BEATRIZ, ALLAN, MARY ANN, G.R. No.

153029
JOCELYN, WELMA, ROWEL and In a Decision dated November 24, 1998, the trial court dismissed the complaint
SOFRONIO WENDEL II, all Present: concluding that the two parcels of land are owned in common by respondent
surnamed ACRE, and Sofronio. Thereupon, petitioners filed a notice of appeal which was
Petitioners, PUNO, C.J., Chairperson, likewise dismissed by the Court of Appeals in its Resolution of March 11, 2002
SANDOVAL-GUTIERREZ, for lack of merit, finding that In view of the failure of the plaintiffs-appellants to
CORONA, prove by preponderance of evidence their entitlement to the properties in
- versus - AZCUNA, and question, the land covered by TCT No. 100087 is exclusively owned by
GARCIA, JJ. defendant-appellee and with respect to the property covered by TCT No.
116740, the defendant-appellee co-owned such property with her sister Nellie
EVANGELINE YUTTIKKI, Del Mar.
Respondent. Promulgated:
Petitioners contend that the Court of Appeals erred in declaring respondent
September 27, 2007 the owner of the contested properties.

x -------------------------------------------------------------------------------------------x Undeniably, the marriage between respondent and Sofronio is bigamous

DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari under
Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the
Decision[1] dated March 11, 2002 rendered by the Court of Appeals in CA-G.R.
CV No. 64656, entitled Beatriz Acre, et al., plaintiffs-appellants, v.
Evangeline Yuttikki, defendant-appellant.
considering that their union was celebrated while he was still married to
Beatriz. As such, their property regime is covered by Article 148 of the Family
Code providing that all properties acquired by the parties out of their actual
joint contribution of money, property, or industry shall be governed by the rules
on co-ownership.[2] Hence, if there is no contribution from either or both of the
spouses, there can be no co-ownership.[3]
Petitioners failed to present any evidence to establish that Sofronio made an
actual contribution in acquiring the contested properties. Clearly, co-ownership
does not exist here.

Beatriz Acre, petitioner, and Sofronio Acre, Jr. were married on November 8,
1957. Their union produced six children, also petitioners.
Sometime in 1972, Sofronio left the conjugal dwelling because of constant
marital dispute. Later, petitioners found that he married Evangeline Yuttikki,
respondent, on May 18, 1972 while his marriage to Beatriz was still
subsisting. On November 16, 1996, Sofronio died. His union with respondent
lasted for more than 24 years.
During respondents marriage with Sofronio, they acquired the following
properties: (a) a motor vehicle; (b) two parcels of land covered by Transfer
Certificate of Title (TCT) No. 116740 in the name of Evangeline Y. Acre,
married to Sofronio V. Acre, Jr.; (c) and TCT No. 100087 registered in the
names of Evangeline Y. Acre, married to Sofronio V. Acre, Jr. and Nellie Y.
Del Mar, married to Jose Del Mar.
Petitioners filed with the Regional Trial Court, Branch 58, Cebu City, a
complaint for reconveyance and recovery of properties and/or partition with
damages. They alleged that Sofronio alone acquired the subject properties
with his funds.
The Court of Appeals held:
In the instant case, the property covered by TCT No. 100087
contains a recital that the property is registered in the name
of Evangeline Y. Acre, married to Sofronio V. Acre, Jr. On the
other hand, RCT No. 116740 shows that the property
described therein was registered in the names of Evangeline
Y. Acre, married to Sofronio Acre, and Nellie Y. Del Mar,
married to Jose Del Mar. Therefore, the certificates of title on
its face show that the disputed properties were exclusively
owned by defendant-appellee (with respect to TCT No.
100087) and co-owned by the defendant-appellee with her
sister Nellie (with regard to TCT No. 116740). The rule is well-
settled that the words married to preceding Sofronio Acre, Jr.
are merely descriptive of the civil status of the defendant-
appellee.
1
WHEREFORE, we DENY the instant petition and AFFIRM the assailed YNARES-SANTIAGO, J.:
Decision of the Court of Appeals in CA-G.R. CV No. 64656. Costs against
petitioners.
These consolidated petitions for review under Rule 45 of the Revised Rules of
SO ORDERED. Civil Procedure assail the June 4, 2004 decision[1] of the Court of Appeals in
CA-G.R. CV No. 54831, which reversed the decision of the Regional Trial
PHILIPPINE NATIONAL BANK, G.R. No. 164801 Court of Iloilo City, Branch 38, in Civil Case No. 18836, and its August 4, 2004
Petitioner, resolution denying reconsideration thereof.
Present:
Davide, Jr., C.J. (Chairman), The facts are as follows:
- versus - Quisumbing,
Ynares-Santiago, Deogracias, Glicerio, Tomas and Caridad, all surnamed Militar, were
Carpio, and heirs of Estanislao Militar and the registered co-owners of Lot Nos. 3011 and
Azcuna, JJ. 3017 covered by OCT No. T-8238-A (0-16879) and OCT No. 94-(0-16878).
HEIRS OF ESTANISLAO MILITAR
AND DEOGRACIAS MILITAR, On August 16, 1941, Deogracias sold his undivided share in Lot No. 3011 to
represented by TRANQUILINA Pedro Golez, and in Lot No. 3017 to spouses Sofronio and Lourdes Lumagbas.
MILITAR, Golez annotated the sale at the back of the title thereof while spouses
Respondents. Lumagbas caused the subdivision of Lot No. 3017 into Lot No. 3017-A and Lot
No. 3017-B, with Lot No. 3017-A registered in their names under TCT No.
x ----------------------------------------------- x 8239.

SPOUSES JOHNNY LUCERO G.R. No. 165165 Notwithstanding the sale, Deogracias continued to occupy a portion of Lot No.
AND NONA ARIETE, 3011 and Lot No. 3017-B until his death on March 17, 1964. Glicerio died on
Petitioners, March 22, 1939, Tomas on August 20, 1959 and Caridad on April 29, 1957.
Glicerio and Caridad died without issue. Deogracias was survived by
- versus - Teodorico and Remedios, while Tomas was survived by Wenceslao and
Ladislao.
HEIRS OF ESTANISLAO MILITAR,
DEOGRACIAS MILITAR, and However, in a Deed of Absolute Sale dated April 24, 1975,
TRANQUILINA MILITAR (deceased), Deogracias, Glicerio, Tomas and Caridad purportedly sold Lot No. 3011 to
now represented by AZUCENA spouses Rodolfo and Nilda Jalbuna. In another Deed of Sale dated April 25,
MILITAR, FREDDIE MILITAR, 1975, Glicerio, Tomas and Caridad purportedly sold Lot No. 3017-B to the
EDUARDO MILITAR, ROMEO L. same spouses. Consequently, titles to Lot Nos. 3011 and 3017-B were
MILITAR, NELLY LY BOLANIO, Promulgated: cancelled and new titles, TCT Nos. 39083 and 39082, respectively, were
LETICIA LY and DELIA LY SI issued to spouses Jalbuna.
ASOYCO,
Respondents. August 18, 2005 Subsequently, Lot No. 3011 was subdivided into Lot No. 3011-A and
Lot No. 3011-B, with Lot No. 3011-A registered in the name of spouses
x ---------------------------------------------------------------------------------------- x Jalbuna and Lot No. 3011-B in the name of Golez.

On June 5, 1975, spouses Jalbuna mortgaged Lot No. 3017-B to Philippine

National Bank (PNB) as security for a loan. When they defaulted, PNB
extrajudicially foreclosed the mortgage and sold Lot No. 3017-B at public
DECISION auction, with PNB as the highest bidder. Title thereto was consolidated in the
name of PNB and was issued TCT No. T-61465.

2
Thereafter, PNB sold the lot to spouses Johnny and Nona Lucero, who were
issued TCT No. 76938. As the new owners of Lot No. 3017-B, they filed an
ejectment case against Tranquilina, Azucena, Freddie and Eduardo, all
surnamed Militar, the actual occupants therein.
On October 2, 1989, Tranquilina, Azucena, Freddie and Eduardo as
surviving heirs of Teodorico and Deogracias Militar, filed a complaint against
spouses Jalbuna, PNB, and spouses Lucero for Reconveyance of Title,
Annulment of Sale, Cancellation of Titles and Damages. Other heirs of
Deogracias on the side of Remedios filed a complaint-in-intervention to join
the plaintiffs. They prayed for: 1) the declaration of nullity of the two (2) deeds
of sale dated April 24, 1975 and April 25, 1975 covering Lot No. 3011 and Lot
No. 3017-B, respectively; 2) the cancellation of title covering Lot No. 3017-B
in the name of spouses Lucero; 3) the cancellation of title covering Lot No.
3011-A in the name of spouses Jalbuna; 4) the reconveyance of Lot 3011-A
and Lot No. 3017-B to the heirs of Deogracias Militar; and 5) actual, exemplary
and moral damages.[2]
Spouses Jalbuna invoked prescription, non-inclusion of indispensable
parties and lack of cause of action since their predecessor, Deogracias, no
longer had interest over the properties having sold them to third parties.
PNB claimed that it was a mortgaee in good faith and for value; that
the title of spouses Jalbuna was free from all liens and encumbrances when
they secured the loan; and that it conducted verification and inspection of the
property before granting the loan.
Spouses Lucero alleged that the complaint was commenced without
the real party in interest; that the cause of action has prescribed; and that they
were innocent purchasers in good faith and for value.
The trial court rendered a decision[3] dated October 18, 1995,
dismissing the complaint, complaint-in-intevention, as well as the cross claim
of PNB. It held that the case was not brought in the name of all indispensable
parties and although the two (2) deeds of sale were void for being simulated
or fictitious, their nullity cannot be invoked against PNB and spouses Lucero
because they were buyers in good faith. It found that the action for
reconveyance had prescribed as it was filed more than fourteen (14) years
from the execution of the Deeds of Sale covering the disputed properties. An
action for reconveyance prescribes after ten (10) years from the issuance of
title, which operates as a constructive notice.
On appeal, the Court of Appeals reversed the decision of the trial
court. It held that ultimate issue is the propriety of reconveyance and not the
shares of the respective heirs which is proper in a case for partition. Thus, a
final determination of the case can be had despite non-inclusion of other heirs
because their interests may be severed and proceeded with separately.
Further, it held that PNB and spouses Lucero were not buyers in good faith;
and that the action for reconveyance based on implied trust does not prescribe.
The dispositive portion reads as follows:
WHERERFORE, premises considered, the Decision
dated October 18, 1995, of the Regional Trial Court of Iloilo
City, Sixth Judicial Region, Branch 38, in Civil Case No.
18836, is hereby REVERSED and SET ASIDE. The
Certificate of Title covering Lot 3011-A in the names of
Spouses Jalbuna and the Certificate of Title covering Lot
3017-B in the names of Spouses Lucero-Ariete are hereby
declared null and void. Spouses Jalbuna and Spouses
Lucero-Ariete are directed to reconvey the subject properties
to its original owners, namely Glicerio, Tomas and Caridad,
as the undivided property, of the aforestated co-owners.
SO ORDERED.[4]
Hence, the instant consolidated petitions, the resolution of which hinges on
three pivotal questions: 1) whether or not the case was brought by all
indispensable parties; 2) whether or not petitioners PNB and spouses Lucero
were mortgagee and purchasers in good faith, respectively; and 3) whether or
not action for reconveyance has prescribed or is barred by laches.
We are not persuaded by PNBs claim that the case was not brought
by all indispensable parties as other heirs of Glicerio, Tomas and Caridad have
not been named as parties therein.
An indispensable party is one whose interest will be affected by the
court's action in the litigation, and without whom no final determination of the
case can be had. The party's interest in the subject matter of the suit and in
the relief sought are so inextricably intertwined with the other parties' that his
legal presence as a party to the proceeding is an absolute necessity. In his
absence there cannot be a resolution of the dispute of the parties before the
court which is effective, complete, or equitable.[5]
Conversely, a party is not indispensable to the suit if his interest in the
controversy or subject matter is distinct and divisible from the interest of the
other parties and will not necessarily be prejudiced by a judgment which does
complete justice to the parties in court. He is not indispensable if his presence
would merely permit complete relief between him and those already parties to
the action or will simply avoid multiple litigation.[6]
There are two essential tests of an indispensable party: (1) can relief
be afforded the plaintiff without the presence of the other party?; and, (2) can
the case be decided on the merits without prejudicing the rights of the other
party? There is, however, no fixed formula for determining who is an
indispensable party; this can only be determined in the context and by the facts
of the particular suit or litigation.[7]
3

In the case at bar, the ultimate relief sought by the action is the
reconveyance of titles to their rightful owners. The records reveal that prior to
the forgery, the disputed properties were registered in the names of the co-
owners, Glicerio, Tomas and Caridad, whose interests remained undivided.
Thus, if reconveyance of the titles is granted, the titles will revert back to the
estates of the deceased co-owners and not to their individual heirs, whose
interests are divisible and may properly be ventilated in another proceeding.
Therefore, a co-heir may bring such action without necessarily joining all the
other co-heirs as co-plaintiffs because the suit is deemed to be instituted for
the benefit of all. As correctly held by the Court of Appeals:
It should be remembered, nevertheless, that the
ultimate issue herein is the propriety of reconveyance and not
the shares of the respective heirs of the co-owners, the latter
being determined in a case for partition. An action for partition
is the action where co-ownership is declared and the
segregation and conveyance of a determinate portion of the
property is made. The heirs of the co-owners, (Glicerio,
Tomas and Caridad), if there are any, including the appellants
herein may claim their respective shares in an action for
partition. Any claim of interest, by way of succession, from the
co-owners may be severed and proceeded with separately
and a final determination in the action for recoveyance can be
had despite the non-inclusion of other heirs because the
interest of the respective heirs of the co-owners, may be
severed. Corollary, the instant case, may proceed without the
other heirs, if there are any, because they are mere necessary
parties. Moreover, in a co-ownership, the act of one benefits
all the co-owners, unless the former repudiates the co-
ownership. Thus, if the appellants herein prevail in the case
for reconveyance, it will also redound to the benefit of the
other co-owners or co-heirs.[8]
PNB next argues that since Deogracias sold his shares in the disputed
lots, his heirs, herein respondents, do not have a cause of action against it,
spouses Jalbuna and spouses Lucero.
This argument is proper had Deogracias died ahead of the other co-
owners. However, records show that Glicerio, Tomas and Caridad
predeceased Deogracias. Glicerio died on March 22, 1939, Tomas on August
20, 1959, Caridad on April 29, 1957, while Deogracias died on March 17, 1964.
Article 1003 of the Civil Code provides:
Art. 1003. If there are no descendants, ascendants,
illegitimate children, or a surviving spouse, the collateral
relatives shall succeed to the entire estate of the deceased in
accordance with the following articles.
Clearly, when Glicerio and Caridad died intestate and without issue,
their shares in the disputed properties were inherited by Deogracias and
Tomas. It is this portion that respondents, as heirs of Deogracias, have an
interest on and which vested them with personality to institute the present
case.
PNB and spouses Lucero claim to be mortgagee and buyers in good
faith, respectively, since title to Lot No. 3017-B appeared to be free from any
encumbrance. They argue that a person dealing with a registered land may
rely on the correctness of the certificate of title and is not required to go beyond
it to determine the condition of the property.
Whether petitioners are innocent mortgagee or purchasers in good
faith and for value, is a factual matter, which cannot be raised in a petition for
review on certiorari under Rule 45.[9] Settled is the rule that this Court is not a
trier of facts and does not normally embark on a re-examination of the
evidence adduced by the parties during trial.[10] In Heirs of the Late Spouses
Aurelio and Esperanza Balite v. Lim,[11] we held that factual findings of the
Court of Appeals are binding and conclusive upon us. These findings may be
reviewed only under exceptional circumstances such as when the inference is
manifestly mistaken; the judgment is based on a misapprehension of facts;
findings of the trial court contradict those of the appellate court; or the latter
manifestly overlooked relevant and undisputed facts that, if properly
considered, would justify a different conclusion.
The Court of Appeals reversed the decision of the trial court based on
its findings of facts which are in accord with the documents on record. Thus,
we affirm the Court of Appeals finding that petitioners were not mortgagee or
buyers in good faith.
Moreover, the burden of proving the status of a purchaser in good faith
and for value lies upon him who asserts that status.[12] In discharging the
burden, it is not enough to invoke the ordinary presumption of good
faith.[13] The rule is settled that a buyer of real property in possession of
persons other than the seller must be wary and should investigate the rights
of those in possession. Without such inquiry, the buyer can hardly be regarded
as buyer in good faith and cannot have any right over the property.[14]
PNB claims that it conducted the necessary inquiry and investigation
on the subject lot and was convinced that Nilda Jalbuna, as one of the heirs of
Estanislao Militar, had every right to mortgage the same, even if she was not
in actual possession thereof.
However, considering that the land was in the possession of persons
other than the mortgagors, PNB should have inquired whether the possessors
4
knew that the lot is being mortgaged, and the circumstances surrounding the
acquisition of the lot by the mortgagors. Indeed, while PNB is not expected to
conduct an exhaustive investigation on the history of the mortgagors title, it
cannot be excused from the duty of exercising the due diligence required of a
banking institution. In Tomas v. Tomas,[15] we noted that it is standard practice
for banks, before approving a loan, to send representatives to the property
offered as collateral to assess its actual condition and to investigate who are
the real owners thereof. We held that banks are expected to exercise more
care and prudence than private individuals in their dealings, even those
involving registered lands, for their business is affected with public interest.
Verily, PNB was remiss in the exercise of due diligence required of a banking
institution, hence it cannot be considered as mortgagee in good faith.
Neither could spouses Lucero be considered buyers in good faith. As
respondents neighbors, they could have verified the status of the property they
were buying by inquiring from the possessors thereof. This, they failed to do;
hence they cannot be considered buyers in good faith.
As to whether the action for reconveyance has prescribed, we held
in Santos v. Santos,[16] citing Lacsamana v. CA,[17] that the right to file an
action for reconveyance on the ground that the certificate of title was obtained
by means of a fictitious deed of sale is virtually an action for the declaration of
its nullity, which does not prescribe.
In the case at bar, the complaint filed was for the reconveyance of the
properties in question to the estates of Deogracias, Glicerio, Tomas and
Caridad, considering that the deeds of sale were simulated and fictitious. The
complaint thus amounts to an action for declaration of nullity of a void contract,
which does not prescribe.
Neither could laches be successfully invoked. Laches is a doctrine in
equity which has been aptly described as justice outside legality, and applied
only in the absence of, and never against, statutory law. Aequetas nunguam
contravenit legis. The positive mandate of Art. 1410 of the Civil Code
conferring imprescriptibility to actions or defense for the declaration of the
inexistence of a contract should pre-empt and prevail over all abstract
arguments based only on equity. Certainly, laches cannot be set up to resist
the enforcement of an imprescriptible legal right; thus, respondents can validly
vindicate their inheritance despite the lapse of time.[18]
Finally, while certificates of title are indefeasible, unassailable and
binding against the whole world, they merely confirm or record title already
existing and vested. They cannot be used to protect a usurper from the true
owner, nor can they be used for the perpetration of fraud; neither do they
permit one to enrich himself at the expense of others.[19]
WHEREFORE, the petitions are DENIED. The decision of the Court
of Appeals dated June 4, 2004 in CA-G.R. CV No. 54831 and its resolution
dated August 4, 2004, are hereby AFFIRMED in toto.
SO ORDERED.
Spouses ALEXANDER CRUZ and ADELAIDA CRUZ, petitioners, vs.
ELEUTERIO LEIS, RAYMUNDO LEIS, ANASTACIO L. LAGDANO,
LORETA L. CAYONDA and the HONORABLE COURT OF
APPEALS, respondents. Lexj uris
DECISION
KAPUNAN, J.:
Private respondents, the heirs of spouses Adriano Leis and Gertrudes
Isidro,[1] filed an action before the Regional Trial Court (RTC) of Pasig
seeking the nullification of the contracts of sale over a lot executed by
Gertrudes Isidro in favor of petitioner Alexander Cruz, as well as the title
subsequently issued in the name of the latter. Private respondents claimed
that the contracts were vitiated by fraud as Gertrudes was illiterate and
already 80 years old at the time of the execution of the contracts; that the
price for the land was insufficient as it was sold only for P39,083.00 when the
fair market value of the lot should be P1,000.00 per square meter, instead
of P390.00, more or less; and that the property subject of the sale was
conjugal and, consequently, its sale without the knowledge and consent of
private respondents was in derogation of their rights as heirs.
The facts that gave rise to the complaint: Juri smis
Adriano and Gertrudes were married on 19 April 1923. On 27 April 1955,
Gertrudes acquired from the then Department of Agriculture and Natural
Resources (DANR) a parcel of land with an area of one hundred (100)
square meters, situated at Bo. Sto. Nio, Marikina, Rizal and covered by
Transfer Certificate of Title (TCT) No. 42245. The Deed of Sale described
Gertrudes as a widow. On 2 March 1956, TCT No. 43100 was issued in the
name of "Gertrudes Isidro," who was also referred to therein as a "widow."
On 2 December 1973, Adriano died. It does not appear that he executed a
will before his death.
On 5 February 1985, Gertrudes obtained a loan from petitioners, the spouses
Alexander and Adelaida Cruz, in the amount of P15,000.00 at 5% interest,
payable on or before 5 February 1986. The loan was secured by a mortgage
5
over the property covered by TCT No. 43100. Gertrudes, however, failed to
pay the loan on the due date.
Unable to pay her outstanding obligation after the debt became due and
payable, on 11 March 1986, Gertrudes executed two contracts in favor of
petitioner Alexander Cruz. The first is denominated as "Kasunduan," which
the parties concede is a pacto de retro sale, granting Gertrudes one year
within which to repurchase the property. The second is a "Kasunduan ng
Tuwirang Bilihan," a Deed of Absolute Sale covering the same property for
the price of P39,083.00, the same amount stipulated in the "Kasunduan." Jjj
uris
For failure of Gertrudes to repurchase the property, ownership thereof was
consolidated in the name of Alexander Cruz in whose name TCT No. 130584
was issued on 21 April 1987, canceling TCT No. 43100 in the name of
Gertrudes Isidro.
On 9 June 1987, Gertrudes Isidro died. Thereafter, her heirs, herein private
respondents, received demands to vacate the premises from petitioners, the
new owners of the property. Private respondents responded by filing a
complaint as mentioned at the outset.
On the basis of the foregoing facts, the RTC rendered a decision in favor of
private respondents. The RTC held that the land was conjugal property since
the evidence presented by private respondents disclosed that the same was
acquired during the marriage of the spouses and that Adriano contributed
money for the purchase of the property. Thus, the court concluded,
Gertrudes could only sell to petitioner spouses her one-half share in the
property.
The trial court also ruled that no fraud attended the execution of the
contracts. Nevertheless, the "Kasunduan," providing for a sale con pacto de
retro, had superseded the "Kasunduan ng Tuwirang Bilihan," the deed of
absolute sale. The trial court did not consider the pacto de retro sale an
equitable mortgage, despite the allegedly insufficient price. Nonetheless, the
trial court found for private respondents. It rationalized that petitioners failed
to comply with the provisions of Article 1607 of the Civil Code requiring a
judicial order for the consolidation of the ownership in the vendee a retro to
be recorded in the Registry of Property.
The dispositive portion of the RTC's Decision reads: lex
WHEREFORE, in the light of all the foregoing, judgment is
hereby rendered:
1. Declaring Exhibit G "Kasunduan ng Tuwirang Bilihan" Null
and Void and declar[ing] that the title issued pursuant thereto
is likewise Null and Void;
2. Declaring the property in litigation as conjugal property;
3. Ordering the Registry of Deeds of Marikina Branch to
reinstate the title of Gertrudes Isidro;
4. Ordering the plaintiff[s] [sic] to comply with the provision[s]
of Article 1607 in relation to Article 1616 of the Civil Code;
5. Ordering the defendant[s] to pay plaintiff[s] P15,000.00
nominal damages for the violation of plaintiffs rights;
6. Ordering the defendant[s] to pay plaintiff[s] the sum of
P8,000.00 as and for attorneys fees;
7. Dismissing defendant[s'] counterclaim; and
8. Ordering defendant[s] to pay the cost of suit. Jksm
SO ORDERED.[2]
Petitioners appealed to the Court of Appeals in vain. The Court of Appeals
affirmed the decision of the Regional Trial Court, holding that since the
property was acquired during the marriage of Gertrudes to Adriano, the same
was presumed to be conjugal property under Article 160 of the Civil Code.
The appellate court, like the trial court, also noted that petitioner did not
comply with the provisions of Article 1607 of the Civil Code.
Petitioners are now before this Court seeking the reversal of the decision of
the Court of Appeals. First, they contend that the subject property is not
conjugal but is owned exclusively by Gertrudes, who was described in the
Deed of Sale between Gertrudes and the DANR as well as in TCT No. 43100
as a widow. Second, assuming the land was conjugal property, petitioners
argue that the same became Gertrudes exclusively when, in 1979, she
mortgaged the property to the Daily Savings Bank and Loan Association. The
bank later foreclosed on the mortgage in 1981 but Gertrudes redeemed the
same in 1983. Chief
The paraphernal or conjugal nature of the property is not determinative of the
ownership of the disputed property. If the property was paraphernal as
contended by petitioners, Gertrudes Isidro would have the absolute right to
6
dispose of the same, and absolute title and ownership was vested in
petitioners upon the failure of Gertrudes to redeem the property. On the other
hand, if the property was conjugal, as private respondents maintain, upon the
death of Adriano Leis, the conjugal partnership was terminated,[3] entitling
Gertrudes to one-half of the property.[4] Adrianos rights to the other half, in
turn, were transmitted upon his death to his heirs,[5] which includes his widow
Gertrudes, who is entitled to the same share as that of each of the legitimate
children.[6] Thus, as a result of the death of Adriano, a regime of co-
ownership arose between Gertrudes and the other heirs in relation to the
property.
Incidentally, there is no merit in petitioners contention that Gertrudes
redemption of the property from the Daily Savings Bank vested in her
ownership over the same to the exclusion of her co-owners. We dismissed
the same argument by one of the petitioners in Paulmitan vs. Court of
Appeals,[7] where one of the petitioners therein claimed ownership of the
entire property subject of the case by virtue of her redemption thereof after
the same was forfeited in favor of the provincial government for non-payment
of taxes. We held, however, that the redemption of the land "did not
terminate the co-ownership nor give her title to the entire land subject of the
co-ownership." We expounded, quoting our pronouncement in Adille vs.
Court of Appeals:[8]
The petition raises a purely legal issue: May a co-owner
acquire exclusive ownership over the property held in
common? Esmsc
Essentially, it is the petitioners contention that the property
subject of dispute devolved upon him upon the failure of his
co-heirs to join him in its redemption within the period
required by law. He relies on the provisions of Article 1515 of
the old Civil Code, Article 1613 of the present Code, giving
the vendee a retro the right to demand redemption of the
entire property.
There is no merit in this petition.
The right of repurchase may be exercised by a co-owner
with respect to his share alone (CIVL CODE, art. 1612;
CIVIL CODE (1889), art. 1514.). While the records show that
petitioner redeemed the property in its entirety, shouldering
the expenses therefor, that did not make him the owner of all
of it. In other words, it did not put to end the existing state of
co-ownership (Supra, Art. 489). There is no doubt that
redemption of property entails a necessary expense. Under
the Civil Code: Esmmis
Art. 488. Each co-owner shall have a right to compel the
other co-owners to contribute to the expenses of
preservation of the thing or right owned in common and to
the taxes. Any one of the latter may exempt himself from this
obligation by renouncing so much of his undivided interest
as may be equivalent to his share of the expenses and
taxes. No such waiver shall be made if it is prejudicial to the
co-ownership.
The result is that the property remains to be in a condition of
co-ownership. While a vendee a retro, under Article 1613 of
the Code, "may not be compelled to consent to a partial
redemption," the redemption by one co-heir or co-owner of
the property in its totality does not vest in him ownership
over it. Failure on the part of all the co-owners to redeem it
entitles the vendee a retro to retain the property and
consolidate title thereto in his name (Supra, art. 1607). But
the provision does not give to the redeeming co-owner the
right to the entire property. It does not provide for a mode of
terminating a co-ownership.
It is conceded that, as a rule, a co-owner such as Gertrudes could only
dispose of her share in the property owned in common. Article 493 of the
Civil Code provides:
ART. 493. Each co-owner shall have the full ownership of his
part 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. Es-mso
Unfortunately for private respondents, however, the property was registered
in TCT No. 43100 solely in the name of "Gertrudes Isidro, widow." Where a
parcel of land, forming part of the undistributed properties of the dissolved
conjugal partnership of gains, is sold by a widow to a purchaser who merely
relied on the face of the certificate of title thereto, issued solely in the name
of the widow, the purchaser acquires a valid title to the land even as against
the heirs of the deceased spouse. The rationale for this rule is that "a person
dealing with registered land is not required to go behind the register to
determine the condition of the property. He is only charged with notice of the
burdens on the property which are noted on the face of the register or the
certificate of title. To require him to do more is to defeat one of the primary
objects of the Torrens system."[9]
7
As gleaned from the foregoing discussion, despite the Court of Appeals RIZALINO, substituted by his G.R. No. 157493
finding and conclusion that Gertrudes as well as private respondents failed to heirs, JOSEFINA, ROLANDO and
repurchase the property within the period stipulated and has lost all their FERNANDO, ERNESTO,
rights to it, it still ruled against petitioners by affirming the Regional Trial LEONORA, BIBIANO, JR., Present:
Court's decision on the premise that there was no compliance with Article LIBRADO and ENRIQUETA, all
1607 of the Civil Code requiring a judicial hearing before registration of the surnamed OESMER, YNARES-SANTIAGO, J.,
property in the name of petitioners. This provision states: Ms-esm Petitioners, Chairperson,
AUSTRIA-MARTINEZ,
ART. 1607. In case of real property, the consolidation of CALLEJO, SR., and
ownership in the vendee by virtue of the failure of the vendor - versus - CHICO-NAZARIO, JJ.
to comply with the provisions of article 1616 shall not be
recorded in the Registry of Property without a judicial order,
after the vendor has been duly heard. PARAISO DEVELOPMENT Promulgated:
CORPORATION,
The aforequoted article is intended to minimize the evils which the pacto de Respondent. February 5, 2007
retro sale has caused in the hands of usurers. A judicial order is necessary in x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
order to determine the true nature of the transaction and to prevent the
interposition of buyers in good faith while the determination is being
made.[10]E-xsm
DECISION
It bears stressing that notwithstanding Article 1607, the recording in the
Registry of Property of the consolidation of ownership of the vendee is not a
condition sine qua non to the transfer of ownership. Petitioners are the CHICO-NAZARIO, J.:
owners of the subject property since neither Gertrudes nor her co-owners
redeemed the same within the one-year period stipulated in the
"Kasunduan." The essence of a pacto de retro sale is that title and ownership Before this Court is a Petition for Review on Certiorari under Rule 45 of the
of the property sold are immediately vested in the vendee a retro, subject to 1997 Revised Rules of Civil Procedure seeking to reverse and set aside the
the resolutory condition of repurchase by the vendor a retro within the Court of Appeals Decision[1] dated 26 April 2002 in CA-G.R. CV No. 53130
stipulated period. Failure thus of the vendor a retro to perform said resolutory entitled, Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, Enriqueta, Adolfo,
condition vests upon the vendee by operation of law absolute title and and Jesus, all surnamed Oesmer vs. Paraiso Development Corporation, as
ownership over the property sold. As title is already vested in the vendee a modified by its Resolution[2] dated 4 March 2003, declaring the Contract to Sell
retro, his failure to consolidate his title under Article 1607 of the Civil Code valid and binding with respect to the undivided proportionate shares of the six
does not impair such title or ownership for the method prescribed thereunder signatories of the said document, herein petitioners, namely: Ernesto,
is merely for the purpose of registering the consolidated title.[11] Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer);
and ordering them to execute the Deed of Absolute Sale concerning their 6/8
WHEREFORE, the decision of the Court of Appeals is MODIFIED in that the share over the subject parcels of land in favor of herein respondent Paraiso
petitioners are deemed owners of the property by reason of the failure of the Development Corporation, and to pay the latter the attorneys fees plus costs
vendor, Gertrudes Isidro, to repurchase the same within the period of the suit. The assailed Decision, as modified, likewise ordered the
stipulated. However, Transfer Certificate of Title No. 130584, in the name of respondent to tender payment to the petitioners in the amount
Alexander M. Cruz, which was issued without judicial order, is hereby of P3,216,560.00 representing the balance of the purchase price of the subject
ordered CANCELLED, and Transfer Certificate of Title No. 43100 in the parcels of land.
name of Gertrudes Isidro is ordered REINSTATED, without prejudice to The facts of the case are as follows:
compliance by petitioners with the provisions of Article 1607 of the Civil
Code. Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all
surnamed Oesmer, together with Adolfo Oesmer (Adolfo) and Jesus Oesmer
SO ORDERED. (Jesus), are brothers and sisters, and the co-owners of undivided shares of
8
two parcels of agricultural and tenanted land situated in Barangay Ulong
Tubig, Carmona, Cavite, identified as Lot 720 with an area of 40,507 square
meters (sq. m.) and Lot 834 containing an area of 14,769 sq. m., or a total land
area of 55,276 sq. m. Both lots are unregistered and originally owned by their
parents, Bibiano Oesmer and Encarnacion Durumpili, who declared the lots
for taxation purposes under Tax Declaration No. 3438[3] (cancelled by I.D. No.
6064-A) for Lot 720 and Tax Declaration No. 3437[4] (cancelled by I.D. No.
5629) for Lot 834. When the spouses Oesmer died, petitioners, together with
Adolfo and Jesus, acquired the lots as heirs of the former by right of
succession.
Respondent Paraiso Development Corporation is known to be engaged in the
real estate business.
Sometime in March 1989, Rogelio Paular, a resident and former Municipal
Secretary of Carmona, Cavite, brought along petitioner Ernesto to meet with a
certain Sotero Lee, President of respondent Paraiso Development
Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of
brokering the sale of petitioners properties to respondent corporation.
Pursuant to the said meeting, a Contract to Sell[5] was drafted by the Executive
Assistant of Sotero Lee, Inocencia Almo. On 1 April 1989, petitioners Ernesto
and Enriqueta signed the aforesaid Contract to Sell. A check in the amount
of P100,000.00, payable to Ernesto, was given as option money. Sometime
thereafter, Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said
Contract to Sell. However, two of the brothers, Adolfo and Jesus, did not sign
the document.
On 5 April 1989, a duplicate copy of the instrument was returned to respondent
corporation. On 21 April 1989, respondent brought the same to a notary public
for notarization.
In a letter[6] dated 1 November 1989, addressed to respondent corporation,
petitioners informed the former of their intention to rescind the Contract to Sell
and to return the amount of P100,000.00 given by respondent as option
money.
Respondent did not respond to the aforesaid letter. On 30 May 1991, herein
petitioners, together with Adolfo and Jesus, filed a Complaint[7] for Declaration
of Nullity or for Annulment of Option Agreement or Contract to Sell with
Damages before the Regional Trial Court (RTC) of Bacoor, Cavite. The said
case was docketed as Civil Case No. BCV-91-49.
During trial, petitioner Rizalino died. Upon motion of petitioners, the trial court
issued an Order,[8] dated 16 September 1992, to the effect that the deceased
petitioner be substituted by his surviving spouse, Josefina O. Oesmer, and his
children, Rolando O. Oesmer and Fernando O. Oesmer. However, the name
of Rizalino was retained in the title of the case both in the RTC and the Court
of Appeals.
After trial on the merits, the lower court rendered a Decision[9] dated 27 March
1996 in favor of the respondent, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of herein [respondent] Paraiso
Development Corporation. The assailed Contract to Sell is
valid and binding only to the undivided proportionate share of
the signatory of this document and recipient of the check,
[herein petitioner] co-owner Ernesto Durumpili Oesmer. The
latter is hereby ordered to execute the Contract of
Absolute Sale concerning his 1/8 share over the subject two
parcels of land in favor of herein [respondent] corporation,
and to pay the latter the attorneys fees in the sum of Ten
Thousand (P10,000.00) Pesos plus costs of suit.
The counterclaim of [respondent] corporation is
hereby Dismissed for lack of merit.[10]
Unsatisfied, respondent appealed the said Decision before the Court of
Appeals. On 26 April 2002, the appellate court rendered a Decision modifying
the Decision of the court a quo by declaring that the Contract to Sell is valid
and binding with respect to the undivided proportionate shares of the six
signatories of the said document, herein petitioners, namely: Ernesto,
Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed
Oesmer). The decretal portion of the said Decision states that:
WHEREFORE, premises considered, the Decision of the
court a quo is hereby MODIFIED. Judgment is hereby
rendered in favor of herein [respondent] Paraiso Development
Corporation. The assailed Contract to Sell is valid and binding
with respect to the undivided proportionate share of the six (6)
signatories of this document, [herein petitioners], namely,
Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and
Leonora (all surnamed Oesmer). The said [petitioners] are
hereby ordered to execute the Deed of Absolute Sale
concerning their 6/8 share over the subject two parcels of land
and in favor of herein [respondent] corporation, and to pay the
latter the attorneys fees in the sum of Ten Thousand Pesos
(P10,000.00) plus costs of suit.[11]
Aggrieved by the above-mentioned Decision, petitioners filed a Motion for
Reconsideration of the same on 2 July 2002. Acting on petitioners Motion for
9
Reconsideration, the Court of Appeals issued a Resolution dated 4 March
2003, maintaining its Decision dated 26 April 2002, with the modification that
respondent tender payment to petitioners in the amount of P3,216,560.00,
representing the balance of the purchase price of the subject parcels of
land. The dispositive portion of the said Resolution reads:
WHEREFORE, premises considered, the assailed Decision is
hereby modified. Judgment is hereby rendered in favor of
herein [respondent] Paraiso Development Corporation. The
assailed Contract to Sell is valid and binding with respect to
the undivided proportionate shares of the six (6) signatories
of this document, [herein petitioners], namely, Ernesto,
Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all
surnamed Oesmer). The said [petitioners] are hereby ordered
to execute the Deed of Absolute Sale concerning their 6/8
share over the subject two parcels of land in favor of herein
[respondent] corporation, and to pay the latter attorneys fees
in the sum of Ten Thousand Pesos (P10,000.00) plus costs
of suit.Respondent is likewise ordered to tender payment to
the above-named [petitioners] in the amount of Three Million
Two Hundred Sixteen Thousand Five Hundred Sixty Pesos
(P3,216,560.00) representing the balance of the purchase
price of the subject two parcels of land. [12]
Hence, this Petition for Review on Certiorari.
Petitioners come before this Court arguing that the Court of Appeals erred:
I. On a question of law in not holding that,
the supposed Contract to Sell (Exhibit D) is not
binding upon petitioner Ernesto Oesmers co-owners
(herein petitioners Enriqueta, Librado, Rizalino,
Bibiano, Jr., and Leonora).
II. On a question of law in not holding that,
the supposed Contract to Sell (Exhibit D) is void
altogether considering that respondent itself did not
sign it as to indicate its consent to be bound by its
terms. Moreover, Exhibit D is really a unilateral
promise to sell without consideration distinct from the
price, and hence, void.
Petitioners assert that the signatures of five of them namely: Enriqueta,
Librado, Rizalino, Bibiano, Jr., and Leonora, on the margins of the supposed
Contract to Sell did not confer authority on petitioner Ernesto as agent to sell
their respective shares in the questioned properties, and hence, for lack of
written authority from the above-named petitioners to sell their respective
shares in the subject parcels of land, the supposed Contract to Sell is void as
to them. Neither do their signatures signify their consent to directly sell their
shares in the questioned properties. Assuming that the signatures indicate
consent, such consent was merely conditional. The effectivity of the alleged
Contract to Sell was subject to a suspensive condition, which is the approval
of the sale by all the co-owners.
Petitioners also assert that the supposed Contract to Sell (Exhibit D), contrary
to the findings of the Court of Appeals, is not couched in simple language.
They further claim that the supposed Contract to Sell does not bind the
respondent because the latter did not sign the said contract as to indicate its
consent to be bound by its terms. Furthermore, they maintain that the
supposed Contract to Sell is really a unilateral promise to sell and the option
money does not bind petitioners for lack of cause or consideration distinct from
the purchase price.
The Petition is bereft of merit.
It is true that the signatures of the five petitioners, namely: Enriqueta, Librado,
Rizalino, Bibiano, Jr., and Leonora, on the Contract to Sell did not confer
authority on petitioner Ernesto as agent authorized to sell their respective
shares in the questioned properties because of Article 1874 of the Civil Code,
which expressly provides that:
Art. 1874. When a sale of a piece of land or any interest
therein is through an agent, the authority of the latter shall be
in writing; otherwise, the sale shall be void.
The law itself explicitly requires a written authority before an agent can sell an
immovable. The conferment of such an authority should be in writing, in as
clear and precise terms as possible. It is worth noting that petitioners
signatures are found in the Contract to Sell. The Contract is absolutely silent
on the establishment of any principal-agent relationship between the five
petitioners and their brother and co-petitioner Ernesto as to the sale of the
subject parcels of land. Thus, the Contract to Sell, although signed on the
margin by the five petitioners, is not sufficient to confer authority on petitioner
Ernesto to act as their agent in selling their shares in the properties in question.
However, despite petitioner Ernestos lack of written authority from the five
petitioners to sell their shares in the subject parcels of land, the supposed
Contract to Sell remains valid and binding upon the latter.
10
As can be clearly gleaned from the contract itself, it is not only petitioner
Ernesto who signed the said Contract to Sell; the other five petitioners also
personally affixed their signatures thereon. Therefore, a written authority is no
longer necessary in order to sell their shares in the subject parcels of land
because, by affixing their signatures on the Contract to Sell, they were not
selling their shares through an agent but, rather, they were selling the same
directly and in their own right.
The Court also finds untenable the following arguments raised by petitioners
to the effect that the Contract to Sell is not binding upon them, except to
Ernesto, because: (1) the signatures of five of the petitioners do not signify
their consent to sell their shares in the questioned properties since petitioner
Enriqueta merely signed as a witness to the said Contract to Sell, and that the
other petitioners, namely: Librado, Rizalino, Leonora, and Bibiano, Jr., did not
understand the importance and consequences of their action because of their
low degree of education and the contents of the aforesaid contract were not
read nor explained to them; and (2) assuming that the signatures indicate
consent, such consent was merely conditional, thus, the effectivity of the
alleged Contract to Sell was subject to a suspensive condition, which is the
approval by all the co-owners of the sale.
It is well-settled that contracts are perfected by mere consent, upon the
acceptance by the offeree of the offer made by the offeror. From that moment,
the parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law. To produce a contract, the
acceptance must not qualify the terms of the offer. However, the acceptance
may be express or implied. For a contract to arise, the acceptance must be
made known to the offeror. Accordingly, the acceptance can be withdrawn or
revoked before it is made known to the offeror.[13]
In the case at bar, the Contract to Sell was perfected when the petitioners
consented to the sale to the respondent of their shares in the subject parcels
of land by affixing their signatures on the said contract. Such signatures show
their acceptance of what has been stipulated in the Contract to Sell and such
acceptance was made known to respondent corporation when the duplicate
copy of the Contract to Sell was returned to the latter bearing petitioners
signatures.
As to petitioner Enriquetas claim that she merely signed as a witness to the
said contract, the contract itself does not say so. There was no single
indication in the said contract that she signed the same merely as a witness.
The fact that her signature appears on the right-hand margin of the Contract
to Sell is insignificant. The contract indisputably referred to the Heirs of Bibiano
and Encarnacion Oesmer, and since there is no showing that Enriqueta signed
the document in some other capacity, it can be safely assumed that she did
so as one of the parties to the sale.
Emphasis should also be given to the fact that petitioners Ernesto and
Enriqueta concurrently signed the Contract to Sell. As the Court of Appeals
mentioned in its Decision,[14] the records of the case speak of the fact that
petitioner Ernesto, together with petitioner Enriqueta, met with the
representatives of the respondent in order to finalize the terms and conditions
of the Contract to Sell. Enriqueta affixed her signature on the said contract
when the same was drafted. She even admitted that she understood the
undertaking that she and petitioner Ernesto made in connection with the
contract. She likewise disclosed that pursuant to the terms embodied in the
Contract to Sell, she updated the payment of the real property taxes and
transferred the Tax Declarations of the questioned properties in her
name.[15] Hence, it cannot be gainsaid that she merely signed the Contract to
Sell as a witness because she did not only actively participate in the
negotiation and execution of the same, but her subsequent actions also reveal
an attempt to comply with the conditions in the said contract.
With respect to the other petitioners assertion that they did not understand the
importance and consequences of their action because of their low degree of
education and because the contents of the aforesaid contract were not read
nor explained to them, the same cannot be sustained.
We only have to quote the pertinent portions of the Court of Appeals Decision,
clear and concise, to dispose of this issue. Thus,
First, the Contract to Sell is couched in such a simple
language which is undoubtedly easy to read and
understand. The terms of the Contract, specifically the
amount of P100,000.00 representing the option money paid
by [respondent] corporation, the purchase price of P60.00 per
square meter or the total amount of P3,316,560.00 and a brief
description of the subject properties are well-indicated
thereon that any prudent and mature man would have known
the nature and extent of the transaction encapsulated in the
document that he was signing.
Second, the following circumstances, as testified by
the witnesses and as can be gleaned from the records of the
case clearly indicate the [petitioners] intention to be bound by
the stipulations chronicled in the said Contract to Sell.
As to [petitioner] Ernesto, there is no dispute as to his
intention to effect the alienation of the subject property as he
in fact was the one who initiated the negotiation process and
culminated the same by affixing his signature on the Contract
to Sell and by taking receipt of the amount of P100,000.00
which formed part of the purchase price.
11

xxxx
As to [petitioner] Librado, the [appellate court] finds it
preposterous that he willingly affixed his signature on a
document written in a language (English) that he purportedly
does not understand. He testified that the document was just
brought to him by an 18 year old niece named Baby and he
was told that the document was for a check to be paid to
him. He readily signed the Contract to Sell without consulting
his other siblings. Thereafter, he exerted no effort in
communicating with his brothers and sisters regarding the
document which he had signed, did not inquire what the check
was for and did not thereafter ask for the check which is
purportedly due to him as a result of his signing the said
Contract to Sell. (TSN, 28 September 1993, pp. 22-23)
The [appellate court] notes that Librado is a 43 year
old family man (TSN, 28 September 1993, p. 19). As such, he
is expected to act with that ordinary degree of care and
prudence expected of a good father of a family. His unwitting
testimony is just divinely disbelieving.
The other [petitioners] (Rizalino, Leonora and Bibiano
Jr.) are likewise bound by the said Contract to Sell. The theory
adopted by the [petitioners] that because of their low degree
of education, they did not understand the contents of the said
Contract to Sell is devoid of merit. The [appellate court] also
notes that Adolfo (one of the co-heirs who did not sign) also
possess the same degree of education as that of the signing
co-heirs (TSN, 15 October 1991, p. 19). He, however, is
employed at the Provincial Treasury Office at Trece
Martirez, Cavite and has even accompanied Rogelio Paular
to the Assessors Office to locate certain missing documents
which were needed to transfer the titles of the subject
properties. (TSN, 28 January 1994, pp. 26 & 35) Similarly, the
other co-heirs [petitioners], like Adolfo, are far from ignorant,
more so, illiterate that they can be extricated from their
obligations under the Contract to Sell which they voluntarily
and knowingly entered into with the [respondent] corporation.
The Supreme Court in the case of Cecilia Mata v.
Court of Appeals (207 SCRA 753 [1992]), citing the case
of Tan Sua Sia v. Yu Baio Sontua (56 Phil. 711), instructively
ruled as follows:
The Court does not accept the petitioners claim that
she did not understand the terms and conditions of the
transactions because she only reached Grade Three and was
already 63 years of age when she signed the documents. She
was literate, to begin with, and her age did not make her senile
or incompetent. x x x.
At any rate, Metrobank had no obligation to explain
the documents to the petitioner as nowhere has it been proven
that she is unable to read or that the contracts were written in
a language not known to her. It was her responsibility to
inform herself of the meaning and consequence of the
contracts she was signing and, if she found them difficult to
comprehend, to consult other persons, preferably lawyers, to
explain them to her. After all, the transactions involved not
only a few hundred or thousand pesos but, indeed, hundreds
of thousands of pesos.
As the Court has held:
x x x The rule that one who signs a contract is presumed to
know its contents has been applied even to contracts of
illiterate persons on the ground that if such persons are unable
to read, they are negligent if they fail to have the contract read
to them. If a person cannot read the instrument, it is as much
his duty to procure some reliable persons to read and explain
it to him, before he signs it, as it would be to read it before he
signed it if he were able to do and his failure to obtain a
reading and explanation of it is such gross negligence as will
estop from avoiding it on the ground that he was ignorant of
its contents.[16]
That the petitioners really had the intention to dispose of their shares in the
subject parcels of land, irrespective of whether or not all of the heirs consented
to the said Contract to Sell, was unveiled by Adolfos testimony as follows:
ATTY. GAMO: This alleged agreement between you and your
other brothers and sisters that unless everybody will
agree, the properties would not be sold, was that
agreement in writing?
WITNESS: No sir.
ATTY. GAMO: What you are saying is that when your brothers
and sisters except Jesus and you did not sign that
agreement which had been marked as [Exhibit] D,
your brothers and sisters were grossly violating your
agreement.
12

