Tiofisto Ono vs.

Vicente Yu 614 SCRA 514

Facts: Action for quieting of title initiated by respondent Lim , assert exclusive ownership to the
exclusion of the other.

1. Lim filed in the RTC in Cebu a petition for the reconstitution of the owners duplicate copy
alleging that said OCT had been lost during World War II by his mother Luisa.
2. Lot 943 had been sold in 1937 to Luisa by spouses Ono, the lot registered owners.
3. The deed evidencing the sale had been lost without being registered.
4. Ono, the only legitimate heir of spouses Ono had executed in favor of Luisa a notarized
document denominated as confirmation of sale which was duly filed in the provinsial
assessors office of Cebu.
5. Zosiomo and petitoner Teofisto Ono opposed Lims petition contenting that they had
certificate of title in their possession as the successors in interest of Spouses Ono.
6. On account of Onos opposistion, Lim converted the petition for reconstitution into a
complaint for quieting of title averiing that he and his predecessors had been in actual
possesion of the property since 1937.
7. The Onos in their answer sold to Luisa and that the confir,ation of sale purportedly executed
by antonio was fabricated.
Issue:
1. Whether the averments readily show that the action was neither a direct nor a collateral act?
Held:
The action was neither a direct nor a collateral attact for lim was asserting only that the existing title
registered in the name of the petitioners predecessors had become inoeprative due to the
conveyance of Lims mother and resultantly should be cancelled. Lim did not thereby assail the
validity of the OCT or challenge the judgment . The actions sought the removal of the cloud form
Lims title.

Lucasan vs PDIC 557 SCRA 306

DOCTRINE: To avail of the remedy of quieting of title, two (2) indispensable requisites must concur,
namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance or proceeding claimed to be
casting a cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie
appearance of validity or legal efficacy.

For levied properties sold on public auctions, the right to redeem becomes functus officio on the
date of its expiry, and its exercise after the period is not really one of redemption but a repurchase.
The judgment debtor therefore, no longer has legal or equitable title to or interest in the real property
subject of the action. Thus, he may not avail of the remedy of quieting of title.

FACTS:
Petitioner Inocencio Y. Lucasan (Lucasan) and his wife Julianita Sorbito (now deceased) were the
owners of Lot situated in Bacolod City. Pacific Banking Corporation (PBC) extended a loan to
Lucasan, with Carlos Benares as his co-maker. Lucasan and Benares failed to pay the loan when it
became due and demandable. Consequently, PBC filed a collection case with the RTC of Bacolod
City. The RTC rendered a decision ordering Lucasan and Benares to jointly and severally pay PBC until
the full payment of the obligation. Lucasan failed to pay the monetary award; thus, to satisfy the
judgment, the RTC issued a writ of execution directing the sheriff to effect a levy on the properties
owned by Lucasan and sell the same at public auction. In compliance with the writ, the City Sheriff of
Bacolod issued a Notice of Embargo. Annotated therefore on Lucasans TCTs as prior encumbrances
on the same titles were the mortgages in favor of Philippine National Bank (PNB) and Republic
Planters Bank (RPB) executed to secure Lucasans loans with the banks.

The lots were later sold at a public auction where PBC was awarded the highest bidder. A certificate
of sale was executed in its favor and was registered. Neither PNB nor RPB, the mortgagees, assailed
the auction sale. Lucasan, as well as the mortgagee banks, PNB and RPB, did not redeem the
properties within the redemption period. Nevertheless, PBC did not file a petition for consolidation of
ownership.

Lucasan, through counsel, wrote a letter to the Philippine Deposit Insurance Corporation (PDIC),
PBCs receiver and liquidator seeking the cancellation of the certificate of sale and offering to pay
PBCs claim against Lucasan. Not long thereafter, Lucasan paid his loans with the PNB and RPB.
Consequently, the mortgagee banks executed their respective releases of mortgage, resulting in the
cancellation of the prior encumbrances in favor of PNB and RPB.

Later, PDIC denied Lucasans request for the cancellation of the certificate of sale stating that the
subject lots have already become part of the acquired assets of Pacific Banking Corporation by
virtue of a Certificate of Sale executed by the City Sheriff of Bacolod. That reacquisition of the
subject properties have to be through PDICs public bidding disposal policy.

Lucasan then filed a petition denominated as declaratory relief with the RTC of Bacolod City. He
sought confirmation of his rights provided in the second paragraph of Section 1, Rule 63 of the Rules
of Court in relation to Section 75 of Presidential Decree (P.D.) No. 1529 and pleaded for the lifting
and/or cancellation of the notice of embargo and the certificate of sale, offering to pay as
consideration for the cancellation.

PDIC moved to dismiss the complaint for lack of cause of action. It averred that an action to quiet
title under Section 1 of Rule 63 may only be brought when there is a cloud on, or to prevent a cloud
from being cast upon, the title to real property. It asseverated that a cloud on the title is an
outstanding instrument record, claim, encumbrance or proceeding which is actually invalid or
inoperative, but which may nevertheless impair or affect injuriously the title to property. PDIC
claimed that the notice of embargo was issued pursuant to a writ of execution while the certificate
of sale was executed as a result of a public bidding. Thus, their annotations on the titles were valid,
operative or effective. PDIC asserted that Lucasans petition is nothing but a disguised attempt to
compel PDIC to resell the properties at a reduced price. Accordingly, it prayed for the dismissal of
the petition.

Lucasan opposed the motion. He countered that the subject properties were still in his possession,
and neither PBC nor PDIC instituted an action for consolidation of ownership. Since the certificate of
title was still in his name, he contended that he could pursue all legal and equitable remedies,
including those provided for in Section 1, Rule 63 of the Rules of Court to reacquire the properties. He
also claimed that PDICs policy of disposing the subject properties through public bidding was unjust,
capricious and arbitrary, considering that the judgment debt was lower in amount.

The RTC granted PDICs motion to dismiss, finding the claim of any cloud over the titles of [Lucasan]
to be bereft of basis in fact and in law.

Lucasan filed a motion for reconsideration, but the RTC denied. On appeal, the CA affirmed in toto
the RTC ruling. It declared that Lucasan already lost his right to redeem the properties when he failed
to exercise it within the prescribed period. The effect of such failure was to vest in PBC absolute
ownership over the subject properties. Lucasan sought a reconsideration of the CA Decision, but the
same was denied.

ISSUE:
WON Lucasan has sufficient cause of action for quieting of title. -- NO

HELD:
The requisites of quieting of title are wanting in this case. Quieting of title is a common law remedy for
the removal of any cloud of doubt or uncertainty with respect to real property. To avail of the
remedy of quieting of title, two (2) indispensable requisites must concur, namely: (1) the plaintiff or
complainant has a legal or an equitable title to or interest in the real property subject of the action;
and (2) the deed, claim, encumbrance or proceeding claimed to be casting a cloud on his title must
be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy. Stated differently, the plaintiff must show that he has a legal or at least an equitable title
over the real property in dispute, and that some deed or proceeding beclouds its validity or efficacy.

