Friday, August 15, 2014

Quiao vs Quiao (Civil Law)

BRIGIDO B. QUIAO
vs.
RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO, represented by their mother RITA QUIAO,

-------- A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will of the holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency.

To be vested, a right must have become a title—legal or equitable—to the present or future enjoyment of property.

While one may not be deprived of his “vested right,” he may lose the same if there is due process and such deprivation is founded in law and jurisprudence.

---------- Prior to the liquidation of the conjugal partnership, The interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into title until it appears that there are assets in the community as a result of the liquidation and settlement. 

---------- The definition of “net profits” under Article 102(4) applies to both the dissolution of the absolute community regime under Article 102 of the Family Code, and to the dissolution of the conjugal partnership regime under Article 129 of the Family Code.

---------- difference between ACP and CPG regime

G.R. No 176556 / July 4, 2012
REYES, J.

FACTS:
On Oct. 26, 2000, Rita C. Quiao (Rita) filed a complaint for legal separation against Brigido B. Quiao. The RTC ruled in favor of Rita; all of their children, except Letecia who is of legal age, was ordered to remain under the custody of Rita who was adjudged as the innocent spouse. As to the proporties, the ff. is the dispositive portion of the judgment:

Except for the personal and real properties already foreclosed by the RCBC, all the remaining properties, namely:
1)coffee mill in Balongagan, Las Nieves, Agusan del Norte;
2)coffee mill in Durian, Las Nieves, Agusan del Norte;
3)corn mill in Casiklan, Las Nieves, Agusan del Norte;
4)coffee mill in Esperanza, Agusan del Sur;
5)parcel of land with an area of 1,200 square meters located in Tungao, Butuan City;
6)parcel of agricultural land with an area of 5 hectares located in Manila de Bugabos, Butuan City;
7)parcel of land with an area of 84 square meters located in Tungao, Butuan City;
8)Bashier Bon Factory located in Tungao, Butuan City;

shall be divided equally between herein [respondents] and [petitioner] subject to the respective legitimes of the children and the payment of the unpaid conjugal liabilities of [P]45,740.00.

[Petitioner’s] share, however, of the net profits earned by the conjugal partnership is forfeited in favor of the common children.

Neither party filed an MR nor an appeal. On Dec.12, 2005, the respondents filed a motion for execution which the trial court granted, and a writ was issued. On July 6, 2006, the writ was partially executed with the petitioner paying the respondents the following:
(a) P22,870.00 – as petitioner's share of the payment of the conjugal share;
(b) P19,000.00 – as attorney's fees; and
(c) P5,000.00 – as litigation expenses.

On July 7, 2006, or after more than nine months from the promulgation of the Decision, the petitioner filed before the RTC a Motion for Clarification, asking the RTC to define the term “Net Profits Earned.”

Thus, the RTC explained that the phrase “NET PROFIT EARNED” denotes “the remainder of the properties of the parties after deducting the separate properties of each [of the] spouse and the debts.” The Order further held that after determining the remainder of the properties, it shall be forfeited in favor of the common children because the offending spouse does not have any right to any share of the net profits earned, pursuant to Articles 63, No. (2) and 43, No. (2) of the Family Code. Thus, the RTC said that there was no blatant disparity when the sheriff intended to forfeit all the remaining properties after deducting the payments of the debts, because only separate properties of the Brigido shall be delivered to him which he has none.

Not satisfied with the Order, the Brigido filed an MR. Consequently, the RTC issued another Order dated November 8, 2006, holding that although the Decision dated October 10, 2005 has become final and executory, it may still consider the Motion for Clarification because Brigido simply wanted to clarify the meaning of “net profit earned.” Furthermore, the same Order held:

ALL TOLD, the Court Order dated August 31, 2006 is hereby ordered set aside. NET PROFIT EARNED, which is subject of forfeiture in favor of [the] parties' common children, is ordered to be computed in accordance [with] par. 4 of Article 102 of the Family Code.
  
Thereafter, Rita filed an MR praying for the correction and reversal of the Order dated November 8, 2006. Thereafter, on January 8, 2007, the trial court had changed its ruling again and granted the respondents' MR whereby the Order dated November 8, 2006 was set aside to reinstate the Order dated August 31, 2006.

Not satisfied with the trial court's Order, Brigido filed on February 27, 2007 this instant Petition for Review under Rule 45.