WITNESS: Yes, sir, they violated what we have agreed
upon.[17]
We also cannot sustain the allegation of the petitioners that assuming the
signatures indicate consent, such consent was merely conditional, and that,
the effectivity of the alleged Contract to Sell was subject to the suspensive
condition that the sale be approved by all the co-owners. The Contract to Sell
is clear enough. It is a cardinal rule in the interpretation of contracts that if the
terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall control. [18] The
terms of the Contract to Sell made no mention of the condition that before it
can become valid and binding, a unanimous consent of all the heirs is
necessary. Thus, when the language of the contract is explicit, as in the
present case, leaving no doubt as to the intention of the parties thereto, the
literal meaning of its stipulation is controlling.
In addition, the petitioners, being owners of their respective undivided
shares in the subject properties, can dispose of their shares even without the
consent of all the co-heirs. Article 493 of the Civil Code expressly provides:
Article 493. 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. [Emphases supplied.]
Consequently, even without the consent of the two co-heirs, Adolfo and Jesus,
the Contract to Sell is still valid and binding with respect to the 6/8
proportionate shares of the petitioners, as properly held by the appellate court.
Therefore, this Court finds no error in the findings of the Court of
Appeals that all the petitioners who were signatories in the Contract to Sell are
bound thereby.
The final arguments of petitioners state that the Contract to Sell is void
altogether considering that respondent itself did not sign it as to indicate its
consent to be bound by its terms; and moreover, the Contract to Sell is really
a unilateral promise to sell without consideration distinct from the price, and
hence, again, void. Said arguments must necessarily fail.
The Contract to Sell is not void merely because it does not bear the
signature of the respondent corporation. Respondent corporations consent to
be bound by the terms of the contract is shown in the uncontroverted facts
which established that there was partial performance by respondent of its
obligation in the said Contract to Sell when it tendered the amount
of P100,000.00 to form part of the purchase price, which was accepted and
acknowledged expressly by petitioners. Therefore, by force of law, respondent
is required to complete the payment to enforce the terms of the
contract. Accordingly, despite the absence of respondents signature in the
Contract to Sell, the former cannot evade its obligation to pay the balance of
the purchase price.
As a final point, the Contract to Sell entered into by the parties is not
a unilateral promise to sell merely because it used the word option money
when it referred to the amount of P100,000.00, which also form part of the
purchase price.
Settled is the rule that in the interpretation of contracts, the
ascertainment of the intention of the contracting parties is to be discharged by
looking to the words they used to project that intention in their contract, all the
words, not just a particular word or two, and words in context, not words
standing alone.[19]
In the instant case, the consideration of P100,000.00 paid by respondent to
petitioners was referred to as option money. However, a careful examination
of the words used in the contract indicates that the money is not option money
but earnest money. Earnest money and option money are not the same but
distinguished thus: (a) earnest money is part of the purchase price, while
option money is the money given as a distinct consideration for an option
contract; (b) earnest money is given only where there is already a sale, while
option money applies to a sale not yet perfected; and, (c) when earnest money
is given, the buyer is bound to pay the balance, while when the would-be buyer
gives option money, he is not required to buy, but may even forfeit it depending
on the terms of the option.[20]
The sum of P100,000.00 was part of the purchase price. Although the same
was denominated as option money, it is actually in the nature of earnest money
or down payment when considered with the other terms of the
contract. Doubtless, the agreement is not a mere unilateral promise to sell,
but, indeed, it is a Contract to Sell as both the trial court and the appellate court
declared in their Decisions.
WHEREFORE, premises considered, the Petition is DENIED, and
the Decision and Resolution of the Court of Appeals dated 26 April 2002 and
4 March 2003, respectively, are AFFIRMED, thus, (a) the Contract to Sell
is DECLARED valid and binding with respect to the undivided proportionate
shares in the subject parcels of land of the six signatories of the said
document, herein petitioners Ernesto, Enriqueta, Librado, Rizalino, Bibiano,
13
Jr., and Leonora (all surnamed Oesmer); (b) respondent is ORDERED to
tender payment to petitioners in the amount of P3,216,560.00 representing the
balance of the purchase price for the latters shares in the subject parcels of
land; and (c) petitioners are further ORDERED to execute in favor of
respondent the Deed of Absolute Sale covering their shares in the subject
parcels of land after receipt of the balance of the purchase price, and to pay
respondent attorneys fees plus costs of the suit. Costs against petitioners.
SO ORDERED.
AGNES GAPACAN, EUGENIA GAPACAN-KIAKI and MARILYN
GAPACAN, petitioners, vs. MARIA GAPACAN
OMIPET, respondent.
DECISION
BELLOSILLO, J.:
Man is bound to his land and will remain so; it is source of his strength,
the fountainhead of his life. Yet ownership of this natural resource does not
always insure harmony, security and well-being, for many a time it causes
divisiveness and dissension within the community, even among the closest of
kin. This case depicts the situation contemplated herein.
Paicat Gapacan, a native Igorot of the Kankanai tribe, was the primitive
possessor of an unregistered land with an area of 1.0111 hectares situated in
Abatan, Bauko, Mt. Province, divided into three (3) parcels of rice land and
another parcel planted to camote, and declared by him for taxation purposes
for the first time on 27 March 1931.[1] Paicat had two (2) children, Maria and
Antonio both surnamed Gapacan.
In his adulthood, Antonio left Abatan to try his luck in the mine fields of
Mankayan, Benguet Province. Consequently, his sister Maria who remained
in Abatan took care of their aging father until his death during the Second
World War and eventually took over the cultivation of their father's land.
It came to pass that Antonio married Agnes Gapacan and begot two (2)
daughters, Eugenia Gapacan and Marilyn Gapacan, with her. After he retired
from the mines, Antonio and his family returned to Abatan. On 15 June 1954,
Antonio executed an Affidavit of Transfer of Real Property showing that the
property described under Tax Declarations Nos. 0808 and 37642 had been
transferred to him by his sister Maria Gapacan, making him in effect the legal
owner of the property in question. The Affidavit of Transfer of Real
Property was allegedly thumbmarked by Maria's husband, Pedro Omipet, in
her behalf.[2] Thus, by virtue of the Affidavit of Transfer of Real Property,
Antonio had the property in question declared in his name for taxation
purposes in 1954.[3] Since then, Agnes Gapacan and her daughters Eugenia
and Marilyn had been occupying and cultivating the three (3) parcels of rice
land and a parcel devoted to camote subject matter of the present controversy.
Sometime in the second week of April 1992 Maria hired the services of
Orlando Boleyley and Gaston Gapacan to clear and cultivate some portions of
the contested land but they were stopped by petitioners. Petitioners even went
to the extent of filing a case for Forcible Entry against Maria's granddaughter
Gertrude Beguil and three (3) others before the Municipal Circuit Trial Court of
Bauko-Sabangan, Mt. Province.
Petitioners alleged ownership of the disputed agricultural field which they
claimed was covered by a tax declaration in the name of the late Antonio
Gapacan. Because of the failure of the defendants to file their respective
answers to the complaint within the reglementary period, the Municipal Circuit
Trial Court rendered a decision on 16 September 1992 ordering defendants to
vacate the land in dispute and restore possession thereof to the plaintiffs. [4]
On 9 December 1992 respondent Maria Gapacan Omipet filed a
complaint for Quieting of Title before the proper Regional Trial Court praying
that she be declared the lawful owner of the property and that herein
petitioners be ordered to refrain from making further encroachments thereon.
At the time of the filing of the complaint for Quieting of Title, Maria who
could neither read nor write was already a very old woman. [5] She alleged in
her complaint that the disputed land was part of her inheritance from her
deceased parents which she in fact had declared in her name for taxation
purposes in 1948 although the area was only 1,188 square meters for which
Tax Declaration No. A-0808 was issued in her name.[6] She further contended
that she merely lent the parcels of rice land to petitioners when Antonio
Gapacan returned to Abatan after his retirement.
On 6 May 1994 the trial court dismissed the complaint and adjudged
defendants, herein petitioners, to have the right of possession over the parcel
of land delineated as Lot 1. It likewise enjoined private respondent Maria
Gapacan Omipet from performing acts injurious or prejudicial to the
possession of the premises by petitioners, explaining that -
x x x the bare assertions of Maria Omipet that she directly inherited the
contested area from her parents is insufficient to sustain her
position. Coming from the plaintiff herself, her testimony on the matter is self-
serving and hence unreliable as the better part of judicial prudence
dictates. The declarations of the plaintiff to the end that she has been the
actual possessor of the land subject hereof for the last three decades and
that she merely lent the parcels of rice paddies in question to the defendants,
albeit confirmed in the sense by her witnesses, are not very convincing x x x
x Aside from the observation that being a party to the case Maria Omipet is
pre-disposed to report matters as they are wished for, rather than as they
really are; the confirmatory statements of witnesses Baguil, Locaney,
Tambol, Dilem and Astudillo on the point are much too superficial,
14
transparently mechanical, and palpably biased to be judiciously persuasive.
Baguil has the most to gain or lose pending the outcome of this
proceeding. Locaney and Timbol on account of close blood ties or gratitude
to the plaintiff are discernibly partisans of the latter. While Dilem and Astudillo
merely mouthed their lines without emotional authenticity. By and large, the
testimonies of the plaintiff and all her witnesses in this suit, although under
oath, are simply difficult to swallow, hook, line and sinker. [7]
Maria Gapacan Omipet appealed to the Court of Appeals alleging that the
trial court (a) "unreasonably erred in brushing aside the coherent testimony of
plaintiff-appellant x x x and her credible and unbiased witnesses, and in failing
to give credence to her possession and ownership of the land in question, as
substantiated by her actual and existing improvements found on the land in
question;" and (b) failed to declare the documentary evidence of the heirs of
Antonio Gapacan as null and void.[8]
On 12 March 2001 the Court of Appeals rendered the assailed Decision
declaring the property described as Lot 1 in the Sketch Plan[9] to be the
common property of both plaintiff-appellant Maria Gapacan Omipet and
defendant-appellees Agnes Gapacan, Eugenia Gapacan-Kiaki and Marilyn
Gapacan. It also ordered the equitable partition of the disputed property
between the two (2) contending parties.[10]
The appellate court made the following preliminary declarations: (a)
nullifying Tax Declaration No. A-0808 in the name of Maria Gapacan Omipet
which covered only 1,188 square meters or 12% of the total area of the land
in question (Exh. "A") as it was unlawfully secured by her to the exclusion of
her brother Antonio Gapacan; (b) nullifying Tax Declaration No. A-9844 (Exh.
"2") in the name of Antonio Gapacan and the tax declarations as these were
based among others on an Affidavit of Transfer of Real Property which was
void as the purported transfer was not signed by Maria Gapacan Omipet; (c)
nullifying Tax Declaration No. 36555 (Exh. "5") in the name of Antonio
Gapacan and all tax declarations that revised it because these were based
upon a false information that the property was being declared for the first time
and was intended to lay the legal basis for the illegal claim by Antonio Gapacan
that he was the sole owner of the disputed property; and finally, (d) denying
probative value to the Agreement (Exh. "10") because it was based upon void
tax declarations and false claims of dominion and right of possession over the
land in question.
On the right of possession, the appellate court opined that although
Antonio Gapacan during his lifetime and his heirs upon his death had been in
actual possession of the rice lands in question except the "camote" land since
1971 their possession was tainted with bad faith since -
Antonio knew that the property was his fathers. His father did not give it to
either of his children, the latters claims to the contrary
notwithstanding. Antonio, of course, knew that Maria was legally entitled to a
share in said property so that when he fraudulently caused the execution of
the Affidavit of Transfer of Real Property and the issuance in his name of
T.D. No. H-9844 (Exhibit 2) he acted in gross bad faith (Art. 256, Civil Code).
By virtue of the evident bad faith of both parties, the Court of Appeals
ruled that the fruits of the land in question, which they appropriated for
themselves, compensated each other which rendered the need for an
accounting irrelevant.
In view thereof, the appellate court declared Lot 1 in the Sketch Plan as
common property of plaintiff-appellant Maria Gapacan Omipet on one hand,
and defendant-appellees Agnes Gapacan, Eugenia Gapacan-
Kiaki and Marilyn Gapacan on the other; and ordered the fair and equitable
partition of Lot 1 with one-half for plaintiff-appellant and the other for
defendant-appellees.
Their Motion for Reconsideration having been denied on 4 July 2001,
petitioners now interpose the present petition for review seeking the reversal
of the Decision of the Court of Appeals of 12 March 2001 which declared an
unregistered parcel of land identified in the Sketch Plan as Lot 1 the common
property of both petitioners Agnes Gapacan, Eugenia Gapacan-Kiaki and
Marilyn Gapacan on one hand, and private respondent Maria Gapacan Omipet
on the other, and its subsequent Resolution of 4 July 2001 denying
petitioners' Motion for Reconsideration.
The following facts appear undisputed: that the subject parcels of land
were originally owned by Paicat Gapacan who upon his death was survived
by his two (2) children, private respondent Maria Gapacan, and Antonio
Gapacan; that the subject realty consisted of three (3) parcels of rice land and
another parcel planted to camote with a total approximate area of 1.0111
hectares known as Lot 1 in the Sketch Plan;[11] that the land was part of the
ten (10) parcels allegedly given to private respondent by her parents, seven
(7) of which had already been distributed by her among her children and other
relatives; that in 1948, a portion of 1,188 square meters of the total land area
was tax-declared by private respondent under Tax Declaration No. A-0808;
that sometime in 1954 Antonio Gapacan caused the cancellation of the tax
declaration in the name of Maria Omipet and transferred the subject property
in his name by virtue of an Affidavit of Transfer of Real Property; and, that on
the basis of the Affidavit of Transfer of Real Property, Antonio also caused the
land to be declared in his name for taxation purposes as reflected in Tax
Declaration No. A-9844.
Petitioners, as heirs and successors-in-interest of the late Antonio
Gapacan, argue that this case stemmed from a complaint for Quieting of
Title filed by private respondent, and on the basis of Art. 477 of the Civil Code
which requires the plaintiff to show legal or equitable title to, or interest in the
subject real property, the trial court was correct in ruling that private
respondent had not sufficiently shown that she had the legal, i.e., registered,
15
title over the disputed property. Thus, according to them, the ruling of the Court
of Appeals declaring the subject land as the common property of the party-
litigants and ordering its partition is a complete deviation from the cause
of action of the caseand the findings of fact of the trial court. They now pray
for the reinstatement of the decision of the trial court insofar as it ruled that
they had the right of possession over the disputed land.
The argument is bereft of merit. Article 476 of the Civil Code provides that
an action to quiet title may be brought when there exists a cloud on the title to
real property or any interest therein. In the early case of Bautista v.
Exconde,[12]we held that a property owner whose property rights were being
disturbed may ask a competent court for a proper determination of the
respective rights of the party-claimants, not only to place things in their proper
place, that is, to require the one who has no right to refrain from acts injurious
to the peaceful enjoyment of the property not only of the rightful owner but also
for the benefit of both with the view of dissipating any cloud of doubt over the
property. It goes without saying therefore that the appellate court in resolving
the present controversy is well within its authority to adjudicate on the
respective rights of the parties, that is, to pass upon the
ownership of the subject property; hence todeclare the same as common
property of the party-litigants. Besides, private respondent Maria Gapacan
Omipet instituted the present action for the purpose of asking the court to pass
judgment upon the issue of ownership of the disputed property with the hope
that she would be declared its rightful owner.
Private respondent anchors her claim of absolute dominion over the
subject property on the ground that she inherited the same from her parents,
further noting that the family of Antonio Gapacan possessed the property by
reason alone of her tolerance. In view of this claim, it was incumbent upon
private respondent to prove by satisfactory evidence that she was legally
designated the sole owner of the property in litigation. Unfortunately, there was
paucity of proof that that in fact was the case. The tax declarations private
respondent presented in evidence were clearly founded on fraudulent claims
of ownership which did not merit any probative value. Evidently, those tax
declarations not only covered a mere fraction of the total area disputed but
were based on a false and capricious assertion of ownership over the entire
subject property. The tax declarations therefore were secured for the exclusive
purpose of excluding Antonio, the other legal heir. To be sure, tax declarations
in themselves do not vest absolute ownership of the property upon the
declarant, nor do declarations of ownership for taxation purposes constitute
adequate evidence of ownership or of the right to possess realty. Further, the
testimonies given by private respondent's witnesses buttressing her claim of
dominion were adjudged, and rightly so, as inconclusive and of dubious
reliability by both the trial court and the Court of Appeals.
On the question of the right of possession, as correctly pointed out by the
appellate court, the evidence preponderates in favor of Antonio Gapacan and
subsequently his heirs upon his death. It has been clearly established that
Antonio and his family had been in possession of the subject realty since
1971. However, Antonio could not honestly claim the rights of a possessor in
good faith since his tax declarations, and more so, his Affidavit of Transfer of
Real Property, were either spurious or founded on false and unlawful
claims. The parcels of land in question, as part of the hereditaments of Paicat,
a common ancestor of Maria and Antonio, were given to neither of them in
particular. It is difficult to believe that Maria and Antonio were blissfully ignorant
of their respective legal rights over the disputed realty. As the two (2) surviving
heirs of the Paicat Gapacan, neither Maria nor Antonio can claim absolute
ownership over the entire property to the prejudice of the other, for each, in
legal contemplation, is entitled to only one-half (1/2) pro-indiviso share of his
or her father's estate. Prior to partition, Maria and Antonio, and upon the latter's
death, the petitioners, hold the disputed property in their capacity as co-
owners.
In Consignado v. Court of Appeals[13]it was explained that "the juridical
concept of co-ownership is unity of the object or property and plurality of
subjects x x x x Each co-owner, jointly with the other co-owners, is the owner
of the whole property, but at the same time of the undivided aliquot part x x x
x Each co-owner has the right to sell, assign or dispose of his share, unless
personal rights are involved x x x and therefore, he may lose such rights to
others, as by prescription thereof by a co-owner x x x x" The Court, after a
thorough review of the records, finds no plausible reason to disturb the findings
and conclusions of the Court of Appeals in its assailed Decision.
WHEREFORE, the petition is DENIED for lack of merit. The Decision of
the Court of Appeals dated 12 March 2001, which declared Lot 1 in the Sketch
Plan[14] as the common property of both petitioners Agnes Gapacan, Eugenia
Gapacan-Kiaki and Marilyn Gapacan on one hand, and private respondent
Maria Gapacan Omipet on the other, and ordered its equitable partition
between the contending parties, as well as the Resolution dated 4 July 2001
denying reconsideration, is AFFIRMED. No costs.
SO ORDERED.
G.R. No. L-30994 September 30, 1982
OLIMPIA BASA, ARSENIO BASA, NEMESIO BASA, RICARDO BASA,
ATANACIA BASA, JULIANA BASA, and FELICIANO BASA, petitioners,
vs.
HON. ANDRES C. AGUILAR, Judge Presiding Branch II of the Court of
First Instance of Pampanga, GENARO PUYAT, BRIGIDA MESINA,
PRIMO TIONGSON, and MACARIA PUYAT, respondents.
VASQUEZ, J:
16
This is an appeal by certiorari from the decision of the Court of First Instance
of Pampanga in Civil Case No. 2513, entitled "Olimpia Basa, et al., Plaintiffs,
versus Genaro Puyat, et al., Defendants. "
The seven (7) petitioners are owners co-pro-indiviso of an undivided ONE-
HALF (1/2) share of a parcel of land located in Barrio San Mateo, Arayat,
Pampanga, with an area of 32,383 square meters, more or less. Private
respondents Genaro Puyat and Brigida Mesina were the owners of the other
undivided half of the same parcel of land.
On March 6, 1964, Genaro Puyat, with the marital consent of Brigida Mesina,
sold his ONE-HALF (1/2) share of the parcel of land in question for the price
of ONE THOUSAND (P1,000.00) PESOS in favor of private respondents
Primo Tiongson and Macaria Puyat. Primo Tiongson is a son-in-law of
Genaro Puyat who is married to Macaria Puyat, a daughter of Genaro Puyat.
Seven (7) days later, on or March 13, 1964, the herein petitioners filed Civil
Case No. 2513, praying that they be allowed to exercise the right of
redemption under Article 1620 of the Civil Code, for which purpose they
deposited with the court the sum of ONE THOUSAND PESOS (P1,000.00)
as redemption money.
The trial court rendered the judgment dismissing the case. It ruled that the
petitioners are not entitled to exercise the right of redemption under Article
1620 of the Civil Code, reasoning out as follows:
There is nothing repugnant, from the point of view of public
policy, for parents to sell to their children. It could not,
therefore, have been intended by the framers of the Civil
Code of the Philippines to include within the purview of the
term 'third person' the children of a co-owner of a thing. For
after all, these children have an inchoate right to succession
to the same property. To hold otherwise, is to stretch the
meaning of the law into ludicrious (sic) situations.
The logic of His Honor, the trial judge, carries more sentiment than law. It
disregards the express letter of the law invoked by the petitioners and
ignores the pelosophy of the same. Article 1620 of the Civil Code reads:
ART. 1620. A co-owner of a thing may exercise the right of
redemption in case the shares of all the other co-owners or
of any of them, are sold to a third person. If the price of the
alienation is grossly excessive, the redemptioner shall pay
only a reasonable one.
Should two or more co-owners desire to exercise the right of
redemption, they may only do so in proportion to the share
they may respectively have in the thing owned in common,
Legal redemption is in the nature of a privilege created by law partly for
reasons of public policy and partly for the benefit and convenience of the
redemptioner, to afford him a way out of what might be a disagreeable or
inconvenient association into which he has been thrust. (10 Manresa, 4th
Ed., 317.) It is intended to minimized co-ownership. The law grants a co-
owner the exercise of the said right of redemption when the shares of the of
her owners are sold to "a third person." A third person, within the meaning of
this Article, is anyone who is not a co-owner. (Sentencia of February 7, 1944
as cited in Tolentino, Comments on the Civil Code, Vol. V, p. 160.)
Private respondent Primo Tiongson is definitely not a co-owner of the land in
question. He is not even an heir of private respondents Genaro Puyat and
Brigida Mesina, nor included in the "family relations" of the said spouses as
defined in Article 217 of the Civil Code. The circumstance that he is married
to Macaria Puyat, a daughter of Genaro Puyat and Brigida Mesina, is of no
moment. The conveyance to the Tiongson spouses was by onerous title,
made during the lifetime of Genaro Puyat and Brigida Mesina. The alleged
inchoate right of succession from Genaro Puyat and Brigida Mesina, which
pertained only to Macaria Puyat. is thus out of the question. To deny to the
petitioners the right of redemption recognized in Article 1620 of the Civil
Code is to defeat the purpose of minimizing co-ownership and to contravene
the public policy in this regard. Moreover, it would result in disallowing the
petitioners a way out of what, in the words of Manresa, " might be a
disagreeable or inconvenient association into which they have been thrust."
WHEREFORE, the judgment appealed from is hereby REVERSED, and in
lieu thereof, a new one is rendered declaring the petitioners to be entitled to
exercise the right of legal redemption under Article 1620 of the Civil Code
with respect to the ONE-HALF (1/2) share sold by private respondent Genaro
Puyat and Brigida Mesina in favor of their corespondents Primo Tiongson
and Macaria Puyat. The private respondents shall pay the costs.
SO ORDERED.
G.R. No. L-46296 September 24, 1991
EPITACIO DELIMA, PACLANO DELIMA, FIDEL DELIMA, VIRGILIO
DELIMA, GALILEO DELIMA, JR., BIBIANO BACUS, OLIMPIO BACUS
and PURIFICACION BACUS, petitioners,
vs.
HON. COURT OF APPEALS, GALILEO DELIMA (deceased), substituted
by his legal heirs, namely: FLAVIANA VDA. DE DELIMA, LILY D. ARIAS,
17
HELEN NIADAS, ANTONIO DELIMA, DIONISIO DELIMA, IRENEA
DELIMA, ESTER DELIMA AND FELY DELIMA, respondents.
Gabriel J. Canete for petitioners.
Emilio Lumontad, Jr. for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals reversing the trial court's judgment which declared as null and void
the certificate of title in the name of respondents' predecessor and which
ordered the partition of the disputed lot among the parties as co-owners.
The antecedent facts of the case as found both by the respondent appellate
court and by the trial court are as follows:
During his lifetime, Lino Delima acquired Lot No. 7758 of the Talisay-
Minglanilla Friar Lands Estate in Cebu by sale on installments from the
government. Lino Delima later died in 1921 leaving as his only heirs three
brothers and a sister namely: Eulalio Delima, Juanita Delima, Galileo Delima
and Vicente Delima. After his death, TCT No. 2744 of the property in
question was issued on August 3, 1953 in the name of the Legal Heirs of
Lino Delima, deceased, represented by Galileo Delima.
On September 22, 1953, Galileo Delima, now substituted by respondents,
executed an affidavit of "Extra-judicial Declaration of Heirs." Based on this
affidavit, TCT No. 2744 was cancelled and TCT No. 3009 was issued on
February 4,1954 in the name of Galileo Delima alone to the exclusion of the
other heirs.
Galileo Delima declared the lot in his name for taxation purposes and paid
the taxes thereon from 1954 to 1965.
On February 29, 1968, petitioners, who are the surviving heirs of Eulalio and
Juanita Delima, filed with the Court of First Instance of Cebu (now Regional
Trial Court) an action for reconveyance and/or partition of property and for
the annulment of TCT No. 3009 with damages against their uncles Galileo
Delima and Vicente Delima,. Vicente Delima was joined as party defendant
by the petitioners for his refusal to join the latter in their action.
On January 16, 1970, the trial court rendered a decision in favor of
petitioners, the dispositive portion of which states:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the following
are the declared owners of Lot No. 7758 of the Talisay-Minglanilla
Friar Lands Estate presently covered by transfer Certificate of Title
No. 3009, each sharing a pro-indiviso share of one-fourth;
1) Vicente Delima (one-fourth)
2) Heirs of Juanita Delima, namely: Bibiano Bacus, Olimpio Bacus
and Purificacion Bacus (on-fourth);
3) Heirs of Eulalio Delima, namely Epitacio, Pagano, Fidel, Virgilio
and Galileo Jr., all surnamed Delima (one-fourth); and
4) The Heirs of Galileo Delima, namely Flaviana Vda. de Delima, Lily
D. Arias, Helen Niadas and Dionisio, Antonio, Eotu Irenea, and Fely,
all surnamed Delima (one-fourth).
Transfer Certificate of Title No. 3009 is declared null and void and
the Register of Deeds of Cebu is ordered to cancel the same and
issue in lieu thereof another title with the above heirs as pro-indiviso
owners.
After the payment of taxes paid by Galileo Delima since 1958, the
heirs of Galileo Delima are ordered to turn a over to the other heirs
their respective shares of the fruits of the lot in question computed at
P170.00 per year up to the present time with legal (interest).
Within sixty (60) days from receipt of this decision the parties are
ordered to petition the lot in question and the defendants are directed
to immediately turn over possession of the shares here awarded to
the respective heirs.
Defendants are condemned to pay the costs of the suit.
The counterclaim is dismissed.
SO ORDERED. (pp. 54-55, Rollo)
Not satisfied with the decision, respondents appealed to the Court of
Appeals. On May 19, 1977, respondent appellate court reversed the trial
court's decision and upheld the claim of Galileo Delima that all the other
brothers and sister of Lino Delima, namely Eulalio, Juanita and Vicente, had
already relinquished and waived their rights to the property in his favor,
18
considering that he (Galileo Delima) alone paid the remaining balance of the
purchase price of the lot and the realty taxes thereon (p. 26, Rollo).
Hence, this petition was filed with the petitioners alleging that the Court of
Appeals erred:
1) In not holding that the right of a co-heir to demand partition of
inheritance is imprescriptible. If it does, the defenses of prescription
and laches have already been waived.
2) In disregarding the evidence of the petitioners.(p.13, Rollo)
The issue to be resolved in the instant case is whether or not petitioners'
action for partition is already barred by the statutory period provided by law
which shall enable Galileo Delima to perfect his claim of ownership by
acquisitive prescription to the exclusion of petitioners from their shares in the
disputed property. Article 494 of the Civil Code expressly provides:
Art. 494. No co-owner shall be obliged to remain in the co-
ownership. Each co-owner may demand at any time the partition of
the thing owned in common, insofar as his share is concerned.
Nevertheless, an agreement to keep the thing undivided for a certain
period of time, not exceeding ten years, shall be valid. This term may
be extended by a new agreement.
A donor or testator may prohibit partition for a period which shall not
exceed twenty years.
Neither shall there be any partition when it is prohibited by law.
No prescription shall run in favor of a co-owner or co-heir against his
co-owners or co-heirs so long as he expressly or impliedly
recognizes the co-ownership.
As a rule, possession by a co-owner will not be presumed to be adverse to
the others, but will be held to benefit all. It is understood that the co-owner or
co-heir who is in possession of an inheritance pro-indiviso for himself and in
representation of his co-owners or co-heirs, if, as such owner, he administers
or takes care of the rest thereof with the obligation of delivering it to his co-
owners or co-heirs, is under the same situation as a depository, a lessee or a
trustee (Bargayo v. Camumot, 40 Phil, 857; Segura v. Segura, No. L-29320,
September 19, 1988, 165 SCRA 368). Thus, an action to compel partition
may be filed at any time by any of the co-owners against the actual
possessor. In other words, no prescription shall run in favor of a co-owner
against his co-owners or co-heirs so long as he expressly or impliedly
recognizes the co-ownership (Del Blanco v. Intermediate Appellate Court,
No. 72694, December 1, 1987, 156 SCRA 55).
However, from the moment one of the co-owners claims that he is the
absolute and exclusive owner of the properties and denies the others any
share therein, the question involved is no longer one of partition but of
ownership (De Castro v. Echarri, 20 Phil. 23; Bargayo v. Camumot, supra;
De los Santos v. Santa Teresa, 44 Phil. 811). In such case, the
imprescriptibility of the action for partition can no longer be invoked or
applied when one of the co-owners has adversely possessed the property as
exclusive owner for a period sufficient to vest ownership by prescription.
It is settled that possession by a co-owner or co-heir is that of a trustee. In
order that such possession is considered adverse to the cestui que
trust amounting to a repudiation of the co-ownership, the following elements
must concur: 1) that the trustee has performed unequivocal acts amounting
to an ouster of the cestui que trust; 2) that such positive acts of repudiation
had been made known to the cestui que trust; and 3) that the evidence
thereon should be clear and conclusive (Valdez v. Olorga, No. L-22571, May
25, 1973, 51 SCRA 71; Pangan v. Court of Appeals, No. L-39299, October
18, 1988, 166 SCRA 375).
We have held that when a co-owner of the property in question executed a
deed of partition and on the strength thereof obtained the cancellation of the
title in the name of their predecessor and the issuance of a new one wherein
he appears as the new owner of the property, thereby in effect denying or
repudiating the ownership of the other co-owners over their shares, the
statute of limitations started to run for the purposes of the action instituted by
the latter seeking a declaration of the existence of the co-ownership and of
their rights thereunder (Castillo v. Court of Appeals, No. L-18046, March 31,
1964, 10 SCRA 549). Since an action for reconveyance of land based on
implied or constructive trust prescribes after ten (10) years, it is from the date
of the issuance of such title that the effective assertion of adverse title for
purposes of the statute of limitations is counted (Jaramil v. Court of Appeals,
No. L-31858, August 31, 1977, 78 SCRA 420).
Evidence shows that TCT No. 2744 in the name of the legal heirs of Lino
Delima, represented by Galileo Delima, was cancelled by virtue of an
affidavit executed by Galileo Delima and that on February 4, 1954, Galileo
Delima obtained the issuance of a new title in Ms name numbered TCT No.
3009 to the exclusion of his co-heirs. The issuance of this new title
constituted an open and clear repudiation of the trust or co-ownership, and
the lapse of ten (10) years of adverse possession by Galileo Delima from
February 4, 1954 was sufficient to vest title in him by prescription. As the
certificate of title was notice to the whole world of his exclusive title to the
19
land, such rejection was binding on the other heirs and started as against A parcel of unirrigated riceland situated
them the period of prescription. Hence, when petitioners filed their action for at Brgy. Pagdaraoan, San Fernando, La Union under Tax
reconveyance and/or to compel partition on February 29, 1968, such action Declaration No. 39645, series of 1957, with an area of 4,304.5
was already barred by prescription. Whatever claims the other co-heirs could square meters, more or less bounded on the North
have validly asserted before can no longer be invoked by them at this time. by Valentin and IsidoroSobrepea; on the East by
Nicolas Ducusin; on the South by Victor Ducusin; and on the
ACCORDINGLY, the petition is hereby DENIED and the assailed decision of West by the National Highway.[4]
the Court of Appeals dated May 19, 1977 is AFFIRMED.

Considering that all the other compulsory heirs of Timotea already

SO ORDERED.
received their respective shares,[5] the property passed by succession, both
to Timoteas daughter, Paz Galvez, and to the formers grandson, Porfirio, the
latter succeeding by right of representation as the son of Ulpiano.
PAZ GALVEZ, CARLOS TAM, G.R. No. 157954
and TYCOON PROPERTIES, Porfirio Galvez was surprised to discover that on 4 May
INC., Present: 1970,[6] Paz Galvez executed an affidavit of adjudication stating that she is the
Petitioners, true and lawful owner of the said property. Tax Declarations No. 15749[7] and
No. 12342[8] were then issued in the name of Paz Galvez. On 22 June 1992,
PANGANIBAN, C.J. without the knowledge and consent of Porfirio Galvez, Paz Galvez sold the
Chairperson, property to Carlos Tam for a consideration of Ten Thousand Pesos
- versus - YNARES-SANTIAGO, (P10,000.00) by way of a Deed of Absolute Sale.[9] Carlos Tam thereafter filed
AUSTRIA-MARTINEZ, an application for registration of said parcel of land under Land Registration
CALLEJO, SR., and Case No. 2278 before the Regional Trial Court (RTC) of San Fernando, La
CHICO-NAZARIO, JJ. Union. On 21 January 1994, Original Certificate of Title No. 0-2602 of the
HON. COURT OF APPEALS and Registry of Deeds of San Fernando, La Union, was issued in the name of
PORFIRIO GALVEZ, Promulgated: Carlos Tam.[10] Subsequently, on 27 September 1994, Carlos Tam sold the
property to Tycoon Properties, Inc. through a Deed of Absolute Sale executed
Respondents. March 24, 2006 by the former in favor of the latter.[11] As a result, the title of Carlos Tam over
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x the property was cancelled and a new one, Transfer Certificate of Title (TCT)
No. T-40390[12] was issued in favor of Tycoon Properties, Inc.

On 12 May 1994, Porfirio Galvez filed Civil Case No. 4895 before the
DECISION RTC, Branch 26, of San Fernando, La Union, for Legal Redemption with
Damages and Cancellation of Documents[13] against Paz Galvez and Carlos
Tam. The Complaint was later amended to implead as additional defendant,
CHICO-NAZARIO, J.: Tycoon Properties, Inc.[14] When Tycoon Properties, Inc. filed its Answer, it
also filed a cross-claim against Carlos Tam. In a decision[15]dated 15
December 1999, the trial court held:

The factual antecedents of this case reveal that Timotea F. Galvez died WHEREFORE, in view of the foregoing, judgment is
intestate on 28 April 1965.[1] She left behind her children Ulpiano and hereby rendered as follows:
Paz Galvez. Ulpiano, who died on 24 July 1959,[2] predeceased Timotea and
was survived by his son, Porfirio Galvez. Timotea left a parcel of land situated 1. declaring null and void the
at Pagdaraoan, San Fernando, La Union, covered by Tax Declaration No. Affidavit of Adjudication executed by
39645[3] and more particularly described as follows: defendant PAZ GALVEZ dated May
4, 1970;

20
2. declaring null and void the Deed
of Absolute Sale over the property
originally covered by Tax Declaration
No. 39645 executed by PAZ
GALVEZ in favor of CARLOS TAM;
3. the Original Certificate of Title
No. 0-2602, in the name of CARLOS
TAM be considered cancelled;
4. The Deed of Sale between
CARLOS TAM and TYCOON
PROPERTIES, Inc. is hereby
ordered cancelled with Transfer
Certificate of Title No. T-40390,
being null and void;
5. That CARLOS TAM shall
receive from the Clerk of Court, San
Fernando City, La Union the amount
of Ten Thousand (P10,000.00)
pesos, as redemption of the property
pursuant to law;
6. That the property covered by
Transfer Certificate of Title No. T-
40390, be reconveyed (whole
property) to PORFIRIO GALVEZ, he
having redeemed one-half () of the
property from CARLOS TAM and
other half of the property belongs to
him as co-heir of TIMOTEA FLORES
GALVEZ.
7. Defendant PAZ GALVEZ and
CARLOS TAM shall be
liable solidarily for the actual
damages of the plaintiff in the
amount of Ten Thousand
(P10,000.00) pesos as well as moral
damages in the amount of Fifty
Thousand (P50,000.00) Pesos,
together with attorney's fees in the
amount of Ten Thousand
(P10,000.00) Pesos acceptance fee
and Five Hundred (P500.00) per
appearance fee.[16]
Petitioners Paz Galvez, Carlos Tam and Tycoon Properties, Inc. appealed the
decision to the Court of Appeals.[17] In a decision of the Court of Appeals
dated 28 August 2002,[18] the appellate court resolved to affirm the decision of
the trial court. Petitioners filed a Motion for Reconsideration which was denied
in a resolution dated 14 April 2003.[19]
Not contented with the decision of the Court of Appeals, petitioners are now
before this Court via Petition for Review on Certiorari under Rule 45 of the
Rules of Court.
Petitioners Carlos Tam and Tycoon Properties, Inc. separately filed their
Memorandum[20] but raised the same issues to wit:
I
THE HONORABLE COURT OF APPEALS ERRED WHEN IT
REFUSED TO HOLD THAT RESPONDENT'S CLAIM OVER
THE SUBJECT PROPERTY, WHICH IS BASED ON AN
IMPLIED TRUST, HAS ALREADY PRESCRIBED BECAUSE
THE ACTION WAS FILED 24 YEARS AFER PETITIONER
REPUDIATED THE SAID TRUST.
II
THE HONORABLE COURT OF APPEALS ERRED WHEN IT
FAILED TO RECOGNIZE THAT RESPONDENT'S CLAIM IS
ALREADY BARRED BY LACHES BECAUSE HE FAILED TO
ASSERT HIS ALLEGED RIGHT FOR ALMOST TWENTY
FOUR (24) YEARS.
III
THE HONORABLE COURT ERRED IN FAILING TO
RECOGNIZE THAT PETITIONERS [CARLOS TAM AND]
TYCOON PROPERTIES ARE BUYERS IN GOOD FAITH
AND FOR VALUE AND HAS THE RIGHT TO RELY ON THE
FACE OF THE TITLE.[21]
In assailing the decisions of the trial and appellate courts, petitioners cite
Article 1451[22] of the Civil Code and claim that an implied or constructive trust
which prescribes in ten years, was established between
Paz Galvezand Porfirio Galvez. It is petitioners unflinching stand that the
implied trust was repudiated when Paz Galvez executed an Affidavit of Self-
Adjudication on 4 May 1970, registered the same before the Register of Deeds
21
of La Union on 4 June 1970 and secured a new tax declaration in her
name. From 4 May 1970 to the time the complaint was filed on 12 May 1994,
24 years have passed, hence, the action is clearly barred both by prescription
and laches.
We find the petition bereft of merit.
Ostensibly, this case is governed by the rules on co-ownership[23] since both
Paz Galvez and Porfirio Galvez are obviously co-owners of the disputed
property having inherited the same from a common ancestor. Article 494 of
the Civil Code provides that [a] prescription shall not run in favor of a co-owner
or co-heir against his co-owners or co-heirs as long as he expressly or
impliedly recognizes the co-ownership.
It is a fundamental principle that a co-owner cannot acquire by prescription the
share of the other co-owners, absent any clear repudiation of the co-
ownership.[24] In Santos v. Santos,[25] citing the earlier case of Adille v. Court
of Appeals,[26] this Court found occasion to rule that:
Prescription, as a mode of terminating a relation of co-
ownership, must have been preceded by repudiation (of the
co-ownership). The act of repudiation, in turn, is subject to
certain conditions: (1) a co-owner repudiates the co-
ownership; (2)such an act of repudiation is clearly made
known to the other co-owners; (3) the evidence thereon is
clear and conclusive; and (4) he has been in possession
through open, continuous, exclusive, and notorious
possession of the property for the period required by law.
For title to prescribe in favor of a co-owner there must be a clear showing that
he has repudiated the claims of the other co-owners and the latter has been
categorically advised of the exclusive claim he is making to the property in
question. The rule requires a clear repudiation of the co-ownership duly
communicated to the other co-owners.[27] It is only when such unequivocal
notice has been given that the period of prescription will begin to run against
the other co-owners and ultimately divest them of their own title if they do not
seasonably defend it.[28]
To sustain a plea of prescription, it must always clearly appear that one who
was originally a joint owner has repudiated the claims of his co-owners, and
that his co-owners were apprised or should have been apprised of his claim of
adverse and exclusive ownership before the alleged prescriptive period began
to run.[29]
In Salvador v. Court of Appeals,[30] it was held that the possession of a co-
owner is like that of a trustee and shall not be regarded as adverse to the other
co-owner but in fact beneficial to all of them.
The case of Huang v. Court of Appeals[31] is instructive on the creation of trust
relationships.
Trust is a fiduciary relationship with respect to property which
involves the existence of equitable duties imposed upon the
holder of the title to the property to deal with it for the benefit
of another. A person who establishes a trust is called
the trustor; one in whom confidence is reposed as regards
property for the benefit of another person is known as the
trustee; and the person for whose benefit the trust has been
created is referred to as the beneficiary
or cestui que trust. Trust is either express or implied. Express
trust is created by the intention of the trustor or of the
parties. Implied trust comes into being by operation of
law. The latter kind is either constructive or resulting trust. A
constructive trust is imposed where a person holding title to
property is subject to an equitable duty to convey it to another
on the ground that he would be unjustly enriched if he were
permitted to retain it. The duty to convey the property arises
because it was acquired through fraud, duress, undue
influence or mistake, or through breach of a fiduciary duty, or
through the wrongful disposition of anothers property. On the
other hand, a resulting trust arises where a person makes or
causes to be made a disposition of property under
circumstances which raise an inference that he does not
intend that the person taking or holding the property should
have the beneficial interest in the property. It is founded on
the presumed intention of the parties, and as a general rule, it
arises where, and only where such may be reasonably
presumed to be the intention of the parties, as determined
from the facts and circumstances existing at the time of the
transaction out of which it is sought to be established.
Acts which may be considered adverse to strangers may not be considered
adverse insofar as co-owners are concerned. Thus, Salvador v. Court of
Appeals reiterated what acts constitute proof of exclusive ownership
amounting to repudiation, emphasizing that the act must be borne out of clear
and convincing evidence of acts of possession which unequivocably amounts
to an ouster or deprivation of the right of the other co-owner. The case
of Pangan v. Court of Appeals[32] enumerated the following as constituting acts
of repudiation:
22
 Filing by a trustee of an action in court against the trustor to
quiet title to property, or for recovery of ownership thereof,
held in possession by the former, may constitute an act of
repudiation of the trust reposed on him by the latter.
The issuance of the certificate of title would constitute an
open and clear repudiation of any trust, and the lapse of more
than 20 years, open and adverse possession as owner would
certainly suffice to vest title by prescription.
An action for the reconveyance of land based on implied or
constructive trust prescribes within 10 years. And it is from the
date of the issuance of such title that the effective assertion of
adverse title for purposes of the statute of limitation is
counted.
The prescriptive period may only be counted from the time
petitioners repudiated the trust relation in 1955 upon the filing
of the complaint for recovery of possession against private
respondents so that the counterclaim of the private
respondents contained in their amended answer wherein they
asserted absolute ownership of the disputed realty by reason
of the continuous and adverse possession of the same is well
within the 10-year prescriptive period.
There is clear repudiation of a trust when one who is an
apparent administrator of property causes the cancellation of
the title thereto in the name of the apparent beneficiaries and
gets a new certificate of title in his own name.
It is only when the defendants, alleged co-owners of the
property in question, executed a deed of partition and on the
strength thereof obtained the cancellation of the title in the
name of their predecessor and the issuance of a new one
wherein they appear as the new owners of a definite area
each, thereby in effect denying or repudiating the ownership
of one of the plaintiffs over his alleged share in the entire lot,
that the statute of limitations started to run for the purposes of
the action instituted by the latter seeking a declaration of the
existence of the co-ownership and of their rights thereunder.
In this case, we find that Paz Galvez effected no clear and evident repudiation
of the co-ownership. The execution of the affidavit of self-adjudication does
not constitute such sufficient act of repudiation as contemplated under the law
as to effectively exclude Porfirio Galvez from the property. This Court has
repeatedly expressed its disapproval over the obvious bad faith of a co-heir
feigning sole ownership of the property to the exclusion of the other heirs
essentially stating that one who acts in bad faith should not be permitted to
profit from it to the detriment of others. In the cases
of Adille[33] and Pangan[34] where, as in this case, a co-heir was excluded from
his legal share by the other co-heir who represented himself as the only heir,
this Court held that the act of exclusion does not constitute repudiation.
On the issue of prescription, while admittedly prescription operates as a bar to
recovery of property, the ten-year period commenced to run from date of
registration. In this case, Carlos Tam obtained his title to the property on 21
January 1994. Since the complaint of Porfirio Galvez was filed on 12 May
1994, the same was well within the ten-year period to file the action.
On the matter of laches, it is hornbook doctrine that laches is a creation of
equity and its application is controlled by equitable
considerations. Laches cannot be used to defeat justice or perpetrate fraud
and injustice.[35]Neither should its application be used to prevent the rightful
owners of a property from recovering what has been fraudulently registered in
the name of another.[36] The equitable remedy of laches is, therefore,
unavailing in this case.
Finally, petitioners claim that if the sale would be nullified, the nullification
should extend only to the one-half share of Porfirio Galvez[37] but not to the
share of Paz Galvez, who, by her overt act of selling the property, manifested
her intention to dispose of her part.
Notably, Porfirio Galvezs complaint was captioned legal redemption with
damages, cancellation of documents and reconveyance of share.[38] In his
prayer, he sought for the reconveyance of his one-half share in the property
and at the same time be subrogated to the other half pertaining to
Paz Galvez and sold to Carlos Tam after reimbursement of the amount which
the latter paid for the property.
The pertinent provisions of the Civil Code on legal redemption are as follows:
ART. 1619. Legal redemption is the right to be subrogated, upon the same
terms and conditions stipulated in the contract, in the place of one who
acquires a thing by purchase or dation in payment, or by any other
transaction whereby ownership is transmitted by onerous title.
ART. 1620. A co-owner of a thing may exercise the right of redemption in case
the shares of all the other co-owners or of any of them, are sold to a
third person. If the price of the alienation is grossly excessive,
the redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of
redemption, they may only do so in proportion to the share they may
respectively have in the thing owned in common.
23

In the case of Hermoso v. Court of Appeals,[39] this Court, in interpreting the
provision of the law on legal redemption, held:
The purpose of Article 1067 (of the old Civil Code, now Article
1088 of the present Civil Code) is to keep strangers to the
family out of a joint ownership, if, as is often the case, the
presence of outsiders be undesirable and the other heir or
heirs be willing and in a position to repurchase the share sold
(De Jesus vs. Manlapus, 81 Phil. 144). While there should be
no question that an heir may dispose his right before partition
(Rivero vs. Serrano [CA] 46 O.G.
642; Wenceslao vs. Calimon, 46 Phil.
906; Hernaez vs. Hernaez, 32 Phil. 214), a co-heir would
have had to pay only the price for which the vendee acquired
it (Hernaez vs. Hernaez, Ibid.).
It is a one-way street. It is always in favor of
the redemptioner since he can compel the vendee to sell to
him but he cannot be compelled by the vendee to buy the
alienated property.
In another case, [40] this Court reiterated that:
Legal redemption is in the nature of a privilege created by law
partly for reasons of public policy and partly for the benefit and
convenience of the redemptioner, to afford him a way out of
what might be a disagreeable or [an] inconvenient association
into which he has been thrust. (10 Manresa, 4th Ed., 317.) It is
intended to minimize co-ownership. The law grants a co-
owner the exercise of the said right of redemption when the
shares of the other owners are sold to a third person.
The rule on redemption is liberally construed in favor of the original owner of
the property and the policy of the law is to aid rather than defeat him in the
exercise of his right of redemption.[41]
Thus, petitioners cannot be accommodated in this respect and we agree with
the trial court when it held:
The provision of Art. 1088 of the Civil Code of
the Philippines is very clear on the matter.
Art. 1088, provides: Should any of the heirs
sell his hereditary rights to a stranger before
the partition, any or all 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
(1) month from the time they were notified in
writing of the sale by the vendor.
There was no written notice sent to Porfirio Galvez by
Paz Galvez when she sold her share over the land to Carlos
Tam. Porfirio Galvez only discovered on May 12, 1994 that
the land was sold to Carlos Tam. Art. 1620, Civil Code of
the Philippines, provides:
Art. 1620. A co-owner of a thing may exercise
the right of redemption in case the share of
all the other co-owners or any of them are
sold to a third person. If the price of the
alienation is grossly excessive,
the redemptioner shall pay only a reasonable
one.
No written notice of the sale was given by
Paz Galvez (vendor) to Porfirio Galvez, the co-owner as
required under Art. 1623 of the Civil Code. The written notice
is mandatory. Hence, the right to redeem commenced when
plaintiff sought to exercise it by instituting the complaint in the
instant case on June 12, 1994. The complaint of legal
redemption may be filed even several years after the
consummation of sale (Zosima Verdad vs. Court of Appeals,
et al.; G.R. No. 10972, April 29, 1996).[42]
As to petitioners Carlos Tam and Tycoon Properties, Inc.s claim that they are
buyers in good faith, same fails to persuade.
A purchaser in good faith and for value is one who buys the property without
notice that some other person has a right to or interest in such property and
pays its fair price before he has notice of the adverse claims and interest of
another person in the same property. So it is that the honesty of intention which
constitutes good faith implies a freedom from knowledge of circumstances
which ought to put a person on inquiry.[43]
Suffice it to state that both the trial and appellate courts found otherwise as
Tam did not exert efforts to determine the previous ownership of the property
in question[44] and relied only on the tax declarations in the name of
Paz Galvez.[45] It must be noted that Carlos Tam received a copy of the
summons and the complaint on 22 September 1994. This notwithstanding, he
24
sold the property to Tycoon Properties, Inc. on 27 September
1994.Significantly, Carlos Tam is also an owner of Tycoon Properties, Inc. to
the extent of 45%.[46] A notice of lis pendens dated 8 July 1997 filed with the
Registry of Deeds of the Province of La Union was inscribed on TCT
No. T- 40390.[47] Despite the inscription, Tycoon Properties, Inc. mortgaged
the land to Far East Bank and Trust Company for the sum
of P11,172,600.[48] All these attendant circumstances negate petitioners claim
of good faith.
WHEREFORE, premises considered, the decision of the Court of Appeals
dated 28 August 2002 and its Resolution dated 14 April
2003 are AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 96643. April 23, 1993.
ERNESTO DEIPARINE, JR., petitioner,
vs.
THE HON. COURT OF APPEALS, CESARIO CARUNGAY and ENGR.
NICANOR TRINIDAD, respondents.
Gregorio B. Escasinas for petitioner.
Florido and Associates for respondents.
SYLLABUS
1. CIVIL LAW; CONTRACTS; RESCISSION IS USED IN TWO DIFFERENT
CONTEXTS IN THE CIVIL CODE. Deiparine seems to be confused over
the right of rescission, which is used in two different contexts in the Civil
Code. Under the law on contracts, there are what are called "rescissible
contracts" which are enumerated in Article 1381 . . . There is also a right of
rescission under the law on obligations as granted in Article 1191.
2. ID.; ID.; ARTICLES 19, 1159, 1191, 1714, 1715 AND 1727, CIVIL CODE
ARE APPLICABLE, WHILE ARTICLES 1381, 1385 AND 1725, SAME CODE
ARE NOT, IN CASE OF BREACH OF CONSTRUCTION CONTRACT.
The petitioner challenges the application by the lower court of Article 1191 of
the Civil Code in rescinding the construction agreement. His position is that
the applicable rules are Articles 1385 and 1725 of the Civil Code . . . Article
1385, upon which Deiparine relies, deals with the rescission of the contracts
enumerated above, which do not include the construction agreement in
question . . . The construction contract falls squarely under the coverage of
Article 1191 because it imposes upon Deiparine the obligation to build the
structure and upon the Carungays the obligation to pay for the project upon
its completion. Article 1191, unlike Article 1385, is not predicated on
economic prejudice to one of the parties but on breach of faith by one of
them that violates the reciprocity between them. The violation of reciprocity
between Deiparine and the Carungay spouses, to wit, the breach caused by
Deiparine's failure to follow the stipulated plans and specifications, has given
the Carungay spouses the right to rescind or cancel the contract. Article 1725
cannot support the petitioner's position either, for this contemplates a
voluntary withdrawal by the owner without fault on the part of the contractor,
who is therefore entitled to indemnity, and even damages, for the work he
has already commenced. There is no such voluntary withdrawal in the case
at bar. On the contrary, the Carungays have been constrained to ask for
judicial rescission because of the petitioner's failure to comply with the terms
and conditions of their contract. The other applicable provisions are: Article
1714 . . . Article 1715 . . . Article 1727 . . . It is a basic principle in human
relations, acknowledged in Article 19 of the Civil Code, that "every person
must, in the performance of his duties, act with justice, give everyone his
due, and observe honesty and good faith." This admonition is reiterated in
Article 1159, which states that "obligations arising from contracts have the
force of law between the contracting parties and should be complied with in
good faith." The petitioner has ignored these exhortations and is therefore
not entitled to the relief he seeks.
3. ADMINISTRATIVE LAW; THE PHILIPPINE DOMESTIC CONSTRUCTION
BOARD HAS NO POWER TO ADJUDICATE A CASE FOR RESCISSION
OF CONSTRUCTION CONTRACT. The wording of P.D. 1746 is clear.
The adjudicatory powers of the Philippine Domestic Construction Board are
meant to apply only to public construction contracts. Its power over private
construction contracts is limited to the formulation and recommendation of
rules and procedures for the adjudication and settlement of disputes
involving such (private) contracts. It therefore has no jurisdiction over cases
like the one at bar which remain cognizable by the regular courts of justice.
4. LEGAL AND JUDICIAL ETHICS; COUNSEL WHO TRIES TO MISLEAD
THE COURT BY DELIBERATELY MISQUOTING THE LAW IS SUBJECT
TO DISCIPLINE. Counsel is obviously trying to mislead the Court. First,
he purposely misquotes Section 6(b), paragraph 3, substituting the word
"the" for "public," . . . Second, he makes the wrong emphasis in paragraph 5,
. . . For deliberately changing the language of the above-quoted paragraph 3,
Atty. Gregorio B. Escasinas has committed contempt of this Court and shall
be disciplined. As for paragraph 5, the correct stress should be on the words
"formulate and recommend," which is all the body can do, rather than on
adjudication and settlement."
DECISION
25
CRUZ, J p:
This case involves not only the factual issue of breach of contract and the
legal questions of jurisdiction and rescission. The basic inquiry is whether the
building subject of this litigation is safe enough for its future occupants. The
petitioner says it is, but the private respondents demur. They have been
sustained by the trial court and the appellate court. The petitioner says they
have all erred.
The spouses Cesario and Teresita Carungay entered into an agreement with
Ernesto Deiparine, Jr. on August 13, 19B2, for the construction of a three-
story dormitory in Cebu City. 1 The Carungays agreed to pay P970,000.00,
inclusive of contractor's fee, and Deiparine bound himself to erect the
building "in strict accordance to (sic) plans and specifications." Nicanor
Trinidad, Jr., a civil engineer, was designated as the representative of the
Carungay spouses, with powers of inspection and coordination with the
contractor.
Deiparine started the construction on September 1, 1982. 2 On November 6,
1982, Trinidad sent him a document entitled General Conditions and
Specifications which inter alia prescribed 3,000 psi (pounds per square inch)
as the minimum acceptable compressive strength of the building. 3
In the course of the construction, Trinidad reported to Cesario Carungay that
Deiparine had been deviating from the plans and specifications, thus
impairing the strength and safety of the building. On September 25, 1982,
Carungay ordered Deiparine to first secure approval from him before pouring
cement. 4 This order was not heeded, prompting Carungay to send
Deiparine another memorandum complaining that the "construction works
are faulty and done haphazardly . . . mainly due to lax supervision coupled
with . . . inexperienced and unqualified staff." 5 This memorandum was also
ignored.
After several conferences, the parties agreed to conduct cylinder tests to
ascertain if the structure thus far built complied with safety standards.
Carungay suggested core testing. Deiparine was reluctant at first but in the
end agreed. He even promised that if the tests should show total failure, or if
the failure should exceed 10%, he would shoulder all expenses; otherwise,
the tests should be for the account of Carungay.
The core testing was conducted by Geo-Testing International, a Manila-
based firm, on twenty-four core samples. On the basis of 3,000 psi, all the
samples failed; on the basis of 2,500 psi, only three samples passed; and on
the basis of 2,000 psi, nineteen samples failed. 6 This meant that the building
was structurally defective.
In view of this finding, the spouses Carungay filed complaint with the
Regional Trial Court of Cebu for the rescission of the construction contract
and for damages. Deiparine moved to dismiss, alleging that the court had no
jurisdiction over construction contracts, which were now cognizable by the
Philippine Construction Development Board pursuant to Presidential Decree
No. 1746. The motion was denied in an order dated April 12, 1984.
After trial on the merits, Judge Juanito A. Bernad rendered judgment: a)
declaring the construction agreement rescinded; b) condemning Deiparine to
have forfeited his expenses in the construction in the same of P244,253.70;
c) ordering Deiparine to reimburse to the spouses Carungay the sum of
P15,104.33 for the core testing; d) ordering Deiparine to demolish and
remove all the existing structures and restore the premises to their former
condition before the construction began, being allowed at the same time to
take back with him all the construction materials belonging to him; and e)
ordering Deiparine to pay the Carungay spouses attorney's fees in the
amount of P10,000.00 as well as the costs of the suit. 7
On appeal, the decision was affirmed in toto by the respondent court on
August 14, 1990. 8 His motion for reconsideration having been denied,
petitioner Ernesto Deiparine, Jr. has come to this Court to question once
more the jurisdiction of the regular courts over the case and the power of the
trial court to grant rescission. He will lose again.
The challenge to the jurisdiction of the trial court is untenable.
P.D. 1746 created the Construction Industry Authority of the Philippines
(CIAP) as the umbrella organization which shall exercise jurisdiction and
supervision over certain administrative bodies acting as its implementing
branches. The implementing body in this case is the Philippine Domestic
Construction Board (PDCB) and not the inexistent Philippine Construction
Development Board as maintained by Deiparine.
Among the functions of the PDCB under Section 6 of the decree are to:
xxx xxx xxx
3. Adjudicate and settle claims and implementation of public construction
contracts and for this purpose, formulate and adopt the necessary rules and
regulations subject to the approval of the President:
xxx xxx xxx
26
5. Formulate and recommend rules and procedures for the adjudication and
settlement of claims and disputes in the implementation of contracts in
private construction; (Emphasis supplied)
Deiparine argues that the Philippine Construction Development Board (that
is, the Philippine Domestic Construction Board) has exclusive jurisdiction to
hear and try disputes arising from domestic constructions. He invokes the
above-mentioned functions to prove his point.
His counsel is obviously trying to mislead the Court. First, he purposely
misquotes Section 6(b), paragraph 3, substituting the word "the" for "public,"
thus:
3. Adjudicate and settle claims and disputes in the implementation of the
construction contracts and for this purpose, formulate and adopt the
necessary rules and regulations subject to the approval of the President;
(Emphasis ours).
Second, he makes the wrong emphasis in paragraph 5, thus:
5. Formulate and recommend rules and procedures for the ADJUDICATION
and SETTLEMENT of CLAIMS and DISPUTES in the implementation of
CONTRACTS in PRIVATE CONSTRUCTIONS.
For deliberately changing the language of the abovequoted paragraph 3,
Atty. Gregorio P. Escasinas has committed contempt of this Court and shall
be disciplined. As for paragraph 5, the correct stress should be on the words
"formulate and recommend," which is all the body can do, rather than on
"adjudication and settlement."
The wording of P.D. 1746 is clear. The adjudicatory powers of the Philippine
Domestic Construction Board are meant to apply only to public construction
contracts. Its power over private construction contracts is limited to the
formulation and recommendation of rules and procedures for the adjudication
and settlement of disputes involving such (private) contracts. It therefore has
no jurisdiction over cases like the one at bar which remain cognizable by the
regular courts of justice.
On the issue of rescission, Deiparine insists that the construction agreement
does not specify any compressive strength for the structure nor does it
require that the same be subjected to any kind of stress test. Therefore,
since he did not breach any of his covenants under the agreement, the court
erred in rescinding the contract.
The record shows that Deiparine commenced the construction soon after the
signing of the contract, even before Trinidad had submitted the contract
documents, including the General Conditions and Specifications.
According to Eduardo Logarta, the petitioner's own project engineer,
Deiparine actually instructed him and some of the other workers to ignore the
specific orders or instructions of Carungay or Trinidad relative to the
construction. 9 Most of these orders involved safety measures such as: (1)
the use of two concrete vibrators in the pouring of all columns, beams and
slabs; (2) making PVC pipes well-capped to prevent concrete from setting
inside them; (3) the use of 12-mm reinforcement bars instead of 10-mm bars;
(4) the use of mixed concrete reinforcements instead of hollow block
reinforcements; and (5) securing the approval of the owner or his
representative before any concrete-pouring so that it could be determined
whether the cement mixture complied with safety standards. Deiparine
obviously wanted to avoid additional expenses which would reduce his profit.
Parenthetically, it is not disputed that Deiparine is not a civil engineer or an
architect but a master mariner and former ship captain; 10 that Pio Bonilla, a
retainer of Deiparine Construction, was not the supervising architect of the
protect; 11 that the real supervisor of the construction was Eduardo-Logarta,
who was only a third year civil engineering student at the time; 12 that his
understudy was Eduardo Martinez, who had then not yet passed the board
examinations; 13 and that the supposed project engineer, Nilo Paglinawan,
was teaching full-time at the University of San Jose-Recoletos, and had in
fact entered the construction site only after November 4, 1982, although the
construction had already begun two months earlier. 14
It was after discovering that the specifications and the field memorandums
were not being followed by Deiparine that Carungay insisted on the stress
tests.
There were actually two sets of specifications. The first "Specifications" are
labeled as such and are but a general summary of the materials to be used
in the construction. These were prepared by Trinidad prior to the execution of
the contract for the purpose only of complying with the document
requirements of the loan application of Cesario Carungay with the
Development Bank of the Philippines. The other specifications, which were
also prepared by Trinidad, are entitled "General Conditions and
Specifications" and laid down in detail the requirements of the private
respondent in the construction of his building.
In his testimony, Deiparine declared that when the contract was signed on
August 13, 1982, it was understood that the plans and specifications would
be given to him by Trinidad later. 15 Deiparine thus admitted that the plans
and specifications referred to in the construction agreement were not the first
27
Specifications but the General Conditions and Specifications submitted by
Trinidad in November 1982. This second set of specifications required a
structural compressive strength of 3,000 psi. 16 It completely belies
Deiparine's contention that no compressive strength of the dormitory was
required.
Deiparine further argues that by following the concrete mixture indicated in
the first specifications, that is, 1:2:4, the structure would still attain a
compressive strength of 2,500 psi, which was acceptable for dormitories.
According to him, the 3,000 psi prescribed in the General Conditions and
Specifications was recommended for roads, not for buildings. In so arguing,
he is interpreting the two specifications together but applying only the first
and rejecting the second.
Deiparine also avers that the contract does not also require any kind of test
to be done on the structure and that, test or no test, he has not violated the
agreement. Nevertheless, he subjected the building to a cylinder test just to
convince Carungay that the unfinished dormitory was structurally sound.
A cylinder test is done by taking samples from fresh concrete, placing them
in a cylinder mold and allowing them to harden for a maximum of 28 days,
following which they are subjected to compression to determine if the cement
mixture to be poured conforms to accepted standards in construction. 17
Carungay was not satisfied with the results of the cylinder test because they
were inconsistent and could easily be falsified by the simple expedient of
replacing the samples with a good mixture although a different mixture had
been used in the actual pouring. Consequently, Carungay requested core
testing, a more reliable procedure because the specimens obtained by
extracting concrete from the hardened existing structure would determine its
actual strength. The core test is less prone to manipulation than the cylinder
test because the samples in the former are taken from the building which is
already standing. 18
Deiparine vehemently refused to go along with the core test, insisting that the
results of the cylinder test earlier made were conclusive enough to prove that
the building was structurally sound. What was the real reason for this
refusal? After all, Carungay would shoulder the expenses if the specimens
passed the core test, unlike the cylinder test, which was for the petitioner's
account. The only logical explanation would be that Deiparine was not sure
that the core test would prove favorable to him.
We see no reason to disturb the factual finding of the courts below that
Deiparine did not deal with the Carungays in good faith. His breach of this
duty constituted a substantial violation of the contract correctible by judicial
rescission.
The petitioner challenges the application by the lower court of Article 1191 of
the Civil Code in rescinding the construction agreement. His position is that
the applicable rules are Articles 1385 and 1725 of the Civil Code.
Article 1385 states:
Rescission creates the obligation to return the things which were the object
of the contract, together with their fruits, and the price with its interest;
consequently, it can be carried out only when he who demands rescission
can return whatever he may be obliged to restore.
Article 1725 provides that in a contract for a piece of work:
The owner may withdraw at will from the construction of the work, although it
may have been commenced, indemnifying the contractor for all the latter's
expenses, work, and the usefulness which the owner may obtain therefrom,
and damages.
Deiparine seems to be confused over the right of rescission, which is used in
two different contexts in the Civil Code.
Under the law on contracts, there are what are called "rescissible contracts"
which are enumerated in Article 1381 thus:
(1) Those which are entered into by guardians whenever the wards who they
represent suffer lesion by more than one-fourth of the value of the things
which are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the
lesion stated in the preceding number:
(3) Those undertaken in fraud of creditors when the later cannot in any other
manner collect the claims due them:
(4) Those which refer to things under litigation if they have been entered into
by the defendants without the knowledge and approval of the litigants or of
competent judicial authority;
(5) All other contracts specially declared by law to be subject to rescission.
Article 1385, upon which Deiparine relies, deals with the rescission of the
contracts enumerated above, which do not include the construction
agreement in question.
28
There is also a right of rescission under the law on obligations as granted in
Article 1191, providing as follows:
"Art. 1191. The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the latter should
become impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who
have acquired the thing, in accordance with articles 1385 and 1388 and the
Mortgage Law.
This was the provision the trial court and the respondent court correctly
applied because it relates to contracts involving reciprocal obligations like the
subject construction contract. The construction contract fails squarely under
the coverage of Article 1191 because it imposes upon Deiparine the
obligation to build the structure and upon the Carungays the obligation to pay
for the project upon its completion.
Article 1191, unlike Article 1385, is not predicated on economic prejudice to
one of the, parties but on breach of faith by one of them that violates the
reciprocity between them. 19 The violation of reciprocity between Deiparine
and the Carungay spouses, to wit, the breach caused by Deiparine's failure
to follow the stipulated plans and specifications, has given the Carungay
spouses the right to rescind or cancel the contract.
Article 1725 cannot support the petitioner's position either, for this
contemplates a voluntary withdrawal by the owner without fault on the part of
the contractor, who is therefore entitled to indemnity, and even damages, for
the work he has already commenced. there is no such voluntary withdrawal
in the case at bar. On the contrary, the Carungays have been constrained to
ask for judicial rescission because of the petitioner's failure to comply with
the terms and conditions of their contract.
The other applicable provisions are:
Article 1714. If the contractor agrees to produce the work from material
furnished by him, he shall deliver the thing produced to the employer and
transfer dominion over the thing. This contract shall be governed by the
following articles as well as by the pertinent provisions on warranty of title
and against hidden defects and the payment of price in a contract of sale.
Article 1715. The contractor shall execute the work in such a manner that it
has the qualities agreed upon and has no defects which destroy or lessen its
value or fitness for its ordinary or stipulated use. Should the work be not of
such quality, the employer may require that the contractor remove the defect
or execute another work. If the contractor fails or refuses to comply with this
obligation, the employer may have the defect removed or another work
executed, at the contractor's cost.
Article 1727. The contractor is responsible for the work done by persons
employed by him.
While it is true that the stress test was not required in any of the contract
documents, conducting the test was the only manner by which the owner
could determine if the contractor had been faithfully complying with his
presentations under their agreement. Furthermore, both parties later agreed
in writing that the core test should be conducted. When the structure failed
under this test the Carungay spouses were left with no other recourse than to
rescind their contract.
It is a basic principle in human relations, acknowledged in Article 19 of the
Civil Code, that "every person must, in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith." This
admonition is reiterated in Article 1159, which states that "obligations arising
from contracts have the force of law between the contracting parties and
should be complied with in good faith." The petitioner has ignored these
exhortations and is therefore not entitled to the relief he seeks.
WHEREFORE, the challenged decision is hereby AFFIRMED and the instant
petition for review is DENIED, with costs against the petitioner. For
deliberately changing the language of Section 6(b), paragraph 3, of P.D. No.
1746, Atty. Gregorio B. Escasinas is hereby fined P1,000.00, with the
warning that repetition of a similar offense will be dealt with more severely. It
is so ordered.
HEIRS OF CESAR MARASIGAN G .R . No. 15 6 07 8
namely: Luz Regina, Cesar Jr.,
Benito, Santiago, Renato, Jose,
Geraldo, Orlando, Peter, Paul, Present:
Mauricio, Rommel, Michael,
Gabriel, and Maria Luz, all
surnamed Marasigan, YNARES-SANTIAGO, J.,
Petitioners, Chairperson,
AUSTRIA-MARTINEZ,
29
 CHICO-NAZARIO, On 17 December 1997, a Complaint for Judicial Partition of the Estate of Alicia
- versus - NACHURA, and Marasigan was filed before the RTC by several of her heirs and private
REYES, JJ. respondents herein, namely, Apolonio, Lilia, Octavio, Jr., Horacio, Benito, Jr.,
and Marissa, against Cesar, docketed as Special Civil Action No. P-77-97.
Ap ol oni o, Li li a, O ct a v io, J r. , According to private respondents, Alicia owned in common with her
Ho ra ci o, Ben it o J r. , a nd siblings 13 parcels of land called Hacienda Sta. Rita in Pili and Minalabac,
M aris s a, al l s urn am ed Promulgated: Camarines Sur, with an aggregate area of 4,960,963 square meters or 496
M ara sig an , and t h e Cou rt o f hectares, and more particularly described as follows:
Ap p ea l s,
Res p on d en ts . March 14, 2008 ORIGINAL CERTIFICATE OF TITLE NO. 626
x-------------------------------------------------x
A parcel of land denominated as Lot 516-B of the Subdivision
Survey Plan Csd-05-001020, situated at Sagurong, Pili,
DECISION Camarines Sur, bounded on the NE., by PNR; on the SE., by
Bgy. Road; on the SW., by Lot 2870; and on the NW., by Lot
512, containing an area of EIGHT THOUSAND SEVEN
CHICO-NAZARIO, J.: HUNDRED TWELVE (8,712) SQUARE METERS, more or
less, declared under A.R.P. No. 014 166 and assessed
at P12, 860.00.
This is a Petition for Review under Rule 45 of the Revised Rules of Court, with
petitioners praying for the reversal of the Decision [1] of the Court of Appeals ORIGINAL CERTIFICATE OF TITLE NO. 627
dated 31 July 2002 and its Resolution[2] dated 13 November 2002 denying the
Petition for Certiorari and Prohibition, with prayer for the issuance of a writ of A parcel of land denominated as Lot 4237, Cad-291, Pili
preliminary injunction and restraining order, in CA- G.R. SP No. Cadastre, Plan Cen-05-000006, situated at Saguron, Pili,
67529. Petitioners are asking this Court to (a) give due course to their petition; Camarines Sur, bounded on the N., by Irr. ditch
and (b) reverse and set aside, and thus, declare null and void the Decision of beyond Lot 445; on the E., by Lots 517 and 518; on the S., by
the Court of Appeals in CA-G.R. SP No. 67529. However, petitioners are Creek, Lot 468, 467; and on the W., by Lot 2948 and Mun. of
asking for the following reliefs in their Memorandum: (a) the dismissal of the Minalabac, containing an area of EIGHT HUNDRED SIXTY
complaint for partition of the estate of the late Alicia Marasigan, docketed as ONE THOUSAND ONE HUNDRED SIXTY THREE (861,163)
Special Civil Action No. P-77-97, filed before the Regional Trial Court (RTC) SQUARE METERS, more or less, declared under A.R.P. No.
of Pili, Camarines Sur; (b) annulment or rescission of the public auction sale 016 268 and assessed at P539,020.00.
of petitioners 1/7th undivided share in the estate of Alicia Marasigan, and direct
Apolonio Marasigan to restore the same to petitioners; or (c) in the alternative, ORIGINAL CERTIFICATE OF TITLE NO. 628
allowance of the physical partition of the entire 496 hectares of Hacienda Sta.
Rita. A parcel of land denominated as Lot 2870 Cad. 291, Pili
Cadastre Plan Swo-05000607, situated at Sagurong, Pili,
Central to the instant Petition is the estate of Alicia Marasigan (Alicia). Camarines Sur, bounded on the N., by Binasagan River; on
the E., by Lots 512 and 516; on the S., by Barangay Road;
Alicia was survived by her and on the W., by Lot 469, containing an area of THIRTEEN
siblings: Cesar, Apolonio, Lilia, and Benito; Marissa, a sister-in-law; and THOUSAND FOUR HUNDRED SIXTY TWO (13,462)
the children of her brothers who predeceased SQUARE METERS, mote or less, declared under A.R.P. No.
her: Francisco, Horacio, and Octavio. She died intestate and without issue 014 130 and assessed at P15,180.00.
on 21 January 1995.
ORIGINAL CERTIFICATE OF TITLE NO. 629

