G.R. No. L-7476; October 9, 1913
AGUEDA BENEDICTO DE LA RAMA, plaintiff-appellant, vs. ESTEBAN DE LA RAMA, defendant-appellant.

FACTS:
Agueda Benedicto de la Rama filed an action against her husband, Esteban de la Rama, for divorce on the ground of adultery. She also prayed for a division of the conjugal property and alimony pendente lite. Esteban denied the charge and countercharged Agueda with adultery. The trial court ruled in favor of Agueda, granting the divorce, dissolving the conjugal partnership, awarding her P81,042.76 as her share of the conjugal property, and granting P3,200 as alimony. Esteban appealed to the Supreme Court of the Philippine Islands, which reversed the trial court, finding that both parties had committed adultery and thus neither was entitled to a divorce. Agueda then appealed to the Supreme Court of the United States, which reversed the Philippine Supreme Court’s decision. The U.S. Supreme Court held that the Philippine Supreme Court erred in overturning the trial court’s factual findings on adultery and remanded the case for further proceedings consistent with its opinion. Upon remand, the Philippine Supreme Court had to address the remaining assignments of error not previously considered, which pertained to the liquidation and division of the conjugal property.

ISSUE:
1. Whether the Supreme Court of the Philippine Islands, upon remand from the U.S. Supreme Court, should affirm the trial court’s judgment in its entirety, including the property division.
2. Whether the trial court correctly liquidated and divided the conjugal property in accordance with the Civil Code.

RULING:
1. No. The Philippine Supreme Court held that the U.S. Supreme Court’s decision only definitively settled the issue of adultery and the right to a divorce. The U.S. Supreme Court did not review or affirm the trial court’s rulings on the division of conjugal property and alimony. By remanding the case “for further proceedings not inconsistent with this opinion,” the U.S. Supreme Court intended for the Philippine Supreme Court to rule on the remaining unresolved assignments of error related to property division.
2. No, the trial court’s liquidation was procedurally defective. The Court found that the trial court failed to follow the mandatory procedure for liquidating a conjugal partnership under the Civil Code. Specifically, the trial court did not:
Order the creation of an inventory of all partnership property existing at the time of dissolution.
Ensure the proper deductions were made from the inventory in the order prescribed by law (e.g., payment of the wife’s dowry, her paraphernal property, partnership debts, and the husband’s capital).
Base the division on the net remainder of the partnership property after these lawful deductions, as required by Articles 1424 and 1426 of the Civil Code.
Instead, the trial court’s calculation appeared to be based on estimated profits and income, not on the actual property existing at dissolution. The case was remanded to the trial court for proper liquidation proceedings in strict conformity with the Civil Code.

The Court also addressed a specific evidentiary issue, upholding the trial judge’s discretion to reject the contents of an inventory (Exhibit 1) presented by the defendant, finding it unreliable and not reflective of the true state of the conjugal assets.*