G.R. No. 13952 - Ahern vs. Julian

Petitioner William Ahern, in filing voluntary insolvency proceedings, declared that his only assets were his personal clothing (valued at P50) exempt from execution and a claim of P186.67 from his wife, Sofronia Garcia de Ahern, for services rendered as manager of her rice mill.

A judgment creditor, Toribio Julian, objected to Ahern’s discharge on the ground that a specific parcel of land, the rice mill constructed thereon, and the milling business were in fact marital community (bienes gananciales) property and should be subject to the debtor’s liabilities.

Ahern’s earlier career involved managing a garage business in Manila, which later was taken over by a creditor, the International Banking Corporation, due to persistent financial difficulties and significant indebtedness.

Prior to 1913, Ahern accumulated substantial judgment debts (around ten to twelve thousand pesos), involving various creditors including the objector in the current proceedings.

In 1910, a tract of land near Manila was purchased and registered in the name of Ahern’s wife.

The property was later sold and the proceeds of sale were turned over to Ahern for settling debts arising from the garage business, though the specifics of the transaction (date of sale, sale price) remained unclear.

In 1913, following the troubled garage business, Ahern and his wife purchased a tract of land in Cabanatuan, Nueva Ecija, for P13,031.

On this property, a rice mill was constructed with significant investment, totaling around P60,000 for the land, mill construction, and milling equipment.

Both Ahern and his wife managed and operated the rice-milling business, though it reportedly did not prove profitable.

The objector argued that under Article 1407 of the Civil Code, since the property was acquired during the marriage, it is presumed to be communal property subject to the payment of Ahern’s debts.

Petitioner’s counsel contended that the property was actually the separate property of his wife, asserting that the funds used for the Cabanatuan property originated partly from an advance (claimed to be a gift or loan) of P25,000 by the wife’s aunt and partly from loans taken in her name.

The only evidence offered to substantiate this claim was the uncorroborated and internally inconsistent oral testimony of Ahern and his wife.

No documentary or written evidence was introduced to validate the alleged source or the nature (loan, gift, or advance) of the P25,000.

The testimony regarding the source of the funds, the money turned over for the purchase of the Manila tract, and subsequent usage in settling business debts was vague, unspecific, and contradicted by the circumstances surrounding the transactions.

The absence of written evidence, especially given the recent nature of the transactions and the parties’ active involvement, made the testimony inherently unreliable.

Due to the lack of clear, satisfactory, and convincing proof, the statutory presumption that property acquired during the marriage is communal remained un rebutted.

Whether the Cabanatuan property (including the rice mill and the milling business) should be treated as marital community property subject to the petitioner’s debts under Article 1407 of the Civil Code.
Whether the uncorroborated oral testimony asserting that the funds used to acquire the property were separate, coming from the wife’s aunt and personal loans, is sufficient to overcome the statutory presumption of community property.
How the absence of written or documentary evidence affects the civil presumption regarding the communal character of property acquired during the marriage.