30
A parcel of land denominated as Lot 517-B of the Subdivision
Survey Plan Csd-05-001020, situated at Sagurong, Pili,
Camarines Sur, bounded on the NE., by PNR; on the SE., by
Lot 519; on the SW., by Lots 2025 and 2942; and on the NW.,
by Brgy. Road, containing an area of THIRTEEN THOUSAND
SEVEN HUNDRED SIXTY FIVE (13,765) SQUARE
METERS, more or less, declared under A.R.P. No. 014 167
and assessed at P20,310.00.
ORIGINAL CERTIFICATE OF TITLE NO. 652
A parcel of land denominated as Lot 4207-B of the subdivision
survey Plan Csd-05-011349-D, situated at Sagurong (San
Jose), Pili, Camarines Sur, bounded on the NE., by Lot 4207-
C, Lot 6157; on the SE., by Irr. ditch, Lot 2942; and on the
NW., by Lot 4298 (3051-B), containing an area of FIFTY
FOUR (54) SQUARE METERS, mote or less, declared under
A.R.P. No. 014 384 and assessed at P40.00.
ORIGINAL CERTIFICATE OF TITLE NO. 653
A parcel of land denominated as Lot 4207-A of the subdivision
survey Plan Csd-05-011349-D, situated at Sagurong (San
Jose), Pili, Camarines Sur, bounded on the NE., by Lot 4205
(I0T 443-A Csd-05-001019); on the SE., and SW., by Irr. ditch
(Lot 2942); on the W., by Lot 4207-C Lot 6157; and on the
NW., by Lot 4208 (Lot 3051-B, Csd-05-001019), containing
an area of TWENTY SEVEN THOUSAND THREE
HUNDRED THIRTY SEVEN (27,33) SQUARE METERS,
more or less, declared under A.R.P. No. 014 383 and
assessed at P20,150.00.
A.R.P. NO. 014 385
A parcel of land denominated as Lot 4207-C Lot 6157 of the
subdivision survey Plan Csd-05-001019, situated at Sagurong
(San Jose), Pili, Camarines Sur, bounded on the NE., by Lot
4207-A Lot 6155; on the SE., by Lot 4207-A Lot 6155; on the
SW., by Lot 4207-B Lot 6156 and Irr, ditch; and on the NW.,
by Lot 4208 (3051-B), containing an area of THREE
HUNDRED SIXTY ONE (361) SQUARE METERS, more or
less, declared under A.R.P. No. 014 385 and assessed
at P270.00.
ORIGINAL CERTIFICATE OF TITLE NO. 654
A parcel of land denominated as Lot 443-A of the subdivision
survey Plan Csd-05-001019, situated at Sagurong (San
Jose), Pili, Camarines Sur, bounded on the NE., by Lots 474,
4019, 4018, 4027, creek; on the SE., by Hrs. of Benito
Marasigan; and on the NW., by Lot 443-B, Ireneo Llorin;
containing an area of TWO HUNDRED FORTY FOUR
THOUSAND EIGHT HUNDRED FIFTY EIGHT (244,858)
SQUARE METERS, more or less, declared under A.R.P. No.
014 382 and assessed at P195,400.00.
ORIGINAL CERTIFICATE OF TITLE NO. 655
A parcel of land denominated as Lot 2942-A of the subdivision
survey Plan Csd-05-010854-D, situated at Sagurong (San
Jose/San Agustin), Pili, Camarines Sur, bounded on the N.,
by Creek; on the NE., by Lot 3049; on the SE., by Creek; and
on the W., by Lots 3184, 3183, 2942-13, 3183, 3060 and
3177; containing an area of FOUR HUNDRED SIXTY SIX
THOUSAND SIX HUNDRED TWENTY TWO (466,622)
SQUARE METERS, more or less, declared under A.R.P. No.
014 386 and assessed at P287,160.00.
ORIGINAL CERTIFICATE OF TITLE NO. 656
A parcel of land denominated as Lot 2 Plan Cen-05-000007,
situated at San Jose, Pili, Camarines Sur, bounded on the N.,
by Lots 509 and 508, Binasagan River; on the E., by Lots 523,
521 and 520; on the S., by Lot 522; and on the W., by Phil.
Natl. Railways; containing an area of ONE HUNDRED FIVE
THOUSAND TWO HUNDRED TWELVE (105,212) SQUARE
METERS, more or less, declared under A.R.P. No. 016 939
and assessed at P524,220.00.
ORIGINAL CERTIFICATE OF TITLE NO. 657
A parcel of land denominated as Lot 1, Plan Cen-05-000007,
situated at San Jose, Pili, Camarines Sur, bounded on the N.,
by Lots 525, 526, 527; on the E., by Lots 528-A, 529, 530,
531, 532 and Natl. Road; on the S., by Lots 533 and 522 pt.;
and on the W., by Lots 521, 523; containing an area of FIFTY
SIX THOUSAND SIX HUNDRED FIFTY TWO (56,652)
SQUARE METERS, more or less, declared under A.R.P. No.
016 993 and assessed at P292,090.00
TRANSFER CERTIFICATE OF TITLE NO. 16841
31
 A parcel of land denominated as Lots 1 and 2, Plan II-10759,
situated at Manapao, Minalabac, Camarines Sur, bounded on
the N., by Lots 3061, 3059, 4119, 3178, 3185, 3186, 3187,
3188, Borabodan Creek, 4350, 4401; and on the W., by Lots
4380, 3030, 3057. 3286, 3053, 3056; containing an area of
TWO MILLION NINE HUNDRED TWENTY TWO
THOUSAND FIFTY NINE (2,922,059) SQUARE METERS,
more or less, declared under A.R.P. No. 014 0372 and
assessed at P888,200.00.
TRANSFER CERTIFICATE OF TITLE NO. 16842
A parcel of land denominated as Lot 443-A of Plan Psu-
62335, situated at Manapao, Minalaban, Camarines Sur (San
Jose, Pili, Cam. Sur); bounded on the NE., by Shannon
Richmond and Eugenio Dato; on the E., by Eugenio Dato; on
the S., by Eugenio Dato and Creek; and on the SW and NW.,
by Shannon Richmond; containing an area of TWO
HUNDRED FORTY THOUSAND SEVEN HUNDRED SIX
(240,706) SQUARE METERS, more or less, declared under
A.R.P. No. 014 245 and assessed at P146,830.00.[3]
Alicia left behind her 2/21 shares in the afore-described 13 parcels of
land.
In answer to the private respondents Complaint, Cesar enumerated Alicias
several other properties and assets which he also wanted included in the
action for partition, to wit:
1. 1/8 share in the parcel of land covered by TCT No.
10947 located at Poblacion, San Juan, Batangas,
containing an area of 4,827 square meters, more or less;
2. 1/8 share in the parcel of land with improvements
thereon (cockpit arena) located in Poblacion, San Juan,
Batangas covered by TCT No. 0-3255;
3. A parcel of commercial land under property Index No.
024-21-001-25-005 situated in Poblacion, San Juan
Batangas containing an area of 540 square meters, more
or less;
4. A parcel of land situated in Yabo, Sipocot, Camarines
Sur containing an area of 2,000 hectares and covered by
Tax Declaration No. 7546;
5. A parcel of land located at Brgy. Yabo, Sipocot,
Camarines Sur with an area of 21,000 square meters,
more or less, covered by Tax Declaration No. 6622;
6. A parcel of land located at Brgy. Yabo, Sipocot,
Camarines Sur with an area of 2,6750 hectares under
Tax Declaration No. 5352;
7. A parcel of land located at Barrio Yabo, Sipocot,
Camarines Sur with an area of 2,3750 hectares and
covered by Tax Declaration No. 3653, and
8. Shares of Stock in Bolbok Rural Bank, Inc., a family
owned rural bank consisting of 3,230 shares at P100.00
per share.[4]
Cesars request for inclusion was contested by private respondents on the
ground that the properties he enumerated had already been previously
partitioned and distributed to the appropriate parties.[5]
On 4 February 2000, the RTC decided in favor of private respondents and
issued an Order of Partition of the Estate of Alicia Marasigan, decreeing that:
As regards to [sic] the real properties located in Hacienda Sta.
Rita in the municipalities of Pili and Minilabac, Camarines Sur
as described in par. 3 of the complaint, the actual area
representing the 2/21 pro-indiviso share having been
determined consisting of 422,422.65 sq. meters, more or less
(Exhibit 0-2) therefore, the share of each heir of the late
Alicia Marasigan is 1/7 or equivalent to 67,496.09 square
meters each (Exh. 0-3).
Wherefore, in view of the foregoing, decision is hereby
rendered.
1. Ordering the partition of the estate of Alicia
Marasigan in Hacienda Sta. Rita located in the
municipalities of Pili and Minalabac, Camarines
Sur consisting of 422,422.65 sq. meters among
her surviving brothers and sisters namely:
APOLONIO, LILIA, BENITO and CESAR, all
surnamed MARASIGAN who will inherit per
capita and her nephews and nieces who are the
children of deceased brothers the children of
Francisco Marasigan and children of Horacio
Marasigan who will inherit per stirpes and Octavio
32
 Marasigan, Jr., who will inherit by right of
representation of his deceased father, Octavio
Marasigan, Sr.
2. Declaring the partition of the San Juan,
Batangas properties made by the heirs of Alicia
Marasigan as contained in the minutes of the
Board Meeting of the Rural Bank of Bolbok valid
and binding among them.
3. Ordering the partition of the real properties
located in San Juan, Batangas as shown and
reflected in Exhibits 1 to 10 inclusive presented
by defendant, in the same sharing and proportion
as provided in paragraph one above-cited in this
dispositive portion.
4. No pronouncement as to costs.[6]
As the parties could not agree on how they shall physically partition among
themselves Alicias estate, private respondents filed a Motion to Appoint
Commissioners[7] following the procedure outlined in Sections 4, 5, 6 and 7 of
Rule 69 of the Rules of Court, citing, among other bases for their motion:
That unfortunately, the parties could not agree to make the
partition among themselves which should have been
submitted for the confirmation of the Honorable Court more so
because no physical division could be had on the 2/21 pro-
indiviso shares of the decedent [Alicia] due to different
locations, contours and conditions;
The RTC granted the Motion and appointed Myrna V. Badiong,
Assistant Provincial Assessor of Camarines Sur, as Chairman of the Board of
Commissioners.[8] Private respondents nominated Sandie B. Dacara as the
second commissioner. Cesar failed to nominate a third commissioner despite
due notice. Upon lapse of the period given, only two commissioners were
appointed.
On 26 October 2000, the two Commissioners conducted an ocular
inspection of Hacienda Sta. Rita, together with the Local Assessment
Operations Officer IV of the Provincial Assessors Office, the Barangay
Agrarian Reform Committee (BARC) Chairman, and the Marasigans
caretaker. However, Cesar contended that he did not receive any notice
from the Commissioners to attend the ocular inspection and he was, thus,
not present on said occasion.
The Commissioners Report[9] was released on 17 November 2000 stating the
following findings and recommendations:
The undersigned Commissioners admit the 472,472.65
(47.2472.65) square meters representing the 2/21 pro-
indiviso share of the deceased Alicia Marasigan and the 1/7
share of each of the heirs of Alicia N. Marasigan equivalent to
67,496.09 square meters or 6.7496.09 hectares determined
by Geodetic Engineer Roberto R. Revilla in his Compliance
with the Order of the Honorable Court dated November 18,
1998.
Considering that the physical division of the 2/21 pro-indiviso
share of the decedent, Alicia Marasigan cannot be done
because of the different locations and conditions of the
properties, undersigned Commissioners hereby recommend
that the heirs may assign their 1/7 share to one of the parties
willing to buy the same (Sec. 5, Rule 69 of the Rules of Court)
provided he pays to the heir[s] willing to assign his/her 1/7
share such amounts the Commissioners have recommended
and duly approved by the Honorable Court.
In consideration of such findings and after a careful and
thorough deliberations by the undersigned on the subject
matter, considering the subject properties classification and
actual predominant use, desirability and demand and together
with the benefits that may be derived therefrom by the
landowners, we have decided to recommend as it is hereby
recommended that the price of the 1/7 share of each of the
heir[s] is P700,000.00 per hectare, thus:
P700,000.00 x 6.7496.09 hectares = P4,724,726.30 or in
words:
FOUR MILLION SEVEN HUNDRED TWENTY FOUR
THOUSAND SEVEN HUNDRED TWENTY SIX AND 30/100
PESOS FOR THE 1/7 SHARE (6.7496.09 HECTARES) OF
EACH OF THE HEIRS.[10]
Cesar opposed the foregoing findings and prayed for the disapproval of the
Commissioners Report. In his Comment/Opposition to the Commissioners
Report, he maintained that:
33
 He does not expect that he would be forced, to buy his co-
owners share or to sell his share instead. Had he known that
it would be the recourse he would have appealed the
judgment [with petitioners referring to the RTC Order of
Partition]. But the findings of facts in the Decision as well [as]
dispositive do not show that any valid grounds for exception
to partition is even present in the instant case.[11]
Cesar alleged that the estate is not indivisible just because of the different
locations and conditions of the parcels of land constituting the same. Section
5, Rule 69 of the Rules of Court can only be availed of if the partition or division
of the real properties involved would be prejudicial to the interest of any of the
parties. He asserted that despite the segregation of his share, the remaining
parcels of land would still be serviceable for the planting of rice, corn, and
sugarcane, thus evidencing that no prejudice would be caused to the interests
of his co-heirs.
Countering Cesars arguments, private respondents contended that physical
division is impossible because Alicias estate is equivalent to 2/21 shares in
Hacienda Sta. Rita, which is composed of 13 parcels under different titles and
tax declarations, situated in different barangays and municipalities, and covers
an area of 496 hectares.
After a serious consideration of the matters raised by the parties, the RTC
issued an Order dated 22 June 2001 approving in toto the recommendations
embodied in the Commissioners Report, particularly, the recommendation that
the property be assigned to one of the heirs at P700,000.00 per hectare or a
total amount of P4,724,726.00,[12] after finding the same to be in accordance
with the Rules of Court and the New Civil Code. Pertinent portions of the Order
are reproduced below:
WHEREFORE, in view of all the foregoing, the
Commissioners Report dated November 17, 2000 is hereby
approved in toto, more specifically its recommendation to
assign the property to any one of the heirs interested at the
price of P700,000.00 per hectare or in the total amount
of P4,724,726.00 per share.
Regarding the properties of deceased Alicia Marasigan
located at San Juan, Batangas, the herein Commissioners,
Mrs. Myrna V. Badiong and Engr. Sandie B. Dacara are
hereby directed to proceed with utmost dispatch to San Juan,
Batangas and inspect said properties (Exhibits 1 to 10
inclusive) and thereafter to submit a Supplemental Report as
to its partition or other disposition with notice to all parties and
their counsels all at the expense of the estate, within a period
of thirty (30) days from receipt hereof.
Dissatisfied, Cesar filed a Motion for Reconsideration, [13] which was denied by
the RTC for lack of merit.[14]
In the meantime, Cesar died on 25 October 2001. He was substituted by his
heirs and herein petitioners, namely, Luz Regina, Cesar, Jr., Benito, Santiago,
Renato, Jose, Geraldo, Orlando, Peter, Paul, Mauricio, Rommel, Michael,
Gabriel, and Maria Luz, all surnamed Marasigan.
Upon the denial by the RTC of Cesars Motion for Reconsideration, petitioners
elevated their case to the Court of Appeals via a Petition for Certiorari and
Prohibition under Rule 65 of the Rules of Court, docketed as Special Civil
Action No. 67529.[15] They claimed that the RTC judge acted with grave abuse
of discretion amounting to lack or excess of jurisdiction in approving the
Commissioners Report although the facts would clearly indicate the following:
(a) The procedure taken by the Commissioners violated the
procedure for partition provided in Section 4, Rule 69 of
the 1997 Rules of Procedure because there was no
notice sent to them for the viewing and examination
of the properties of the estate; neither were they heard
as to their preference in the portion of the estate, thus
depriving them of due process;
(b) The ground used by the Commissioners resulting in their
recommendation to assign the property is not one of those
grounds provided under the Rules
(c) Article 492 of the New Civil Code is inapplicable
(d) Assignment of the real properties to one of the parties will
not end the co-ownership.
Moreover, petitioners accused the RTC of committing grave abuse of
discretion in solely relying on the testimony of Apolonio to the effect that
physical division is impractical because, while other portions of the land are
suitable for agriculture, the others are not, citing the different contours of the
land and unavailability of water supply in some parts.
The Court of Appeals dismissed petitioners Petition for Certiorari and
Prohibition in a Decision[16] promulgated on 31 July 2002, and ruled that the
RTC acted within its authority in issuing the Order of 22 June 2001. The Court
of Appeals found that petitioners failed to discharge the burden of proving that
the proceedings before the Board of Commissioners were unfair and
34
prejudicial. It likewise found that the petitioners were not denied due process
considering that they were afforded the opportunity to be heard during the
hearing for approval of the Commissioners Report on 18 January
2001. According to the appellate court, whether or not the physical division of
the estate will cause prejudice to the interests of the parties is an issue
addressed to the discretion of the Commissioners. It further held that it would
be absurd to believe that the prejudice referred to in Section 5, Rule 69 of the
Rules of Court does not embrace physical impossibility and impracticality. It
concurred in the finding of the RTC that:
It is not difficult to believe that a physical partition/division of
the 2/21 pro-indiviso shares of the decedent Alicia Marasigan
contained in and spread throughout thirteen (13) parcels of
the Hacienda Sta. Rita with a total area of 946 (sic) hectares
would be quite impossible if totally impractical. The said
parcels are of different measurements in terms of areas and
shapes located in different barrages of the Municipalities of
Pili and Minalabac, Camarines Sur.[17]
The Court of Appeals also noted that whether or not the RTC correctly applied
Section 5, Rule 69 of the Rules of Court and Article 492 of the New Civil Code,
would involve an error of judgment, which cannot be reviewed
on certiorari. Finally, the Court of Appeals found unmeritorious petitioners
argument that the assignment of the estate to one of the parties does not end
the co-ownership, considering that it questions the 4 February
2000[18] Decision of the RTC which had already become final and executory.
Petitioners filed a Motion for Reconsideration[19] of the foregoing Decision but
the same was denied by the Court of Appeals in a Resolution dated 13
November 2002. Still aggrieved, petitioners filed on 31 December 2002this
Petition for Review under Rule 45 of the Revised Rules of Court, docketed as
G.R. No. 156078.
Pending resolution of the instant Petition by this Court, the RTC granted private
respondents Urgent Motion for Execution on 26 December 2002. The RTC
ordered the sale of petitioners 1/7 pro-indiviso share in Alicias estate upon the
urgent motion of private respondents dated 27 September 2002 for the partial
execution of the judgment of the Court approving the Commissioners report
pending certiorari.[20]
Petitioners share in Alicias estate was sold in a public auction on 26
February 2003.[21] Based on the Commissioners Report on the Auction Sale,
there were two bidders, Apolonio Marasigan and Amado Lazaro. Apolonio,
with a bid of P701,000.00 per hectare, won over Amado Lazaro, whose bid
was P700,000.00 per hectare. Petitioners 1/7 share as Cesars heirs in Alicias
estate was sold in the public auction for P3,777,689.00.
This amount is lower than the P4,724,726.30 price of the 1/7 share in Alicias
estate as earlier determined by the Commissioners due allegedly to the
acquisition by the Department of Agrarian Reform (DAR) of a portion of
Hacienda Sta. Rita located in Minilabac, Camarines Sur which was placed
under Republic Act No. 6657, or the Comprehensive Agrarian Reform Law,
with 100.00 hectares thereof compulsorily acquired.
On 24 March 2003, petitioners filed with the RTC a Motion to Declare Failure
of Bidding and to Annul Public Auction Sale.
On 5 May 2003, however, the RTC released an Omnibus Order [22] ruling,
among other things, that the objection of petitioners as to the difference of the
value of their 1/7 share as determined by the Commissioners vis--vis the
winning bid was no longer an issue since Apolonio Marasigan indicated his
willingness to pay for the deficiency.
Following the public auction and sale of their 1/7 share in the
property,[23] petitioners filed a Notice of Appeal[24] with the RTC on 26 May
2003 indicating that they were appealing the 5 May 2003 Omnibus Order of
the RTC[25] to the Court of Appeals. Thereafter, or on 9 June 2003, petitioners
filed a Record on Appeal[26] pursuant to Section 3, Rule 41 of the Rules of
Court, praying that it be approved and transmitted to the Court of Appeals.[27]
On 2 July 2003, the RTC issued an Order denying due course to petitioners
Notice of Appeal on the ground that the proper remedy is not appeal,
but certiorari. Petitioners then filed on 27 August 2003 another Petition before
the Court of Appeals for Certiorari and Mandamus,[28] docketed as CA-G.R.
SP No. 78912, praying that the RTC be directed to approve their Notice of
Appeal and Record on Appeal, and to forward the same to the appellate court.
In a Resolution[29] dated 10 October 2003, the Court of Appeals dismissed CA-
G.R. SP No. 78912 outright on the ground that the verification and certificate
of non-forum shopping of the petition was signed by only Cesar Marasigan,
Jr., without any accompanying document to prove his authority to sign on
behalf of the other petitioners. Petitioners filed a Motion for Reconsideration
but it was denied by the Court of Appeals in a Resolution[30] dated 12 July
2004.[31]
Cesar G. Marasigan, Jr., in a Petition for Certiorari filed with this Court on 4
September 2004 and docketed as G.R. No. 164970, prayed for the reversal
and setting aside of the Court of Appeals Resolution dated 10 October 2003
dismissing CA-G.R. SP No. 78912, and Resolution dated 12 July 2004
denying the Motion for Reconsideration thereof. This Court, however, issued
a Resolution on 13 October 2004 denying the petition for failure of the
petitioner to show that the Court of Appeals committed a reversible error. The
same has become final and executory.
Going back to the Petition at bar, petitioners raise before this Court the
following assignment of errors:
35
 I. THE COURT A QUO HAS DECIDED A
QUESTION OF SUBSTANCE NOT THEREFORE
DETERMINED BY THE SUPREME COURT IN
FINDING THAT THERE IS NO NEED FOR DUE
NOTICE TO THE PARTIES TO ATTEND THE
VIEWING AND EXAMINATION OF THE REAL
ESTATE SUBJECT OF PARTITION WHEN THE
COMMISSIONERS HAVE DECIDED NOT TO
PARTITION THE PROPERTY AND SUCH NOTICE
UNDER SECTION 4 OF RULE 69 IS
INDISPENSABLE ONLY WHEN THEIR DECISION
IS TO PARTITION.
II. THE DECISION OF THE COURT OF APPEALS
IS NOT IN ACCORDANCE WITH LAW
PARTICULARLY WITH ARTICLES 494 AND 495 OF
THE NEW CIVIL CODE AND SECTIONS 5 RULE 69
OF THE RULES.
III. THAT THE FINDINGS OF THE COURT OF
APPEALS OF PHYSICAL IMPOSSIBILITY AND
IMPRACTICALITY IF EMBRACED IN PREJUDICE
REFERRED IN SECTION 5, RULE 69 OF THE
RULES SHALL MAKE SAID RULE VIOLATIVE OF
THE CONSTITUTIONAL LIMITATIONS ON THE
RULE MAKING POWER OF THE SUPREME
COURT THAT ITS RULES SHALL NOT INCREASE,
DECREASE OR MODIFY SUBSTANTIVE
RIGHTS.[32]
In their Memorandum, however, petitioners submitted for resolution the
following issues.
I. RESPONDENTS HAVE NO CAUSE OF ACTION
FOR PARTITION BECAUSE THE SUBJECT MATTER
OF THE CASE CONSISTS OF UNDIVIDED SHARES
WHICH CANNOT BE PARTITIONED.
II. THE REGIONAL TRIAL COURT HAS NO
JURISDICTION TO PARTITION UNDIVIDED OR
UNIDENTIFIED LAND AND HAS NOT ACQUIRED
JURISDICTION OVER 496 HECTARES OF UNDIVIDED
LAND WHICH SHOULD BE THE PROPER SUBJECT OF
PARTITION.
III. THE JUDGMENT OF PARTITION AND ALL
SUBSEQUENT PROCEEDINGS ARE NULL AND
VOID AB INITIO, INCLUDING THE PUBLIC
AUCTION SALE OF PETITIONERS SHARES WHICH
HAD NOT RENDERED THIS PETITION MOOT.
IV. EVEN ASSUMING ARGUENDO THAT LACK OF
CAUSE OF ACTION AND LACK OF JURISDICTION, AS
DISCUSSED, CAN BE IGNORED, THE PROCEEDINGS
BELOW ARE TAINTED WITH SERIOUS
IRREGULARITIES THAT CALL FOR THE EXERCISE
OF THE SUPERVISORY POWERS OF THIS
HONORABLE COURT.
V. CERTIORARI AS A SPECIAL CIVIL ACTION
UNDER RULE 65 AND APPEAL BY CERTIORARI
UNDER RULE 45, BOTH OF THE 1997 RULES OF CIVIL
PROCEDURE, WERE EMPLOYED AS PROPER
REMEDIES IN THIS CASE.[33]
This Court significantly notes that the first three issues,[34] alleging lack of
jurisdiction and cause of action, are raised by petitioners for the first time in
their Memorandum. No amount of interpretation or argumentation can place
them within the scope of the assignment of errors they raised in their Petition.
The parties were duly informed by the Court in its Resolution dated 17
September 2003 that no new issues may be raised by a party in his/its
Memorandum and the issues raised in his/its pleadings but not included
in the Memorandum shall be deemed waived or abandoned. The raising
of additional issues in a memorandum before the Supreme Court is irregular,
because said memorandum is supposed to be in support merely of the position
taken by the party concerned in his petition, and the raising of new issues
amounts to the filing of a petition beyond the reglementary period.[35] The
purpose of this rule is to provide all parties to a case a fair opportunity to be
heard. No new points of law, theories, issues or arguments may be raised by
a party in the Memorandum for the reason that to permit these would be
offensive to the basic rules of fair play, justice and due process. [36]
Petitioners failed to heed the Courts prohibition on the raising of new
issues in the Memorandum.
Moreover, Section 1 of Rule 9 of the Rules of Court provides that:
36
 SECTION 1. Defenses and objections not
pleaded. Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed
waived. However, when it appears from the pleadings or the
evidence on record that the court has not jurisdiction over the
subject matter, that there is another action pending between
the same parties for the same cause, or that the action is
barred by a prior judgment or by statute of limitations, the
court shall dismiss the claim.
First, it bears to point out that Cesar, petitioners predecessor, did not file any
motion to dismiss, and his answer before the RTC did not bear the
defenses/objections of lack of jurisdiction or cause of action on these grounds;
consequently, these must be considered waived. The exception that the court
may still dismiss a case for lack of jurisdiction over the subject matter, although
the same is not pleaded, but is apparent in the pleadings or evidence on
record, does not find application to the present Petition. Second, petitioners
arguments[37] on the lack of jurisdiction of the RTC over the case more
appropriately pertain to venue, rather than jurisdiction over the subject matter,
and are, moreover, not apparent from the pleadings and evidence on
record. Third, the property subject of partition is only the 47.2 hectare pro-
indiviso area representing the estate of Alicia. It does not include the entire
496 hectares of land comprising Hacienda Sta. Rita.
Even petitioners argument that non-payment of appropriate docket fees by
private respondents deprived the RTC of jurisdiction to partition the entire
Hacienda Sta. Rita[38] deserves scant consideration. In National Steel
Corporation v. Court of Appeals,[39] the Court ruled:
x x x while the lack of jurisdiction of a court may be raised at
any stage of an action, nevertheless, the party raising such
question may be estopped if he has actively taken part in the
very proceedings which he questions and he only objects to
the courts jurisdiction because the judgment or the order
subsequently rendered is adverse to him.
Irrefragably, petitioners raised the issues of jurisdiction for lack of payment of
appropriate docket fees and lack of cause of action belatedly in their
Memorandum before this Court. Cesar and petitioners were noticeably mum
about these in the proceedings before. In fact, Cesar actively participated in
the proceedings conducted before the RTC by seeking affirmative reliefs
therefrom, such as the inclusion of more properties in the partition. Hence,
petitioners are already estopped from assailing the jurisdiction of the RTC on
this ground.
It is conceded that this Court adheres to the policy that where the court itself
clearly has no jurisdiction over the subject matter or the nature of the action,
the invocation of this defense may de done at any time.[40] While it is the
general rule that neither waiver nor estoppel shall apply to confer jurisdiction
upon a court, the Court may rule otherwise under meritorious and exceptional
circumstances. One such exception is Tijam v. Sibonghanoy,[41] which finds
application in this case. This Court held in Tijam that after voluntarily
submitting a cause and encountering an adverse decision on the merits, it is
too late for the loser to question the jurisdiction or power of the court."
This Court further notes that while petitioners filed their last pleading in this
case, their Memorandum, on 26 December 2003, they failed to mention
therein that the Court of Appeals had already dismissed CA-G.R. SP No.
78912.[42] To recall, CA-G.R. No. 78912 is a Petition
for Certiorari and Mandamus involving the RTC Order dated 2 July 2003,
which denied petitioners Notice of Appeal. Petitioners intended to appeal the
RTC Omnibus Order dated 5 May 2003 sustaining the public auction and sale
of petitioners share in Alicias estate. Petitioners failure to provide this Court
with information on the developments in CA-G.R. SP No. 78912 is not only in
violation of the rules on non-forum shopping, but is also grossly misleading,
because they are raising in their Memorandum in the present case the same
issues concerning the public auction and sale of their share in Alicias
estate. The purpose of the rule against forum shopping is to promote and
facilitate the orderly administration of justice.
Forum shopping occurs when a party attempts to have his
action tried in a particular court or jurisdiction where he feels
he will receive the most favorable judgment or verdict. In our
jurisdiction, it has taken the form of filing multiple petitions or
complaints involving the same issues before two or more
tribunals or agencies in the hope that one or the other court
would make a favorable disposition. There is also forum
shopping when, because of an adverse decision in one forum,
a party seeks a favorable opinion (other than by appeal or
certiorari) in another. The rationale against forum shopping is
that a party should not be allowed to pursue simultaneous
remedies in two different fora. Filing multiple petitions or
complaints constitutes abuse of court processes, which tends
to degrade the administration of justice, wreaks havoc upon
orderly judicial procedure, and adds to the congestion of the
heavily burdened dockets of the courts. Thus, the rule
proscribing forum shopping seeks to promote candor and
transparency among lawyers and their clients in the pursuit of
their cases before the courts to promote the orderly
administration of justice, prevent undue inconvenience upon
the other party, and save the precious time of the courts. It
also aims to prevent the embarrassing situation of two or more
37
 courts or agencies rendering conflicting resolutions or
decisions upon the same issue.[43]
Petitioners have indeed managed to muddle the issues in the instant case by
raising issues for the first time in their Memorandum, as well as including
issues that were already pending before another tribunal and have eventually
been decided with finality, for which reason petitioners are herein admonished
by this Court.
The Court, nonetheless, manages to strip the issues in this Petition down to
the singular issue of whether or not the Court of Appeals erred in affirming in
toto the RTC Order adopting the Commissioners recommendation on the
manner of partition of the estate of Alicia Marasigan.
After an exhaustive study of the merits of the case and the pleadings submitted
by the parties, this Court is convinced that the Court of Appeals did not err in
affirming the Order of the RTC which approved the Commissioners
recommendations as to the manner of implementing the Order of Partition of
Alicias estate. There is no reason to reverse the Court of Appeals dismissal of
petitioners Petition for Certiorari and Prohibition and ruling that the RTC acted
well-within its jurisdiction in issuing the assailed Order. Nowhere is it shown
that the RTC committed such patent, gross and prejudicial errors of law or fact,
or a capricious disregard of settled law and jurisprudence, as to amount to a
grave abuse of discretion or lack of jurisdiction on its part, in adopting and
confirming the recommendations submitted by the Commissioners, and which
would have warranted the issuance of a writ of certiorari.
This petition originated from an original action for partition. It is governed by
Rule 69 of the Rules of Court, and can be availed of under the following
circumstances:
Section 1. Complaint in action for partition of real estate. A
person having the right to compel the partition of real estate
may do so as provided in this Rule, setting forth in his
complaint the nature and extent of his title and an adequate
description of the real estate of which partition is demanded
and joining as defendants all other persons interested in the
property.
In this jurisdiction, an action for partition is comprised of two
phases: first, the trial court, after determining that a co-ownership in fact exists
and that partition is proper, issues an order for partition; and, second, the trial
court promulgates a decision confirming the sketch and subdivision of the
properties submitted by the parties (if the parties reach an agreement) or by
the appointed commissioners (if the parties fail to agree), as the case may
be.[44]
The delineations of these two phases have already been thoroughly
discussed by this Court in several cases where it explained:
The first phase of a partition and/or accounting suit is taken
up with the determination of whether or not a co-ownership in
fact exists, (i.e., not otherwise legally proscribed) and may be
made by voluntary agreement of all the parties interested in
the property. This phase may end with a declaration that
plaintiff is not entitled to have a partition either because a co-
ownership does not exist, or partition is legally prohibited. It
may end, upon the other hand, with an adjudgment that a co-
ownership does in truth exist, partition is proper in the
premises and an accounting of rents and profits received by
the defendant from the real estate in question is in order. In
the latter case, the parties may, if they are able to agree, make
partition among themselves by proper instruments of
conveyance, and the court shall confirm the partition so
agreed upon. In either case i.e., either the action is dismissed
or partition and/or accounting is decreed the order is a final
one, and may be appealed by any party aggrieved thereby.
The second phase commences when it appears that the
parties are unable to agree upon the partition directed by the
court. In that event, partition shall be done for the parties by
the court with the assistance of not more than three (3)
commissioners. This second stage may well also deal with the
rendition of the accounting itself and its approval by the court
after the parties have been accorded opportunity to be heard
thereon, and an award for the recovery by the party or parties
thereto entitled of their just share in the rents and profits of the
real estate in question. Such an order is, to be sure, final and
appealable.[45]
Trouble arose in the instant petition in the second phase.
Petitioners postulate that the Court of Appeals erred in holding that notice to
the heirs regarding the examination and viewing of the estate is no longer
necessary given the circumstances. They aver that, in effect, the Court of
Appeals was saying that such notice is only necessary when the
Commissioners actually distribute the properties, but is not mandatory when
the Commissioners recommend the assignment of the properties to any of the
heirs. Petitioners contend that this is prejudicial to their right to due process
38
since they are deprived of the opportunity to be heard on the valuation of their
share in the estate.
Petitioners opposition is anchored on Section 4 of Rule 69 of the Rules of
Court, which reads:
Section 4. Oath and duties of commissioners. Before making
such partition, the commissioners shall take and subscribe an
oath that they will faithfully perform their duties as
commissioners, which oath shall be filed in court with the other
proceedings in the case. In making the partition, the
commissioners shall view and examine the real estate,
after due notice to the parties to attend at such view and
examination, and shall hear the parties as to their
preference in the portion of the property to be set apart
to them and the comparative value thereof, and shall set
apart the same to the parties in lots or parcels as will be most
advantageous and equitable, having due regard to the
improvements, situation and quality of the different parts
thereof.
Petitioners insist that the above provision is explicit and does not allow any
qualification, contending that it does not require that the lack of notice must
first be proven to have caused prejudice to the interest of a party before the
latter may object to the Commissioners viewing and examination of the real
properties on the basis thereof. They maintain that they were prejudiced by
the mere lack of notice.
We, on the other hand, find that the scales of justice have
remained equal throughout the proceedings before the RTC and the
Commissioners. This Court, in the performance of its constitutionally
mandated duty to settle actual controversies involving rights which are
legally demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government,
is duty-bound to ensure that due process is afforded to all the parties to a
case.
As the Court of Appeals declared, due process is not a mantra, the
mere invocation of which shall warrant a reversal of a decision. Well-settled is
the rule that the essence of due process is the opportunity to be
heard.In Legarda v. Court of Appeals,[46] the Court held that as long as parties
to a case were given the opportunity to defend their interest in due course,
they cannot be said to have been denied due process of the law. Neither do
the records show any indicia that the preference of petitioners for the physical
subdivision of the property was not taken into consideration by the
Commissioners.
Petitioners persistent assertion that their rights were prejudiced by the lack of
notice is not enough. Blacks Law Dictionary defines the word prejudice as
damage or detriment to ones legal rights or claims. Prejudice means injury or
damage.[47] No competent proof was adduced by petitioners to prove their
allegation. Mere allegations cannot be the basis of a finding of prejudice. He
who alleges a fact has the burden of proving it and a mere allegation is not
evidence.[48]
It should not be forgotten that the purpose of the rules of procedure is
to secure for the parties a just, speedy and inexpensive determination of every
action or proceeding. [49] The ultimate purpose of the rules of procedure is to
attain, not defeat, substantial justice.[50]
Records reveal that the parties were given sufficient opportunity to
raise their concerns. From the time the action for partition was filed by private
respondents, all the parties, including the late Cesar, petitioners predecessor,
were given a fair opportunity to be heard. Since the parties were unable to
agree on how the properties shall be divided, Commissioners were appointed
by the Court pursuant to Section 3 of Rule 69 of the Rules of Court.
Section 3. Commissioners to make partition when parties fail
to agree. - If the parties are unable to agree upon the partition,
the court shall appoint not more than three (3) competent and
disinterested persons as commissioners to make the partition,
commanding them to set off to the plaintiff and to each party
in interest such part and proportion of the property as the court
shall direct.
While the lack of notice to Cesar of the viewing and examination by the
Commissioners of the real properties comprising Alicias estate is a procedural
infirmity, it did not violate any of his substantive rights nor did it deprive him of
due process. It is a matter of record, and petitioners cannot deny, that Cesar
was able to file his Comment/Opposition to the Commissioners Report. And
after the RTC adopted and confirmed the Commissioners recommendations
in its Order dated 22 June 2001, Cesar was able to file a Motion for
Reconsideration of the said Order. He had sufficient opportunity to present
before the RTC whatever objections or oppositions he may have had to the
Commissioners Report, including the valuation of his share in Alicias estate.
Petitioners also allege that the ruling of the Court of Appeals -- that physical
impossibility and impracticality are embraced by the word prejudice, referred
to in Section 5 of Rule 69 of the Rules of Court -- violates the constitutional
limitation on the rule-making power of the Supreme Court, according to which,
the Rules of Court shall not increase, decrease or modify substantive rights.
39
 According to petitioners, Section 5 of Rule 69 of the Rules of Court,
which provides:
Section 5. Assignment or sale of real estate by
commissioners. - When it is made to appear to the
commissioners that the real estate, or a portion
thereof, cannot be divided without prejudice to the
interests of the parties, the court may order it assigned to one
of the parties willing to take the same, provided he pays to the
other parties such amounts as the commissioners deem
equitable, unless one of the interested parties asks that the
property be sold instead of being so assigned, in which case
the court shall order the commissioners to sell the real estate
at public sale under such conditions and within such time as
the court may determine.
should be read in conjunction with Articles 494 and 495 of the New Civil which
provide for the following substantive rights:
Article 494. No co-owner shall be obliged to remain in
the co-ownership. Each co-owner may demand at any time
the partition of the thing owned in common, insofar as his
share is concerned.
Nevertheless, an agreement to keep the thing
undivided for a certain period of time, not exceeding ten years,
shall be valid. This term may be extended by a new
agreement.
A donor or testator may prohibit partition for a period
which shall not exceed twenty years.
Neither shall there be any partition when it is
prohibited by law.
No prescription shall run in favor of a co-owner or co-
heir against his co-owners or co-heirs so long as he expressly
or impliedly recognizes the co-ownership.
Article 495. Notwithstanding the provisions of the
preceding article, the co-owners cannot demand a physical
division of the thing owned in common, when to do so would
render unserviceable for the use for which it is intended. But
the co-ownership may be terminated in accordance with
Article 498.
Article 498 of the New Civil Code, referred to by Article 495 of the same Code,
states:
Article 498. Whenever the thing is essentially indivisible and
the co-owners cannot agree that it be allotted to one of them
who shall indemnify the others, it shall be sold and its
proceeds distributed.
Evidently, the afore-quoted Civil Code provisions and the Rules of Court must
be interpreted so as to give effect to the very purpose thereof, which is to put
to an end to co-ownership in a manner most beneficial and fair to all the co-
owners.
As to whether a particular property may be divided without prejudice
to the interests of the parties is a question of fact. To answer it, the court must
take into consideration the type, condition, location, and use of the subject
property. In appropriate cases such as the one at bar, the court may delegate
the determination of the same to the Commissioners.
The Commissioners found, after a viewing and examination of Alicias estate,
that the same cannot be divided without causing prejudice to the interests of
the parties. This finding is further supported by the testimony of Apolonio
Marasigan that the estate cannot be divided into smaller portions, since only
certain portions of the land are suitable to agriculture, while others are not, due
to the contours of the land and unavailability of water supply.
The impracticality of physically dividing Alicias estate becomes more
apparent, considering that Hacienda Sta. Rita is composed of parcels and
snippets of land located in two different municipalities, Pili and Minalabac,
Camarines Sur. The actual area representing Alicias 2/21 pro-indiviso shares
in Hacienda Sta. Rita is 422,422.65 square meters, more or less. Each of
Alicias heirs is entitled to 1/7 share in her estate equivalent to 67,496.09
square meters or roughly seven hectares.[51] Cesar and his heirs are entitled
only to his 1/7 share in the yet unidentified, unsegregated 2/21 pro-
indiviso shares of Alicia in each of the 13 parcels of land that comprises
Hacienda Sta. Rita. Dividing the parcels of land even further, each portion
allotted to Alicias heirs, with a significantly reduced land area and widely
scattered in two municipalities, would irrefragably diminish the value and use
of each portion, as compared to keeping the entire estate intact.
The correctness of the finding of the RTC and the Commissioners that
dividing Alicias estate would be prejudicial to the parties cannot be passed
40
upon by the Court of Appeals in a petition for certiorari. Factual questions are
not within the province of a petition for certiorari. There is a question of fact
when the doubt arises as to the truth or falsity of the alleged facts. As to
whether the court a quo decided the question wrongly is immaterial in a
petition for certiorari. It is a legal presumption that findings of fact of a trial court
carry great weight and are entitled to respect on appeal, absent any strong
and cogent reason to the contrary, since it is in a better position to decide the
question of credibility of witnesses.[52]
The writ of certiorari issues for the correction of errors of jurisdiction
only or grave abuse of discretion amounting to lack or excess of
jurisdiction. The writ of certiorari cannot be legally used for any other
purpose.[53] At most, the petition pertains to an error of judgment, and not of
jurisdiction, for clearly under Section 5 of Rule 69, the question of whether a
partys interest shall be prejudiced by the division of the real property is left to
the determination and discretion of the Commissioners.
Hence, it is totally unnecessary for this Court to address the issue raised by
petitioners concerning the alleged unconstitutionality of Section 5, Rule 69 of
the Rules of Court for having been issued beyond the constitutional limitation
on the rule-making power of this Court. Basic is the principle that a
constitutional issue may only be passed upon if essential to the decision of a
case or controversy.[54] A purported constitutional issue raised by petitioners
may only be resolved if essential to the decision of a case and
controversy. Even if all the requisites for judicial review are present, this Court
will not entertain a constitutional question unless it is the very lis mota[55] of the
case or if the case can be disposed of on some other grounds, such as the
application of a statute or general law. The present problem of partition by co-
heirs/co-owners can be resolved without elevating their case to one of
constitutionality.
In the absence of evidence to the contrary, this Court can only presume that
the proceedings in Special Civil Action No. P-77-97 before the RTC, including
the recommendation made by the Commissioners, were fairly and regularly
conducted, meaning that both the RTC and the appointed Commissioners had
carefully reviewed, studied, and weighed the claims of all the parties.
Petitioners argument that the assignment of the property will not terminate the
co-ownership is specious, considering that partition, in general, is the
separation, division, and ASSIGNMENT of a thing held in common by those to
whom it may belong.[56]
Inasmuch as the parties continued to manifest their desire to terminate their
co-ownership, but the co-heirs/co-owners could not agree on which properties
would be allotted to each of them, this Court finds that the Court of Appeals
was correct in ruling that the RTC did not act with grave abuse of discretion
amounting to lack or excess of jurisdiction when it approved the
Commissioners recommendation that the co-heirs/co-owners assign their
shares to one of them in exchange for proper compensation.
This Court has consistently held that one of the purposes for which courts are
organized is to put an end to controversy in the determination of the respective
rights of the contending parties. With the full knowledge that courts are not
infallible, the litigants submit their respective claims for judgment, and they
have a right at some time or another to have final judgment on which they can
rely over a final disposition of the issue or issues submitted, and to know that
there is an end to the litigation;[57] otherwise, there would be no end to legal
processes.[58]
Finally, petitioners raise before this Court the issue that the public auction sale
of their shares is null and void; at the same time they allege deficiency in the
bid price for their 1/7 share in Alicias estate vis--vis the valuation of the same
by the Commissioners. [59] This Court is already barred from ruling on the
validity of the public auction sale. This Courts ruling dated 13 October 2004 in
G.R. No. 164970 denying their petition for certiorari lays to rest petitioners
questioning of the Court of Appeals Resolution dismissing their appeal therein
of the issue of the validity of the public sale of their share in Alicias estate. Such
decision or order can no longer be disturbed or reopened no matter how
erroneous it may have been.[60]
Indeed, while it is understandable for petitioners to protect their rights to their
portions of the estate, the correlative rights of the other co-owners/co-heirs
must also be taken into consideration to balance the scales of justice.And, by
finding the course of action, within the boundaries of law and jurisprudence,
that is most beneficial and equitable for all of the parties, the courts duty has
been satisfactorily fulfilled.
Thus, contrary to petitioners averments, this Court finds that the Court of
Appeals did not err in ruling that the RTC did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in adopting and
confirming the recommendations of the Commissioners.
WHEREFORE, premises considered, the Petition for Review on Certiorari is
hereby DENIED for lack of merit, and the assailed Decision dated 31 July
2002 of the Court of Appeals in docket no. CA-G.R. SP No. 67529 is
hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
OAQUIN QUIMPO, SR., substituted G.R. No. 160956
by Heirs of Joaquin Quimpo, Sr.,
Petitioners, Present:
YNARES-SANTIAGO, J
Chairperson,
41
 - versus - AUSTRIA-MARTINEZ,
CORONA,*
NACHURA, and
REYES, JJ.
CONSUELO ABAD VDA. DE
BELTRAN, IRENEO ABAD,
DANILO ABAD, MARITES Promulgated:
ABAD, ANITA and HELEN ABAD,
Respondents. February 13, 2008
x-----------------------------------------------------------------------------------------x
RESOLUTION
NACHURA, J.:
This Petition for Review on Certiorari assails the July 22, 2003 Decision[1] of
the Court of Appeals in CA-G.R. CV No. 56187, and the October 16, 2003
Resolution denying the motion for its reconsideration.
Eustaquia Perfecto-Abad (Eustaquia) was the owner of several
parcels of land in Goa, Camarines Sur, described as follows:
Parcel I - Residential land situated at Abucayan, Goa,
Camarines Sur covering an area of 684 square-meters;
Parcel II Coconut land situated at Abucayan, Goa, Camarines
Sur covering an area of 4.3731 hectares;
Parcel III Residential land situated at San Jose Street, Goa,
Camarines Sur covering an area of 1,395 square meters; and
Parcel IV Abaca and coconut land situated at Abucayan, Goa,
Camarines Sur covering an area 42.6127 hectares.[2]
Eustaquia died intestate in 1948 leaving these parcels of land to her
grandchild and great grandchildren, namely, Joaquin Quimpo and
respondents Consuelo, Ireneo, Danilo, Marites, Anita and Helen, all surnamed
Abad.
In 1966, Joaquin and respondents undertook an oral partition of parcel
III (San Jose property) and parcel IV. Half of the properties was given to
Joaquin and the other half to the respondents. However, no document of
partition was executed, because Joaquin refused to execute a deed. Consuelo
and Ireneo occupied their respective shares in the San Jose property, and
installed several tenants over their share in parcel IV. Joaquin, on the other
hand, became the administrator of the remaining undivided properties and of
the shares of respondents Danilo, Marites, Anita and Helen, who were still
minors at that time.
In 1989, Danilo, Marites, Anita and Helen wanted to take possession
of the portions allotted to them, but Joaquin prevented them from occupying
the same. Joaquin also refused to heed respondents demand for partition of
parcels I and II, prompting respondents to file a complaint for judicial partition
and/or recovery of possession with accounting and damages with the Regional
Trial Court (RTC) of Camarines Sur.[3]
Joaquin denied the material allegations in the complaint, and averred,
as his special and affirmative defenses, lack of cause of action and
prescription. He asserted absolute ownership over parcels III and IV, claiming
that he purchased these lands from Eustaquia in 1946, evidenced by deeds of
sale executed on August 23, 1946 and December 2, 1946. He, likewise,
claimed continuous, peaceful and adverse possession of these lots since
1946, and alleged that Consuelos occupation of the portion of the San
Jose property was by mere tolerance.[4]
During the pendency of the case, Joaquin died. Accordingly, he was
substituted by his wife, Estela Tena-Quimpo and his children, namely, Jose,
Adelia, Joaquin, Anita, Angelita, Amelia, Arlene, Joy and Aleli, all surnamed
Quimpo (the Quimpos).
On December 12, 1996, the RTC rendered a Decision [5] in favor of
respondents, declaring them as co-owners of all the properties left by
Eustaquia. It rejected Joaquins claim of absolute ownership over parcels III
and IV, and declared void the purported deeds of sale executed by Eustaquia
for lack of consideration and consent. The court found that at the time of the
execution of these deeds, Joaquin was not gainfully employed and had no
known source of income, which shows that the deeds of sale state a false
and fictitious consideration. Likewise, Eustaquia could not have possibly
given her consent to the sale because she was already 91 years old at that
time. The RTC also sustained the oral partition among the heirs in
1966. According to the trial court, the possession and occupation of land by
respondents Consuelo and Ireneo, and Joaquins acquiescence for 23 years,
furnish sufficient evidence that there was actual partition of the properties. It
held that Joaquin and his heirs are now estopped from claiming ownership
over the entire San Jose property as well as over parcel IV.
The RTC disposed, thus:
WHEREFORE, decision is hereby rendered in favor
of the plaintiffs Consuelo Vda. de Beltran, Ireneo Abad,
Marites Abad, Danilo Abad, Anita Abad and Helen Abad and
42
 against defendant Joaquin Quimpo, substituted by the latters
wife Estela Tena and their children, Amparo, Jose, Amelia,
Joaquin Jr., Adelia, Arlene, Anita, Joy, Angelita and Aleli, all
surnamed Quimpo, as follows:
1. Ordering the above-named substituted
defendants, and the plaintiffs to execute their
written agreement of partition with respect to
parcel Nos. III and IV more particularly described
in paragraph 7 of the complaint, and for them to
execute an agreement of partition with respect to
parcel Nos. I and II, both parcels are more
particularly described in paragraph 7 of the
complaint;
2. Declaring the plaintiffs Danilo Abad, Marites
Abad, Anita Abad and Helen Abad the owner of
six (6) hectares a portion included in parcel No.
IV also described in paragraph 7 of the complaint,
and therefore, entitled to its possession and
ordering the said substituted defendants to
deliver that portion to them as their share thereto;
3. Ordering the above-named substituted
defendants to pay plaintiffs the sum of Six
Thousand Pesos (P6,000.00), Philippine
Currency, as reasonable attorneys fees and the
sum of One Thousand Pesos (P1,000.00) also of
Philippine Currency, as litigation expenses and
for the said defendants to pay the costs.
The counterclaim, not being proved, the same is
hereby ordered dismissed.
SO ORDERED.[6]
On appeal, the CA affirmed the RTC ruling. Sustaining the RTC, the
CA declared that it was plausible that Eustaquias consent was vitiated
because she was then 91 years old and sickly. It was bolstered by the fact that
the deeds of sale only surfaced 43 years after its alleged execution and 23
years from the time of the oral partition. The CA also rejected petitioners
argument that the action was barred by prescription and laches, explaining
that prescription does not run against the heirs so long as the heirs, for whose
benefit prescription is invoked, have not expressly or impliedly repudiated the
co-ownership. The CA found no repudiation on Joaquins part. It, therefore,
concluded that respondents action could not be barred by prescription or
laches.
The Quimpos, thus, filed the instant petition for review on certiorari imputing
the following errors to the CA:
1) THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT PETITIONERS DID NOT ACQUIRE
OWNERSHIP OVER [THE] SUBJECT PARCELS OF LAND
BY WAY OF DEEDS OF ABSOLUTE SALE EXECUTED IN
THEIR FAVOR;
2) THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT CO-OWNERSHIP EXISTS AMONG
PETITIONERS AND RESPONDENTS OVER THE SUBJECT
PARCELS OF LAND;
3) THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT RESPONDENTS HAVE PROVEN THEIR
FILIATION TO THE ORIGINAL OWNER OF THE SUBJECT
PARCELS OF LAND BY MERE SCANT EVIDENCE;
4) THE HONORABLE COURT OF APPEALS ERRED IN NOT
RULING THAT LACHES HAS TIMEBARRED THE
RESPONDENTS FROM ASSAILING THE ABSOLUTE
OWNERSHIP OF PETITIONERS OVER THE SUBJECT
PARCELS OF LAND; AND
5) THE HONORABLE COURT OF APPEALS ERRED IN
RULING THAT RESPONDENTS ARE ENTITLED TO
ATTORNEYS FEES.[7]
The Quimpos insist on the validity of the deeds of sale between
Joaquin and Eustaquia. They assail the probative value and weight given by
the RTC and the CA in favor of the respondents pieces of evidence while
refusing to give credence or value to the documents they
presented. Specifically, they contend that the notarized deeds of sale and the
tax declarations should have adequately established Joaquins ownership of
parcels III and IV.
The contention has no merit. Well-entrenched is the rule that the
Supreme Courts role in a petition under Rule 45 is limited to reviewing or
reversing errors of law allegedly committed by the appellate court. Factual
findings of the trial court, especially when affirmed by the Court of Appeals,
are conclusive on the parties. Since such findings are generally not
reviewable, this Court is not duty-bound to analyze and weigh all over again
the evidence already considered in the proceedings below, unless the factual
43
findings complained of are devoid of support from the evidence on record or
the assailed judgment is based on a misapprehension of facts.[8]
Petitioners fail to convince us that the CA committed reversible
error in affirming the trial court and in giving no weight to the pieces of
evidence they presented.
The stated consideration for the sale are P5,000.00 and P6,000.00,
respectively, an amount which was so difficult to raise in the year
1946. Respondents established that at the time of the purported sale Joaquin
Quimpo was not gainfully employed. He was studying in Manila and Eustaquia
was the one supporting him; that when Eustaquia died two (2) years later,
Joaquin was not able to continue his studies. The Quimpos failed to override
this. Except for the incredible and unpersuasive testimony of Joaquins
daughter, Adelia Magsino, no other testimonial or documentary evidence was
offered to prove that Joaquin was duly employed and had the financial capacity
to buy the subject properties in 1946.
In Rongavilla v. Court of Appeals,[9] reiterated in Cruz v. Bancom Finance
Corp,[10] we held that a deed of sale, in which the stated consideration has not
been, in fact, paid is a false contract; that it is void ab initio.Furthermore, Ocejo
v. Flores,[11] ruled that a contract of purchase and sale is null and void and
produces no effect whatsoever where it appears that the same is without cause
or consideration which should have been the motive thereof, or the purchase
price which appears thereon as paid but which in fact has never been paid by
the purchaser to the vendor.
Likewise, both the trial court and the CA found that Eustaquia was 91
years old, weak and senile, at the time the deeds of sale were executed. In
other words, she was already mentally incapacitated by then, and could no
longer be expected to give her consent to the sale. The RTC and CA cannot,
therefore, be faulted for not giving credence to the deeds of sale in favor of
Joaquin.
Petitioners also presented Tax Declaration Nos. 3650,[12] 3708,[13] and
3659[14] to substantiate Joaquins claim of absolute dominion over parcels III
and IV. But we note that these tax declarations are all in the name of Eustaquia
Perfecto-Abad. These documents, therefore, do not support their claim of
absolute dominion since 1946, but enervate it instead. Besides, the fact that
the disputed property may have been declared for taxation purposes in the
name of Joaquin Quimpo does not necessarily prove ownership for it is well
settled that a tax declaration or tax receipts are not conclusive evidence of
ownership.[15] The CA, therefore, correctly found this proof inadequate to
establish Joaquins claim of absolute dominion.
For forty-three (43) years, Consuelo and Ireneo occupied their
portions of the San Jose property and significantly, Joaquin never disturbed
their possession. They also installed tenants in parcel IV, and Joaquin did not
prevent them from doing so, nor did he assert his ownership over the
same. These unerringly point to the fact that there was indeed an oral partition
of parcels III and IV.
In Maglucot-aw v. Maglucot,[16] we held, viz.:
[P]artition may be inferred from circumstances
sufficiently strong to support the presumption. Thus, after a
long possession in severalty, a deed of partition may be
presumed. It has been held that recitals in deeds, possession
and occupation of land, improvements made thereon for a
long series of years, and acquiescence for 60 years, furnish
sufficient evidence that there was an actual partition of land
either by deed or by proceedings in the probate court, which
had been lost and were not recorded.
Furthermore, in Hernandez v. Andal,[17] we explained that:
On general principle, independent and in spite of the statute
of frauds, courts of equity have enforced oral partition when
it has been completely or partly performed.
Regardless of whether a parol partition or
agreement to partition is valid and enforceable
at law, equity will in proper cases, where the
parol partition has actually been consummated
by the taking of possession in severalty and
the exercise of ownership by the parties of the
respective portions set off to each, recognize
and enforce such parol partition and the rights
of the parties thereunder. Thus, it has been
held or stated in a number of cases involving
an oral partition under which the parties went
into possession, exercised acts of ownership,
or otherwise partly performed the partition
agreement, that equity will confirm such
partition and in a proper case decree title in
accordance with the possession in severalty.
In numerous cases it has been held or
stated that parol partitions may be sustained
on the ground of estoppel of the parties to
assert the rights of a tenant in common as to
44
 parts of land divided by parol partition as to
which possession in severalty was taken and
acts of individual ownership were
exercised. And a court of equity will recognize
the agreement and decree it to be valid and
effectual for the purpose of concluding the
right of the parties as between each other to
hold their respective parts in severalty.
A parol partition may also be sustained on
the ground that the parties thereto have
acquiesced in and ratified the partition by
taking possession in severalty, exercising acts
of ownership with respect thereto, or otherwise
recognizing the existence of the partition.
A number of cases have specifically
applied the doctrine of part performance, or
have stated that a part performance is
necessary, to take a parol partition out of the
operation of the statute of frauds. It has been
held that where there was a partition in fact
between tenants in common, and a part
performance, a court of equity would have
regard to and enforce such partition agreed to
by the parties.
The CA, therefore, committed no reversible error in sustaining the oral partition
over parcels III and IV and in invalidating the deeds of sale between Eustaquia
and Joaquin.
Similarly, we affirm the CA ruling that respondents are co-owners of
the subject four (4) parcels of land, having inherited the same from a common
ancestor Eustaquia Perfecto-Abad. Petitioners assertion that respondents
failed to prove their relationship to the late Eustaquia deserves scant
consideration.
During the pre-trial, Joaquin Quimpo admitted that:
Eustaquia Perfecto Abad and Diego Abad had two (2) children
by the names of Leon Abad and Joaquin Abad; that Leon
Abad has three (3) children namely: Anastacia, Wilfredo and
Consuelo, all surnamed Abad; that Joaquin Abad has only
one (1) child, a daughter by the name of Amparo; that Wilfredo
has four (4) children, namely, Danilo, Helen, Marites and
Anita; Amparo has one child, son Joaquin Quimpo, x x x [18]
Consuelo was the grandchild of Eustaquia, while respondents Danilo, Helen,
Marites, Anita and also Joaquin Quimpo were Eustaquias great
grandchildren. As such, respondents can rightfully ask for the confirmation of
the oral partition over parcels III and IV, and the partition of parcels I and
II. Jurisprudence is replete with rulings that any co-owner may demand at any
time the partition of the common property unless a co-owner has repudiated
the co-ownership. This action for partition does not prescribe and is not subject
to laches.[19]
Finally, petitioners challenge the attorneys fees in favor of
respondents.
The grant of attorneys fees depends on the circumstances of each
case and lies within the discretion of the court. It may be awarded when a
party is compelled to litigate or to incur expenses to protect its interest by
reason of an unjustified act by the other,[20] as in this case.
In fine, we find no reversible error in the assailed rulings of the Court
of Appeals.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the
Court of Appeals in CA-G.R. CV No. 56187, are AFFIRMED.
SO ORDERED.
GAVINA MAGLUCOT-AW, CATALINA ORCULLO, RICHARD ESTANO,
NIDA MAGLUCOT, MELANIA MAGLUCOT-CATUBIG, EMILIANO
CATUBIG, LADISLAO SALMA, petitioners, vs. LEOPOLDO MAGLUCOT,
SEVERO MAGLUCOT, WILFREDA MAGLUCOT-ALEJO and
CONSTANCIO ALEJO, respondents.
DECISION
KAPUNAN, J.:
This petition for review on certiorari assails the Decision, dated 11 November
1997, of the Court of Appeals in CA-G.R. CV No. 48816 which reversed and
set aside the Decision, dated 13 December 1994, of the Regional Trial Court,
Branch 30 of Dumaguete City, Negros Oriental in an action for recovery of
possession and damages.
45
The core issue in this case is whether a partition of Lot No. 1639 had been
effected in 1952. Petitioners contend that there was already a partition of
said lot; hence, they are entitled to exclusive possession and ownership of
Lot No. 1639-D, which originally formed part of Lot No. 1639 until its partition.
Private respondents, upon the other hand, claim that there was no partition;
hence, they are co-owners of Lot No. 1639-D. Notably, this case presents a
unique situation where there is an order for partition but there is no showing
that the sketch/subdivision plan was submitted to the then Court of First
Instance for its approval or that a decree or order was registered in the
Register of Deeds.
The antecedent facts of the case are as follows: Korte
