Ferrer vs. Ferrer G.R. No. 166496. November 29, 2006.

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9/10/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 508

570 SUPREME COURT REPORTS ANNOTATED


Ferrer vs. Ferrer
*
G.R. No. 166496. November 29, 2006.

JOSEFA BAUTISTA FERRER, petitioner, vs. SPS. MANUEL M.


FERRER & VIRGINIA FERRER and SPS. ISMAEL M. FERRER
and FLORA FERRER, respondents.

Actions; Causes of Action; Elements; Failure to make a sufficient


allegation of a cause of action in the complaint warrants the dismissal
thereof.—Section 1(g) Rule 16 of the 1997 Rules of Civil Procedure makes
it clear that failure to make a sufficient allegation of a cause of action in the
complaint warrants the dismissal thereof. Section 2, Rule 2 of the 1997
Rules of Civil Procedure defines a cause of action as the act or omission by
which a party violates the right of another. It is the delict or the wrongful act
or omission committed by the defendant in violation of the primary right of
the plaintiff. A cause of action has the following essential elements, viz.: (1)
A right in favor of the plaintiff by whatever means and under whatever law
it arises or is created; (2) An obligation on the part of the named defendant
to respect or not to violate such right; and (3) Act or omission on the part of
such defendant in violation of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff for which the latter
may maintain an action for recovery of damages or other appropriate relief.

Husband and Wife; Conjugal Partnerships; Sales; The obligation to


reimburse for the cost of improvements, under Article 120 of the Family
Code, rests on the spouse upon whom ownership of the

_______________

* FIRST DIVISION.

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Ferrer vs. Ferrer

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entire property is vested—there is no obligation on the part of the purchaser


of the property, in case the property is sold by the ownerspouse; When the
cost of the improvement and any resulting increase in value are more than
the value of the property at the time of the improvement, the entire property
of one of the spouses shall belong to the conjugal partnership, subject to
reimbursement of the value of the property of the owner-spouse at the time
of the improvement, otherwise, said property shall be retained in ownership
by the ownerspouse.—Petitioner was not able to show that there is an
obligation on the part of the respondents to respect or not to violate her
right. While we could concede that Civil Case No. 61327 made a reference
to the right of the spouse as contemplated in Article 120 of the Family Code
to be reimbursed for the cost of the improvements, the obligation to
reimburse rests on the spouse upon whom ownership of the entire property
is vested. There is no obligation on the part of the purchaser of the property,
in case the property is sold by the ownerspouse. Indeed, Article 120
provides the solution in determining the ownership of the improvements that
are made on the separate property of the spouses at the expense of the
partnership or through the acts or efforts of either or both spouses. Thus,
when the cost of the improvement and any resulting increase in value are
more than the value of the property at the time of the improvement, the
entire property of one of the spouses shall belong to the conjugal
partnership, subject to reimbursement of the value of the property of the
owner-spouse at the time of the improvement; otherwise, said property shall
be retained in ownership by the owner-spouse, likewise subject to
reimbursement of the cost of the improvement. The subject property was
precisely declared as the exclusive property of Alfredo on the basis of
Article 120 of the Family Code.

PETITION for review on certiorari of the decision and resolution of


the Court of Appeals.

The facts are stated in the opinion of the Court.


Romualdo M. Jubay for petitioner.
Tambio Law Office for private respondents.

572

572 SUPREME COURT REPORTS ANNOTATED


Ferrer vs. Ferrer

CHICO-NAZARIO, J.:

Before this
1
Court is an Appeal by Certiorari which assails the
Decision of the Court of Appeals dated 16 August 2004 in
2
CA-G.R.
SP No. 78525, reversing and setting aside the Order dated 16
December 2002 of the Regional Trial Court (RTC), Mandaluyong
City, Branch 212 in Civil Case No. MC02–1780. 3
The Court of
Appeals ordered the dismissal of the Complaint filed by petitioner
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Josefa Bautista Ferrer against respondents Sps. Manuel M. Ferrer


and Virginia Ferrer, and Sps. Ismael M. Ferrer and Flora Ferrer in
the aforesaid Civil Case No. MC02–1780.
In her Complaint for payment of conjugal improvements, sum of
money, and accounting with prayer for injunction and damages,
petitioner alleged that she is the widow of Alfredo Ferrer (Alfredo),
a half-brother of respondents Manuel M. Ferrer (Manuel) and Ismael
M. Ferrer (Ismael). Before her marriage to Alfredo, the latter
acquired a piece of 4
lot, covered by Transfer Certificate of Title
(TCT) No. 67927. He applied for a loan with the Social Security
System (SSS) to build improvements thereon, including a residential
house and a twodoor apartment building. However, it was during
their marriage that payment of the loan was made using the couple’s
conjugal funds. From their conjugal funds, petitioner posited, they
constructed a warehouse on the lot. Moreover, petitioner averred that
respondent Manuel occupied one door of the apartment building, as
well as the warehouse; however, in September 1991, he stopped
paying rentals thereon, alleging that he had acquired ownership over
the property by virtue of a Deed of Sale executed by Alfredo in
favor of respondents,