Admittedly, the subject parcels of land were levied upon by virtue of a writ of execution. They were
later sold on a public auction, awarded to PBC as the highest bidder. A certificate of sale in favor of
PBC was issued. Under the Rules of Court, the judgment debtor or redemptioner had the right to
redeem the property from PBC within twelve (12) months from the registration of the certificate of
sale. With the expiration of the twelve-month period of redemption and no redemption having been
made, the judgment debtor or the redemptioner lost whatever right he had over the land in question.

Lucasan admitted that he failed to redeem the properties within the redemption period, on account
of his then limited financial situation.It was only fifteen (15) years later that he manifested his desire to
reacquire the properties. Clearly thus, he had lost whatever right he had over the subject lots.

The payment of loans made by Lucasan to PNB and RPB cannot, in any way, operate to restore
whatever rights he had over the subject properties. Such payment only extinguished his loan
obligations to the mortgagee banks and the liens which Lucasan claimed were subsisting at the time
of the registration of the notice of embargo and certificate of sale.

Neither can Lucasan capitalize on PBCs failure to file a petition for consolidation of ownership after
the expiration of the redemption period.

Certainly, Lucasan no longer possess any legal or equitable title to or interest over the subject parcels
of land; hence, he cannot validly maintain an action for quieting of title.

Clado-Reyes vs. Sps. Limpe 556 SCRA 400

FACTS: Subject of the present controversy is a 2,445-square meter portion of a certain lot in Guiguinto,
Bulacan covered by Transfer Certificate of Title (TCT) No. RT-32498 (T-199627), having a total lot area
of 20,431 square meters, more or less.

On February 1, 1995, petitioners filed an action to quiet title, reconveyance and damages against
respondents and alleged that they have been occupying the disputed lot since 1945 through their
predecessor-in-interest, Mamerto B. Reyes. They claimed that during his lifetime, Mamerto had
accepted a verbal promise of the former lot owner, Felipe Garcia, to give the disputed lot to him in
exchange for the surrender of his tenancy rights as a tiller thereof.

To prove that Mamerto was a former tenant of Felipe; that during his lifetime he had worked on the
lot; and that he owned and possessed the same, petitioners presented two documents, namely: (1)
Certification dated October 12, 1979 and (2) Pagpapatunay dated November 17, 1982 allegedly
executed by Simeon I. Garcia, the eldest son of Felipe, attesting to such facts. Petitioners also alleged
that whenever respondents visited the lot, respondent Julius Limpe would promise to deliver the
certificate of title to them. However, sometime in October 1994, petitioners received a letter from
respondents asserting ownership over the disputed lot.

In their answer, respondents contended that they are the legal owners of the lot by virtue of a Deed
of Exchange of Real Estate and Deed of Absolute Sale executed on July 5, 1974 and February 28,
1974, respectively, between them and Farm-Tech Industries, Incorporated. To further assert ownership
over the lot, they presented TCT No. T-199627, Tax Declaration Nos. 15172 and 9529 and realty tax
receipts of the lot, which were all registered and declared in their names.

The trial court ruled in favor of respondents. Accordingly, the trial court ordered petitioners to
reconvey the disputed lot to respondents. The Court of Appeals affirmed the trial courts ruling and
upheld respondents title over the disputed lot. Hence, this petition.

ISSUE: WON THE PETITIONERS HAVE A CAUSE OF ACTION TO QUIET TITLE, RECONVEYANCE AND
DAMAGES AGAINST RESPONDENTS.

HELD: The petition lacks merit. PETITION DENIED.

To begin with, an action for quieting of title originated in equity jurisprudence to secure an
adjudication that a claim of title to or an interest in property, adverse to that of the complainant, is
invalid, so that the complainant and those claiming under him may be forever free from any danger
of hostile claim. Thus, our courts are tasked to determine the respective rights of the contending
parties, not only to put things in their proper places, but also to benefit both parties, so that he who
has the right would see every cloud of doubt over the property dissipated, and he could afterwards
without fear introduce the improvements he may desire, to use and even to abuse the property as
he may deem best.

Under Articles 476 and 477 the New Civil Code, there are two indispensable requisites in order that an
action to quiet title could prosper: (1) that the plaintiff or complainant has a legal or an equitable
title to or interest in the real property subject of the action; and (2) that the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.

To prove their case, petitioners merely cited Section 4 of Article XIII of the 1987 Constitution and
Section 2 of the Comprehensive Agrarian Reform Law and stated that their title was founded upon
those provisions. They hardly argued on the matter. Neither was there positive evidence (1) that their
predecessor had legal title, i.e., a certificate of land transfer; (2) that the lot was an agricultural lot
and not a commercial one as contended by respondents; and (3) that they are qualified
beneficiaries under the Agrarian Reform Law. Time and again we have held that a mere allegation is
not evidence, and he who alleges has the burden of proving the allegation with the requisite
quantum of evidence.

Next, the documentary evidence petitioners presented, namely, the Certification and
Pagpapatunay, did not confirm their title over the disputed lot. First, original copies of those
documents were not presented in court. Second, as the appellate court pointed out, Simeon I.
Garcia, the declarant in those documents, was not presented in court to prove the veracity of their
contents. Third, even a cursory examination of those documents would not show any transfer or
intent to transfer title or ownership of the disputed lot from the alleged owner, Felipe Garcia, to
petitioners or their predecessor-in-interest, Mamerto B. Reyes. Fourth, petitioners did not bother to
adduce evidence that Simeon I. Garcia, as the eldest son of the late Felipe Garcia, inherited the
entire lot as to effectively convey title or ownership over the disputed lot, i.e. thru extrajudicial
settlement of the estate of the late Felipe Garcia. Accordingly, we agree that the documents
allegedly executed by Simeon I. Garcia are purely hearsay and have no probative value.

In contrast, respondents presented evidence which clearly preponderates in their favor. First, the
transfer certificate of title, tax declarations and realty tax receipts were all in their names. Second,
pursuant to the Torrens System, TCT No. RT-32498 (T-199627) enjoys the conclusive presumption of
validity and is the best proof of ownership of the lot. Third, although tax declarations or realty tax
receipts are not conclusive evidence of ownership, nevertheless, they are good indicia of possession
in the concept of an owner, for no one in his right mind would be paying taxes for a property that is
not in his actual or at least constructive possession. As we previously held, such realty tax payments
constitute proof that the holder has a claim of title over the property.