Petitioners filed with the RTC a complaint for recovery of possession and
damages alleging, inter alia, that they are the owners of Lot No. 1639-D. Said
lot was originally part of Lot No. 1639 which was covered by Original
Certificate Title No. 6775 issued in the names of Hermogenes Olis,
Bartolome Maglucot, Pascual Olis, Roberto Maglucot, Anselmo Lara and
Tomas Maglucot on 16 August 1927.[1] On 19 April 1952, Tomas Maglucot,
one of the registered owners and respondents predecessor-in-interest, filed a
petition to subdivide Lot No. 1639.[2] Consequently, on 13 May 1952, then
CFI of Negros Oriental issued an order[3] directing the parties to subdivide
said lot into six portions as follows: Rtcspped
a) Hermogenes Olis - lot 1639-A
b) Pascual Olis - lot 1639-B
c) Bartolome Maglucot - lot 1639-C
d) Roberto (Alberto) - lot 1639-D
Maglucot
e) Anselmo Lara - lot 1639-E
f) Tomas Maglucot - lot 1639-F.[4]
Sometime in 1963, Guillermo Maglucot rented a portion of Lot No. 1639-D
(subject lot). Subsequently, Leopoldo and Severo, both surnamed Maglucot,
rented portions of subject lot in 1964 and 1969, respectively, and each
paying rentals therefor. Said respondents built houses on their corresponding
leased lots. They paid the rental amount of P100.00 per annum to Mrs.
Ruperta Salma, who represented the heirs of Roberto Maglucot, petitioners
predecessor-in-interest. In December 1992, however, said respondents
stopped paying rentals claiming ownership over the subject lot. Petitioners
thus filed the complaint a quo. Sdaadsc
After trial, the lower court rendered judgment in favor of petitioners. The RTC
found the existence of tax declarations in the names of Hermogenes Olis and
Pascual Olis (purported owners of Lot Nos. 1639-A and 1639-B,
respectively)[5]as indubitable proof that there was a subdivision of Lot No.
1639. It likewise found that Tomas Maglucot, respondents predecessor-in-
interest, took active part in the partition as it was he, in fact, who commenced
the action for partition.[6]The court a quo cited Article 1431 of the Civil Code
which states that "[t]hrough estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon." Applying said provision of
law, it held that while there was no court order showing that Lot No. 1639
was partitioned, its absence could not be used by Tomas Maglucot, or
respondents as his successors-in-interest, to deny the existence of an
approved partition against the other co-owners who claim that there was
one.[7] Said court, likewise, ruled that the tax declarations[8] over the houses
of respondents, expressly stating that the same are constructed on the lots of
Roberto Maglucot, constitute a conclusive admission by them of the
ownership of the subject lot by the latter.[9]
The dispositive portion of the lower courts decision reads as follows: Missdaa
WHEREFORE, on the basis of the foregoing discussion,
judgment is hereby rendered in favor of the plaintiffs against
the defendants ordering the latter:
1. To demolish their houses inside lot 1639-D, vacate the
premises thereof and deliver the possession of the same to
Plaintiffs; Slxmis
2. To jointly and solidarily pay plaintiffs the sum of
P15,000.00 for attorneys fees;
3. To each pay plaintiffs the sum of P100.00 every year from
1993 for actual damages representing the amount of unpaid
rentals up to the time they actually vacate the premises in
question; Sclaw
4. To pay the costs.[10]
On appeal, the CA reversed the decision of the RTC. The appellate court
ruled that the sketch plan and tax declarations relied upon by petitioners are
not conclusive evidence of partition.[11] The CA likewise found that the
46
prescribed procedure under Rule 69 of the Rules of Court was not followed.
It thus declared that there was no partition of Lot No. 1639. Slxsc
Petitioners filed this petition for review on certiorari alleging that the CA
committed the following reversible errors:
I mutual agreement in 1946, judicial confirmation in 1952, and respondents
IN VIOLATING THE LAW ON ACQUISITIVE
PRESCRIPTION PLAINTIFFS HAVING POSSESSED LOT
1639-D SINCE 1946;
II
IN VIOLATING THE LAW ON ESTOPPEL; THE FACT OF
PAYMENT OF RENTALS AND OFFER TO BUY BY THE
DEFENDANTS IS ADMISSION THAT THE AREA IN LOT
1639-D, HAD LONG BEEN ADJUDICATED TO
PLAINTIFFS;
III
IN DECLARING THAT THERE WAS NO PRIOR
PARTITION, CONTRARY TO THE FINDINGS OF THE
TRIAL COURT, AND AGAINST THE EVIDENCE ON
RECORD, OF WHICH IF PROPERLY CONSIDERED
WOULD CHANGE THE OUTCOME OF THE CASE;
IV
IN DECLARING THAT THERE IS NO LAW OR
JURISPRUDENCE APPLICABLE UNDER THE PREMISES;
THIS WOULD ONLY SHOW THAT THE RECORD OF THE
CASE WAS NOT PROPERLY SCRUTINIZED, AND THE
LAW WAS NOT PROPERLY STUDIED; ESPECIALLY IN
THE CASE AT BENCH THAT THE ORAL AND MUTUAL
PARTITION HAPPENED DURING THE REGIME OF THE
OLD RULES OF PROCEDURE;[12]
Petitioners maintain that Lot No. 1639 was mutually partitioned and
physically subdivided among the co-owners and that majority of them
participated in the actual execution of the subdivision. Further, the co-owners
accepted their designated shares in 1946 as averred by Tomas Maglucot in
his petition for partition.[13] Petitioners opine that in 1952, Tomas Maglucot
himself initiated a court proceeding for a formal subdivision of Lot No. 1639.
In said petition, he averred that only Hermogenes Olis and the heirs of
Pascual Olis were not agreeable to the partition.[14] Petitioners further
contend that respondents admitted in their tax declarations covering their
respective houses that they are "constructed on the land of Roberto
Maglucot."[15] Simply put, petitioners vigorously assert that respondents are
estopped from claiming to be co-owners of the subject lot in view of the
acquiescence because they themselves exclusively exercised ownership
over Lot No. 1639-A beginning 1952 up to the present.[16]
For their part, respondents posit three points in support of their position. First,
they emphasize that petitioners failed to show that the interested parties
were apprised or notified of the tentative subdivision contained in the sketch
and that the CFI subsequently confirmed the same.[17] Second, they point to
the fact that petitioners were unable to show any court approval of any
partition.[18] Third, they maintain that Lot No. 1639 remain undivided since to
date, OCT No. 6275 is still an existing and perfectly valid title, containing no
annotation of any encumbrance or partition whatsoever.[19]
After a careful consideration of the pleadings filed by the parties and the
evidence on record, we find that the petition is meritorious. As stated earlier,
the core issue in this case is whether there was a valid partition in
1952. Scslx
Preliminarily, this Court recognizes that "the jurisdiction of this Court in cases
brought before it from the Court of Appeals via Rule 45 of the Rules of Court
is limited to reviewing errors of law. Findings of fact of the latter are
conclusive, except in the following instances: (1) when the findings are
grounded entirely on speculation, surmises, or conjectures; (2) when the
inference made is manifestly mistaken, absurd, or impossible; (3) when there
is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when in making its findings the Court of Appeals went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellant
and the appellee; (7) when the findings are contrary to those of the trial court;
(8) when the findings are conclusions without citation of specific evidence on
which they are based; (9) when the facts set forth in the petition as well as in
the petitioners main and reply briefs are not disputed by the respondent; and
(10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record."[20] This case falls
under exceptions (7), (8) and (10) in that the findings of facts of the CA are in
conflict with that of the RTC, are mere conclusions without citation of specific
evidence on which they are based and are premised on absence of evidence
but are contradicted by the evidence on record. For these reasons, we shall
consider the evidence on record to determine whether indeed there was
partition. Slx
47
In this jurisdiction, an action for partition is comprised of two phases: first, an
order for partition which determines whether a co-ownership in fact exists,
and whether partition is proper; and, second, a decision confirming the
sketch or subdivision submitted by the parties or the commissioners
appointed by the court, as the case may be.[21] The first phase of a partition
and/or accounting suit is taken up with the determination of whether or not a
co-ownership in fact exists, (i.e., not otherwise legally proscribed) and may
be made by voluntary agreement of all the parties interested in the property.
This phase may end with a declaration that plaintiff is not entitled to have a
partition either because a co-ownership does not exist, or partition is legally
prohibited. It may end, upon the other hand, with an adjudgment that a co-
ownership does in truth exist, partition is proper in the premises and an
accounting of rents and profits received by the defendant from the real estate
in question is in order. In the latter case, the parties may, if they are able to
agree, make partition among themselves by proper instruments of
conveyance, and the court shall confirm the partition so agreed upon. In
either case i.e., either the action is dismissed or partition and/or accounting is
decreed the order is a final one, and may be appealed by any party
aggrieved thereby. The second phase commences when it appears that "the
parties are unable to agree upon the partition" directed by the court. In that
event, partition shall be done for the parties by the court with the assistance
of not more than three (3) commissioners. This second stage may well also
deal with the rendition of the accounting itself and its approval by the court
after the parties have been accorded opportunity to be heard thereon, and an
award for the recovery by the party or parties thereto entitled of their just
share in the rents and profits of the real estate in question. Such an order is,
to be sure, final and appealable.[22]
The present rule on the question of finality and appealability of a decision or
order decreeing partition is that it is final and appealable.[23] The order of
partition is a final determination of the co-ownership over Lot No. 1639 by the
parties and the propriety of the partition thereof. Hence, if the present rule
were applied, the order not having been appealed or questioned by any of
the parties to the case, it has become final and executory and cannot now be
disturbed. Mesm
The true test to ascertain whether or not an order or a judgment is
interlocutory or final is: Does it leave something to be done in the trial court
with respect to the merits of the case? If it does, it is interlocutory; if it does
not, it is final. The key test to what is interlocutory is when there is something
more to be done on the merits of the case.[24] An order for partition is final
and not interlocutory and, hence, appealable because it decides the rights of
the parties upon the issue submitted.[25]
However, this Court notes that the order of partition was issued when the
ruling in Fuentebella vs. Carrascoso,[26] which held that the order of partition
is interlocutory, was controlling. In addition, the reports of the commissioners
not having been confirmed by the trial court are not binding.[27] In this case,
both the order of partition and the unconfirmed sketch plan are, thus,
interlocutory. Nevertheless, where parties do not object to the interlocutory
decree, but show by their conduct that they have assented thereto, they
cannot thereafter question the decree,[28] especially, where, by reason of
their conduct, considerable expense has been incurred in the execution of
the commission.[29] Respondents in this case have occupied their respective
lots in accordance with the sketch/subdivision plan. They cannot after
acquiescing to the order for more than forty (40) years be allowed to question
the binding effect thereof.
This case is to be distinguished from the order in the action for partition
in Arcenas vs. Cinco.[30] In that case, the order was clearly interlocutory since
it required the parties " to submit the corresponding deed of partition to the
Court for its approval." Here, the order appointed two commissioners and
directed them merely to approve the sketch plan already existing and
tentatively followed by the parties. Calrky
Under the present rule, the proceedings of the commissioners without being
confirmed by the court are not binding upon the parties.[31] However, this rule
does not apply in case where the parties themselves actualized the
supposedly unconfirmed sketch/subdivision plan. The purpose of court
approval is to give effect to the sketch/subdivision plan. In this case, the
parties themselves or through their predecessors-in-interest implemented the
sketch plan made pursuant to a court order for partition by actually occupying
specific portions of Lot No. 1639 in 1952 and continue to do so until the
present until this case was filed, clearly, the purpose of the court approval
has been met. This statement is not to be taken to mean that confirmation of
the commissioners may be dispensed with but only that the parties herein
are estopped from raising this question by their own acts of ratification of the
supposedly non-binding sketch/subdivision plan. Kycalr
The records of the case show that sometime in 1946 there was a prior oral
agreement to tentatively partition Lot No. 1639.[32] By virtue of this
agreement, the original co-owners occupied specific portions of Lot No.
1639.[33] It was only in 1952 when the petition to subdivide Lot No. 1639 was
filed because two of the co-owners, namely Hermogenes Olis and heirs of
Pascual Olis, refused to have said lot subdivided and have separate
certificates of title. Significantly, after the 1952 proceedings, the parties in this
case by themselves and/or through their predecessors-in-interest occupied
specific portions of Lot No. 1639 in accordance with the sketch plan. Such
possession remained so until this case arose, or about forty (40) years later.
From its order in 1952, it can be gleaned that the CFI took notice of the
tentative subdivision plan by oral partition of the parties therein. Further, it
48
appears that said court was aware that the parties therein actually took
possession of the portions in accordance with the sketch/subdivision plan.
With this factual backdrop, said court ordered the partition and appointed two
(2) commissioners to approve the tentative sketch/subdivision plan. It would
not be unreasonable to presume that the parties therein, having occupied
specific portions of Lot No. 1639 in accordance with the sketch/subdivision
plan, were aware that it was that same sketch/subdivision plan which would
be considered by the commissioners for approval. There is no showing that
respondents by themselves or through their predecessors-in-interest raised
any objections. On the contrary, the records show that the parties continued
their possession of the specific portions of Lot No. 1639 pursuant to the
sketch/subdivision plan. Kyle
It has been previously held that a co-owner, who, though not a party to a
partition accepts the partition allotted to him, and holds and conveys the
same in severalty, will not be subsequently permitted to avoid partition. [34] It
follows that a party to a partition is also barred from avoiding partition when
he has received and held a portion of the subdivided land especially in this
case where respondents have enjoyed ownership rights over their share for a
long time.
Parties to a partition proceeding, who elected to take under partition, and
who took possession of the portion allotted to them, are estopped to question
title to portion allotted to another party.[35] A person cannot claim both under
and against the same instrument.[36] In other words, they accepted the lands
awarded them by its provisions, and they cannot accept the decree in part,
and repudiate it in part. They must accept all or none.[37] Parties who had
received the property assigned to them are precluded from subsequently
attacking its validity of any part of it.[38] Here, respondents, by themselves
and/or through their predecessors-in-interest, already occupied of the lots in
accordance with the sketch plan. This occupation continued until this action
was filed. They cannot now be heard to question the possession and
ownership of the other co-owners who took exclusive possession of Lot
1639-D also in accordance with the sketch plan. Exsm
In technical estoppel, the party to be estopped must knowingly have acted so
as to mislead his adversary, and the adversary must have placed reliance on
the action and acted as he would otherwise not have done. Some authorities,
however, hold that what is tantamount to estoppel may arise without this
reliance on the part of the adversary, and this is called, ratification or election
by acceptance of benefits, which arises when a party, knowing that he is not
bound by a defective proceeding, and is free to repudiate it if he will, upon
knowledge, and while under no disability, chooses to adopt such defective
proceeding as his own.[39] Ratification means that one under no disability
voluntarily adopts and gives sanction to some unauthorized act or defective
proceeding, which without his sanction would not be binding on him. It is this
voluntary choice, knowingly made, which amounts to a ratification of what
was theretofore unauthorized, and becomes the authorized act of the party
so making the ratification.[40]
The records show that respondents were paying rent for the use of a portion
of Lot No. 1639-D. Had they been of the belief that they were co-owners of
the entire Lot No. 1639 they would not have paid rent. Respondents
attempted to counter this point by presenting an uncorroborated testimony of
their sole witness to the effect that the amount so paid to Roberto Maglucot
and, subsequently, to Ruperta Salma were for the payment of real property
taxes. We are not persuaded. It is quite improbable that the parties would be
unaware of the difference in their treatment of their transactions for so long a
time. Moreover, no evidence was ever presented to show that a tax
declaration for the entire Lot No. 1639 has ever been made. Replete in the
records are tax declarations for specific portions of Lot 1639. It is
inconceivable that respondents would not be aware of this. With due
diligence on their part, they could have easily verified this fact. This they did
not do for a period spanning more than four decades.
The payment of rentals by respondents reveal that they are mere lessees. As
such, the possession of respondents over Lot No. 1639-D is that of a holder
and not in the concept of an owner. One who possesses as a mere holder
acknowledges in another a superior right which he believes to be ownership,
whether his belief be right or wrong.[41] Since the possession of respondents
were found to be that of lessors of petitioners, it goes without saying that the
latter were in possession of Lot No. 1639-D in the concept of an owner from
1952 up to the time the present action was commenced. Msesm
Partition may be inferred from circumstances sufficiently strong to support
the presumption.[42] Thus, after a long possession in severalty, a deed of
partition may be presumed.[43] It has been held that recitals in deeds,
possession and occupation of land, improvements made thereon for a long
series of years, and acquiescence for 60 years, furnish sufficient evidence
that there was an actual partition of land either by deed or by proceedings in
the probate court, which had been lost and were not recorded.[44] And where
a tract of land held in common has been subdivided into lots, and one of the
lots has long been known and called by the name of one of the tenants in
common, and there is no evidence of any subsequent claim of a tenancy in
common, it may fairly be inferred that there has been a partition and that
such lot was set off to him whose name it bears.[45]
Respondents insist that the absence of any annotation in the certificate of
title showing any partition of Lot No. 1639 and that OCT No. 6725 has not
been canceled clearly indicate that no partition took place. The logic of this
argument is that unless partition is shown in the title of the subject property,
49
there can be no valid partition or that the annotation in the title is the sole
evidence of partition. Esmso
Again, we are not persuaded. The purpose of registration is to notify and
protect the interests of strangers to a given transaction, who may be ignorant
thereof, but the non-registration of the deed evidencing such transaction
does not relieve the parties thereto of their obligations thereunder.[46] As
originally conceived, registration is merely a species of notice. The act of
registering a document is never necessary in order to give it legal effect as
between the parties.[47]Requirements for the recording of the instruments are
designed to prevent frauds and to permit and require the public to act with
the presumption that recorded instruments exist and are genuine.[48]
It must be noted that there was a prior oral partition in 1946. Although the
oral agreement was merely tentative, the facts subsequent thereto all point to
the confirmation of said oral partition. By virtue of that agreement, the parties
took possession of specific portions of the subject lot. The action for partition
was instituted because some of the co-owners refused to have separate titles
issued in lieu of the original title. In 1952, an order for partition was issued by
the cadastral court. There is no evidence that there has been any change in
the possession of the parties. The only significant fact subsequent to the
issuance of the order of partition in 1952 is that respondents rented portions
of Lot No. 1639-D. It would be safe to conclude, therefore, that the oral
partition as well as the order of partition in 1952 were the bases for the
finding of actual partition among the parties. The legal consequences of the
order of partition in 1952 having been discussed separately, we now deal
with oral partition in 1946. Given that the oral partition was initially tentative,
the actual possession of specific portions of Lot No. 1639 in accordance with
the oral partition and the continuation of such possession for a very long
period indicate the permanency and ratification of such oral partition. The
validity of an oral partition is already well-settled. In Espina vs. Abaya,[49] we
declared that an oral partition is valid. In Hernandez vs. Andal,[50] reiterated
in Tan vs. Lim,[51] this Court has ruled, thus:
On general principle, independent and in spite of the statute
of frauds, courts of equity have enforce oral partition when it
has been completely or partly performed. Esmmis
Regardless of whether a parol partition or agreement to
partition is valid and enforceable at law, equity will proper
cases where the parol partition has actually been
consummated by the taking of possession in severalty and
the exercise of ownership by the parties of the respective
portions set off to each, recognize and enforce such parol
partition and the rights of the parties thereunder. Thus, it has
been held or stated in a number of cases involving an oral
partition under which the parties went into possession,
exercised acts of ownership, or otherwise partly performed
the partition agreement, that equity will confirm such partition
and in a proper case decree title in accordance with the
possession in severalty.
In numerous cases it has been held or stated that parol
partition may be sustained on the ground of estoppel of the
parties to assert the rights of a tenant in common as to parts
of land divided by parol partition as to which possession in
severalty was taken and acts of individual ownership were
exercised. And a court of equity will recognize the
agreement and decree it to be valid and effectual for the
purpose of concluding the right of the parties as between
each other to hold their respective parts in severalty.
A parol partition may also be sustained on the ground that
the parties thereto have acquiesced in and ratified the
partition by taking possession in severalty, exercising acts of
ownership with respect thereto, or otherwise recognizing the
existence of the partition.
A number of cases have specifically applied the doctrine of
part performance, or have stated that a part performance is
necessary, to take a parol partition out of the operation of the
statute of frauds. It has been held that where there was a
partition in fact between tenants in common, and a part
performance, a court of equity would have regard to enforce
such partition agreed to by the parties. Esmsc
Two more points have constrained this Court to rule against respondents.
First, respondents Wilfreda Maglucot-Alejo and Constancio Alejo offered to
buy the share of Roberto Maglucot. Second, the tax declarations contain
statements that the houses of respondents were built on the land owned by
Roberto Maglucot. Esm
On the first point, petitioners presented Aida Maglucot who testified that after
respondents were informed that petitioners were going to use Lot No. 1639-D
belonging to Roberto Maglucot, respondents Wilfreda Maglucot-Alejo and
Constancio Alejo went to the house of said witness and offered to buy the
share of Roberto Maglucot.[52] Aida Maglucot further testified that they
refused the offer because they also intend to use the lot for a residential
purpose.[53] This testimony of Aida Maglucot is unrebutted by respondents,
and the CA did not touch upon this finding of fact. Hence, the offer to buy has
been established by the unrebutted evidence of the petitioners. Why would
they give such offer if they claim to be at least a co-owner of the said lot? In
50
effect, respondents impliedly admit the title of the petitioners and that they
are not co-owners, much less the sole owners, of Lot No. 1639-D. Chief
On the second point, the existence of Tax Declaration No. 04-557 in the
names of Constancio Alejo and Godofreda Maglucot,[54] Tax Declaration No.
04-87-13 in the names of Leopoldo Maglucot and Regina Barot,[55] Tax
Declaration No. 04-593 in the names of Severo Maglucot and Samni
Posida[56] showing that the houses of the above-mentioned persons are
constructed on the land of Roberto Maglucot[57] constitute incontrovertible
evidence of admission by the same persons of the ownership of the land by
Roberto Maglucot. Tax Declarations are public documents. Unless their
veracity is directly attacked, the contents therein are presumed to be true and
accurate.[58] The lone testimony of Severo Maglucot that Roberto Maglucot
was only made to appear as owner of the land in their respective
declarations because he was the administrator of Lot No. 1639 is
uncorroborated and not supported by any other evidence. Jksm
No injustice is dealt upon respondents because they are entitled to occupy a
portion of Lot No. 1639, particularly Lot No. 1639-A, in their capacity as heirs
of Tomas Maglucot, one of the original co-owners of Lot No. 1639 in
accordance with the sketch plan of said lot showing the partition into six
portions.[59]
Finally, this Court takes notice of the language utilized by counsel for
petitioners in their petition for review on certiorari. Thrice in the petition,
counsel for petitioners made reference to the researcher of the CA. First, he
alluded to the lack of scrutiny of the records and lack of study of the law "by
the researcher."[60] Second, he cited the researcher of the CA as having
"sweepingly stated without reference to the record"[61] that "[w]e have
scanned the records on hand and found no evidence of any partition."
Finally, counsel for petitioners assailed the CA decision, stating that "this will
only show that there was no proper study of the case by the researcher."[62]
Any court when it renders a decision does so as an arm of the justice system
and as an institution apart from the persons that comprise it. Decisions are
rendered by the courts and not the persons or personnel that may participate
therein by virtue of their office. It is highly improper and unethical for counsel
for petitioners to berate the researcher in his appeal. Counsel for petitioner
should be reminded of the elementary rules of the legal profession regarding
respect for the courts by the use of proper language in its pleadings and
admonished for his improper references to the researcher of the CA in his
petition. A lawyer shall abstain from scandalous, offensive, or menacing
language or behavior before the courts.[63]
WHEREFORE, the petition is GRANTED The decision of the Court of
Appeals is SET ASIDE and the decision of the Regional Trial Court is hereby
REINSTATED. h Y
SO ORDERED.
G.R. No. 170080 April 4, 2007
CONSOLACION Q. AUSTRIA, Petitioner,
vs.
CONSTANCIA Q. LICHAUCO, CONSUELO Q. JALANDONI, JOSE
ALBERTO L. QUINTOS, RICARDO M. QUINTOS, JR., AILEEN M.
QUINTOS and TYRONE M. QUINTOS, Respondents.
DECISION
TINGA, J.:
Petitioner Consolacion Q. Austria assails the Decision 1 of the Court of
Appeals in C.A. G.R. CV No. 68591 dated June 21, 2005 and its
Resolution2 dated October 7, 2005, which respectively affirmed the
decision3 of the Regional Trial Court of Makati City, Branch 142, dated
February 14, 2000 and its order4 dated August 7, 2000, and denied
petitioners motion for reconsideration.
The facts as narrated by the Court of Appeals are as follows:
Plaintiffs-appellees Constancia Lichauco, Consuelo Jalandoni, defendants
Benedicto Quintos and Antonio Quintos, and defendant-appellant
Consolacion Austria are siblings of full blood. Jose Alberto, Ricardo, Jr.,
Aileen and Tyrone, all surnamed Quintos, are the nephews and niece of the
defendant-appellant.
The above-named persons are co-owners of two (2) parcels of land with an
aggregate area of six hundred sixty one (661) square meters located in
Palanan, Makati City. The aforesaid parcels of land have permanent
improvements thereon which straddle both lots, namely, a residential
bungalow and two (2) units, two-storey apartments, the titles of which are
registered jointly in the names of the parties as co-owners thereof.
The plaintiffs-appellees allege that sometime in the early part of 1996, they
informed defendant-appellant of their desire to have the subject properties
partitioned based on the percentage of each co-owners respective share.
51
A realtor was even engaged to prepare the schemes by which the subject
properties could be physically partitioned among the co-owners. However,
the defendant-appellant Austria refused to accede to any of the schemes
presented by the realtor for the physical apportionment of the subject
properties between the co-owners thereof.
Because of the refusal of the defendant-appellant Austria to partition the
property, and the inability of the co-owners to mutually agree on an
arrangement acceptable to all of them, on July 1, 1997, the plaintiffs-
appellees filed a complaint with the Regional Trial Court of Makati City,
Branch 142, which was docketed as Civil Case No. 97-1485, against the
defendant-appellant Austria and two other defendants namely Benedicto
Quintos and Antonio Quintos (as unwilling co-plaintiffs) for partition of the
subject property.
Within the period for filing an answer, the defendant-appellant Austria filed
an Omnibus Motion to Dismiss.
In its order dated November 10, 1997, the lower court denied the omnibus
motion to dismiss of the defendant-appellant Austria, and directed the
defendants to file their answer within the remaining period provided by the
Rules.
Within the prescriptive period, the defendant-appellant Austria filed a Motion
for Reconsideration of the November 10, 1997 order, which the lower court
denied in an order dated February 2, 1998.
Not satisfied, the defendant-appellant Austria filed before the Court of
Appeals a Petition for certiorari and prohibition under Rule 65 of the Revised
Rules of Court which was docketed as CA-GR SP No. 46907, seeking to
annul the orders of November 10, 1997 and February 2, 1998.
In a Resolution dated July 9, 1998, the Court of Appeals required the
plaintiffs-appellees to comment, and temporarily restrained the respondent
judge, his agents, representatives, and other persons acting in his behalf
from proceeding with Civil Case No. 97-1485 in order that the petition may
not become moot and academic.
On November 9, 1998, the defendant-appellant Austria received a copy of
the Decision dated October 30, 1998 dismissing her petition for certiorari and
prohibition. The defendant-appellant Austria moved for the reconsideration
thereof.
Subsequently, on July 19, 2001, defendant-appellant Austria received a copy
of the Resolution of the Court of Appeals dated July 9, 2001, denying her
motion for reconsideration of the decision denying her petition for certiorari
and prohibition.
Undaunted, the defendant-appellant Austria then filed a petition for review
under Rule 45 of the Revised Rules of Court with the Supreme Court.
In a resolution dated October 15, 2001, the Supreme Court denied the said
petition for review for non-compliance with the 1997 Rules of Civil Procedure
for failure to pay on time docket and other fees and deposit costs in violation
of Sec. 3, Rule 45 in relation to Sec. 5(c), Rule 56.
Still not satisfied, on November 9, 2001, the defendant-appellant Austria filed
a motion for reconsideration of the resolution dated October 15, 2001
denying her petition for review.
In its resolution dated January 24, 2002, the Supreme Court denied with
finality the petitioners motion for reconsideration.
During the pendency of the defendant-appellants petition for certiorari and
prohibition before the Court, the plaintiffs-appellees filed with the Regional
Trial Court of Makati City, Branch 142 where the main case is pending, a
motion dated April 6, 1998 praying that a declaration of default be issued
against all defendants and for plaintiffs to be allowed to present evidence ex-
parte.
In an order dated July 13, 1998, the Presiding Judge of the Regional Trial
Court of Makati City held in abeyance the proceedings before it while
awaiting the resolution of the motion for reconsideration pending before the
Court of Appeals.
Notwithstanding the order holding in abeyance the proceedings in the lower
court, plaintiffs-appellees filed a Manifestation and Motion dated September
14, 1998 praying for the resolution of their Motion dated April 6, 1998. In its
order dated September 25, 1998, the lower court deemed the incident
submitted for resolution.
While the motion for reconsideration filed by the appellant is still pending
before the Court of Appeals, the lower court in its order dated July 6, 1999
declared the defendants in default, set the reception of ex-parte evidence,
and commissioned the Branch Clerk of Court to receive the ex-
parte evidence and to submit her corresponding report thereon as soon as
the same is concluded.
On On August 4, 1999, the defendant-appellant Austria filed a Motion for
Reconsideration of the Order dated July 6, 1999 with an urgent prayer to
52
cancel plaintiffs ex parte presentation of evidence on August 9, 1999, which
was however denied by the lower court, for lack of merit, in an order dated
January 14, 2000.
The plaintiffs-appellees then presented their evidence ex-parte on January
28, 2000.
The assailed decision was subsequently rendered by the lower court on
February 14, 2000, finding in favor of the plaintiffs-appellees.
A motion for new trial was thereafter filed by the defendant-appellant Austria,
which was, in an order dated August 7, 2000, denied for lack of merit.5
Petitioner elevated the case to the Court of Appeals which dismissed her
petition and affirmed the trial courts decision but deleted the order that
petitioner pay reasonable rental for her use of a portion of the disputed
properties. The appellate court denied reconsideration.
In assailing the Decision of the Court of Appeals, petitioner avers that her
motion for new trial and appeal of the judgment by default are valid remedies
under the Rules of Court. She insists that the appellate court erred in not
reversing the declaration of default despite the fact that she questioned the
default order in the petition for review which she seasonably filed with the
Court of Appeals. Petitioner also contends that it was error for the trial court
to allow the sale of the entire property in dispute.
Respondents filed a Comment6 dated March 30, 2006, arguing that petitioner
was correctly declared in default because of her obstinate refusal to file an
answer to the complaint despite being ordered to do so by the trial court.
They also allege that they cannot be compelled to remain in co-ownership
only because of petitioners unjustified refusal to consent to a partition.
A Reply to Comment7 dated July 25, 2006 was filed by petitioner who
insisted that she was denied the right to fully ventilate her case.
Only two issues are raised in this petition. The first issue pertains to
petitioners insistence that the judgment by default rendered by the trial court,
which was subsequently affirmed by the Court of Appeals, is a denial of her
day in court. The second issue concerns the validity of the trial courts
decision alternatively ordering the partition of the subject property or
authorizing its sale.
A defendant declared in default has the following remedies: (a) a motion to
set aside the order of default under Sec. 3(b), Rule 9 of the Rules of Court;
(b) a motion for new trial under Sec. 1(a), Rule 37 if the default was
discovered after judgment but while appeal is still available; (c) a petition for
relief under Rule 38 if judgment has become final and executory; and (d) an
appeal from the judgment under Sec. 1, Rule 41 even if no petition to set
aside the order of default has been resorted to.8
In this case, petitioner did not move to set aside the order of default rendered
by the trial court but filed a motion for new trial after a decision had already
been rendered in the case. The motion for new trial, however, was denied by
the trial court for lack of merit. She then appealed to the Court of Appeals,
assailing both the denial of her motion for new trial and the adverse decision
of the trial court.
Evidently, petitioner utilized the appropriate remedies available to her. The
fact, however, that she availed of the proper remedies does not by itself
result in a judgment in her favor or the reversal of the assailed order and
decision of the trial court. As correctly ruled by the Court of Appeals,
petitioner was declared in default because of her adamant refusal to file an
answer despite being required to do so.
The factual circumstances in the cases of Heirs of Akut v. Court of
Appeals9 and Ampeloquio v. Court of Appeals,10cited by petitioner in
pleading liberality, are markedly different from this case. In Heirs of
Akut, petitioners were not able to file an answer within the reglementary
period because they failed to obtain the services of counsel on time and two
of the petitioners were then sick. In Ampeloquio, the trial courts order
denying defendants motion to dismiss was mistakenly served upon one of its
counsels on record and not upon the lawyer in charge of the case.
Consequently, the answer was not filed on time. In both cases, there was no
indication that the failure to answer was intended to delay the case.
In contrast, the facts of this case suggest an intention on the part of petitioner
to delay the proceedings. The complaint was first filed in 1997 but is only
now being finally laid to rest because of several procedural stumbling blocks,
including the elevation of the case to this Court on the issue of the propriety
of the trial courts denial of petitioners motion to dismiss, hurled by petitioner
one after the other.
Parenthetically, the appellate court initially issued a temporary restraining
order as an incident to the petition for certiorari filed by petitioner questioning
the trial courts order denying her motion to dismiss but the restraining order
was lifted after its 60-day validity.11 The expiration of the temporary
restraining order resulted in the running of the prescribed period to file an
answer and the continuation of the proceedings before the trial court.
Petitioners obstinate refusal to file an answer to the complaint despite these
circumstances clearly justifies the declaration of default by the trial court and
its affirmation by the Court of Appeals.
53
This case has crept, ever so slowly, up the ladder of judicial process. While
we are not dissuading parties from availing of the judicial remedies outlined
in the Rules of Court, they should be cautioned to be judicious in availing of
these remedies. After all, rules of procedure are intended to be, not tools of
delay, but of prompt and just disposition of every partys cause. Having fully
availed of, even exploited, these remedies, petitioner cannot feign denial of
her day in court. She has been given every opportunity to fully ventilate her
side.
Now, we turn to the second issue raised by petitioner, i.e., the validity of the
trial courts decision alternatively directing the partition of the subject
properties or authorizing their sale to a third party.
There are two stages in every action for partition. The first phase is the
determination of whether a co-ownership in fact exists and a partition is
proper, i.e., not otherwise legally proscribed, and may be made by voluntary
agreement of all the parties interested in the property. This phase may end
either: (a) with a declaration that plaintiff is not entitled to have a partition
either because a co-ownership does not exist, or partition is legally
prohibited; or (b) with a determination that a co-ownership does in truth exist,
partition is proper in the premises, and an accounting of rents and profits
received by the defendant from the real estate in question is in order. In the
latter case, the parties may, if they are able to agree, make partition among
themselves by proper instruments of conveyance, and the court shall confirm
the partition so agreed upon.12
The second phase commences when it appears that the parties are unable
to agree upon the partition directed by the court. In that event, partition shall
be done for the parties by the court with the assistance of not more than
three (3) commissioners. This second stage may well also deal with the
rendition of the accounting itself and its approval by the court after the parties
have been accorded opportunity to be heard thereon, and an award for the
recovery by the party or parties thereto entitled of their just share in the rents
and profits of the real estate in question.13
The proceedings in this case have only reached the first phase. It must be
mentioned as an aside that even if the order decreeing partition leaves
something more to be done by the trial court for the complete disposition of
the case, i.e., the appointment of commissioners, the proceedings for the
determination of just compensation by the appointed commissioners, the
submission of their reports and hearing thereon, and the approval of the
partition, it is considered a final order and may be appealed by the party
aggrieved thereby.14
There is no question that a co-ownership exists between petitioner and
respondents. To this extent, the trial court was correct in decreeing partition
in line with the Civil Code provision that no co-owner shall be obliged to
remain in the co-ownership.15
However, the trial court went astray when it also authorized the sale of the
subject properties to a third party and the division of the proceeds thereof.
What makes this portion of the decision all the more objectionable is the fact
that the trial court conditioned the sale upon the price and terms acceptable
to plaintiffs (respondents herein) only, and adjudicated the proceeds of the
sale again only to plaintiffs. The pertinent portion of the trial courts
disposition states:
WHEREFORE, on the basis of the foregoing considerations, judgment is
hereby rendered in favor of plaintiff:
1) Directing the partition (physical division) of the subject properties
and all improvements thereon among the co-owners in accordance
with their respective shares; or
2) Authorizing the sale, conveyance or transfer of the above-
described properties to a third-party at such price and under such
terms acceptable to plaintiffs and thereafter, dividing the
proceeds of said sale among them in accordance with their
proportionate interests.16 [Emphasis supplied.]
It is true that petitioner did not assign this error on appeal resulting in the
appellate courts failure to rule on the matter. Nonetheless, we cannot simply
brush this issue aside considering that its resolution is necessary in arriving
at a just disposition of the case.17 The rectification of the trial courts decision
is accordingly in order.
WHEREFORE, the petition is GRANTED IN PART. The Decision of the
Court of Appeals dated June 21, 2005 is REVERSED in so far as it affirms
the portion of the decision dated February 14, 2000 of the Regional Trial
Court of Makati City, Branch 142, which authorizes the sale, conveyance or
transfer of the properties subject of this case and the division of the proceeds
of said sale to respondents herein. The Decision dated June 21, 2005 and
Resolution dated October 7, 2005 are AFFIRMED in all other respects. No
pronouncement as to costs.
SO ORDERED.
CONCEPCION V. VDA. DE DAFFON, petitioner, vs. THE HONORABLE
COURT OF APPEALS, LOURDES OSMEA VDA. DE DAFFON,
AILEEN DAFFON, JOSELITO DAFFON, JR., ANA VANESA
DAFFON, LEILA DAFFON and SUZETTE DAFFON, respondents.
54
 DECISION
YNARES-SANTIAGO, J.:
Petitioner Concepcion Villamor was married to the late Amado Daffon,
with whom she begot one son, Joselito Daffon. Joselito married Lourdes
Osmea, and they bore six children, namely, Aileen, Joselito Jr., Ana Vanesa,
Leila, Julius and Suzette.
Amado passed away on January 21, 1982. His son, Joselito, died on
October 25, 1990.
On January 21, 1994, respondents Lourdes Osmea Vda. De Daffon,
together with her six minor children, instituted an action for partition against
petitioner Concepcion Villamor Vda. de Daffon, which case was docketed as
Civil Case No. DNA-281 of the Regional Trial Court of Danao City, Branch
25.[1] Respondents alleged that Amado left several real and personal
properties which formed part of his conjugal partnership with
petitioner. Joselito being a forced heir of Amado was entitled to at least one
half of Amados estate, consisting of his share in the said conjugal
properties. However, the said properties were never partitioned between
petitioner and Joselito. After Joselitos death, petitioners behavior towards
respondents, her daughter-in-law and grandchildren, changed. She claimed
absolute ownership over all the properties and deprived them of the fruits
thereof. Thus, respondents prayed that the conjugal properties of Amado
Daffon and petitioner be partitioned and that the one-half share of Amado be
further partitioned between petitioner, on one hand, and the respondents as
heirs of Joselito Daffon, on the other hand.
Petitioner filed a Motion to Dismiss on the grounds of (1) lack of
jurisdiction over the subject matter of the case; (2) failure of the complaint to
state a cause of action; and (3) waiver, abandonment and extinguishment of
the obligation.[2] She argued that the trial court cannot take cognizance of the
action for partition considering her claim of absolute ownership over the
properties; and that respondents themselves admitted that petitioner has
repudiated the co-ownership. Anent the third ground, petitioner alleged that
Joselito Daffon filed a complaint against Milagros Marin, who was likewise
married to Amado Daffon, for recovery of a parcel of land in Mandaluyong.[3] In
said complaint, respondent Lourdes Osmea Vda. de Daffon allegedly admitted
that the land sought was the only property of the late Amado Daffon.
In an Order dated July 22, 1994, the trial court denied the Motion to
Dismiss.[4] Petitioner filed a motion for reconsideration which was also denied
on September 23, 1994.[5]
On October 25, 1994, petitioner filed a petition for certiorari with the Court
of Appeals, docketed as CA-G.R. SP No. 35536. On November 14, 1996, the
Court of Appeals rendered the assailed decision denying due course and
dismissing the petition for certiorari.[6] Petitioners motion for reconsideration
was denied in the Resolution dated April 21, 1997.[7]
The case is now before us on petition for review, based on the following
issues:
I
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT PRIVATE RESPONDENTS NEED NOT BE
ACKNOWLEDGED AS HEIRS OF THE DECEASED AMADO DAFFON.
II
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT IT IS NOT NECESSARY THAT PRIVATE RESPONDENTS
BE THE REGISTERED OWNERS OF THE PROPERTIES CLAIMED IN THE
ACTION FOR PARTITION.
III
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT THE TRIAL COURT IS NOT REQUIRED TO TAKE
JUDICIAL NOTICE OF ANOTHER CASE PENDING IN ANOTHER COURT.
IV
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT
HOLDING THAT THE TRIAL COURTS DENIAL OF PETITIONERS MOTION
TO DISMISS THE COMPLAINT BASED ON FAILURE TO STATE A CAUSE
OF ACTION IS REVIEWABLE BY THE SPECIAL CIVIL ACTION OF
CERTIORARI.[8]
There is no merit in the petition.
It should be stressed that in the determination of whether a complaint fails
to state a cause of action, only the statements in the complaint may be properly
considered.[9] Moreover, a defendant who moves to dismiss the complaint on
the ground of lack of cause of action hypothetically admits all the averments
thereof. The test of sufficiency of the facts found in a complaint as constituting
a cause of action is whether or not admitting the facts alleged the court can
render a valid judgment upon the same in accordance with the prayer thereof.
The hypothetical admission extends to the relevant and material facts well
pleaded in the complaint and inferences fairly deducible therefrom. Hence, if
the allegations in the complaint furnish sufficient basis by which the complaint
55
can be maintained, the same should not be dismissed regardless of the
defense that may be assessed by the defendants.[10]
In the case at bar, the complaint sufficiently alleged that defendant
(i.e., petitioner herein) was married to Amado Quiros Daffon and that they
begot an only son in Joselito Daffon.[11] The complaint further alleged that
Joselito Daffon later got married to herein plaintiff Lourdes Osmea and before
the former died on October 25, 1990 he sired the six (6) children who are now
plaintiffs with their mother.[12] This, to our mind, was sufficient allegation that
Joselito Daffon was a legitimate son of the spouses Amado and Concepcion
Daffon; and that plaintiffs (i.e., respondents herein) were likewise legitimate
heirs of Joselito Daffon. Admitting the truth of these averments, there was,
therefore, no need to inquire whether respondent minor children were duly
acknowledged by the deceased Amado Daffon. To be sure, the illegitimacy of
the said children and the lack of acknowledgment are matters which petitioner
may raise as a defense in her answer and threshed out by the court during a
full-blown trial.
In the same vein, there is no need for the complaint to specifically allege
respondents claim of co-ownership of the properties. The complaint needs
only to allege the ultimate facts on which the plaintiffs rely for their claim. [13]
The rules of procedure require that the complaint must make a concise
statement of the ultimate facts or the essential facts constituting the plaintiffs
cause of action. A fact is essential if it cannot be stricken out without leaving
the statement of the cause of action inadequate. A complaint states a cause
of action only when it has its three indispensable elements, namely: (1) a
right in favor of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and (3) an act or omission on the part of
such defendant violative of the right of plaintiff or constituting a breach of the
obligation of defendant to the plaintiff for which the latter may maintain an
action for recovery of damages.[14]
The allegations contained therein are sufficient to establish respondents
right to the estate of Amado Daffon. By stating their relationship to the
deceased, they established their line of succession as the basis for their
claim. Their rights to succeed as heirs were transmitted from the moment of
death of the decedent.[15]
Contrary to petitioners contention, the fact that she repudiated the co-
ownership between her and respondents did not deprive the trial court of
jurisdiction to take cognizance of the action for partition. In a complaint for
partition, the plaintiff seeks, first, a declaration that he is a co-owner of the
subject properties; and second, the conveyance of his lawful shares. [16] As the
Court of Appeals correctly held, an action for partition is at once an action for
declaration of co-ownership and for segregation and conveyance of a
determinate portion of the properties involved. If the defendant asserts
exclusive title over the property, the action for partition should not be
dismissed. Rather, the court should resolve the case and if the plaintiff is
unable to sustain his claimed status as a co-owner, the court should dismiss
the action, not because the wrong remedy was availed of, but because no
basis exists for requiring the defendant to submit to partition. If, on the other
hand, the court after trial should find the existence of co-ownership among the
parties, the court may and should order the partition of the properties in the
same action.[17]
An action for partition is comprised of two phases: first, an order for partition
which determines whether a co-ownership in fact exists, and whether
partition is proper; and, second, a decision confirming the sketch or
subdivision submitted by the parties or the commissioners appointed by the
court, as the case may be. The first phase of a partition and/or accounting
suit is taken up with the determination of whether or not a co-ownership in
fact exists, (i.e., not otherwise legally proscribed) and may be made by
voluntary agreement of all the parties interested in the property. This phase
may end with a declaration that plaintiff is not entitled to have a partition
either because a co-ownership does not exist, or partition is legally
prohibited. It may end, upon the other hand, with an adjudgment that a co-
ownership does in truth exist, partition is proper in the premises and an
accounting of rents and profits received by the defendant from the real estate
in question is in order. In the latter case, the parties may, if they are able to
agree, make partition among themselves by proper instruments of
conveyance, and the court shall confirm the partition so agreed upon.[18]
Petitioner insists that in her testimony given in Civil Case No. 56336,
respondent Lourdes Daffon admitted that the land in Mandaluyong was the
only property left by the deceased Amado Daffon. The pertinent portion of her
testimony runs this way:
Q And because of that incident being the surviving spouse of Joselito
Daffon, how did it affect you personally and also your husband at
that time when he was still alive?
A She (sic) felt sad and she (sic) suffered mental torture, mental anxiety
and numerous sleepless nights for that is the only property left to us
by my father-in-law and his son and his grandchildren.[19]
We do not agree with petitioners interpretation of the above phrase. The
foregoing statement, saying that the deceased only left the said Mandaluyong
property to his son Joselito, does not exclude the possibility that Amado owned
other land and personal belongings during his lifetime, which he may not have
left to his son. This does not deprive Joselito or his successors-in-interest of
the right to share in those other properties. As a matter of fact, respondents
complaint contains a long list of properties allegedly owned by Amado
Daffon.[20] Again, the resolution of whether or not these belonged to Amado
56
Daffon and formed part of his estate is a matter best taken up during trial and
after an evaluation of the evidence to be presented by the contending parties.
Petitioner argues that the order which denied the Motion to Dismiss is an
interlocutory order which is not appealable. Hence, it may be the subject of a
special civil action for certiorari. However, for certiorari to lie, it must be
convincingly proved that the lower court committed grave abuse of discretion,
or an act too patent and gross as to amount to an evasion of a positive duty,
or a virtual refusal to perform the duty enjoined or act in contemplation of law;
or that the trial court exercised its power in an arbitrary and despotic manner
by reason of passion and personal hostility.[21] In the case at bar, the trial court
did not commit grave abuse of discretion in denying petitioners Motion to
Dismiss.Thus, the Court of Appeals was correct in dismissing the petition for
certiorari.
We are indeed distressed by the circumstances under which the instant
case reached this Court. Instead of filing an answer and meeting the issues
head-on, petitioner and her counsel chose to elevate the incident of the denial
of the Motion to Dismiss to the higher courts. In doing so, they effectively
delayed the resolution of the case and the adjudication of the respective rights
of the parties by the court below. What makes this case more reprehensible is
that petitioner abused the legal process to delay her own grandchildrens
expectancy to share in the estate left by their father and grandfather. If there
is any merit in her claim of absolute ownership over the contested properties,
she could have just allowed the case to be fully tried, during which she should
have proved her case with competent proof. While litigants may utilize all
available means to defend themselves, the legal strategies they employ should
not amount to machinations which frustrate and prejudice the rights of
others. Moreover, frivolous appeals, such as the one filed in this case, are not
countenanced in this jurisdiction.
WHEREFORE, in view of the foregoing, the instant petition is
DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 35536 is
AFFIRMED.
SO ORDERED.
ULPIANO BALO, LYDIA BALO- G.R. No. 129704
LUMPAS, EUGENIO BALO,
ULPIANO BALO, JR., NIDA
BALO-MORALETA, NORA BALO- Present:
CATANO, ZAIDA BALO, JUDITH
BALO-MANDREZA, DANILO
BALO and RONILO BALO, PUNO,
P e t i t i o n e r s, Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
- versus - TINGA, and
CHICO-NAZARIO, JJ.
THE HON. COURT OF APPEALS,
HON. JUDGE ENRIQUE ASIS and
JOSEFINA GARRIDO,
Promulgated:
R e s p o n d e n t s.
September 30, 2005
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
A complaint for Judicial Partition of Real Properties and Accounting with
Damages, docketed as Civil Case No. 279, was filed by private respondent
Josefina Garrido against petitioners Ulpiano Balo, Lydia Balo-Lumpas,
Eugenio Balo, Ulpiano Balo, Jr., Nida Balo-Moraleta, Nora Balo-Catano, Zaida
Balo, Judith Balo-Mandreza, Danilo Balo and Ronilo Balo, before the Regional
Trial Court (RTC) of Abuyog, Leyte, Branch 10, alleging that she (private
respondent) and petitioners are the co-owners of undivided parcels of land
located at Mayorga, Leyte. According to her, these lands were originally owned
by the spouses Eugenio Balo, Sr. and Ma. Pasagui-Balo, who, at the time of
the filing of the complaint, were already deceased. The Balo spouses were
survived by their two (2) children, Ulpiano, Sr. and Maximino, the latter likewise
deceased. Private respondent is the daughter of Maximino Balo and Salvacion
Sabulao. Petitioner Ulpiano Balo is the son of Eugenio Balo, Sr., while the
other petitioners, the children of Ulpiano, are Eugenios grandchildren.
Private respondent further alleged in her complaint that immediately upon the
death of her grandfather, Eugenio Sr., the petitioners took possession of the
said real properties without her knowledge and consent. The petitioners being
her uncle and cousins, private respondent earnestly requested them that they
come up with a fair and equal partition of the properties left by her
grandparents. The petitioners having outrightly refused her proposal, private
respondent filed the complaint.[1]
In lieu of an Answer, petitioners filed a Motion to Dismiss [2] on the following
grounds:
1. Failure to state a cause of action - plaintiff, though
she claims to be a daughter of Maximino who died
sometime in 1946, failed to allege whether or not she
is a legitimate child. Plaintiffs failure to allege
legitimacy is fatal considering the provision of Article
992 of the Civil Code.[3] To allow Plaintiff to inherit from
57
 the estate of the spouses Eugenio and Maria Balo in
representation of her father Maximino Balo would be
to permit intestate succession by an illegitimate child
from the legitimate parent of his father, assuming that
she is the child of Maximino Balo.
2. The complaint does not show that the estate of
the spouses Eugenio and Maria Balo have been
settled and its obligations have been paid.
3. The properties enumerated in the Complaint were
proceeded against by way of execution to satisfy a
judgment against Eugenio and Maria Balo.
Subsequently, defendant Ulpiano repurchased the
said properties and has been, together with his
children, openly, exclusively and adversely in
possession of the real estate properties in question.
Private respondent filed her comment/opposition to the motion to dismiss.[4]
In an Order dated 12 September 1996, the RTC denied the motion to dismiss
for lack of merit.[5] The trial court held:
The complaint clearly states that the late Eugenio Balo, Sr.,
and Maria Pasagui Balo had two (2) children, namely:
Ulpiano, Sr. and Maximino. The plaintiff is the daughter of the
late Maximino Balo and Salvacion Sabulao; while the
defendants are children of the late Ulpiano Balo, Sr. and
Felicidad Superio.
The complaint enumerates/annexes 13 tax declarations in the
name of Eugenio Balo, Sr. marked as Annexes A to M. The
plaintiff as an heir prays that these parcels of land be
partitioned in accordance with Article 982 of the Civil Code
which states:
The grandchildren and other descendants
shall inherit by right of representation, and if
any one of them should have died, leaving
several heirs, the portion pertaining to him
shall be divided among the latter in equal
portions.
No evidence may be alleged or considered to test the
sufficiency of the complaint except the very facts pleaded
therein. It would be improper to inject into the allegation, facts
not alleged and use them as basis for the decision on the
motion.
The Court is not permitted to go beyond and outside of the
allegations in the complaint for data or facts.
Therefore, the allegation of illegitimacy and claim of absolute
ownership are modifications and unreasonable inferences. If
there is doubt to the truth of the facts averred in the complaint,
the Court does not dismiss the complaint but requires an
answer and proceeds to hear the case on the merit.[6]
Petitioners filed a Motion for Reconsideration[7] which the RTC denied in its
Order[8] dated 07 November 1996.
Petitioners filed a Petition for Certiorari[9] before the Court of Appeals. After the
filing of Comment and other pleadings, the case was deemed submitted for
decision. In a resolution dated 16 April 1997, the Court of Appeals denied due
course to the petition and accordingly dismissed the same. The Court of
Appeals justified the dismissal in the following manner:
It is an established rule that an order denying a motion to
dismiss is basically interlocutory in character and cannot be
the proper subject of a petition for certiorari. When a motion
to dismiss is denied, the proper procedure is to proceed with
the trial and if the decision be adverse to the movant, the
remedy is to take an appeal from said decision, assigning as
one of the errors therefore the denial of the motion to
dismiss.[10]
Petitioners filed a Motion for Reconsideration[11] which the Court of Appeals
denied in a resolution dated 30 June 1997.[12] Hence this petition for
review[13] under Rule 45 of the Rules of Court.
Petitioners cite the following grounds for the allowance of their petition, to wit:
I
WHETHER OR NOT THE FAILURE TO ALLEGE THE
NATURE AND EXTENT OF PLAINTIFFS TITLE IN A
58
 PETITION FOR PARTITION IS FATAL TO ITS CAUSE OF
ACTION.
II
WHETHER OR NOT THE ACTION FOR JUDICIAL
PARTITION AND ACCOUNTING HAS PRESCRIBED, WAS
WAIVED, OR WAS OTHERWISE ABANDONED.[14]
At the threshold of the instant petition for review is the correctness of the
appellate courts dismissal of the petition for certiorari filed by the petitioners.
In resolving to deny the petition, the Court of Appeals relied on the long
established jurisprudence that an order denying a motion to dismiss is
interlocutory and cannot be the proper subject of a petition for certiorari.
The general rule regarding denial of a motion to dismiss as a basis of a resort
to the extraordinary writ of certiorari is that:
. . . [A]n order denying a motion to dismiss is an interlocutory
order which neither terminates nor finally disposes of a case
as it leaves something to be done by the court before the case
is finally decided on the merits. As such, the general rule is
that the denial of a motion to dismiss cannot be questioned in
a special civil action for certiorari which is a remedy designed
to correct errors of jurisdiction and not errors of judgment.
To justify the grant of the extraordinary remedy of certiorari,
therefore, the denial of the motion to dismiss must have been
tainted with grave abuse of discretion. By grave abuse of
discretion is meant, such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction. The abuse
of discretion must be grave as where the power is exercised
in an arbitrary or despotic manner by reason of passion or
personal hostility and must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act all in contemplation of
law.[15]
Specific instances whereby the rule admits certain exceptions are provided as
follows:
. . . Under certain situations, recourse
to certiorari or mandamus is considered appropriate, i.e., (a)
when the trial court issued the order without or in excess of
jurisdiction; (b) where there is patent grave abuse of discretion
by the trial court; or (c) appeal would not prove to be a speedy
and adequate remedy as when an appeal would not promptly
relieve a defendant from the injurious effects of the patently
mistaken order maintaining the plaintiffs baseless action and
compelling the defendant needlessly to go through a
protracted trial and clogging the court dockets by another
futile case.[16]
Applying the foregoing, the Court of Appeals should not have dismissed the
petition outright as the same alleges grave abuse of discretion. Instead, it
should have proceeded to determine whether or not the trial court did commit
grave abuse of discretion as alleged by the petitioners. The Court of Appeals
having failed in this regard, it behooves upon this Court to discuss the merits
of the petition to put to rest the issues raised by the petitioners.
Contrary to petitioners contention, allegations sufficient to support a cause of
action for partition may be found in private respondents complaint.[17]
Nothing is more settled than the rule that in a motion to dismiss for failure to
state a cause of action, the inquiry is into the sufficiency, not the veracity, of
the material allegations.[18] Moreover, the inquiry is confined to the four corners
of the complaint, and no other.[19]
In a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination is
the sufficiency of the allegations made in the complaint to
constitute a cause of action and not whether those allegations
of fact are true, for said motion must hypothetically admit the
truth of the facts alleged in the complaint.
The test of the sufficiency of the facts alleged in the complaint
is whether or not, admitting the facts alleged, the court could
render a valid judgment upon the same in accordance with the
prayer of the complaint. (Garcon vs. Redemptorist Fathers, 17
SCRA 341)
If the allegations of the complaint are sufficient in form and
substance but their veracity and correctness are assailed, it is
incumbent upon the court to deny the motion to dismiss and
require the defendant to answer and go to trial to prove his
defense. The veracity of the assertions of the parties can be
ascertained at the trial of the case on the merits. (Galeon vs.
Galeon, 49 SCRA 516-521)[20]
59