ISSUES:
What law governs the dissolution and liquidation of the common properties of a couple who got married in 1977 (before the Family Code was enacted) and obtained a decree of legal separation when the Family Code is already in effect?

Can the Family Code be given retroactive effect for purposes of determining the net profits to be forfeited as a result of the decree of legal separation without impairing vested rights acquired under the Old Civil Code?

WON Brigido acquired vested rights over half of the properties of the CPG pursuant to Art. 143 of the Old Civil Code which provides: “All property of the conjugal partnership of gains is owned in common by the husband and wife.” 

HELD: 
1) Article 129 of the Family Code in relation to Article 63(2) of the Family Code
2) No, it cannot be given retroactive effect if it will impair vested rights. However, the Family Code applies in the instant case because there is no vested right that will be impaired. (based on Art. 256 of the Family Code which provides for retroactivity except when vested rights will be impaired)
3) No, he did not.

The Decision dated October 10, 2005 has become final and executory at the time the Motion for Clarification was filed on July 7, 2006.
  
From the foregoing, the petitioner had clearly slept on his right to question the RTC’s Decision dated October 10, 2005.  For 270 days, the petitioner never raised a single issue until the decision had already been partially executed.  Thus at the time the petitioner filed his motion for clarification, the trial court’s decision has become final and executory.  A judgment becomes final and executory when the reglementary period to appeal lapses and no appeal is perfected within such period.  Consequently, no court, not even this Court, can arrogate unto itself appellate jurisdiction to review a case or modify a judgment that became final.

Brigido argues that the decision he is questioning is a void judgment, which “never attains finality and cannot be a source of any right nor any obligation.” But what precisely is a void judgment in our jurisdiction?  When does a judgment becomes void?

“A judgment is null and void when the court which rendered it had no power to grant the relief or no jurisdiction over the subject matter or over the parties or both.” In other words, a court, which does not have the power to decide a case or that has no jurisdiction over the subject matter or the parties, will issue a void judgment or a coram non judice.

The questioned judgment does not fall within the purview of a void judgment.  For sure, the trial court has jurisdiction over a case involving legal separation. The RTC also acquired jurisdiction over the persons of both parties, considering that summons and a copy of the complaint with its annexes were served upon the herein petitioner. Thus, without doubt, the RTC, which has rendered the questioned judgment, has jurisdiction over the complaint and the persons of the parties.

Thus, the judgment, being final and and not void, cannot anymore be disturbed, even if the modification is meant to correct what may be considered an erroneous conclusion of fact or law. In fact, we have ruled that for “[as] long as the public respondent acted with jurisdiction, any error committed by him or it in the exercise thereof will amount to nothing more than an error of judgment which may be reviewed or corrected only by appeal.” Granting without admitting that the RTC's judgment dated October 10, 2005 was erroneous, the petitioner's remedy should be an appeal filed within the reglementary period.  Unfortunately, the petitioner failed to do this.  He has already lost the chance to question the trial court's decision, which has become immutable and unalterable.

Article 129 of the Family Code applies to the present case since the parties' property relation is governed by the system of relative community or conjugal partnership of gains.

Petitioner and respondent tied the marital knot on January 6, 1977.  Since at the time of the exchange of marital vows, the operative law was the Civil Code of the Philippines (R.A. No. 386) and since they did not agree on a marriage settlement, the property relations between the petitioner and the respondent is the system of relative community or conjugal partnership of gains. Under this property relation, “the husband and the wife place in a common fund the fruits of their separate property and the income from their work or industry.” The husband and wife also own in common all the property of the conjugal partnership of gains.

At the time of the dissolution of the petitioner and the respondent's marriage the operative law is already the Family Code, the same applies in the instant case, and the applicable law, in so far as the liquidation of the conjugal partnership assets and liabilities is concerned, is Article 129 of the Family Code in relation to Article 63(2) of the Family Code The latter provision is applicable because according to Article 256 of the Family Code “this Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other law.”

Now, the petitioner asks:  Was his vested right over half of the common properties of the conjugal partnership violated when the trial court forfeited them in favor of his children pursuant to Articles 63(2) and 129 of the Family Code?
No.

In Go, Jr. v. Court of Appeals, we define and explained “vested right” in the following manner:

A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will of the holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency The term “vested right” expresses the concept of present fixed interest which, in right reason and natural justice, should be protected against arbitrary State action, or an innately just and imperative right which enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny.

