003 Sunga-Chan v.

CA (Daguman) fact that the levied parcel of land is a conjugal or community property, as the
June 25, 2008 | Velasco Jr., J. | Community Property case may be, of spouses Norberto and Sunga-Chan does not per se vitiate the
levy and the consequent sale of the property. Verily, said property is not
PETITIONER: Lilibeth Sunga-Chan et.al. among those exempted from execution under Section 13, Rule 39 of the
RESPONDENTS: Honorable Court of Appeals Rules of Court.
And it cannot be overemphasized that the TRO issued by the Court on May
SUMMARY: 31, 2005 came after the auction sale in question. Parenthetically, the records
In 1977, Chua and Jacinto Sunga formed a partnership to engage in the show that spouses Sunga-Chan and Norberto were married on February 4,
marketing of liquefied petroleum gas. For convenience, the business, was 1992, or after the effectivity of the Family Code on August 3, 1988. Withal,
registered as a sole proprietorship in the name of Jacinto, albeit the their absolute community property may be held liable for the obligations
partnership arrangement called for equal sharing of the net profit. After contracted by either spouse. Absent any indication otherwise, the use and
Jacinto's death in 1989, his widow, Cecilia Sunga, and married daughter, appropriation by petitioner Sunga- Chan of the assets of Shellite even after
petitioner Lilibeth Sunga-Chan (husband of Norberto Chan), continued with the business was discontinued on May 30, 1992 may reasonably be considered
the business without Chua's consent. Chua's subsequent repeated demands to have been used for her and her husband's benefit.
for accounting and winding up went unheeded, prompting him to file on a
Complaint for Winding Up of a Partnership Affairs, Accounting and DOCTRINE:
damages. A writ of execution could not be immediately implemented Chua, Art. 94 of said Code pertinently provides: Art. 94. The absolute community
inter alia, asked the trial court to commission a certified public accountant of property shall be liable for: (1) x x x x (2) All debts and obligations
(CPA) to undertake the accounting work and inventory of the partnership contracted during the marriage by the designated administrator-spouse for
assets if petitioners refuse to do it within the time set by the court the benefit of the community, or by both spouses, or by one spouse with
Subsequently, the RTC admitted and approved the computation of claims in the consent of the other. (3) Debts and obligations contracted by either
view of petitioners' failure and refusal, despite notice, to appear and submit spouse without the consent of the other to the extent that the family may
an accounting report. Petitioners, on 2002, submitted their own CPA- have been benefited.
certified valuation and accounting report. Thus, it is limited Chua's
entitlement from the winding up of partnership affairs to an aggregate FACTS:
amount of 3.1M pesos. Chua, on the other hand, submitted a new 1. 1977- Chua and Jacinto Sunga formed a partnership engaged in
computation, this time applying simple interest amounting to 8.7M pesos. marketing of liquefied petroleum gas. For convenience, the business
RTC issued a Resolution approving the new computation of claims Chua (Shellite) was registered as a sole proprietorship in the name of Jacinto,
submitted Petitioners sought reconsideration, but their motion was denied by although the partnership arrangement called for equal sharing of the net
the RTC. The the sheriff of Manila levied upon petitioner Sunga-Chan's profit.
property over which a building leased to the Philippine National Bank (PNB) 2. Jacinto died in 1989, his widow, Cecilia Sunga, and married daughter,
stood. In the auction sale of the levied lot, Chua, with a tender of PhP 8 Lilibeth Sunga-Chan, continued the business without Chua’s consent.
million, emerged as the winning bidder. On April 11, 2005, the RTC, via a Chua’s subsequent repeated demands for accounting and winding up was
Resolution, confirmed the sheriff's final deed of sale, ordered the Registry of left unheeded. Chua filed a Complaint for Winding Up the Partnership
Deeds of Manila to cancel TCT No. 208782, and granted a writ of possession Affairs, Accounting, and Damages with Writ pf Preliminary Attachment.
in favor of Chua. On May 31, 2005, the Court issued a TRO, enjoining the 3. The RTC ruled to render an accounting of the assets, income and profits
RTC and the sheriff from enforcing the April 11, 2005 writ of possession. of Shellite since the time of death of Jacinto. Return to the partnership
Whether the absolute community of spouses Lilibeth Sunga-Chan and her any and all properties and profits misapplied and converted by their own
husband Norberto Chan can be lawfully made to answer for the liability of use. To Order to pay the plaintiff shares and interest in the partnership.