_______________

1 Penned by Associate Justice Delilah Vidallon-Magtolis with Associate Justices


Eliezer R. De Los Santos and Arturo D. Brion, concurring; Rollo, pp. 27–35.
2 Id., at pp. 40–41.
3 Records, pp. 1–9.
4 Id., at pp. 11–12.

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Ferrer vs. Ferrer

Manuel and Ismael and their spouses. TCT No. 67927 was
cancelled, and TCT. No. 2728 was issued and registered in the
names of respondents.
It is petitioner’s contention that on 2 October 1989, when her
husband was already bedridden, respondents Ismael and Flora Ferrer
made him sign a document, purported to be his last will and
testament. The document, however, was a Deed of Sale covering
Alfredo’s lot and the improvements thereon. Learning of this
development, Alfredo filed with the RTC of Pasig, a Complaint for
Annulment of the5 said sale against respondents, docketed as Civil6
Case No. 61327. On 22 June 1993, the RTC dismissed the same.
The RTC found that the terms and conditions of the Deed of Sale are
not contrary to law, morals, good customs, and public policy, and
should be complied with by the parties in good faith, there being no
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compelling reason under the law to do otherwise. The dismissal was


affirmed by the Court of Appeals. Subsequently, on 7 November
1994, this Court, in G.R. No. L-117067, finding no reversible error
committed by the appellate court in affirming the dismissal
7
of the
RTC, affirmed the Decision of the Court of Appeals.
Further, in support of her Complaint, petitioner alluded to a
portion of the Decision dated 22 June 1993 of the RTC in Civil Case
No. 61327, which stated, to wit:

“In determining which property is the principal and which is the accessory,
the property of greater value shall be considered the principal. In this case,
the lot is the principal and the improvements the accessories. Since Article
120 of the Family Code provides the rule that the ownership of accessory
follows the ownership of the principal, then the subject lot with all its
improvements became an exclusive and capital property of Alfredo with an
obligation to reim

_______________

5 Entitled, Sps. Alfredo S. Ferrer and Josefa Jimenez Ferrer v. Sps. Ismael R.
Ferrer and Flora C. Ferrer and Sps. Manuel M. Ferrer and Virginia Ferrer.
6 Penned by Jose H. Hernandez; Records, pp. 17–22.
7 Id., at p. 3.

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Ferrer vs. Ferrer

burse the conjugal partnership of the cost of improvements at the time of


liquidation of [the] conjugal partnership. Clearly, Alfredo has all the rights
8
to sell the subject property by himself without need of Josefa’s consent.”

According to petitioner, the ruling of the RTC shows that, when


Alfredo died on 29 September 1999, or at the time of the liquidation
of the conjugal partnership, she had the right to be reimbursed for
the cost of the improvements on Alfredo’s lot. She alleged that the
cost of the improvements amounted to P500,000.00; hence, one-half
thereof should be reimbursed and paid by respondents as they are
now the registered owners of Alfredo’s lot. She averred that
respondents cannot claim lack of knowledge about the fact that the
improvements were constructed using conjugal funds as they had
occupied one of the apartment buildings on Alfredo’s lot, and even
paid rentals to petitioner. In addition, petitioner prayed that
respondents be ordered to render an accounting from September,
1991, on the income of the boarding house constructed thereon
which they had appropriated for themselves, and to remit one-half

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thereof as her share. Finally, petitioner sought from respondents


moral and exemplary damages, litigation and incidental expenses.
9
For their part, respondents filed a Motion to Dismiss, contending
that petitioner had no cause of action against them, and that the
cause of action was barred by prior judgment. 10
On 16 December 2002, the RTC rendered an Order, denying the
Motion to Dismiss. According to the RTC, no pronouncement as to
the improvements constructed on Alfredo’s lot has been made in
Civil Case No. 61327, and the payment of petitioner’s share in the
conjugal partnership
11
constitutes a separate cause of action. A
subsequent Order dated 17