Worth stressing, in civil cases, the plaintiff must establish his cause of action by preponderance of
evidence; otherwise, his suit will not prosper. After carefully considering the arguments of the parties,
as well as their respective evidence, we unanimously agree that the petitioners were not able to
prove that they have any legal or equitable title over the disputed lot.

Ragasa vs. Roa 494 SCRA 95 (2006)
Facts:
1. Ragasas filed a complainr against respondents Roa founded in the following allegations.
2. Petitioner entered into a contract with Oakland Developmetn Resourced Corporation for the
purchase in installments of a piece of property with improvements in QC.
3. Plaintiffs took possession of said property and resided thereat with their relatives who
continued to occupy the same
4. Plaintiffs were able to pay for the purchase price of said property. A deed of absolute sale was
executed by and between Oakland and the original owner .
5. Oakland failed to cause the transfer of title ot the plaintiffs. On the part of the plaintiffs all the
while they thought that the Deed of Absolute sale and possessopn of the original of the
owners copy is sufficient proof.
6. During one of her trips and upon learning that the Oakland development was no longer
functional as a corporate entity she decided to cause the transfer of registration of deed
herself.
7. She was surprised to leand from the registry, that the property in question was already sold by
the sheriff to the SPS ROA as highest bidder.

Issue: Whether the petitioners action was already barred by prescription?

Held: The action essentially is one of quieting of title to real property.
"The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one
who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors
remain in actual possession of the land, claiming to be owners thereof, the reason for this rule
being that while the owner in fee continues liable to an action, proceeding, or suit upon the
adverse claim, he has a continuing right to the aid of a court of equity to ascertain and
determine the nature of such claim and its effect on his title, or to assert any superior equity in his
favor. He may wait until his possession is disturbed or his title is attacked before taking steps to
vindicate his right. But the rule that the statute of limitations is not available as a defense to an
action to remove a cloud from title can only be invoked by a complain[ant] when he is in
possession. One who claims property which is in the possession of another must, it seems, invoke
his remedy within the statutory period."


Olviga vs. CA 227 SCRA 330






Sapto vs. Fabian 103 PHIL 383
DOCTRINE: The statute of limitations is not a defense to an action to remove a cloud from title when
complainant is in possession of the property. However, the statute of limitations is a defense when the
property is in anothers possession; the complainant must invoke his remedy within the statutory
period.

FACTS:
Upon his death, Moro was left a parcel of land registered under his name to his children, Samuel,
Constancio, and Ramon.

After Ramons death, Samuel and Constancio executed a deed of sale of a portion of the property
in favor of Fabiana; the sale was approved by the Provincial Governor but was unregistered. Since
1931 when possession of conveyed land was transferred, Fabiana has possessed the property.

After Constancios death, Samuel married Dora and had two children. After Samuels death, his
widow and children filed an action with the Court of First Instance to recover the parcel of land sold
to Fabiana. Trial court held that, although the sale was unregistered, it was valid and binding upon
the parties and also the vendors heirs; trial court ordered the Samuels heirs to execute the
necessary deed of conveyance in Fabianas favor.

Samuels heirs appealed to the Supreme Court claiming that Fabianas action had long prescribed;
twenty years had lapsed since the original sale.

ISSUE:
Whether or not Fabianas action had already prescribed since twenty years had passed since the
original sale. -- NO

HELD:
The statute of limitations is not a defense to an action to remove a cloud from title when complainant
is in possession of the property. However, the statute of limitations is a defense when the property is in
anothers possession; the complainant must invoke his remedy within the statutory period. In this case,
prescription does not run again Fabiana because she already possesses the property. Thus, her
action may prosper.

Tan vs. Valde-Huesa 66 SCRA 61


















NCC: Articles 484-501

Co-ownership
Dailisan vs CA 560 SCRA 351

FACTS: This is a Petition for Review of the Decision and Resolution of the CA which reversed and set
aside the Decision of the RTC-QC.
1. Petitioner filed a Complaint for partition before the RTC- QC, alleging that he
purchased 1/4 of the land of Federico Pugao identified as Lot 16 in Bago Bantay, QC covered
by a TCT.
2. According to petitioner, he had paid Federico several installments which totaled to
P6K. When the mortgage was released, petitioner demanded the execution of a deed of
absolute sale. Instead, Federico proposed to mortgage the property to petitioner as security
for a P10K loan, payable in 3 months, and upon payment of the loan the deed of absolute
sale would be executed.
3. When Petitioner asked for the partition of the lot Federico refused and even sent a
notice of eviction against petitioner.
4. According to Federico, he allowed petitioner and his niece to occupy one 1/4 of his
lot, and admitted that he executed in favor of petitioner a deed of real estate mortgage. The
loan was paid, mortgage cancelled.
5. Federico alleged that petitioner made him sign pages of what the former told him to
be parts of the real estate mortgage. He filed a complaint for falsification and ejectment
against petitioner. He passed away while this case was pending before the trial court.
6. RTC found that respondents failed to disprove the validity of the deed of absolute
sale, ruled in favor of petitioner and ordered the partition of the subject property. MR was
denied.
7. On appeal, CA granted and noted that petitioner should have filed an action for
specific performance to compel Federico to honor the deed of absolute sale; but had
already expired. CA noted that petitioner "filed the instant action for partition simply because
it is not barred by prescription." It ruled that the sale was void because theres no consent and
that there was no proof of payment of the price or consideration. MR was denied. ISSUES:
Was deed of absolute sale valid? HELD:The notarized deed of absolute sale as a public
document has in its favor the presumption of regularity which may only be rebutted by
evidence so clear, strong and convincing as to exclude all controversy as to the falsity of the
certificate. The burden of proof to overcome the presumption lies on the party contesting
such execution. The action or defense for the declaration of the inexistence of a contract
does not prescribe. Respondents' claim is that the deed of sale is a voidable, and not void,
contract because of mistake and/or fraud. Respondents stress Federico's low educational
attainment and inability to understand the English language.
Nevertheless, one of the respondents testified that she was aware of the existence of the deed of
sale way back in 1984. Yet, none of them took any action to annul the deed within the prescribed 4-
year period which expired in 1988.
According to Art. 1332, it would have been incumbent upon petitioner to show that he fully
explained the terms of the contract to Federico if not for a crucial point. Respondents have lost both
their right to file an action for annulment or to set up such nullity of the deed of sale as a defense in
an action to enforce the same.
Respondents were unable to overcome the presumption of validity of the deed of absolute sale as
well as the regularity in its execution.
CA ruled that petitioner's cause of action has prescribed following its conclusion that petitioner's
action is actually one for specific performance, not partition. Interestingly, petitioner suddenly
changed tack and declared that his original action was indeed an action for specific performance.
He should not have gone that far. His objective is to make Federico honor their contract and perform
his obligation to deliver a separate title covering the lot he sold to him but which can be done only
after the portion is segregated from the rest of Federico's property.
Petitioner's action before the RTC was properly captioned as one for partition because there are
sufficient allegations in the complaint that he is a co-owner of the property. The regime of CO-
OWNERSHIP exists when ownership of an undivided thing or right belongs to different persons. By the
nature of a co-ownership, a co-owner cannot point to a specific portion of the property owned in
common as his own because his share therein remains intangible.
The description "undivided 1/4 portion" shows that the portion sold is still undivided and not sufficiently
identified. While the description provides a guide for identifying the location of the lot sold, there was
no indication of its exact metes and bounds. This is the reason why petitioner was constrained to
cause the survey of the property. As a co-owner of the property, therefore, petitioner has the right to
demand partition, a right which does not prescribe.
Ownership of the thing sold is acquired only from the time of delivery, either actual or constructive.
Article 1498 provides that when the sale is made through a public instrument, the execution shall be
equivalent to the delivery of the thing which is the object of the contract, if from the deed the
contrary does not appear or cannot be inferred. The Court notes that Federico had already
delivered the portion he sold to petitioner, subject to the execution of a technical survey, when he
executed the deed of absolute sale, which is a public instrument.
In view of the delivery in law, coupled with petitioner's actual occupation of the portion where his
house stands, all that is needed is its segregation from the rest of the property.
WHEREFORE, the petition is GRANTED. The challenged Decision and Resolution are SET ASIDE, and the
Decision of the RTC-QC is REINSTATED.