Lilibeth Chan under the Judgment? YES. Given the solidary liability of 4. Chua asked the trial court to commission a CPA to undertake the
petitioners to satisfy the judgment award, respondent sheriff cannot really be accounting and inventory of assets. In the report, Chua’s claims
faulted for levying upon and then selling at public auction the property of amounted to 14M pesos. RTC approved this computation.
petitioner Sunga-Chan to answer for the whole obligation of petitioners. The 5. In 2002, the petitioners submitted their own CPA-certified valuation
 which amounted only to 3M pesos. Chua agains submitted a new claimed monthly profits of PhP 35,000, reckoned from 1988 to October
computation, this time applying simple interest, amounted to 8.7M 15, 1992. To petitioners, the imposable rate should only be 6% and
pesos. computed from the finality of the RTC's underlying decision, i.e., from
6. 2006- RTC issued a Resolution rejecting the accounting report of the December 20, 2001. Third on the petitioners' list of unliquidated claims
petitioners and accepted Chua’s new computation. MR for the is the yet-to-be established value of the one-half partnership share and
petitioners was denied. interest adjudicated to Chua, which, they submit, must first be
7. Petitioners went to the CA on a petitioner for certiorari under Rule 65 determined with reasonable certainty in a judicial proceeding. And in this
assailing the RTC Resolution. However, CA denied the petition for lack regard, petitioners, citing Eastern Shipping Lines, Inc. v. Court of Appeals,29
of merit. would ascribe error on the RTC for adding a 12% per annum interest on
the approved valuation of the one-half share of the assets, inclusive of
ISSUE/s: goodwill, due Chua.
1. Whether the RTC can impose interest on a final judgment of 5. Petitioners are partly correct. As may be recalled, the trial court admitted
unliquidated claims? Partially Granted. Anent the impasse over the and approved Chua's computation of claims amounting to PhP
partnership assets, we are inclined to agree with petitioners' assertion that 8,733,644.75, but rejected that of petitioners, who came up with the
Chua's share and interest on such assets partake of an unliquidated claim figure of only PhP 3,154,736.65. We highlight the substantial differences
which, until reasonably determined, shall not earn interest for him. As in the accounting reports on the following items, to wit: (1) the aggregate
may be noted, the legal norm for interest to accrue is "reasonably amount of the partnership assets bearing on the 50% share of Chua
determinable," not, as Chua suggested and the CA declared, thereon; (2) interests added on Chua's share of the assets; (3) amount of
determinable by mathematical computation. profits from 1988 through May 30, 1992, net of alleged payments made
2. Whether the obligation is divisible? NO. The continuance of the to Chua; and (4) interests added on the amount entered as profits.
business and management of Shellite by petitioners against the will of 6. From the foregoing submitted valuation reports, there can be no dispute
Chua gave rise to a solidary obligation, the acts complained of not being about the goodwill earned thru the years by Shellite. In fact, the parties,
severable in nature by their own judicial admissions, agreed on the monetary value, i.e., PhP
3. Whether the absolute community of spouses Lilibeth Sunga-Chan and 250,000, of this item. Clearly then, petitioners contradict themselves
her husband Norberto Chan can be lawfully made to answer for the when they say that such amount of goodwill is without basis. Thus, the
liability of Lilibeth Chan under the Judgment? YES. Parenthetically, the Court is loathed to disturb the trial court's approval of the amount of
records show that spouses Sunga-Chan and Norberto were married on PhP 250,000, representing the monetary value of the goodwill, to be paid
February 4, 1992, or after the effectivity of the Family Code on August to Chua. Needless to stress, it is not the duty of the Court, not being a
3, 1988. Withal, their absolute community property may be held liable trier of facts, to analyze or weigh all over again the evidence or premises
for the obligations contracted by either spouse. supportive of such determination, absent, as here, the most compelling
and cogent reasons.
