioner Benigno Toda, Jr. even though acquired in the
name of petitioner Rose Marie Tuason Toda or both of them — she undertaking to
execute the corresponding deeds of conveyances.

(d) Petitioner Benigno Toda, Jr. shall assume the payment of all conjugal obligations,
petitioner Rose Marie Tuason Toda representing and warranting that she has no
pending obligation or incurred no obligation chargeable to the conjugal partnership
except those listed in Annex 'A' hereof.

If the Rosaria Apartment is subject to a mortgage loan and such loan is a conjugal
debt, petitioner Benigno Toda, Jr. shall assume such loan and shall obtain the
discharge of the mortgage.

(e) After the signing of this document:

(1) Each of them shall own, dispose of, possess, administer and
enjoy his or her separate estate, present and future, without the
consent of the other;

(2) All earnings from any profession business or industry shall

likewise belong to each of them respectively;

(3) All expenses and obligations incurred by each of them shall be

their respective and separate responsibilities.

(f) With the signing of this document, Civil Case No. 35566 of this same Court, CA-
G.R. No. 11123-SP and SC-G.R. No. L-56121 shall be deemed dismissed with
prejudice as between the parties hereto.  10

The parties then prayed that judgment be rendered:

(a) Approving the agreement for voluntary dissolution and partition of the conjugal
partnership;

(b) declaring the conjugal partnership of petitioners dissolved and adjudicating to

each of them his or her share in the properties and assets of said conjugal
partnership in accordance with the agreement embodied in paragraph 4 hereof; and

(c) enjoining the parties to comply with the terms and conditions of the aforesaid
agreement.  11

Ironically, the said agreement failed to fully subserve the intended amicable settlement of all the
disputes of the spouses. Instead, as lamented by the counsel of one of them, the compromise
agreement which was designed to terminate a litigation spawned two new petitions, with each party
initiating one against the other. Thus, illustrative of the saying that a solution which creates another
problem is no solution, the contradictory interpretations placed by the parties on some provisions of
the agreement resulted in appeals to respondent court and, eventually, the present recourse to us.

Benigno appealed from the aforestated orders of the trial court of November 20, 1981, June 2, 1982,
December 9, 1982, March 1, 1983 and March 14, 1983 containing the directives hereinbefore
respectively set out. The same were disposed of by the Court of Appeals as explained at the start of
this decision.

Rose Marie now submits that the Court of Appeals erred:

1. In holding that the compromise agreement of the parties herein became effective
only after its judicial approval on June 9, 1981 and not upon its execution on March
30,1981;

2. In setting aside the order of the lower court dated June 2, 1981 directing Benigno
to pay interest of eighteen percent and non-payment penalty of five percent; and

3. In setting aside the order of the lower court directing the annotation of Rose
Marie's lien on Benigno's property.  12

On the other hand, Benigno contends in his present petition before us that:

1. The Court of Appeals erred on a question of law when it affirmed the lower court's
award of P4,623,929.24 without trial and evidence-taking and overruled petitioner's
claim of violation of his due process right;

2. The Court of Appeals erred on a question of law and due process when it upheld
the lower court's denial of petitioner's motion for her inhibition/disqualification;

3. Since the document (the parties' compromise agreement) explicitly provided for
assumption of liability rather than agency to pay and since there was no evidence-
taking, the Court of Appeals finding of an agency to pay is reviewable as a question
of law; and

4. The Court of Appeals on a question of law involving the parol evidence rule.  13

The award of cash dividends basically depends on the date of effectivity of the compromise
agreement as this will determine whether the same is conjugal property or separate property of the
spouses.

We are in agreement with the holding of the Court of Appeals that the compromise agreement
became effective only on June 9, 1981, the date when it was approved by the trial court, and not on
March 30,1981 when it was signed by the parties. Under Article 190 of the Civil Code,   "(i)n the
14

absence of an express declaration in the marriage settlements, the separation of property between
spouses during the marriage shall not take place save in virtue of a judicial order." Hence, the
separation of property is not effected by the mere execution of the contract or agreement of the
parties, but by the decree of the court approving the same. It, therefore, becomes effective on y
upon judicial approval, without which it is void.  Furthermore, Article 192 of said Code explicitly
15

provides that the conjugal partnership is dissolved only upon the issuance of a decree of separation
of property.
Consequently, the conjugal partnership of Benigno and Rose Marie should be considered dissolved
only on June 9, 1981 when the trial court approved their joint petition for voluntary dissolution of their
conjugal partnership. Conformably thereto, the cash dividends declared on July 1, 1981 and July
25,1981 in the amount of P2,191.62 and P40,196.12, respectively, should pertain to Rose Marie;
and that declared on April 2,5, 1981 in the amount of P37,126.30 ought to be paid to Benigno,
pursuant to Paragraph 4 (c) of the compromise agreement which awards to Benigno the conjugal
assets not otherwise specifically assigned to Rose Marie.