Eusebio vs IAC 144 SCRA 1541
FACTS: MELENCIO-HERRERA, J:
The controversy in this case is between 2 co-owners of a parcel of land in La Loma, QC. Petitioner
filed a suit in 1981 against Private Respondent before the CFI-QC for determination of their
participations in the co-ownership, and for actual partition of the LOT. The court gave 611sqm to
petitioner while 200 sqm was given to defendant.
As the manner of dividing the LOT has yet to be determined, and it could not then be known which
buildings have to be cut by a dividing line, the Trial Court simply provided for the demolition of any
building or part claimed by either party, which would be within the area assigned to the other party.
Respondent appealed to IAC which initially affirmed the judgment of the Trial Court in toto. However,
on MR, it rendered a Resolution amending its previous affirmance, holding that Respondent "has the
legal right to retain the house together with its improvements and the possession thereof until full
payment of the value thereof." It is that modification which petitioner has alleged to be erroneous
and which should be set aside.
The LOT was part of a subdivision owned by J.M. Tuazon & Co., It was occupied by
Philip Zinsineth as a lessee since 1924, where he had constructed a house and garage. After
his death, his "leasehold rights" were inherited by his two daughters, the mother of the
contending parties.
The parties concerned agreed that the leasehold rights will be placed in the name
of petitioner to the extent of 383 sqm., and in the name of Fernando J. Santos, Jr., a son of to
the extent of 428 sqm. On that same date, a contract to sell the LOT on installment was
executed by GA, Inc. in favor of petitioner because GA, Inc. wanted to deal only with one
person. However, Rodolfo and Fernando signed an affidavit reading, "That actually the
property was bought by us jointly and the monthly installments shall be paid by us pro-rata to
the area which we are presently occupying. "That it is our understanding that as soon as the
property is fully paid for by us, the same shall be subdivided so as to have two transfer
certificates of title issued to us for our corresponding portions.
Installment payments under the Contract to Sell had not been kept up to date. Thus
a new agreement followed that all overdue monthly installment will be advanced by
petitioner.
Full payment was made to GA, Inc., and TCT was issued solely in the name of
petitioner. FERNANDO was not able to contribute his full share. FERNANDO subsequently
transferred his rights to respondent who is his brother.
In the case instituted by petitioner against respondent, the RTC found that as a result of RODOLFO's
payments made on behalf of FERNANDO, his share in the LOT had to be increased from 383 to 611,
the participation of ROHIMUST was decreased to 200 sqm. That adjudication is now final.
ISSUE: Was the CA correct?
HELD: The Appellate Tribunal erred in invoking Article 546 which prescribes the rights of the possessor
in good faith as regards useful expenses. Article 546 presupposes, but does not establish, possession in
good faith.
The possession of the parties was in the concept of lessees of the LOT, which was not possession in
good faith for purposes of Article 546. Conceding that the parties became co- owners after the
contract to sell was executed, neither co- owner can claim possession in himself of any particular
identified part of the LOT. The possession held by a co-heir of the undivided estate is understood to
be enjoyed in the name of the rest of the heirs. An undivided estate is co-ownership by the heirs. The
ownership of the physically undivided thing pertains to more than one person, thus defined as "the
right of common dominion which two or more persons have in a spiritual part of a thing which is not
physically divided" (Sanchez Roman).
The provision of Article 543 is applicable. Under this provision, after the LOT is actually partitioned,
respondent would be "deemed to have exclusively possessed the part which may be allotted to him
upon the its division " consisting of the definite 200 sqm area assigned to him, together with all
buildings and parts of buildings erected therein
Petitioner can have no claim over such buildings or parts of a building, which improvements
respondent can keep or demolish without paying any compensation. For the same reason, if there
were buildings or parts of a building, found in the definite area assigned to petitioner, he will be
deemed to have been in exclusive possession since the contract of the deed of sale was executed,
and he can keep or demolish these improvements without paying any compensation
WHEREFORE, the Resolution of respondent Court is hereby set aside, and its Decision in the same
case, affirming the judgment of the Trial Court in toto, shall stand without modification. Let this case
be remanded to the Trial Court for actual partition of the LOT between its co-owners under the
provisions of Rule 69 of the Rules of Court.


Art. 472-473
Siari Valley Estate v. Lucasan
97 Phil. 987

DOCTRINE: One who has stolen a part of the stolen money must have taken the larger sum lost by the
offended party. If the commingling of two things is made in bad faith, the one responsible for it will
lose his share.

FACTS:
Siara Valley Estate filed an action to recover 200 head of cattle that were driven to the adjoining
ranch of Lucasan, which the latter denied having appropriated or retained any cattle belonging to
the former. Lucasan alleging that theres no actual evidence on the number of missing bulls and that
plaintiffs cattle comingle with his. Trial Court: Ruled in favor of Siara Valley.

ISSUE:
WON Lucasan can recover his share of the cattle. -- NO

HELD:
Defendants cowboys and even his sons Rafael and Vicente- rounded up and drove plaintiff's cattle
into his pasture; he knew he had plaintiff's cattle, but refused toreturn them despite demands by
plaintiff; he even threatened plaintiff's men when the latter tried to retrieve its animals; he harassed
them with false prosecutions for their attempts to get back the company's animals; he wouldn't allow
plaintiff' s cowboys to get into his pasture to identify its flock; he rebranded several Siari Valley cattle
with his own brand; he sold cattle without registering the sales; after some cattle impounded were
entrusted to his custody as trustee, he disposed of not less than 5 head of cattle among those he
received as such trustee; lastly, he disposed of much more cattle than he had a right to.

