G.R. No.

121069

February 7, 2003

no evidence presented in Civil Case No. 8289-M by either of the parties and that the decision 3 therein was based on a compromise agreement. After trial on the merits, the trial court rendered a decision in favor of the plaintiffs, the decretal portion of which reads as follows: "WHEREFORE, judgment is hereby made in favor of plaintiffs, the Court hereby declares plaintiffs as the sole and absolute owners of the properties covered by Tax Declarations Nos. 28960 and 28961 of Hagonoy, Bulacan, and orders the defendants to respect, acknowledge and confirm the right of ownership of plaintiffs over the whole property described above, to remove whatever improvements introduced by them thereon, and to pay the plaintiffs, solidarily and severally P10,000.00 as attorneys fees and costs of suit. "SO ORDERED."
4

BENJAMIN CORONEL AND EMILIA MEKING VDA. DE CORONEL, petitioners, vs. FLORENTINO CONSTANTINO, AUREA BUENSUCESO, AND THE HONORABLE COURT OF APPEALS,respondents.
DECISION AUSTRIA-MARTINEZ, J.: This refers to the petition for review on certiorari of the decision of the Court of Appeals, 1 dated March 27, 1995, in CA-G.R. CV No. 44023 which affirmed the decision of the Regional 2 Trial Court of Bulacan, Branch 8, dated April 12, 1993 in Civil Case No. 105-M-91 ; and the resolution of said appellate court, dated July 4, 1995, denying the motion for reconsideration of its decision. The factual background of the case is as follows: The subject property consists of two parcels of land situated in Sta. Monica, Hagonoy, Bulacan, designated as Cadastral Lots Nos. 5737 and 5738. The property is originally owned by Honoria Aguinaldo. One-half (1/2) of it was inherited by Emilia Meking Vda. de Coronel together with her sons Benjamin, Catalino and Ceferino, all surnamed Coronel. The other half was inherited by Florentino Constantino and Aurea Buensuceso. On February 20, 1991, Constantino and Buensuceso filed a complaint for declaration of ownership, quieting of title and damages with prayer for writ of mandatory and/or prohibitory injunction with the Regional Trial Court of Bulacan (Branch 8) against Benjamin, Emilia and John Does, docketed as Civil Case No. 105-M-91. Plaintiffs allege that: on April 23, 1981, Jess C. Santos and Priscilla Bernardo purchased the property belonging to Emilia and her sons by virtue of a deed of sale signed by Emilia; on June 21, 1990, Santos and Bernardo in turn sold the same to Constantino and Buensuceso by virtue of a compromise agreement in Civil Case No. 8289-M; they are the owners of the subject property and defendants have illegally started to introduce construction on the premises in question; and pray that "defendants respect, acknowledge and confirm the right of ownership of the plaintiffs to the share, interest and participation of the one-third (1/3) portion of the above described property".l^vvphi1.net After defendants filed their Answer, pre-trial ensued wherein the parties stipulated that: (1) the property in question was previously owned by Honoria Aguinaldo, one-half (1/2) of which was inherited by the defendants while the other half was inherited by the plaintiffs from the same predecessor; (2) it was admitted by counsel for the defendants that there was a sale between Jess Santos and the plaintiffs covering the subject property; and (3) that there was

On appeal brought by defendants, the Court of Appeals affirmed the decision of the lower court and denied defendants motion for reconsideration. Hence, herein petition brought by defendants, raising the following issues: "I. WHETHER OR NOT THE CONTRACT [OF] SALE EXECUTED BY A PARENT-CO-OWNER, IN HER OWN BEHALF, IS UNENFORCEABLE WITH RESPECT TO THE SHARES OF HER CO-HEIRS-CHILDREN; "II. WHETHER OR NOT THE MINOR CHILDREN CAN RATIFY UNAUTHORIZED ACTIONS OF THEIR PARENTS; "III. WHETHER OR NOT THE CO-HEIRS ARE INDISPENSABLE DEFENDANTS IN AN ACTION FOR DECLARATION OF OWNERSHIP AND QUIETING OF TITLE; "IV. WHETHER OR NOT THE DEED OF SALE WHICH IS A PRIVATE DOCUMENT WAS SUFFICIENTLY ESTABLISHED WHEN THE COUNSEL FOR THE DEFENDANTS5 PETITIONERS ADMITTED ONLY ITS EXISTENCE BUT NOT ITS CONTENTS." The third issue was raised by the petitioners for the first time with the Court of Appeals. They claim that the complaint should have been dismissed because private respondents failed to

implead the heirs of Ceferino and Catalino who died in 1983 and 1990, respectively, in their complaint as indispensable parties. We do not agree. A careful reading of the "Kasulatan ng Bilihang Patuluyan" which is a private document, not having been duly notarized, shows that only the share of Emilia in the subject property was sold because Benjamin did not sign the document and the shares of Ceferino and Catalino were not subject of the sale. Pertinent portions of the document read as follows: "KASULATAN NG BILIHANG PATULUYAN "PANIWALAAN NG LAHAT: "Kaming mag-iinang Emilia Micking Vda. Coronel at Benjamin M. Coronel kapwa may sapat na gulang, Pilipino, naninirahan sa nayon ng Sta. Monica, Hagonoy, Bulacan, sa kasulatang ito ay malaya naming: "P I N A T U T U N A Y A N "Na, kami ay tunay na nagmamay-ari ng isang lagay na lupang Bakuran na minana namin sa aming Lolong yumaong Mauricio Coronel, na ang ayos, takal at kalagayan ay ang sumusunod: "ORIGINAL CERTIFICATE OF TITLE NO. 5737 "Bakuran sa nayon ng Sta. Monica, Hagonoy, Bulacan na may sukat na 416 Square Meters ang kabuuan 208 Square Meters Lot A-1 ang kalahati nito na kanilang ipinagbibili. "x x x x x x x x x "Na, dahil at alang-alang sa halagang DALAWAMPUT LIMANG LIBONG PISO (P25,000) salaping Pilipino, na aming tinanggap sa kasiyahang loob namin, buhat sa mag-asawang Jess C. Santos at Prescy Bernardo, kapwa may sapat na gulang, Pilipino at naninirahan sa nayon ng Sta. Monica, Hagonoy, Bulacan, sa bisa ng kasulatang ito, ay aming isinasalin, inililipat at ipinagbibili ng bilihang patuluyan ang lahat ng aming dapat na makaparte sa lupang Bakuran Nakasaad sa dakong unahan nito, sa nabanggit na Jess C. Santos at Prescy Bernardo o sa kanilang tagapagmana at kahalili. "Na, ako namang Jess C. Santos, bilang nakabili, ay kusang loob ding nagsasaysay sa kasulatang ito na ako ay kasangayon sa lahat ng ditoy nakatala, bagaman ang lupang naturan ay hindi pa nahahati sa dapat magmana sa yumaong Honoria Aguinaldo. "Na, sa aming kagipitan inari naming ipagbili ang aming karapatan o kaparte na minana sa yumaong Guillermo Coronel ay napagkasunduan namin mag-iina na ipagbili ang bakurang ito na siyang makalulunas sa aming pangangailangan x x x."

"Na, kaming nagbili ang magtatanggol ng katibayan sa pagmamayari sa lupang naturan, sakaling may manghihimasok. SA KATUNAYAN NITO, kami ay lumagda sa kasulatang ito sa bayan ng Malabon, Rizal ngayong ika-23 ng Abril, 1981. (Signed) EMILIA MICKING Vda. CORONEL Nagbili (Unsigned) BENJAMIN M. CORONEL Nagbili (Signed) JESS C. SANTOS Nakabili (Signed) PRISCILLA BERNARDO 7 Nakabili"

Thus, it is clear, as already stated, that petitioner Benjamin did not sign the document and that the shares of Catalino and Ceferino in the subject property were not sold by them. Since the shares of Catalino and Ceferino were not sold, plaintiffs Constantino and Buensuceso have no cause of action against them or against any of their heirs. Under Rule 3, Section 7 of the 1997 Rules of Civil Procedure, indispensable parties are parties in interest without whom no final determination can be had of an action. In the present case, the heirs of Catalino and Ceferino are not indispensable parties because a complete determination of the rights of herein petitioners and respondents can be had even if the said heirs are not impleaded. Besides, it is undisputed that petitioners never raised before the trial court the issue of the private respondents failure to implead said heirs in their complaint. Instead, petitioners actively participated in the proceedings in the lower court and raised only the said issue on appeal with the Court of Appeals. It is a settled rule that jurisdictional questions may be 8 raised at any time unless an exception arises where estoppel has supervened. In the present case, petitioners participation in all stages of the case during trial, without raising the issue of the trial courts lack of jurisdiction over indispensable parties, estops them from challenging the validity of the proceedings therein. Further, the deed of sale is not a competent proof that petitioner Benjamin had sold his own share of the subject property. It cannot be disputed that Benjamin did not sign the document and therefore, it is unenforceable against him.l^vvphi1.net Emilia executed the instrument in her own behalf and not in representation of her three children.

Article 493 of the Civil Code states: "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." Consequently, the sale of the subject property made by Emilia in favor of Santos and Bernardo is limited to the portion which may be allotted to her upon the termination of her coownership over the subject property with her children. As to the first, second and fourth issues it has been established that at the time of 9 execution of the "Kasulatan ng Bilihang Patuluyan" on April 23, 1981 , the subject property was co-owned, pro-indiviso, by petitioner Emilia together with her petitioner son Benjamin, and her two other sons, Catalino and Ceferino. No proof was presented to show that the coownership that existed among the heirs of Ceferino and Catalino and herein petitioners has ever been terminated. Applying Articles 1317 and 1403 of the Civil Code, the Court of Appeals ruled that through their inaction and silence, the three sons of Emilia are considered to have ratified the aforesaid sale of the subject property by their mother. Articles 1317 and 1403 (1) of the Civil Code provide: "Art. 1317. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. "A contract entered into in the name of another by one who has no authority or legal representation or who has acted "beyond his powers shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. "Art. 1403. The following contracts are unenforceable, unless they are ratified: "(1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers. x x x x x x x x x" We do not agree with the appellate court. The three sons of Emilia did not ratify the sale. 10 In Maglucot-Aw vs. Maglucot we held that:

"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. No evidence was presented to show that the three brothers were aware of the sale made by their mother. Unaware of such sale, Catalino, Ceferino and Benjamin could not be considered as having voluntarily remained silent and knowingly chose not to file an action for the annulment of the sale. Their alleged silence and inaction may not be interpreted as an act of ratification on their part. We also find no concrete evidence to show that Ceferino, Catalino and Benjamin benefited from the sale. It is true that private respondent Constantino testified that Benjamin took money from Jess Santos but this is mere allegation on the part of Constantino. No other evidence was presented to support such allegation. Bare allegations, unsubstantiated by 11 evidence, are not equivalent to proof under our Rules of Court. Neither do the records show that Benjamin admitted having received money from Jess Santos. Even granting that Benjamin indeed received money from Santos, Constantinos testimony does not show that the amount received was part of the consideration for the sale of the subject property.1a\^/phi1.net To repeat, the sale is valid insofar as the share of petitioner Emilia Meking Vda. de Coronel is concerned. The due execution of the "Kasulatan ng Bilihang Patuluyan" was duly established when petitioners, through their counsel, admitted during the pre-trial conference that the said 12 document was signed by Emilia. While petitioners claim that Emilia erroneously signed it under the impression that it was a contract of mortgage and not of sale, no competent evidence was presented to prove such allegation. Hence, Jess C. Santos and Priscilla Bernardo, who purchased the share of Emilia, became co-owners of the subject property together with Benjamin and the heirs of Ceferino and Catalino. As such, Santos and Bernardo could validly dispose of that portion of the subject property pertaining to Emilia in favor of herein private respondents Constantino and Buensuceso. However, the particular portions properly pertaining to each of the co-owners are not yet defined and determined as no partition in the proper forum or extrajudicial settlement among the parties has been effected among the parties. Consequently, the prayer of respondents for a mandatory or prohibitory injunction lacks merit. WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with the following MODIFICATIONS:

1. Plaintiffs-private respondents Florentino Constantino and Aurea Buensuceso are declared owners of one-half (1/2) undivided portion of the subject property plus the one-fourth () undivided share of defendant-petitioner Emilia Meking Vda. de Coronel; and, defendantpetitioner Benjamin Coronel together with the heirs of Catalino Coronel and the heirs of Ceferino Coronel are declared owners of one-fourth () share each of the other one-half (1/2) portion of the subject property, without prejudice to the parties entering into partition of the subject property, judicial or otherwise. 2. The order of removal of the improvements and the award of the amount of Ten Thousand Pesos (P10,000.00) as attorneys fees and costs of suit are DELETED. No costs.SO ORDERED. Bellosillo, (Chairman), Mendoza, Quisumbing and Callejo, Sr., JJ., concu

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 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." 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: WHEREFORE, in the light of all the foregoing, judgment is hereby rendered:

G.R. No. 125233

March 9, 2000

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.
KAPUNAN, J.: Private respondents, the heirs of spouses Adriano Leis and Gertrudes Isidro, 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: 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
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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 attorney's fees; 7. Dismissing defendant[s'] counterclaim; and 8. Ordering defendant[s] to pay the cost of suit. SO ORDERED.
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heirs, which includes his widow Gertrudes, who is entitled to the same share as that of each 6 of the legitimate children. 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 ownership over the same to the exclusion of her co-owners. We dismissed the same argument by one of the petitioners in Paulmitan 7 vs. Court of Appeals, 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 8 of Appeals: The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common? Essentially, it is the petitioner's 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 retrothe 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: 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 coownership. 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

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. 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 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 3 Adriano Leis, the conjugal partnership was terminate, entitling Gertrudes to one-half of the 4 property. Adriano's rights to the other half, in turn, were transmitted upon his death to his

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 coowners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. 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 past 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 9 the primary objects of the Torrens system." As gleaned from the foregoing discussion, despite the Court of Appeals' finding and conclusion that Gertrudes as well as private respondents failed to repurchase the property within the period stipulated and has lost all their rights to it, it still ruled against petitioners by affirming the Regional Trial Court's decision on the premise that there was no compliance with Article 1607 of the Civil Code requiring a judicial hearing before registration of the property in the name of petitioners. This provision states: Art. 1607. In case of real property, the consolidation of ownership in the vendee by virtue of the failure of the vendor 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. The aforequoted article is intended to minimize the evils which the pacto de retro sale has caused in the hands of usurers.1wphi1 A judicial order is necessary in order to determine the true nature of the transaction and to prevent the interposition of buyers in good faith while 10 the determination is being made. 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 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 of the property sold are immediately vested in the vendee a retro, subject to the resolutory condition of repurchase by the vendor a retro within the stipulated period. Failure thus of the vendor a retro to perform said resolutory condition vests upon the vendee by operation of law absolute title and ownership over the property sold. As title is already vested in the vendee a retro, his failure to consolidate his title under Article 1607 of the Civil Code does not impair such title or ownership for the method prescribed thereunder is merely for the purpose of registering the 11 consolidated title. WHEREFORE, the decision of the Court of Appeals is MODIFIED in that the petitioners are deemed owners of the property by reason of the failure of the vendor, Gertrudes Isidro, to repurchase the same within the period stipulated. However, Transfer Certificate of Title No. 130584, in the name of Alexander M. Cruz, which was issued without judicial order, is hereby ordered CANCELLED, and Transfer Certificate of Title No. 43100 in the name of Gertrudes Isidro is ordered REINSTATED, without prejudice to compliance by petitioners with the provisions of Article 1607 of the Civil Code.1wphi1.nt SO ORDERED.