Section 1, Rule 8 of the 1997 Rules of Civil Procedure provides that the
complaint needs only to allege the ultimate facts upon which private
respondent bases her claim.
The rules of procedure require that the complaint must make
a concise statement of the ultimate facts or the essential facts
constituting the plaintiffs cause of action. A fact is essential if
it cannot be stricken out without leaving the statement of the
cause of action inadequate. A complaint states a cause of
action only when it has its three indispensable elements,
namely: (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or
not to violate such right; and (3) an act or omission on the part
of such defendant violate of the right of plaintiff or constituting
a breach of the obligation of defendant to the plaintiff for which
the latter may maintain an action for recovery of damages.[21]
In her Complaint, the private respondent made the following assertions:
. . . That the afore-described parcels of lands were originally
owned by Eugenio Balo, Sr. and Ma. Pasagui-Balo, who are
now both deceased and after their death, were inherited into
two (2) equal shares by their two (2) children, namely:
Ulpiano, Sr. and Maximino, both surnamed Balo, the later
(sic) being already dead.
That plaintiff is the daughter of the late Maximino Balo and
Salvacion Sabulao, who after her fathers death, had inherited
her fathers share of the inheritance.
That defendant Ulpiano Balo, Sr. aside from being the son of
Eugenio Balo, Sr., is married to Felicidad Superio, and is the
father of all the other defendants in this case.
The defendants took possession of the above-described real
properties immediately after the death of plaintiffs
grandfather Eugenio Balo, Sr. without her knowledge and
consent.
That plaintiff is desirous that the above-described real
properties be partitioned between her and defendants.
That plaintiff has proposed to the defendants that the above-
described real properties be amicably partitioned between
them by mutual agreement in a very fair and practical division
of the same, but said defendants refused and continue to do
so without any justifiable cause or reason to accede to the
partition of the said properties.[22]
The foregoing allegations show substantial compliance with the formal and
substantial requirements of a Complaint for Partition as required under Section
1, Rule 69 of the 1997 Rules of Civil Procedure.[23]
On the insistence of petitioners that private respondent first prove her
legitimacy before an action for partition may be maintained, this Court, in the
case of Briz v. Briz,[24] pronounced that proof of legal acknowledgment is not a
prerequisite before an action for partition may be filed. We said:[25]
. . . In other words, there is no absolute necessity requiring
that the action to compel acknowledgment should have been
instituted and prosecuted to a successful conclusion prior to
the action in which that same plaintiff seeks additional relief in
the character of heir. Certainly, there is nothing so peculiar to
the action to compel acknowledgment as to require that a rule
should be here applied different from that generally applicable
in other cases. For instance, if the plaintiff had in this action
impleaded all of the persons who would be necessary parties
defendant to an action to compel acknowledgement, and had
asked for relief of that character, it would have been
permissible for the court to make the judicial pronouncement
declaring that the plaintiff is entitled to be recognized as the
natural child of Maximo Briz, and at the same time to grant the
additional relief sought in this case against the present
defendants; that is, a decree compelling them to surrender to
the plaintiff the parcel of land sued for and to pay her the
damages awarded in the appealed decision.
The conclusion above stated, though not heretofore explicitly
formulated by this court, is undoubtedly to some extent
supported by our prior decisions. Thus, we have held in
numerous cases, and the doctrine must be considered well
settled, that a natural child having a right to compel
acknowledgment, but who has not been in fact legally
acknowledged, may maintain partition (proceedings for the
division of the inheritance against his coheirs (Siguiong vs.
Siguiong, 8 Phil. 5; Tiamson vs. Tiamson, 32 Phil 62); and the
same person may intervene in proceedings for the distribution
60
 of the estate of his deceased natural father, or mother
(Capistrano vs. Fabella, 8 Phil. 135; Conde vs. Abaya, 13 Phil.
249; Ramirez vs. Gmur, 42 Phil 855). In neither of these
situations has it been thought necessary for the plaintiff to
show a prior decree compelling acknowledgment. The
obvious reason is that in partition suits and distribution
proceedings the other persons who might take by inheritance
are before the court; and the declaration of heirship is
appropriate to such proceedings.
To further reiterate that in partition proceedings, dismissal prior to answer is
premature, this Court has held:
In a complaint for partition, the plaintiff seeks, first, a
declaration that he is a co-owner of the subject properties; and
second, the conveyance of his lawful shares. As the Court of
Appeals correctly held, an action for partition is at once an
action for declaration of co-ownership and for segregation and
conveyance of a determine portion of the properties involved.
If the defendant asserts exclusive title over the property, the
action for partition should not be dismissed. Rather, the court
should resolve the case and if the plaintiff is unable to sustain
his claimed status as a co-owner, the court should dismiss the
action, not because the wrong remedy was availed of, but
because no basis exists for requiring the defendant to submit
to partition. If, on the other hand, the court after trial should
find the existence of co-ownership among the parties, the
court may and should order the partition of the properties in
the same action.[26]
The case of Vda. De Daffon v. Court of Appeals[27] is almost most appropriate.
In said case, the action for partition filed by the plaintiffs was met by a motion
to dismiss filed by the defendants based on the grounds of failure of the
complaint to state a cause of action, waiver, abandonment and extinguishment
of the obligation. The trial court denied the motion to dismiss and the denial
was affirmed by the appellate court and by this Court. We held there that the
trial court and the Court of Appeals were correct in dismissing the petition
for certiorari absent a clear showing of grave abuse of discretion amounting to
lack or excess of jurisdiction. We further expressed our dismay over the delay
in the resolution of the said case due to the fact that the issue of the denial of
the Motion to Dismiss was elevated to this Court by petitioner and counsel
instead of just filing an Answer and meeting the issues head-on.
On the matter of prescription cited by the petitioners as a ground for the
dismissal of the complaint, it is noteworthy that the motion to dismiss filed by
the petitioners did not ipso facto establish prescription. An allegation of
prescription can effectively be used in a motion to dismiss only when the
complaint on its face shows that indeed the action has already
prescribed;[28] otherwise, the issue of prescription is one involving evidentiary
matters requiring a full-blown trial on the merits and cannot be determined in a
mere motion to dismiss.[29]
WHEREFORE, premises considered, the instant Petition is DENIED and the
decision of the Court of Appeals in CA-G.R. SP No. 42803, affirming the Order
of the Regional Trial Court dated 12 September 1996, isAFFIRMED. This case
is ordered remanded to the court of origin which is directed to resolve the case
with dispatch. Costs against petitioners.
SO ORDERED.
PEDRO SEPULVEDA, SR., substituted by SOCORRO S. LAWAS,
Administratrix of His Estate, petitioner, vs. ATTY. PACIFICO S.
PELAEZ, respondent.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules
of Court, of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No.
43758 affirming the decision of the Regional Trial Court (RTC) of Danao City,
Branch 25, in Civil Case No. SF-175.
On December 6, 1972, private respondent Atty. Pacifico Pelaez filed a
complaint against his granduncle, Pedro Sepulveda, Sr., with the then Court
of First Instance (CFI) of Cebu, for the recovery of possession and ownership
of his one-half (1/2) undivided share of several parcels of land covered by Tax
Declaration (T.D.) Nos. 28199, 18197, 18193 and 28316; his undivided one-
third (1/3) share in several other lots covered by T.D. Nos. 28304, 35090,
18228, 28310, 26308, 28714, 28311, 28312 and 28299 (all located in Danao,
Cebu); and for the partition thereof among the co-owners. The case was
docketed as Civil Case No. SF-175.
The eleven (11) lots were among the twenty-five (25) parcels of land
which the private respondents mother, Dulce Sepulveda, inherited from her
grandmother, Dionisia Sepulveda under the Project of Partition[2] dated April
16, 1937 submitted by Pedro Sepulveda, Sr. as the administrator of the
formers estate, duly approved by the then CFI of Cebu in Special Proceeding
61
No. 778-0. Under the said deed, Pedro Sepulveda, Sr. appeared to be the
owner of an undivided portion of Lot No. 28199, while his brother and Dulces
uncle Santiago Sepulveda, was the undivided owner of one-half (1/2) of the
parcels of land covered by T.D. Nos. 18197, 18193 and 28316. Dulce and her
uncles, Pedro and Santiago, were likewise indicated therein as the co-owners
of the eleven other parcels of land, each with an undivided one-third (1/3)
share thereof.
In his complaint, the private respondent alleged that his mother Dulce
died intestate on March 2, 1944, and aside from himself, was survived by her
husband Rodolfo Pelaez and her mother Carlota Sepulveda. Dulces
grandfather Vicente Sepulveda died intestate on October 25, 1920,[3] and
Dulce was then only about four years old. According to the private respondent,
his grandmother Carlota repeatedly demanded the delivery of her mothers
share in the eleven (11) parcels of land, but Pedro Sepulveda, Sr. who by then
was the Municipal Mayor of Tudela, refused to do so. Dulce, likewise, later
demanded the delivery of her share in the eleven parcels of land, but Pedro
Sepulveda, Sr. still refused, claiming that he needed to continue to possess
the property to reap the produce therefrom which he used for the payment of
the realty taxes on the subject properties. The private respondent alleged that
he himself demanded the delivery of his mothers share in the subject
properties on so many occasions, the last of which was in 1972, to no avail.
The private respondent further narrated that his granduncle executed an
affidavit[4] on November 28, 1961, stating that he was the sole heir of Dionisia
when she died intestate on June 5, 1921, when, in fact, the latter was survived
by her three sons, Santiago, Pedro and Vicente. Pedro Sepulveda, Sr. also
executed a Deed of Absolute Sale[5] on July 24, 1968 over the property
covered by T.D. No. 19804 (T.D. No. 35090) in favor of the City of Danao
for P7,492.00. According to the private respondent, his granduncle received
this amount without his (private respondents) knowledge.
The private respondent prayed that, after due hearing, judgment be
rendered in his favor, thus:
ON THE FIRST CAUSE OF ACTION:
1. Declaring the plaintiff the absolute owner of ONE-HALF (1/2)
portion of the TWO (2) parcels of land described in paragraph
2 of the complaint;
2. Declaring the plaintiff the absolute owner of the ONE-THIRD
(1/3) portion of the NINE (9) parcels of land described in
paragraph 3 of the complaint;
3. Ordering the defendant to deliver to the plaintiff the latters ONE-
THIRD (1/3) share of the SEVEN THOUSAND FOUR
HUNDRED NINETY-TWO PESOS (P7,492.00) representing
the purchase price of the parcel of land described in paragraph
3(a) of the complaint with interest thereon until the amount is
fully paid;
ON THE SECOND CAUSE OF ACTION:
1. Ordering the partition and segregation of the ONE-HALF (1/2)
portion belonging to the plaintiff of the TWO (2) parcels of land
described in paragraph 2 of the complaint;
2. Ordering the partition and segregation of the ONE-THIRD (1/3)
portion belonging to the plaintiff of the remaining EIGHT (8)
parcels of land described in paragraph 3 of the complaint;
COMMON TO THE FIRST AND SECOND CAUSES OF ACTION:
1. Ordering the defendant to pay the plaintiff the amount of FIFTY
THOUSAND PESOS (P50,000.00) as moral damages;
2. Ordering the defendant to pay the plaintiff exemplary damages
the amount of which is left to the discretion of this Honorable
Court;
3. Ordering the defendant to deliver to the plaintiff the latters share
of the fruits of the ELEVEN (11) parcels of land subject-matter
of this complaint, the value of which will be proven during the
trial;
4. Ordering the defendant to pay the plaintiff actual litigation
expenses, the value of which will be proven during the trial;
5. Ordering the defendant to pay attorneys fee in the amount of
TWELVE THOUSAND PESOS (P12,000.00);
6. Granting to the plaintiff such other reliefs and remedies as he
may be entitled to in accordance with law and equity.[6]
In his answer to the complaint, Pedro Sepulveda, Sr. admitted having
executed a deed of sale over the parcel of land covered by T.D. No. 19804 in
favor of Danao City, but averred that the latter failed to pay the purchase price
thereof; besides, the private respondent had no right to share in the proceeds
of the said sale. He likewise denied having received any demand for the
62
delivery of Dulces share of the subject properties from the latters mother
Carlota, or from the private respondent.
During the trial, Pedro Sepulveda, Sr. died intestate. A petition for the
settlement of his estate was filed on May 8, 1975 with the RTC of Cebu,
docketed as Special Proceeding No. SF-37. His daughter, petitioner Socorro
Sepulveda Lawas, was appointed administratrix of his estate in July 1976. In
compliance with the decision of this Court in Lawas v. Court of
Appeals,[7] docketed as G.R. No. L-45809 and promulgated on December 12,
1986, the deceased was substituted by the petitioner.
To prove the delivery of Dulces share under the project of partition, the
petitioner presented the Affidavit of Consolidation she executed in October
1940 covering thirteen (13) of the twenty-five (25) parcels of land which were
deeded to her under the Project of Partition,[8] as well as the Order[9] dated
March 24, 1962 of the then CFI in Special Proceeding No. 778-R, denying
Carlotas motion for the reconstitution of the records of the said case, and for
the delivery of Dulces share in the eleven parcels of land. The court likewise
declared therein that Dulce, through her grandchildren and her mother,
Carlota, had already received her share of the estate from Pedro Sepulveda,
Sr. as early as January 10, 1938.
According to the petitioner, Dulce and Pedro Sepulveda, Sr. had a verbal
agreement wherein the eleven parcels of land covered by the complaint would
serve as the latters compensation for his services as administrator of Dionisias
estate. Thus, upon the termination of Special Proceeding No. 778-0, and
subsequent to the distribution of the shares of Dionisias heirs, Pedro
Sepulveda, Sr. then became the sole owner of Dulces shares.
The petitioner likewise adduced evidence that Santiago Sepulveda died
intestate and was survived by his wife, Paz Velez Sepulveda and their then
minor children.[10] It was pointed out that the private respondent failed to
implead Paz Sepulveda and her minor children as parties-defendants in the
complaint.
It was further claimed that Pedro Sepulveda, Sr. declared the property
covered by T.D. No. 18199[11] under his name for taxation purposes since the
beginning of 1948.[12] It was likewise alleged that the eleven (11) parcels of
land deeded to Dulce under the Project of Partition had been declared for
taxation purposes under the name of Pedro Sepulveda since 1974, and that
he and his heirs paid the realty taxes thereon.[13]
On June 7, 1993, the trial court rendered judgment [14] in favor of the
private respondent. The fallo of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor
of plaintiff and against the defendant by declaring that the plaintiff is legally
and rightfully entitled to the one half (1/2) portion of the two (2) parcels of
land described in paragraph 2 of the Complaint and to the one third (1/3)
portion of the nine (9) parcels of land described in paragraph 3 of the
complaint as co-owner thereof, and ordering the partition and segregation of
the said one half (1/2) portion of the said two (2) parcels of land and of the
said one third (1/3) portion of the nine (9) parcels of land, and in the partition
thereof, the mechanics of partition outlined in Rule 69 of the Revised Rules
of Court must be followed (Magallon vs. Montejo, 146 SCRA 282); ordering
the defendant Socorro Lawas, as administratrix of the Estate of Pedro
Sepulveda, Sr., to deliver to plaintiff the latters one third (1/3) share of
the P7,492.00 representing the purchase price of the parcel of land sold to
Danao City with interest of twelve [per] centum (12%) per annum (Reformina
vs. Tomol, 139 SCRA 260) from the date of filing of the Complaint until the
amount due to plaintiff is fully paid, to pay attorneys fees to plaintiffs attorney
in the sum of P10,000.00, and to pay the costs. The counterclaim is hereby
dismissed.
SO ORDERED.[15]
The trial court ruled that the private respondents action for reconveyance
based on constructive trust had not yet prescribed when the complaint was
filed; that he was entitled to a share in the proceeds of the sale of the property
to Danao City; and that the partition of the subject property among the
adjudicatees thereof was in order.
The petitioner appealed the decision to the CA, which rendered judgment
on January 31, 2002, affirming the appealed decision with modification.
The petitioner now comes to the Court via a petition for review
on certiorari, contending that the appellate court erred as follows:
1. THE COURT OF APPEALS ERRED IN THE INCORRECT
APPLICATION OF ART. 494 OF THE CIVIL CODE AND IN
UPHOLDING THE REGIONAL TRIAL COURTS FINDING THAT A
TRUST RELATIONSHIP WAS CREATED BETWEEN HEREIN
RESPONDENT AND PEDRO SEPULVEDA [SR.].
2. THE COURT OF APPEALS ERRED IN NOT APPLYING THE LAWS
ON PRESCRIPTION AND LACHES TO THE FACTS AS PROVEN
IN THE CASE AGAINST HEREIN RESPONDENT.
3. THE COURT OF APPEALS ERRED IN UPHOLDING THE FINDING
OF THE REGIONAL TRIAL COURT, BRANCH 25 IN DANAO CITY
THAT PAYMENT WAS MADE BY DANAO CITY FOR ONE (1) OF
THE ELEVEN (11) PARCELS INVOLVED IN THE CASE AND OF
WHICH HEREIN RESPONDENT SHOULD BE PAID BY
PETITIONER ONE THIRD (1/3) OF THE PURCHASE PRICE.
63
 4. THE COURT OF APPEALS ERRED IN AWARDING MORAL AND
EXEMPLARY DAMAGES AND A SHARE IN THE RENTS AND
PROFITS OF THE ELEVEN (11) PARCELS TO HEREIN
RESPONDENT.
5. THE COURT OF APPEALS ERRED IN UPHOLDING THE
REGIONAL TRIAL COURTS FINDING THAT ATTORNEYS FEES
ARE TO BE AWARDED AND EVEN INCREASING THE AMOUNT
THEREOF.[16]
The petition is granted for the sole reason that the respondent failed to
implead as parties, all the indispensable parties in his complaint.
As gleaned from the material averments of the complaint and the reliefs
prayed for therein, the private respondent, as plaintiff therein, sought the
recovery of the ownership and possession of the ten (10) parcels of land and
the partition thereof; and for the payment of his share in the proceeds of the
sale of the property which Pedro Sepulveda, Sr. sold to Danao City amounting
to P7,492.00, which Pedro Sepulveda, Sr. claimed was left unpaid. It appears
that when the private respondent filed the complaint, his father, Rodolfo
Pelaez, was still alive. Thus, when his mother Dulce Pelaez died intestate on
March 2, 1944, she was survived by her husband Rodolfo and their son, the
private respondent. Under Article 996 of the New Civil Code, [17] Rodolfo
Pelaez, as surviving spouse, is entitled to a portion in usufruct equal to that
corresponding by way of legitime to each of the legitimate children who has
not received any betterment. The rights of the usufructuary are provided in
Articles 471 to 490 of the old Civil Code.[18] In Gamis v. Court of Appeals,[19] we
held that:
Under articles 807 and 834 of the old Civil Code the surviving spouse is a
forced heir and entitled to a share in usufruct in the estate of the deceased
spouse equal to that which by way of legitime corresponds or belongs to
each of the legitimate children or descendants who have not been bettered
or have not received any share in the one-third share destined for
betterment. The right of the surviving spouse to have a share in usufruct in
the estate of the deceased spouse is provided by law of which such spouse
cannot be deprived and which cannot be ignored. Of course, the spouse may
waive it but the waiver must be express.
Section 1, Rule 69 of the Rules of Court provides that in an action for
partition, all persons interested in the property shall be joined as defendants.
Section 1. Complaint in action for partition of real estate.- A person having
the right to compel the partition of real estate may do so as in this rule
prescribed, setting forth in his complaint the nature and extent of his title and
an adequate description of the real estate of which partition is demanded and
joining as defendants all the other persons interested in the property.
Thus, all the co-heirs and persons having an interest in the property are
indispensable parties; as such, an action for partition will not lie without the
joinder of the said parties.[20] The mere fact that Pedro Sepulveda, Sr. has
repudiated the co-ownership between him and the respondent does not
deprive the trial court of jurisdiction to take cognizance of the action for
partition, for, in a complaint for partition, the plaintiff seeks, first, a declaration
that he is a co-owner of the subject property; and, second, the conveyance of
his lawful shares.[21] As the Court ruled in De Mesa v. Court of Appeals:[22]
The first stage of an action for judicial partition and/or accounting is
concerned with the determination of whether or not a co-ownership in fact
exists and a partition is proper, that is, it is not otherwise legally proscribed
and may be made by voluntary agreement of all the parties interested in the
property. This phase may end in a declaration that plaintiff is not entitled to
the desired partition either because a co-ownership does not exist or a
partition is legally prohibited. It may also end, on the other hand, with an
adjudgment that a co-ownership does in truth exist, that partition is proper in
the premises, and that an accounting of rents and profits received by the
defendant from the real estate in question is in order. In the latter case, the
parties may, if they are able to agree, make partition among themselves by
proper instruments of conveyance, and the court shall confirm the partition so
agreed upon by all the parties. In either case, whether the action is dismissed
or partition and/or accounting is decreed, the order is a final one and may be
appealed by any party aggrieved thereby.
The second stage commences when the parties are unable to agree upon
the partition ordered by the court. In that event, partition shall be effected for
the parties by the court with the assistance of not more than three (3)
commissioners. This second phase may also deal with the rendition of the
accounting itself and its approval by the Court after the parties have been
accorded the opportunity to be heard thereon, and an award for the recovery
by the party or parties thereto entitled of their just shares in the rents and
profits of the real estate in question.[23]
In the present action, the private respondent, as the plaintiff in the trial
court, failed to implead the following indispensable parties: his father, Rodolfo
Pelaez; the heirs of Santiago Sepulveda, namely, Paz Sepulveda and their
children; and the City of Danao which purchased the property covered by T.D.
19804 (T.D. No. 35090) from Pedro Sepulveda, Sr. and maintained that it had
failed to pay for the purchase price of the property.
64
 Rodolfo Pelaez is an indispensable party he being entitled to a share in
usufruct, equal to the share of the respondent in the subject properties. There
is no showing that Rodolfo Pelaez had waived his right to usufruct.
Section 7, Rule 3 of the Rules of Court reads:
SEC. 7. Compulsory joinder of indispensable parties. Parties in interest
without whom no final determination can be had of an action shall be joined
either as plaintiffs or defendants.
Indeed, the presence of all indispensable parties is a condition sine qua
non for the exercise of judicial power. It is precisely when an indispensable
party is not before the court that the action should be dismissed. Thus, the
plaintiff is mandated to implead all the indispensable parties, considering that
the absence of one such party renders all subsequent actions of the court null
and void for want of authority to act, not only as to the absent parties but even
as to those present.[24] One who is a party to a case is not bound by any
decision of the court, otherwise, he will be deprived of his right to due process.
Without the presence of all the other heirs as plaintiffs, the trial court could not
validly render judgment and grant relief in favor of the private respondent. The
failure of the private respondent to implead the other heirs as parties-plaintiffs
constituted a legal obstacle to the trial court and the appellate courts exercise
of judicial power over the said case, and rendered any orders or judgments
rendered therein a nullity.[25]
To reiterate, the absence of an indispensable party renders all
subsequent actions of the court null and void for want of authority to act, not
only as to the absent parties but even as to those present.[26] Hence, the trial
court should have ordered the dismissal of the complaint.[27]
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
Decisions of the Court of Appeals in CA-G.R. CV No. 43758 and of the
Regional Trial Court are SET ASIDE. The Regional Trial Court is ORDERED
to dismiss the complaint without prejudice. No pronouncement as to costs.
SO ORDERED.
MAURICIA ALEJANDRINO, petitioner, vs. THE HONORABLE COURT OF
APPEALS, HON. BENIGNO G. GAVIOLA, RTC-9, CEBU CITY, and
LICERIO P. NIQUE, respondents.
DECISION
ROMERO, J.:
Questioned in this petition for review on certiorari is the Decision[1] of the
Court of Appeals which ruled that the trial court, in an action for quieting of title,
did not act in excess of jurisdiction when it issued an order for the segregation
of property, after the finality of its decision.
The facts show that the late spouses Jacinto Alejandrino and Enrica
Labunos left their six children named Marcelino, Gregorio, Ciriaco, Mauricia,
Laurencia and Abundio a 219-square-meter lot in Mambaling, Cebu City
identified as Lot No. 2798 and covered by Transfer Certificate of Title No.
19658. Upon the demise of the Alejandrino spouses, the property should have
been divided among their children with each child having a share of 36.50
square meters. However, the estate of the Alejandrino spouses was not settled
in accordance with the procedure outlined in the Rules of Court.
Petitioner Mauricia (one of the children) allegedly purchased 12.17
square meters of Gregorios share, 36.50 square meters of Ciriacos share and
12.17 square meters of Abundios share thereby giving her a total area of 97.43
square meters, including her own share of 36.50 square meters. It turned out,
however, that a third party named Licerio Nique, the private respondent in this
case, also purchased portions of the property, to wit: 36.50 square meters from
Laurencia, 36.50 square meters from Gregorio through Laurencia, 12.17
square meters from Abundio also through Laurencia and 36.50 square meters
from Marcelino or a total area of 121.67 square meters of the Alejandrino
property.[2]
However, Laurencia (the alleged seller of most of the 121.67 square
meters of the property) later questioned the sale in an action for quieting of
title and damages against private respondent Nique. It was docketed as Civil
Case No. CEB-7038 in the Regional Trial Court of Cebu City, Branch 9,
presided by Judge Benigno G. Gaviola. In due course, the lower court
rendered a decision on November 27, 1990 disposing of the case as follows:
WHEREFORE, the Court hereby renders judgment in favor of
defendant and against plaintiff, dismissing the complaint filed by
plaintiff against defendant, and on the Counterclaim and prayer of
defendant in its Answer, the Court hereby declares defendant as
the owner in fee simple of the share of plaintiff Laurencia
Alejandrino and the shares of Marcelino, Gregorio and Abundio,
all surnamed Alejandrino, of the parcel of land known as Lot No.
2798 and covered by Transfer Certificate of Title No. 19658 which
4 shares totals an area of 146 square meters more or less; and
the Court further Orders plaintiff to:
1. Vacate the premises subject of the complaint and
surrender the property to defendant to the extent
of the 4 shares aforementioned;
2. Pay the defendant the amount of P15,000.00 as
litigation and necessary expenses; the sum
65
 of P10,000.00 as reimbursement for attorneys
fees; the sum of P10,000.00 as moral damages
and P10,000.00 as exemplary damages;
3. Plus costs.
SO ORDERED.[3]
Laurencia appealed the decision to the Court of Appeals under CA-G.R.
CV No. 33433 but later withdrew the same.[4] On April 13, 1992, the Court of
Appeals considered the appeal withdrawn in accordance with Rule 50 of the
Rules of Court.[5]
Meanwhile, herein petitioner Mauricia Alejandrino filed on May 5, 1992
before the Regional Trial Court of Cebu City, Branch VII, a complaint for
redemption and recovery of properties with damages against private
respondent Nique that was docketed as Civil Case No. CEB-11673. Adelino
B. Sitoy, Laurencias counsel in Civil Case No. CEB-7038, filed Civil Case No.
CEB-11673 for petitioner Mauricia.
The amended complaint in the latter case dated May 17, 1992 alleged
that private respondent Nique never notified petitioner Mauricia of the
purchase of 121.67 square meters of the undivided Lot No. 2798 nor did he
give petitioner Mauricia the preemptive right to buy the area as a co-owner of
the same lot. As such co-owner, petitioner Mauricia manifested her willingness
to deposit with the court the amount of P29,777.78, the acquisition cost of the
portion purchased by private respondent Nique. Petitioner Mauricia also
alleged that she demanded from private respondent the area of around 24.34
square meters that the latter had unduly, baselessly and maliciously claimed
as his own but which, as part of Lot No. 2798, actually belongs to her. The
amended complaint prayed that petitioner Mauricia be allowed to redeem the
area of 121.67 square meters under the redemption price of P29,777.78 and
that private respondent Nique be ordered to execute the necessary documents
for the redemption and the eventual transfer of certificate of title to her. The
amended complaint further prayed for the return to petitioner Mauricia of the
24.34-square-meter portion of the lot and for damages amounting to P115,000
and attorneys fees of P30,000.
On August 2, 1993, the lower court granted the motion to admit the
amended complaint and forthwith ordered the defendant therein to file an
amended answer.
In Civil Case No. CEB-7038 in the meantime, private respondent filed a
motion for the segregation of the 146-square-meter portion of the property that
had been declared by the trial court as his own by virtue of purchase. On May
6, 1993, the trial court issued an order the pertinent portions of which read as
follows:
ORDER
For resolution is a `Motion to Order Segregation of 146 Square
Meters In Lot No. 2798 dated January 15, 1993 filed by defendant
and the `Opposition thereto dated February 2, 1992 by plaintiff.
Movant-defendant also filed a rejoinder dated February 15, 1993 to
the Opposition.
After going over the allegations in the motion, the opposition thereto
and the rejoinder as well as the records of the case, particularly the
decision rendered by this Court and the Order dated October 28,
1992, denying the motion for reconsideration filed by plaintiffs and
allowing the issuance of a writ of execution, the Court is inclined to
Grant the instant motion.
xxxxxxxxxxxx
In addition thereto, the Court makes the following observation:
1. Plaintiff (oppositor) has a total share of 146 square meters. This
is admitted by her in her complaint (par. 4 thereof). In the
decision rendered by this Court, this share now belongs to
defendant movant by way of sale. The decision of this Court
has long become final.
2. The total area of the land is 219 sq. meters (par. 2 of complaint),
thus, the share of Mauricia Alejandrino is only 73 square
meters.
3. As early as June 10, 1983, Mauricia Alejandrino and Laurencia
Alejandrino had entered into an 'Extrajudicial Settlement of
Estate' whereby they agreed to divide the land subject of this
case with Laurencia Alejandrino owning 146 square
meters in the frontage and Mauricia Alejandrino owning 75
square meters in the back portion (Exh. '16', Extrajudicial
Settlement of Estate, par. 1) (underscoring supplied), and
that the parties assure each other and their successor in
interest that a right of way of two meters is granted to each
party by the other permanently (Exh. '16', par. 2). This
partition is signed by the parties and their
witnesses. Although not notarized, it is certainly valid as
between the parties, Maurecia (sic) Alejandrino, being an
immediate party, may not renege on this.
4. Since the share of defendant Licerio P. Nique is specifically
known to be 146 square meters, and that its location shall be
66
 on the `frontage of the property while the 73 square meters
of Maurecia (sic) Alejandrino shall be at the back portion,
then, the Court cannot see its way clear, why the 146 sq.
meters share of defendant may not be segregated.
5. The contention by oppositor that the `segregation of defendants
share of 146 sq. meters from Lot No. 2798 was not decreed
in the judgment is a rather narrow way of looking at the
judgment. Paragraph 1 of the dispositive portion of the
judgment by this Court, Orders plaintiff to `vacate the
premises subject of the complaint and surrender the property
to defendant to the extent of the 4 shares aforementioned.
The 4 shares of Laurencia Alejandrino of 146 sq. meters can
be segregated because Laurencia and Maurecia had already
executed an extrajudicial partition indicating where their
respective shares shall be located (Exh. `16). To deny the
segregation is to make the decision of this Court just about
valueless is not altogether useless. The matter of allowing
the segregation should be read into the decision.
The bottomline is still that plaintiff Laurencia, despite the fact that
the decision of this Court had long become final; and despite the
fact that she even withdraw (sic) her appeal, she still is enjoying the
fruits of the property to the exclusion of the rightful owner.
WHEREFORE, the Court hereby Grants the motion. The defendant
Licerio Nique may proceed to segregate his 2146 (sic) sq. meters
from Lot NO. 2798 covered by TCT No. 19658, by having the same
surveyed by a competent Geodetic Engineer, at the expense of
movant-defendant.
SO ORDERED.[6]
Petitioner Mauricia questioned this order of the lower court in a petition
for certiorari and prohibition with prayer for the issuance of a writ of preliminary
injunction filed before the Court of Appeals. In due course, the Court of
Appeals dismissed the petition in a Decision promulgated on August 25, 1993.
The Court of Appeals stated that, in issuing the questioned order of May
6, 1993, the respondent court was merely performing its job of seeing to it that
execution of a final judgment must conform to that decreed in the dispositive
part of the decision. It ratiocinated thus:
x x x. In ordering the segregation of the 146 square meters,
respondent Judge correctly referred to the text of the decision to
ascertain which portion of the land covered by TCT No. 19658 was
actually sold by Laurencia Alejandrino (sister of herein petitioner
Mauricia) to private respondent Nique. The respondent Judge did
not err in relying upon Exhibit `16', the Deed of Extrajudicial
Settlement, dated June 10, 1983, mentioned in page 3 of the
Decision. Pertinent portion of Exhibit `16 reads:
`NOW, THEREFORE, the above-named parties-heirs
hereby stipulates (sic), declare and agree as follows:
`1. That the parties have agreed to divide the parcel of land with Laurencia
Alejandrino owning 146 square meters in the frontage and Mauricia
Alejandrino 73 square meters in the back portions;
`2. That the parties mutually and reciprocally assure each other and their
successor of interest (sic) that a right of way of two meters is granted to each
party to the other permanently. (underscoring supplied, Annex `1, Comment,
p. 65, Rollo)
duly signed by herein petitioner and witnessed by private
respondent Nique. It readily reveals that when Laurencia
subsequently sold her shares to herein private respondent, per the
Deed of Absolute Sale dated October 29, 1986 (Exhs. `B and `10),
the parties must have referred to the 146 square meters in the
frontage described in said document, Exhibit `16. Laurencia had no
authority to sell more, or, less, than that agreed upon in the
extrajudicial settlement between her and herein petitioner Mauricia.
Insofar as the latter is concerned, she is estopped from claiming
that said extrajudicial settlement was a fatally defective instrument
because it was not notarized nor published. What is important is
that private respondent personally knew about Laurencia and
Mauricias agreement because he was a witness to said agreement
and he relied upon it when he purchased the 146 square meters
from Laurencia.
It cannot be validly claimed by petitioner that she was deprived of
her property without due process of law considering that private
respondent is merely segregating the portion of the land actually
sold to him by Laurencia Alejandrino and it does not affect the 73
square meters that properly pertain to petitioner.
Moreover, the Supreme Court has ruled that where there is
ambiguity caused by an omission or mistake in the dispositive
portion of a decision the court may clarify such ambiguity by an
amendment even after the judgment had become final, and for this
purpose it may resort to the pleadings filed by the parties, the courts
finding of facts and conclusions of law as expressed in the body of
the decision (Republic Surety and Insurance Co., Inc., et al., versus
Intermediate Appellate Court, et al., 152 SCRA 309). The assailed
order, in effect, clarifies the exact location of the 146 square meters
67
 pursuant to Exhibit `16. Respondent court did not act in excess of
its jurisdiction. Hence, writs of certiorari and prohibition do not lie in
this case.[7]
Petitioner Mauricia filed a motion for the reconsideration of the Court of
Appeals decision. However, on February 15, 1994, the Court of Appeals
denied the same for lack of merit there being no new ground or compelling
reason that justifies a reconsideration of its Decision.[8]
In the instant petition for review on certiorari, petitioner assails the
decision of the Court of Appeals, contending that the lower court acted beyond
its jurisdiction in ordering the segregation of the property bought by private
respondent as the same was not decreed in its judgment, which had long
become final and executory. Petitioner argues that partition of the property
cannot be effected because private respondent is also a defendant in Civil
Case No. CEB-11673. She asserts that Exhibit 16, the extrajudicial settlement
of estate referred to in the questioned order of the lower court, was not
discussed in the decision of the lower court and even if it were, she could not
be bound thereby considering that she was not a party litigant in Civil Case
No. CEB-7038. She questions the validity of the deed of extrajudicial
settlement because it was not notarized or published.
In his comment on the petition, private respondent alleges that although
petitioner was not a party litigant in Civil Case No. CEB-7038, she is estopped
from questioning the decision in that case and filing the instant petition
because she had knowledge of the existence of said case where res
judicata had set in. He adds that the instant petition was filed in violation of
Circular No. 28-91 on forum shopping in that the Petitioner in the instant
petition whose counsel is also the counsel of plaintiff-appellant Laurencia
Alejandrino in CA-G.R. CV No. x x x, had filed a civil action Civil Case No.
CEB-11673 x x x for REDEMPTION & RECOVERY OF PROPERTIES WITH
DAMAGES, which is presently pending before Branch 7 of the Regional Trial
Court of Cebu City. He asserts that the lower court did not exceed its
jurisdiction and/or commit grave abuse of discretion in granting his motion for
segregation of the 146 square meters of the land involved that rightfully
belonged to him in accordance with the decision of the lower court. He charges
counsel for petitioner with exhibiting unethical conduct and practice in
appearing as counsel for petitioner in Civil Case No. CEB-11673 after he had
appeared for complainant Laurencia in CA-G.R. CV No. 33433 or Civil Case
No. CEB-7038.
Under the circumstances of this case, the ultimate issue that needs
determination is whether or not as an heir of the Alejandrino property,
Laurencia may validly sell specific portions thereof to a third party.
Article 1078 of the Civil Code provides that where there are two or more
heirs, the whole estate of the decedent is, before partition, owned in common
by such heirs, subject to the payment of the debts of the deceased. Under a
co-ownership, the ownership of an undivided thing or right belongs to different
persons.[9] Each co-owner of property which is held pro indiviso exercises his
rights over the whole property and may use and enjoy the same with no other
limitation than that he shall not injure the interests of his co-owners. The
underlying rationale is that until a division is made, the respective share of
each cannot be determined and every co-owner exercises, together with his
co-participants, joint ownership over the pro indiviso property, in addition to his
use and enjoyment of the same.[10]
Although the right of an heir over the property of the decedent is inchoate
as long as the estate has not been fully settled and partitioned, [11] the law
allows a co-owner to exercise rights of ownership over such inchoate right.
Thus, the Civil Code provides:
ART. 493. 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.
With respect to properties shared in common by virtue of inheritance,
alienation of a pro indiviso portion thereof is specifically governed by Article
1088 that provides:
ART. 1088. Should any of the heirs sell his hereditary rights to a
stranger before the 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.
In the instant case, Laurencia was within her hereditary rights in selling
her pro indiviso share in Lot No. 2798. However, because the property had not
yet been partitioned in accordance with the Rules of Court, no particular
portion of the property could be identified as yet and delineated as the object
of the sale. Thus, interpreting Article 493 of the Civil Code providing that an
alienation of a co-owned property shall be limited to the portion which may be
allotted to (the seller) in the division upon the termination of the co-ownership,
the Court said:
x x x (p)ursuant to this law, a co-owner has the right to alienate
his pro-indiviso share in the co-owned property even without the
consent of the other co-owners. Nevertheless, as a mere part
owner, he cannot alienate the shares of the other co-owners. The
prohibition is premised on the elementary rule that `no one can
give what he does not have (Nemo dat quod non habet). Thus, we
68
 held in Bailon-Casilao vs. Court of Appeals (G.R. No. 78178, April
15, 1988, 160 SCRA 738, 745), viz:
`x x x 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.
`The proper action in cases like this is not for the nullification of the sale or
for the recovery of possession of the thing owned in common from the third
person who substituted the co-owner or co-owners who alienated their
shares, but the DIVISION of the common property of the co-owners who
possessed and administered it.[12]
The legality of Laurencias alienation of portions of the estate of the
Alejandrino spouses was settled in Civil Case No. CEB-7038. The decision in
that case had become final and executory with Laurencias withdrawal of her
appeal. When private respondent filed a motion for the segregation of the
portions of the property that were adjudged in his favor, private respondent
was in effect calling for the partition of the property. However, under the law,
partition of the estate of a decedent may only be effected by (1) the heirs
themselves extrajudicially, (2) by the court in an ordinary action for partition,
or in the course of administration proceedings, (3) by the testator himself, and
(4) by the third person designated by the testator.[13]
The trial court may not, therefore, order partition of an estate in an action
for quieting of title. As there is no pending administration proceedings, the
property of the Alejandrino spouses can only be partitioned by the heirs
themselves in an extrajudicial settlement of estate. However, evidence on the
extrajudicial settlement of estate was offered before the trial court and it
became the basis for the order for segregation of the property sold to private
respondent. Petitioner Mauricia does not deny the fact of the execution of the
deed of extrajudicial settlement of the estate. She only questions its validity on
account of the absence of notarization of the document and the non-
publication thereof.
On extrajudicial settlement of estate, Section 1 of Rule 74 of the Rules of
Court provides:
If the decedent left no will and no debts and the heirs are all of
age, or the minors are represented by their judicial or legal
representatives duly authorized for the purpose, the parties may,
without securing letters of administration, divide the estate
among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should
they disagree, they may do so in an ordinary action for partition.
x x x.
The fact of the extrajudicial settlement or administration shall be
published in a newspaper of general circulation in the manner
provided in the next succeeding section; but no extrajudicial
settlement shall be binding upon any person who has not
participated therein or had no notice thereof.
Notarization of the deed of extrajudicial settlement has the effect of making it
a public document[14] that can bind third parties. However, this formal
requirement appears to be superseded by the substantive provision of the Civil
Code that states:
ART. 1082. Every act which is intended to put an end to indivision
among co-heirs and legatees or devisees is deemed to be a
partition, although it should purport to be a sale, an exchange, a
compromise, or any other transaction.
By this provision, it appears that when a co-owner sells his inchoate right
in the co-ownership, he expresses his intention to put an end to indivision
among (his) co-heirs. Partition among co-owners may thus be evidenced by
the overt act of a co-owner of renouncing his right over the property regardless
of the form it takes. In effect, Laurencia expressed her intention to terminate
the co-ownership by selling her share to private respondent.
Moreover, the execution of the deed of extrajudicial settlement of the
estate reflected the intention of both Laurencia and petitioner Mauricia to
physically divide the property. Both of them had acquired the shares of their
brothers and therefore it was only the two of them that needed to settle the
estate. The fact that the document was not notarized is no hindrance to its
effectivity as regards the two of them. The partition of inherited property need
not be embodied in a public document. In this regard, Tolentino subscribes to
that opinion when he states as follows:
x x x. We believe, however, that the public instrument is not
essential to the validity of the partition. This is not one of those
contracts in which form is of the essence. The public instrument is
necessary only for the registration of the contract, but not for its
validity. The validity of an oral contract among the heirs,
terminating the co-ownership, has been recognized by the
Supreme Court in a decision x x x (where) that tribunal said: `An
agreement among the heirs that a certain lot should be sold and its
proceeds paid to one of them is a valid oral contract, and the same
has the force of law between the parties from and after the original
assent thereto, and no one of them may withdraw or oppose its
execution without the consent of all.
In a still later case, the Supreme Court held that `partition among heirs or
renunciation of an inheritance by some of them is not exactly a conveyance
for the reason that it does not involve transfer of property from one to the
other, but rather a confirmation or ratification of title or right to property by the
69
heir renouncing in favor of another heir accepting and receiving the
inheritance. Hence, the court concluded, `it is competent for the heirs of an
estate to enter into an oral agreement for distribution of the estate among
themselves.[15]
The deed of extrajudicial settlement executed by Mauricia and Laurencia
evidence their intention to partition the property. It delineates what portion of
the property belongs to each other. That it was not notarized is immaterial in
view of Mauricias admission that she did execute the deed of extrajudicial
settlement. Neither is the fact that the trial court only mentioned the existence
of such document in its decision in Civil Case No. CEB-7028. That document
was formally offered in evidence and the court is deemed to have duly
considered[16] it in deciding the case. The court has in its favor the presumption
of regularity of the performance of its task that has not been rebutted by
petitioner Mauricia. Neither may the fact that the other heirs of the Alejandrino
spouses, named Marcelino, Gregorio, Ciriaco and Abundio did not participate
in the extrajudicial settlement of estate affect its validity. In her amended
complaint in Civil Case No. CEB-11673, petitioner Mauricia herself admitted
having acquired by purchase the rights over the shares of her brothers.
On the part of Laurencia, the court found that she had transmitted her
rights over portions she had acquired from her brothers to private respondent
Nique. The sale was made after the execution of the deed of extrajudicial
settlement of the estate that private respondent himself witnessed. The
extrajudicial settlement of estate having constituted a partition of the property,
Laurencia validly transferred ownership over the specific front portion of the
property with an area of 146 square meters.
The trial court, therefore, did not abuse its discretion in issuing the order
for the segregation of the property. In so doing, it was merely reiterating the
partition of the property by petitioner Mauricia and her sister Laurencia that
was embodied in the deed of extrajudicial settlement of estate. The order may
likewise be deemed as a clarification of its decision that had become final and
executory. Such clarification was needed lest proper execution of the decision
be rendered futile.
The Court finds no merit in the issue of forum shopping raised by private
respondent. Forum shopping exists where the elements of litis pendentia are
present or where a final judgment in one case will amount to res judicata in the
other.[17] Because the judgment in Civil Case No. CEB-7028 is already final
and executory, the existence of res judicata is determinative of whether or not
petitioner is guilty of forum shopping. For the principle of res judicata to apply,
the following must be present: (1) a decision on the merits; (2) by a court of
competent jurisdiction; (3) the decision is final; and (4) the two actions involve
identical parties, subject matter and causes of action.[18] The fourth element is
not present in this case. The parties are not identical because petitioner was
not impleaded in Civil Case No. CEB-7028. While the subject matter may be
the same property of the Alejandrino spouses, the causes of action are
different. Civil Case No. CEB-7028 is an action for quieting of title and
damages while Civil Case No. CEB-11673 is for redemption and recovery of
properties.
It appears moreover, that private respondents argument on forum
shopping is anchored on the fact that counsel for both plaintiffs in those two
cases is one and the same, thereby implying that the same counsel merely
wanted to prevail in the second case after having failed to do so in the first. The
records show, however, that Laurencia executed an affidavit[19] consenting to
the appearance of her counsel in any case that petitioner Mauricia might file
against private respondent. She affirmed in that affidavit that she could be
included even as a defendant in any case that petitioner Mauricia would file
because she fully agree(d) with whatever cause of action Mauricia would have
against private respondent. Such a statement can hardly constitute a proper
basis for a finding of forum shopping, much less evidence of misconduct on
the part of counsel. As noted earlier, the two cases have different causes of
action and the two plaintiffs who would have conflicting claims under the facts
of the case actually presented a united stand against private respondent. If
there is any charge that could be leveled against counsel, it is his lack of
thoroughness in pursuing the action for quieting of title. As counsel for plaintiff
therein, he could have impleaded petitioner Mauricia knowing fully well her
interest in the property involved in order to avoid multiplicity of suits. However,
such an omission is not a sufficient ground for administrative sanction.
WHEREFORE, the instant petition for review on certiorari is
hereby DENIED for lack of merit. Costs against petitioner.
SO ORDERED.
LOURDES A. VALMONTE and ALFREDO D. VALMONTE, petitioners,
vs. THE HONORABLE COURT OF APPEALS, THIRD DIVISION
and ROSITA DIMALANTA, respondents.
DECISION
MENDOZA, J.:
Petitioner Lourdes A. Valmonte is a foreign resident. The question is
whether in an action for partition filed against her and her husband, who is also
her attorney, summons intended for her may be served on her husband, who
has a law office in the Philippines. The Regional Trial Court of Manila, Branch
48, said no and refused to declare Lourdes A. Valmonte in default, but the
Court of Appeals said yes. Hence this petition for review on certiorari.
The facts of the case are as follows:
70
 Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband
and wife. They are both residents of 90222 Carkeek Drive South Seattle,
Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a member of the
Philippine bar, however, practices his profession in the Philippines, commuting
for this purpose between his residence in the state of Washington and Manila,
where he holds office at S-304 Gedisco Centre, 1564 A. Mabini, Ermita,
Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister
of petitioner Lourdes A. Valmonte, filed a complaint for partition of real property
and accounting of rentals against petitioners Lourdes A. Valmonte and Alfredo
D. Valmonte before the Regional Trial Court of Manila, Branch 48. The subject
of the action is a three-door apartment located in Paco, Manila.
In her Complaint, private respondent alleged:
The plaintiff is of legal age, a widow and is at present a resident of 14823
Conway Road, Chesterfield, Missouri, U.S.A., while the defendants are
spouses, of legal age and at present residents of 90222 Carkeek Drive, South
Seattle, Washington, U.S.A., but, for purposes of this complaint may be served
with summons at Gedisco Center, Unit 304, 1564 A. Mabini St., Ermita, Manila
where defendant Alfredo D. Valmonte as defendant Lourdes Arreola
Valmontes spouse holds office and where he can be found.
Apparently, the foregoing averments were made on the basis of a letter
previously sent by petitioner Lourdes A. Valmonte to private respondents
counsel
in which, in regard to the partition of the property in question, she referred
private respondents counsel to her husband as the party to whom all
communications intended for her should be sent. The letter reads:
July 4, 1991
Dear Atty. Balgos:
This is in response to your letter, dated 20 June 1991, which I received on 3
July 1991. Please address all communications to my lawyer, Atty. Alfredo D.
Valmonte, whose address, telephone and fax numbers appear below.
c/o Prime Marine
Gedisco Center, Unit 304
1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 21-2095
Service of summons was then made upon petitioner Alfredo D. Valmonte,
who at the time, was at his office in Manila. Petitioner Alfredo D. Valmonte
accepted the summons, insofar as he was concerned, but refused to accept
the summons for his wife, Lourdes A. Valmonte, on the ground that he was not
authorized to accept the process on her behalf. Accordingly the process server
left without leaving a copy of the summons and complaint for petitioner
Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with
Counterclaim. Petitioner Lourdes A. Valmonte, however, did not file her
Answer. For this reason private respondent moved to declare her in default.
Petitioner Alfredo D. Valmonte entered a special appearance in behalf of his
wife and opposed the private respondents motion.
In its Order dated July 3, 1992, the trial court, denied private respondents
motion to declare petitioner Lourdes A. Valmonte in default. A motion for
reconsideration was similarly denied on September 23, 1992. Whereupon,
private respondent filed a petition for certiorari, prohibition and mandamus with
the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision
granting the petition and declaring Lourdes A. Valmonte in default. A copy of
the appellate courts decision was received by petitioner Alfredo D. Valmonte
on January 15, 1993 at his Manila office and on January 21,
1993 in Seattle, Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner
Lourdes A. Valmonte was validly served with summons. In holding that she
had been, the Court of Appeals stated:[1]
[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally
directed the aforementioned counsel of Dimalanta to address all
communications (evidently referring to her controversy with her sister Mrs.
Dimalanta over the Paco property, now the subject of the instant case) to her
lawyer who happens also to be her husband. Such directive was made
without any qualification just as was her choice/designation of her husband
Atty. Valmonte as her lawyer likewise made without any qualification or
reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his
being his wifes attorney (at least with regard to the dispute vis-a-vis [sic] the
Paco property) would appear to be feeble or trifling, if not incredible.
This view is bolstered by Atty. Valmontes subsequent alleged special
appearance made on behalf of his wife. Whereas Mrs. Valmonte had
manifestly authorized her husband to serve as her lawyer relative to her
dispute with her sister over the Paco property and to receive all
communications regarding the same and subsequently to appear on her
behalf by way of a so-called special appearance, she would nonetheless now
insist that the same husband would nonetheless had absolutely no authority
71
to receive summons on her behalf. In effect, she is asserting that
representation by her lawyer (who is also her husband) as far as the Paco
property controversy is concerned, should only be made by him when such
representation would be favorable to her but not otherwise. It would
obviously be inequitable for this Court to allow private respondent Lourdes A.
Valmonte to hold that her husband has the authority to represent her when
an advantage is to be obtained by her and to deny such authority when it
would turn out to be her disadvantage. If this be allowed, Our Rules of Court,
instead of being an instrument to promote justice would be made use of to
thwart or frustrate the same.
xxx xxx xxx
Turning to another point, it would not do for Us to overlook the fact that the
disputed summons was served not upon just an ordinary lawyer of private
respondent Lourdes A. Valmonte, but upon her lawyer husband. But that is
not all, the same lawyer/husband happens to be also her co-defendant in the
instant case which involves real property which, according to her
lawyer/husband/ co-defendant, belongs to the conjugal partnership of the
defendants (the spouses Valmonte). It is highly inconceivable and certainly it
would be contrary to human nature for the lawyer/husband/co-defendant to
keep to himself the fact that they (the spouses Valmonte) had been sued with
regard to a property which he claims to be conjugal. Parenthetically, there is
nothing in the records of the case before Us regarding any manifestation by
private respondent Lourdes A. Valmonte about her lack of knowledge about
the case instituted against her and her lawyer/husband/co-defendant by her
sister Rosita.
PREMISES CONSIDERED, the instant petition for certiorari, prohibition and
mandamus is given due course. This Court hereby Resolves to nullify the
orders of the court a quo dated July 3, 1992 and September 23, 1992 and
further declares private respondent Lourdes Arreola Valmonte as having
been properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court of
Appeals erred (1) in refusing to apply the provisions of Rule 14, 17 of the
Revised Rules of Court and applying instead Rule 14, 8 when the fact is that
petitioner Lourdes A. Valmonte is a nonresident defendant; and (2) because
even if Rule 14, 8 is the applicable provision, there was no valid substituted
service as there was no strict compliance with the requirement by leaving a
copy of the summons and complaint with petitioner Alfredo D. Valmonte.
Private respondent, upon the other hand, asserts that petitioners are invoking
a technicality and that strict adherence to the rules would only result in a
useless ceremony.
We hold that there was no valid service of process on Lourdes A.
Valmonte.
To provide perspective, it will be helpful to determine first the nature of
the action filed against petitioners Lourdes A. Valmonte and Alfredo D.
Valmonte by private respondent, whether it is an action in personam, in rem
or quasi in rem. This is because the rules on service of summons embodied in
Rule 14 apply according to whether an action is one or the other of these
actions.
In an action in personam, personal service of summons or, if this is not
possible and he cannot be personally served, substituted service, as provided
in Rule 14, 7-8[2] is essential for the acquisition by the court of jurisdiction over
the person of a defendant who does not voluntarily submit himself to the
authority of the court.[3] If defendant cannot be served with summons because
he is temporarily abroad, but otherwise he is a Philippine resident, service of
summons may, by leave of court, be made by publication. [4] Otherwise stated,
a resident defendant in an action in personam, who cannot be personally
served with summons, may be summoned either by means of substituted
service in accordance with Rule 14, 8 or by publication as provided in 17 and
18 of the same Rule.[5]
In all of these cases, it should be noted, defendant must be a resident of
the Philippines, otherwise an action in personam cannot be brought because
jurisdiction over his person is essential to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over
the person of the defendant is not essential for giving the court jurisdiction so
long as the court acquires jurisdiction over the res. If the defendant is a
nonresident and he is not found in the country, summons may be served
extraterritorially in accordance with Rule 14, 17, which provides:
17. Extraterritorial service. - When the defendant does not reside and is not
found in the Philippines and the action affects the personal status of the
plaintiff or relates to, or the subject of which is, property within the
Philippines, in which the defendant has or claims a lien or interest, actual or
contingent, or in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property of the
defendant has been attached within the Philippines, service may, by leave of
court, be effected out of the Philippines by personal service as under Section
7; or by publication in a newspaper of general circulation in such places and
for such time as the court may order, in which case a copy of the summons
and order of the court shall be sent by registered mail to the last known
address of the defendant, or in any other manner the court may deem
sufficient. Any order granting such leave shall specify a reasonable time,
which shall not be less than sixty (60) days after notice, within which the
defendant must answer.
72
 In such cases, what gives the court jurisdiction in an action in rem or quasi
in rem is that it has jurisdiction over the res, i.e. the personal status of the
plaintiff who is domiciled in the Philippines or the property litigated or attached.
Service of summons in the manner provided in 17 is not for the purpose of
vesting it with jurisdiction but for complying with the requirements of fair play
or due process, so that he will be informed of the pendency of the action
against him and the possibility that property in the Philippines belonging to him
or in which he has an interest may be subjected to a judgment in favor of the
plaintiff and he can thereby take steps to protect his interest if he is so
minded.[6]
Applying the foregoing rules to the case at bar, private respondents
action, which is for partition and accounting under Rule 69, is in the nature of
an action quasi in rem. Such an action is essentially for the purpose of
affecting the defendants interest in a specific property and not to render a
judgment against him. As explained in the leading case of Banco Espaol
Filipino v. Palanca :[7]
[An action quasi in rem is] an action which while not strictly speaking an
action in rem partakes of that nature and is substantially such. . . . The
action quasi in rem differs from the true action in rem in the circumstance that
in the former an individual is named as defendant and the purpose of the
proceeding is to subject his interest therein to the obligation or lien burdening
the property. All proceedings having for their sole object the sale or other
disposition of the property of the defendant, whether by attachment,
foreclosure, or other form of remedy, are in a general way thus designated.
The judgment entered in these proceedings is conclusive only between the
parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in
the Philippines, service of summons on her must be in accordance with Rule
14, 17. Such service, to be effective outside the Philippines, must be made
either (1) by personal service; (2) by publication in a newspaper of general
circulation in such places and for such time as the court may order, in which
case a copy of the summons and order of the court should be sent by
registered mail to the last known address of the defendant; or (3) in any other
manner which the court may deem sufficient.
Since in the case at bar, the service of summons upon petitioner Lourdes
A. Valmonte was not done by means of any of the first two modes, the question
is whether the service on her attorney, petitioner Alfredo D. Valmonte, can be
justified under the third mode, namely, in any . . . manner the court may deem
sufficient.
We hold it cannot. This mode of service, like the first two, must be made
outside the Philippines, such as through the Philippine Embassy in the foreign
country where the defendant resides.[8] Moreover, there are several reasons
why the service of summons on Atty. Alfredo D. Valmonte cannot be
considered a valid service of summons on petitioner Lourdes A. Valmonte. In
the first place, service of summons on petitioner Alfredo D. Valmonte was not
made upon the order of the court as required by Rule 14, 17 and certainly was
not a mode deemed sufficient by the court which in fact refused to consider
the service to be valid and on that basis declare petitioner Lourdes A.
Valmonte in default for her failure to file an answer.
In the second place, service in the attempted manner on petitioner was
not made upon prior leave of the trial court as required also in Rule 14, 17. As
provided in 19, such leave must be applied for by motion in writing, supported
by affidavit of the plaintiff or some person on his behalf and setting forth the
grounds for the application.
Finally, and most importantly, because there was no order granting such
leave, petitioner Lourdes A. Valmonte was not given ample time to file her
Answer which, according to the rules, shall be not less than sixty (60) days
after notice. It must be noted that the period to file an Answer in an action
against a resident defendant differs from the period given in an action filed
against a nonresident defendant who is not found in the Philippines. In the
former, the period is fifteen (15) days from service of summons, while in the
latter, it is at least sixty (60) days from notice.
Strict compliance with these requirements alone can assure observance
of due process. That is why in one case,[9] although the Court considered
publication in the Philippines of the summons (against the contention that it
should be made in the foreign state where defendant was residing) sufficient,
nonetheless the service was considered insufficient because no copy of the
summons was sent to the last known correct address in the Philippines.
Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA
458,462-463 (1975), in which it was held that service of summons upon the
defendants husband was binding on her. But the ruling in that case is justified
because summons were served upon defendants husband in their conjugal
home in Cebu City and the wife was only temporarily absent, having gone to
Dumaguete City for a vacation. The action was for collection of a sum of
money. In accordance with Rule 14, 8, substituted service could be made on
any person of sufficient discretion in the dwelling place of the defendant, and
certainly defendants husband, who was there, was competent to receive the
summons on her behalf. In any event, it appears that defendant in that case
submitted to the jurisdiction of the court by instructing her husband to move for
the dissolution of the writ of attachment issued in that case.
On the other hand, in the case of Gemperle v. Schenker,[10] it was held
that service on the wife of a nonresident defendant was found sufficient
because the defendant had appointed his wife as his attorney-in-fact. It was
held that although defendant Paul Schenker was a Swiss citizen and resident
of Switzerland, service of summons upon his wife Helen Schenker who was in
the Philippines was sufficient because she was her husbands representative
and attorney-in-fact in a civil case, which he had earlier filed against William
73
Gemperle. In fact Gemperles action was for damages arising from allegedly
derogatory statements contained in the complaint filed in the first case. As this
Court said, i]n other words, Mrs. Schenker had authority to sue, and had DECISION
actually sued, on behalf of her husband, so that she was, also, empowered to
represent him in suits filed against him, particularly in a case, like the one at
bar, which is a consequence of the action brought by her on his AUSTRIA-MARTINEZ, J.:
behalf.[11] Indeed, if instead of filing an independent action Gemperle filed
a counterclaim in the action brought by Mr. Schenker against him, there would Before this Court is a Petition for Review on Certiorari under Rule 45 of the
have been no doubt that the trial court could have acquired jurisdiction over Rules of Court, assailing the November 30, 2006 Decision[1] and April 30, 2007
Mr. Schenker through his agent and attorney-in-fact, Mrs. Schenker. Resolution[2] of the Court of Appeals in CA-G.R. SP No. 93570.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not The relevant facts are culled from the records.
appoint her husband as her attorney-in-fact. Although she wrote private
respondent s attorney that all communications intended for her should be John Nabor C. Arriola (respondent) filed Special Civil Action No. 03-0010 with
addressed to her husband who is also her lawyer at the latters address in the Regional Trial Court, Branch 254, Las Pias City (RTC)
Manila, no power of attorney to receive summons for her can be inferred against Vilma G. Arriola and Anthony Ronald G. Arriola (petitioners) for
therefrom. In fact the letter was written seven months before the filing of this judicial partition of the properties of decedent Fidel Arriola (the decedent
case below, and it appears that it was written in connection with the Fidel). Respondent is the son of decedent Fidel with his first wife Victoria
negotiations between her and her sister, respondent Rosita Dimalanta, C. Calabia, while petitioner Anthony is the son of decedent Fidel with his
concerning the partition of the property in question. As is usual in negotiations second wife, petitioner Vilma.
of this kind, the exchange of correspondence was carried on by counsel for
the parties. But the authority given to petitioners husband in these negotiations On February 16, 2004, the RTC rendered a Decision, the dispositive portion
certainly cannot be construed as also including an authority to represent her of which reads:
in any litigation.
For the foregoing reasons, we hold that there was no valid service on WHEREFORE, premises considered, judgment is hereby
petitioner Lourdes A. Valmonte in this case. rendered:

WHEREFORE, the decision appealed from is REVERSED and the 1. Ordering the partition of the parcel of land covered
orders dated July 3, 1992 and September 23, 1992 of the Regional Trial Court by Transfer Certificate of Title No. 383714 (84191) left by the
of Manila, Branch 48 are REINSTATED. decedent Fidel S. Arriola by and among his heirs
John Nabor C. Arriola, Vilma G. Arriola and Anthony Ronald
SO ORDERED.
G. Arriola in equal shares of one-third (1/3) each without
VILMA G. ARRIOLA and G.R. No. 177703 prejudice to the rights of creditors or mortgagees thereon, if
ANTHONY RONALD G. any;
ARRIOLA, Present:
Petitioners, 2. Attorney's fees in the amount of TEN THOUSAND
YNARES-SANTIAGO, J., (P10,000.00) PESOS is hereby awarded to be reimbursed by
Chairperson, the defendants to the plaintiff;
AUSTRIA-MARTINEZ,
- versus - CORONA,* 3. Costs against the defendants.
NACHURA, and
REYES, JJ. SO ORDERED.[3]

JOHN NABOR C. ARRIOLA, Promulgated: The decision became final on March 15, 2004.[4]
Respondent. January 28, 2008
x------------------------------------------------x As the parties failed to agree on how to partition among them the land covered
by TCT No. 383714 (subject land), respondent sought its sale through public
74
auction, and petitioners acceded to it.[5] Accordingly, the RTC ordered the
public auction of the subject land.[6] The public auction sale was scheduled
on May 31, 2003 but it had to be reset when petitioners refused to include in
the auction the house (subject house) standing on the subject land. [7] This
prompted respondent to file with the RTC an Urgent Manifestation and Motion
for Contempt of Court,[8] praying that petitioners be declared in contempt.
The RTC denied the motion in an Order[9] dated August 30, 2005, for the
reason that petitioners were justified in refusing to have the subject house
included in the auction, thus:
The defendants [petitioners] are correct in holding that the
house or improvement erected on the property should not be
included in the auction sale.
A cursory reading of the aforementioned Decision and of the
evidence adduced during the ex-parte hearing clearly show
that nothing was mentioned about the house existing on the
land subject matter of the case. In fact, even plaintiff's
[respondent's] initiatory Complaint likewise did not mention
anything about the house. Undoubtedly therefore, the Court
did not include the house in its adjudication of the subject land
because it was plaintiff himself who failed to allege the same.
It is a well-settled rule that the court can not give a relief to
that which is not alleged and prayed for in the complaint.
To hold, as plaintiff argued, that the house is considered
accessory to the land on which it is built is in effect to add to
plaintiff's [a] right which has never been considered or passed
upon during the trial on the merits.
In the absence of any other declaration, obvious or otherwise,
only the land should be partitioned in accordance to[sic] the
aforementioned Decision as the house can not be said to have
been necessarily adjudicated therein. Thus, plaintiff can not
be declared as a co-owner of the same house without
evidence thereof and due hearing thereon.
The Decision of the Court having attained its finality, as
correctly pointed out, judgment must stand even at the risk
that it might be erroneous.
WHEREFORE, the Urgent Manifestation and Motion for
Contempt of Court filed by plaintiff is hereby DENIED for lack
of merit.
SO ORDERED.[10]
The RTC, in its Order dated January 3, 2006, denied respondent's Motion for
Reconsideration.[11]
Respondent filed with the CA a Petition for Certiorari[12] where he sought to
have the RTC Orders set aside, and prayed that he be allowed to proceed with
the auction of the subject land including the subject house.
In its November 30, 2006 Decision, the CA granted the Petition for Certiorari,
to wit:
WHEREFORE, the petition is GRANTED. The assailed orders
dated August 30, 2005 and January 3, 2006 issued by the
RTC, in Civil Case No. SCA 03-0010, are REVERSED and
SET ASIDE, and the sheriff is ordered to proceed with the
public auction sale of the subject lot covered by TCT No.
383714, including the house constructed thereon.
SO ORDERED.[13] (Emphasis supplied.)
Petitioners filed a motion for reconsideration but the CA denied the same in its
Resolution[14] of April 30, 2007.
Hence, the present petition on the sole ground that the CA erred in holding
that the RTC committed grave abuse of discretion in denying the motion for
contempt of court.
The assailed CA Decision and Resolution must be modified for reasons other
than those advanced by petitioners.
The contempt proceeding initiated by respondent was one for indirect
contempt. Section 4, Rule 71 of the Rules of Court prescribes the procedure
for the institution of proceedings for indirect contempt, viz:
Sec. 4. How proceedings commenced. Proceedings
for indirect contempt may be initiated motu proprio by the
court against which the contempt was committed by an order
or any other formal charge requiring the respondent to show
cause why he should not be punished for contempt.
In all other cases, charges for indirect contempt
shall be commenced by a verified petition with
supporting particulars and certified true copies of
documents or papers involved therein, and upon full
compliance with the requirements for filing initiatory
pleadings for civil actions in the court concerned. If the
contempt charges arose out of or are related to a principal
action pending in the court, the petition for contempt shall
allege that fact but said petition shall be docketed, heard and
75
 decided separately, unless the court in its discretion orders
the consolidation of the contempt charge and the principal
action for joint hearing and decision. (Emphases supplied.)
Under the aforecited second paragraph of the Rules, the requirements
for initiating an indirect contempt proceeding are a) that it be initiated by way
of a verified petition and b) that it should fully comply with the requirements for
filing initiatory pleadings for civil actions. In Regalado v. Go,[15] we held:
As explained by Justice Florenz Regalado, the filing
of a verified petition that has complied with the
requirements for the filing of initiatory pleading, is
mandatory x x x:
This new provision clarifies with a regularity
norm the proper procedure for
commencing contempt proceedings. While
such proceeding has been classified as
special civil action under the former Rules,
the heterogenous practice tolerated by the
courts, has been for any party to file a motion
without paying any docket or lawful fees
therefore and without complying with the
requirements for initiatory pleadings, which is
now required in the second paragraph of this
amended section.
xxxx
Henceforth, except for
indirect contempt proceedings
initiated motu propio by order of or a formal
charge by the offended court, all charges
shall be commenced by a verified petition
with full compliance with the requirements
therefore and shall be disposed in
accordance with the second paragraph of this
section.
xxxx
Even if the contempt proceedings
stemmed from the main case over which the court
already acquired jurisdiction, the rules direct that
the petition for contempt be treated
independently of the principal action.
Consequently, the necessary prerequisites for
the filing of initiatory pleadings, such as the filing
of a verified petition, attachment of a certification
on non-forum shopping, and the payment of the
necessary docket fees, must be faithfully
observed.
xxxx
The provisions of the Rules are worded in very clear
and categorical language. In case where the
indirect contempt charge is not initiated by the courts, the
filing of a verified petition which fulfills the requirements on
initiatory pleadings is a prerequisite. Beyond question now is
the mandatory requirement of a verified petition in initiating an
indirect contempt proceeding. Truly, prior to the amendment
of the 1997 Rules of Civil Procedure, mere motion without
complying with the requirements for initiatory pleadings was
tolerated by the courts. At the onset of the 1997 Revised
Rules of Civil Procedure, however, such practice can no
longer be countenanced.[16] (Emphasis ours.)
The RTC erred in taking jurisdiction over the indirect contempt
proceeding initiated by respondent. The latter did not comply with any of the
mandatory requirements of Section 4, Rule 71. He filed a mere Urgent
Manifestation and Motion for Contempt of Court, and not a verified petition. He
likewise did not conform with the requirements for the filing of initiatory
pleadings such as the submission of a certification against forum shopping and
the payment of docket fees. Thus, his unverified motion should have been
dismissed outright by the RTC.
It is noted though that, while at first the RTC overlooked the infirmities
in respondent's unverified motion for contempt, in the end, it dismissed the
motion, albeit on substantive grounds. The trouble is that, in the CA decision
assailed herein, the appellate court committed the same oversight by delving
into the merits of respondent's unverified motion and granting the relief sought
therein. Thus, strictly speaking, the proper disposition of the present petition
ought to be the reversal of the CA decision and the dismissal of respondent's
unverified motion for contempt filed in the RTC for being in contravention of
Section 4, Rule 71.
However, such simplistic disposition will not put an end to the dispute between
the parties. A seed of litigation has already been sown that will likely sprout
into another case between them at a later time. We refer to the question of
whether the subject house should be included in the public auction of the
subject land. Until this question is finally resolved, there will be no end to
litigation between the parties. We must therefore deal with it squarely, here
and now.
The RTC and the CA differed in their views on whether the public auction
should include the subject house. The RTC excluded the subject house
76
because respondent never alleged its existence in his complaint for partition
or established his co-ownership thereof.[17] On the other hand, citing Articles
440,[18] 445[19] and 446[20] of the Civil Code, the CA held that as the deceased
owned the subject land, he also owned the subject house which is a mere
accessory to the land. Both properties form part of the estate of the deceased
and are held in co-ownership by his heirs, the parties herein. Hence, the CA
concludes that any decision in the action for partition of said estate should
cover not just the subject land but also the subject house.[21] The CA further
pointed out that petitioners themselves implicitly recognized the inclusion of
the subject house in the partition of the subject land when they proposed in
their letter of August 5, 2004, the following swapping-arrangement:
Sir:
Thank you very much for accommodating us even if we are
only poor and simple people. We are very much pleased with
the decision of Presiding Judge Manuel B. Fernandez, Jr.,
RTC Br. 254, Las Pias, on the sharing of one-third (1/3) each
of a land covered by Transfer Certificate of Title No. 383714
(84191) in Las Pias City.
However, to preserve the sanctity of our house which is our
residence for more than twenty (20) years, we wish to request
that the 1/3 share of John Nabor C. Arriola be paid by the
defendants depending on the choice of the plaintiff between
item(1) or item (2), detailed as follows:
(1) Swap with a 500-square meters [sic] lot located
at Baras Rizal x x x.
(2) Cash of P205,700.00 x x x.
x x x x.[22]
We agree that the subject house is covered by the judgment of partition for
reasons postulated by the CA. We qualify, however, that this ruling does not
necessarily countenance the immediate and actual partition of the subject
house by way of public auction in view of the suspensive proscription imposed
under Article 159 of The Family Code which will be discussed forthwith.
It is true that the existence of the subject house was not specifically alleged in
the complaint for partition. Such omission notwithstanding, the subject house
is deemed part of the judgment of partition for two compelling reasons.
First, as correctly held by the CA, under the provisions of the Civil Code, the
subject house is deemed part of the subject land. The Court quotes with
approval the ruling of the CA, to wit:
The RTC, in the assailed Order dated August 30,
2005 ratiocinated that since the house constructed on the
subject lot was not alleged in the complaint and its ownership
was not passed upon during the trial on the merits, the court
cannot include the house in its adjudication of the subject lot.
The court further stated that it cannot give a relief to[sic] which
is not alleged and prayed for in the complaint.
We are not persuaded.
To follow the foregoing reasoning of the RTC will in effect
render meaningless the pertinent rule on accession. In
general, the right to accession is automatic
(ipso jure), requiring no prior act on the part of the owner
or the principal. So that even if the improvements
including the house were not alleged in the complaint for
partition, they are deemed included in the lot on which
they stand, following the principle of accession.
Consequently, the lot subject of judicial partition in this
case includes the house which is permanently attached
thereto, otherwise, it would be absurd to divide the
principal, i.e., the lot, without dividing the house which is
permanently attached thereto.[23] (Emphasis supplied)
Second, respondent has repeatedly claimed that the subject house was built
by the deceased.[24] Petitioners never controverted such claim. There is then
no dispute that the subject house is part of the estate of the deceased;as such,
it is owned in common by the latter's heirs, the parties herein,[25] any one of
whom, under Article 494[26] of the Civil Code, may, at any time, demand the
partition of the subject house.[27] Therefore, respondent's recourse to the
partition of the subject house cannot be hindered, least of all by the mere
technical omission of said common property from the complaint for partition.
That said notwithstanding, we must emphasize that, while we treat the
subject house as part of the co-ownership of the parties, we stop short of
authorizing its actual partition by public auction at this time. It bears
emphasis that an action for partition involves two phases: first, the declaration
of the existence of a state of co-ownership; and second, the actual termination
of that state of co-ownership through the segregation of the common
property.[28] What is settled thus far is only the fact that the subject house is
under the co-ownership of the parties, and therefore susceptible of partition
among them.
Whether the subject house should be sold at public auction as ordered by the
RTC is an entirely different matter, depending on the exact nature of the
subject house.
77
Respondent claims that the subject house was built by decedent Fidel on his
exclusive property.[29] Petitioners add that said house has been their residence
for 20 years.[30] Taken together, these averments on record establish that the
subject house is a family home within the contemplation of the provisions of
The Family Code, particularly:
Article 152. The family home, constituted jointly by the
husband and the wife or by an unmarried head of a family, is
the dwelling house where they and their family reside, and the
land on which it is situated.
Article 153. The family home is deemed constituted on a
house and lot from the time it is occupied as a family
residence. From the time of its constitution and so long as
any of its beneficiaries actually resides therein, the family
home continues to be such and is exempt from execution,
forced sale or attachment except as hereinafter provided and
to the extent of the value allowed by law. (Emphasis
supplied.)
One significant innovation introduced by The Family Code is the
automatic constitution of the family home from the time of its occupation as a
family residence, without need anymore for the judicial or extrajudicial
processes provided under the defunct Articles 224 to 251 of the Civil Code and
Rule 106 of the Rules of Court. Furthermore, Articles 152 and 153 specifically
extend the scope of the family home not just to the dwelling structure in which
the family resides but also to the lot on which it stands. Thus, applying these
concepts, the subject house as well as the specific portion of the subject land
on which it stands are deemed constituted as a family home by the deceased
and petitioner Vilma from the moment they began occupying the same as a
family residence 20 years back.[31]
It being settled that the subject house (and the subject lot on which it stands)
is the family home of the deceased and his heirs, the same is shielded from
immediate partition under Article 159 of The Family Code, viz:
Article 159. The family home shall continue despite the death
of one or both spouses or of the unmarried head of the
family for a period of ten years or for as long as there is a
minor beneficiary, and the heirs cannot partition the same
unless the court finds compelling reasons therefor. This
rule shall apply regardless of whoever owns the property
or constituted the family home. (Emphasis supplied.)
The purpose of Article 159 is to avert the disintegration of the family unit
following the death of its head. To this end, it preserves the family home as the
physical symbol of family love, security and unity by imposing the following
restrictions on its partition: first, that the heirs cannot extra-judicially partition it
for a period of 10 years from the death of one or both spouses or of the
unmarried head of the family, or for a longer period, if there is still a minor
beneficiary residing therein; and second, that the heirs cannot judicially
partition it during the aforesaid periods unless the court finds compelling
reasons therefor. No compelling reason has been alleged by the parties; nor
has the RTC found any compelling reason to order the partition of the family
home, either by physical segregation or assignment to any of the heirs or
through auction sale as suggested by the parties.
More importantly, Article 159 imposes the proscription against the immediate
partition of the family home regardless of its ownership. This signifies that even
if the family home has passed by succession to the co-ownership of the heirs,
or has been willed to any one of them, this fact alone cannot transform the
family home into an ordinary property, much less dispel the protection cast
upon it by the law. The rights of the individual co-owner or owner of the family
home cannot subjugate the rights granted under Article 159 to the beneficiaries
of the family home.
Set against the foregoing rules, the family home -- consisting of the subject
house and lot on which it stands -- cannot be partitioned at this time, even if it
has passed to the co-ownership of his heirs, the parties herein.Decedent Fidel
died on March 10, 2003.[32] Thus, for 10 years from said date or until March 10,
2013, or for a longer period, if there is still a minor beneficiary residing therein,
the family home he constituted cannot be partitioned, much less when no
compelling reason exists for the court to otherwise set aside the restriction and
order the partition of the property.
The Court ruled in Honrado v. Court of Appeals[33] that a claim for exception
from execution or forced sale under Article 153 should be set up and proved
to the Sheriff before the sale of the property at public auction.Herein petitioners
timely objected to the inclusion of the subject house although for a different
reason.
To recapitulate, the evidence of record sustain the CA ruling that the subject
house is part of the judgment of co-ownership and partition. The same
evidence also establishes that the subject house and the portion of the subject
land on which it is standing have been constituted as the family home of
decedent Fidel and his heirs. Consequently, its actual and immediate partition
cannot be sanctioned until the lapse of a period of 10 years from the death of
Fidel Arriola, or until March 10, 2013.
It bears emphasis, however, that in the meantime, there is no obstacle to the
immediate public auction of the portion of the subject land covered by TCT No.
383714, which falls outside the specific area of the family home.
78
WHEREFORE, the petition is PARTLY GRANTED and the November 30,
2006 Decision and April 30, 2007 Resolution of the Court of Appeals
are MODIFIED in that the house standing on the land covered by Transfer
Certificate of Title No. 383714 is DECLARED part of the co-ownership of the
parties John Nabor C. Arriola, Vilma G. Arriola and Anthony Ronald
G. Arriola but EXEMPTED from partition by public auction within the period
provided for in Article 159 of the Family Code.
No costs.
SO ORDERED.
G.R. No. 149313 January 22, 2008
JULITA ROMBAUA PANGANIBAN, PAQUITO ROMBAUA, RUPERTO
ROMBAUA, TERESITA ROMBAUA TELAJE and LEONOR ROMBAUA
OPIANA, petitioners,
vs.
JULITA S. OAMIL, respondent.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review on certiorari are the Decision1 of the Court
of Appeals dated March 2, 2001 in CA-G.R. CV No. 57557, which affirmed in
toto the Order dated October 23, 1997 of the Regional Trial Court of
Olongapo City, Branch 73, and the Resolution2 dated July 10, 2001 denying
the motion for reconsideration.
The facts as culled from the records are as follows:
On April 26, 1993 Julita Oamil, herein respondent, filed a complaint for
specific performance with damages3 with the Regional Trial Court of
Olongapo City, praying that Partenio Rombaua (Partenio) be ordered to
execute a final deed of sale over the parcel of land which was the subject of
a prior "Agreement to Sell" executed by and between them on May 17, 1990.
The property which is alleged to be covered by the said "Agreement to Sell"
consists of 204.5 square meters of land located at #11 21st St., East Bajac-
Bajac, Olongapo City, and is claimed by respondent Oamil to be Partenios
conjugal share in a parcel of commercial land (the subject property) with an
aggregate area of 409 square meters acquired by Partenio and his deceased
first wife Juliana4 during their marriage.
There are two portions of the subject property in contention: one consisting of
204.5 square meters facing 21stStreet (the 21st St. portion), and another
consisting of 204.5 square meters facing Canda Street (the Canda St.
portion). Petitioners and their father Partenio are acknowledged co-owners of
the subject property to the following extent: one-half to Partenio as his
conjugal share, and one-sixth each of the remaining half to petitioners and
Partenio as the surviving heirs of Juliana.
For failure to file an answer, Partenio was declared in default, and
respondent presented her evidence ex parte.
On December 26, 1993, the trial court promulgated its Decision,5 the
dispositive portion of which reads as follows:
WHEREFORE, viewed from all the foregoing, judgment is hereby
rendered as follows:
(1) The defendant is hereby ordered to execute a deed of absolute
sale over the portion (front) of the realty subject matter of this case
in favor of the plaintiff and to surrender the possession thereof to the
plaintiff. Failure of the defendant to do so, then the City Assessor of
Olongapo is hereby directed to effect the transfer of all rights/interest
on the one-half (1/2) front portion of the said realty in the name of the
plaintiff, upon the finality of this decision;
(2) Plaintiff, however, is ordered to pay the amount of EIGHT
THOUSAND PESOS (P8,000.00) representing the balance of the
interests due on the amount of P200,000.00, delinquent for one (1)
year computed at 12% per annum;
(3) Defendant is, likewise, hereby ordered to pay the plaintiff
attorneys fees in the amount of TEN THOUSAND PESOS
(P10,000.00).
Let a copy of this Decision be furnished the City Assessor of
Olongapo City.
SO ORDERED.6
Note that the trial court did not specify which portion of the property the
21st St. portion or the Canda St. portion should be deeded to respondent as
buyer of Partenios conjugal share.
Partenio failed to appeal, and the decision became final and executory on
February 4, 1994. Entry of judgment was made on February 8, 1994, and a
79
writ of execution was issued on February 15, 1994 and served upon Partenio
on February 21, 1994. The writ was served as well upon the City Assessor of
Olongapo City, who caused the transfer of the Tax Declaration covering the
21st St. portion in respondents name.
In June 1994, petitioners filed a verified petition for relief from the decision of
the trial court, grounded on the following: 1) that Partenios conjugal share in
the property, and that of petitioners as well, are being litigated in a judicial
partition proceeding7 (the partition case) which is pending with the Court of
Appeals, hence the trial court may not yet render a decision disposing of a
definite area of the subject property in respondents favor; and, (2) that
petitioners were unjustly deprived of the opportunity to protect and defend
their interest in court because, notwithstanding that they are indispensable
parties to the case (being co-owners of the subject property), they were not
impleaded in Civil Case No. 140-0-93.
In lieu of a hearing, the parties were directed to submit their respective
position papers. Respondent, meanwhile, moved to dismiss the petition,
claiming that the stated grounds for relief are not included in the enumeration
under Section 2, Rule 38 of the Rules of Court. Petitioners opposed the
motion.
In an Order dated January 13, 1995, the trial court denied the petition for
relief because the decision in Civil Case No. 140-0-93 had become final and
executory. It held that only indispensable parties to the case may participate
in the proceedings thereof, and since petitioners may not be considered as
indispensable parties because the subject matter of the proceedings involves
Partenios conjugal share in the property, they are precluded from filing a
petition for relief from the courts judgment.
Petitioners moved for reconsideration insisting that they are indispensable
parties in Civil Case No. 140-0-93 because as co-owners of the subject
property by virtue of succession to the rights of their deceased mother, they
possess an interest that must be protected. Instead of resolving the motion,
the trial court, with the concurrence of the petitioners and the respondent,
deferred the proceedings, to await the result of a pending appeal with the
Court of Appeals of the decision in Special Civil Action No. 340-0-86,8 the
partition case, where the trial court, in its decision, awarded specifically the
Canda St. portion to Partenio as his conjugal share.
In the meantime, or sometime in 1995, a Motion for leave of court to file a
Complaint in Intervention was filed by Sotero Gan (Gan), who claims to be
the actual and rightful owner of Partenios conjugal share. Gan claims to
have purchased Partenios conjugal share in the property, and in return, the
latter on November 29, 1990 executed a deed of waiver and quitclaim of his
possessory rights. Gan likewise claims that the tax declaration covering the
portion of the property had been transferred in his name. He thus seeks the
dismissal of Civil Case No. 140-0-93 and the reinstatement of his name on
the tax declaration which by then had been placed in respondents name.
The parties submitted their respective oppositions to Gans motion, the core
of their argument being that with the finality of the decision in the case,
intervention was no longer proper, and that Gans cause of action, if any,
should be litigated in a separate proceeding.
The trial court, in an Order dated January 22, 1996, denied Gans motion for
intervention for being filed out of time, considering that the decision of the
court had become final and executory in February 1994. Gan moved for
reconsideration which was opposed by respondent, citing, among others, an
Order dated April 18, 1994 issued by the Department of Environment and
Natural Resources (CENRO of Olongapo) which includes a finding that Gan
had transferred his rights and interest in the subject property to one Chua
Young Bing.
In another Order dated October 23, 1997,9 the trial court denied Gans
motion for reconsideration, as well as the petitioners motion for
reconsideration of the January 13, 1995 order denying the petition for relief.
In said order, the court made reference to the decision in Special Civil Action
No. 340-0-86, which by then had become final and executory.10 The trial
court likewise substantially modified its Decision dated December 26, 1993,
by awarding specifically the 21st St. portion of the property to Partenio as his
conjugal share, despite the pronouncement in Special Civil Action No. 340-0-
86 which awards the Canda St. portion to him.
From the foregoing October 23, 1997 order, the petitioners and Gan
interposed their separate appeals to the Court of Appeals. Meanwhile,
respondent filed a motion for execution pending appeal, which was denied on
the ground that there exist no special or compelling reasons to allow it.
On March 2, 2001, the appellate court rendered the herein assailed Decision,
which affirmed in toto the appealed October 23, 1997 Order of the trial court.
The appellate court sustained the trial courts ruling that Partenios conjugal
share in the subject property consists of the 21st St. portion, thereby
disregarding the prior final and executory decision in Special Civil Action No.
340-0-86 which declares that Partenio is entitled to the Canda St. portion.
The appellate court based the award of the 21st St. portion to respondent on
the ground that petitioners have always acknowledged their father Partenios
"acts of ownership" over the 21st St. portion, thus signifying their consent and
thereby barring them from questioning the award.
80
Respondents moved for reconsideration but it was denied.
Petitioners are now before us via the present petition, raising the sole issue
of whether petitioners can intervene in the proceedings in Civil Case
No. 140-0-93 in order to protect their rights as co-owners of the subject
property.
We resolve to GRANT the petition.
Under a co-ownership, the ownership of an undivided thing or right belongs
to different persons. During the existence of the co-ownership, no individual
can claim title to any definite portion of the community property until the
partition thereof; and prior to the partition, all that the co-owner has is an
ideal or abstract quota or proportionate share in the entire land or
thing.11 Before partition in a co-ownership, every co-owner has the absolute
ownership of his undivided interest in the common property. The co-owner is
free to alienate, assign or mortgage this undivided interest, except as to
purely personal rights. The effect of any such transfer is limited to the portion
which may be awarded to him upon the partition of the property.12
Under Article 497 of the Civil Code, in the event of a division or partition of
property owned in common, assignees of one or more of the co-owners may
take part in the division of the thing owned in common and object to its being
effected without their concurrence. But they cannot impugn any partition
already executed, unless there has been fraud, or in case it was made
notwithstanding a formal opposition presented to prevent it, without prejudice
to the right of the debtor or assignor to maintain its validity.
The decision in Special Civil Action No. 340-0-86, which is an action for
judicial partition of the subject property, determines what Partenio, and
ultimately, respondent, as his successor-in-interest, is entitled to in Civil Case
No. 140-0-93. As Partenios successor-in-interest to the property, respondent
could not acquire any superior right in the property than what Partenio is
entitled to or could transfer or alienate after partition. In a contract of sale of
co-owned property, what the vendee obtains by virtue of such a sale are the
same rights as the vendor had as co-owner, and the vendee merely steps
into the shoes of the vendor as co-owner.13
As early as May 17, 1990, when respondent and Partenio executed the
"Agreement to Sell", the former knew that the property she was purchasing
was conjugal property owned in common by Partenio and the heirs of his
deceased wife.14 And while Civil Case No. 140-0-93 (the specific
performance case) was pending, respondent was apprised of the pendency
of Special Civil Action No. 340-0-86 (the partition case). Yet, respondent did
not intervene, nor did she take part, nor enter any formal opposition as
assignee of Partenios conjugal share in the property in said partition
proceedings. She did not exercise the rights granted her under Article 497 of
the Civil Code. Instead, when the court in Civil Case No. 140-0-93 decided to
suspend the proceedings and hold the same in abeyance while the appeal in
Special Civil Action No. 340-0-86 remained unresolved, the respondent
unconditionally agreed to its temporary abatement. In other words, she chose
to sit back and await the resolution thereof.
Consequently, when the decision in Special Civil Action No. 340-0-86
became final and executory without the respondent having questioned the
same in any manner whatsoever, by appeal or otherwise, the division of
property decreed therein may no longer be impugned by her.
Thus said, the trial court in Civil Case No. 140-0-93 could not award the
21st St. portion to Partenio, since the court in Special Civil Action No. 340-0-
86 specifically awarded the Canda St. portion to him. The decision in Special
Civil Action No. 340-0-86, which became final and executory, should put an
end to the co-ownership between Partenio and the respondents, and the
award made to each co-owner of specific portions of the property as their
share in the co-ownership should be respected.
Since the issue of each of the co-owners specific portion in the aggregate
property has been laid to rest in Special Civil Action No. 340-0-86, the final
and executory decision in said proceeding should be conclusive on the issue
of which specific portion of the property became the subject matter of the
sale between Partenio and the respondent; that is, that Partenio, as declared
owner of the Canda St. portion, could have transferred to respondent only
that part of the property and not the 21st St. portion. Although Partenio was
free to sell or transfer his undivided interest to the respondent, the effect of
such transfer is limited to the portion which may be awarded to him upon the
partition of the property.
It was likewise error for the appellate court to have considered the alleged
acts of ownership exercised upon the 21st St. portion by Partenio as weighing
heavily against the decreed partition in Special Civil Action No. 340-0-86.
The determination of this issue is beyond the ambit of the trial court in Civil
Case No. 140-0-93. As far as it was concerned, it could only award to the
respondent, if proper, whatever specific portion Partenio is found to be
entitled to in the event of a partition, in accordance with Article 493 of the
Civil Code and the procedure outlined in the Rules of Court. It could not, in
an ordinary proceeding for specific performance with damages, subject the
property to a partial division or partition without the knowledge and
participation of the other co-owners, and while a special civil action for
partition was simultaneously pending in another court.
81
The court in Civil Case No. 140-0-93 is not a partition court but one litigating
an ordinary civil case, and all evidence of alleged acts of ownership by one
co-owner should have been presented in the partition case, there to be
threshed out in order that the partition court may arrive at a just division of
the property owned in common; it is not for the trial court in the specific
performance case to properly appreciate. Being a court trying an ordinary
civil suit, the court in Civil Case No. 140-0-93 had no jurisdiction to act as a
partition court. Trial courts trying an ordinary action cannot resolve to perform
acts pertaining to a special proceeding because it is subject to specific
prescribed rules.15
That the trial court suspended the proceedings in Civil Case No. 140-0-93 to
make way for the resolution of Special Civil Action No. 340-0-86 was an
indication that it intended to abide by whatever would be decreed in the latter
case. For, understandably, the resolution of Special Civil Action No. 340-0-86
will settle the issue in Civil Case No. 140-0-93 with respect to which specific
portion of the property constitutes the subject matter of the specific
performance suit and which would, in any case, be adjudicated to either of
the two the defendant co-owner and seller Partenio or the plaintiff buyer
Oamil, the herein respondent. Yet in the end, the trial court ultimately
disregarded what had been finally adjudicated and settled in Special Civil
Action No. 340-0-86, and instead it took a position that was entirely
diametrically opposed to it.
It was likewise irregular for the respondent to have obtained a certificate of
title over specific property which has not been partitioned, especially where
she concedes awareness of the existing co-ownership which has not been
terminated, and recognizes her status as mere successor-in-interest to
Partenio. The spring may not rise higher than its source.
In sum, the trial court and the Court of Appeals, by disregarding the final and
executory judgment in Special Civil Action No. 340-0-86, certainly ignored
the principle of conclusiveness of judgments, which states that
[A] fact or question which was in issue in a former suit and was there
judicially passed upon and determined by a court of competent
jurisdiction, is conclusively settled by the judgment therein as far as
the parties to that action and persons in privity with them are
concerned and cannot be again litigated in any future action between
such parties or their privies, in the same court or any other court of
concurrent jurisdiction on either the same or different cause of
action, while the judgment remains unreversed by proper authority. It
has been held that in order that a judgment in one action can be
conclusive as to a particular matter in another action between the
same parties or their privies, it is essential that the issue be identical.
If a particular point or question is in issue in the second action, and
the judgment will depend on the determination of that particular point
or question, a former judgment between the same parties or their
privies will be final and conclusive in the second if that same point or
question was in issue and adjudicated in the first suit (Nabus vs.
Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action
is not required but merely identity of issues.16
The ruling in Special Civil Action No. 340-0-86 that the Canda St. portion
shall go to Partenio became the law of the case and continues to be
binding between the parties as well as their successors-in-interest, the
decision in said case having become final and executory. Hence, the binding
effect and enforceability of that dictum can no longer be relitigated anew in
Civil Case No. 140-0-93 since said issue had been resolved and finally laid to
rest in the partition case, by conclusiveness of judgment, if not by the
principle of res judicata. It may not be reversed, modified or altered in any
manner by any court.
As a result of the trial courts refusal to abide by the decision in Special Civil
Action No. 340-0-86, the rights of the petitioners have been unnecessarily
transgressed, thereby giving them the right to seek relief in court in order to
annul the October 23, 1997 Order of the trial court which substantially and
wrongly modified its original decision in Civil Case No. 140-0-93. It was clear
mistake for the trial court to have gone against the final and executory
decision in Special Civil Action No. 340-0-86 and its original decision, which
does not award a definite portion of the disputed property to Partenio,
precisely because, as a court litigating an ordinary civil suit, it is not
authorized to partition the subject property but only to determine the rights
and obligations of the parties in respect to Partenios undivided share in the
commonly owned property. As a result of this mistake, the petitioners are
entitled to relief.
Finally, with respect to Gans intervention, we affirm the appellate courts
finding that the same is no longer proper considering that the decision in Civil
Case No. 140-0-93 had become final and executory. Gan moved to intervene
only in 1995, when the decision became final and executory in February
1994. Certainly, intervention, being merely collateral or ancillary to the
principal action, may no longer be allowed in a case already terminated by
final judgment.17 Moreover, since Gan did not appeal the herein assailed
decision of the appellate court, then the same, as against him, has become
final and executory.
WHEREFORE, the petition is GRANTED. The Decision of the Court of
Appeals dated March 2, 2001 in CA-G.R. CV No. 57557 and the Resolution
dated July 10, 2001 are REVERSED and SET ASIDE, with the exception
that the denial of the intervenor Sotero Gans motion for intervention
is AFFIRMED.
82
The Order dated October 23, 1997 of the Regional Trial Court of Olongapo
City in Civil Case No. 140-0-93 is hereby DECLARED of no effect. In all
other respects, the Decision of the trial court in Civil Case No. 140-0-93
dated December 26, 1993 is AFFIRMED. The said court is
moreover ORDERED to abide by the pronouncement in Special Civil Action
No. 340-0-86 with respect to Partenio Rombauas conjugal share in the
disputed property.
SO ORDERED.
G.R. No. 56550 October 1, 1990
MARINA Z. REYES, AUGUSTO M. ZABALLERO and SOCORRO Z.
FRANCISCO, petitioners,
vs.
THE HONORABLE ALFREDO B. CONCEPCION, Presiding Judge, CFI of
Cavite, Tagaytay, Br. IV, SOCORRO MARQUEZ VDA. DE ZABALLERO,
EUGENIA Z. LUNA, LEONARDO M. ZABALLERO, and ELENA FRONDA
ZABALLERO, respondents.
Law Firm of Raymundo A. Armovit for petitioners.
Leonardo M. Zaballero for private respondents.
CORTS, J.:
On March 13, 1980, petitioners filed with the CFI a complaint for injunction
and damages, docketed as Civil Case No. TG-572, seeking to enjoin private
respondents Socorro Marquez Vda. De Zaballero, Eugenia Z. Luna and
Leonardo M. Zaballero from selling to a third party their pro-indiviso shares
as co-owners in eight parcels of registered land (covered by TCT Nos. A-
1316 to A-1322) located in the province of Cavite, with an aggregate area of
about 96 hectares. Petitioner claimed that under Article 1620 of the new Civil
Code, they, as co-owners, had a preferential right to purchase these shares
from private respondents for a reasonable price.
On March 17, 1980, respondent trial judge denied the ex parte application for
a writ of preliminary injunction, on the ground that petitioners' registered
notice of lis pendens was ample protection of their rights.
On April 24, 1980, private respondents received the summons and copies of
the complaint. Private respondents then filed their answer with counterclaim,
praying for the partition of the subject properties. Private respondent Elena
Fronda Zaballero filed a motion for intervention dated April 29, 1980,
adopting therein her co-respondents answer with counterclaim.
At the pre-trial hearing, the parties agreed on the following stipulation of
facts:
xxx xxx xxx
1. That the plaintiffs, the defendants and the intervenor are
the pro-indiviso co-owners of the properties cited and
described in the complaint;
2. That six and nine tenth (6-9/10) hectares of the land
covered by TCT No. T-1319; approximately twelve (12)
hectares of that covered by TCT No. T-1320; and the entire
parcel of covered by TCT No. T-1321, are subject of
expropriation proceedings instituted by the National Housing
Authority (NHA) now pending before this Court in Civil Case
Nos. TG-392, TG-396 and TG-417;
3. That based on the evidence presented by the herein
parties in the aforecited expropriation cases, the current
valuation of the land and the improvements thereon is at
P95,132.00 per hectare;
4. That on 16 April 1980, the plaintiffs received a written
notice from the defendants and the intervenor that the
VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS
CORPORATION had offered to buy the latter's share in the
properties listed in the complaint subject to the following
terms:
1. The selling price shall be net at TWELVE
& 50/100 (P12.50) PESOS per square
meter, or a total price of NINE MILLION
(P9,000,000.00) PESOS for a total area of
SEVENTY TWO (72) HECTARES ONLY;
2. A downpayment equivalent to THIRTY
(30%) PERCENT of the selling price, or a
minimum downpayment of TWO MILLION
SEVEN HUNDRED THOUSAND
(P2,700,000.00) PESOS;
83
 3. The balance of the purchase price to be
payable within THREE (3) YEARS from the
date of downpayment in THREE (3) EQUAL,
ANNUAL PAYMENTS with interest at the
legal rate prevailing at the time of payment;
4. The balance shall be covered by a BANK
GUARANTEE of payments and shall not be
governed by Art. 1250 of the Civil Code.
(Cf. Annexes 1, 2 and 3,
Answer)
5. That in said letters (Annexes 1, 2 and 3, Answer), the
plaintiffs were requested:
a) To exercise their pre-emptive right to
purchase defendants' and intervenor's
shares under the above-quoted terms; or
b) To agree to a physical partition of the
properties; or
c) To sell their shares, jointly with the
defendants and the intervenor, to the
VOLCANO SECURITIES TRADERS AND
AGRI-BUSINESS CORPORATION at the
price and under the terms aforequoted.
6. That the VOLCANO SECURITIES TRADERS AND AGRI-
BUSINESS CORPORATION is ready, willing and able to
purchase not only the aliquot shares of the defendants and
the intervenor, but also that of the plaintiffs, in and to all the
properties subject of this case, for and in consideration of the
net amount of TWELVE and 50/100 (P12.50) PESOS per
square meter and under the afore-quoted terms;
xxx xxx xxx
[Annex "C" of the Petition, pp. 1-2, Rollo, pp. 43-44.]
The parties laid down their respective positions, as follows:
PLAINTIFFS
1. That the subject properties are incapable of physical
partition;
2. That the price of P12.50 per square meter is grossly
excessive;
3. That they are willing to exercise their pre-emptive right for
an amount of not more that P95,132.00 per hectare, which is
the fair and reasonable value of said properties;
4. That the statutory period for exercising their pre-emptive
right was suspended upon the filing of the complaint;
DEFENDANTS AND INTERVENOR
1. That the reasonable price of the subject properties is
P12.50 per square meter;
2. That plaintiffs' right of legal pre-emption had lapsed upon
their failure to exercise the same within the period prescribed
in Art. 1623 of the Civil Code of the Philippines;
3. That, assuming the soundness of plaintiffs' claim that the
price of P12.50 per square meter is grossly excessive, it
would be to the best interest of the plaintiffs to sell their
shares to the VOLCANO SECURITIES TRADERS AND
AGRI-BUSINESS CORPORATION, whose sincerity,
capacity and good faith is beyond question, as the same was
admitted by the parties herein;
4. That the subject properties consisting approximately 95
hectares may be physically partitioned without difficulty in
the manner suggested by them to plaintiffs, and as
graphically represented in the subdivision plan, which will be
furnished in due course to plaintiffs' counsel.
[Annex "C" of the Petition, pp. 2-3; Rollo, pp. 44-45.]
Based on the foregoing, respondent trial judge rendered a pre-trial order
dated July 9, 1980 granting petitioners a period of ten days from receipt of
the subdivision plan to be prepared by a competent geodetic engineer within
which to express their approval or disapproval of the said plan, or to submit
within the same period, if they so desire, an alternative subdivision plan.
84
On July 16, 1980, counsel for private respondents sent to the counsel for
petitioners a letter enclosed with a subdivision plan.
On August 4, 1980, petitioners filed their comment to the pre-trial order,
contending that the question of reasonable value of the subject properties
remains a contentious issue of fact ascertainable only after a full trial.
Petitioners likewise insisted on their pre- emptive right to purchase private
respondents' shares in the co-ownership after due determination of the
reasonable price thereof.
Thereafter, counsel for private respondents sent the counsel for petitioners
another subdivision plan prepared by a geodetic engineer. Still, no definite
communication was sent by petitioners signifying their approval or
disapproval to the subdivision plans.
In order to settle once and for all the controversy between the parties, private
respondents filed a motion dated December 16, 1980 requesting that
petitioners be required to formally specify which of the two options under
Article 498 of the New Civil Code they wished to avail of: that petitioners'
shares in the subject properties be sold to private respondents, at the rate of
P12.50 per square meter; or that the subject properties be sold to a third
party, VOLCANO LAKEVIEW RESORTS, INC. (claimed to have been
erroneously referred to in the pre-trial as VOLCANO SECURITIES
TRADERS AND AGRI-BUSINESS CORPORATION) and its proceeds
thereof distributed among the parties.
Finding merit in the private respondents' request, and for the purpose of
determining the applicability of Article 498 of the New Civil Code, respondent
trial judge issued an order dated February 4, 1981 which directed the parties
to signify whether or not they agree to the scheme of allotting the subject
properties to one of the co-owners, at the rate of P12.50 per square meter, or
whether or not they know of a third party who is able and willing to buy the
subject properties at terms and conditions more favorable than that offered
by VOLCANO LAKEVIEW RESORTS, INC. The order contained a series of
questions addressed to all the parties, who were thereupon required to
submit their answers thereto.
Private respondents filed a "Constancia" expressing that they were willing to
allot their shares in the subject properties to Socorro Marquez Vda. de
Zaballero, at the rate of P12.50 per square meter, and that they did not know
of any other party who was willing and able to purchase the subject
properties under more favorable conditions than that offered by VOLCANO
LAKEVIEW RESORTS, INC.
However, instead of submitting their answers to the queries posed by
respondent trial judge, petitioners filed a motion for clarification as to the true
identity of the third party allegedly willing to purchase the subject properties.
On February 26, 1981, respondent trial judge rejected petitioners' motion on
the ground that it was irrelevant.
Thereupon, on February 27, 1981, petitioners filed a pleading captioned
"Compliance and Motion", (1) reiterating the relevance of ascertaining the
true identity of the third party buyer, VOLCANO SECURITIES TRADERS
AND AGRI-BUSINESS CORPORATION or VOLCANO LAKEVIEW
RESORTS, INC., (2) expressing their view that there is actually no bona fide
and financially able third party willing to purchase the subject properties at
the rate of P12.50 per square meter, and, (3) once again insisting on their
pre-emptive right to purchase the shares of private respondents in the co-
ownership at a "reasonable price", which is less than that computed
excessively by the latter at the rate of P12.50 per square meter. Petitioners
therein prayed that further proceedings be conducted in order to settle the
factual issue regarding the reasonable value of the subject properties.
On March 16, 1981, respondent trial judge issued an order denying
petitioners' motion. The judge ruled that petitioners did not possess a pre-
emptive right to purchase private respondents' shares in the co-ownership.
Thus, finding that the subject properties were essentially indivisible,
respondent trial judge ordered the holding of a public sale of the subject
properties pursuant to Article 498 of the New Civil Code. A notice of sale was
issued setting the date of public bidding for the subject properties on April 13,
1981.
Petitioners then filed a motion for reconsideration from the above order.
Respondent trial judge reset the hearing on petitioners' motion for
reconsideration to April 6, 1981, and moved the scheduled public sale to
April 14, 1981.
Without awaiting resolution of their motion for reconsideration, petitioners
filed the present petition for certiorari, alleging that the respondent trial judge
acted without jurisdiction, or in grave abuse of its discretion amounting to
lack of jurisdiction, in issuing his order dated March 16, 1981 which denied
petitioners' claim of a pre-emptive right to purchase private respondents' pro-
indiviso shares and which, peremptorily ordered the public sale of the subject
properties. On April 8, 1981, this Court issued a temporary restraining order
enjoining the sale of the subject properties at public auction.
With the comment and reply, the Court considered the issues joined and the
case submitted for decision.
85
The Court finds no merit in the present petition.
The attack on the validity of respondent trial judge's order dated March 16,
1981 is ultimately premised on petitioners' claim that they had a pre-emptive
right to purchase the pro-indiviso shares of their co-owners, private
respondents herein, at a "reasonable price". It is this same claim which forms
the basis of their complaint for injunction and damages filed against private
respondents in the court a quo.
This claim is patently without basis. In this jurisdiction, the legal provisions on
co-ownership do not grant to any of the owners of a property held in common
a pre-emptive right to purchase the pro-indiviso shares of his co-owners.
Petitioners' reliance on Article 1620 of the New Civil Code is misplaced.
Article 1620 provides:
A co-owner of a thing may exercise the right of redemption in
case the shares of all the co-owners or of any of them, are
sold to a third person. If the price of the alienation is grossly
excessive, the redemptioner shall pay only a reasonable
one.
Should two or more co-owners desire to exercise the right of
redemption, they may only do so in proportion to the share
they may respectively have in the thing owned in common
[Emphasis supplied].
Article 1620 contemplates of a situation where a co-owner has alienated
his pro-indiviso shares to a stranger. By the very nature of the right of "legal
redemption", a co-owner's light to redeem is invoked only after the shares of
the other co-owners are sold to a third party or stranger to the co-ownership
[See Estrada v. Reyes, 33 Phil. 31 (1915)]. But in the case at bar, at the time
petitioners filed their complaint for injunction and damages against private
respondents, no sale of the latter's pro-indiviso shares to a third party had yet
been made. Thus, Article 1620 of the New Civil Code finds no application to
the case at bar.
There is likewise no merit to petitioners' contention that private respondents
had acknowledged the pre-emptive right of petitioners to purchase their
shares at a "reasonable price". Although it appears that private respondents
had agreed to sell their pro-indiviso shares to petitioners, the offer was made
at a fixed rate of P12.50 per square meter [See Pre-trial Order dated July 9,
1980, Annex "C" of the Petition; Rollo, pp. 43-45]. It cannot be said that
private respondents had agreed, without qualification, to sell their shares to
petitioners. Hence, petitioners cannot insist on a right to purchase the shares
at a price lower than the selling price of private respondents.
Neither do petitioners have the legal right to enjoin private respondents from
alienating their pro-indiviso shares to a third party. The rights of a co-owner
of a property are clearly specified in Article 493 of the New Civil Code, thus:
Art. 493. 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.
The law does not prohibit a co-owner from selling, alienating or mortgaging
his ideal share in the property held in common. The law merely provides that
the alienation or mortgage shall be limited only to the portion of the property
which may be allotted to him upon termination of the co-ownership
[See Mercado v. Liwanag, G.R. No. L-14429, June 30, 1962, 5 SCRA 472;
PNB v. The Honorable Court of Appeals, G.R. No. L-34404, June 25, 1980,
98 SCRA 207; Go Ong v. The Honorable Court of Appeals, G.R. No. 75884,
September 24, 1987, 154 SCRA 270,] and, as earlier discussed, that the
remaining co-owners have the right to redeem, within a specified period, the
shares which may have been sold to the third party. [Articles 1620 and 1623
of the New Civil Code.]
Considering the foregoing, the Court holds that respondent trial judge
committed no grave abuse of discretion when he denied petitioners' claim of
a pre-emptive right to purchase private respondents' pro-indiviso shares.
Moreover, there is no legal infirmity tainting respondent trial judge's order for
the holding of a public sale of the subject properties pursuant to the
provisions of Article 498 of the New Civil Code. After a careful examination of
the proceedings before respondent trial judge, the Court finds that
respondent trial judge's order was issued in accordance with the laws
pertaining to the legal or juridical dissolution of co-ownerships.
It must be noted that private respondents, in their answer with counterclaim
prayed for, inter alia, the partition of the subject properties in the event that
the petitioners refused to purchase their pro-indiviso shares at the rate of
P12.50 per square meter. Unlike petitioners' claim of a pre-emptive right to
purchase the other co-owners' pro-indiviso shares, private respondents'
counterclaim for the partition of the subject properties is recognized by law,
specifically Article 494 of the New Civil Code which lays down the general
rule that no co-owner is obliged to remain in the co-ownership. Article 494
reads as follows:
86
 No co-owner shall be obliged to remain in the co-ownership.
Each co-owner may demand at any time partition of the thing
owned in common, insofar as his share is concerned.
Nevertheless, an agreement to keep the thing undivided for
a certain period of time, not exceeding ten years, shall be
valid. This term may be extended by a new agreement.
A donor or testator may prohibit partition for a period which
shall not exceed twenty years.
Neither shall there be partition when it is prohibited by law.
No prescription shall run in favor of a co-owner or co-heir
against his co-owners or co-heirs so long as he expressly or
impliedly recognizes the co-ownership.
None of the legal exceptions under Article 494 applies to the case at bar.
Private respondents' counterclaim for the partition of the subject properties
was therefore entirely proper. However, during the pre-trial proceedings,
petitioners adopted the position that the subject properties were incapable of
physical partition. Initially, private respondents disputed this position. But
after petitioners inexplicably refused to abide by the pretrial order issued by
respondent trial judge, and stubbornly insisted on exercising an alleged pre-
emptive right to purchase private respondents' shares at a "reasonable
price", private respondents relented and adopted petitioner's position that the
partition of the subject properties was not economically feasible, and,
consequently, invoked the provisions of Article 498 of the New Civil Code
[Private respondents' "Motion To Allot Properties To Defendants Or To Sell
the Same Pursuant To Article 498 Of The Civil Code", Annex "D" of the
Petition; Rollo, pp. 46-49].
Inasmuch as the parties were in agreement as regards the fact that the
subject properties should not be partitioned, and private respondents
continued to manifest their desire to terminate the co-ownership arrangement
between petitioners and themselves, respondent trial judge acted within his
jurisdiction when he issued his order dated February 4, 1981 requiring the
parties to answer certain questions for the purpose of determining whether or
not the legal conditions for the applicability of Article 498 of the New Civil
Code were present in the case.
Art. 498 provides that:
Whenever the thing is essentially indivisible and the co-
owners cannot agree that it be alloted to one of them who
shall indemnify the others, it shall be sold and its proceeds
distributed.
The sale of the property held in common referred to in the above article is
resorted to when (1) the right to partition the property among the co-owners
is invoked by any of them but because of the nature of the property, it cannot
be subdivided or its subdivision [See Article 495 of the New Civil Code]
would prejudice the interests of the co-owners (See Section 5 of Rule 69 of
the Revised Rules of Court) and (2) the co-owners are not in agreement as
to who among them shall be allotted or assigned the entire property upon
reimbursement of the shares of the other co-owners.
Petitioners herein did not have justifiable grounds to ignore the queries
posed by respondent trial judge and to insist that hearings be conducted in
order to ascertain the reasonable price at which they could purchase private
respondents' pro-indiviso shares [Petitioners' "Compliance and Motion" dated
February 27, 1981, Annex "H" of the Petition; Rollo, pp. 57-60].
Since at this point in the case it became reasonably evident to respondent
trial judge that the parties could not agree on who among them would be
allotted the subject properties, the Court finds that respondent trial judge
committed no grave abuse of discretion in ordering the holding of a public
sale for the subject properties (with the opening bid pegged at P12.50 per
square meter), and the distribution of the proceeds thereof amongst the co-
owners, as provided under Article 498 of the New Civil Code.
Contrary to petitioners' contention, there was no need for further hearings in
the case because it is apparent from the various allegations and admissions
of the parties made during the pre-trial proceedings, and in their respective
pleadings, that the legal requisites for the application of Article 498 of the
New Civil Code were present in the case. No factual issues remained to be
litigated upon.
WHEREFORE, the present petition is DISMISSED for lack of merit. The
temporary restraining order issued by the Court is hereby LIFTED.
SO ORDERED.
HEIRS OF PANFILO F. ABALOS,[1] G.R. No. 156224
Petitioners,
Present:
PUNO, C.J., Chairperson,
- versus - SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
87
 LEONARDO-DE CASTRO, JJ.
AURORA A. BUCAL, DEMETRIO
BUCAL, ARTEMIO F. ABALOS,
LIGAYA U. ABALOS, ROMULO
F. ABALOS, JESUSA O. ABALOS,
MAURO F. ABALOS and
LUZVIMINDA R. ABALOS, Promulgated:
Respondents.
February 19, 2008
X --------------------------------------------------------------------------------------- X
DECISION
AZCUNA, J.:
This petition for review on certiorari under Rule 45 of the Rules on Civil
Procedure assails the August 31, 2001 Decision[2] and November 20, 2002
Resolution[3] of the Court of Appeals (CA) in CA-G.R. CV No. 39138, which
affirmed with modification the May 25, 1992 Decision [4] of the Regional Trial
Court (RTC) of Lingayen, Pangasinan, Branch 39, in Civil Case No. 16289.
Prologue
On October 30, 1978, petitioners father, Panfilo Abalos, filed before
the RTC of Lingayen, Pangasinan, a complaint[5] docketed as Civil Case No.
15465 for Partition, Annulment of Certain Documents, Accounting and
Damages against Faustino Abalos, his brother, and Danilo Abalos, his nephew
and the only surviving heir of his brother Pedro Abalos. In the amended
complaint,[6] Panfilo alleged that their father/grandfather, Francisco Abalos,
died intestate and was survived by his wife, Teodorica, and their children,
namely: Maria, Faustino, Pedro, Roman and Panfilo; that at the time of his
death, Francisco left the following real properties:
xxx xxx xxx
a.) A parcel of residential land situated in Linoc,
Binmaley, Pangasinan, containing an area of 1,020 sq.
meters, bounded on the North by Leoncio Dalmacio; On
the East by Dimas Perez; On the South by Callejon;
And on the West by Magno Dalmacio; declared under
Tax Declaration No. 121 in the name of Francisco
Abalos and assessed at P255.50; [n]ot registered under
Act 496 [or] under the Spanish [M]ortgaged Law[;]
b.) A parcel of unirrigated riceland situated in Linoc,
Binmaley, Pangasinan, containing an area of 841 sq.
meters, bounded on the North by Callejon; On the
South by Roberto Aquino; On the East by Eulalio Javier;
And on the West by Hipolito Perez. It is originally
covered by Tax Declaration in the name of Francisco
Abalos now covered by Tax Declaration No. 14457 in
the name of Faustino Abalos and assessed at P20.00[;]
[n]ot registered under Act 496 [or] under the Spanish
[M]ortgaged Law;
c.) A parcel of unirrigated riceland situated in Linoc,
Binmaley, Pangasinan, containing an area of 1,196 sq.
meters, bounded on the North by Callejon; On the East
by Estanislao Ferrer; On the South by Saturnino
Aquino; And on the West by Hipolito Perez[.] It is
originally declared in the name of Francisco Abalos and
now covered by Tax Declaration No. 14458 in the name
of Faustino Abalos and assessed at P30.00;
d.) A parcel of fishpond situated in Linoc, Binmaley,
Pangasinan, containing an area of 1,158 sq. meters,
bounded on the North by Doyao River; On the East by
Hipolito Perez; On the South by Leoncio Dalmacio; And
on the West by Teodoro Abalos. It is originally declared
in the [name] of Francisco Abalos and now covered by
Tax Declaration No. 21592 in the name of Faustino
Abalos and assessed at P370.00;
e.) A parcel of fishpond situated in Linoc, Binmaley,
Pangasinan, containing an area of 1,158 sq. meters,
bounded on the North by Leoncio Dalmacio; On the
East by Teodoro Abalos; On the South by Leoncio
Dalmacio; And on the West by Evaristo Dalmacio. It is
originally declared in the name of Francisco Abalos and
now covered by Tax Declaration No. 21591 in the name
of Faustino Abalos and assessed at P370.00;
f.) A parcel of unirrigated riceland situated in Linoc,
Binmaley, Pangasinan, containing an area of 950 sq.
meters[,] bounded on the North by Liberato Gonzalo;
On the East by Severina Catalan; On the South by
Severina Catalan; And on the West by Barrio Road of
Linoc[;] [d]eclared under Tax Declaration No. 124 in the
[name] of Francisco Abalos and [a]ssessed at P20.00;
88
 g.) A parcel of fishpond situated in Canaoalan,
Binmaley, Pangasinan, containing an area of 2,480 sq.
meters, bounded on the North by Francisco
Deogracias; On the East by a Path; On the South by
Ponciano Cayabyab; And on the West by Ponciano
Cayabyab[;] [d]eclared under Tax Declaration No. 122
in the name of Francisco Abalos and assessed
at P70.00;
h.) A parcel of fishpond situated in Canaoalan,
Binmaley, Pangasinan, containing an area of 1,585 sq.
meters, bounded on the North by Adriano Gonzalo; On
the East by Florencio Perez; On the South by Pioquinto
Ferrer; And on the West by Pator Terrado[;] [d]eclared
under Tax Declaration No. 123 in the name of Francisco
Abalos and assessed at P60.00;
i.) A parcel of little fishpond adjoining and North of the
land described in paragraph 4 sub-paragraph (a) of this
complaint whose Tax Declaration could not be
produced by the plaintiff;[7]
xxx xxx xxx
that said properties were administered by Teodorica; that following their
mothers death, there was a verbal agreement among Faustino, Pedro and
Panfilo that Faustino would administer all the properties left by their parents
except those given by Teodorica to each of the siblings as their partial advance
inheritance; that taking undue advantage of his position and in clear breach of
the trust and confidence reposed on him, Faustino, by means of fraud and
machination, took possession of the properties given to Maria and Roman
upon their death and transferred some of the administered properties in his
name and/or in the name of his heirs or disposed of them in favor of third
parties; that since his administration of the properties, Faustino has not made
any accounting of the produce, appropriating them almost to himself; and that
Panfilo repeatedly demanded the partition of the properties but Faustino
refused to do so despite earnest efforts towards amicable settlement.
After Panfilo rested his case and following the postponements at the instance
of defendants, the trial court, upon motion, declared that Faustino and Danilo
were deemed to have waived their right to present evidence.[8] OnFebruary 21,
1984, RTC Branch 37 of Lingayen, Pangasinan, rendered its Decision, [9] the
dispositive portion of which stated:
WHEREFORE, judgment is hereby rendered ordering:
i. the partition of the intestate estate of
the deceased Francisco Abalos in the following
manner
a. to the plaintiff, Panfilo Abalos, is the
fishpond, Parcel D referred to as Duyao;
and of fishpond, Parcel H referred to as
Pinirat plus his advance inheritance,
Parcel F referred to as Manga;
b. to defendant, Faustino Abalos, is the
residential land where his house stands
and parcels A to I, plus his advance
inheritance, Parcels [B] and C;
c. to defendant, Danilo Abalos, is that
fishpond, parcel E referred to as Emong,
and the portion of the fishpond, Parcel H
referred to as Pinirat and his advance
inheritance of his father Pedro Abalos,
Parcel G.
ii. the defendant Faustino Abalos to
reimburse to plaintiff the total amount of P19,580.00,
Philippine Currency, as plaintiffs lawful share from
1944;
iii. the annulment of all documents and/or
instruments which transferred said properties and are
considered inconsistent with the above partition;
iv. the dismissal of defendants counterclaim;
v. the defendants to pay the costs of the
suit.
SO ORDERED.[10]
Despite the filing of a notice of appeal beyond the reglementary period,
the trial court still gave due course to the appeal of Faustino and Danilo; thus,
Panfilo filed a petition for certiorari before this Court, which subsequently
referred the case to the Intermediate Appellate Court (IAC, now the Court of
Appeals).[11] The IAC granted the petition and denied the motion for
reconsideration.[12] On October 30, 1985, this Court affirmed the
Decision.[13] Upon the issuance of an entry of judgment on November 4, 1985,
the IAC ordered the remand of the case to the RTC.[14] Thereafter,
89
on December 11, 1985, the trial court issued a writ of execution in favor of
Panfilo.[15]
The Case
The instant case arose when petitioners father, Panfilo, began to
execute the Decision in Civil Case No. 15465. In opposition, respondents, who
are children and in-laws of the now deceased Faustino, filed on January 8,
1986 a case for Quieting of Title, Possession, Annulment of Document and
Damages with Preliminary Injunction.[16] Docketed as Civil Case No. 16289,
the complaint alleged, among others, that:
xxx xxx xxx
III
Plaintiffs are the absolute owners and in actual
possession of the following parcels of land more particularly
described, to wit:
(a.) A parcel of land (fishpond) with an approximate
area of 289.5 square meters, more or less, located at Linoc,
Binmaley, Pangasinan. Bounded on the North by
the Duyao River; on the East by Faustino Abalos before, now
Romulo Abalos; on the South by Leoncio Dalmacio; and on
the West by Romulo Abalos. Declared in the name of Aurora
A. Bucal under Tax [Dec.] No. 1568 of the current land records
of Binmaley, Pangasinan; assessed value P150.00;
(b.) A parcel of riceland located at Linoc, Binmaley,
Pangasinan, containing an area of 1,196 square meters, more
or less. Bounded on the North by Callejon; on the East by
Estanislao Ferrer; on the South by Saturnino Aquino; and on
the West by Hipolito Ferrer. Declared in the names of Artemio
F. Abalos and Mauro F. Abalos under Tax [Dec.] No. 1007 of
the land records of Binmaley, Pangasinan; assessed
value P260.00;
(c.) A parcel of residential land located at Linoc,
Binmaley, Pangasinan, with an area of 1,029 square meters,
more or less. Bounded on the North by Leoncio Dalmacio; on
the East by Dimas Perez; on the South by Callejon; and on
the West by Magno Dalmacio. Declared in the name of
Romulo F. Abalos under Tax [Dec.] No. 35 of the current land
records of Binmaley, Pangasinan; assessed value P6,120.00;
(d.) A portion of fishpond located at Linoc, Binmaley,
Pangasinan, with an area of 289.5 square meters, more or
less. Bounded on the North by the Duyao River; on the East
by Faustino Abalos; on the South by Leoncio Dalmacio; and
on the West by Teodoro Abalos. Declared in the name of
Romulo F. Abalos under Tax [Dec.] No. 33 of the current land
records of Binmaley, Pangasinan; assessed value P180.00;
(e.) A portion (eastern) of fishpond located at Linoc,
Binmaley, Pangasinan, with an area of 579 square meters,
more or less. Bounded on the North by Leoncio Dalmacio; on
the East by Teodoro Abalos; on the South by Leoncio Abalos;
and on the West by Evaristo Dalmacio. Declared in the names
of Artemio F. Abalos and Mauro F. Abalos under Tax [Dec.]
No. 1009 of the land records of Binmaley, Pangasinan;
assessed value P340.00;
(f.) A parcel of fishpond located at Canaoalan,
Binmaley, Pangasinan, with an area of 1,506 square meters,
more or less. Bounded on the North by Adriano Gonzalo; on
the East by Florencio Perez; on the South by Pioquinto Ferrer;
and on the West by Pastor Terrado. Declared in the names of
Romulo F. Abalos and Mauro F. Abalos under Tax [Dec.] No.
1314 of the land records of Binmaley, Pangasinan; assessed
value P970.00;
IV
Parcel (a) above-described belongs in absolute ownership to
spouses Aurora A. Bucal and Demetrio Bucal who are in
actual possession thereof as such, having acquired the same
by absolute sale from Romulo F. Abalos who in turn bought
the same from Maria Abalos; that the latter in turn acquired
the same by inheritance from her deceased parents,
Francisco Abalos and Teodorica Ferrer, who died on May 4,
1928 and June 2, 1945, respectively. A copy of the sale from
Maria Abalos to Romulo F. Abalos is hereto attached as
ANNEX A while the sale by Romulo F. Abalos to Aurora A.
Bucal is hereto attached as ANNEX B. A copy of Tax [Dec.]
No. 1568 covering said land is hereto attached as ANNEX C;
V
Parcel (b) above-described belongs in absolute common
ownership to the spouses Artemio F. Abalos and Ligaya U.
Abalos and spouses Mauro F. Abalos and Luzviminda R.
Abalos who acquired the same by absolute sale in 1978 from
Faustino Abalos as shown by a deed a copy of which is hereto
attached as ANNEX D; that the latter acquired the same by
absolute sale from Bernardo Victorio in 1914, and that
Faustino Abalos donated the same in consideration of his
90
marriage with Teodora Ferrer as shown by a deed a copy of
which is hereto attached as ANNEX E. A copy of Tax [Dec.]
No. 1007 is hereto attached as ANNEX F;
VI
Parcel (c) above-described belongs in absolute ownership to
the spouses Romulo F. Abalos and Jesusa O. Abalos and are
in actual possession as such having acquired the same by
absolute sale from Aurora A. Bucal as shown by a deed a
copy of which is hereto attached as ANNEX G; that Aurora A.
Bucal in turn bought the same from Maria Abalos as shown
by a deed a copy of which is hereto attached as ANNEX H;
and that Maria Abalos inherited the same land from her
deceased parents;
VII
Parcel (d) above-described belongs in absolute ownership to
spouses Romulo F. Abalos and Jesusa O. Abalos having
acquired the same in 1978 by means of a deed of quitclaim
and renunciation of rights a copy of which is hereto attached
as ANNEX I; that Romulo F. Abalos declared the same for
taxation purposes as shown by Tax [Dec.] No. 33 a copy of
which is hereto attached as ANNEX J;
VIII
Parcel (e) above-described belongs in common absolute
ownership to the spouses Artemio F. Abalos and Ligaya U.
Abalos and spouses Mauro F. Abalos and Luzviminda R.
Abalos having acquired the same from Maria Abalos as
shown by two (2) documents copies of which are hereto
attached as ANNEXES K and L; that Faustino and Maria
bought the same from Genoveva Perez as shown by a deed
a copy of which is hereto attached as ANNEX M; that
Genoveva Perez in turn bought the same from Teodoro
Abalos as shown by a deed a copy of which is hereto attached
as ANNEX N; that Mauro F. Abalos and Artemio F. Abalos
have declared the land in their names for taxation purposes
as shown by Tax [Dec.] No. 1009 a copy of which is hereto
attached as ANNEX O;
IX
Parcel (f) above-described belongs in absolute common
ownership to spouses Romulo F. Abalos and Jesusa O.
Abalos and spouses Mauro F. Abalos and Luzviminda R.
Abalos and are in actual possession as such having acquired
the same by absolute sale in 1978 as shown by a deed a copy
of which is hereto attached as ANNEX P; that Faustino in turn
inherited the same from his deceased parents; and that the
present owners have declared the same for taxation purposes
as shown by Tax [Dec.] No. 1314 a copy of which is hereto
attached as ANNEX Q;
X
The possession of the present owners as well as their
predecessors-in-interest have always been in good faith,
peaceful, public, exclusive, adverse, continuous and in the
concept of absolute owners since their respective acquisition
[up to] the present without question from anyone, much less
from the defendant herein. Said owners have likewise
religiously paid the taxes due on the lands [up to] the current
year;[17]
xxx xxx xxx
Respondents claimed that on two separate occasions in December
1985 Panfilo sought to execute the decision by attempting to take possession
of the lands in question through the use of force, threat, violence and
intimidation. In addition, to satisfy the damages awarded to Panfilo, the deputy
sheriff also levied upon parcels (b) and (c) above-described for the purpose of
selling the same at public auction, in regard to which they also filed their
respective notice of third-party claim. Respondents argued that to compel
them to abide by the writ of execution and notice of levy issued by the court in
Civil Case No. 15465 would amount to deprivation of property without due
process of law because the decision rendered in said case is not binding upon
them as they were not made parties thereto and they became owners thereof
prior to the institution of the case.
On January 8, 1986, the trial court directed the parties to maintain
the status quo pending the resolution on the motion for the issuance of the writ
of preliminary injunction.[18][19]
In the Objection to the Issuance of Writ of Preliminary
Injunction,[20] Answer,[21] and Memorandum of Authorities[22] filed by Panfilo,
he stressed that the title, right or interest of respondents with respect to the
fishponds mentioned in sub-paragraphs (a), (d), and (f) of paragraph III of the
91
Complaint had already been declared null and void in Civil Case No. 15465 by
a co-equal and competent court and affirmed with finality by this Court. It was
averred that respondents were never in possession of the fishponds as he was
the one peacefully placed in its possession by the deputy sheriff. For failing to
intervene in Civil Case No. 15465, Panfilo asserted that respondents are now
barred by the principles of res judicata and estoppel in pais.
On July 21, 1986, however, the trial court ordered the issuance of a writ of
preliminary injunction.[23] Concurring with the position of respondents, it held
that the principle of res judicata does not apply since there is no identity of
parties, subject matter, and causes of action between Civil Case No. 15465
and the present case. In Civil Case No. 15465, the parties are Panfilo, as
plaintiff, and Faustino Abalos and Danilo Abalos, as defendants, while in the
present case, the parties are the children of Faustino Abalos and their
respective spouses, as plaintiffs, and Panfilo, as defendant; in the former, the
principal action is for partition while in the latter, the suit is for quieting of title,
possession, annulment of document and damages. The trial court opined that
while it is true that respondents Aurora, Artemio, Romulo, and Mauro are
legitimate children and compulsory heirs of Faustino Abalos, the documents
showing their acquisition of the properties in question revealed that they
became owners thereof not through their father alone but also by way of third
persons who were not parties in Civil Case No. 15465. Moreover, they
acquired their ownership prior to the institution of said case.
Assailing the aforesaid Order, Panfilo filed a petition for certiorari before this
Court. In a Resolution, the petition was referred to the CA, which later
dismissed the same for lack of merit .[24] The CA ruled that, for not being
impleaded as parties, respondents are considered as third persons in Civil
Case No. 15465 since they did not in any way participate or intervene in the
partition. Neither did the trial court violate the principle that no court has the
power to interfere by injunction with the judgments or decrees of a court of
concurrent or coordinate jurisdiction having equal power. The CA viewed that
the writ of execution was issued for the specific purpose of levying upon the
properties of Faustino Abalos, not that of respondents, as the judgment debtor
in Civil Case No. 15465.
On December 16, 1987, this Court, in G.R. No. 77965 entitled Panfilo
Abalos v. Aurora Bucal, et al. and Court of Appeals, affirmed the CA decision,
which resolution became final and executory on August 2, 1988.[25]
Upon motion of respondents, the trial court ordered the issuance of
an alias writ of preliminary injunction on March 14, 1989.[26] Again, Panfilo
challenged the order via petition for certiorari with prohibition before the CA
but the same was denied.[27] When the incident was elevated to this Court, it
was dismissed on November 15, 1989. The resolution became final and
executory on February 9, 1990.[28]
Meanwhile, in the proceedings before the trial court, Panfilo and
respondents submitted their respective pre-trial briefs.[29] On October 23,
1989, the trial court issued the Pre-trial Order.[30] Taking into account the
admissions made by the parties, particularly the fact that Panfilo claimed
proprietary rights only with respect to parcels (a), (d) and (f) mentioned in the
complaint, the court delimited the issues for resolution as follows:
The factual issues are: (1) With respect to parcels A,
D, and F, whether or not the plaintiffs claiming ownership and
possession over said parcels are the lawful owners and
possessors thereof by virtue of genuine and duly executed
documents of sale, quitclaim and renunciation of rights; (2)
Whether or not plaintiffs predecessors-in-interest were the
lawful owners and possessors of parcels A, D and F; (3)
Whether or not Faustino Abalos and his wife [Teodorica]
Ferrer were awarded the properties subject of partition
proceedings in Civil Case No. 15465; (4) Whether or not by
virtue of the decision rendered in that partition proceedings,
the fishpond referred to as Duyao which is parcel A, D and F
was awarded; (5) Whether or not pursuant to the decision of
the Supreme Court in appealed case No. 713355 the
defendant Panfilo Abalos was placed in possession by the
Deputy Sheriff Romulo Jimenez duly assisted by the
members of the police force of Binmaley, sometime on or
about the last part of December 1985.
The legal issues are: (1) Whether or not the decision
in Civil Case No. 15465 entitled Panfilo Abalos versus
Faustino Abalos[] is binding upon the plaintiffs who were not
impleaded as party litigants either as plaintiffs or defendants;
(2) What is the legal basis of the plaintiffs to file action to quiet
title against the defendant?[31]
Likewise, in the course of the trial and in their respective
memoranda,[32] the parties admitted that parcels (a) and (d) are portions of a
fishpond locally known as Duyao[33] and are parts of parcel (d) stated in the
Complaint of Civil Case No. 15465, which was to be held in common pro-
indiviso by the heirs of Francisco Abalos.
Thus, the controversy was narrowed down to only two (2) properties,
namely: the fishpond located at Linoc, Binmaley, Pangasinan, locally known
as Duyao, and the fishpond located at Canaoalan, Binmaley, Pangasinan,
locally known as Pinirat.
On May 25, 1992, RTC Branch 39 of Lingayen, Pangasinan, rendered
its Decision,[34] ordering thus:
92
 WHEREFORE, judgment is hereby rendered declaring:
1. That the plaintiffs-spouses Aurora
Bucal and Demetrio Bucal are the
absolute owners of one-fourth ()
portion pro-indiviso of that fishpond
which is locally known as Duyao;
2. That the defendant Panfilo Abalos is
the absolute owner of three-fourth ()
portion pro-indiviso of that fishpond
locally known as Duyao;
3. That the plaintiffs have no right
whatsoever over the fishpond locally
known as Pinirat and confirming the
adjudication thereof in Civil Case No.
15465; [and]
4. No award of damages, and no costs.
SO ORDERED.[35]
As to Panfilo
1. THE LOWER COURT ERRED IN ADJUDICATING
ONE-FOURTH PORTION OF THE FISHPOND KNOWN
AS DUYAO TO PLAINTIFFS DEMETRIO BUCAL AND
AURORA ABALOS- BUCAL, NOTWITHSTANDING
THAT SAID ENTIRE FISHPOND WAS AWARDED TO
DEFENDANT PANFILO ABALOS IN CIVIL CASE NO.
15465, ENTITLED PANFILO ABALOS VS. FAUSTINO
ABALOS & DANILO ABALOS.
2. THE LOWER COURT ERRED IN ADJUDICATING
ONE-FOURTH PORTION OF THE FISHPOND KNOWN
AS DUYAO TO PLAINTIFFS DEMETRIO BUCAL AND
AURORA ABALOS-BUCAL, AS ALLEGED
INHERITANCE OF MARIA ABALOS FROM HER LATE
PARENTS, NOTWITHSTANDING THAT MARIA
ABALOS ALREADY INHERITED FROM HER LATE
PARENTS THE PARCEL OF RESIDENTIAL LAND
DESCRIBED AS PARCEL (C) IN PLAINTIFFS
COMPLAINT.