_______________

8 Id., at p. 20.
9 Id., at pp. 201–210.
10 Id., at pp. 244–245.
11 Id., at p. 251.

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Ferrer vs. Ferrer

January 2003 was issued by the RTC, denying respondents’ Motion


for Reconsideration.
Aggrieved, respondents elevated the case to the Court of Appeals
by way of a Petition for Certiorari, alleging grave abuse of
discretion amounting to lack or excess of jurisdiction on the RTC in
denying the dismissal.
On 16 August 2004, the Court of Appeals rendered a Decision
granting the Petition. It held that petitioner’s Complaint failed to
state a cause of action. The appellate court rationalized as follows:

“[W]e believe that the instant complaint is not the proper action for the
respondent to enforce her right of reimbursement of the cost of the
improvement[s] on the subject property. As correctly pointed out by the
petitioners, the same should be made and directed in the settlement 12of estate
of her deceased husband Alfredo Ferrer pursuant to Article 129 of the
Family Code. Such being the case, it ap

_______________

12 Art. 129. Upon the dissolution of the conjugal partnership regime, the following
procedure shall apply:

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

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Amounts advanced by the conjugal partnership in payment of personal debts


(2) and obligations of either spouse shall be credited to the conjugal partnership
as an asset thereof.
(3) Each spouse shall be reimbursed for the use of his or her exclusive funds in
the acquisition of property or for the value of his or her exclusive property,
the ownership of which has been vested by law in the conjugal partnership.
(4) The debts and obligations of the conjugal partnership shall be paid out of the
conjugal 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 paragraph (2) of Article 121.
(5) Whatever remains of the exclusive properties of the spouses shall thereafter
be delivered to each of them.

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Ferrer vs. Ferrer

pears that the complaint herein fails to state a cause of action against the
petitioners, the latter not being the proper parties against whom the subject
action for reimbursement must be directed to. A complaint states a cause of
action where it contains three essential elements of a cause of action,
namely: (1) the legal right of the plaintiff; (2) the correlative obligation of
the defendant, and (3) the act or omission of the defendant in violation of
said legal right. If these elements are absent, the complaint becomes
vulnerable to a motion to dismiss on the ground of failure to state a cause of
action. Albeit the respondent herein has the legal right to be reimbursed of
the cost of the improvements of the subject property, it is not the petitioners
but the estate of her deceased husband which has the obligation to pay the
same. The complaint herein is therefore dismissible for failure to state a
cause of action against the petitioners. Needless to say, the respondent is not
without any further recourse as she may file her claim against the estate of
her deceased husband.

_______________

(6) Unless the owner had been indemnified from whatever source, the loss or
deterioration of movables used for the benefit of the family, belonging to
either spouse, even due to fortuitous event, shall be paid to said spouse from
the conjugal funds, if any.
(7) The net remainder of the conjugal partnership properties shall constitute the
profits, 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 or forfeiture of such share as
provided in this Code.
(8) The presumptive legitimes of the common children shall be delivered upon
the partition in accordance with Article 51.

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(9) In the partition of the properties, the conjugal dwelling and the lot on which
it is situated shall, unless otherwise agreed upon by the parties, be
adjudicated to the 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.

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Ferrer vs. Ferrer

In light of the foregoing, we find that the public respondent committed


grave abuse of discretion in denying13
the petitioners’ motion to dismiss for
failure to state a cause of action.”

Aggrieved, petitioner filed a Motion for Reconsideration thereon.


However, on14
17 December 2004, the Court of Appeals rendered a
Resolution denying the motion.
Hence, the present recourse.
Petitioner submits the following grounds for the allowance of the
instant Petition, to wit:

A. THE HONORABLE COURT OF APPEALS ERRED IN


RULING THAT PETITIONER’S COMPLAINT FAILS TO
STATE A CAUSE OF ACTION AGAINST THE
RESPONDENTS, THE LATTER NOT BEING THE
PROPER PARTIES AGAINST WHOM THE SUBJECT
ACTION FOR REIMBURSEMENT MUST BE
DIRECTED TO.
B. THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT THE PUBLIC RESPONDENT, HON.
RIZALINA T. CAPCO-UMALI, COMMITTED GRAVE
ABUSE OF DISCRETION IN DENYING THE
[RESPONDENTS’] MOTION TO DISMISS 15
FOR
FAILURE TO STATE A CAUSE OF ACTION.