G.R. No. 176858

September 15, 2010

HEIRS OF JUANITA PADILLA, represented by CLAUDIO PADILLA, Petitioners, vs. DOMINADOR MAGDUA, Respondent.
DECISION CARPIO, J.: The Case Before the Court is a petition for review on certiorari assailing the Orders dated 8 September 2 3 2006 and 13 February 2007 of the Regional Trial Court (RTC) of Tacloban City, Branch 34, in Civil Case No. 2001-10-161. The Facts Juanita Padilla (Juanita), the mother of petitioners, owned a piece of land located in San Roque, Tanauan, Leyte. After Juanitas death on 23 March 1989, petitioners, as legal heirs of Juanita, sought to have the land partitioned. Petitioners sent word to their eldest brother
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Ricardo Bahia (Ricardo) regarding their plans for the partition of the land. In a letter dated 5 June 1998 written by Ricardo addressed to them, petitioners were surprised to find out that Ricardo had declared the land for himself, prejudicing their rights as co-heirs. It was then discovered that Juanita had allegedly executed a notarized Affidavit of Transfer of Real 4 Property (Affidavit) in favor of Ricardo on 4 June 1966 making him the sole owner of the land. The records do not show that the land was registered under the Torrens system. On 26 October 2001, petitioners filed an action with the RTC of Tacloban City, Branch 34, for recovery of ownership, possession, partition and damages. Petitioners sought to declare void the sale of the land by Ricardos daughters, Josephine Bahia and Virginia Bahia-Abas, to respondent Dominador Magdua (Dominador). The sale was made during the lifetime of Ricardo. Petitioners alleged that Ricardo, through misrepresentation, had the land transferred in his name without the consent and knowledge of his co-heirs. Petitioners also stated that prior to 1966, Ricardo had a house constructed on the land. However, when Ricardo and his wife Zosima separated, Ricardo left for Inasuyan, Kawayan, Biliran and the house was leased to third parties. Petitioners further alleged that the signature of Juanita in the Affidavit is highly questionable because on 15 May 1978 Juanita executed a written instrument stating that she would be leaving behind to her children the land which she had inherited from her parents. Dominador filed a motion to dismiss on the ground of lack of jurisdiction since the assessed value of the land was within the jurisdiction of the Municipal Trial Court of Tanauan, Leyte. In an Order dated 20 February 2006, the RTC dismissed the case for lack of jurisdiction. The RTC explained that the assessed value of the land in the amount of P590.00 was less than 6 the amount cognizable by the RTC to acquire jurisdiction over the case. Petitioners filed a motion for reconsideration. Petitioners argued that the action was not merely for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. Since actions to annul contracts are actions beyond pecuniary estimation, the case was well within the jurisdiction of the RTC. Dominador filed another motion to dismiss on the ground of prescription. In an Order dated 8 September 2006, the RTC reconsidered its previous stand and took cognizance of the case. Nonetheless, the RTC denied the motion for reconsideration and dismissed the case on the ground of prescription pursuant to Section 1, Rule 9 of the Rules of Court. The RTC ruled that the case was filed only in 2001 or more than 30 years since the Affidavit was executed in 1966. The RTC explained that while the right of an heir to his inheritance is imprescriptible, yet when one of the co-heirs appropriates the property as his own to the exclusion of all other heirs, then prescription can set in. The RTC added that since
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prescription had set in to question the transfer of the land under the Affidavit, it would seem logical that no action could also be taken against the deed of sale executed by Ricardos daughters in favor of Dominador. The dispositive portion of the order states: WHEREFORE, premises considered, the order of the Court is reconsidered in so far as the pronouncement of the Court that it has no jurisdiction over the nature of the action. The dismissal of the action, however, is maintained not by reason of lack of jurisdiction but by reason of prescription. SO ORDERED.
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Petitioners filed another motion for reconsideration which the RTC denied in an Order dated 13 February 2007 since petitioners raised no new issue. Hence, this petition. The Issue The main issue is whether the present action is already barred by prescription. The Courts Ruling Petitioners submit that the RTC erred in dismissing the complaint on the ground of prescription. Petitioners insist that the Affidavit executed in 1966 does not conform with the requirement of sufficient repudiation of co-ownership by Ricardo against his co-heirs in accordance with Article 494 of the Civil Code. Petitioners assert that the Affidavit became part of public records only because it was kept by the Provincial Assessors office for real property tax declaration purposes. However, such cannot be contemplated by law as a record or registration affecting real properties. Petitioners insist that the Affidavit is not an act of appropriation sufficient to be deemed as constructive notice to an adverse claim of ownership absent a clear showing that petitioners, as co-heirs, were notified or had knowledge of the Affidavit issued by their mother in Ricardos favor. Respondent Dominador, on the other hand, maintains that Juanita, during her lifetime, never renounced her signature on the Affidavit or interposed objections to Ricardos possession of the land, which was open, absolute and in the concept of an owner. Dominador contends that the alleged written instrument dated 15 May 1978 executed by Juanita years before she died was only made known lately and conveys the possibility of being fabricated. Dominador adds that the alleged highly questionable signature of Juanita on the Affidavit was only made an issue after 35 years from the date of the transfer in 1966 until the filing of the case in 2001. As a buyer in good faith, Dominador invokes the defense of acquisitive prescription against petitioners.

At the outset, only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court. The factual findings of the lower courts are final and conclusive and may not be reviewed on appeal except under any of the following circumstances: (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the finding of absence of facts is contradicted by the presence of evidence on record; (8) the findings of the Court of Appeals are contrary to those of the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the Court of Appeals are beyond the 8 issues of the case; and (11) such findings are contrary to the admissions of both parties. We find that the conclusion of the RTC in dismissing the case on the ground of prescription based solely on the Affidavit executed by Juanita in favor of Ricardo, the alleged seller of the property from whom Dominador asserts his ownership, is speculative. Thus, a review of the case is necessary. Here, the RTC granted the motion to dismiss filed by Dominador based on Section 1, Rule 9 of the Rules of Court which states: 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 no 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 case. (Emphasis supplied) The RTC explained that prescription had already set in since the Affidavit was executed on 31 May 1966 and petitioners filed the present case only on 26 October 2001, a lapse of more than 30 years. No action could be taken against the deed of sale made in favor of Dominador without assailing the Affidavit, and the action to question the Affidavit had already prescribed. After a perusal of the records, we find that the RTC incorrectly relied on the Affidavit alone in order to dismiss the case without considering petitioners evidence. The facts show that the land was sold to Dominador by Ricardos daughters, namely Josephine Bahia and Virginia Bahia-Abas, during the lifetime of Ricardo. However, the alleged deed of sale was not presented as evidence and neither was it shown that Ricardos daughters had any authority from Ricardo to dispose of the land. No cogent evidence was ever presented that Ricardo gave his consent to, acquiesced in, or ratified the sale made by his daughters to Dominador. In its 8 September 2006 Order, the RTC hastily concluded that Ricardos daughters had legal personality to sell the property:

On the allegation of the plaintiffs (petitioners) that Josephine Bahia and Virginia Bahia-Abas had no legal personality or right to [sell] the subject property is of no moment in this case. It should be Ricardo Bahia who has a cause of action against [his] daughters and not the herein plaintiffs. After all, Ricardo Bahia might have already consented to or ratified the 9 alleged deed of sale. Also, aside from the Affidavit, Dominador did not present any proof to show that Ricardos possession of the land had been open, continuous and exclusive for more than 30 years in 10 order to establish extraordinary acquisitive prescription. Dominador merely assumed that Ricardo had been in possession of the land for 30 years based on the Affidavit submitted to the RTC. The petitioners, on the other hand, in their pleading filed with the RTC for recovery of ownership, possession, partition and damages, alleged that Ricardo left the land after he separated from his wife sometime after 1966 and moved to another place. The records do not mention, however, whether Ricardo had any intention to go back to the land or whether Ricardos family ever lived there. Further, Dominador failed to show that Ricardo had the land declared in his name for taxation purposes from 1966 after the Affidavit was executed until 2001 when the case was filed. Although a tax declaration does not prove ownership, it is evidence of claim to possession of the land. Moreover, Ricardo and petitioners are co-heirs or co-owners of the land. Co-heirs or coowners cannot acquire by acquisitive prescription the share of the other co-heirs or coowners absent a clear repudiation of the co-ownership, as expressed in Article 494 of the Civil Code which states: Art. 494. x x x No prescription shall run in favor of a co-owner or co-heir against his coowners or co-heirs as long as he expressly or impliedly recognizes the co-ownership. Since possession of co-owners is like that of a trustee, in order that a co-owners possession may be deemed adverse to the cestui que trust or other co-owners, the following requisites must concur: (1) that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or other co-owners, (2) that such positive acts of repudiation have been made known to the cestui que trust or other co-owners, and (3) that the evidence 11 thereon must be clear and convincing. In the present case, all three requisites have been met. After Juanitas death in 1989, petitioners sought for the partition of their mothers land. The heirs, including Ricardo, were notified about the plan. Ricardo, through a letter dated 5 June 1998, notified petitioners, as his co-heirs, that he adjudicated the land solely for himself. Accordingly, Ricardos interest in the land had now become adverse to the claim of his co-heirs after repudiating their claim of 12 entitlement to the land. In Generosa v. Prangan-Valera, we held that in order that title may prescribe in favor of one of the co-owners, it must be clearly shown that he had repudiated

the claims of the others, and that they were apprised of his claim of adverse and exclusive ownership, before the prescriptive period begins to run. However, in the present case, the prescriptive period began to run only from 5 June 1998, the date petitioners received notice of Ricardos repudiation of their claims to the land. Since petitioners filed an action for recovery of ownership and possession, partition and damages with the RTC on 26 October 2001, only a mere three years had lapsed. This three-year period falls short of the 10-year or 30-year acquisitive prescription period required by law in order to be entitled to claim legal ownership over the land. Thus, Dominador cannot invoke acquisitive prescription. Further, Dominadors argument that prescription began to commence in 1966, after the Affidavit was executed, is erroneous. Dominador merely relied on the Affidavit submitted to the RTC that Ricardo had been in possession of the land for more than 30 years. Dominador did not submit any other corroborative evidence to establish Ricardos alleged possession 13 since 1966. In Heirs of Maningding v. Court of Appeals, we held that the evidence relative to the possession, as a fact, upon which the alleged prescription is based, must be clear, complete and conclusive in order to establish the prescription. Here, Dominador failed to present any other competent evidence to prove the alleged extraordinary acquisitive prescription of Ricardo over the land. Since the property is an unregistered land, Dominador bought the land at his own risk, being aware as buyer that no title had been issued over the land. As a consequence, Dominador is not afforded protection unless he can manifestly prove his legal entitlement to his claim. With regard to the issue of the jurisdiction of the RTC, we hold that the RTC did not err in taking cognizance of the case. Under Section 1 of Republic Act No. 7691 (RA 7691), amending Batas Pambansa Blg. 129, the RTC shall exercise exclusive jurisdiction on the following actions: Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980", is hereby amended to read as follows: "Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction. "(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation; "(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or
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buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; x x x On the other hand, Section 3 of RA 7691 expanded the jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts over all civil actions which involve title to or possession of real property, or any interest, outside Metro Manila where the assessed value does not exceed Twenty thousand pesos (P20,000.00). The provision states: Section 3. Section 33 of the same law is hereby amended to read as follows: "Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Trial Circuit Trial Courts shall exercise: xxx "(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots." In the present case, the records show that the assessed value of the land was P590.00 according to the Declaration of Property as of 23 March 2000 filed with the RTC. Based on the value alone, being way belowP20,000.00, the MTC has jurisdiction over the case. However, petitioners argued that the action was not merely for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. Since annulment of contracts are actions incapable of pecuniary estimation, the RTC has jurisdiction over the 15 case. 1avvphi1 Petitioners are correct. In Singson v. Isabela Sawmill,
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we held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable by courts of first instance (now Regional Trial Courts).