To be vested, a right must have become a title—legal or equitable—to the present or future enjoyment of property.

October 18, 2005 ABAKADA Guro Party List Officer Samson S. Alcantara, et al. v. The Hon. Executive Secretary Eduardo R. Ermita:
The concept of “vested right” is a consequence of the constitutional guaranty of due process that expresses a present fixed interest which in right reason and natural justice is protected against arbitrary state action; it includes not only legal or equitable title to the enforcement of a demand but also exemptions from new obligations created after the right has become vested.  Rights are considered vested when the right to enjoyment is a present interest, absolute, unconditional, and perfect or fixed and irrefutable.

From the foregoing, it is clear that while one may not be deprived of his “vested right,” he may lose the same if there is due process and such deprivation is founded in law and jurisprudence.

In the present case, the petitioner was accorded his right to due process.  First, he was well-aware that the respondent prayed in her complaint that all of the conjugal properties be awarded to her. In fact, in his Answer, the petitioner prayed that the trial court divide the community assets between the petitioner and the respondent as circumstances and evidence warrant after the accounting and inventory of all the community properties of the parties. Second, when the Decision dated October 10, 2005 was promulgated, the petitioner never questioned the trial court's ruling forfeiting what the trial court termed as “net profits,” pursuant to Article 129(7) of the Family Code. Thus, the petitioner cannot claim being deprived of his right to due process.

Furthermore, we take note that the alleged deprivation of the petitioner's “vested right” is one founded, not only in the provisions of the Family Code, but in Article 176 of the old Civil Code.  This provision is like Articles 63 and 129 of the Family Code on the forfeiture of the guilty spouse's share in the conjugal partnership profits.  The said provision says:

Art. 176.  In case of legal separation, the guilty spouse shall forfeit his or her share of the conjugal partnership profits, which shall be awarded to the children of both, and the children of the guilty spouse had by a prior marriage.  However, if the conjugal partnership property came mostly or entirely from the work or industry, or from the wages and salaries, or from the fruits of the separate property of the guilty spouse, this forfeiture shall not apply.

In case there are no children, the innocent spouse shall be entitled to all the net profits.

From the foregoing, the petitioner's claim of a vested right has no basis considering that even under Article 176 of the Civil Code, his share of the conjugal partnership profits may be forfeited if he is the guilty party in a legal separation case.  Thus, after trial and after the petitioner was given the chance to present his evidence, the petitioner's vested right claim may in fact be set aside under the Civil Code since the trial court found him the guilty party.

Abalos v. Dr. Macatangay, Jr.:
[P]rior to the liquidation of the conjugal partnership, the interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into title until it appears that there are assets in the community as a result of the liquidation and settlement.  The interest of each spouse is limited to the net remainder or “remanente liquido” (haber ganancial) resulting from the liquidation of the affairs of the partnership after its dissolution.  Thus, the right of the husband or wife to one-half of the conjugal assets does not vest until the dissolution and liquidation of the conjugal partnership, or after dissolution of the marriage, when it is finally determined that, after settlement of conjugal obligations, there are net assets left which can be divided between the spouses or their respective heirs.
  
The net profits of the conjugal partnership of gains are all the fruits of the separate properties of the spouses and the products of their labor and industry.

The petitioner inquires from us the meaning of “net profits” earned by the conjugal partnership for purposes of effecting the forfeiture authorized under Article 63 of the Family Code.  He insists that since there is no other provision under the Family Code, which defines “net profits” earned subject of forfeiture as a result of legal separation, then Article 102 of the Family Code applies.

What does Article 102 of the Family Code say?  Is the computation of “net profits” earned in the conjugal partnership of gains the same with the computation of “net profits” earned in the absolute community?

First and foremost, we must distinguish between the applicable law as to the property relations between the parties and the applicable law as to the definition of “net profits.” As earlier discussed, Article 129 of the Family Code applies as to the property relations of the parties. In other words, the computation and the succession of events will follow the provisions under Article 129 of the said Code.

As to the definition of “net profits,” we cannot but refer to Article 102(4) of the Family Code, since it expressly provides that for purposes of computing the net profits subject to forfeiture under Article 43, No. (2) and Article 63, No. (2), Article 102(4) applies. In this provision, net 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.”