Both arguments raise the sole issue of whether the Court of Appeals
erred in dismissing petitioner’s Complaint for failure to state a cause
of action. 16
Section 1(g) Rule 16 of the 1997 Rules of Civil Procedure
makes it clear that failure to make a sufficient allegation of a

_______________

13 Rollo, pp. 33–34.

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14 Penned by Associate Justice Delilah Vidallon-Magtolis with Associate Justices


Eliezer R. De Los Santos and Monina ArevaloZenarosa, concurring; Rollo, pp. 38–
39.
15 Id., at p. 16.
16 Section 1. Grounds.—Within the time for but before filing the answer to the
complaint or pleading asserting a claim, a motion to dismiss may be made on any of
the following grounds:

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Ferrer vs. Ferrer

cause of action in the complaint warrants the dismissal thereof.


Section 2, Rule 2 of the 1997 Rules of Civil Procedure defines a
cause of action as the act or omission by which a party violates the
right of another. It is the delict or the wrongful act or omission
committed 17
by the defendant in violation of the primary right of the
plaintiff.
A cause of action has the following essential elements, viz.:

(1) A right in favor of the plaintiff by whatever means and


under whatever law it arises or is created;
(2) An obligation on the part of the named defendant to respect
or not to violate such right; and
(3) Act or omission on the part of such defendant in violation
of the right of the plaintiff or constituting a breach of the
obligation

_______________

(a) That the court has no jurisdiction over the person of the defending party;
(b) That the court has no jurisdiction over the subject matter of the claim;
(c) That venue is improperly laid;
(d) That the plaintiff has no legal capacity to sue;
(e) That there is another action pending between the same parties for the same
cause;
(f) That the cause of action is barred by a prior judgment or by the statute of
limitations;
(g) That the pleading asserting the claim states no cause of action;
(h) That the claim or demand set forth in the plaintiff’s pleading has been paid,
waived, abandoned, or otherwise extinguished;
(i) That the claim on which the action is founded is unenforceable under the
provisions of the statute of frauds; and
(j) That a condition precedent for filing the claim has not been complied with.

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17 Danfoss, Incorporated v. Continental Cement Corporation, G.R. No. 143788, 9


September 2005, 469 SCRA 505, 511.

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Ferrer vs. Ferrer

of the defendant to the plaintiff for which the latter may


maintain an action 18
for recovery of damages or other
appropriate relief.

A complaint states a cause19


of action only when it has the three
indispensable elements.
In the determination of the presence of these elements, inquiry is
confined to the four corners of the complaint. 20
Only the statements in
the Complaint may be properly considered. The absence of any of
these elements makes a complaint vulnerable to a Motion
21
to Dismiss
on the ground of a failure to state a cause of action.
After a reading of the allegations contained in petitioner’s
Complaint, we are convinced that the same failed to state a cause of
action.
In the case at bar, petitioner asserts a legal right in her favor by
relying on the Decision of the RTC in Civil Case No. 61327. It can
be recalled that the aforesaid case is an action for Annulment filed
by Alfredo and petitioner against the respondents to seek annulment
of the Deed of Sale, executed by Alfredo in respondents’ favor and
covering the herein subject premises. The Complaint was dismissed
by the RTC, and subsequently affirmed by the Court of Appeals and
by this Court in G.R. No. L-117067.
According to petitioner, while the RTC in Civil Case No. 61327
recognized that the improvements constructed on Alfredo’s lots were
deemed as Alfredo’s exclusive and capital property, the court also
held that petitioner, as Alfredo’s

_______________

18 Swagman Hotels and Travel, Inc. v. Court of Appeals and Neal B. Christian,
G.R. No. 161135, 8 April 2005, 455 SCRA 175, 183.
19 Goodyear Philippines, Inc. v. Anthony Sy and Jose L. Lee, G.R. No. 154554, 9
November 2005, 474 SCRA 427, 435.
20 Concepcion V. Vda. de Daffon v. Court of Appeals, G.R. No. 129017, 436 Phil.
233, 238; 387 SCRA 427, 432 (2002).
21 Victoria J. Ilano v. Hon. Dolores L. Español, G.R. No. 161756, 16 December
2005, 478 SCRA 365, 372.

580

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580 SUPREME COURT REPORTS ANNOTATED


Ferrer vs. Ferrer

spouse, has the right to claim reimbursement from the estate of


Alfredo. It is argued by petitioner that her husband had no other
property, and his only property had been sold to the respondents;
hence, she has the legal right to claim for reimbursement from the
respondents who are now the owners of the lot and the
improvements thereon. In fine, petitioner asseverates that the
Complaint cannot be dismissed on the ground of failure to state a
cause of action because the respondents have the correlative
obligation to pay the value of the improvements.
Petitioner was not able to show that there is an obligation on the
part of the respondents to respect or not to violate her right. While
we could concede that Civil Case No. 61327 made a22reference to the
right of the spouse as contemplated in Article 120 of the Family
Code to be reimbursed for the cost of the improvements, the
obligation to reimburse rests on the spouse upon whom ownership of
the entire property is vested. There is no obligation on the part of the
purchaser of the property, in case the property is sold by the owner-
spouse.

