G.R. No. 160762 - Spouses Go vs. Yamane

The subject property is a 750-square-meter lot located at Res. Sec. "K" in Baguio City, originally registered in the name of Muriel Pucay Yamane under Transfer Certificate of Title No. 12491.
The property became involved in litigation due to a motion for execution of a charging lien filed by Atty. Guillermo F. De Guzman in Civil Case No. 1841 involving the Pucay sisters, which sought payment of attorney’s fees in the amount of P10,000.

The property was levied to satisfy the lien and was scheduled for public auction on August 11, 1981.
Four days before the auction, respondent (Leonardo Yamane) filed a Third-Party Claim asserting that the property was conjugal and should not be used to satisfy the personal obligation of the Pucay sisters.
Despite the filing of the third-party claim, the auction proceeded, and the property was sold to spouses Josephine Mendoza Go and Henry Go as highest bidders.
After no redemption occurred within the prescribed one-year period, a Final Sheriff’s Certificate of Sale was issued on August 26, 1982, transferring the title to the petitioners.

On September 4, 1984, respondent filed a Complaint with the Regional Trial Court (RTC) of Baguio City, Civil Case No. 417-R, seeking annulment and cancellation of the auction sale on the ground that the property was conjugal and should not be liable for a personal obligation.
Petitioners moved to dismiss the complaint for res judicata, citing a prior case (LRC Case No. 2288) that had directed the cancellation of the title; however, the trial court denied the motion on November 28, 1984.
In a separate proceeding, on December 28, 1984, Muriel Yamane lodged a Complaint for Damages (Civil Case No. 505-R) against the petitioners and Atty. De Guzman, alleging fraud and misrepresentation in connection with the levy and auction sale.
A joint hearing of Civil Cases Nos. 417-R and 505-R was ordered on May 27, 1985; eventually, Civil Case No. 505-R was dismissed on October 15, 1985, due to non-appearance by Muriel.

In a Decision dated March 25, 1998, the RTC of Baguio City, Branch 4, held that the property was the paraphernal property of the late Muriel Pucay Yamane—not conjugal—because Leonardo Yamane’s name on the title was deemed merely descriptive and not indicative of co-ownership.
Respondent sought to file a Motion for Reconsideration of the RTC decision (filed on May 28, 1998, after a granted request to do so) which was ultimately denied on June 5, 1998.
Dissatisfied with the RTC ruling, respondent elevated the matter to the Court of Appeals (CA) on June 15, 1998.

The CA reversed the RTC’s decision and declared both the Sheriff’s Certificate of Sale (dated August 12, 1981) and the Final Sheriff’s Certificate of Sale (dated August 26, 1982) null and void.
The CA ruled that property purchased during the subsistence of the marriage is presumed to be conjugal under the New Civil Code unless clear, categorical, and convincing evidence is provided to establish it as paraphernal.
As the petitioners failed to prove that Muriel acquired the property with her exclusive funds, the CA maintained that the property was indeed conjugal.

Atty. De Guzman’s services, engaged for the recovery case against Cypress Corporation, were rendered during the marriage, thus connected to the conjugal circumstances.
The respondent’s lack of redemption within the stipulated period was contended as an indication of non-ownership; however, it was explained that his timely filing of the Third-Party Claim (asserting the conjugal nature of the property) should preserve his interest, regardless of the redemption issue.

Whether the CA erred in giving due course to the respondent’s appeal despite it being filed beyond the 15-day reglementary period as mandated by the Rules of Court.
The discussion includes whether exceptional circumstances (such as fraud, accident, mistake, or excusable negligence) justify relaxing the reglementary period to serve substantial justice.

Whether the subject property is conjugal or paraphernal in nature.
The determination hinges on whether clear, categorical, and convincing evidence was provided that the property was acquired solely with the exclusive funds of Muriel, thereby rendering it her paraphernal property, or whether it should be presumed as conjugal because it was acquired during the marriage.
A secondary element involves whether the charging lien for Atty. De Guzman’s fees can be enforced against a conjugal property absent any demonstrated benefit or advantage to the conjugal partnership.