Thus, without any iota of doubt, Article 102(4) applies to both the dissolution of the absolute community regime under Article 102 of the Family Code, and to the dissolution of the conjugal partnership regime under Article 129 of the Family Code. Where lies the difference? As earlier shown, the difference lies in the processes used under the dissolution of the absolute community regime under Article 102 of the Family Code, and in the processes used under the dissolution of the conjugal partnership regime under Article 129 of the Family Code.

Let us now discuss the difference in the processes between the absolute community regime and the conjugal partnership regime.

On Absolute Community Regime:

When a couple enters into a regime of absolute community, the husband and the wife becomes joint owners of all the properties of the marriage. Whatever property each spouse brings into the marriage, and those acquired during the marriage (except those excluded under Article 92 of the Family Code) form the common mass of the couple's properties. And when the couple's marriage or community is dissolved, that common mass is divided between the spouses, or their respective heirs, equally or in the proportion the parties have established, irrespective of the value each one may have originally owned.

Under Article 102 of the Family Code, upon dissolution of marriage,
1) An inventory is prepared, listing separately all the properties of the absolute community and the exclusive properties of each;
2) The debts and obligations of the absolute community are paid out of the absolute community's assets;
----if the community's properties are insufficient, the separate properties of each of the couple will be solidarily liable for the unpaid balance. Whatever is left of the separate properties will be delivered to each of them;
3) The net remainder of the absolute community is its net assets, which shall be divided between the husband and the wife;
----for purposes of computing the net profits subject to forfeiture, 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.
  
 On Conjugal Partnership Regime:

Before we go into our disquisition on the Conjugal Partnership Regime, we make it clear that Article 102(4) of the Family Code applies in the instant case for purposes only of defining “net profit.”  As earlier explained, the definition of “net profits” in Article 102(4) of the Family Code applies to both the absolute community regime and conjugal partnership regime as provided for under Article 63, No. (2) of the Family Code, relative to the provisions on Legal Separation.

Now, when a couple enters into a regime of conjugal partnership of gains under Article 142 of the Civil Code, “the husband and the wife place in common fund the fruits of their separate property and income from their work or industry, and divide equally, upon the dissolution of the marriage or of the partnership, the net gains or benefits obtained indiscriminately by either spouse during the marriage.” From the foregoing provision, each of the couple has his and her own property and debts.  The law does not intend to effect a mixture or merger of those debts or properties between the spouses.  Rather, it establishes a complete separation of capitals.

Considering that the couple's marriage has been dissolved under the Family Code, Article 129 of the same Code applies in the liquidation of the couple's properties in the event that the conjugal partnership of gains is dissolved. (See Art. 129)

In the normal course of events, the following are the steps in the liquidation of the properties of the spouses:

(a) An inventory of all the actual properties shall be made, separately listing the couple's conjugal properties and their separate properties. In the instant case, the trial court found that the couple has no separate properties when they married. Rather, the trial court identified the conjugal properties as stated above (coffee mills, corn mills, etc.)

(b) Ordinarily, the benefit received by a spouse from the conjugal partnership during the marriage is returned in equal amount to the assets of the conjugal partnership; and if the community is enriched at the expense of the separate properties of either spouse, a restitution of the value of such properties to their respective owners shall be made.

(c) Conjugal partnership shall pay the debts of the conjugal partnership; while the debts and obligation of each of the spouses shall be paid from their respective separate properties.  But if the conjugal partnership is not sufficient to pay all its debts and obligations, the spouses with their separate properties shall be solidarily liable.

(d) Now, what remains of the separate or exclusive properties of the husband and of the wife shall be returned to each of them. In the instant case, since it was already established by the trial court that the spouses have no separate properties, there is nothing to return to any of them.  The listed properties above are considered part of the conjugal partnership.  Thus, ordinarily, what remains in the above-listed properties should be divided equally between the spouses and/or their respective heirs. However, since the trial court found the petitioner the guilty party, his share from the net profits of the conjugal partnership is forfeited in favor of the common children, pursuant to Article 63(2) of the Family Code.  Again, lest we be confused, like in the absolute community regime, nothing will be returned to the guilty party in the conjugal partnership regime, because there is no separate property which may be accounted for in the guilty party's favor.
  

The RTC Decision dated October 10, 2005 is AFFIRMED.

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