_______________

22 Art. 120. The ownership of improvements, whether for utility or adornment,


made on the separate property of the spouses at the expense of the partnership or
through the acts or efforts of either or both spouses shall pertain to the conjugal
partnership, or to the original owner-spouse, subject to the following rules:
When the cost of the improvement made by the conjugal partnership and any
resulting increase in value are more than the value of the property at the time of the
improvement, the entire property of one of the spouses shall belong to the conjugal
partnership, subject to reimbursement of the value of the property of the owner-
spouse at the time of the improvement; otherwise, said property shall be retained in
ownership by the owner-spouse, likewise subject to reimbursement of the cost of the
improvement.
In either case, the ownership of the entire property shall be vested upon the
reimbursement, which shall be made at the time of the liquidation of the conjugal
partnership.

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Ferrer vs. Ferrer

Indeed, Article 120 provides the solution in determining the


ownership of the improvements that are made on the separate
property of the spouses at the expense of the partnership or through

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the acts or efforts of either or both spouses. Thus, when the cost of
the improvement and any resulting increase in value are more than
the value of the property at the time of the improvement, the entire
property of one of the spouses shall belong to the conjugal
partnership, subject to reimbursement of the value of the property of
the owner-spouse at the time of the improvement; otherwise, said
property shall be retained in ownership by the owner-spouse,
likewise subject to reimbursement of the cost of the improvement.
The subject property was precisely declared as the exclusive
property of Alfredo on the basis of Article 120 of the Family Code.
What is incontrovertible is that the respondents, despite the
allegations contained in the Complaint that they are the buyers of the
subject premises, are not petitioner’s spouse nor can they ever be
deemed as the owner-spouse upon whom the obligation to reimburse
petitioner for her costs rested. It is the owner-spouse who has the
obligation to reimburse the conjugal partnership or the spouse who
expended the acts or efforts, as the case may be. Otherwise stated,
respondents do not have the obligation to respect petitioner’s right to
be reimbursed.
On this matter, we do not find an act or omission on the part of
respondents in violation of petitioner’s rights. The right of the
respondents to acquire as buyers the subject premises from Alfredo
under the assailed Deed of Sale in Civil Case No. 61327 had been
laid to rest. This is because the validity of the Deed of Sale had
already been determined and upheld with finality. The same had
been similarly admitted by petitioner in her Complaint. It can be
said, thus, that respondents’ act of acquiring the subject property by
sale was not in violation of petitioner’s rights. The same can also be
said of the respondents’ objection to reimburse petitioner. Simply, no
correlative obligation exists on the part of the

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Ferrer vs. Ferrer

respondents to reimburse the petitioner. Corollary thereto, neither


can it be said that their refusal to reimburse constituted a violation of
petitioner’s rights. As has been shown in the foregoing, no
obligation by the respondents under the law exists. Petitioner’s
Complaint failed to state a cause of action against the respondents,
and for this reason, the Court of Appeals was not in error in
dismissing the same.
WHEREFORE, the Petition is DENIED. The Decision dated 16
August 2004 and the Resolution dated 17 December 2004 of the
Court of Appeals in CA-G.R. SP. No. 78525 are AFFIRMED. Costs
de oficio.
SO ORDERED.
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Panganiban (C.J., Chairperson), Ynares-Santiago, Austria-


Martinez and Callejo, Sr., JJ., concur.

Petition denied, judgment and resolution affirmed.

Notes.—A spouse who desires to sell real property as such


administrator of the conjugal property must observe the procedure
for the sale of the ward’s estate required of judicial guardians under
Rule 95, 1964 Revised Rules of Court, not the summary judicial
proceedings under the Family Code. (Uy vs. Court of Appeals, 346
SCRA 246 [2000])
In the enforcement of a writ of execution relative to a judgment
arising from a transaction of the husband which did not redound to
the benefit of the family, nor with her consent, the wife is deemed a
stranger to the action and is justified in bringing an independent
action to vindicate her right of ownership over her separate property
which is levied upon. (Naguit vs. Court of Appeals, 347 SCRA 60
[2000])

——o0o——

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