3. THE LOWER COURT ERRED IN ADJUDICATING

The trial court made the following factual findings: that the original ONE-FOURTH PORTION OF THE FISHPOND KNOWN
owners of the two fishponds were spouses Francisco Abalos and Teodorica AS DUYAO TO PLAINTIFFS DEMETRIO BUCAL AND
Ferrer, who died on May 4, 1928 and June 2, 1945, respectively; that the AURORA ABALOS-BUCAL, NOTWITHSTANDING
spouses had five (5) children, namely: (a) Maria, who died single on March 20, THAT THE FINAL DECISION IN CIVIL CASE [15465]
1972; (b) Roman, who died single on June 10, 1944; (c) Panfilo, petitioner EXPRESSLY ANNULLED ALL DOCUMENTS AND
herein; (d) Pedro, who died on May 11, 1971 and was survived by his only INSTRUMENTS WHICH TRANSFERRED SAID
child, Danilo; and (e) Faustino, whose children Aurora, Artemio, Romulo and PROPERTIES AND ARE CONSIDERED
Mauro are among the respondents herein; that Roman predeceased his INCONSISTENT WITH THE PARTITION ORDERED IN
mother, hence, when the latter died only four of the siblings inherited SAID CIVIL CASE.
the Duyao, becoming its pro-indiviso co-owners; that on November 11, 1968,
Maria sold her share to Romulo, who, in turn, sold the same to Aurora; that in 4. THE LOWER COURT ERRED IN NOT TREATING THE
view of the sale, the said portion of the Duyao should have been excluded from PLAINTIFFS AS IN ESTOPPEL.
the Decision in Civil Case No. 15465 for the reason that said case refers to the
partition of the estate only of spouses Francisco and Teodorica; that Romulo 5. THE LOWER COURT HAD NO JURISDICTION OVER
is not the owner the other portion of the Duyao for failure to establish his THE SUBJECT MATTER OF THE PRESENT CASE.[36]
ownership thereon and also considering that it could have been the same
portion that he sold to Aurora; and that the Decision in Civil Case No. 15465 As to respondents
has res judicata effect with respect to the Pinirat since the deed of sale
executed by Faustino in favor of Romulo and Mauro was simulated and 1. THE TRIAL COURT ERRED IN NOT FINDING THAT
employed merely to defraud the other heirs. THE LATE SPOUSES FRANCISCO ABALOS AND
TEODORICA FERRER LEFT AN INTESTATE ESTATE
Both Panfilo and respondents elevated the case to the CA, assigning CONSISTING OF FIVE PARCELS OF LAND ONLY.
the alleged errors of the trial court:

93
 2. THE TRIAL COURT ERRED IN NOT FINDING THAT
ONE-FOURTH PRO INDIVISO OF THE LAND KNOWN
AS [DUYAO] WAS THE SHARE OF FAUSTINO
ABALOS, WHICH HE QUITCLAIMED IN FAVOR OF HIS
SON ROMULO ABALOS, AND IN APPLYING RES
JUDICATA.
the Pinirat was Roman Abalos advance legitime, which, upon his death, was
inherited by his remaining siblings. Since Maria subsequently died without
transferring her share, her part of the Pinirat should be divided among Pedro
(which is transmitted to Danilo), Faustino and Panfilo.As Faustinos share over
the Pinirat is with respect to 1/3 portion thereof, he could validly convey only
such part to Romulo and Mauro.

3. THE TRIAL COURT ERRED IN NOT FINDING THAT The CA disposed:

THE LAND KNOWN AS PINIRAT WAS THE SHARE OF
FAUSTINO ABALOS, WHICH HE SOLD TO HIS SONS, WHEREFORE, premises considered, the
THE PLAINTIFFS ROMULO AND MAURO ABALOS, assailed Decision of the court a quo in Civil Case No. 16289
AND IN APPLYING RES JUDICATA. is hereby modified, as follows:

4. THE TRIAL COURT ERRED IN VOIDING THE 1. Being co-owners of Duyao Fishpond,
INSTRUMENTS OF TRANSFER EXECUTED BY plaintiffs-appellants Spouses Aurora
FAUSTINO ABALOS IN FAVOR OF ROMULO ABALOS Bucal and Demetrio Bucal, plaintiffs-
OF HIS SHARE OF THE [DUYAO] LOT AND IN FAVOR appellants Spouses Romulo Abalos and
OF MAURO ABALOS AND ROMULO ABALOS OF THE Jesusa O. Abalos, defendant-appellant
PINIRAT LOT. Panfilo Abalos and Danilo Abalos, in
representation of his deceased father,
5. THE TRIAL COURT ERRED IN NOT UPHOLDING THE Pedro Abalos, should divide and
CLAIM OF PLAINTIFF ROMULO ABALOS OVER OF distribute the same equally;
THE [DUYAO] LOT AND THE CLAIM OF PLAINTIFFS
MAURO ABALOS AND ROMULO ABALOS OVER THE 2. One-third of the Pinirat Fishpond is co-
[PINIRAT] LOT.[37] owned by plaintiffs-appellants Spouses
Romulo Abalos and Jesus Abalos, and
Spouses Mauro Abalos and Luzviminda
On August 31, 2001, the CA rendered its Decision.[38] According to the R. Abalos; That defendant-appellant
appellate court, the first and second assigned errors of Panfilo are Panfilo Abalos is the sole owner of
unmeritorious on the ground that the disposition of the trial court in Civil Case another 1/3 portion of the Pinirat
No. 15465 insofar as the Duyao is concerned has no factual and legal basis. fishpond; While the remaining 1/3 portion
It also held untenable his third and fourth assigned errors, noting that the is for Danilo Abalos, in representation of
principles of res judicata and estoppel are not applicable in this case since his deceased father Pedro Abalos;
respondents were not made parties to Civil Case No. 15465 despite their
acquisition of the contested parcels prior to the commencement of said 3. No pronouncement as to cost.
case. Finally, Panfilos fifth assigned error was rejected, saying that this Court
already settled the issue of res judicata in G.R. No. 77965 when petitioner SO ORDERED.[39]
questioned the propriety of the issuance of the writ of preliminary injunction.
Panfilo moved for reconsideration of the Decision but was denied.[40]
On the other hand, the CA ruled that the first assigned error of
respondents was rendered moot and academic since it was stipulated and Hence this petition.
agreed upon during the pre-trial of the present case that the dispute covers
only parcels (a), (d) and (f). The second assigned error, nonetheless, was Echoing the same grounds relied upon by their father, petitioners now
affirmed, observing that the Duyao property was co-owned pro-indiviso by the claim that the CA seriously erred in failing to consider the finality of the
four remaining children of spouses Francisco and Teodorica; hence, Faustinos Decision in Civil Case No. 15465. According to them, the finding that
transfer of his share during his lifetime in favor of his son Romulo is perfectly respondents became owners of the subject properties prior to the institution of
legal. However, the CA denied the third assigned error as it found that said case in effect modified the disposition and distribution previously ordered.
94
Petitioners opine that when the CA ruled that respondents have acquired
ownership of the questioned parcels prior to the commencement of Civil Case
No. 15465 it had disregarded the conclusiveness of a final judgment rendered
in said case which decreed the annulment of all documents and/or instruments
transferring said properties and were considered inconsistent with the order of
partition. They contend that sustaining the conclusion of the CA would allow
the re-opening of the factual issue of whether the documents, which were the
source of respondents alleged title, were valid an issue that was dealt with in
an extensive hearing on the merits conducted in said case and supported by
testimonial and documentary evidence for the purpose. Being the prevailing
party in Civil Case No. 15465, in regard to which respondents had remained
silent and did not even care to intervene or question, petitioners assert that
they already acquired a vested right over the entire Duyao and portion of
the Pinirat. They also oppose the CAs failure to recognize that estoppel and
laches have already set in to bar respondents from further pursuing their
claims.
The petition is not meritorious.
Res judicata means "a matter adjudged; a thing judicially acted upon
or decided; a thing or matter settled by judgment." It lays the rule that an
existing final judgment or decree rendered on the merits, without fraud or
collusion, by a court of competent jurisdiction, upon any matter within its
jurisdiction, is conclusive of the rights of the parties or their privies, in all other
actions or suits in the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the first suit.[41]
For the preclusive effect of res judicata to be enforced, however, the
following requisites must be present: (1) the judgment or order sought to bar
the new action must be final; (2) the decision must have been rendered by a
court having jurisdiction over the subject matter and the parties; (3) the
disposition of the first case must be a judgment on the merits; and (4) there
must be between the first and second action, identity of parties, subject matter
and causes of action.[42]
In the instant case, the fourth requisite, in particular the identity of
parties, is clearly wanting.
As found by the CA, this Court, through our earlier resolution in G.R.
No. 77965, already settled that res judicata does not apply in this case. In G.R.
No. 77965, which Panfilo instituted to challenge the propriety of the writ of
preliminary injunction issued by the trial court, this Court agreed with the CAs
disposition that respondents are considered as third persons with respect to
Civil Case No. 15465 since they were not impleaded as defendants
therein. This Court held as in accordance with law and jurisprudence the CAs
opinion that all those who did not in any way participate or intervene in the
partition case are considered third persons within the contemplation of Article
499 of the Civil Code.[43]
The foregoing rule still stands.
Indeed, Panfilo, the father of petitioners, should have impleaded
respondents when he filed Civil Case No. 15465 since at that time the latter
were already claiming ownership over the subject fishponds, which were
transferred in their names prior to the commencement of the case. Petitioners
cannot shift to respondents the burden of joining the case because they are
not duty bound to intervene therein and they have every right to institute an
independent action: First, intervention is not compulsory or mandatory but
merely optional and permissive;[44] and Second, as the persons who are in
actual possession of the fishponds they claim to own, respondents may wait
until their possession are in fact disturbed before taking steps to vindicate their
rights. Understandably, at the time of the institution and pendency of Civil Case
No. 15465, respondents still had no definite idea as to how the very nature of
the partition case could actually affect their possession.
On the other hand, Panfilo had personal knowledge that respondents
acquired ownership of the properties prior to the filing of Civil Case No. 15465,
that they are in actual possession thereof, and that they have declared the
lands in their names for taxation purposes. Panfilo could not be ignorant of
these because he resided in the same locality where the properties are
found.[45] Quite startling, however, is that he did not bother to implead
respondents in the partition case despite all these and the fact that the
defendants therein raised the point that Faustino was not the owner of some
of the lands in question and that they belong to others not parties to the
case.[46] As his successors-in-interest, petitioners must suffer from Panfilos
evident omission.
Even if res judicata requires not absolute but substantial identity of
parties, still there exists substantial identity only when the additional party
acts in the same capacity or is in privity with the parties in the former
action.[47] In this case, while it is true that respondents are legitimate children
and relatives by affinity of Faustino it is more important to remember that, as
shown by their documents of acquisition, they became owners of the subject
fishponds not through Faustino alone but also from a third person (i.e.,
Maria Abalos). Respondents are asserting their own rights and interests which
are distinct and separate from those of Faustinos claim as a hereditary heir of
Francisco Abalos. Hence, they cannot be considered as privies to the
judgment rendered in Civil Case No. 15465. Unfortunately for petitioners, they
relied solely on their untenable defense of res judicatainstead of contesting the
genuineness and due execution of respondents documentary evidence.
Moreover, Panfilo erred in repeatedly believing that there was no
necessity to implead respondents as defendants in Civil Case No. 15465
95
since, according to him, the necessary parties in a partition case are only the
co-owners or co-partners in the inheritance of Francisco Abalos. On the
contrary, the Rules of Court provides that in an action for partition, all other
persons interested in the property shall be joined as defendants. [48] Not only
the co-heirs but also all persons claiming interests or rights in the property
subject of partition are indispensable parties.[49] In the instant case, it is the
responsibility of Panfilo as plaintiff in Civil Case No. 15465 to implead all
indispensable parties, that is, not only Faustino and Danilo but also
respondents in their capacity as vendees and donees of the subject fishponds.
Without their presence in the suit the judgment of the court cannot attain real
finality against them. Being strangers to the first case, they are not bound by
the decision rendered therein; otherwise, they would be deprived of their
constitutional right to due process.[50]
Finally, it must be stressed that in a complaint for partition, the plaintiff
seeks, first, a declaration that he is a co-owner of the subject properties;
and second, the conveyance of his lawful shares. An action for partition is at
once an action for declaration of co-ownership and for segregation and
conveyance of a determinate portion of the properties involved. [51]
Reyes-de Leon v. Del Rosario[52] held:
The issue of ownership or co-ownership, to be more
precise, must first be resolved in order to effect a partition of
properties. This should be done in the action for partition itself.
As held in the case of Catapusan v. Court of Appeals:
In actions for partition, the court cannot
properly issue an order to divide the property
unless it first makes a determination as to the
existence of co-ownership. The court must
initially settle the issue of ownership, the first
stage in an action for partition. Needless to
state, an action for partition will not lie if the
claimant has no rightful interest over the
subject property. In fact, Section 1 of Rule 69
requires the party filing the action to state in
his complaint the nature and the extent of his
title to the real estate. Until and unless the
issue of ownership is definitely resolved, it
would be premature to effect a partition of the
properties. x x x (citations omitted)[53]
It is only properties owned in common that may be the object of an
action for partition; it will not lie if the claimant has no rightful interest over the
subject property. Thus, in this case, only the shares in the lots which are
determined to have been co-owned by Panfilo, Faustino and Danilo could be
included in the order of partition and, conversely, shares in the lots which were
validly disposed of in favor of respondents must be excluded therefrom. In this
connection, the Court sees no reason to depart from the findings of fact and
the partition ordered by the appellate court as these are amply supported by
evidence on record. Furthermore, the rule is that factual issues are beyond our
jurisdiction to resolve since in a petition for review under Rule 45 of the 1997
Rules of Civil Procedure this Courts power is limited only to review questions
of law when there is doubt or difference as to what the law is on a certain state
of facts.[54]
WHEREFORE, the petition is DENIED and the August 31,
2001 Decision and November 20, 2002 Resolution of the Court of Appeals in
CA-G.R. CV No. 39138 are AFFIRMED.
No costs.
SO ORDERED.
G.O.A.L., INC., petitioner, vs. COURT OF APPEALS, OFFICE OF THE
RESIDENT LEGAL AFFAIRS, HOUSING AND LAND USE
REGULATORY BOARD, RIZALINO SIMBILLO, WILLIAM ONG,
HERMINIA MESINA, SELFA MARTINEZ, FILOMENO TENG,
RAFAEL JAVIER, FERNANDO DEL MUNDO, MILDRED PAREJA,
REMEDIOS LASQUETE, GEORGE CABIGAN, and ARCADIO
SAMPANG, respondents.
DECISION
BELLOSILLO, J.:
G. O. A. L., INC. (GOAL), in this petition for review on certiorari, seeks to
set aside part of the decision of the Court of Appeals dated 28 September
1994[1] which affirmed the decision of the Office of the President Legal Affairs
(OPLA) that earlier likewise affirmed the decision of the Housing and Land Use
Regulatory Board (HLURB). Petitioner confines its petition to the construction
of the fifth floor of Gemin I Condominium and all works related thereto,
including the issuance of title to private respondent Teng and providing free
parking spaces for the condominium units.[2]
On 23 May 1983 GOAL and the National Housing Authority (NHA)
entered into an agreement whereby NHA extended to GOAL a loan of P4.425
million for the construction of Gemin I Condominium at 941 Gonzales St.,
Ermita, Manila. Sometime in 1984 a Contract Agreement was entered into
between GOAL and Matson International Corporation for the construction of
96
the condominium within one (1) year at the cost of P4.2 million. However, in
the later part of 1984, the contractor abandoned the project with only 60% of it
finished. In 1985 GOAL offered the condominium units for sale with private
respondents among its buyers. To remedy the situation brought about by the
abandonment of the project by the first contractor, GOAL subsequently
pursued the construction of the fifth floor with NHA granting additional funding
on the condition that it would hold on to the condominium certificates of title of
private respondents.
In August 1989 private respondents filed with the Housing and Land Use
Regulatory Board (HLURB), Office of Appeals, Adjudication and Legal Affairs
(OAALA), a complaint against GOAL. Among the issues raised were the illegal
construction of the fifth floor of Gemin I Condominium, the failure to deliver the
title of private respondent Filomeno Teng despite his repeated demands, and
the failure to provide adequate parking spaces for the unit owners.
On 31 March 1989 OAALA rendered its decision ordering GOAL, inter
alia, (a) to stop the construction of the fifth floor, (b) to deliver the title of private
respondent Teng, and (c) to provide adequate parking space for the unit
owners.[3]
On appeal to the Office of the President Legal Affairs (OPLA) and
subsequently to the Court of Appeals, the decision rendered by the HLURB-
OAALA was affirmed in toto. Petitioner's motion for reconsideration was
denied. Hence this petition.
Petitioner imputes error to the Court of Appeals in not finding the true
facts of the case that greatly affected its decision, and its decision being
contrary to law.
GOAL contends that the Court of Appeals failed to appreciate the fact that
the construction of the fifth floor was with the written approval of public
respondent HLURB as required by Sec. 22 of P.D. 957 which provides -
Sec. 22. Alteration of Plans. - No owner or developer shall change or alter
the roads, open spaces, infrastructures, facilities for public use and/or other
form of subdivision development as contained in the approved subdivision
plan and/or represented in its advertisements, without the permission of the
Authority and the written conformity or consent of the duly organized
homeowners association, or in the absence of the latter, by majority of the lot
buyers in the subdivision (underscoring supplied).
The above provision is clear. We do not have to tussle with legal
hermeneutics in the interpretation of Sec. 22 of P.D. 957. The written approval
of the National Housing Authority alone is not sufficient. It must be coupled
with the written conformity or consent of the duly organized homeowners
association or the majority of the lot buyers. Failing in this, the construction of
the fifth floor is violative of the decree invoked. The Court of Appeals simply
applied the law, and correctly so.
Petitioner likewise contends that it should not have been faulted for failing
to deliver the title to private respondent Teng as the proximate cause thereof
was the abandonment of the construction project by the first contractor, hence,
due to force majeure.[4]
We cannot sustain petitioner. There is no one else to blame but
itself. Upon full payment of the agreed price, petitioner is mandated by law to
deliver the title of the lot or unit to the buyer. Both the Contract to Sell of
petitioner and private respondents, and Sec. 25 of P.D. 957 state -
Sec. III (Contract to Sell). - Title and Ownership of Unit. Upon full payment by
the vendees of the full amount of the purchase price stipulated under Sec. III
hereof, the assessments and expenses under Sec. IV and otherwise upon
compliance by the VENDEES of all obligations therein, the VENDOR will
convey to the VENDEE all rights and interests of the former and to the Unit,
subject hereof together with the interest in the common area and in the
Condominium Corporation appurtenant to such unit x x x x
Sec. 25, P.D. 957 - Issuance of Title. - The owner or developer shall deliver
the title of the lot or unit to the buyer upon full payment of the lot or unit x x x
x In the event a mortgage over the lot or unit is outstanding at the time of the
issuance of the title to the buyer, the owner or developer shall redeem the
mortgage or the corresponding portion thereof within six months from such
issuance in order that the title over any paid lot or unit may be secured and
delivered to the buyer in accordance herewith.
Petitioner also attempts to justify its failure to deliver the certificate of title
of private respondent Teng by claiming that it used the title as part collateral
for the additional loan NHA had extended for the construction of the fifth floor.
The Court observes the frequent allusion of petitioner to its predicament
brought about by the abandonment of the project by the first contractor. But
such is irrelevant in light of Sec. 25 of P.D. 957 as well as of the Contract to
Sell of the parties. While we empathize with petitioner in its financial dilemma
we cannot make innocent parties suffer the consequences of the formers lack
of business acumen. Upon full payment of a unit, petitioner loses all its rights
and interests to the unit in favor of the buyer. Consequently, it has no right to
use the certificate of title of respondent Teng as collateral for a new loan. The
title of Teng must be released to him as provided by law.
With respect to the second issue, petitioner contends that the decision of
the Court of Appeals is contrary to law considering that under Sec. 12-D, No.
2, Rule V of the Implementing Rules of P.D. 957, what should be given for free
are only off-street parking spaces and not indoor parking areas.
97
 Petitioner is wrong. It has for purposes of its own construed off-street to
mean not including indoor. On the other hand, the law does not exclude indoor
parking. What it specifically excludes is street parking. Therefore, parking may
be in the basement or, in the absence thereof, in the first floor.
Furthermore, at this point, a definition of terms may be necessary. In a
condominium, common areas and facilities are portions of the condominium
property not included in the units, whereas, a unit is a part of the condominium
property which is to be subject to private ownership. [5] Inversely, that which is
not considered a unit should fall under common areas and facilities.
Hence, the parking spaces not being subject to private ownership form
part of the common area over which the condominium unit owners hold
undivided interest. As such, petitioner cannot invoke Sec. I, Art. III, of the Bill
of Rights which provides that No person shall be deprived of life, liberty or
property without due process of law. Petitioner alone does not own the parking
area. The parking space is owned in common by the developer and the unit
owners. Private respondents must be allowed to use the parking area.
Finally, petitioner contends that the payment of P10,000.00 as moral
damages and P5,000.00 as exemplary damages plus P5,000.00 as attorney's
fees is too much of a penalty. However, the Court of Appeals upheld these
awards holding that -
In the light of the foregoing premises, we sense no error in the award of
attorney's fees, moral and exemplary damages, and administrative fines
against petitioner. This is allowed by the provisions of civil law and under
Secs. 38 and 39 of P.D. 957:
Sec. 38. Administrative Fines. - The Authority may prescribe and impose
fines not exceeding ten thousand pesos for violations of the provisions of this
Decree or any rule or regulation thereunder. Fines shall be payable to the
Authority and enforceable through writs of execution in accordance with the
provisions of the Rules of Court.
Sec. 39. Penalties - Any person who shall violate any of the provisions of this
Decree and/or any rule or regulation that may be issued pursuant to this
Decree shall, upon conviction, be punished by a fine of not more than twenty
thousand (P20,000.00) pesos and/or imprisonment of not
more than ten years: Provided, that in the case of corporations, partnership,
cooperatives, or associations, the President, manager, or Administrator or
the person who has charge of the administration of the business shall be
criminally responsible for any violation of this Decree and/or the rules and
regulations promulgated pursuant thereto.[6]
Petitioner can hardly be excused for its failure to comply with the
provisions of P.D. 957 by claiming ignorance of the requirements of the decree
and that a mistake upon a doubtful or difficult question of law may be the basis
of good faith. Being engaged in a business affected by P.D. 957, petitioner
should be aware of its provisions and its mandates which, as can be readily
perceived, are clear, simple and unmistakable.[7]
WHEREFORE, finding no error in the Decision sought to be reviewed, the
petition is DENIED. Costs against petitioner.
SO ORDERED
LUZ R. YAMANE, in her G.R. No. 154993
capacity as the CITY
TREASURER OF MAKATI Present:
CITY,
Petitioner, PUNO, J.,
Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
- versus - TINGA, and
CHICO-NAZARIO, JJ.
BA LEPANTO CONDOMINUM Promulgated:
CORPORATION,
Respondent. October 25, 2005
x-------------------------------------------------------------------x
DECISION
TINGA, J.:
Petitioner City Treasurer of Makati, Luz Yamane (City Treasurer),
presents for resolution of this Court two novel questions: one procedural, the
other substantive, yet both of obvious significance. The first pertains to the
proper mode of judicial review undertaken from decisions of the regional trial
courts resolving the denial of tax protests made by local government
treasurers, pursuant to the Local Government Code. The second is whether a
local government unit can, under the Local Government Code, impel a
condominium corporation to pay business taxes.[1]
While we agree with the City Treasurers position on the first issue,
there ultimately is sufficient justification for the Court to overlook what is
essentially a procedural error. We uphold respondents on the second issue.
Indeed, there are disturbing aspects in both procedure and substance that
attend the attempts by the City of Makati to flex its taxing muscle. Considering
that the tax imposition now in question has utterly no basis in law, judicial relief
98
is imperative. There are fewer indisputable causes for the exercise of judicial
review over the exercise of the taxing power than when the tax is based on
whim, and not on law.
The facts, as culled from the record, follow.
Respondent BA-Lepanto Condominium Corporation (the Corporation) is a duly
organized condominium corporation constituted in accordance with the
Condominium Act,[2] which owns and holds title to the common and limited
common areas of the BA-Lepanto Condominium (the Condominium), situated
in Paseo de Roxas, Makati City. Its membership comprises the various unit
owners of the Condominium. The Corporation is authorized, under Article V of
its Amended By-Laws, to collect regular assessments from its members for
operating expenses, capital expenditures on the common areas, and other
special assessments as provided for in the Master Deed with Declaration of
Restrictions of the Condominium.
On 15 December 1998, the Corporation received a Notice of Assessment
dated 14 December 1998 signed by the City Treasurer. The Notice of
Assessment stated that the Corporation is liable to pay the correct city
business taxes, fees and charges, computed as totaling P1,601,013.77 for the
years 1995 to 1997.[3] The Notice of Assessment was silent as to the statutory
basis of the business taxes assessed.
Through counsel, the Corporation responded with a written tax protest
dated 12 February 1999, addressed to the City Treasurer. It was evident in the
protest that the Corporation was perplexed on the statutory basis of the tax
assessment.
With due respect, we submit that the Assessment has
no basis as the Corporation is not liable for business taxes and
surcharges and interest thereon, under the Makati [Revenue]
Code or even under the [Local Government] Code.
The Makati [Revenue] Code and the [Local
Government] Code do not contain any provisions on which the
Assessment could be based. One might argue that Sec.
3A.02(m) of the Makati [Revenue] Code imposes business tax
on owners or operators of any business not specified in the said
code. We submit, however, that this is not applicable to the
Corporation as the Corporation is not an owner or operator of
any business in the contemplation of the Makati [Revenue] Code
and even the [Local Government] Code.[4]
Proceeding from the premise that its tax liability arose from Section
3A.02(m) of the Makati Revenue Code, the Corporation proceeded to argue
that under both the Makati Code and the Local Government Code, business is
defined as trade or commercial activity regularly engaged in as a means of
livelihood or with a view to profit. It was submitted that the Corporation, as a
condominium corporation, was organized not for profit, but to hold title over
the common areas of the Condominium, to manage the Condominium for the
unit owners, and to hold title to the parcels of land on which the Condominium
was located. Neither was the Corporation authorized, under its articles of
incorporation or by-laws to engage in profit-making activities. The
assessments it did collect from the unit owners were for capital expenditures
and operating expenses.[5]
The protest was rejected by the City Treasurer in a letter dated 4
March 1999. She insisted that the collection of dues from the unit owners was
effected primarily to sustain and maintain the expenses of the common areas,
with the end in view [sic] of getting full appreciative living values [sic] for the
individual condominium occupants and to command better marketable [sic]
prices for those occupants who would in the future sell their respective
units.[6] Thus, she concluded since the chances of getting higher prices for
well-managed common areas of any condominium are better and more
effective that condominiums with poor [sic] managed common areas, the
corporation activity is a profit venture making [sic].[7]
From the denial of the protest, the Corporation filed an Appeal with the
Regional Trial Court (RTC) of Makati.[8] On 1 March 2000, the Makati RTC
Branch 57 rendered a Decision[9]dismissing the appeal for lack of merit.
Accepting the premise laid by the City Treasurer, the RTC acknowledged, in
sadly risible language:
Herein appellant, to defray the improvements and beautification of
the common areas, collect [sic] assessments from its members.
Its end view is to get appreciate living rules for the unit owners
[sic], to give an impression to outsides [sic] of the quality of service
the condominium offers, so as to allow present owners to
command better prices in the event of sale.[10]
With this, the RTC concluded that the activities of the Corporation fell squarely
under the definition of business under Section 13(b) of the Local Government
Code, and thus subject to local business taxation.[11]
From this Decision of the RTC, the Corporation filed a Petition for
Review under Rule 42 of the Rules of Civil Procedure with the Court of
Appeals. Initially, the petition was dismissed outright[12] on the ground that only
decisions of the RTC brought on appeal from a first level court could be
elevated for review under the mode of review prescribed under Rule
42.[13] However, the Corporation pointed out in its Motion for
99
Reconsideration that under Section 195 of the Local Government Code, the
remedy of the taxpayer on the denial of the protest filed with the local treasurer
is to appeal the denial with the court of competent jurisdiction.[14] Persuaded by
this contention, the Court of Appeals reinstated the petition.[15]
On 7 June 2002, the Court of Appeals Special Sixteenth Division
rendered the Decision[16] now assailed before this Court. The appellate court
reversed the RTC and declared that the Corporation was not liable to pay
business taxes to the City of Makati.[17] In doing so, the Court of Appeals delved
into jurisprudential definitions of profit,[18] and concluded that the Corporation
was not engaged in profit. For one, it was held that the very statutory concept
of a condominium corporation showed that it was not a juridical entity intended
to make profit, as its sole purpose was to hold title to the common areas in the
condominium and to maintain the condominium.[19]
The Court of Appeals likewise cited provisions from the Corporations
Amended Articles of Incorporation and Amended By-Laws that, to its
estimation, established that the Corporation was not engaged in business and
the assessment collected from unit owners limited to those necessary to defray
the expenses in the maintenance of the common areas and management the
condominium.[20]
Upon denial of her Motion for Reconsideration,[21] the City Treasurer
elevated the present Petition for Review under Rule 45. It is argued that the
Corporation is engaged in business, for the dues collected from the different
unit owners is utilized towards the beautification and maintenance of the
Condominium, resulting in full appreciative living values for the condominium
units which would command better market prices should they be sold in the
future. The City Treasurer likewise avers that the rationale for business taxes
is not on the income received or profit earned by the business, but the privilege
to engage in business. The fact that the
Corporation is empowered to acquire, own, hold, enjoy, lease, operate and
maintain, and to convey sell, transfer or otherwise dispose of real or personal
property allegedly qualifies as incident to the fact of [the Corporations] act of
engaging in business.[22]
The City Treasurer also claims that the Corporation had filed the wrong
mode of appeal before the Court of Appeals when the latter filed its Petition for
Review under Rule 42. It is reasoned that the decision of the Makati RTC was
rendered in the exercise of original jurisdiction, it being the first court which took
cognizance of the case. Accordingly, with the Corporation having pursued an
erroneous mode of appeal, the RTC Decision is deemed to have become final
and executory.
First, we dispose of the procedural issue, which essentially boils down
to whether the RTC, in deciding an appeal taken from a denial of a protest by
a local treasurer under Section 195 of the Local Government Code, exercises
original jurisdiction or appellate jurisdiction. The question assumes a measure
of importance to this petition, for the adoption of the position of the City
Treasurer that the mode of review of the decision taken by the RTC is governed
by Rule 41 of the Rules of Civil Procedure means that the decision of the RTC
would have long become final and executory by reason of the failure of the
Corporation to file a notice of appeal.[23]
There are discernible conflicting views on the issue. The first, as
expressed by the Court of Appeals, holds that the RTC, in reviewing denials of
protests by local treasurers, exercises appellate jurisdiction. This position is
anchored on the language of Section 195 of the Local Government Code which
states that the remedy of the taxpayer whose protest is denied by the local
treasurer is to appeal with the court of competent jurisdiction.[24] Apparently
though, the Local Government Code does not elaborate on how such appeal
should be undertaken.
The other view, as maintained by the City Treasurer, is that the
jurisdiction exercised by the RTC is original in character. This is the first time
that the position has been presented to the court for adjudication. Still, this
argument does find jurisprudential mooring in our ruling in Garcia v. De
Jesus,[25] where the Court proffered the following distinction between original
jurisdiction and appellate jurisdiction: Original jurisdiction is the power of the
Court to take judicial cognizance of a case instituted for judicial action for the
first time under conditions provided by law. Appellate jurisdiction is the authority
of a Court higher in rank to re-examine the final order or judgment of a lower
Court which tried the case now elevated for judicial review.[26]
The quoted definitions were taken from the commentaries of the
esteemed Justice Florenz Regalado. With the definitions as beacon, the review
taken by the RTC over the denial of the protest by the local treasurer would fall
within that courts original jurisdiction. In short, the review is the initial judicial
cognizance of the matter. Moreover, labeling the said review as an exercise of
appellate jurisdiction is inappropriate, since the denial of the protest is not the
judgment or order of a lower court, but of a local government official.
The stringent concept of original jurisdiction may seemingly be
neutered by Rule 43 of the 1997 Rules of Civil Procedure, Section 1 of which
lists a slew of administrative agencies and quasi-judicial tribunals or their
officers whose decisions may be reviewed by the Court of Appeals in the
exercise of its appellate jurisdiction. However, the basic law of jurisdiction,
Batas Pambansa Blg. 129 (B.P. 129),[27] ineluctably confers appellate
100
jurisdiction on the Court of Appeals over final rulings of quasi-judicial agencies,
instrumentalities, boards or commission, by explicitly using the phrase
appellate jurisdiction.[28] The power to create or characterize jurisdiction of
courts belongs to the legislature. While the traditional notion of appellate
jurisdiction connotes judicial review over lower court decisions, it has to yield
to statutory redefinitions that clearly expand its breadth to encompass even
review of decisions of officers in the executive branches of government.
Yet significantly, the Local Government Code, or any other statute for
that matter, does not expressly confer appellate jurisdiction on the part of
regional trial courts from the denial of a tax protest by a local treasurer. On the
other hand, Section 22 of B.P. 129 expressly delineates the appellate
jurisdiction of the Regional Trial Courts, confining as it does said appellate
jurisdiction to cases decided by Metropolitan, Municipal, and Municipal Circuit
Trial Courts. Unlike in the case of the Court of Appeals, B.P. 129 does not
confer appellate jurisdiction on Regional Trial Courts over rulings made by non-
judicial entities.
From these premises, it is evident that the stance of the City Treasurer
is correct as a matter of law, and that the proper remedy of the Corporation
from the RTC judgment is an ordinary appeal under Rule 41 to the Court of
Appeals. However, we make this pronouncement subject to two important
qualifications. First, in this particular case there are nonetheless significant
reasons for the Court to overlook the procedural error and ultimately uphold the
adjudication of the jurisdiction exercised by the Court of Appeals in this case.
Second, the doctrinal weight of the pronouncement is confined to cases and
controversies that emerged prior to the enactment of Republic Act No. 9282,
the law which expanded the jurisdiction of the Court of Tax Appeals (CTA).
Republic Act No. 9282 definitively proves in its Section 7(a)(3) that the
CTA exercises exclusive appellate jurisdiction to review on appeal decisions,
orders or resolutions of the Regional Trial Courts in local tax cases original
decided or resolved by them in the exercise of their originally or appellate
jurisdiction. Moreover, the provision also states that the review is triggered by
filing a petition for review under a procedure analogous to that provided for
under Rule 42 of the 1997 Rules of Civil Procedure.[29]
Republic Act No. 9282, however, would not apply to this case simply
because it arose prior to the effectivity of that law. To declare otherwise would
be to institute a jurisdictional rule derived not from express statutory grant, but
from implication. The jurisdiction of a court to take cognizance of a case should
be clearly conferred and should not be deemed to exist on mere
implications,[30] and this settled rule would be needlessly emasculated should
we declare that the Corporations position is correct in law.
Be that as it may, characteristic of all procedural rules is adherence to
the precept that they should not be enforced blindly, especially if mechanical
application would defeat the higher ends that animates our civil procedurethe
just, speedy and inexpensive disposition of every action and
proceeding.[31] Indeed, we have repeatedly upheldand utilized ourselvesthe
discretion of courts to nonetheless take cognizance of petitions raised on an
erroneous mode of appeal and instead treat these petitions in the manner as
they should have appropriately been filed.[32] The Court of Appeals could very
well have treated the Corporations petition for review as an ordinary appeal.
Moreover, we recognize that the Corporations error in elevating the
RTC decision for review via Rule 42 actually worked to the benefit of the City
Treasurer. There is wider latitude on the part of the Court of Appeals to refuse
cognizance over a petition for review under Rule 42 than it would have over an
ordinary appeal under Rule 41. Under Section 13, Rule 41, the stated grounds
for the dismissal of an ordinary appeal prior to the transmission of the case
records are when the appeal was taken out of time or when the docket fees
were not paid.[33] On the other hand, Section 6, Rule 42 provides that in order
that the Court of Appeals may allow due course to the petition for review, it
must first make a prima facie finding that the lower court has committed an
error that would warrant the reversal or modification of the decision under
review.[34] There is no similar requirement of a prima facie determination of
error in the case of ordinary appeal, which is perfected upon the filing of the
notice of appeal in due time.[35]
Evidently, by employing the Rule 42 mode of review, the Corporation
faced a greater risk of having its petition rejected by the Court of Appeals as
compared to having filed an ordinary appeal under Rule 41. This was not an
error that worked to the prejudice of the City Treasurer.
We now proceed to the substantive issue, on whether the City of
Makati may collect business taxes on condominium corporations.
We begin with an overview of the power of a local government unit to impose
business taxes.
The power of local government units to impose taxes within its territorial
jurisdiction derives from the Constitution itself, which recognizes the power of
these units to create its own sources of revenue and to levy taxes, fees, and
charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy.[36]These guidelines
and limitations as provided by Congress are in main contained in the Local
Government Code of 1991 (the Code), which provides for comprehensive
instances when and how local government units may impose taxes. The
significant limitations are enumerated primarily in Section 133 of the Code,
which include among others, a prohibition on the imposition of income taxes
101
except when levied on banks and other financial institutions.[37] None of the
other general limitations under Section 133 find application to the case at bar.
The most well-known mode of local government taxation is perhaps the real
property tax, which is governed by Title II, Book II of the Code, and which bears
no application in this case. A different set of provisions, found under Title I of
Book II, governs other taxes imposable by local government units, including
business taxes. Under Section 151 of the Code, cities such as Makati are
authorized to levy the same taxes fees and charges as provinces and
municipalities. It is in Article II, Title II, Book II of the Code, governing municipal
taxes, where the provisions on business taxation relevant to this petition may
be found.[38]
Section 143 of the Code specifically enumerates several types of business on
which municipalities and cities may impose taxes. These include
manufacturers, wholesalers, distributors, dealers of any article of commerce of
whatever nature; those engaged in the export or commerce of essential
commodities; contractors and other independent contractors; banks and
financial institutions; and peddlers engaged in the sale of any merchandise or
article of commerce. Moreover, the local sanggunian is also authorized to
impose taxes on any other businesses not otherwise specified under Section
143 which the sanggunian concerned may deem proper to tax.
The coverage of business taxation particular to the City of Makati is
provided by the Makati Revenue Code (Revenue Code), enacted through
Municipal Ordinance No. 92-072. The Revenue Code remains in effect as of
this
writing. Article A, Chapter III of the Revenue Code governs business taxes in
Makati, and it is quite specific as to the particular businesses which are covered
by business taxes. To give a sample of the specified businesses under the
Revenue Code which are not enumerated under the Local Government Code,
we cite Section 3A.02(f) of the Code, which levies a gross receipt tax :
(f) On contractors and other independent contractors
defined in Sec. 3A.01(q) of Chapter III of this Code, and on
owners or operators of business establishments rendering
or offering services such as: advertising agencies; animal
hospitals; assaying laboratories; belt and buckle shops;
blacksmith shops; bookbinders; booking officers for film
exchange; booking offices for transportation on commission
basis; breeding of game cocks and other sporting animals
belonging to others; business management services;
collecting agencies; escort services; feasibility studies;
consultancy services; garages; garbage disposal
contractors; gold and silversmith shops; inspection services
for incoming and outgoing cargoes; interior decorating
services; janitorial services; job placement or recruitment
agencies; landscaping contractors; lathe machine shops;
management consultants not subject to professional tax;
medical and dental laboratories; mercantile agencies;
messsengerial services; operators of shoe shine stands;
painting shops; perma press establishments; rent-a-plant
services; polo players; school for and/or horse-back riding
academy; real estate appraisers; real estate brokerages;
photostatic, white/blue printing, Xerox, typing, and
mimeographing services; rental of bicycles and/or tricycles,
furniture, shoes, watches, household appliances, boats,
typewriters, etc.; roasting of pigs, fowls, etc.; shipping
agencies; shipyard for repairing ships for others; shops for
shearing animals; silkscreen or T-shirt printing shops;
stables; travel agencies; vaciador shops; veterinary clinics;
video rentals and/or coverage services; dancing
schools/speed reading/EDP; nursery, vocational and other
schools not regulated by the Department of Education,
Culture and Sports, (DECS), day care centers; etc.[39]
Other provisions of the Revenue Code likewise subject hotel and
restaurant owners and operators[40], real estate dealers, and lessors of real
estate[41] to business taxes.
Should the comprehensive listing not prove encompassing enough,
there is also a catch-all provision similar to that under the Local Government
Code. This is found in Section 3A.02(m) of the Revenue Code, which provides:
(m) On owners or operators of any business not specified
above shall pay the tax at the rate of two percent (2%) for 1993,
two and one-half percent (2 %) for 1994 and 1995, and three
percent (3%) for 1996 and the years thereafter of the gross
receipts during the preceding year.[42]
The initial inquiry is what provision of the Makati Revenue Code does
the City Treasurer rely on to make the Corporation liable for business taxes.
Even at this point, there already stands a problem with the City Treasurers
cause of action.
Our careful examination of the record reveals a highly disconcerting
fact. At no point has the City Treasurer been candid enough to inform the
Corporation, the RTC, the Court of Appeals, or this Court for that matter, as to
what exactly is the precise statutory basis under the Makati Revenue Code for
the levying of the business tax on petitioner. We have examined all of the
pleadings submitted by the City Treasurer in all the antecedent judicial
proceedings, as well as in this present petition, and also the communications
by the City Treasurer to the Corporation which form part of the record. Nowhere
102
therein is there any citation made by the City Treasurer of any provision of the
Revenue Code which would serve as the legal authority for the collection of
business taxes from condominiums in Makati.
Ostensibly, the notice of assessment, which stands as the first instance
the taxpayer is officially made aware of the pending tax liability, should be
sufficiently informative to apprise the taxpayer the legal basis of the tax. Section
195 of the Local Government Code does not go as far as to expressly require
that the notice of assessment specifically cite the provision of the ordinance
involved but it does require that it state the nature of the tax, fee or charge, the
amount of deficiency, surcharges, interests and penalties. In this case, the
notice of assessment sent to the Corporation did state that the assessment
was for business taxes, as well as the amount of the assessment. There may
have been prima facie compliance with the requirement under Section 195.
However in this case, the Revenue Code provides multiple provisions on
business taxes, and at varying rates. Hence, we could appreciate the
Corporations confusion, as expressed in its protest, as to the exact legal basis
for the tax.[43] Reference to the local tax ordinance is vital, for the power of local
government units to impose local taxes is exercised through the appropriate
ordinance enacted by the sanggunian, and not by the Local Government Code
alone.[44] What determines tax liability is the tax ordinance, the Local
Government Code being the enabling law for the local legislative body.
Moreover, a careful examination of the Revenue Code shows that
while Section 3A.02(m) seems designed as a catch-all provision, Section
3A.02(f), which provides for a different tax rate from that of the former provision,
may be construed to be of similar import. While Section 3A.02(f) is quite
exhaustive in enumerating the class of businesses taxed under the provision,
the listing, while it does not include condominium-related enterprises, ends with
the abbreviation etc., or et cetera.
We do note our discomfort with the unlimited breadth and the
dangerous uncertainty which are the twin hallmarks of the words et cetera.
Certainly, we cannot be disposed to uphold any tax imposition that derives its
authority from enigmatic and uncertain words such as et cetera. Yet we cannot
even say with definiteness whether the tax imposed on the Corporation in this
case is based on et cetera, or on Section 3A.02(m), or on any other provision
of the Revenue Code. Assuming that the assessment made on the Corporation
is on a provision other than Section 3A.02(m), the main legal issue takes on a
different complexion. For example, if it is based on et cetera under Section
3A.02(f), we would have to examine whether the Corporation faces analogous
comparison with the other businesses listed under that provision.
Certainly, the City Treasurer has not been helpful in that regard, as she
has been silent all through out as to the exact basis for the tax imposition which
she wishes that this Court uphold. Indeed, there is only one thing that prevents
this Court from ruling that there has been a due process violation on account
of the City Treasurers failure to disclose on paper the statutory basis of the
taxthat the Corporation itself does not allege injury arising from such failure on
the part of the City Treasurer.
We do not know why the Corporation chose not to put this issue into
litigation, though we can ultimately presume that no injury was sustained
because the City Treasurer failed to cite the specific statutory basis of the tax.
What is essential though is that the local treasurer be required to explain to the
taxpayer with sufficient particularity the basis of the tax, so as to leave no doubt
in the mind of the taxpayer as to the specific tax involved.
In this case, the Corporation seems confident enough in litigating
despite the failure of the City Treasurer to admit on what exact provision of the
Revenue Code the tax liability ensued. This is perhaps because the
Corporation has anchored its central argument on the position that the Local
Government Code itself does not sanction the imposition of business taxes
against it. This position was sustained by the Court of Appeals, and now merits
our analysis.
As stated earlier, local tax on businesses is authorized under Section
143 of the Local Government Code. The word business itself is defined under
Section 131(d) of the Code as trade or commercial activity regularly engaged
in as a means of livelihood or with a view to profit.[45] This definition of business
takes on importance, since Section 143 allows local government units to
impose local taxes on businesses other than those specified under the
provision. Moreover, even those business activities specifically named in
Section 143 are themselves susceptible to broad interpretation. For example,
Section 143(b) authorizes the imposition of business taxes on wholesalers,
distributors, or dealers in any article of commerce of whatever kind or nature.
It is thus imperative that in order that the Corporation may be subjected
to business taxes, its activities must fall within the definition of business as
provided in the Local Government Code. And to hold that they do is to ignore
the very statutory nature of a condominium corporation.
The creation of the condominium corporation is sanctioned by Republic
Act No. 4726, otherwise known as the Condominium Act. Under the law, a
condominium is an interest in real property consisting of a separate interest in
a unit in a residential, industrial or commercial building and an undivided
interest in common, directly or indirectly, in the land on which it is located and
in other common areas of the building.[46] To enable the orderly administration
over these common areas which are jointly owned by the various unit owners,
the Condominium Act permits the creation of a condominium corporation,
which is specially formed for the purpose of holding title to the common area,
in which the holders of separate interests shall automatically be members or
shareholders, to the exclusion of others, in proportion to the appurtenant
interest of their respective
103
units.[47] The necessity of a condominium corporation has not gained
widespread acceptance[48], and even is merely permissible under the
Condominium Act.[49] Nonetheless, the condominium corporation has been
resorted to by many condominium projects, such as the Corporation in this
case.
In line with the authority of the condominium corporation to manage
the condominium project, it may be authorized, in the deed of restrictions, to
make reasonable assessments to meet authorized expenditures, each
condominium unit to be assessed separately for its share of such expenses in
proportion (unless otherwise provided) to its owners fractional interest in any
common areas.[50] It is the collection of these assessments from unit owners
that form the basis of the City Treasurers claim that the Corporation is doing
business.
The Condominium Act imposes several limitations on the
condominium corporation that prove crucial to the disposition of this case.
Under Section 10 of the law, the
corporate purposes of a condominium corporation are limited to the holding of
the common areas, either in ownership or any other interest in real property
recognized by law; to the management of the project; and to such other
purposes as may be necessary, incidental or convenient to the
accomplishment of such purpose.[51] Further, the same provision prohibits the
articles of incorporation or by-laws of the condominium corporation from
containing any provisions which are contrary to the provisions of the
Condominium Act, the enabling or master deed, or the declaration of
restrictions of the condominium project.[52]
We can elicit from the Condominium Act that a condominium
corporation is precluded by statute from engaging in corporate activities other
than the holding of the common areas, the administration of the condominium
project, and other acts necessary, incidental or convenient to the
accomplishment of such purposes. Neither the maintenance of livelihood, nor
the procurement of profit, fall within the scope of permissible corporate
purposes of a condominium corporation under the Condominium Act.
The Court has examined the particular Articles of Incorporation and
By-Laws of the Corporation, and these documents unmistakably hew to the
limitations contained in the Condominium Act. Per the Articles of Incorporation,
the Corporations corporate purposes are limited to: (a) owning and holding title
to the common and limited common areas in the Condominium Project; (b)
adopting such necessary measures for the protection and safeguard of the unit
owners and their property, including the power to contract for security services
and for insurance coverage on the entire project; (c) making and adopting
needful rules and regulations concerning the use, enjoyment and occupancy
of the units and common areas, including the power to fix penalties and
assessments for violation of such rules; (d) to provide for the maintenance,
repair, sanitation, and cleanliness of the common and limited common areas;
(e) to provide and contract for public utilities and other services to the common
areas; (f) to contract for the services of persons or firms to assist in the
management and operation of the Condominium Project; (g) to discharge any
lien or encumbrances upon the Condominium Project; (h) to enforce the terms
contained in the Master Deed with Declaration of Restrictions of the Project; (i)
to levy and
collect those assessments as provided in the Master Deed, in order to defray
the costs, expenses and losses of the condominium; (j) to acquire, own, hold,
enjoy, lease operate and maintain, and to convey, sell transfer, mortgage or
otherwise dispose of real or personal property in connection with the purposes
and activities of the corporation; and (k) to exercise and perform such other
powers reasonably necessary, incidental or convenient to accomplish the
foregoing purposes.[53]
Obviously, none of these stated corporate purposes are geared
towards maintaining a livelihood or the obtention of profit. Even though the
Corporation is empowered to levy assessments or dues from the unit owners,
these amounts collected are not intended for the incurrence of profit by the
Corporation or its members, but to shoulder the multitude of necessary
expenses that arise from the maintenance of the Condominium Project. Just
as much is confirmed by Section 1, Article V of the Amended By-Laws, which
enumerate the particular expenses to be defrayed by the regular assessments
collected from the unit owners. These would include the salaries of the
employees of the Corporation, and the cost of maintenance and ordinary
repairs of the common areas.[54]
The City Treasurer nonetheless contends that the collection of these
assessments and dues are with the end view of getting full appreciative living
values for the condominium units, and as a result, profit is obtained once these
units are sold at higher prices. The Court cites with approval the two
counterpoints raised by the Court of Appeals in rejecting this contention. First,
if any profit is obtained by the sale of the units, it accrues not to the corporation
but to the unit owner. Second, if the unit owner does obtain profit from the sale
of the corporation, the owner is already required to pay capital gains tax on the
appreciated value of the condominium unit.[55]
Moreover, the logic on this point of the City Treasurer is baffling. By
this rationale, every Makati City car owner may be considered as being
engaged in business, since the repairs or improvements on the car may be
deemed oriented towards appreciating the value of the car upon resale. There
is an evident distinction between persons who spend on repairs and
104
improvements on their personal and real property for the purpose of increasing
its resale value, and those who defray such expenses for the purpose of
preserving the property. The vast majority of persons fall under the second
category, and it would be highly specious to subject these persons to local
business taxes. The profit motive in such cases is hardly the driving factor
behind such improvements, if it were contemplated at all. Any profit that would
be derived under such circumstances would merely be incidental, if not
accidental.
Besides, we shudder at the thought of upholding tax liability on the
basis of the standard of full appreciative living values, a phrase that defies
statutory explication, commonsensical meaning, the English language, or even
definition from Google. The exercise of the power of taxation constitutes a
deprivation of property under the
due process clause,[56] and the taxpayers right to due process is violated when
arbitrary or oppressive methods are used in assessing and collecting
taxes.[57] The fact that the Corporation did not fall within the enumerated
classes of taxable businesses under either the Local Government Code or the
Makati Revenue Code already forewarns that a clear demonstration is
essential on the part of the City Treasurer on why the Corporation should be
taxed anyway. Full appreciative living values is nothing but blather in search of
meaning, and to impose a tax hinged on that standard is both arbitrary and
oppressive.
The City Treasurer also contends that the fact that the Corporation is
engaged in business is evinced by the Articles of Incorporation, which
specifically empowers the Corporation to acquire, own, hold, enjoy, lease,
operate and maintain, and to convey, sell, transfer mortgage or otherwise
dispose of real or personal property.[58] What the City Treasurer fails to add is
that every corporation
organized under the Corporation Code[59] is so specifically empowered. Section
36(7) of the Corporation Code states that every corporation incorporated under
the Code has the power and capacity to purchase, receive, take or grant, hold,
convey, sell, lease, pledge, mortgage and otherwise deal with such real and
personal property . . . as the transaction of the lawful business of the
corporation may reasonably and necessarily require . . . . [60] Without this power,
corporations, as juridical persons, would be deprived of the capacity to engage
in most meaningful legal relations.
Again, whatever capacity the Corporation may have pursuant to its
power to exercise acts of ownership over personal and real property is limited
by its stated corporate purposes, which are by themselves further limited by
the Condominium Act. A condominium corporation, while enjoying such powers
of ownership, is prohibited by law from transacting its properties for the purpose
of gainful profit.
Accordingly, and with a significant degree of comfort, we hold that
condominium corporations are generally exempt from local business taxation
under the Local Government Code, irrespective of any local ordinance that
seeks to declare otherwise.
Still, we can note a possible exception to the rule. It is not unthinkable
that the unit owners of a condominium would band together to engage in
activities for profit under the shelter of the condominium corporation. [61] Such
activity would be prohibited under the Condominium Act, but if the fact is
established, we see no reason why the condominium corporation may be made
liable by the local government unit for business taxes. Even though such
activities would be considered as ultra vires, since they are engaged in beyond
the legal capacity of the condominium corporation[62], the principle of estoppel
would preclude the corporation or its officers and members from invoking the
void nature of its undertakings for profit as a means of acquitting itself of tax
liability.
Still, the City Treasurer has not posited the claim that the Corporation
is engaged in business activities beyond the statutory purposes of a
condominium corporation. The assessment appears to be based solely on the
Corporations collection of assessments from unit owners, such assessments
being utilized to defray the necessary expenses for the Condominium Project
and the common areas. There is no contemplation of business, no orientation
towards profit in this case. Hence, the assailed tax assessment has no basis
under the Local Government Code or the Makati Revenue Code, and the
insistence of the city in its collection of the void tax constitutes an attempt at
deprivation of property without due process of law.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.
G.R. No. L-52361 April 27, 1981
SUNSET VIEW CONDOMINIUM CORPORATION, petitioner,
vs.
THE HON. JOSE C. CAMPOS, JR. OF THE COURT OF FIRST INSTANCE,
BRANCH XXX, PASAY CITY and AGUILAR-BERNARES
REALTY, respondents.
G.R. No. L-52524 April 27, 1981
105
SUNSET VIEW CONDOMINIUM CORPORATION, petitioner,
vs.
THE HON. JOSE C. CAMPOS, JR., PRESIDING JUDGE OF THE COURT
OF FIRST INSTANCE, BRANCH XXX, PASAY CITY, and LIM SIU
LENG, respondents.
FERNANDEZ, J.:
These two cases which involve similar facts and raise Identical questions of
law were ordered consolidated by resolution of this Court dated March 17,
1980. 1
The petitioner, Sunset View Condominium Corporation, in both cases, is a
condominium corporation within the meaning of Republic Act No. 4726 in
relation to a duly registered Amended Master Deed with Declaration of
Restrictions of the Sunset View Condominium Project located at 2230 Roxas
Boulevard, Pasay City of which said petitioner is the Management Body
holding title to all the common and limited common areas. 2
G.R. NO. 52361
The private respondent, Aguilar-Bernares Realty, a sole proprietorship with
business name registered with the Bureau of Commerce, owned and
operated by the spouses Emmanuel G. Aguilar and Zenaida B. Aguilar, is the
assignee of a unit, "Solana", in the Sunset View Condominium Project with
La Perla Commercial, Incorporated, as assignor. 3 The La Perla Commercial,
Incorporated bought the "Solana" unit on installment from the Tower
Builders, Inc. 4 The petitioner, Sunset View Condominium Corporation, filed
for the collection of assessments levied on the unit against Aguilar-Bernares
Realty, private respondent herein, a complaint dated June 22, 1979 docketed
as Civil Case No. 7303-P of the Court of First Instance of Pasay City, Branch
XXX. The private respondent filed a Motion to Dismiss the complaint on the
grounds (1) that the complaint does not state a cause of action: (2) that the
court has no jurisdiction over the subject or nature other action; and (3) that
there is another action pending between the same parties for the same
cause. The petitioner filed its opposition thereto. The motion to dismiss was
granted on December 11, 1979 by the respondent Judge who opined that the
private respondent is, pursuant to Section 2 of Republic Act No. 4726, a
"holder of a separate interest" and consequently, a shareholder of the plaintiff
condominium corporation; and that "the case should be properly filed with the
Securities & Exchange Commission which has exclusive original jurisdiction
on controversies arising between shareholders of the corporation." the
motion for reconsideration thereof having been denied, the petitioner,
alleging grave abuse of discretion on the part of respondent Judge, filed the
instant petition for certiorari praying that the said orders be set aside.
G.R. NO. 52524
The petitioner filed its amended complaint dated July 16, 1979 docketed as
Civil Case No. 14127 of Branch I of the City Court of Pasay City for the
collection of overdue accounts on assessments and insurance premiums and
the interest thereon amounting to P6,168 06 as of March 31, 1979 against
the private respondent Lim Siu Leng 5 to whom was assigned on July 11,
1977 a unit called "Alegria" of the Sunset. View Condominium Project by
Alfonso Uy 6 who had entered into a "Contract to Buy and Sell" with Tower
Builders, Inc. over the said unit on installment basis. 7
The private respondent filed a motion to dismiss on the ground of lack of
jurisdiction, alleging that the amount sought to be collected is an
assessment. The correctness and validity of which is certain to involve a
dispute between her and the petitioner corporation; that she has
automatically become, as a purchaser of the condominium unit, a
stockholder of the petitioner pursuant to Section 2 of the Condominium Act,
Republic Act No. 4726; that the dispute is intra-corporate and is
consequently under the exclusive jurisdiction of the Securities & Exchange
Commission as provided in Section 5 of P.D. No. 902-A. 8
The petitioner filed its opposition thereto, alleging that the private respondent
who had not fully paid for the unit was not the owner thereof, consequently
was not the holder of a separate interest which would make her a
stockholder, and that hence the case was not an intra-corporate dispute. 9
After the private respondent had filed her answer to the opposition to the
motion to dismiss 10 of the petitioner, the trial court issued an order dated
August 13, 1979 denying the motion to dismiss. 11 The private respondent's
motion for reconsideration thereof was denied by the trial court in its Order
dated September 19, 1979. 12
The private respondent then appealed pursuant to Section 10 of Rule 40 of
the Rules of Court to the Court of First Instance, where the appeal was
docketed as Civil Case No. 7530P. The petitioner filed its "Motion to Dismiss
Appeal" on the ground that the order of the trial court appealed from is
interlocutory. 13
The motion to dismiss the appeal was denied and the parties were ordered to
submit their respective memorandum on the issue raised before the trial
court and on the disputed order of the trial judge. 14 After the parties had
submitted their respective memoranda on the matter, the respondent Judge
106
issued an order dated December 14, 1979 in which he directed that "the
appeal is hereby dismissed and d the judgment of the lower court is
reversed. The case is dismissed and the parties are directed to ventilate their
controversy with the Securities & Exchange Commission. 15 The petitioner's
motion for reconsideration thereof was denied in an order dated January 14,
1980. 16 Hence this petition for certiorari, alleging grave abuse of discretion
on the part of the respondent Judge.
Issues Common to Both Cases
It is admitted that the private respondents in both cases have not yet fully
paid the purchase price of their units. The Identical issues raised in both
petitions are the following:
1. Is a purchaser of a condominium unit in the condominium project managed
by the petitioner, who has not yet fully paid the purchase price thereof,
automaticaly a ,stockholder of the petitioner Condominium Corporation
2. Is it the regular court or the Securities & Exchange Commission that has
jurisdiction over cases for collection of assessments assessed by the
Condominium Corporation on condominium units the full purchase price of
which has not been paid?
The private respondents in both cases argue that every purchaser of a
condominium unit, regardless of whether or not he has fully paid the
purchase price, is a "holder of a separate interest" mentioned in Section 2 of
Republic Act No. 4726, otherwise known as "The Condominium Act" and is
automatically a shareholder of the condominium corporation.
The contention has no merit. Section 5 of the Condominium Act expressly
provides that the shareholding in the Condominium Corporation will be
conveyed only in a proper case. Said Section 5 provides:
Any transfer or conveyance of a unit or an apartment, office
or other space therein, shall include the transfer or
conveyance of the undivided interests in the common areas
or, in a proper case, the membership or shareholding in the
condominium corporation ...
It is clear then that not every purchaser of a condominium unit is a
shareholder of the condominium corporation. The Condominium Act leaves
to the Master Deed the determination of when the shareholding will be
transferred to the purchaser of a unit. Thus, Section 4 of said Act provides:
The provisions of this Act shall apply to property divided or to
be divided into condominium only if there shall be recorded
in the Register of Deeds of the province or city in which the
property lies and duly annotated in the corresponding
certificate of title of the land ... an enabling or master deed
which shall contain, among others, the following:
xxx xxx xxx
(d) Astatement of the exact nature of the interest acquired or
to be acquired by the purchaser in the separate units and in
the common areas of the condominium project ...
The Amended Master Deeds in these cases, which were duly registered in
the Register of Deeds, and which contain, by mandate of Section 4, a
statement of the exact nature of the interest acquired by a purchaser of a
unit, provide in Section 6 of Part 1:
(d) Each Unit owner shall, as an essential condition to such
ownership, acquire stockholding in the Condominium
Corporation herein below provided ... 17
The Amended Master Deeds likewise provide in Section 7 (b), thus.
(b) All unit owners shall of necessity become stockholders of
the Condominium Corporation. TOWER shall acquire all the
shares of stock of SUNSET VIEW and shall allocate the said
shares to the units in proportion to the appurtenant interest
in the COMMON AREAS and LIMITED COMMON AREAS
as provided in Section 6 (b) above. Said shares allocated
are mere appurtenances of each unit, and therefore, the
same cannot be transferred, conveyed, encumbered or
otherwise disposed of separately from the Unit ... 18
It is clear from the above-quoted provisions of the Master Deeds that the
shareholding in the Condominium Corporation is inseparable from the unit to
which it is only an appurtenant and that only the owner of a unit is a
shareholder in the Condominium Corporation.
Subparagraph (a) of Part 1, Section 6, of the Master Deeds determines when
and under what conditions ownership of a unit is acquired by a purchaser
thus:
(a) The purchaser of a unit shall acquire title or ownership of
such Unit, subject to the terms and conditions of the
107
 instrument conveying the unit to such purchaser and to the
terms and conditions of any subsequent conveyance under
which the purchaser takes title to the Unit, and subject
further to this MASTER DEED ... 19
The instrument conveying the unit "Solana" in G.R. NO. 52361 is the
"Contract to Buy and Sell" dated September 13, 1977, Annex "D", while that
conveying the unit "Alegria" in G.R. NO. 52524 is the "Contract to Buy and
Sell" dated May 12, 1976, Annex "C". In both deeds of conveyance, it is
provided:
4. Upon full payment by the BUYER of the total purchase
price and full compliance by the BUYER of an its obligations
herein, the SELLER will convey unto the BUYER, as soon as
practicable after completion of the construction, full and
absolute title in and to the subject unit, to the shares of stock
pertaining thereto and to an rights and interests in
connection therewith ... 20
The share of stock appurtenant to the unit win be transferred accordingly to
the purchaser of the unit only upon full payment of the purchase price at
which time he will also become the owner of the unit. Consequently, even
under the contract, it is only the owner of a unit who is a shareholder of the
Condominium Corporation. Inasmuch as owners is conveyed only upon full
payment of the purchase price, it necessarily follows that a purchaser of a
unit who has not paid the full purchase price thereof is not The owner of the
unit and consequently is not a shareholder of the Condominium Corporation.
That only the owner of a unit is a stockholder of the Condominium
Corporation is inferred from Section 10 of the Condominium Act which reads:
SEC. 10. ... Membership in a condominium corporation,
regardless of whether it is a stock or non-stock corporation,
shall not be transferable separately from the condominium
unit of which it is an appurtenance When a member or
stockholder ceases is to own a unit in the project in which
the condominium corporation owns or holds the common
areas, he shall automatically cease to be a member or
stockholder of the condominium corporation.
Pursuant to the above statutory provision, ownership of a unit is a
condition sine qua non to being a shareholder in the condominium
corporation. It follows that a purchaser of a unit who is not yet the owner
thereof for not having fully paid the full purchase price, is not a shareholder
By necessary implication, the "separate interest" in a condominium, which
entitles the holder to become automatically a share holder in the
condominium corporation, as provided in Section 2 of the Condominium Act,
can be no other than ownership of a unit. This is so because nobody can be
a shareholder unless he is the owner of a unit and when he ceases to be the
owner, he also ceases automatically to be a shareholder.
The private respondents, therefore, who have not fully paid the purchase
price of their units and are consequently not owners of their units are not
members or shareholders of the petitioner condominium corporation,
Inasmuch as the private respondents are not shareholders of the petitioner
condominium corporation, the instant case for collection cannot be a
"controversy arising out of intracorporate or partnership relations between
and among stockholders, members or associates; between any or all of them
and the corporation, partnership or association of which they are
stockholders, members or associates, respectively" which controversies are
under the original and exclusive jurisdiction of the Securities & Exchange
Commission, pursuant to Section 5 (b) of P.D. No. 902- A. The subject
matters of the instant cases according to the allegations of the complaints
are under the jurisdiction of the regular courts: that of G.R. NO. 52361, which
is for the collection of P8,335.38 with interest plus attorney's fees equivalent
to the principal or a total of more than P10,000.00 is under the jurisdiction of
the Court of First Instance; and that of G.R. NO. 52524, which is for the
collection of P6,168-06 is within the jurisdiction of the City Court.
In view of the foregoing, it is no longer necessary to resolve the issue raised
in G.R. NO. 52524 of whether an order of the City Court denying a motion to
dismiss on the ground of lack of jurisdiction can be appealed to the Court of
First Instance.
WHEREFORE, the questioned orders of the respondent Judge dated
December 11, 1979 and January 4, 1980 in Civil Case No. 7303-P, subject
matter of the Petition in G.R. No. 52361, are set aside and said Judge is
ordered to try the case on the merits. The orders dated December 14, 1979
and January 14, 1980 in Civil Case No. 7530-P, subject matter of the petition
in G.R. No. 52524 are set aside and the case is ordered remanded to the
court a quo, City Court of Pasay City, for trial on the merits, with costs
against the private respondents.
SO ORDERED.
G.R. No. 95778 July 17, 1992
SKYWORLD CONDOMINIUM OWNERS ASSOCIATION, INC., petitioners,
vs.
108
SECURITIES AND EXCHANGE COMMISSION and BAGUIO SKYWORLD
CONDOMINIUM, respondents.
GUTIERREZ, JR., J.:
This is a petition to review the decision of the Securities and Exchange
Commission (SEC), en banc. The petition was reinstated after a
reconsideration of two previous resolutions of this Court denying the same
for non-compliance with the required payment of costs and clerk's
commission, and after recalling the entry of judgment issued on February 6,
1992. We also decided to treat the petition as an exception to the rule that
SEC decisions must first pass the intermediate appeal process.
Petitioner Skyworld Condominium Owners Association, Inc. (SCOAI) was the
appellant in SEC-AC No. 297. Its appeal was treated by the Commission, en
banc as a motion for reconsideration. The Petitioner primarily assails the
allegedly unauthorized action of Special Prosecutor Norberto Ruiz of the
Prosecution and Enforcement Department of the SEC to decide the
consolidated petitions for revocation of certificate of registration.
Petitioner SCOAI claims to be a legitimate condominium corporation in
relation to the Skyworld Condominium located at Session Road corner
Calderon St., Baguio City and covered by Transfer Certificate of Title (TCT)
No. 33451 of the Registry of Deeds of Baguio City.
SCOAI was organized and granted a certificate of registration on March 21,
1985 by the SEC. It claims to be the condominium corporation recognized by
the Inter-Realty Development Corporation (hereinafter referred to as Inter-
Realty), the original owner of the land covered by TCT No. 33451 and the
condominium project. It also claims to have been recognized by the China
Banking Corporation (CBC), the subsequent owner of the condominium
project because the latter consented to the organization of the SCOAI.
The antecedent facts of the case are as follows:
On September 12, 1975, Inter Realty obtained a loan from the CBC as
security for which it mortgaged three (3) parcels of land, which were later
consolidated into one title, TCT No. 33451, and the improvements thereon.
On July 21, 1987, the initial indebtedness was increased to P7,000,000.00.
For Inter-Realty's failure to pay the debt, the CBC foreclosed the
condominium project. The foreclosure sale was held on April 11, 1983 after
compliance with the notice requirements. The project was sold to CBC which
who the highest bidder.
On April 6, 1984, Inter-Realty and CBC executed a Memorandum of
Agreement providing for an extended period for redemption of the
condominium project, until all the condominium units shall have been sold
and the proceeds turned over to the CBC and applied to the loan accounts of
Inter-Realty (Rollo, pp. 38-42).
Meanwhile, on the same date, April 6, 1984, Inter-Realty made a written
authorization in favor of Angel Bautista, a real estate dealer, to buy or sell the
condominium units to buyers (Rollo, pp. 43-44). The authority was for a
period of one year or until April 1985 in order to facilitate the disposition of
the units and the payment of indebtedness with the CBC.
In May, 1985, CBC was notified by petitioner SCOAI through Angel Bautista,
who was the latter's president, of the organization and official incorporation of
the SCOAI.
When Inter-Realty failed to redeem the foreclosed properties by October
1985, CBC consolidated its ownership over the land (now covered by TCT
No. 38837) and 78% of the condominiums residential units and common
areas.
On December 16, 1985, the CBC as new owner of the foreclosed properties
and with the aim of recovering the unpaid debt of Inter-Realty, authorized
Angel Bautista to sell the unsold condominium units. This authority was,
however, revoked by CBC on April 17, 1986 after discovering that Bautista
violated his fiduciary obligations as agent.
Two petitions were filed against the petitioner SCOAI, one of them contesting
the existence of the petitioner as an entity, and the other, for a writ of
preliminary injunction praying that the petitioner be stopped from exercising
the prerogatives of a condominium corporation. The first petition was filed on
August 8, 1986 by CBC before the SEC docketed as SEC No. 3035. The
second was filed on October 9, 1986 before the Regional Trial Court of
Baguio, Branch V (Civil Case No. 915-R) by the respondent Baguio Skyworld
Condominium Corporation (BSCC) which was organized at the instance of
CBC and registered with the SEC on September 19, 1986.
On October 3, 1986, a petition was filed by CBC against Angel Bautista
before the Regional Trial Court of Baguio City (Branch III, Civil Case No.
908-R) for a writ of preliminary injunction to enjoin Mr. Bautista from further
representing himself as agent of the new owner-developer, the CBC, which
already revoked his authority to sell. The trial court granted a writ of
109
preliminary injunction which was later made permanent by the Court of
Appeals.
On November 14, 1986, the case filed by the BSCC was dismissed by the
trial court. On February 3, 1988, the case filed by the CBC was dismissed by
the SEC.
On June 20, 1988, BSCC filed a complaint before the SEC's Prosecution and
Enforcement Department (PED) to revoke the certificate of registration of
petitioner on the ground of fraudulent procurement of the certificate. The
case was docketed as PED No. 88-0418 (Rollo, p. 73, et. seq).
On January 13, 1989, petitioner SCOAI in turn sued to revoke the certificate
of registration of the BSCC before the SEC's Securities Investigation and
Clearing Department (SICD). The case was docketed as SEC No. 3493.
Acting upon the complaint of the BSCC in PED No. 88-0418, the PED,
through Senior SE Specialist Norberto Ruiz filed a petition docketed as SEC
No. 3601 dated June 30, 1989 with the BSCC as a relator, for the revocation
of the registration of the herein petitioner. (See Rollo, pp. 95-107). The said
petition was approved by PED Director Elnora Adviento as recommended by
the Chief of the Prosecution Division, Villamin P. Lam.
On July 5, 1989, the SICD endorsed SEC No. 3493 (the one filed by SCOAI)
to the PED so that a new docket number, PED No. 89-572-A was assigned
to that case.
The two cases for revocation of registration of the SCOAI (PED No. 88-0418)
and the BSCC (PED No. 89-572-A) were consolidated on July 25, 1989.
A hearing was conducted on September 11, 1989 by the PED with Mr.
Norberto Ruiz as the hearing officer. The counsels of the two parties were
present.
On December 12, 1989, the PED issued a resolution ordering the revocation
of the certificate of registration of the SCOAI. The resolution was prepared by
Mr. Norberto Ruiz after studying the substantial evidence he received and
the arguments of the parties in the memoranda submitted by the parties to
him. On the same date, the resolution was presented by PED Director Elnora
Adviento before the Commission en banc which approved the same.
As reflected in the Minutes of the Executive Session of the Commission
Sitting En Banc, December 12, 1989, 3:50 p.m.:
PED MATTERS
Baguio Skyworld Condominium Corporation v. Skyworld Condominium
Owner's Association, Inc.
. . . Based on the foregoing documentary evidence submitted
to them, she (Director Elnora Adviento) recommended that
the Certificate of Registration of Skyworld Condominium
Owners Association, Inc. be revoked and cancelled in view
of the findings that it procured its certificate of registration
through fraud/misrepresentation and there is no evidence to
show that Skyworld Condominium Owners Association have
managed the Skyworld Condominium.
The Commission en banc resolved to approve the resolution,
as recommended. (Rollo, pp. 110-111; emphasis supplied)
A motion for reconsideration was filed before the PED but was denied.
On March 6, 1990, the petitioner filed a notice of appeal before the
Commission, en banc. The appeal was docketed as SEC-AC No. 297. The
Commission treated it as a motion for reconsideration because the approved
resolution was deemed to be the decision of the Commission, en banc on the
issue of revocation. The motion was denied for lack of merit. Hence, this
petition in which the following assigned errors are raised:
I
THE RESPONDENT COMMISSION ERRED WHEN IT ALLOWED
SPECIAL PROSECUTOR NORBERTO RUIZ IN DECIDING (sic)
THE CASE AFTER FILING THE PETITION WITH THE SICD
WITHOUT HEARING.
II
THE RESPONDENT COMMISSION ERRED WHEN IT APPROVED
THE RESOLUTION OF NORBERTO B. RUIZ DATED DECEMBER
12, 1989 IN AN EXECUTIVE SESSION IN THE AFTERNOON OF
THE SAME DAY WITHOUT APPEAL.
III
THE RESPONDENT COMMISSION ERRED WHEN IT DECLARED
THAT PROSECUTOR NORBERTO B. RUIZ HAS AUTHORITY TO
DECIDE THE REVOCATION CASE AFTER HE HAS FILED A
PETITION WITH SICD TO REVOKE THE CERTIFICATE OF
REGISTRATION OF PETITIONER.
110
 IV
THE RESPONDENT COMMISSION ERRED WHEN IT TREATED
THE APPEAL AS MOTION FOR RECONSIDERATION.
V partnership or association of which they are stockholders,
THE RESPONDENT COMMISSION ERRED WHEN IT DISMISSED
THE APPEAL. (Rollo, p. 14)
The assigned errors can more conveniently be restated into the following: 1)
whether or not the respondent Commission validly approved the alleged
unauthorized resolution or decision made by Mr. Norberto B. Ruiz on the
revocation case; and 2) whether or not the appeal, SEC-AC No. 297 was
correctly treated as a motion for reconsideration and, thereafter, dismissed.
The petitioner essentially questions the authority of Mr. Ruiz to decide. It was
Mr. Ruiz who was assigned the case of PED No. 88-0418 for investigation
and prosecution. Accordingly, Mr. Ruiz filed a petition (SEC No. 3601) before
the Securities Investigation and Clearance Department (SICD) of the SEC. It
is argued that Mr. Ruiz acted as prosecutor and judge over the case, hence,
he issued the resolution without authority and with grave abuse of discretion.
He allegedly went beyond the duties required of a member of the PED which
are limited to investigation and prosecution of civil and criminal cases as well
as other actions involving violation of laws, rules and regulations enforced by
the SEC. The petitioner adds that the presentation for approval of the
resolution of Mr. Ruiz to the Commission, en banc was irregular, null and
void for being done without the knowledge of the petitioner. Thus, the
petitioner was allegedly deprived of the benefit of an appeal from the
resolution to the Commission, en banc.
The contentions are without merit. Pres. Decree No. 902-A vests on the
Commission the original and exclusive jurisdiction to hear and decide cases
involving, among others, disputes between the corporation and the state
regarding its legal right to exist, and the power to hear and decide on the
suspension or revocation of a certificate of registration of a corporation.
Section 5, Pres. Decree No. 902-A provides:
Sec. 5. In addition to the regulatory and adjudicative
functions of the Securities and Exchange Commission over
corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws
and decrees, it shall have original and exclusive jurisdiction
to hear and decide cases involving:
xxx xxx xxx
b. Controversies arising out of intra-corporate or partnership
relations, between and among stockholders, members or
associates; between any or all of them and the corporation,
members or associates, respectively; and between such
corporation, partnership or association and the State insofar
as it concerns their individual franchise or right to exist as
such entity; . . . . (Emphasis Supplied)
More specifically, Pres. Decree No. 902-A grants to the Commission in
paragraph 1(1), Section 6 the power:
Sec. 6.
xxx xxx xxx
1) To suspend or revoked, after proper notice and hearing,
the franchise or certificate of registration of corporations,
partnerships or associations, upon any of the grounds,
provided by law, including the following:
1) Fraud in procuring its certificate of registration;
xxx xxx xxx
The Commission can validly delegate the authority to exercise the specific
powers assigned to it by law. The final paragraph of Section 6, Pres. Decree
No. 902-A states:
In the exercise of the foregoing authority and jurisdiction of
the Commission, hearings shall be conducted by the
Commission or by a Commissioner or by such other bodies,
boards, committees and/or officers as may be created or
designated by the Commission for the purpose. . . .
In the consolidated cases, the Commission empowered the PED to conduct
the hearing and to decide on the revocation of a certificate of registration.
The task was assigned to Mr. Ruiz for and in behalf of the Commission.
It is true that Mr. Ruiz signed a petition with the BSCC as a relator prior to the
consolidation of the two cases. However, that petition was apparently
disregarded. Mr. Ruiz was validly authorized to handle the two cases
111
simultaneously filed by the private parties themselves against each other. It
must be recalled that in PED No. 88-0418, BSCC pursued its case by itself
and not as a mere relator suing through the help of the PED. A private entity
is not prohibited from prosecuting its action for revocation of registration by
itself. Otherwise, the petition of SCOAI against the BSCC also seeking the
revocation of the latter's registration would not have been taken cognizance
of by the SEC on the ground that the case should have been prosecuted by
the Commission upon the relation of SCOAI. Under the old rules, the
Commission may, motu propio, commence such an action (Section 3(c),
Rule XX, SEC Rules of Procedure [1977]; See also Section 2(a) and (b),
Rule XX, SEC Revised Rules of Procedure [1989]). Commencement of a
similar action by a private citizen or corporation is not precluded.
In judging the merits of the case at the instance of the Commission, Mr. Ruiz
acted only as a trier of the facts presented to him and not as a prosecutor at
the same time. The resolution arrived at was adopted by the Commission, en
banc as its own decision, upon its approval.
The Court agrees with the analysis of the respondent Commission that the
petitioner was barred by estoppel by laches from repudiating the jurisdiction
of the hearing officer to whom it has submitted itself and before whom it
presented evidence by way of memorandum.
The petitioner alleges further that Mr. Ruiz went beyond the limited powers to
investigate and to prosecute granted to the PED by Pres. Decree No. 902-A
as amended by Pres. Decree No. 1758 (1981).
The pertinent provision, Section 6 of Pres. Decree No. 1758 states:
Sec. 6. The Prosecution and Enforcement Department shall
have, subject to the Commission's control and supervision,
the exclusive authority to investigate, on complaint or motu
propio, any act or omission of the Board of
Directors/Trustees of corporations, or of partnerships, or of
other associations, or of their stockholders, officers or
partners, including any fraudulent devices, schemes or
representations, in violation of any law or rules and
regulations administered and enforced by the Commission;
to file and prosecute in accordance with law and rules and
regulations issued by the Commission and in appropriate
cases, the corresponding criminal or civil case before the
Commission or the proper court or body upon prima
facie finding of violation of any laws or rules and regulations
administered and enforced by the Commission; and to
perform such other powers and functions as may be
provided by law or duly delegated to it by the Commission.
xxx xxx xxx
(Emphasis supplied)
The action of Mr. Ruiz was still within the ambit of the investigative authority
given to him by the Commission under its delegated power to revoke, after
proper notice and hearing, a certificate of registration of any corporation on
the ground of fraud in procuring the certificate of registration (Section 6, 1[1],
Pres. Decree No. 902-A as amended).
At the time the consolidated cases were filed and tried, the SEC Rules of
Procedure (effective July 12, 1977) did not contain any provision specifically
designating the body or officer who should hear and decide suits for
suspension or revocation of franchise or certificates of registration. No
amendments were yet infused into the rules to keep up with the changes
introduced by Pres. Decree No. 1758. The Commission had to rely on a
particular office to hear the case on September 11, 1989.
The Revised SEC Rules of Procedure (1989) that designates the body
(SICD) before which, actions for suspension or revocation of franchise or
certificate of registration of a corporation should be filed took effect only on
October 29, 1989 (See Section 2[c], Rule XX). To require the specified body
to take over the adjudication after the case was ready for decision was
improper and impractical.
We take this occasion to reiterate our ruling on the validity of the delegation
of the power to hold a hearing. In American Tobacco Company v. Director of
Patents, 67 SCRA 287 (1975); where the authority of the Director of Patents
to assign hearing officers to receive evidence was questioned, we ruled:
Thus it is well-settled that while the power resides solely in
the administrative agency vested by law, this does not
preclude a delegation of the power to hold a hearing on the
basis of which the decision of the administrative agency will
be made.
The rule that requires an administrative officer to exercise
his own judgment and discretion does not preclude him from
utilizing, as a matter of practical administrative procedure,
the aid of subordinates to investigate and report to him the
facts, on the basis of which the officer makes his
decisions. It is sufficient that the judgment and discretion
finally exercised are those of the officer authorized by law.
xxx xxx xxx
112
 In the case at bar, while the hearing officer may make
preliminary rulings on the myriad of questions raised at the
hearings of these cases, the ultimate decision on the merits
of all the issues and questions involved is left to the Director
of Patents. (Emphasis supplied, at pp. 295-296).
The provisions of Pres. Decree No. 902-A as amended do not prohibit the
respondent Commission from designating an officer or a division to hear a
case. The Court reiterates that in the absence in the then rules of the
Commission of a provision designating a particular officer or department that
should try a particular action, the Commission can validly call upon any of its
qualified departments to try a particular action, including the PED to hear and
make a preliminary ruling on the case. This was what the Commission did to
meet the demands of orderly and responsible administration of all the tasks
assigned to it as a government agency.
The reduction of existing delays in regulating agencies
requires the elimination of needless work at top levels.
Unnecessary and unimportant details often occupy far too
much of the time and energy of the heads of these agencies
and prevent full and expeditious consideration of the more
important issues. The remedy is a far wider range of
delegations to subordinate officers. The subdelegation of
power has been justified by "sound principles of
organization" which demand that "those at the top be able to
concentrate their attention upon the larger and more
important questions of policy and practice; and their time be
freed, so far as possible, from the consideration of the
smaller and far less important matters of detail." (American
Tobacco Co. v. Director of Patents, supra, at page 293-294).
The Commission can not also be faulted for approving the PED resolution
without the knowledge of the petitioner.
The parties do not participate in the deliberation and decision making
process. They are not supposed to be present when the SEC deliberates and
votes on the action to be taken. Notice is given after the decision is
promulgated but not before the Board sits down to act on cases already
heard and awaiting resolution.
In the present case, it was the Commission for whom the PED acted in
gathering data in the consolidated cases. The delegation made to the PED
was done in accordance with law and the resulting recommendation was
arrived at after notice and hearing. The subsequent approval by the
Commission, en banc was the ultimate exercise of judgment of the
Commission. Contrary to the allegation of the petitioner, the approval by the
Commission, en bancwas regular and valid for having been done in the
exercise of its original jurisdiction on a case involving the right of each of the
party corporations to exist as an entity (Section 5, Pres. Decree No. 902-A as
amended).
In view of these, it was also proper for the commission to have treated the
appeal of the petitioner as a motion for reconsideration. In doing so, no right
of the petitioner to due process was violated.
The Court finds no grave abuse of discretion committed by the Commission
in deciding in that manner. The Commission properly made a thorough study
of the facts presented by the opposing parties, and exhaustively explained its
reasons for sustaining its decision to revoke the certificate of registration of
the SCOAI. A reading of the order in SEC-AC No. 297 dated September 14,
1990 reveals that its findings are supported by substantial evidence and
justified by the relevant laws and jurisprudence.
The Court, thus, upholds the finding of the Commission that the
indispensable requirement that all incorporators of a condominium
corporation must be shareholders thereof was not satisfactorily complied with
by the petitioner at the time a certificate of registration was applied for.
(Section 5, Corporation Code of the Philippines [Batas Pambansa Blg. 68];
Section 10, Condominium Act [Rep. Act. 4726]. To be a shareholder, one
must necessarily be an owner of a condominium unit. (Sunset View
Condominium Corporation v. Campos, Jr., 104 SCRA 295 [1981]). In the
case at bar, it was found by the SEC that only one, Angel Bautista, was
considered to be an owner of a unit in the Skyworld Condominium at the time
of incorporation. (Rollo, p. 32)
The Master Deed with Declaration of Restrictions in its section 8 provides
that a condominium corporation should be organized by a developer
"pursuant to the provisions of the Condominium Act and of the Corporation
Code as amended for the purpose of holding files to all common areas and
managing the project." (See Rollo, p. 158). The Court likewise confirms the
analysis of the respondent Commission that petitioner SCOAI was barred by
estoppel from repudiating the resulting adverse decision after it had
voluntarily submitted to the jurisdiction of the hearing officer in settling the
issue of revocation. (Tijam v. Sibonghanoy, 23 SCRA 29 [1968]; Baaga v.
Commission on the Settlement of Land Problems, 181 SCRA 599 [1990];
Sapugay v. Court of Appeals, 183 SCRA 464 [1990]; 166 SCRA 657 [1988];
Maersk-Tabacalera Shipping Agency (Filipinas), Inc. v. Court of Appeals, 187
SCRA 646 [1990]; Marquez v. Secretary of Labor, 171 SCRA 337 (1989]).
The contentions that the private respondent BSCC and the CBC were
engaged in forum-shopping and that the prosecution of the SEC consolidated
cases was barred by res judicata deserve scant consideration. Suffice it to
113
state that the actions before the courts commonly involved prayers for
restraint and/or injunction against SCOAI. The petitions did not seek an
administrative inquiry on revocation of a certificate of registration. The
pertinent issue in the case at bar is one that is more appropriately dealt with
by an administrative agency such as the SEC. Hence, even if the courts did
touch on the right of a corporation (SCOAI) to exist and to exercise
prerogatives as such, the court decisions would not bind the parties as to
prevent a recourse before the SEC.
The Court finds this petition to be part of a dilatory attempt to stall the
execution of the order revoking and cancelling the certificate of registration of
the Skyworld Condominium Owners Association, Inc. That petitioner seeks a
re-examination of the facts is evident from its arguments. It is unfortunate for
it that courts do not grant a judicial review much less a factual inquiry absent
any showing of arbitrary action or manifest and grievous error on the part of
administrative agencies regarding the determination of facts and
interpretation of laws which they are entrusted to enforce (Blue Bar Coconut
Philippines V. Tantuico, Jr., 163 SCRA 716 [1988]; Beautifont, Inc. v. Court
of Appeals, 157 SCRA 481 [1988]; Maximo v. Court of Appeals, 182 SCRA
420 [1990]).
We have further held that:
The legal presumption is that official duty has been duly
performed (Section 5, m, Rule 131, Rules of Court); and it is
"particularly strong as regards administrative agencies . . .
vested with powers said to be quasi-judicial in nature, in
connection with the enforcement of laws affecting particular
fields of activity, the proper regulation and/or promotion of
which requires a technical or special training, aside from a
good knowledge and grasp of the overall conditions, relevant
to said field obtaining in the nation" [Pangasinan
Transportation v. Public Utility Commission, 70 Phil. 221].
(Beautifont, Inc. v Court of Appeals, at p. 493).
The Court sustains the decision of the respondent Commission dated
December 12, 1989 and the Order dated September 14, 1990 denying the
motion for reconsideration since no jurisdictional flaw has been found to
justify a reversal.
WHEREFORE, the petition is hereby DISMISSED for lack of grave abuse of
discretion committed by the public respondent. The Order revoking and
cancelling the certificate of registration of petitioner corporation is
AFFIRMED.
SO ORDERED.
G.R. No. 156364 September 3, 2007
JACOBUS BERNHARD HULST, petitioner,
vs.
PR BUILDERS, INC., respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court assailing the Decision1 dated October 30, 2002 of the
Court of Appeals (CA) in CA-G.R. SP No. 60981.
The facts:
Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna Hulst-Van
Ijzeren (Ida), Dutch nationals, entered into a Contract to Sell with PR
Builders, Inc. (respondent), for the purchase of a 210-sq m residential unit in
respondent's townhouse project in Barangay Niyugan, Laurel, Batangas.
When respondent failed to comply with its verbal promise to complete the
project by June 1995, the spouses Hulst filed before the Housing and Land
Use Regulatory Board (HLURB) a complaint for rescission of contract with
interest, damages and attorney's fees, docketed as HLRB Case No. IV6-
071196-0618.
On April 22, 1997, HLURB Arbiter Ma. Perpetua Y. Aquino (HLURB Arbiter)
rendered a Decision2 in favor of spouses Hulst, the dispositive portion of
which reads:
WHEREFORE, premises considered, judgment is hereby rendered
in favor of the complainant, rescinding the Contract to Sell and
ordering respondent to:
1) Reimburse complainant the sum of P3,187,500.00, representing
the purchase price paid by the complainants to P.R. Builders, plus
interest thereon at the rate of twelve percent (12%) per annum from
the time complaint was filed;
2) Pay complainant the sum of P297,000.00 as actual damages;
3) Pay complainant the sum of P100,000.00 by way of moral
damages;
114
 4) Pay complainant the sum of P150,000.00 as exemplary damages;
5) P50,000.00 as attorney's fees and for other litigation expenses;
and
6) Cost of suit.
SO ORDERED.3
Meanwhile, spouses Hulst divorced. Ida assigned her rights over the
purchased property to petitioner.4 From then on, petitioner alone pursued the
case.
On August 21, 1997, the HLURB Arbiter issued a Writ of Execution
addressed to the Ex-Officio Sheriff of the Regional Trial Court of Tanauan,
Batangas directing the latter to execute its judgment.5
On April 13, 1998, the Ex-Officio Sheriff proceeded to implement the Writ of
Execution. However, upon complaint of respondent with the CA on a Petition
for Certiorari and Prohibition, the levy made by the Sheriff was set aside,
requiring the Sheriff to levy first on respondent's personal properties.6 Sheriff
Jaime B. Ozaeta (Sheriff) tried to implement the writ as directed but the writ
was returned unsatisfied.7
On January 26, 1999, upon petitioner's motion, the HLURB Arbiter issued an
Alias Writ of Execution.8
On March 23, 1999, the Sheriff levied on respondent's 15 parcels of land
covered by 13 Transfer Certificates of Title (TCT)9 in Barangay Niyugan,
Laurel, Batangas.10
In a Notice of Sale dated March 27, 2000, the Sheriff set the public auction of
the levied properties on April 28, 2000 at 10:00 a.m..11
Two days before the scheduled public auction or on April 26, 2000,
respondent filed an Urgent Motion to Quash Writ of Levy with the HLURB on
the ground that the Sheriff made an overlevy since the aggregate appraised
value of the levied properties at P6,500.00 per sq m is P83,616,000.00,
based on the Appraisal Report12 of Henry Hunter Bayne Co., Inc. dated
December 11, 1996, which is over and above the judgment award.13
At 10:15 a.m. of the scheduled auction date of April 28, 2000, respondent's
counsel objected to the conduct of the public auction on the ground that
respondent's Urgent Motion to Quash Writ of Levy was pending resolution.
Absent any restraining order from the HLURB, the Sheriff proceeded to sell
the 15 parcels of land. Holly Properties Realty Corporation was the winning
bidder for all 15 parcels of land for the total amount of P5,450,653.33. The
sum of P5,313,040.00 was turned over to the petitioner in satisfaction of the
judgment award after deducting the legal fees.14
At 4:15 p.m. of the same day, while the Sheriff was at the HLURB office to
remit the legal fees relative to the auction sale and to submit the Certificates
of Sale15 for the signature of HLURB Director Belen G. Ceniza (HLURB
Director), he received the Order dated April 28, 2000 issued by the HLURB
Arbiter to suspend the proceedings on the matter.16
Four months later, or on August 28, 2000, the HLURB Arbiter and HLURB
Director issued an Order setting aside the sheriff's levy on respondent's real
properties,17 reasoning as follows:
While we are not making a ruling that the fair market value of the
levied properties is PhP6,500.00 per square meter (or an aggregate
value of PhP83,616,000.00) as indicated in the Hunter Baynes
Appraisal Report, we definitely cannot agree with the position of the
Complainants and the Sheriff that the aggregate value of the
12,864.00-square meter levied properties is only around
PhP6,000,000.00. The disparity between the two valuations are [sic]
so egregious that the Sheriff should have looked into the matter first
before proceeding with the execution sale of the said properties,
especially when the auction sale proceedings was seasonably
objected by Respondent's counsel, Atty. Noel Mingoa. However,
instead of resolving first the objection timely posed by Atty. Mingoa,
Sheriff Ozaete totally disregarded the objection raised and,
posthaste, issued the corresponding Certificate of Sale even prior to
the payment of the legal fees (pars. 7 & 8, Sheriff's Return).
While we agree with the Complainants that what is material in an
execution sale proceeding is the amount for which the properties
were bidded and sold during the public auction and that, mere
inadequacy of the price is not a sufficient ground to annul the sale,
the court is justified to intervene where the inadequacy of the price
shocks the conscience (Barrozo vs. Macaraeg, 83 Phil. 378). The
difference between PhP83,616,000.00 and Php6,000,000.00 is
PhP77,616,000.00 and it definitely invites our attention to look into
the proceedings had especially so when there was only one bidder,
the HOLLY PROPERTIES REALTY CORPORATION represented by
Ma, Chandra Cacho (par. 7, Sheriff's Return) and the auction sale
proceedings was timely objected by Respondent's counsel (par. 6,
Sheriff's Return) due to the pendency of the Urgent Motion to Quash
the Writ of Levy which was filed prior to the execution sale.
115
 Besides, what is at issue is not the value of the subject
properties as determined during the auction sale, but the
determination of the value of the properties levied upon by the
Sheriff taking into consideration Section 9(b) of the 1997 Rules
of Civil Procedure x x x.
xxxx
It is very clear from the foregoing that, even during levy, the Sheriff
has to consider the fair market value of the properties levied upon to
determine whether they are sufficient to satisfy the judgment, and
any levy in excess of the judgment award is void (Buan v. Court of
Appeals, 235 SCRA 424).
x x x x18 (Emphasis supplied).
The dispositive portion of the Order reads:
WHEREFORE, the levy on the subject properties made by the Ex-
Officio Sheriff of the RTC of Tanauan, Batangas, is hereby SET
ASIDE and the said Sheriff is hereby directed to levy instead
Respondent's real properties that are reasonably sufficient to enforce
its final and executory judgment, this time, taking into consideration
not only the value of the properties as indicated in their respective
tax declarations, but also all the other determinants at arriving at a
fair market value, namely: the cost of acquisition, the current value of
like properties, its actual or potential uses, and in the particular case
of lands, their size, shape or location, and the tax declarations
thereon.
SO ORDERED.19
A motion for reconsideration being a prohibited pleading under Section 1(h),
Rule IV of the 1996 HLURB Rules and Procedure, petitioner filed a Petition
for Certiorari and Prohibition with the CA on September 27, 2000.
On October 30, 2002, the CA rendered herein assailed Decision20 dismissing
the petition. The CA held that petitioner's insistence that Barrozo v.
Macaraeg21 does not apply since said case stated that "when there is a right
to redeem inadequacy of price should not be material" holds no water as
what is obtaining in this case is not "mere inadequacy," but an inadequacy
that shocks the senses; that Buan v. Court of Appeals22 properly applies
since the questioned levy covered 15 parcels of land posited to have an
aggregate value of P83,616,000.00 which shockingly exceeded the judgment
debt of only around P6,000,000.00.
Without filing a motion for reconsideration,23 petitioner took the present
recourse on the sole ground that:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
AFFIRMING THE ARBITER'S ORDER SETTING ASIDE THE LEVY
MADE BY THE SHERIFF ON THE SUBJECT PROPERTIES.24
Before resolving the question whether the CA erred in affirming the Order of
the HLURB setting aside the levy made by the sheriff, it behooves this Court
to address a matter of public and national importance which completely
escaped the attention of the HLURB Arbiter and the CA: petitioner and his
wife are foreign nationals who are disqualified under the Constitution from
owning real property in their names.
Section 7 of Article XII of the 1987 Constitution provides:
Sec. 7. Save in cases of hereditary succession, no private lands
shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of
the public domain. (Emphasis supplied).
The capacity to acquire private land is made dependent upon the capacity to
acquire or hold lands of the public domain. Private land may be transferred or
conveyed only to individuals or entities "qualified to acquire lands of the
public domain." The 1987 Constitution reserved the right to participate in the
disposition, exploitation, development and utilization of lands of the public
domain for Filipino citizens25 or corporations at least 60 percent of the capital
of which is owned by Filipinos.26 Aliens, whether individuals or corporations,
have been disqualified from acquiring public lands; hence, they have also
been disqualified from acquiring private lands.27
Since petitioner and his wife, being Dutch nationals, are proscribed under the
Constitution from acquiring and owning real property, it is unequivocal that
the Contract to Sell entered into by petitioner together with his wife and
respondent is void. Under Article 1409 (1) and (7) of the Civil Code, all
contracts whose cause, object or purpose is contrary to law or public policy
and those expressly prohibited or declared void by law are inexistent and
void from the beginning. Article 1410 of the same Code provides that the
action or defense for the declaration of the inexistence of a contract does not
prescribe. A void contract is equivalent to nothing; it produces no civil
effect.28 It does not create, modify or extinguish a juridical relation.29
Generally, parties to a void agreement cannot expect the aid of the law; the
courts leave them as they are, because they are deemed in pari delicto or "in
equal fault."30 In pari delicto is "a universal doctrine which holds that no
116
action arises, in equity or at law, from an illegal contract; no suit can be
maintained for its specific performance, or to recover the property agreed to
be sold or delivered, or the money agreed to be paid, or damages for its
violation; and where the parties are in pari delicto, no affirmative relief of any
kind will be given to one against the other."31
This rule, however, is subject to exceptions32 that permit the return of that
which may have been given under a void contract to: (a) the innocent party
(Arts. 1411-1412, Civil Code);33 (b) the debtor who pays usurious interest
(Art. 1413, Civil Code);34 (c) the party repudiating the void contract
before the illegal purpose is accomplished or before damage is caused
to a third person and if public interest is subserved by allowing
recovery (Art. 1414, Civil Code);35 (d) the incapacitated party if the interest
of justice so demands (Art. 1415, Civil Code); 36 (e) the party for whose
protection the prohibition by law is intended if the agreement is not illegal per
se but merely prohibited and if public policy would be enhanced by permitting
recovery (Art. 1416, Civil Code);37 and (f) the party for whose benefit the law
has been intended such as in price ceiling laws (Art. 1417, Civil Code) 38 and
labor laws (Arts. 1418-1419, Civil Code).39
It is significant to note that the agreement executed by the parties in this case
is a Contract to Sell and not a contract of sale. A distinction between the two
is material in the determination of when ownership is deemed to have been
transferred to the buyer or vendee and, ultimately, the resolution of the
question on whether the constitutional proscription has been breached.
In a contract of sale, the title passes to the buyer upon the delivery of the
thing sold. The vendor has lost and cannot recover the ownership of the
property until and unless the contract of sale is itself resolved and set
aside.40 On the other hand, a contract to sell is akin to a conditional sale
where the efficacy or obligatory force of the vendor's obligation to transfer
title is subordinated to the happening of a future and uncertain event, so that
if the suspensive condition does not take place, the parties would stand as if
the conditional obligation had never existed.41 In other words, in a contract to
sell, the prospective seller agrees to transfer ownership of the property to the
buyer upon the happening of an event, which normally is the full payment of
the purchase price. But even upon the fulfillment of the suspensive condition,
ownership does not automatically transfer to the buyer. The prospective
seller still has to convey title to the prospective buyer by executing a contract
of absolute sale.42
Since the contract involved here is a Contract to Sell, ownership has not yet
transferred to the petitioner when he filed the suit for rescission. While the
intent to circumvent the constitutional proscription on aliens owning real
property was evident by virtue of the execution of the Contract to Sell, such
violation of the law did not materialize because petitioner caused the
rescission of the contract before the execution of the final deed transferring
ownership.
Thus, exception (c) finds application in this case. Under Article 1414, one
who repudiates the agreement and demands his money before the illegal act
has taken place is entitled to recover. Petitioner is therefore entitled to
recover what he has paid, although the basis of his claim for rescission,
which was granted by the HLURB, was not the fact that he is not allowed to
acquire private land under the Philippine Constitution. But petitioner is
entitled to the recovery only of the amount of P3,187,500.00, representing
the purchase price paid to respondent. No damages may be recovered on
the basis of a void contract; being nonexistent, the agreement produces no
juridical tie between the parties involved.43 Further, petitioner is not entitled to
actual as well as interests thereon,44 moral and exemplary damages and
attorney's fees.
The Court takes into consideration the fact that the HLURB Decision dated
April 22, 1997 has long been final and executory. Nothing is more settled in
the law than that a decision that has acquired finality becomes immutable
and unalterable and may no longer be modified in any respect even if the
modification is meant to correct erroneous conclusions of fact or law and
whether it was made by the court that rendered it or by the highest court of
the land.45The only recognized exceptions to the general rule are the
correction of clerical errors, the so-called nunc pro tunc entries which cause
no prejudice to any party, void judgments, and whenever circumstances
transpire after the finality of the decision rendering its execution unjust and
inequitable.46 None of the exceptions is present in this case. The HLURB
decision cannot be considered a void judgment, as it was rendered by a
tribunal with jurisdiction over the subject matter of the complaint.47
Ineluctably, the HLURB Decision resulted in the unjust enrichment of
petitioner at the expense of respondent. Petitioner received more than what
he is entitled to recover under the circumstances.
Article 22 of the Civil Code which embodies the maxim, nemo ex alterius
incommode debet lecupletari (no man ought to be made rich out of another's
injury), states:
Art. 22. Every person who through an act of performance by another,
or any other means, acquires or comes into possession of something
at the expense of the latter without just or legal ground, shall return
the same to him.
The above-quoted article is part of the chapter of the Civil Code on Human
Relations, the provisions of which were formulated as basic principles to be
observed for the rightful relationship between human beings and for the
117
stability of the social order; designed to indicate certain norms that spring
from the fountain of good conscience; guides for human conduct that should
run as golden threads through society to the end that law may approach its
supreme ideal which is the sway and dominance of justice.48 There is unjust
enrichment when a person unjustly retains a benefit at the loss of another, or
when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience.49
A sense of justice and fairness demands that petitioner should not be
allowed to benefit from his act of entering into a contract to sell that violates
the constitutional proscription.
This is not a case of equity overruling or supplanting a positive provision of
law or judicial rule. Rather, equity is exercised in this case "as the
complement of legal jurisdiction [that] seeks to reach and to complete justice
where courts of law, through the inflexibility of their rules and want of power
to adapt their judgments to the special circumstances of cases, are
incompetent to do so."50
The purpose of the exercise of equity jurisdiction in this case is to prevent
unjust enrichment and to ensure restitution. Equity jurisdiction aims to do
complete justice in cases where a court of law is unable to adapt its
judgments to the special circumstances of a case because of the inflexibility
of its statutory or legal jurisdiction.51
The sheriff delivered to petitioner the amount of P5,313,040.00 representing
the net proceeds (bidded amount is P5,450,653.33) of the auction sale after
deducting the legal fees in the amount of P137,613.33.52 Petitioner is only
entitled to P3,187,500.00, the amount of the purchase price of the real
property paid by petitioner to respondent under the Contract to Sell. Thus,
the Court in the exercise of its equity jurisdiction may validly order petitioner
to return the excess amount of P2,125,540.00.
The Court shall now proceed to resolve the single issue raised in the present
petition: whether the CA seriously erred in affirming the HLURB Order setting
aside the levy made by the Sheriff on the subject properties.
Petitioner avers that the HLURB Arbiter and Director had no factual basis for
pegging the fair market value of the levied properties at P6,500.00 per sq m
or P83,616,000.00; that reliance on the appraisal report was misplaced since
the appraisal was based on the value of land in neighboring developed
subdivisions and on the assumption that the residential unit appraised had
already been built; that the Sheriff need not determine the fair market value
of the subject properties before levying on the same since what is material is
the amount for which the properties were bidded and sold during the public
auction; that the pendency of any motion is not a valid ground for the Sheriff
to suspend the execution proceedings and, by itself, does not have the effect
of restraining the Sheriff from proceeding with the execution.
Respondent, on the other hand, contends that while it is true that the HLURB
Arbiter and Director did not categorically state the exact value of the levied
properties, said properties cannot just amount to P6,000,000.00; that the
HLURB Arbiter and Director correctly held that the value indicated in the tax
declaration is not the sole determinant of the value of the property.
The petition is impressed with merit.
If the judgment is for money, the sheriff or other authorized officer must
execute the same pursuant to the provisions of Section 9, Rule 39 of the
Revised Rules of Court, viz:
Sec. 9. Execution of judgments for money, how enforced.
(a) Immediate payment on demand. - The officer shall enforce an
execution of a judgment for money by demanding from the judgment
obligor the immediate payment of the full amount stated in the writ of
execution and all lawful fees. x x x
(b) Satisfaction by levy. - If the judgment obligor cannot pay all or
part of the obligation in cash, certified bank check or other mode of
payment acceptable to the judgment obligee, the officer shall levy
upon the properties of the judgment obligor of every kind and
nature whatsoever which may be disposed of for value and not
otherwise exempt from execution, giving the latter the option to
immediately choose which property or part thereof may be levied
upon, sufficient to satisfy the judgment. If the judgment obligor does
not exercise the option, the officer shall first levy on the personal
properties, if any, and then on the real properties if the personal
properties are insufficient to answer for the judgment.
The sheriff shall sell only a sufficient portion of the personal or
real property of the judgment obligor which has been levied
upon.
When there is more property of the judgment obligor than is
sufficient to satisfy the judgment and lawful fees, he must sell
only so much of the personal or real property as is sufficient to
satisfy the judgment and lawful fees.
Real property, stocks, shares, debts, credits, and other personal
property, or any interest in either real or personal property, may be
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 levied upon in like manner and with like effect as under a writ of
attachment(Emphasis supplied).53
Thus, under Rule 39, in executing a money judgment against the property of
the judgment debtor, the sheriff shall levy on all property belonging to the
judgment debtor as is amply sufficient to satisfy the judgment and costs, and
sell the same paying to the judgment creditor so much of the proceeds as will
satisfy the amount of the judgment debt and costs. Any excess in the
proceeds shall be delivered to the judgment debtor unless otherwise directed
by the judgment or order of the court.54
Clearly, there are two stages in the execution of money judgments. First, the
levy and then the execution sale.
Levy has been defined as the act or acts by which an officer sets apart or
appropriates a part or the whole of a judgment debtor's property for the
purpose of satisfying the command of the writ of execution. 55 The object of a
levy is to take property into the custody of the law, and thereby render it
liable to the lien of the execution, and put it out of the power of the judgment
debtor to divert it to any other use or purpose.56
On the other hand, an execution sale is a sale by a sheriff or other ministerial
officer under the authority of a writ of execution of the levied property of the
debtor.57
In the present case, the HLURB Arbiter and Director gravely abused their
discretion in setting aside the levy conducted by the Sheriff for the reason
that the auction sale conducted by the sheriff rendered moot and academic
the motion to quash the levy. The HLURB Arbiter lost jurisdiction to act on
the motion to quash the levy by virtue of the consummation of the auction
sale. Absent any order from the HLURB suspending the auction sale, the
sheriff rightfully proceeded with the auction sale. The winning bidder had
already paid the winning bid. The legal fees had already been remitted to the
HLURB. The judgment award had already been turned over to the judgment
creditor. What was left to be done was only the issuance of the
corresponding certificates of sale to the winning bidder. In fact, only the
signature of the HLURB Director for that purpose was needed58 a purely
ministerial act.
A purely ministerial act or duty is one which an officer or tribunal performs in
a given state of facts, in a prescribed manner, in obedience to the mandate
of a legal authority, without regard for or the exercise of his own judgment
upon the propriety or impropriety of the act done. If the law imposes a duty
upon a public officer and gives him the right to decide how or when the duty
shall be performed, such duty is discretionary and not ministerial. The duty is
ministerial only when the discharge of the same requires neither the exercise
of official discretion nor judgment.59 In the present case, all the requirements
of auction sale under the Rules have been fully complied with to warrant the
issuance of the corresponding certificates of sale.
And even if the Court should go into the merits of the assailed Order, the
petition is meritorious on the following grounds:
Firstly, the reliance of the HLURB Arbiter and Director, as well as the CA,
on Barrozo v. Macaraeg60 and Buan v. Court of Appeals61 is misplaced.
The HLURB and the CA misconstrued the Court's pronouncements
in Barrozo. Barrozo involved a judgment debtor who wanted to repurchase
properties sold at execution beyond the one-year redemption period. The
statement of the Court in Barrozo, that "only where such inadequacy shocks
the conscience the courts will intervene," is at best a mere obiter dictum. This
declaration should be taken in the context of the other declarations of the
Court in Barrozo,to wit:
Another point raised by appellant is that the price paid at the auction
sale was so inadequate as to shock the conscience of the court.
Supposing that this issue is open even after the one-year period has
expired and after the properties have passed into the hands of third
persons who may have paid a price higher than the auction sale
money, the first thing to consider is that the stipulation contains no
statement of the reasonable value of the properties; and although
defendant' answer avers that the assessed value was P3,960 it also
avers that their real market value was P2,000 only. Anyway, mere
inadequacy of price which was the complaint' allegation is
not sufficient ground to annul the sale. It is only where such
inadequacy shocks the conscience that the courts will
intervene. x x x Another consideration is that the assessed value
being P3,960 and the purchase price being in effect P1,864 (P464
sale price plus P1,400 mortgage lien which had to be discharged)
the conscience is not shocked upon examining the prices paid in the
sales in National Bank v. Gonzales, 45 Phil., 693 and Guerrero v.
Guerrero, 57 Phil., 445, sales which were left undisturbed by this
Court.
Furthermore, where there is the right to redeem as in this case
inadequacy of price should not be material because the
judgment debtor may re-acquire the property or else sell his
right to redeem and thus recover any loss he claims to have
suffered by reason of the price obtained at the execution sale.
x x x x (Emphasis supplied).62
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In other words, gross inadequacy of price does not nullify an execution sale.
In an ordinary sale, for reason of equity, a transaction may be invalidated on
the ground of inadequacy of price, or when such inadequacy shocks one's
conscience as to justify the courts to interfere; such does not follow when the
law gives the owner the right to redeem as when a sale is made at public
auction,63 upon the theory that the lesser the price, the easier it is for the
owner to effect redemption.64 When there is a right to redeem, inadequacy of
price should not be material because the judgment debtor may re-acquire the
property or else sell his right to redeem and thus recover any loss he claims
to have suffered by reason of the price obtained at the execution
sale.65 Thus, respondent stood to gain rather than be harmed by the low sale
value of the auctioned properties because it possesses the right of
redemption. More importantly, the subject matter in Barrozo is the auction
sale, not the levy made by the Sheriff.
The Court does not sanction the piecemeal interpretation of a decision. To
get the true intent and meaning of a decision, no specific portion thereof
should be isolated and resorted to, but the decision must be considered in its
entirety.66
As regards Buan, it is cast under an entirely different factual milieu. It
involved the levy on two parcels of land owned by the judgment debtor; and
the sale at public auction of one was sufficient to fully satisfy the judgment,
such that the levy and attempted execution of the second parcel of land was
declared void for being in excess of and beyond the original judgment award
granted in favor of the judgment creditor.
In the present case, the Sheriff complied with the mandate of Section 9, Rule
39 of the Revised Rules of Court, to "sell only a sufficient portion" of the
levied properties "as is sufficient to satisfy the judgment and the lawful fees."
Each of the 15 levied properties was successively bidded upon and sold, one
after the other until the judgment debt and the lawful fees were fully satisfied.
Holly Properties Realty Corporation successively bidded upon and bought
each of the levied properties for the total amount of P5,450,653.33 in full
satisfaction of the judgment award and legal fees.67
Secondly, the Rules of Court do not require that the value of the property
levied be exactly the same as the judgment debt; it can be less or more than
the amount of debt. This is the contingency addressed by Section 9, Rule 39
of the Rules of Court. In the levy of property, the Sheriff does not determine
the exact valuation of the levied property. Under Section 9, Rule 39, in
conjunction with Section 7, Rule 57 of the Rules of Court, the sheriff is
required to do only two specific things to effect a levy upon a realty: (a) file
with the register of deeds a copy of the order of execution, together with the
description of the levied property and notice of execution; and (b) leave with
the occupant of the property copy of the same order, description and
notice.68 Records do not show that respondent alleged non-compliance by
the Sheriff of said requisites.
Thirdly, in determining what amount of property is sufficient out of which to
secure satisfaction of the execution, the Sheriff is left to his own judgment.
He may exercise a reasonable discretion, and must exercise the care which
a reasonably prudent person would exercise under like conditions and
circumstances, endeavoring on the one hand to obtain sufficient property to
satisfy the purposes of the writ, and on the other hand not to make an
unreasonable and unnecessary levy.69 Because it is impossible to know the
precise quantity of land or other property necessary to satisfy an execution,
the Sheriff should be allowed a reasonable margin between the value of the
property levied upon and the amount of the execution; the fact that the
Sheriff levies upon a little more than is necessary to satisfy the execution
does not render his actions improper.70 Section 9, Rule 39, provides
adequate safeguards against excessive levying. The Sheriff is mandated to
sell so much only of such real property as is sufficient to satisfy the judgment
and lawful fees.
In the absence of a restraining order, no error, much less abuse of discretion,
can be imputed to the Sheriff in proceeding with the auction sale despite the
pending motion to quash the levy filed by the respondents with the HLURB. It
is elementary that sheriffs, as officers charged with the delicate task of the
enforcement and/or implementation of judgments, must, in the absence of a
restraining order, act with considerable dispatch so as not to unduly delay the
administration of justice; otherwise, the decisions, orders, or other processes
of the courts of justice and the like would be futile.71 It is not within the
jurisdiction of the Sheriff to consider, much less resolve, respondent's
objection to the continuation of the conduct of the auction sale. The Sheriff
has no authority, on his own, to suspend the auction sale. His duty being
ministerial, he has no discretion to postpone the conduct of the auction sale.
Finally, one who attacks a levy on the ground of excessiveness carries the
burden of sustaining that contention.72 In the determination of whether a levy
of execution is excessive, it is proper to take into consideration
encumbrances upon the property, as well as the fact that a forced sale
usually results in a sacrifice; that is, the price demanded for the property
upon a private sale is not the standard for determining the excessiveness of
the levy.73
Here, the HLURB Arbiter and Director had no sufficient factual basis to
determine the value of the levied property. Respondent only submitted an
Appraisal Report, based merely on surmises. The Report was based on the
projected value of the townhouse project after it shall have been fully
developed, that is, on the assumption that the residential units appraised had
already been built. The Appraiser in fact made this qualification in its
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Appraisal Report: "[t]he property subject of this appraisal has not been
constructed. The basis of the appraiser is on the existing model
units."74 Since it is undisputed that the townhouse project did not push
through, the projected value did not become a reality. Thus, the appraisal
value cannot be equated with the fair market value. The Appraisal Report is
not the best proof to accurately show the value of the levied properties as it is
clearly self-serving.

Therefore, the Order dated August 28, 2000 of HLURB Arbiter Aquino and
Director Ceniza in HLRB Case No. IV6-071196-0618 which set aside the
sheriff's levy on respondent's real properties, was clearly issued with grave
abuse of discretion. The CA erred in affirming said Order.

WHEREFORE, the instant petition is GRANTED. The Decision dated

October 30, 2002 of the Court of Appeals in CA-G.R. SP No. 60981
is REVERSED and SET ASIDE. The Order dated August 28, 2000 of
HLURB Arbiter Ma. Perpetua Y. Aquino and Director Belen G. Ceniza in
HLRB Case No. IV6-071196-0618 is declared NULL and VOID.HLURB
Arbiter Aquino and Director Ceniza are directed to issue the corresponding
certificates of sale in favor of the winning bidder, Holly Properties Realty
Corporation. Petitioner is ordered to return to respondent the amount
of P2,125,540.00, without interest, in excess of the proceeds of the auction
sale delivered to petitioner. After the finality of herein judgment, the amount
of P2,125,540.00 shall earn 6% interest until fully paid.

SO ORDERED.

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