When petitioners filed the action with the RTC they sought to recover ownership and possession of the land by questioning (1) the due execution and authenticity of the Affidavit executed by Juanita in favor of Ricardo which caused Ricardo to be the sole owner of the land to the exclusion of petitioners who also claim to be legal heirs and entitled to the land, and (2) the validity of the deed of sale executed between Ricardos daughters and Dominador. Since the principal action sought here is something other than the recovery of a sum of money, the action is incapable of pecuniary estimation and thus cognizable by the RTC. Well-entrenched is the rule that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the party is entitled to all or some of the claims 17 asserted. In sum, we find that the Affidavit, as the principal evidence relied upon by the RTC to dismiss the case on the ground of prescription, insufficiently established Dominadors rightful claim of ownership to the land. Thus, we direct the RTC to try the case on the merits to determine who among the parties are legally entitled to the land. WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE the Orders dated 8 September 2006 and 13 February 2007 of the Regional Trial Court of Tacloban City, Branch 34 in Civil Case No. 2001-10-161. SO ORDERED.

The petition is casts against the following factual backdrop:cra:nad Following the death of the spouses Maximo Soriano and Manuela Delatre, their two children, namely, Maria and Felipa, inherited from them two (2) adjoining parcels of land with an aggregate area of 9,838 square meters, situated in Licsi, Manaoag, Pangasinan and covered by Tax Declaration No. 9825 in the name of Maximo Soriano. One parcel has an area of 5,219 square meters, while the other, an area of 4,619 square meters. On May 27, 1959, the sisters Maria and Felipa executed a Deed of Extrajudicial Partition whereunder the bigger parcel was adjudicated to Maria while the smaller parcel went to Felipa. The land subject of this case is the 5,219 square meter parcel representing Maria's share in the property left by the parents. It was declared in Maria's name under Tax Declaration No. 17723 (1960) and 17730. Maria was married to Eleuterio Valera, while her sister Felipa, to Fidel Generosa. Maria and Eleuterio were childless, while Felipa and Fidel had three (3) children, namely, Alfonso, Pedro and Florencio, all surnamed Generosa. Maria died on February 8, 1971, while her sister Felipa, on June 3, 1960. On October 18, 1984, or long after Maria's death, her husband Eleuterio married the herein respondent, Pacita Prangan-Valera. On March 31, 1989, Eleuterio executed an affidavit adjudicating unto himself as sole heir the property left behind by his deceased first wife Maria. Consequently, the tax declaration formerly in the name of Maria was cancelled and replaced by Tax Declaration No. 4528 in the name of Eleuterio. On October 17, 1990, Eleuterio died, survived by his second wife, Pacita Prangan-Valera. On November 5, 1990, the brothers Alfonso, Pedro and Florencio, all surnamed Generosa (children of Maria's sister Felipa) executed a document entitled "Deed of Extrajudicial Partition With Sale," therein stating that they are the sole heirs of Eleuterio Valera and as such succeeded to his rights, interest and ownership of the property left by Eleuterio's first wife, Maria. In the same document, the brothers Alfonso and Florencio sold their alleged share in the property to their brother Pedro and the latter's wife, Vida Rosario Generosa. Pursuant to said document, Pedro and his wife, Vida, obtained a tax declaration in their own names covering the entire parcel of what used to be Maria's share in the property of her parents. Such was the state of things when, on November 25, 1991, in the RTC of Urdaneta City, herein respondent Pacita Prangan-Valera filed the complaint in this case against the brothers Pedro, Alfonso and Florencio. Docketed in said court as Civil Case No. V-5268 and raffled to Branch 47 thereof, the complaint prayed for the annulment of the aforesaid Deed of

G.R. No. 166521 August 31, 2006 PEDRO GENEROSA, DECEASED, NOW SUBSTITUTED BY HIS HEIRS, VIDA R. GENEROSA, ROBERT R. GENEROSA, EDMUNDO R. GENEROSA, PEDRO R. GENEROSA, JR., AMALIA R. GENEROSA, LIZA R. GENEROSA, MELODY R. GENEROSA and FIDEL R. GENEROSA, Petitioners, v. PACITA PRANGANVALERA, Respondent.
DECISION GARCIA, J.: This recourse, styled as a "Partial Petition for Review on Certiorari," seeks the modification of 1 the Decision dated September 29, 2004 of the Court of Appeals (CA), as reiterated in its 2 Resolution of December 1, 2004, in CA-G.R. CV No. 79749, reversing and setting aside an earlier decision of the Regional Trial Court (RTC) of Urdaneta City, Pangasinan, Branch 47, in an action for annulment of documents, recovery of possession and damages with application for a writ of preliminary injunction thereat commenced by the herein respondent Pacita Prangan-Valera against, among others, Pedro Generosa, now substituted by his widow Vida R. Generosa and their children.

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Extrajudicial Partition With Sale executed by the defendant brothers and the recovery of possession and ownership of the property in dispute, plus damages, attorney's fees and litigation expenses. In gist, the complaint alleged that the brothers Alfonso, Pedro, and Florencio were never legitimate heirs of the plaintiff's deceased husband, Eleuterio Valera, nor are they related to the latter; that when her husband's first wife Maria died in 1971, Eleuterio continued in possession of the subject property even after he married her (plaintiff) in 1984; that when Eleuterio died in 1990, she continued in possession of the same property until her possession thereof was interrupted when the defendant brothers surreptitiously took possession of the property in 1991, after arrogating unto themselves the very same property on the basis of a falsified Deed of Extrajudicial Partition With Sale wherein said defendants made it appear that they are the sole heirs of her husband, Eleuterio Valera; that on account of the misrepresentation committed by the three, she filed against them a criminal complaint for falsification of public document, docketed as Criminal Case No. D-11039; that the brothers Alfonso and Florencio were convicted in said case and subsequently applied for probation while their brother Pedro was dropped from the case on account of his death during the pendency thereof. In their Answer, the defendant brothers basically sought refuge on their claim of prescription, alleging that they have been in possession of the disputed property for more than thirty (30) years. During the pendency of the suit, defendant Pedro Generosa died and was accordingly substituted by his widow, Vida Generosa, and their children, to wit: Robert, Edmundo, Pedro, Jr., Amalia, Liza, Melody and Fidel, all surnamed Generosa, the petitioners herein. In a decision dated February 7, 2003, the RTC found for the plaintiff, now respondent Pacita Prangan-Valera. It annulled the Deed of Extrajudicial Partition With Sale executed by the three brothers and awarded the entire property subject of the suit to the respondent, with damages, attorney's fees and litigation expenses. More specifically, the decision dispositively reads:cra:nad WHEREFORE, premises considered, judgment is hereby rendered as follows:cra:nad 1. The Deed of Extra-Judicial Partition with sale dated 5 November 1990 (Exh. "C") is hereby ANNULLED and declared NULL and VOID; 2. Tax Declaration No. 5428 in the names of Pedro Generosa and Vida Rosario (Exh. "E") is hereby CANCELLED and ANNULLED; 3. Tax Declaration No. 4528 (Exh. "C") in the name of Eleuterio Valera is hereby ordered to be reinstated. The Municipal assessor of Manaoag, Pangasinan is ordered to reinstate the
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same in the name of Eleuterio Valera. Likewise, the Provincial Assessor of the Province of Pangasinan is directed and ordered to reinstate the same in the name of Eleuterio Valera; 4. Defendants Alfonso Generosa, Florencio Generosa, Vida Generosa and the heirs of deceased Pedro Generosa, namely: Beda Generosa, Robert Generosa, Edmundo Generosa, Pedro Generosa, Jr., Amalia Generosa, Liza Generosa, Melody Generosa and Fidel Generosa, are directed to deliver, reconvey the possession and ownership of that property located in Licsi, Manaoag, Pangasinan containing an area of 5,319 square meters, more or less, bounded on North by Maximo Soriano; East by Road; South by Pedro Rous and Crispin Buessa; West by Mariano Soriano, declared under Tax Decl. No. 4528 and assessed at P1,900.00 to the plaintiff; 5. Ordering defendants to pay plaintiff the sum of P10,000.00 as attorney's fees, P5,000.00 as expenses of litigation and the additional sum of P30,000.00 for and as moral damages. Costs against the defendants. SO ORDERED. From the aforementioned decision of the trial court, the defendants, now petitioners, went on appeal to the CA whereat their appellate recourse was docketed as CA-G.R. CV No. 79749. As stated at the threshold hereof, the CA, in its decision of September 29, 2004, reversed and set aside that of the trial court, thus:cra:nad WHEREFORE, premises considered, the present appeal is hereby GRANTED and the appeal decision in Civil Case No. U-5268 is hereby REVERSED and SET ASIDE. A new judgment is hereby entered declaring that the legal heirs of Maria Soriano Valera are her surviving spouse, the late Eleuterio Valera (succeeded by his widow, herein plaintiffappellee), who is entitled to one-half (1/2) of the subject property; and her brothers (sic), Alfonso, Pedro (deceased) and Florencio, or their children, herein appellants, who are entitled to the other half of the property. No pronouncement as to costs. SO ORDERED. In decreeing the division of the subject property between the petitioners and the respondent in equal shares, the CA ruled that the conviction of the brothers Alfonso and Florencio in the criminal case for falsification of public document filed against them and their brother Pedro at the instance of the respondent "is a concern of the authorities" . and "will not result in the nullification of their rights as co-owners [of the respondent] where such act does not fall under any of the legal grounds for disqualification to succeed as heirs under Articles 1027 and 1032
4

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of the Civil Code." To the CA, the rightful heirs of Maria Soriano-Valera to whom the property involved in the case originally belonged are, on the one hand, the petitioners herein, in representation of Maria's nephews, and on the other hand, her deceased husband Eleuterio Valera, represented by his second wife, the herein respondent Pacita Prangan-Valera, which two (2) sets of heirs are entitled to each of the property left by Maria. In time, the petitioners moved for a reconsideration claiming that to them alone belong the entire property left by Maria. With their motion having been denied by the CA in its Resolution 5 of December 1, 2004, the petitioners are now with this Court via the present recourse on their lone submission that THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT PETITIONERS ARE THE OWNERS OF THE PROPERTY WITH RESPECT TO THE ONE-HALF (1/2) AWARDED TO RESPONDENT BY ACQUISITIVE PRESCRIPTION HAVING BEEN IN POSSESSION THEREOF FOR MORE THAN TWENTY (20) YEARS. No similar recourse was taken by the respondent. We DENY. The evidence on record belies the petitioners' pretension of possession for more than twenty (20) years. As found by the trial court and borne by the evidence: xxx xxx xxx "It was only in 1991, after the death of [respondent's] husband that the said defendants [i.e., the brothers Alfonso, Pedro and Florencio] on the basis of the falsified deed of extra-judicial partition with sale took possession of the property. The claim that they were in possession of the property for more than thirty (30) years appears unsupported. In fact, their own evidence (EXHIBITS "5" and "6") belies their claims of prescription and possession of the property. It was only in 1971, after the death of MARIA, former wife of ELEUTERIO, that defendants were entitled to successional rights over the property in question in conjunction with ELEUTERIO as surviving spouse. xxx xxx xxx It appearing that the property under litigation was transferred in the names of the defendant spouses [Pedro Generosa and Vida Generosa] in 1991 and the action for annulment of document and reconveyance of ownership and recovery of possession was filed in 1993, the action has not yet prescribed." (Words in brackets supplied.) In any event, and as correctly pointed out by the CA, acquisitive prescription, as laches, is based on the doctrine equity. It cannot be invoked to defeat justice or to perpetuate an

injustice. Equity, which has been aptly described as "justice outside legality," should be applied only in the absence of, and never against, statutory law. Aequetas nunguam 6 7 contravenit legis. The positive mandate of Article 494 of the Civil Code conferring imprescriptibility to actions of a co-owner or co-heir against his co-owners or co-heirs should preempt 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, and the herein respondent can validly vindicate her inheritance despite the lapse of time. To reiterate, the herein parties are co-owners of the property subject of the controversy. Surely, in order that title may prescribe in favor of one of the co-owners, it must be clearly shown that he has repudiated the claims of the others, and that they were apprised of his 8 claim of adverse and exclusive ownership, before the prescriptive period begins to run. The evidence relative to the possession, as a fact, upon which the alleged prescription is based, must be clear, complete and conclusive in order to establish said prescription without shadow 9 of doubt. This is not the case here. To stress, the petitioners' claim that they were in possession of the property for more than thirty (30) years appears unsupported. In fact, their own evidence belied their claim of prescription and possession of the property. As found by the trial court, it was only in 1991, after the death of the respondent's husband Eleuterio that the petitioners on the basis of the falsified deed of extrajudicial partition with sale took possession of the property. As it is, the petitioners could neither invoke acquisitive prescription because their mode of acquisition was illegal and void. Ordinary acquisitive prescription requires possession of things in good faith and with just title of the time fixed by law. It may also be added that the possession of co-owners is like that of a trustee. In order that his possession may be deemed adverse to the cestui que trust or the other co-owners, the following requisites must concur: (1) that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or other co-owners, (2) that such positive acts of repudiation have been made known to the cestui que trust or other co-owners, and (3) that the evidence thereon must be clear and convincing. Even granting, arguendo, that the falsified deed of extrajudicial partition with sale could be taken as a positive act of repudiation of the co-ownership existing between the respondent and the petitioners' predecessor-in-interest, there is clearly no showing that prescription has set in, given the fact the property under litigation was transferred in the names of the petitioners in 1991 and the action for annulment of documents, reconveyance of ownership and recovery of possession was filed by the respondent in 1991. The action has not yet prescribed. Article 1456 of the Civil Code provides that if a property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. This provision, in conjunction with Article 1144, gives the respondent a prescriptive period of ten years, for an obligation under an implied trust is one created by law. Accordingly, an action for reconveyance of a parcel of land based on an implied or constructive trust prescribes in ten

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years, the point of reference being the date of the registration of the deed of sale or the date of the issuance of the certificate of title over the property. All told, the Court rules and so hold that the CA correctly adjudicated the disputed parcel of land in such a way that one-half (1/2) thereof shall pertain to the respondent as successor of Eleuterio Valera, while the other one-half (1/2) to the petitioners, in accordance with Article 10 1001 of the Civil Code. cra WHEREFORE, petition is DENIED. The assailed decision of the Court of Appeals is hereby AFFIRMED in toto. Cost against petitioners. SO ORDERED.

