G.R. No. 224946 - Acharon vs. People

Petitioners: Wilhelmina Jovellanos, Mercy Jovellanos-Martinez, and Jose Hermilo Jovellanos.
Respondents: The Court of Appeals and Annette H. Jovellanos, representing herself and as natural guardian for her two minor daughters, Ana Maria and Ma. Jennette, all surnamed Jovellanos.
The case arises as a petition for review on certiorari seeking the reversal of the Court of Appeals’ decision dated June 28, 1991, which modified the Regional Trial Court’s earlier disposition regarding partition and reimbursement of property acquired under a contractual arrangement.

On September 2, 1955, Daniel Jovellanos and Philippine American Life Insurance Company (Philamlife) entered into a contract denominated as a “Lease and Conditional Sale Agreement” covering Lot 8, Block 3 of the Quezon City Community Development Project and a bungalow thereon (locally known as No. 55 South Maya Drive, Philamlife Homes, Quezon City).
The agreement featured a lease period of twenty years at a monthly rental of P288.87, with conditions that if the lessee-vendee’s obligations were fully complied with, ownership would be transferred upon full payment.

Daniel Jovellanos initially married Leonor Dizon, with whom he had three children (the petitioners). Leonor died on January 2, 1959.
Daniel later married Annette H. Jovellanos on May 30, 1967, with whom he had two additional children (the respondents in the suit).
In December 1971, petitioner Mercy Jovellanos married Gil Martinez, and, at Daniel’s behest, they built a house on the back portion of the premises, adding further dimensions to property ownership.

With the stipulated lease amounts fully paid, Philamlife executed a deed of absolute sale to Daniel Jovellanos on January 8, 1975, effectively converting his beneficial title into full legal ownership.
Prior to full payment, Daniel’s rights were only beneficial or expectant under a conditional sale—characterized by a pactum reservati dominii—meaning that despite continuous possession since 1955, full ownership did not vest until the sale was completed in 1975.

The trial court, later affirmed by the Court of Appeals, ruled on several key issues:

Liquidation of the partnerships from Daniel’s first and second marriages, with a directive for reimbursement of amounts advanced from each partnership in acquiring the property.
A partition of the property where:

Annette Jovellanos was declared pro-indiviso owner of one-half (1/2) of the property.
The remaining half was to be divided as one-sixth (1/6) interests among the three other private respondents.

The two-storey house built on the back portion of the property was awarded exclusively to the spouses Gil and Mercy Martinez under Article 448 of the New Civil Code.
The parties were ordered to enter into a partition by proper instruments of conveyance, failing which a partition through commissioners would be arranged.
Payment of attorney’s fees and costs was also mandated.

Payments from September 2, 1955 to January 2, 1959 using conjugal funds of the first marriage.
Payments from January 3, 1959 to May 29, 1967 using Daniel’s capital.
Payments from May 30, 1967 to 1971 using conjugal funds of the second marriage.
Payments from 1972 to January 8, 1975 using conjugal funds of Gil and Mercy Jovellanos-Martinez.

The contract imposed restrictions on the use of the property (e.g., no subleasing, no alteration without approval, etc.) which underscored the non-transfer of full ownership until conditions were met.

Petitioners argued that the property was acquired during the first marriage under an earlier contract and that it is not subject to the Family Code provisions applied to the second marriage’s conjugal partnership.
They also contended that applying the Family Code to determine successional rights impairs their vested rights, having acquired beneficial rights well before the Family Code took effect.

Whether the lot and bungalow covered by the lease and conditional sale agreement should be considered conjugal property of Daniel Jovellanos’ second marriage or whether it remains part of the earlier beneficial property rights.

Whether the provisions of the Family Code, specifically Article 118 concerning reimbursement of amounts advanced by conjugal funds, are applicable in resolving the rights between the petitioners and the respondents.

Determining if the reimbursement directive should affect the partition of the property.

Whether the nature of the “Lease and Conditional Sale Agreement” is purely that of a lease or if it effectively constitutes a contract to sell with a suspensive condition for the transfer of legal title.

Assessing if the beneficial title vested at the time of the agreement or only after full compliance and payment.

Whether the lower courts correctly applied the doctrine of pactum reservati dominii in holding that full ownership was not transferred until the deed of absolute sale was executed upon full payment.