With respect to the amount of P360,095.12 which Benigrio deducted from the P2 million supposed to
be paid to Rose Marie, it is not clear from the records where said amount came from. The Court of
Appeals, in holding that it is conjugal and therefore belongs to Benigno, presumed it to be in the
nature of cash dividends declared prior to the approval of the compromise agreement by reason of
the fact that the amount was deducted by Benigno from the P2 million which he paid on April
14,1981. While no sufficient proof was adduced to conclusively explain such deduction, there exists
the legal presumption that all property of the marriage belongs to the conjugal partnership absent
any proof that it is the exclusive property of either spouse.   Since Rose Marie failed to prove that
16

the amount forms part of her paraphernal property, it is presumed to be conjugal property.
Consequently, Benigno is entitled to the said amount of P360,095.12, hence he rightfully deducted
the same from the amount due to Rose Marie.

The issue regarding the annotation of the lien on Benigno's properties has been mooted by our
resolution dated Aprjl 3, 1989 wherein, at his instance, we ordered the cancellation thereof upon his
posting of the corresponding bond. In our resolution of February 26, 1990, we noted Benigno's
comphance, approved the bond he filed, and ordered the cancellation of the hens annotated on the
certificates of title of the propertiesinvolved.

Likewise, the order denying the motion to inhibit Judge Rizalina Bonifacio Vera has become
academic considering that she no longer presides over the court where the case was filed. Besides,
as correctly explained by respondent court, the groundfor inhibition raised by Benigno is not valid it
being merely on the basis of the judge having acquired knowledge of the facts surrounding the
agreement of the parties, hence she would be a material witness to the issue of the true agreement
which is contested by the parties. However, those facts came to the knowledge of the judge in the
course of her efforts to effect a compromise between parties and are also known to the parties.This
is not a ground for disqualification; on the contrary, said, acts of the judge were in accord with the
rule encouraging compromises in litigations, especially between members of the same family.

Anent the tax savings of P4,623,982.24 obtained by Benigno, we hold that this forms part of the P40
million allocated to Rose Marie under paragraph 4 (b) (1) of the compromise agreement.We give
credit to the ratiocination thereon of the trial court as quoted with approval by respondent court:

The records show that petitioner Benigno Toda, Jr. paid only Pl,125,152.48 in estate
taxes, although the amount stated in the m Compromise Agreement was
P15,749,135.32. The balance of P4,623,929.24 is now being claimed by both parties
as aforestated. In the opinion of this court, the pertinent terms of the Agreement as
quoted, are clear and do not require any interpretation. In brief, under, the
Agreement, petitioner Rose Marie T. Toda is adjudicated the fixed sum of P40
million, to be paid as follows: (a) Payment by petitioner Benigno Toda, Jr. of the
estate taxes, interests and penalties thereon, pertaining to the estate of the late
Manuel Tuason, Jr. in the amount of Pl5,749,135.32 as of March 31, 1982; (b) P2
million within 30 days after signing of the Agreement; (c) the balance within six
months after date of signing of the Agreement. This Court notes that the amount of
taxes, interests and penalties is fixed at P15,749,135.32 and this figure was provided
 by Benigno Toda, Jr. There is no provision as contended by petitioner Benigno Toda,
Jr. that the amount was only an assumed liability and that he could attempt to reduce
it by suit or compromise. It is clear that if the amount of P4,623,929.24 is to be
credited to Benigno Toda, Jr. then the P40 million which petitioner Rose Marie T.
Toda is to receive would be short by that amount. This Court is also of the opinion
that under the Agreement, petitioner Benigno Toda, Jr. was constituted as agent to
pay to the government the liability of the estate of the late Manuel Tuason, Jr. in the
fixed amount of P15,749,135.32 and if he was able to secure a reduction thereof,
then he should deliver to his principal such reduction... 
17

We do not believe that Benigno was denied due process when the trial court resolved the motion of
Rose Marie for the payment of P4,623,982.24 without the benefit of a hearing. The records disclose
that the hearing thereon was postponed twice at the instance of Benigno, which prompted the court
to thereafter consider the motion submitted for resolution on the basis of the allegations therein and
the answer filed by counsel for both parties. Benigno cannot now be heard to claim that he was
deprived of his day in court. Furthermore, respondent court correctly held that the issue involved was
more of a question of interpretation of a contract rather than a determination of facts. Benigno failed
to make a plausible showing that the supposed evidence he had intended to present, if any, would
not be merely collateral matters.

Considering that the amount of P4,623,982.24 actually forms an integral part of the P40 million
(minus the lawful and authorized deductions that may be made therefrom) which Benigno
categorically undertook to pay to Rose Marie, the same must earn interest at the rate of 18% per
annum and 5% non-payment penalty, the same being included in and within the contemplation of
Paragraph 4 (b) (1) (c) of the compromise agreement. Said provision of the agrdement provides for
the payment of the interest and penalty upon non-payment of the balance of the P40 million after the
specific authorized deductions therefrom. Since the amount of P4,623,982.24 was not to be lawfully
deducted by Benigno, as hereinbefore explained, it constitutes part of the contemplated contingent
balance which might tum out to be due to Rose Marie and, therefore, subject to the imposition of
said increments on Benigno's liability.

WHEREFORE, the judgment appealed from is hereby AFFIRMED, with the modification that
Benigno Toda, Jr. is hereby ordered to pay Rose Marie Tuason Toda interest at the rate of a 18%
per annum and 5% non-payment penalty on the tax savings of P4,623,982.24 from date of formal
demand until the same is fully paid.

SO ORDERED.