Thereafter, petitioner and Marcelino Marc formally advised private respondent of their intention to partition the subject property and terminate the co-ownership. Private respondent refused to partition the property hence petitioner and Marcelino Marc instituted an action for partition before the Regional Trial Court of Quezon City which was docketed as Civil Case No. Q-01-44038 and raffled to Branch 78. On October 3, 2002, the trial court ordered the partition of the subject property in the following manner: Perla G. Patricio, 4/6; Marcelino Marc G. Dario, 1/6; and Marcelino G. Dario III, 1/6. The trial court also ordered the sale of the property by public auction wherein all parties concerned may put up their bids. In case of failure, the subject property should be 4 distributed accordingly in the aforestated manner. Private respondent filed a motion for reconsideration which was denied by the trial court on 5 August 11, 2003, hence he appealed before the Court of Appeals, which denied the same on October 19, 2005. However, upon a motion for reconsideration filed by private respondent on December 9, 2005, the appellate court partially reconsidered the October 19, 2005 Decision. In the now assailed Resolution, the Court of Appeals dismissed the complaint for partition filed by petitioner and Marcelino Marc for lack of merit. It held that the family home should continue despite the death of one or both spouses as long as there is a minor beneficiary thereof. The heirs could not partition the property unless the court found compelling reasons to rule otherwise. The appellate court also held that the minor son of private respondent, who is a grandson of spouses Marcelino V. Dario and Perla G. Patricio, was a minor beneficiary of 6 the family home. Hence, the instant petition on the following issues: I. THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN REVERSING ITS EARLIER DECISION OF OCTOBER 19, 2005 WHICH AFFIRMED IN TOTO THE DECISION OF THE TRIAL COURT DATED 03 OCTOBER 2002 GRANTING THE PARTITION AND SALE BY PUBLIC AUCTION OF THE SUBJECT PROPERTY. II. COROLLARILY, THE HONORABLE COURT OF APPEALS PATENTLY ERRED IN APPLYING ARTICLE 159 IN RELATION TO ARTICLE 154 OF THE FAMILY CODE ON FAMILY HOME INSTEAD OF ARTICLE 494 IN RELATION TO ARTICLES 495 7 AND 498 OF THE NEW CIVIL CODE ON CO-OWNERSHIP. The sole issue is whether partition of the family home is proper where one of the co-owners refuse to accede to such partition on the ground that a minor beneficiary still resides in the said home.
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G.R. No. 170829

November 20, 2006

PERLA G. PATRICIO, Petitioner, vs. MARCELINO G. DARIO III and THE HONORABLE COURT OF APPEALS, Second Division, Respondents.
DECISION YNARES-SANTIAGO, J.: This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and 1 set aside the Resolution of the Court of Appeals dated December 9, 2005 in CA-G.R. CV No. 80680, which dismissed the complaint for partition filed by petitioner for being contrary to law and evidence. On July 5, 1987, Marcelino V. Dario died intestate. He was survived by his wife, petitioner Perla G. Patricio and their two sons, Marcelino Marc Dario and private respondent Marcelino G. Dario III. Among the properties he left was a parcel of land with a residential house and a pre-school building built thereon situated at 91 Oxford corner Ermin Garcia Streets in Cubao, Quezon City, as evidenced by Transfer Certificate of Title (TCT) No. RT-30731 (175992) of the Quezon City Registry of Deeds, covering an area of seven hundred fifty five (755) square 2 meters, more or less. On August 10, 1987, petitioner, Marcelino Marc and private respondent, extrajudicially settled the estate of Marcelino V. Dario. Accordingly, TCT No. RT-30731 (175992) was cancelled and TCT No. R-213963 was issued in the names of petitioner, private respondent and Marcelino Marc.

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Private respondent claims that the subject property which is the family home duly constituted by spouses Marcelino and Perla Dario cannot be partitioned while a minor beneficiary is still living therein namely, his 12-year-old son, who is the grandson of the decedent. He argues that as long as the minor is living in the family home, the same continues as such until the beneficiary becomes of age. Private respondent insists that even after the expiration of ten years from the date of death of Marcelino on July 5, 1987, i.e., even after July 1997, the subject property continues to be considered as the family home considering that his minor son, Marcelino Lorenzo R. Dario IV, who is a beneficiary of the said family home, still resides in the premises. On the other hand, petitioner alleges that the subject property remained as a family home of the surviving heirs of the late Marcelino V. Dario only up to July 5, 1997, which was the 10th year from the date of death of the decedent. Petitioner argues that the brothers Marcelino Marc and private respondent Marcelino III were already of age at the time of the death of their 8 father, hence there is no more minor beneficiary to speak of. The family home is a sacred symbol of family love and is the repository of cherished 9 memories that last during ones lifetime. It is the dwelling house where husband and wife, or 10 by an unmarried head of a family, reside, including the land on which it is situated. It is 11 constituted jointly by the husband and the wife or by an unmarried head of a family. The family home is deemed constituted 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 12 except as hereinafter provided and to the extent of the value allowed by law. The law explicitly provides that occupancy of the family home either by the owner thereof or by "any of its beneficiaries" must be actual. That which is "actual" is something real, or actually existing, as opposed to something merely possible, or to something which is presumptive or constructive. Actual occupancy, however, need not be by the owner of the house specifically. Rather, the property may be occupied by the "beneficiaries" enumerated in Article 154 of the Family Code, which may include the in-laws where the family home is constituted jointly by the husband and wife. But the law definitely excludes maids and 13 overseers. They are not the beneficiaries contemplated by the Code. Article 154 of the Family Code enumerates who are the beneficiaries of a family home: (1) The husband and wife, or an unmarried person who is the head of a family; and (2) Their parents, ascendants, descendants, brothers and sisters, whether the relationship be legitimate or illegitimate, who are living in the family home and who depend upon the head of the family for legal support. To be a beneficiary of the family home, three requisites must concur: (1) they must be among the relationships enumerated in Art. 154 of the Family Code; (2) they live in the family home; and (3) they are dependent for legal support upon the head of the family.

Moreover, Article 159 of the Family Code provides that 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 10 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. Article 159 of the Family Code applies in situations where death occurs to persons who constituted the family home.1wphi1 Dr. Arturo M. Tolentino comments on the effect of death of one or both spouses or the unmarried head of a family on the continuing existence of the family home: Upon the death of the spouses or the unmarried family head who constituted the family home, or of the spouse who consented to the constitution of his or her separate property as family home, the property will remain as family home for ten years or for as long as there is a minor beneficiary living in it. If there is no more beneficiary left at the time of death, we believe the family home will be dissolved or cease, because there is no more reason for its existence. If there are beneficiaries who survive living in the family home, it will continue for ten years, unless at the expiration of the ten years, there is still a minor beneficiary, in which case the family home continues until that beneficiary becomes of age. After these periods lapse, the property may be partitioned by the heirs. May the heirs who are beneficiaries of the family home keep it intact by not partitioning the property after the period provided by this article? We believe that although the heirs will continue in ownership by 14 not partitioning the property, it will cease to be a family home. (Emphasis supplied) Prof. Ernesto L. Pineda further explains the import of Art. 159 in this manner: The family home shall continue to exist despite the death of one or both spouses or of the unmarried head of the family. Thereafter, the length of its continued existence is dependent upon whether there is still a minor-beneficiary residing therein. For as long as there is one beneficiary even if the head of the family or both spouses are already dead, the family home will continue to exist (Arts. 153, 159). If there is no minor-beneficiary, it will subsist until 10 years and within this period, the heirs cannot partition the same except when there are compelling reasons which will justify the partition. This rule applies 15 regardless of whoever owns the property or who constituted the family home. (Emphasis supplied) The rule in Article 159 of the Family Code may thus be expressed in this wise: If there are beneficiaries who survive and are living in the family home, it will continue for 10 years, unless at the expiration of 10 years, there is still a minor beneficiary, in which case the family home continues until that beneficiary becomes of age.

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It may be deduced from the view of Dr. Tolentino that as a general rule, the family home may be preserved for a minimum of 10 years following the death of the spouses or the unmarried family head who constituted the family home, or of the spouse who consented to the constitution of his or her separate property as family home. After 10 years and a minor beneficiary still lives therein, the family home shall be preserved only until that minor beneficiary reaches the age of majority. The intention of the law is to safeguard and protect the interests of the minor beneficiary until he reaches legal age and would now be capable of supporting himself. However, three requisites must concur before a minor beneficiary is entitled to the benefits of Art. 159: (1) the relationship enumerated in Art. 154 of the Family Code; (2) they live in the family home, and (3) they are dependent for legal support upon the head of the family. Thus, the issue for resolution now is whether Marcelino Lorenzo R. Dario IV, the minor son of private respondent, can be considered as a beneficiary under Article 154 of the Family Code. As to the first requisite, the beneficiaries of the family home are: (1) The husband and wife, or an unmarried person who is the head of a family; and (2) Their parents, ascendants, descendants, brothers and sisters, whether the relationship be legitimate or illegitimate. The term "descendants" contemplates all descendants of the person or persons who constituted the family home without distinction; hence, it must necessarily include the grandchildren and great grandchildren of the spouses who constitute a family home. Ubi lex non distinguit nec nos distinguire debemos. Where the law does not distinguish, we should not distinguish. Thus, private respondents minor son, who is also the grandchild of deceased Marcelino V. Dario satisfies the first requisite. As to the second requisite, minor beneficiaries must be actually living in the family home to avail of the benefits derived from Art. 159. Marcelino Lorenzo R. Dario IV, also known as Ino, the son of private respondent and grandson of the decedent Marcelino V. Dario, has been living in the family home since 1994, or within 10 years from the death of the decedent, hence, he satisfies the second requisite. However, as to the third requisite, Marcelino Lorenzo R. Dario IV cannot demand support from his paternal grandmother if he has parents who are capable of supporting him. The liability for legal support falls primarily on Marcelino Lorenzo R. Dario IVs parents, especially his father, herein private respondent who is the head of his immediate family. The law first imposes the obligation of legal support upon the shoulders of the parents, especially the father, and only in their default is the obligation imposed on the grandparents. Marcelino Lorenzo R. Dario IV is dependent on legal support not from his grandmother, but from his father.1wphi1 Thus, despite residing in the family home and his being a descendant of Marcelino V. Dario, Marcelino Lorenzo R. Dario IV cannot be considered as beneficiary contemplated under Article 154 because he did not fulfill the third requisite of being dependent on his grandmother for legal support. It is his father whom he is dependent on legal support, and who must now establish his own family home separate and distinct from that of his parents, being of legal age.

Legal support, also known as family support, is that which is provided by law, comprising everything indispensable for sustenance, dwelling, clothing, medical attendance, education 16 and transportation, in keeping with the financial capacity of the family. Legal support has the following characteristics: (1) It is personal, based on family ties which bind the obligor and the obligee; (2) It is intransmissible; (3) It cannot be renounced; (4) It cannot be compromised; (5) 17 It is free from attachment or execution; (6) It is reciprocal; (7) It is variable in amount. Professor Pineda is of the view that grandchildren cannot demand support directly from their grandparents if they have parents (ascendants of nearest degree) who are capable of supporting them. This is so because we have to follow the order of support under Art. 18 199. We agree with this view. The reasons behind Art. 199 as explained by Pineda and Tolentino: the closer the relationship of the relatives, the stronger the tie that binds them. Thus, the obligation to support under Art. 199 which outlines the order of liability for support is imposed first upon the shoulders of the closer relatives and only in their default is the obligation moved to the next nearer relatives and so on. There is no showing that private respondent is without means to support his son; neither is there any evidence to prove that petitioner, as the paternal grandmother, was willing to voluntarily provide for her grandsons legal support. On the contrary, herein petitioner filed for the partition of the property which shows an intention to dissolve the family home, since there is no more reason for its existence after the 10-year period ended in 1997. With this finding, there is no legal impediment to partition the subject property. The law does not encourage co-ownerships among individuals as oftentimes it results in inequitable situations such as in the instant case. Co-owners should be afforded every available opportunity to divide their co-owned property to prevent these situations from arising. As we ruled in Santos v. Santos, no co-owner ought to be compelled to stay in a coownership indefinitely, and may insist on partition on the common property at any time. An action to demand partition is imprescriptible or cannot be barred by laches. Each co-owner 20 may demand at any time the partition of the common property. Since the parties were unable to agree on a partition, the court a quo should have ordered a partition by commissioners pursuant to Section 3, Rule 69 of the Rules of Court. Not more than three competent and disinterested persons should be appointed 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. When it is made to appear to the commissioners that the real estate, or a portion thereof, cannot be divided without great prejudice to the interest of the parties, the court may order it
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assigned to one of the parties willing to take the same, provided he pays to the other parties such sum or sums of money as the commissioners deem equitable, unless one of the parties interested ask 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, and the commissioners 21 shall sell the same accordingly. The partition of the subject property should be made in accordance with the rule embodied in 22 Art. 996 of the Civil Code. Under the law of intestate succession, if the widow and legitimate children survive, the widow has the same share as that of each of the children. However, since only one-half of the conjugal property which is owned by the decedent is to be allocated to the legal and compulsory heirs (the other half to be given exclusively to the surviving spouse as her conjugal share of the property), the widow will have the same share as each of her two surviving children. Hence, the respective shares of the subject property, based on the law on intestate succession are: (1) Perla Generosa Dario, 4/6; (2) Marcelino Marc G. Dario II, 1/6 and (3) Marcelino G. Dario III, 1/6. In Vda. de Daffon v. Court of Appeals, we held that 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 court after trial should find the existence of coownership among the parties, the court may and should order the partition of the properties in 24 the same action. WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals in CA-G.R. CV No. 80680 dated December 9, 2005, is REVERSED and SET ASIDE. The case is REMANDED to the Regional Trial Court of Quezon City, Branch 78, who is directed to conduct a PARTITION BY COMMISSIONERS and effect the actual physical partition of the subject property, as well as the improvements that lie therein, in the following manner: Perla G. Dario, 4/6; Marcelino Marc G. Dario, 1/6 and Marcelino G. Dario III, 1/6. The trial court is DIRECTED to appoint not more than three (3) competent and disinterested persons, who should determine the technical metes and bounds of the property and the proper share appertaining to each heir, including the improvements, in accordance with Rule 69 of the Rules of Court. When it is made to the commissioners that the real estate, or a portion thereof, cannot be divided without great prejudice to the interest of the parties, the court a quo may order it assigned to one of the parties willing to take the same, provided he pays to the other parties such sum or sums of money as the commissioners deem equitable, unless one of the parties interested ask 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, and the commissioners shall sell the same accordingly, and thereafter distribute the proceeds of the sale appertaining to the just share of each heir. No pronouncement as to costs. SO ORDERED.
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G.R. No. 188802

February 14, 2011

REVELINA LIMSON, Petitioner, vs. WACK WACK CONDOMINIUM CORPORATION, Respondent.