One who has stolen a part of the stolen money must have taken the larger sum lost by the offended
party. If the commingling of two things is made in bad faith, the one responsible for it will lose his
share.



Art. 487
Cruz vs. Katapang 544 SCRA 512
FACTS: This petition for review seeks the reversal of the Decision and the Resolution of the CA which
reversed the Decision of the RTC-Taal which had earlier affirmed the Decision of the MCTC-Taal
ordering respondent to vacate and deliver possession of a portion of the lot co- owned by petitioner,
Luz Cruz and Norma Maligaya.
MCTC(for petitioner) RTC (affirmed) CA(reversed)
Petitioner and Norma Maligaya are the co-owners of a parcel of land in Taal, Batangas.
With the consent of Norma, respondent built a house on a lot adjacent to the parcel of land. The
house intruded on a portion of the co- owned property.
Petitioner was surprised to see a part of respondent's house intruding unto a portion of the
co-owned property. She made several demands upon respondent to demolish the intruding structure
and to vacate the portion encroaching on their property. Respondent refused and disregarded her
demands.
Petitioner filed a complaint for forcible entry against respondent before MCTC which
decided in favor of petitioner, ruling that consent of only one of the co- owners is not sufficient to
justify defendant's construction of the house and possession of the portion of the lot in question
RTC affirmed the MCTC's ruling. MR was denied.
Respondent appealed to CA, which reversed the RTC's decision. The CA found no cause of
action for forcible entry because respondent's entry into the property, considering the consent given
by co-owner Norma Maligaya, cannot be characterized as one made through strategy or stealth
which gives rise to a cause of action for forcible entry. MR was denied.
Respondent argues that since Norma Maligaya is residing in the house she built, the issue is
not just possession de facto but also one of possession de jure since it involves rights of co-owners to
enjoy the property. ISSUES: Were the knowledge and consent of a co-owner a valid license to erect
the bungalow on the premises owned pro-indiviso sans consent from the other co-owner? HELD: A
co-owner cannot devote common property to his or her exclusive use to the prejudice of the co-
ownership. A co- owner cannot give valid consent to another to build a house on the co-owned
property, which is an act tantamount to devoting the property to his or her exclusive use.
Article 486 states each co-owner may use the thing owned in common provided he does so in
accordance with the purpose for which it is intended and in such a way as not to injure the interest of
the co-ownership or prevent the other co-owners from using it according to their rights. Giving
consent to a third person to construct a house on the co-owned property will injure the interest of the
co-ownership and prevent other co-owners from using the property in accordance with their rights.
Under Article 491, none of the co-owners shall, without the consent of the others, make alterations in
the thing owned in common. It necessarily follows that none of the co-owners can, without the
consent of the other co-owners, validly consent to the making of an alteration by another person,
such as respondent, in the thing owned in common. Alterations include any act of strict dominion or
ownership and any encumbrance or disposition has been held implicitly to be an act of alteration.
The construction of a house on the co-owned property is an act of dominion. Therefore, it is an
alteration falling under Article 491. There being no consent from all co-owners, respondent had no
right to construct her house on the co-owned property.
Consent of only one co-owner will not warrant the dismissal of the complaint for forcible entry filed
against the builder. The consent given by Norma in the absence of the consent of petitioner DID NOT
VEST upon respondent any right to enter into the co-owned property. Her entry into the property still
falls under the classification "through strategy or stealth".
Entry into the land effected clandestinely without the knowledge of the other co-owners could be
categorized as possession by stealth. As such, respondent's acts constitute forcible entry.
WHEREFORE, the petition is GRANTED. The Decision dated and the Resolution of the CA are REVERSED
and SET ASIDE. The Decision of the Regional Trial Court, Branch 86, Taal, Batangas is REINSTATED.


Plasabas vs. CA 582 SCRA 686

FACTS: NACHURA, J: Assailed in this petition for review on certiorari (Rule 45) are the Decision of the
CA and the Resolution denying reconsideration of the challenged decision.
Petitioners filed a complaint for recovery of title to property with damages before the CFI-
Maasin against respondents. The property subject of the case was a parcel of coconut land in the
name of petitioner Nieves. Petitioners prayed that judgment be rendered confirming their rights and
legal title to the subject property and ordering the defendants to vacate the occupied portion and
to pay damages.
Respondents denied petitioners' allegation of ownership and possession of the premises,
their main defense, that the subject land was inherited by all the parties from their common ancestor,
Francisco Plasabas.
That petitioner Nieves, contrary to her allegations in the complaint, was not the sole and
absolute owner of the land.
Respondents raised in their memorandum that the case should have been terminated at
inception for petitioners' failure to implead indispensable parties, the other co- owners Jose, Victor
and Victoria.
RTC dismissed the case without prejudice for failure to implead the co-owners because final
decree would necessarily affect their rights
Petitioners elevated the case to the CA which affirmed the ruling of the trial court. The CA,
further, declared that the non-joinder of the indispensable parties would violate the principle of due
process, and that Article 487 of the Civil Code could not be applied considering that the complaint
was not for ejectment, but for recovery of title or a reivindicatory action. MR was also denied. ISSUE:
Did CA err in affirming the dismissal of the case without deciding on its merits? HELD: The Court
grants the petition and remands the case to the trial court for disposition on the merits. Article 487
provides that any one of the co-owners may bring an action for ejectment. The article covers all
kinds of actions for the recovery of possession, including an accion publiciana and a reivindicatory
action. A co-owner may file suit without necessarily joining all the other co-owners as co-plaintiffs
because the suit is deemed to be instituted for the benefit of all. Any judgment of the court in favor
of the plaintiff will benefit the other co-owners, BUT if the judgment is adverse, the same cannot
prejudice the rights of the unimpleaded co-owners. With this disquisition, there is no need to
determine whether petitioners' complaint is one for ejectment or for recovery of title. To repeat,
Article 487 of the Civil Code applies to both actions.
Thus, petitioners do not have to implead their co-owners as parties. The ONLY EXCEPTION to this rule is
when the action is for the benefit of the plaintiff alone who claims to be the sole owner and is, thus,
entitled to the possession thereof. In such a case, the action will not prosper unless the plaintiff
impleads the other co-owners who are indispensable parties.
Here, the allegation of petitioners that they are the sole owners of the property in litigation is
immaterial, considering that they acknowledged during the trial that the property is co- owned by
Nieves and her siblings, and that petitioners have been authorized by the co-owners to pursue the
case on the latter's behalf. IMPLEADING THE OTHER CO-OWNERS IS NOT MANDATORY because the
suit is deemed to be instituted for the benefit of all.
RE DISMISSAL:
The trial and appellate courts committed reversible error when they summarily dismissed the case.
The rule is settled that the non-joinder of indispensable parties is not a ground for the dismissal of an
action. The remedy is to implead the non-party claimed to be indispensable. Parties may be added
by order of the court on motion of the party or on its own initiative at any stage of the action and/or
at such times as are just.
If petitioner refuses to implead an indispensable party despite the order of the court, the latter may
dismiss the complaint/petition for the plaintiff's/petitioner's failure to comply therewith.
WHEREFORE, premises considered, the instant petition is GRANTED, and the case is REMANDED to the
trial court for appropriate proceedings. The trial court is further DIRECTED to decide on the merits of
the civil case WITH DISPATCH.