7. This brings us to the question of the propriety of the imposition of
RULING: Judgment in question is partially granted. interest and, if proper, the imposable rate of interest applicable.
8. The norm to be followed in the future on the rates and application
RATIO: thereof is:
9. When an obligation, regardless of its source, is breached, the contravenor
A. Interest on Unliquidated Claims can be held liable for damages. The provisions under Title XVIII on
"Damages" of the Civil Code govern in determining the measure of
4. Petitioners, citing Article 2213 of the Civil Code, fault the trial court for recoverable damages. II. - With regard particularly to an award of interest
imposing, in the execution of its final judgment, interests on what they in the concept of actual and compensatory damages, the rate of interest,
considered as unliquidated claims. Among these was the claim for as well as the accrual thereof, is imposed, as follows:
goodwill upon which the RTC attached a monetary value of PhP 10. When the obligation breached consists in the payment of a sum of
250,000. Petitioners also question the imposition of 12% interest on the money, i.e., a loan or forbearance of money, the interest due should be
 that which may have been stipulated in writing. Furthermore, the interest 15. The Court has certainly not lost sight of the fact that the October 7, 1997
due shall itself earn legal interest from the time it is judicially demanded. RTC decision clearly directed petitioners to render an accounting,
In the absence of stipulation, the rate of interest shall be 12% per annum inventory, and appraisal of the partnership assets and then to wind up
to be computed from default, i.e., from judicial or extrajudicial demand the partnership affairs by restituting and delivering to Chua his one-half
under and subject to the provisions of Article 1169 of the Civil Code. share of the accounted partnership assets. The directive itself is a
11. When an obligation not constituting loans or forbearance of money is recognition that the exact share and interest of Chua over the partnership
breached, an interest on the amount of damages awarded may be cannot be determined with reasonable precision without going through
imposed at the discretion of the court at the rate of 6% per annum. No with the inventory and accounting process. In fine, a liquidated claim
interest, however, shall be adjudged on unliquidated claims or damages cannot validly be asserted without accounting. In net effect, Chua's
except when or until the demand can be established with reasonable interest and share over the partnership asset, exclusive of the goodwill,
certainty. Accordingly, where the demand is established with reasonable assumed the nature of a liquidated claim only after the trial court, through
certainty, the interest shall begin to run from the time the claim is made its November 6, 2002 resolution, approved the assets inventory and
judicially or extrajudicially (Art. 1169, Civil Code) but when such accounting report on such assets.
certainty cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the judgment of B. Indivisible Obligation
the court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for the 1. Petitioners, on the submission that their liability under the RTC decision
computation of legal interest shall, in any case, be on the amount finally is divisible, impugn the implementation of the amended writ of
adjudged. execution, particularly the levy on execution of the absolute community
12. When the judgment of the court awarding a sum of money becomes final property of spouses petitioner Sunga-Chan and Norberto Chan. Joint,
and executory, the rate of legal interest, whether the case falls under instead of solidary, liability for any and all claims of Chua is obviously
paragraph 1 or paragraph 2, above, shall be 12% per annum from such petitioners' thesis. Under the circumstances surrounding the case, we
finality until its satisfaction, this interim period being deemed to be by hold that the obligation of petitioners is solidary for several reasons. For
then an equivalent to a forbearance of credit. one, the complaint of Chua for winding up of partnership affairs,
13. Guided by the foregoing rules, the award to Chua of the amount accounting, appraisal, and recovery of shares and damages is clearly a suit
representing earned but unremitted profits, i.e.. PhP 35,000 monthly, to enforce a solidary or joint and several obligation on the part of
from January 1988 until May 30, 1992, must earn interest at 6% per petitioners. As it were, the continuance of the business and management
annum reckoned from October 7, 1997, the rendition date of the RTC of Shellite by petitioners against the will of Chua gave rise to a solidary
decision, until December 20, 2001, when the said decision became final obligation, the acts complained of not being severable in nature. Indeed,
and executory. Thereafter, the total of the monthly profits inclusive of it is well-nigh impossible to draw the line between when the liability of
the add on 6% interest shall earn 12% per annum reckoned from one petitioner ends and the liability of the other starts. In this kind of
December 20, 2001 until fully paid, as the award for that item is situation, the law itself imposes solidary obligation.