DECISION CARPIO MORALES, J.: On January 22, 1996, Revelina Limson (Revelina) purchased from Conchita Benitez an apartment unit (Unit 703) at Wack Wack Apartments, Wack Wack Road, Mandaluyong City. Upon moving in, Revelina noticed defects in the electrical main panel located inside the unit, drawing her to report them, by letter of February 22, 1996, to the Wack Wack Condominium Corporation (respondent), a non-stock corporation organized for the purpose of holding title to and managing the common areas of Wack Wack Apartments Racquel Gonzalez, who sits as Member of respondents Board of Directors, replied by letter of February 23, 1996 that under Section 3 of the House Rules and Regulations, it is the duty of the unit owner to maintain the electrical and plumbing systems at his/her expense. By still another letter dated February 28, 1996, Revelina informed respondent that the "switch board is such that No. 12 wire is protected by 30 ampere fuse" and that five appliances refrigerator, freezer, iron, dryer and washing machine are connected to only one fuse. Revelina later sought professional assistance from a private electrical consultant, Romago, Incorporated. It was concluded that the wirings in Unit 703 are unsafe, hazardous and did not comply with the Philippine Electrical Code. On Revelinas request, the City Building Office conducted an inspection of Unit 703 following which a Report dated January 21, 1997 was accomplished with the following findings and recommendations: Findings: 1. The load center consists of 100 A 2 pst main switch and fusible cut out Blocks with 16 circuits. The fusible cut out block enclosure is not provided with cover, exposing electrical live part that makes it hazardous, unsafe and will be difficult to maintain because a portion was blocked by a shelf. 2. The jumper cable from main safety switch to fusible cut-out blocks used 2 #10 wire (Capt. 60 amp) per phase. This is undersized and would overheat.
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3. The fusible current protective devise where all 30 Amp., sp., 240 v FOR 2 #12 TW (20 AMP. Capacity wire) this does not comply with the provision of the Philippine Electrical Code that stipulates rating of the protective devise shall be the same as the conductor ampacity especially on a multi outlet circuit. 4. Power supply for water heaters was tapped to small appliance for convenience outlet circuit. Recommendation: 1. Replacement of fusible load center with panel board and circuit breaker components to correct the problem as enumerated on items 2, 3, 4 of our findings. 2. Replace the embedded circular loom with conduit on moulding. 3. Check all grounded circuit for water heater lad. 4. Provide separate circuit for water heater lad. 5. Submit As Built Electrical Plan signed and sealed by a Professional Electrical Engineer together with the previous approved Electrical Plan. (emphasis and underscoring supplied) The Report was sent by then Mayor Benjamin Abalos, Sr. to respondent by letter dated January 31, 1997. On February 3, 1997, respondent, through Architect Eugenio Gonzalez, wrote Revelina to demand that repairs in line with the above-stated recommendation of the City Building Office be undertaken within ten (10) days. Before the deadline, respondents Board of Directors convened on February 7, 1997 and resolved to impose a daily fine of P1,000.00 on Revelina and her husband Benjamin, to commence on February 14, 1997, should the latter fail to comply. Revelina and her husband refused to undertake the repairs and to pay the fine. They claimed that the electrical main panel forms part of the common areas, citing Section 6 of Republic 2 Act No. 4726 , "An Act to Define Condominium, Establish Requirements for its Creation and Government of its Incidents," the pertinent provision of which reads: Sec. 6. Unless otherwise expressly provided in the enabling or master deed or the declaration of restrictions, the incidents of a condominium grant are as follows: a.) x x x The following are not part of the unit: bearing walls, columns, floors, roofs, foundations, and other common structural elements of the buildings; lobbies, stairways, hallways and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air conditioning equipment, reservoir, tanks, pumps and other

central services and facilities, pipes, ducts, flues, chutes, conduits wires and other utility installations, wherever located, except the outlets thereof when located within the unit. (emphasis and underscoring supplied) They argued that an electrical main panel is in the nature of a utility installation. Meanwhile, Revelina and her husband purchased an oversized whirlpool. In the process of installation, the 7th floor utility room which is adjacent to Unit 703 was damaged. Revelina claimed that an agreement had been reached under which respondent would take charge of the repair of the utility room and would bill her for the cost incurred therefor but respondent failed to do so. Yet the Board of Directors assessed her and her husband a fine of P1,000.00 per day until the utility room is repaired. Respondent thereupon filed a complaint for specific performance and damages against Revelina and Benjamin before the Securities and Exchange Commission (SEC) upon the following causes of action: 1. To compel the defendants (Spouses Limson) to undertake the necessary repairs of the defective and hazardous condition of the electrical wiring of their Unit 703 in accordance with the report and recommendation of the Office of the Building Official of Mandaluyong City; 2. To seek payment of liquidated damages from the defendants in accordance with the Resolution of the Board of Directors of plaintiff (respondent herein), starting February 15, 1997 until the defendants shall have complied with the aforestated report and recommendation of the building officials; and 3. To seek payment of [sic] from the defendants for the damages they have caused to the common area of Wack Wack Apartments due to their insistence to install in 3 their unit an over-sized whirlpool. Pursuant to A.M. No. 00-11-03, the complaint was transferred to the Regional Trial Court (RTC) of Mandaluyong City for disposition. As of June 30, 1997, the assessments and penalties charged against the spouses had reached P569,736.94. On July 17, 1997, respondent filed a Notice of Assessment with the Register of Deeds, Mandaluyong City with application for foreclosure and public auction of Unit 703. At the public auction held on August 28, 1997, respondent emerged as highest bidder and thereupon purchased Unit 703 in the amount of P569,736.94, on account of which it was issued a Certificate of Sale on September 15, 1997.
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By Decision of December 22, 2003, Branch 214 of the Mandaluyong RTC dismissed respondents complaint for lack of merit in this wise: Guided by the findings and recommendation of the building official of Mandaluyong City, it would appear that the questioned electrical installations are to be considered as part of the common area and not of Unit 703, though the same are necessarily found inside the said unit. As contained in Section 6, par. 1 of the Condominium Act: "a) The boundary of the Unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof. The following are not part of the unit: bearing walls, columns, floors, roofs, foundations, and other common structural elements of the buildings; lobbies, stairways, hallways and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air conditioning equipment, reservoir, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits wires and other utility installations, wherever located, except the outlets thereof when 5 located within the unit. (underscoring supplied; emphasis in the original) On appeal, the Court of Appeals, by Decision of December 19, 2008, reversed the decision of the trial court, holding in the main that for the electrical main panel to be considered as part of the common areas, it should have been intended for communal use and benefit. The subject electrical main panel being located inside the unit and its principal function being to control the flow of electricity into the unit, the appellate court concluded that charges for its repair cannot be for respondents account. On the imposition of fine on the spouses Limson for failure to correct the faulty electrical wiring despite notice, the appellate court upheld respondents authority to enforce the same. Finding, however, that the amount of P1,000 fine per day was excessive, it reduced the same to P200. Respecting respondents imposition of a fine of P1,000 per day on the spouses alleged failure to repair the 7th floor utility room, the appellate court disallowed the same, however, it holding that respondent did not first seek reimbursement from them before assessment. Finally, the appellate court denied respondents prayer for actual damages in the amount of P5,000 representing repair expenses on the utility room, it having failed to present receipts therefor. Her Motion for Reconsideration having been denied, Revelina filed the present petition for review. The Court finds for Revelina. The pertinent provisions of the Wack Wack Apartments Master Deed follow:
6

Section 5. The Common Areas. The common elements or areas of the Project (herein referred to as the"Common Areas") shall comprise all parts of the Project other than the Units, including without limitation the following: xxxx (e) All central and appurtenant equipment and installations for common facilities and utilities such as power, light, sewerage, drainage, garbage chute, and water connections (including all outlets, pipes, ducts, wires, cables and conduits used in connection therewith, whether located in Common Areas or in Units); all elevators, elevator shafts, tanks, pumps, motors, fans, compressors, and control equipment; all common utility spaces and areas; (f) All other parts of the Project and all apparatus, equipment and installations therein which are for common use or necessary or convenient for the existence, maintenance of safety of the Project. (emphasis and underscoring supplied) Section 3. Maintenance, Repairs and Alterations. (a) All maintenance of and repairs of any Unit (other than the maintenance of and repairs to any of the Common Areas contained therein not necessitated by the act or negligence of the owner, tenant or occupant of such Unit) shall be made [by], and at the expense of, the owner of such unit. Each Unit owner shall be responsible for all damages to any other Unit and to the Common Areas resulting from his failure to effect such maintenance and repairs. Each Unit owner shall also be responsible for promptly reporting to the Condominium Corporation any defect or need for repairs in any of the Common Areas in his Unit. (emphasis and underscoring supplied) xxxx Section 3 (e) of R.A. 4726 defines "common areas" as "the entire project except all units separately granted or held or reserved." Section 6 (a) of the same law provides: a.) x x x The following are not part of the unit: bearing walls, columns, floors, roofs, foundations, and other common structural elements of the buildings; lobbies, stairways, hallways and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air conditioning equipment, reservoir, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits wires and other utility installations, wherever located, except the outlets thereof when located within the unit.(emphasis and underscoring supplied) The electrical panels location inside the unit notwithstanding, it is not automatically considered as part of it. The above-quoted pertinent provisions of the law and the master deed contemplate that "common areas," e.g. utility installations, may be situated within the unit.

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Where a statute is clear, plain and free from ambiguity, it must be given its literal meaning 7 and applied without attempt to interpret. Verba legis non est recedendum, index animi sermo est. There should be no departure from the words of the statute, for speech is the index of intention. An explanation of the Apartments electrical supply system was presented by respondent, viz: a.) x x x [T]he electrical system of the Apartments commences with a common main electrical line (main line) provided by the Apartments, connected to a Meralco line outside the building. This common main line runs to the ground floor of the building, where the common meter station is located; from where individual secondary lines, are tapped to the common main line. There are as many individual secondary lines tapped to the common main line, as there are units. EVERY SECONDARY LINE TRAVELS VERTICALLY TO ITS DESIGNATED FLOOR AND LEADS TO AN INDIVIDUAL UNIT. b.) The construction is such, that every secondary line is embedded within the wall of a unit, until it surfaces from the wall, ready to supply electricity to that unit; the UNIT, in this case, has two (2) metal boxes, inside the UNIT; both attached to the wall of the UNIT. The first of the two (2) metal boxes is the main switch box. (Annex "B" and "B1" The main switch box has a hole, through which the secondary line enters and is attached to the upper end of two (2) big fuses, located in the main switch box (Annex "B-1-a"). The upper end of the two (2) big fuses, where the secondary line (tapped to the main line) ends are indicated and marked as (Annex "B-1-b" and "B-1c")1avvphi1 c.) At the lower end of these two (2) big fuses, there are separate electrical wires (technically called "jumper cables"). The jumper cables originate in the UNITs second metal box which is the fusible cutout box (fuse box), and the jumper cables are connected to the lower end of the two (2) big fuses in the main switch box to draw 8 electricity to feed the fuse box. x x x (capitalization and underscoring in the original) In a multi-occupancy dwelling such as Apartments, limitations are imposed under R.A. 9 4726 in accordance with the common interest and safety of the occupants therein which at times may curtail the exercise of ownership. To maintain safe, harmonious and secured living conditions, certain stipulations are embodied in the duly registered deed of restrictions, in this case the Master Deed, and in house rules which the condominium corporation, like respondent, is mandated to implement. Upon acquisition of a unit, the owner not only affixes 10 his conformity to the sale; he also binds himself to a contract with other unit owners. Unquestionably, the fuse box controls the supply of electricity into the unit. Power is sourced through jumper cables attached to the main switch which connects the units electrical line to the Apartments common electrical line. It is an integral component of a power utility installation. Respondent cannot disclaim responsibility for the maintenance of the

Apartments electrical supply system solely because a component thereof is placed inside a unit. As earlier stated, both the law and the Master Deed refer to utility installations as forming part of the common areas, which reference is justified by practical considerations. Repairs to correct any defects in the electrical wiring should be under the control and supervision of 11 respondent to ensure safety and compliance with the Philippine Electrical Code, not to mention security and peace of mind of the unit owners WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of December 19, 2008 is REVERSED andSET ASIDE. The Decision of Branch 214 of the Mandaluyong Regional Trial Court dismissing the complaint of Wack Wack Condominium Corporation against Revelina and Benjamin Limson is, in light of the foregoing discussions, REINSTATED. SO ORDERED.