Abing vs Waeyan 497 SCRA 402

FACTS: In this appeal by way of a petition for review (Rule 45), petitioner seeks to set aside the
Decision of the CA, reversing that of the RTC-Benguet which affirmed an earlier decision of the MTC-
Mankayan in an ejectment suit commenced by the petitioner against the respondent.
MTC(for petitioner) RTC(affirmed) CA(reversed)
Parties met in 1986 and fell in love. They had a common- law relations. They bought a 2-
storey residential house in Mankayan, Benguet. Consequent to the purchase, the tax declaration was
transferred in the name of respondent.
Respondent left for overseas employment in Korea, and would send money to John who
deposited the same in their joint bank account.
They renovated the house, and annexed a new structure which housed a sari-sari store. This
new structure and the sari-sari store thereat are the properties involved in this case.
In 1995, they parted ways, and decided to partition their properties. They executed a MOA
which was left unsigned by the parties although signed by the witnesses. In this agreement, John shall
leave the couples' dwelling with Juliet paying him the amount of P428,870 representing his share in all
their properties. On the same date Juliet paid John P232,397 as partial payment. The balance will be
paid by Juliet in twelve monthly installment beginning November 1995.
Respondent failed to make good the balance. Thus, Petitioner demanded her to vacate
the annex structure. Respondent refused, prompting John to file an ejectment suit against her before
the MTC.
John alleged that he alone spent for the construction of the annex structure with his own
funds and thru money he borrowed from his relatives. The tax declaration for the structure was under
his name. John claimed exclusive ownership of the subject structure, which gave him the right to
eject Juliet therefrom upon the latter's failure to pay the agreed balance. In her answer, Respondent
countered that their original house was renovated thru their common funds and that the subject
structure annexed thereto was merely an attachment or an extension of their original residential
house, hence the same pertained to the two of them in common.
MTC ruled that the same exclusively pertained to the petitioner.
On respondent's appeal to the RTC, the latter affirmed that of the MTC.
CA reversed that of the RTC, ruling that Juliet Waeyan is entitled to possess the property and
maintain her business. John's cause of action should have been for a sum of money "because he
claims that Juliet still owes him the payment for the extension."
ISSUE: Did CA err in holding that the subject premises is owned by the two of them in common?
HELD: Evidence is wanting to support petitioners naked claim. He even failed to reveal how much he
spent. All that petitioner could offer by way of reinforcing his claim of spending his own funds and
borrowed money in putting up the subject structure was the affidavit executed by a certain Manuel
Macaraeg to the effect that petitioner borrowed P30K from him. But Macaraeg stated in his affidavit
that it was sometime in 1990 when John borrowed said amount from him. The subject structure was
constructed two years after he borrowed P30K, it is even doubtful whether the amount he allegedly
borrowed from the latter went into the construction of the structure in dispute.
There is a paucity of evidence, testimonial or documentary, to support petitioner's self-serving
allegation that the annex structure which housed the sari-sari store was put up thru his own funds
and/or money borrowed by him.
In this connection, Article 147 of the FC is instructive. That in In the absence of proofs to the contrary,
any property acquired by common-law spouses during their period of cohabitation is presumed to
have been obtained thru their joint efforts and is owned by them in equal shares. Their property
relationship is governed by the rules on co- ownership. And under this regime, they owned their
properties in common "in equal shares." Being herself a co-owner of the structure in question,
respondent as ruled by the CA, may not be ejected.
True, under Article 487, a co-owner may bring an action for ejectment against a co-owner who takes
exclusive possession and asserts exclusive ownership of a common property. In this case, evidence is
totally wanting to establish John's or Juliet's exclusive ownership of the property in question. Neither
did Juliet obtain possession by virtue of a contract, express or implied, or thru intimidation, threat,
strategy or stealth. Respondent was in possession of the subject structure and the sari-sari store by
virtue of her being a co-owner thereof. As such, she is as much entitled to enjoy its possession and
ownership as John.
The ruling of the CA that the subject MOA, being unsigned parties, has no binding effect between
them. However, As correctly held by the CA, Juliet's failure to pay John the balance of the latter's
share in their common properties could at best give rise to an action for a sum of money against
Juliet, or for rescission of the said agreement and not for ejectment.
WHEREFORE, the petition is DENIED and the assailed CA Decision is AFFIRMED, except that portion
thereof denying effect to the parties' Memorandum of Agreement for being unsigned by both.