considered to be, by then, equivalent to a forbearance of credit. Likewise, 2. Art. 1207. The concurrence of two or more creditors or of two or more
the PhP 250,000 award, representing the goodwill value of the business, debtors in one and the same obligation does not imply that each one of
the award of PhP 50,000 for moral and exemplary damages, PhP 25,000 the former has a right to demand, or that each of the latter is bound to
attorney's fee, and PhP 25,000 litigation fee shall earn 12% per annum render, entire compliance with the prestation. There is solidary liability
from December 20, 2001 until fully paid. only when the obligation expressly so states, or when the law or the
14. Anent the impasse over the partnership assets, we are inclined to agree nature of the obligation requires solidarity.
with petitioners' assertion that Chua's share and interest on such assets 3. For the other, the duty of petitioners to remit to Chua his half interest
partake of an unliquidated claim which, until reasonably determined, and share of the total partnership assets proceeds from petitioners'
shall not earn interest for him. As may be noted, the legal norm for indivisible obligation to render an accounting and inventory of such
interest to accrue is "reasonably determinable," not, as Chua suggested assets. The need for the imposition of a solidary liability becomes all the
and the CA declared, determinable by mathematical computation. more pronounced considering the impossibility of quantifying how
 much of the partnership assets or profits was misappropriated by each
petitioner.
4. And for a third, petitioners' obligation for the payment of damages and
attorney's and litigation fees ought to be solidary in nature, they having
resisted in bad faith a legitimate claim and thus compelled Chua to
litigate.

C. Community Property is Liable

1. Given the solidary liability of petitioners to satisfy the judgment award,

respondent sheriff cannot really be faulted for levying upon and then
selling at public auction the property of petitioner Sunga-Chan to answer
for the whole obligation of petitioners. The fact that the levied parcel of
land is a conjugal or community property, as the case may be, of spouses
Norberto and Sunga-Chan does not per se vitiate the levy and the
consequent sale of the property. Verily, said property is not among those
exempted from execution under Section 13, Rule 39 of the Rules of
Court.
2. And it cannot be overemphasized that the TRO issued by the Court on
May 31, 2005 came after the auction sale in question. Parenthetically, the
records show that spouses Sunga-Chan and Norberto were married on
February 4, 1992, or after the effectivity of the Family Code on August
3, 1988. Withal, their absolute community property may be held liable
for the obligations contracted by either spouse.
3. Specifically, Art. 94 of said Code pertinently provides: Art. 94. The
absolute community of property shall be liable for: (1) x x x x (2) All
debts and obligations contracted during the marriage by the designated
administrator-spouse for the benefit of the community, or by both
spouses, or by one spouse with the consent of the other. (3) Debts
and obligations contracted by either spouse without the consent of the
other to the extent that the family may have been benefited.
4. Absent any indication otherwise, the use and appropriation by petitioner
Sunga- Chan of the assets of Shellite even after the business was
discontinued on May 30, 1992 may reasonably be considered to have
been used for her and her husband's benefit. It may be stressed at this
juncture that Chua's legitimate claim against petitioners, as readjusted in
this disposition, amounts to only PhP 5,529,392.52, whereas Sunga-
Chan's auctioned property which Chua acquired, as the highest bidder,
fetched a price of PhP 8 million. In net effect, Chua owes petitioner
Sunga-Chan the amount of PhP 2,470,607.48, representing the excess of
the purchase price over his legitimate claims.