[G.R. No. 122047. October 12, 2000] SPOUSES SERAFIN SI AND ANITA BONODE SI, petitioners, vs. COURT OF APPEALS, SPOUSES JOSE ARMADA and REMEDIOS ALMANZOR (deceased, and substituted by heirs: Cynthia Armada, Danilo Armada and Vicente Armada) respondents.
DECISION QUISUMBING, J.: This petition for certiorari under Rule 45 assails the Decision dated March 25, 1994, of [2] the Court of Appeals and its Resolutions dated March 24, 1995 and September 6, 1995 in CA-G.R. CV No. 30727. The Court of Appeals reversed the decision of the Regional Trial Court of Pasig City, Branch 113, and nullified the sale of the subject lot by the spouses Crisostomo and Cresenciana Armada to spouses Serafin and Anita Si. The dispositive portion of the respondent court's decision reads: "WHEREFORE, in view of the foregoing, the decision appealed from is hereby REVERSED, and a new one is rendered: 1) Annulling and declaring as invalid the registration of the Deed of Absolute Sale dated March 27, 1979 executed by Cresenciana V. Alejo in favor of Anita Bonode Si.
[1]

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2) Ordering the Register of Deeds of Pasay City to annul and cancel Transfer Certificate of Title No. 24751, issued in the name of Anita Bonode Si, married to Serafin D. Si., Jose R. Armada, married to Remedios Almanzor and Dr. Severo R. Armada Jr., single. 3) Ordering the Register of Deeds of Pasay City to reconstitute and revive Transfer Certificate of Title No. 16007 in the names of Jose, Crisostomo and Severo, Jr. 4) That plaintiffs be allowed to repurchase or redeem the share corresponding to the share of Crisostomo Armada within thirty (30) days from notice in writing by Crisostomo Armada. 5) The defendants-appellees are jointly and severally ordered to pay the plaintiffsappellants the sum of P10,000.00 as moral damages. 6) The defendants-appellees are jointly and severally ordered to pay the plaintiffappellants the sum of P10,000.00 as attorney's fees and litigation expenses and costs of suit. SO ORDERED."
[3]

The complaint alleged that Conrado Isada sold Crisostomo's share by making it appear that Cresenciana, the attorney-in-fact of her husband, is a Filipino citizen, residing with Isada at No. 13-4th Camarilla Street, Murphy, Cubao, Quezon City. By this time, Crisostomo and Cresenciana had migrated and were already citizens of the United States of America. It also stated that when petitioners registered the deed of absolute sale they inserted the phrase "... and that the co-owners are not interested in buying the same in spite of notice to them.", and that petitioners knew of the misrepresentations of Conrado. Further, the complaint alleged that the other owners, Jose and Severo, Jr., had no written notice of the sale; and that all upon learning of the sale to the spouses Si, private respondents filed a complaint for annulment of sale and reconveyance of title with damages, claiming they had a right of redemption. Petitioners, on the other hand, alleged that on October 2, 1954, Escolastica, with the consent of her husband executed three separate deeds of sale (Exhibits 1, 2, and [6] 3) conveying 113.34 square meters of the property to Severo, and 113.33 square meters each to Crisostomo and Jose. The three deeds of sale particularly described the portion conveyed to each son in metes and bounds. Petitioners contend that since the property was already three distinct parcels of land, there was no longer co-ownership among the brothers. Hence, Jose and Severo, Jr. had no right of redemption when Crisostomo sold his share to the spouses Si. Petitioners point out that it was only because the Armada brothers failed to submit the necessary subdivision plan to the Office of the Register of Deeds in Pasay City that separate titles were not issued and TCT No. 16007 was issued and registered in the names of Jose, Crisostomo, and Severo, Jr. After trial on the merits, the court ruled for petitioners: "IN VIEW OF ALL THE FOREGOING, the complaint is hereby DISMISSED. With costs [7] against the plaintiffs." Private respondents appealed to the Court of Appeals. On March 25, 1994, the appellate court issued the decision now assailed by petitioners. In reversing the decision of the trial court and ruling for private respondents, the Court of Appeals found that: "A careful examination of TCT No. 16007 (Exh. 'A') shows that the portion sold by virtue of the Deeds of Sale (Exh. 1, 2, & 3) to the Armada brothers do not appear in the said title, neither does it indicate the particular area sold. Moreover, no evidence was presented to show that the Register of Deeds issued TCT No. 16007 (Exh. 'A') on the basis of the said deeds of Sale. In fact, TCT No. 16007 (Exh. 'A') shows that the lot is co-owned by Jose, Crisostomo and Severo, Jr. in the proportion of 113.33, 113.34 and 113.33 sq. m. respectively. Furthermore, the evidence on record shows that the Deed of Absolute Sale (Exh. 'B'), executed by Cresencia Armada in favor of defendants Si, stated that the portion sold was the 'undivided one hundred thirteen & 34/100 (113.34) square meters' of the parcel of land

The factual background of the case is as follows: The 340 square meters of land, situated in San Jose District, Pasay City, the property in dispute, originally belonged to Escolastica, wife of Severo Armada, Sr. This was covered by Transfer Certificate of Title (TCT) No. (17345) 2460. During the lifetime of the spouses, the property was transferred to their children and the Registry of Deeds, Pasay City, issued TCT No. 16007 in the names of the three sons, as follows : "DR. CRISOSTOMO R. ARMADA, married to Cresenciana V. Alejo, 113.34 Square Meters; JOSE R. ARMADA, married to Remedios Almanzor, 113.33 Square Meters; and DR. SEVERO R. ARMADA, Jr., single, all [4] of legal age, Filipinos." Annotated also in the title is the total cancellation of said title "... by virtue of the Deed of Sale, (P.E. 77952/T-24751), dated March 28, 1979, executed by CRESENCIANA V. ALEJO, as attorney-in-fact of CRISOSTOMO R. ARMADA, conveying 113.34 square meters of the property herein, in favor of ANITA BONODE SI, married to Serafin D. Si, for the sum of P75,000.00, issuing in lieu thereof Transfer Certificate of Title No. 24751, Reg. Book T-102. (Doc. No. 17, Page No. 5, Book No. 253 of Notary Public of [5] Pasay City, Manila, Julian Florentino)." On April 15, 1980, herein spouses Jose Armada and Remedios Almanzor, filed a complaint for Annulment of Deed of Sale and Reconveyance of Title with Damages, against herein petitioners Anita and Serafin Si and Conrado Isada, brother-in-law of Cresenciana. Isada brokered the sale.

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covered by TCT NO. 16007 of the Registry of Deeds for Pasay City, which means that what was sold to defendants are still undetermined and unidentifiable, as the area sold remains a portion of the whole. Moreover, plaintiff Remedi[o]s Armada testified that on March 27, 1979, Crisostomo Armada, thru his attorney-in-fact and co-defendant, Cresenciana Alejo, sold his undivided 113.34 share to defendants, Sps. Si as evidenced by a Deed of Absolute Sale (Exh. 'B'), and presented for registration with the Register of Deeds (Exh. 'B-1') without notifying plaintiffs of the sale (TSN, pp. 6-8, December 20, 1988). Instead, it appears that the phrase 'and that the co-owners are not interested in buying the same inspite of notice to them', was inserted in the Deed of Sale (Exh. 'B'). xxx Otherwise stated, the sale by a (sic) co-owner of his share in the undivided property is not invalid, but shall not be recorded in the Registry Property, unless accompanied by an affidavit [8] of the Vendor that he has given written notice thereof to all possible redemptioners." On August 29, 1994, petitioners' counsel on record, Atty. Roberto B. Yam received a copy of the CA decision. On October 14, 1994, he filed a motion for reconsideration, but it was denied by the Court of Appeals on November 21, 1994, for being filed out of time. On December 5, 1994, petitioners filed their motion for new trial under Section 1, Rule [9] 53 of the Revised Rules of Court. Petitioners presented new evidence, TCT No. (17345) 2460, registered in the name of Escolastica de la Rosa, married to Severo Armada, Sr., with annotation at the back stating that the cancellation was by virtue of three deeds of sale in favor of Escolastica's sons. On March 24, 1995, respondent court denied the motion, reasoning that when the motion was filed, the reglementary period had lapsed and the decision had become final and executory. Petitioners' motion for reconsideration of said resolution was denied. Hence, the present petition, alleging that: "1. Respondent Court of Appeals committed a reversible error in ruling that a coownership still existed. "2. Respondent Court of Appeals committed a reversible error in denying the Motion for Reconsideration of its Decision of 25 March 1994 on purely technical grounds. "3. Respondent Court of Appeals committed a reversible error in denying the Motion for New Trial.

"4. Respondent Court of Appeals committed a reversible error in ordering petitioners to pay moral damages, attorney's fees, litigation expenses and the [10] costs of the suit." In essence, this Court is asked to resolve: (1) whether respondent court erred in denying petitioners' motion for reconsideration and/or the Motion for New Trial; (2) whether private respondents are co-owners who are legally entitled to redeem the lot under Article 1623 of [11] the Civil Code; and (3) whether the award of moral damages, attorney's fees and costs of suit is correct. The pivotal issue is whether private respondents may claim the right of redemption under Art. 1623 of the Civil Code. The trial court found that the disputed land was not part of [12] an undivided estate. It held that the three deeds of absolute sale technically described the portion sold to each son. The portions belonging to the three sons were separately declared for taxation purposes with the Assessor's Office of Pasay City on September 21, [13] 1970. Jose's testimony that the land was undivided was contradicted by his wife when she [14] said they had been receiving rent from the property specifically allotted to Jose. More significantly, on January 9, 1995, the Registry of Deeds of Pasay City cancelled TCT 24751 [15] and issued three new titles as follows: (1) TCT 134594 in favor of Severo Armada, Jr.; (2) [16] TCT 134595 under the name of Anita Bonode Si, married to Serafin Si; and (3) TCT [17] 134596 owned by Jose Armada, married to Remedios Almanzor. All these are on record. However, the Court of Appeals' decision contradicted the trial court's findings.
[18]

In instances when the findings of fact of the Court of Appeals are at variance with those of the trial court, or when the inference drawn by the Court of Appeals from the facts is manifestly mistaken, this Court will not hesitate to review the evidence in order to arrive at the [19] correct factual conclusion. This we have done in this case. It is our considered view now, that the trial court is correct when it found that: "Rightfully, as early as October 2, 1954, the lot in question had already been partitioned when their parents executed three (3) deed of sales (sic) in favor of Jose, Crisostomo and Severo, all surnamed Armada (Exh. 1, 2, & 3), which documents purports to have been registered with the Register of Deeds of Pasay City, on September 18, 1970, and as a consequence TCT No. 16007 (Exh. A) was issued. Notably, every portion conveyed and transferred to the three sons was definitely described and segregated and with the corresponding technical description (sic). In short, this is what we call extrajudicial partition. Moreover, every portion belonging to the three sons has been declared for taxation purposes with the Assessor's Office of Pasay City on September 21, 1970. These are the unblinkable facts that the portion sold to defendant spouses Si by defendants Crisostomo Armada and Cresenciana Armada was concretely determined and identifiable. The fact that the three portions are embraced in one certificate of title does not make said portions less determinable or identifiable or distinguishable, one from the other, nor that dominion over each portion less exclusive, in [20] their respective owners. Hence, no right of redemption among co-owners exists." (citation omitted)

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". . . [T]he herein plaintiffs cannot deny the fact that they did not have knowledge about the impending sale of this portion. The truth of the matter is that they were properly notified. Reacting to such knowledge and notification they wrote defendant Dr. Crisostomo Armada on February 22, 1979, a portion of said letter is revealing: 'Well you are the king of [21] yourselves, and you can sell your share of Levereza." (emphasis omitted) After the physical division of the lot among the brothers, the community ownership terminated, and the right of preemption or redemption for each brother was no longer [22] available. Under Art. 484 of the Civil Code, there is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. There is no co-ownership when the different portions owned by different people are already concretely determined and [24] separately identifiable, even if not yet technically described. This situation makes inapplicable the provision on the right of redemption of a co-owner in the Civil Code, as follows: "Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners." Moreover, we note that private respondent Jose Armada was well informed of the impending sale of Crisostomo's share in the land. In a letter dated February 22, 1979, Jose told his brother Crisostomo: "Well you are the king of yourselves, and you can sell your share [25] of Leveriza." Co-owners with actual notice of the sale are not entitled to written notice. A written notice is a formal requisite to make certain that the co-owners have actual notice of the sale to enable them to exercise their right of redemption within the limited period of thirty days. But where the co-owners had actual notice of the sale at the time thereof and/or afterwards, a written notice of a fact already known to them, would be superfluous. The [26] statute does not demand what is unnecessary. Considering that respondent Court of Appeals erred in holding that herein private respondent could redeem the lot bought by petitioners, the issue of whether the appellate court erred in denying petitioners' motions for reconsideration and new trial need not be delved into. The same is true with respect to the questioned award of damages and attorney's fees. Petitioners filed their complaint in good faith and as repeatedly held, we cannot put a premium on the right to litigate. WHEREFORE, the petition is GRANTED, the Decision of the Court of Appeals dated March 25, 1994 and its Resolutions dated March 24, 1995 and September 6, 1995 in CA[23]

G.R. CV No. 30727 are ANNULLED and SET ASIDE. Civil Case No. 8023-P is DISMISSED for lack of merit. The decision of the Regional Trial Court of Pasay City, Branch 113, promulgated on August 29, 1989, is REINSTATED. SO ORDERED.