Art. 492
Milencio vs Dy Tiao Luy 55 Phil 100
FACTS: OSTRAND, J: The plaintiffs brought the present action against the defendant-appellee for the
recovery of the possession of a parcel of land in Cabanatuan. The plaintiffs also demand an
increased monthly rental for the use and occupation of the parcel; and if it is found that the said
appellee was occupying the land by virtue of a contract of lease, such contract should be declared
null and void for lack of consent, concurrence, and ratification by the owners.
The defendant alleged that he was occupying the said parcel land by virtue of a contract
of lease executed in favor of his predecessor-in-interest, and which contract is still in force;
That the mother of the plaintiffs, as administratrix of the estate of one of the original co-
owners of the parcel of land, recognized and ratified the existence and validity of the contract
because of the execution of a public document, and by collecting from the assignees of the original
lessee the monthly rent.
It appears from the evidence that the land in question was originally owned by Julian
Melencio. He died leaving his widow, Ruperta Garcia, and his 5 children (Juliana, Ramon, Ruperta,
Pedro, and Emilio). Emilio also died, his minor son Jose P. Melencio succeeded to his interest in the
said parcel of land by representation.
A question has been raised if the land was community property, but the evidence is
undisputed that Ruperta Garcia in reality held nothing but a widow's usufruct in the land.
Ruperta Garcia, and children executed a contract of lease of the land in favor of Yap Kui
Chin, but neither Jose nor Ramon were mentioned in the lease. The term of the lease was for 20
years, extendible for a like period at the option of the lessee.
The lessee took possession of the parcel in question and erected the mill as well as the
necessary buildings, and in matters pertaining to the lease, he dealt with Pedro Melencio who acted
as manager of the property held in common by the heirs of Julian Melencio. The original lessee died
and the lease was transferred twice more before it came into the hands of Dy Tiao Lay.
Ramon (one of Julians children) died, his widow Liberata, was appointed administratrix of
his estate.
The land which includes the parcel in question was registered under the Torrens system. The
lease was not mentioned in the certificate of title, but it was stated that one house and three
warehouses on the land were the property of Yap Kui Chin.
The heirs of Julian made an extrajudicial partition of parts of the inheritance. The land in
question fell to the share of the children of Ramon, who are the original plaintiffs in the present case.
Their mother, Liberta, as administratrix, collected the rent for the lease at P20.20 per month until 1926,
when she demanded of the lessee that the rent should be increased to P300 per month, and she was
then informed by the defendant that a written lease existed and that according to the terms, the
defendant was entitled to an extension of the lease at the original rental. The plaintiffs denied any
knowledge of the existence of such a contract of lease which was executed without their consent
and was void.
A copy of the contract of lease was found among the papers of the deceased Pedro.
This action was brought to SET ASIDE THE LEASE and to RECOVER POSSESSION OF THE LAND. Upon
trial, the court below rendered judgment in favor of the defendant declaring the lease valid.
ISSUE: Was the lease valid?
HELD: The contention of the appellants is that the contract of lease (Exhibit C) is null and void, among
the reason is that calls for an alteration of the property in question, therefore ought to have been
signed by all the co-owners as by law required in the premises.
The first proposition is based on article 397 which provides that "none of the owners shall, without the
consent of the others, make any alterations in the common property even though such alterations
might be advantageous to all."
SC does not think that the alterations are of sufficient importance to nullify the lease, especially so
since none of the co-owners objected to such alterations until over twenty years after the execution
of the contract of lease.
The court below based its decision on the case of Enriquez vs. A. S. Watson & Co but an examination
of the Enriquez case will show that it differs materially from the present.
In that case all of the co-owners of a lot and building executed a contract of lease of the property
for the term of eighteen years in favor of A. S. Watson & Co.; one of the co-owners was a minor, but
he was represented by his legally appointed guardian, and the action of the latter in signing the
lease on behalf of the minor was formally approved by the CFI. In the present case only a small
majority of the co-owners executed the lease in question.
The contract of lease here in question is null and void.
It has been suggested that by reason of prescription and by acceptance of benefits under the lease,
the plaintiffs are estopped to question the authority for making the lease. There is no proof that
Ramon Melencio and his successor over had knowledge of the existence of the lease in question
prior to 1926. We cannot by mere suspicion conclude that they were informed of the existence of the
document and its terms; it must be remembered that under a strict interpretation of the terms of the
lease, the lessees could remain indefinitely in their tenancy unless the lessors could purchase the mill
and the buildings on the land. In such circumstances, better evidence than that presented by the
defendant in regard to the plaintiffs' knowledge of the lease must be required.
The fact that Ramon during his lifetime received his share of the products of land owned in common
with his coheirs is not sufficient proof of knowledge of the existence of the contract of lease when it is
considered that the land in question was only a small portion of a large tract which Pedro was
administering in connection with other community property.
The appealed judgment as to the validity of the lease is therefore REVERSED, and it is ordered that
the possession of the land in controversy be delivered to the intervenor Liberata as administratrix of
the estate of the deceased Ramon Melencio.
It is further ordered that the defendant pay to said administratrix a monthly rent of P50 for the
occupation of the land from May 1st, 1926, until the land is delivered to the administratrix.
The sum of P272 demanded by the defendant in his counterclaim may be deducted from the total
amount of the rent due and unpaid. The buildings erected on the land by the defendant and his
predecessors in interest may be removed by him, or otherwise disposed of, within six months from the
promulgation of this decision.
Separate Opinions JOHNSON, J.: I reserve my vote. STREET and VILLAMOR, JJ., dissenting:
Although the name of Ramon Melencio, father of the plaintiffs in this action, was not in fact signed to
the lease in question, and the lease did not even so much as mention him as one of the co-owners,
the undersigned are nevertheless of the opinion that Ramon Melencio, and his children after him, are
estopped from questioning said lease, for the reason that, from 1905 to the time of his death in 1914,
Ramon Melencio enjoyed the benefits of the lease, as did his widow and children after him, until
May, 1926, when the widow repudiated the lease, as a preliminary to the bringing of this action by
the plaintiffs. By their acceptance of the benefits of the lease over so long a period, the persons now
questioning the lease and their father, their predecessor in interest, are estopped to question the
authority for making the lease. This estoppel cures the want of the special power contemplated in
article 1548 of the Civil Code.
In addition to the estoppel arising from the acceptance of benefits under the lease, an estoppel
further arises from the fact that Ramon Melencio, during the years following the execution of the
lease, stood and saw the lessees place upon the property improvements of a value of more than
P100K for which reason, also equity will not permit the lease to be disturbed to the prejustice of the
lessee.