G.R. No. 122904

April 15, 2005

ADORACION E. CRUZ, THELMA DEBBIE E. CRUZ, GERRY E. CRUZ and NERISSA CRUZ-TAMAYO, Petitioner, vs. THE HONORABLE COURT OF APPEALS, SUMMIT FINANCING CORP., VICTOR S. STA. ANA, MAXIMO C. CONTRERAS, RAMON G. MANALASTAS, and VICENTE TORRES, Respondents.
DECISION TINGA, J.: This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure. 1 Petitioners are assailing the Decision of the Court of Appeals in CA-G.R.CV No. 41298 2 which reversed and set aside theDecision of the Regional Trial Court (RTC), Branch CLXIII, Pasig in Civil Case No. 49466 and dismissed petitioners' complaint therein for annulment of 3 certain deeds, and the November 21, 1995 Resolution, which denied petitioners' motion for reconsideration. Herein petitioner Adoracion Cruz is the mother of her co-petitioners Thelma Cruz, Gerry Cruz and Nerissa Cruz Tamayo, as well as Arnel Cruz, who was one of the defendants in Civil Case No. 49466. Petitioners filed said case on February 11, 1983 against Arnel Cruz and herein private respondents Summit Financing Corporation ("Summit"), Victor S. Sta. Ana and Maximo C. Contreras, the last two in their capacities as deputy sheriff and ex-officio sheriff of Rizal, respectively, and Ramon G. Manalastas in his capacity as Acting Register of Deeds of Rizal. The Complaint alleged that petitioners and Arnel Cruz were co-owners of a parcel of land situated in Taytay, Rizal. Yet the property, which was then covered by Transfer Certificate of Title (TCT) No. 495225, was registered only in the name of Arnel Cruz. According to petitioners, the property was among the properties they and Arnel Cruz inherited upon the death of Delfin Cruz, husband of Adoracion Cruz. On August 22, 1977, petitioners and Arnel Cruz executed a Deed of Partial 5 Partition, distributing to each of them their shares consisting of several lots previously held
4

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by them in common. Among the properties adjudicated to defendant Cruz was the parcel of land covered at the time by TCT No. 495225. It is the subject of this case. Subsequently, the same parties to the Deed of Partial Partition agreed in writing to share equally in the proceeds of the sale of the properties although they had been subdivided and individually titled in the names of the former co-owners pursuant to the Deed of Partial 6 Partition. This arrangement was embodied in a Memorandum of Agreement< executed on August 23, 1977 or a day after the partition. The tenor of the Memorandum of Agreement was annotated at the back of TCT No. 495225 on September 1, 1977. Sometime in January 1983, petitioner Thelma Cruz discovered that TCT No. 495225 had already been cancelled by TCT No. 514477 which was issued on October 18, 1982 in the name of Summit. Upon further investigation, petitioners learned that Arnel Cruz had executed 7 a Special Power of Attorney on May 16, 1980 in favor of one Nelson Tamayo, husband of petitioner Nerissa Cruz Tamayo, authorizing him to obtain a loan in the amount of One Hundred Four Thousand Pesos (P104,000.00) from respondent Summit, to be secured by a real estate mortgage on the subject parcel of land. On June 4, 1980, a Real Estate Mortgage was constituted on the disputed property then covered by TCT No. 495225 to secure the loan obtained by Arnel Cruz thru Nelson Tamayo from respondent Summit. Since the loan had remained outstanding on maturity, Summit instituted extrajudicial foreclosure proceedings, and at the foreclosure sale it was declared 9 the highest bidder. Consequently, Sheriff Sta. Ana issued a Certificate of Sale to respondent Summit, which more than a year later consolidated its ownership of the foreclosed property. Upon presentation of the affidavit of consolidation of ownership, the Acting Register of Deeds of Rizal cancelled TCT No. 495225 and issued, in lieu thereof, TCT No. 514477 in the name of respondent Summit. In their complaint before the RTC, petitioners asserted that they co-owned the properties with Arnel Cruz, as evidenced by the Memorandum of Agreement. Hence, they argued that the mortgage was void since they did not consent to it. In ruling in favor of petitioners, the trial court declared that with the execution of the Memorandum of Agreement, petitioners and Arnel Cruz had intended to keep the inherited properties in a state of co-ownership. The trial court stated that respondent Summit should suffer the consequences of incorrectly assuming that Arnel Cruz was the exclusive owner of the mortgaged property. It found respondent Summit negligent in its failure to inquire further into the limitations of defendant Cruz's title. Thus, the trial court declared that only the undivided share of Cruz in the mortgaged property was validly transferred to respondent Summit although it granted petitioners' prayer for nullification, per the dispositive portion of its Decision, thus: WHEREFORE, judgment is hereby rendered, in favor of plaintiff and against defendants, as follows:
8

1. Declaring the "Special Power of Attorney," the Real Estate Mortgage, the "Public Auction Sale," the "Certificate of Sale," the "Affidavit of Consolidation," executed by defendant Summit Financing Corporation, and the Consolidation of Ownership null and void ab initio; 2. Ordering the Register of Deeds of Rizal, to cancel TCT No. 514477, and to issue, in lieu thereof another TCT, in the name of Arnel E. Cruz, with the same annotations on the Real Estate Mortgage inscribed on September 16, 1980 and thereafter. 3. Ordering defendants, jointly and severally, to pay to plaintiffs, the amount of P10,000.00, as reasonable attorney's fees, plus costs. 4. Dismissing defendants (sic) counterclaims, for lack of merit. 10 SO ORDERED. With the exception of Arnel Cruz, the other defendants, who are herein private respondents, elevated the case to the Court of Appeals. Private respondents as appellants therein argued, among others, that the trial court erred in not holding Arnel Cruz as the sole and exclusive owner of the mortgaged property, in not holding petitioners in estoppel, and in not finding that under the Memorandum of Agreement the parties thereto merely agreed to share in the proceeds of the sale of the properties. Private respondents also questioned the trial court's nullification of the special power of attorney and its declaration that respondent Summit was 11 grossly negligent in not verifying the capacity of Arnel Cruz. In the assailed Decision, the Court of Appeals reversed the trial court's decision. The appellate court stressed that the Memorandum of Agreement does not contain any proscription against the mortgage of the subject property although it provides that the parties thereto are entitled to share in the proceeds of the sale of the properties covered by it. In that regard, the appellate court noted that petitioner Adoracion Cruz had executed two other real estate mortgages on the other parcels of land, which were not objected to by her supposed co-owners. Thus, it upheld the validity of the real estate mortgage executed by Nelson Tamayo on behalf of Arnel Cruz, without prejudice to petitioners' right of action against Arnel 12 Cruz for the collection of the proceeds of the loan. Petitioners moved for the reconsideration of the decision, but the Court of Appeals denied it in the assailedResolution dated November 21, 1995. Hence, the present petition which at the bottom presents the issue whether or not the real estate mortgage on the property then covered by TCT No. 495225 is valid. Resolution of the issue in turn depends on the determination of whether the mortgaged property was the exclusive property of Arnel Cruz when it was mortgaged. If answered in the affirmative, then there was nothing to prevent him from exercising ownership over the said property. Petitioners insist that the Memorandum of Agreement "expressly created a pro-indiviso co13 ownership over the property." Thus, petitioners argue that the Court of Appeals erred in upholding the validity of the mortgage considering that it was executed without their knowledge and consent.

23

On the other hand, private respondents rely on the provisions of the Deed of Partial Partition in claiming that defendant Cruz was already the exclusive owner of the disputed property at the time it was mortgaged. To further bolster their claim, private respondents assert that each of petitioners also executed real estate mortgages on the properties allocated to them in the partition deed as absolute owners in fee simple. This Court finds no merit in the petition. Co-ownership is terminated upon judicial or extra-judicial partition of the properties owned in common. Partition, in general, is the separation, division and assignment of a thing held in 14 common among those to whom it may belong. 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 15 should purport to be a sale, an exchange, a compromise, or any other transaction. From a reading of the following provisions of the Deed of Partial Partition, no other meaning can be gathered other than that petitioners and Arnel Cruz had put an end to the coownership, to wit: That the parties hereto are common co-owners pro-indiviso in equal shares of the following registered real properties . . . That there are no liens and encumbrance of whatsoever nature and kind on the above-described real properties except . . .; That the said liability was actually inscribed and annotated in the aforesaid titles on July 19, 1967 . . .; That since July 19, 1967 and up to this writing two years have already lapsed and no claim has been filed against the estate of said Delfin I. Cruz . . .; That the parties hereto mutually decided to end their common ownership pro-indiviso over the above-described properties and agreed to partition the same as follows: (1) (2) (3) To be adjudicated to THELMA E. CRUZ: . . . To be adjudicated to NERISSA CRUZ-TAMAYO: . . . To be adjudicated to ARNEL E. CRUZ: (a) ... (b) Lot 1-C-2-B-2-B-4-P-4, (LRC) PSD-264936 (c ) ... (d) ... (4) To be adjudicated to GERRY E. CRUZ: . . . (5) To be adjudicated to ADORACION E. CRUZ: . . . That the contracting parties warrant unto each other quiet and peaceful possession 16 as owners and possessors of their respective shares in the partition . . . (emphasis supplied)

In the aforesaid deed, the shares of petitioners and Arnel Cruz's in the mass of co-owned properties were concretely determined and distributed to each of them. In particular, to Arnel Cruz was assigned the disputed property. There is nothing from the words of said deed which expressly or impliedly stated that petitioners and Arnel Cruz intended to remain as coowners with respect to the disputed property or to any of the properties for that matter. It is well-settled in both law and jurisprudence, that contracts are the law between the contracting parties and should be fulfilled, if their terms are clear and leave no room for doubt as to the 17 intention of the contracting parties. To be considered a co-owner, one "must have a spiritual part of a thing which is not physically divided, or each of them is an owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly 18 19 abstract." In Dela Cruz v. Cruz, et al., this Court denied the prayer for legal redemption of plaintiff-appellant therein because "the portions of appellant-plaintiff and of the defendant spouses are concretely determined and identifiable, for to the former belongs the northern 20 half, and to the latter belongs the remaining southern half, of the land." Petitioners do not question the validity or efficacy of the Deed of Partial Partition. In fact, they admitted its existence in their pleadings and submitted it as part of their evidence. Thus, the deed should be accorded its legal dire effect. Since a partition legally made confers upon 21 each heir the exclusive ownership of the property adjudicated to him, it follows that Arnel Cruz acquired absolute ownership over the specific parcels of land assigned to him in the Deed of Partial Partition, including the property subject of this case. As the absolute 22 owner thereof then, Arnel Cruz had the right to enjoy and dispose of the property, as well as the right to constitute a real estate mortgage over the same without securing the consent of petitioners. On the other hand, there is absolutely nothing in the Memorandum of Agreement which diminishes the right of Arnel Cruz to alienate or encumber the properties allotted to him in the deed of partition. The following provisions of the agreement, which recognize the effects of partition, negate petitioner's claim that their consent is required to make the mortgage in favor of respondent Summit valid, to wit: That the parties hereto are common co-owners pro-indiviso in equal shares of the following registered real properties . . . That as a result of said partial partition, the properties affected were actually partitioned and the respective shares of each party, adjudicated to him/her; That despite the execution of this Deed of Partial Partition and the eventual disposal or sale of their respective shares, the contracting parties herein covenanted and agreed among themselves and by these presents do hereby bind themselves to one another that they shall share alike and receive equal shares from the proceeds of the

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sale of any lot or lots allotted to and adjudicated in their individual names by virtue of this deed of partial partition; That this Agreement shall continue to be valid and enforceable among the contracting parties herein up to and until the last lot is covered by the deed of partial partition above adverted to shall have been disposed of or sold and the proceeds 23 thereof equally divided and their respective shares received by each of them. (emphasis supplied) As correctly held by the Court of Appeals, the parties only bound themselves to share in the proceeds of the sale of the properties. The agreement does not direct reconveyance of the properties to reinstate the common ownership of the parties. To insist that the parties also intended to re-establish co-ownership after the properties had been partitioned is to read beyond the clear import of the agreement and to render nugatory the effects of partition, which is not the obvious or implied intent of the parties. Moreover, to ascertain the intent of the parties in a contractual relationship, it is imperative that the various stipulations provided for in the contracts be construed together, consistent with the parties' contemporaneous and subsequent acts as regards the execution of the 24 contract. Subsequent to the execution of the Deed of Partitionand Memorandum of Agreement, the properties were titled individually in the names of the co-owners to which they were respectively adjudicated, to the exclusion of the other co-owners. Petitioners Adoracion Cruz and Thelma Cruz separately sold the properties distributed to them as absolute owners thereof. Being clear manifestations of sole and exclusive dominion over the properties affected, the acts signify total incongruence with the state of co-ownership claimed by petitioners. Thus, this Court holds that the real estate mortgage on the disputed property is valid and does not contravene the agreement of the parties. WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 41298 are hereby AFFIRMED. Costs against petitioners.