Art 493
Republic vs. Heirs of Francisca Dignos-Sorono 549 Scra 58
FACTS: CARPIO-MORALES, J: Assailed via petition for review on certiorari is the decision of the CA
affirming that of the RTC of Lapu-lapu City
Lot Nos. 2296 (A) and 2316 (B) were adjudicated on (1929) by the CFI-Cebu in four equal
shares.
The two lots were not partitioned by the adjudicatees.
The heirs of Tito Dignos, sold (1957) for P2,565.59 the entire two lots to the then Civil
Aeronautics Administration (CAA) via a public instrument entitled "Extrajudicial Settlement and Sale"
without the knowledge of respondents whose predecessors-in-interest were the adjudicatees of the
rest of the 3/4 portion of the two lots.
Mactan Cebu International Airport Authority (MCIAA), erected (1996) a security fence
traversing Lot B and relocated a number of families who had built their dwellings within the airport
perimeter, to a portion of said lot.
Respondents soon asked the agents of MCIAA to cease giving third persons permission to
occupy the lots but the same was ignored.
Respondents filed a Complaint for Quieting of Title, Legal Redemption with Prayer for a Writ
of Preliminary Injunction against MCIAA before the RTC alleging that the existence of the tax
declarations "would cast a cloud on their valid and existing titles" to the lots. They alleged that
"corresponding OCT in favor of the decreed owners were issued, and in all probability, were lost
during the WWII." (This claim was not specifically denied by petitioner).
Respondents further alleged that neither they nor their predecessors-in-interests sold,
alienated or disposed of their shares in the lots of which they have been in continuous peaceful
possession.
Respondents furthermore alleged that neither petitioner nor its predecessor-in-interest had
given them any written notice of its acquisition of the 1/4 share of Tito Dignos.
Petitioner maintained that from the time the lots were sold to CAA, it has been in open,
continuous, exclusive, and notorious possession; through acquisitive prescription (extra ordinary), it
had acquired valid title to the lots since it was a purchaser in good faith and for value; At all events,
petitioner contended that respondents' action was barred by estoppel and laches.
The trial court found for respondents. That respondents and their predecessors-in-interest were in
peaceful and continuous possession of their shares in the lots, and were disturbed only in 1996. The
trial court brushed aside petitioners contention on the ground that registered lands cannot be the
subject of acquisitive prescription.
Neither had respondents' action prescribed, as actions for quieting of title cannot prescribe if the
plaintiffs are in possession of the property in question.
The trial court held that the questioned sale was valid only with respect to Tito Dignos' 1/4 share of
the lots, and that the sale was subject to the right of legal redemption by respondents following
Article 1088 of the Civil Code.
Should any of the heirs sell his hereditary rights to a stranger before partition, any or all of the co-heirs
may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale,
provided they do so within the period of one month from the time they were notified in writing of the
sale by the vendor.
RTC held that the period for legal redemption had not yet lapsed; and the redemption price
should be 1/4 of the purchase price paid by the CAA for the two lots.
CA affirmed the trial court's decision.
ISSUE: Did CA err in affirming the trial court's decision?NO.
HELD: Article 493 provides:
Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in
its enjoyment, except when personal rights are involved. But the effect of the alienation of the
mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him
in the division upon the termination of the co-ownership.
Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner
without the consent of the other co-owners is not null and void. However, only the rights of the co-
owner-seller are transferred, thereby making the buyer a co-owner of the property.
CAA thus acquired only the rights pertaining to the sellers- heirs of Tito Dignos, which is only 1/4
undivided share of the two lots.
RE redemption price Article 1088 applies. The Court may take judicial notice of the increase in value
of the lots. And as mentioned, the heirs of Tito Dignos did not notify respondents about the sale. At
any rate, since the Extrajudicial Settlement and Sale stipulates, thus:
That the HEIRS-VENDORS, their heirs, assigns and successors, undertake and agree to warrant and
defend the possession and ownership of the property/ies herein sold against any and all just claims of
all persons whomsoever and should the VENDEE be disturbed in its possession, to prosecute and
defend the same in the Courts of Justice
petitioner is not without any remedy. This decision is, therefore, without prejudice to petitioner's right
to seek redress against the vendors-heirs of Tito Dignos and their successors- in-interest.
WHEREFORE, the petition is, in light of the foregoing disquisition, DENIED.

Metropolitan Bank and Trust Company vs Pascual 547 SCRA 246

Respondent and Florencia Nevalga got married (1985). Florencia bought from spouses Sering
a 250-sqm lot with a three-door apartment in Makati City. TCT was issued in the name of Florencia,
"married to Nelson Pascual."
Florencia filed a suit for the declaration of nullity of marriage (1994). After trial, the RTC-QC
declared the marriage null and void. The dissolution and liquidation of the ex-spouses' conjugal
partnership of gains followed. The couple did not liquidating their conjugal partnership.
Florencia together with spouses Oliveros, obtained (1997) a PhP58M loan from petitioner
secured by several real estate mortgages (REMs) on their properties, including the subject conjugal
property. Among the documents Florencia submitted was a document denominated as "Waiver"
that respondent purportedly executed (1995), which did not incidentally include the lot in question.
Due to the failure to pay their loan obligation when it fell due, Metrobank initiated
foreclosure proceedings. At the auction sale, Metrobank emerged as the highest bidder.
Respondent got wind of the foreclosure proceedings. Thus, he filed before the RTC a
Complaint to declare the nullity of the mortgage of the disputed property. He alleged that the
property is still conjugal property and was mortgaged without his consent.
Metrobank alleged that the disputed lot was paraphernal, and asserted having approved
the mortgage in good faith.
The RTC Declared the REM Invalid. RTC invoked Art. 116 FC, providing that "all property
acquired during the marriage, whether the acquisition appears to have been made, contracted or
registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is
proved." That the disputed property may not be validly encumbered by Florencia without Nicholson's
consent.
The trial court also declared Metrobank as a mortgagee in bad faith.
Metrobank's MR was denied.
The CA Affirmed with Modification the RTC's Decision. Moral damages and attorney's fees
were ordered deleted. Metrobank moved but was denied reconsideration by the CA.
ISSUE:
a. Did CA err in declaring subject property as conjugal by applying Article 116 FC? NO.
b. Did CA err in not holding that the declaration of nullity of marriage ipso facto dissolved the regime
of community of property of the spouses? NO. Art 493 governs.
HELD:
The Disputed Property is Conjugal
First, while Metrobank is correct in saying that Art. 160 of the Civil Code, the Family Code, is the
applicable legal provision since the property was acquired prior to the enactment of the Family
Code, IT ERRS in its theory that there must be a showing that the property was acquired during
marriage using conjugal funds.
Second, if proof obtains on the acquisition of the property during the existence of the marriage, then
the presumption of conjugal ownership applies. The correct lesson of Francisco and Jocson is that
proof of acquisition during the marital coverture is a condition sine qua non for the operation of the
presumption in favor of conjugal ownership.
Termination of Conjugal Property Regime does not ipso facto End the Nature of Conjugal Ownership
While the declared nullity of marriage severed the marital bond and dissolved the conjugal
partnership, the character of the properties acquired before such declaration continues to subsist as
conjugal properties until and after the liquidation and partition of the partnership.
In Dael v. Intermediate Appellate Court, SC ruled that pending its liquidation following its dissolution,
the conjugal partnership of gains is converted into an implied ordinary co-ownership among the
surviving spouse and the other heirs of the deceased.
In this pre-liquidation scenario, Art. 493 NCC shall govern the property relationship between the
former spouses, where:
Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in
its enjoyment, except when personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him
in the division upon the termination of the co-ownership.
In the case at bar, Florencia constituted the mortgage on the disputed lot (1997), or a little less than
two years after the dissolution of the conjugal partnership, but before the liquidation of the
partnership. What governed the property relations of the former spouses when the mortgage was
given is Art. 493. Under it, Florencia has the right to mortgage or even sell her one-half (1/2) undivided
interest in the disputed property even without the consent of Nicholson.
Therefore, the rights of Metrobank, as mortgagee, are limited only to the 1/2 undivided portion that
Florencia owned. The remaining 1/2 is null and void, Nicholson not having consented to the
mortgage of his undivided half.
WHEREFORE, the petition is PARTLY GRANTED. The appealed Decision of the CA upholding with
modification the Decision of the RTC-Makati City is AFFIRMED with the MODIFICATION that the REM
over the lot covered by TCT No. 156283 of the Registry of Deeds of Makati City is hereby declared
valid only insofar as the pro indiviso share of Florencia thereon is concerned.