G.R. No. 168943

October 27, 2006

IGLESIA NI CRISTO, petitioner, vs. HON. THELMA A. PONFERRADA, in her capacity as Presiding Judge, Regional Trial Court, Br. 104, Quezon City, and HEIRS OF ENRIQUE G. SANTOS, respondents.
DECISION CALLEJO, SR, J.: This is a Petition for Review on Certiorari of the Decision of the Court of Appeals (CA) in CA2 G.R. SP No. 72686 and its Resolution denying the motion for reconsideration of the said decision. On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed Santos, and 3 Sonia Santos-Wallin, represented by Enrique G. Santos, filed a complaint for Quieting of Title and/or Accion Reinvindicatoria before the Regional Trial Court (RTC) of Quezon City against the Iglesia Ni Cristo (INC), defendant therein. Plaintiffs alleged therein that, during his lifetime, Enrique Santos was the owner of a 936square-meter parcel of land located in Tandang Sora, Quezon City covered by Transfer Certificate of Title (TCT) No. 57272 issued by the Register of Deeds on July 27, 1961 which cancelled TCT No. 57193-289. He had been in possession of the owners duplicate of said title and had been in continuous, open, adverse and peaceful possession of the property. He died on February 9, 1970 and was survived by his wife, Alicia Santos, and other plaintiffs, who were their children. Thereafter, plaintiffs took peaceful and adverse possession of the property, and of the owners duplicate of said title. When the Office of the Register of Deeds of Quezon City was burned on June 11, 1988, the original copy of said title was burned as well. The Register of Deeds had the title reconstituted as TCT No. RT-110323, based on the owners duplicate of TCT No. 57272. Sometime in February 1996, plaintiffs learned that defendant was claiming ownership over the property based on TCT No. 321744 issued on September 18, 1984 which, on its face, cancelled TCT No. 320898, under the name of the Philippine National Bank, which allegedly cancelled TCT No. 252070 in the names of the spouses Marcos and Romana dela Cruz. They insisted that TCT Nos. 321744, 320898 and 252070 were not among the titles issued by the Register of Deeds of Quezon City and even if the Register of Deeds issued said titles, it was contrary to law. Enrique Santos, during his lifetime, and his heirs, after his death, never encumbered or disposed the property. In 1996, plaintiffs had the property fenced but defendant deprived them of the final use and enjoyment of their property. Plaintiffs prayed that, after due proceedings, judgment be rendered in their favor, thus:
1

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WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered quieting the title of plaintiffs over and/or recover possession of their said property in the name of deceased Enrique Santos, covered by said TCT No. RT-110323(57272) of the Register of Deeds at Quezon City and that: 1. The title of defendant, TCT No. 321744 be ordered cancelled by the Register of Deeds of Quezon City; 2. The defendant be ordered to pay plaintiffs claims for actual damages in the sum of P100,000.00; 3. The defendant be ordered to pay plaintiffs claims for compensatory damages in the sum of at leastP1,000,000.00; 4. The defendant be ordered to pay plaintiffs claims for reimbursement of the lawyers professional fees consisting of the aforesaid P50,000.00 acceptance fee and reimbursement of the said success fee in par. 10 above; and lawyers expenses of P2,000.00 for each hearing in this case; 5. The defendant be ordered to pay expenses and costs of litigation in the sum of at leastP200,000.00. Other reliefs that are just and equitable in the premises are, likewise, prayed for.
4

IN WITNESS WHEREOF, I hereby affix my signature this 23rd day of October 2001 at Pasig City, Metro Manila. (Sgd.) ENRIQUE G. SANTOS SUBSCRIBED AND SWORN to before me this 23rd day of October 2001 at Pasig City, affiant exhibiting to me his CTC No. 07303074 issued at Sta. Cruz, Laguna on April 16, 2001. (Sgd.) PETER FRANCIS G. ZAGALA Notary Public Until December 31, 2002 PTR No. 0287069 Issued on 1-10-01 5 At Pasig City Defendant moved to dismiss plaintiffs complaint on the following grounds: (1) plaintiffs failed to faithfully comply with the procedural requirements set forth in Section 5, Rule 7 of the 1997 Rules of Civil Procedure; (2) the action (either Quieting of Title or Accion Reinvindicatoria) had prescribed, the same having been filed only on October 24, 2001 beyond the statutory 6 ten-year period therefor; and (3) that the complaint is defective in many respects. Defendant asserted that the case involved more than one plaintiff but the verification and certification against forum shopping incorporated in the complaint was signed only by Enrique Santos. Although the complaint alleges that plaintiffs are represented by Enrique Santos, there is no showing that he was, indeed, authorized to so represent the other plaintiffs to file 7 the complaint and to sign the verification and certification of non-forum shopping. Thus, plaintiffs failed to comply with Section 5, Rule 7 of the Rules of Court. Defendant cited the 8 ruling of this Court in Loquias v. Office of the Ombudsman. Defendant maintained that the complaint is defective in that, although there is an allegation that Enrique Santos represents the other heirs, there is nothing in the pleading to show the latters authority to that effect; the complaint fails to aver with particularity the facts showing the capacity of defendant corporation to sue and be sued; and the pleading does not state the address of plaintiffs. Defendant likewise averred that the complaint should be dismissed on the ground of prescription. It argued that plaintiffs anchor their claim on quieting of title and considering that they are not in possession of the land in question, their cause of action prescribed after ten years. On the other hand, if the supposed right of plaintiffs is based on accion reinvindicatoria, prescription would set in after 10 years from dispossession. In

As gleaned from the caption of the complaint, plaintiffs appear to be the heirs of Enrique Santos, represented by Enrique G. Santos. The latter signed the Verification and Certificate of Non-Forum Shopping which reads: I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am one of the children of the late Enrique Santos and I represent the heirs of said Enrique Santos who are my co-plaintiffs in the above-captioned case and that I directed the preparation of the instant complaint, the contents of which are true and correct to the best of my knowledge and the attachments are faithful reproductions of the official copies in my possession. I hereby certify that I have not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency, and to the best of my knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency, and that I shall notify this Commission within three days from notice that a similar action or proceeding has been filed or is pending thereat.

26

both cases, defendant asserts, the reckoning point is 1984 when defendant acquired TCT No. 321744 and possession of the land in question. In their Comment on the motion, plaintiffs averred that the relationship of a co-owner to the other co-owners is fiduciary in character; thus, anyone of them could effectively act for another for the benefit of the property without need for an authorization. Consequently, Enrique Santos had the authority to represent the other heirs as plaintiffs and to sign the 10 verification and certification against forum shopping. On the issue of prescription, plaintiffs argued that the prescriptive period for the actions should be reckoned from 1996, when defendant claimed ownership over the property and barred plaintiffs from fencing their property, not in 1984 when TCT No. 321744 was issued by the Register of Deeds in the name of defendant as owner. In its reply, defendant averred that absent any authority from his co-heirs, Enrique Santos must implead them as plaintiffs as they are indispensable parties. In response, plaintiffs aver that a co-owner of a property can execute an action for quieting of title without impleading the other co-owners. The trial court issued an Order denying defendants motion to dismiss. It declared that since Enrique Santos was one of the heirs, his signature in the verification and certification constitutes substantial compliance with the Rules. The court cited the ruling of this Court 12 in Dar v. Alonzo-Legasto. The court, likewise, held that prescription had not set in and that failure to state the address of plaintiffs in the complaint does not warrant the dismissal of the complaint. Defendant filed a motion for reconsideration, which the court likewise denied in an 13 Order dated July 10, 2002. Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and Prohibition with Prayer 14 for the Issuance of a Temporary Restraining Order and/or Preliminary Injunction before the CA, raising the following issues: I. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE CERTIFICATION OF NONFORUM SHOPPING SIGNED BY ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE, IN CLEAR CONTRAVENTION OF THE RULES OF COURT, AND THE RULING IN LOQUIAS V. OFFICE OF THE OMBUDSMAN, G.R. NO. 1399396 (SIC), AUGUST 16, 2000, 338 SCRA 62, AND ORTIZ V. COURT OF APPEALS, G.R. NO. 127393, 299 SCRA 708 (DECEMBER 4, 1998). II.
11 9

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION IN APPLYING THE RULING IN DAR, ET. AL. V. HON. ROSE MARIE ALONZO-LEGASTO, ET. AL., G.R. NO. 143016, AUGUST 30, 2000 TO THE INSTANT CASE. III. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE AUTHORITY OF ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE "INC" IS A MATTER OF EVIDENCE. IV. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE ACTION FOR QUIETING OF TITLE AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS 15 NOT YET PRESCRIBED. Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos signed the verification and certification of non-forum shopping. Under Section 5, Rule 7 of the 1997 Rules of Civil Procedure, all the plaintiffs must sign, unless one of them is authorized by a special power of attorney to sign for and in behalf of the others. Petitioner argues that the bare claim of Enrique Santos that he signed the verification and certification in his behalf and of the other plaintiffs who are his co-heirs/co-owners of the property does not even constitute substantial compliance of the rule. Contrary to the ruling of the trial court, the absence or existence of an authority of Enrique Santos to sign the verification and certification for and in behalf of his co-plaintiffs is not a matter of evidence. The defect is fatal to the complaint of respondents and cannot be cured by an amendment of the complaint. The trial court erred in 16 applying the ruling of this Court in Dar v. Alonzo-Legasto. Petitioner maintained that the action of respondents, whether it be one for quieting of title or an accion reinvindicatoria, had prescribed when the complaint was filed on October 24, 2001. Petitioner asserts that this is because when respondents filed their complaint, they were not in actual or physical possession of the property, as it (petitioner) has been in actual possession of the property since 1984 when TCT No. 321744 was issued to it by the Register of Deeds. This is evident from the nature of a reinvindicatory action itself which is an action whereby plaintiff alleges ownership over the subject parcel of land and seeks recovery of its full possession. By their action, respondents thereby admitted that petitioner was in actual possession of the property, and as such, respondents action for quieting of title or accion reinvindicatoria may prescribe in ten (10) years from 1984 or in 1994, it appearing that it acted in good faith when it acquired the property from the registered owner, conformably with Article 555(4) of the New Civil Code.

27

On April 7, 2005, the CA rendered the assailed decision dismissing the petition, holding that the RTC did not commit grave abuse of its discretion amounting to lack or excess of jurisdiction in denying petitioners motion to dismiss. As the Court held in DAR v. Alonzo18 19 Legasto and in Gudoy v. Guadalquiver, the certification signed by one with respect to a property over which he shares a common interest with the rest of the plaintiffs (respondents herein) substantially complied with the Rules. As to the issue of prescription, the appellate court held that the prescriptive period should be reckoned from 1996, when petitioner claimed ownership and barred respondents from fencing the property. Petitioner is now before this Court on petition for review on certiorari, raising the following issues: I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY RESPONDENT ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE AND IN APPLYING THE CASE OF GUDOY V. GUADALQUIVER, 429 SCRA 723, WITHOUT REGARD TO MORE RECENT JURISPRUDENCE. II. WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE AUTHORITY OF RESPONDENT ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE PETITIONER IS A MATTER OF EVIDENCE. III. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION FOR QUIETING OF TITLE AND/OR ACCION REINVINDICATORIA (CIVIL 20 CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED. Petitioner reiterated its arguments in support of its petition in the CA as its arguments in support of its petition in the present case. Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification and certification against forum shopping read: Sec. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit.

17

A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records. A pleading required to be verified which contains a verification based on "information and belief" or upon "knowledge, information and belief," or lacks a proper verification, shall be treated as an unsigned pleading. Sec. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. The purpose of verification is simply to secure an assurance that the allegations of the petition (or complaint) have been made in good faith; or are true and correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does not necessarily render it fatally defective. Indeed, verification 21 is only a formal, not a jurisdictional requirement. The issue in the present case is not the lack of verification but the sufficiency of one executed 22 by only one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo, that the verification requirement is deemed substantially complied with when, as in the present case, only one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the petition (complaint), signed the verification attached to it. Such verification is deemed sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, not merely speculative.

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The same liberality should likewise be applied to the certification against forum shopping. The general rule is that the certification must be signed by all plaintiffs in a case and the signature of only one of them is insufficient. However, the Court has also stressed in a number of cases that the rules on forum shopping were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents of the certification. This is because the requirement of strict compliance with the provisions merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely 23 disregarded. The substantial compliance rule has been applied by this Court in a number of cases: Cavile 24 v. Heirs of Cavile, where the Court sustained the validity of the certification signed by only one of petitioners because he is a relative of the other petitioners and co-owner of the properties in dispute; Heirs of Agapito T. Olarte v. Office of the President of the 25 Philippines, where the Court allowed a certification signed by only two petitioners because the case involved a family home in which all the petitioners shared a common interest; Gudoy 26 v. Guadalquiver, where the Court considered as valid the certification signed by only four of the nine petitioners because all petitioners filed as co-owners pro indiviso a complaint against respondents for quieting of title and damages, as such, they all have joint interest in the 27 undivided whole; and Dar v. Alonzo-Legasto, where the Court sustained the certification signed by only one of the spouses as they were sued jointly involving a property in which they had a common interest. It is noteworthy that in all of the above cases, the Court applied the rule on substantial compliance because of the commonality of interest of all the parties with respect to the subject of the controversy. Applying the doctrines laid down in the above cases, we find and so hold that the CA did not err in affirming the application of the rule on substantial compliance. In the instant case, the property involved is a 936-square-meter real property. Both parties have their respective TCTs over the property. Respondents herein who are plaintiffs in the case below have a common interest over the property being the heirs of the late Enrique Santos, the alleged registered owner of the subject property as shown in one of the TCTs. As such heirs, they are considered co-owners pro indiviso of the whole property since no specific portion yet has been adjudicated to any of the heirs. Consequently, as one of the heirs and principal party, the lone signature of Enrique G. Santos in the verification and certification is sufficient for the RTC to take cognizance of the case. The commonality of their interest gave Enrique G. Santos the authority to inform the RTC on behalf of the other plaintiffs therein that they have not commenced any action or claim involving the same issues in another court or tribunal, and that there is no other pending action or claim in another court or tribunal involving the same issues. Hence, the RTC correctly denied the motion to dismiss filed by petitioner.

Considering that at stake in the present case is the ownership and possession over a prime property in Quezon City, the apparent merit of the substantive aspects of the case should be deemed as a special circumstance or compelling reason to allow the relaxation of the rule. Time and again, this Court has held that rules of procedure are established to secure substantial justice. Being instruments for the speedy and efficient administration of justice, they may be used to achieve such end, not to derail it. In particular, when a strict and literal application of the rules on non-forum shopping and verification will result in a patent denial of 28 substantial justice, these may be liberally construed. The ends of justice are better served when cases are determined on the merits after all parties are given full opportunity to ventilate their causes and defenses rather than on technicality or some procedural 29 imperfections. Indeed, this Court strictly applied the rules on verification and certification against forum 30 shopping as in the cases of Loquias v. Office of the Ombudsman and Tolentino v. 31 Rivera. However, in both cases, the commonality of interest between or among the parties is wanting. In Loquias, the co-parties were being sued in their individual capacities as mayor, vice mayor and members of the municipal board. In Tolentino, the lone signature of Tolentino was held insufficient because he had no authority to sign in behalf of the Francisco spouses. In such case, the Court concluded that Tolentino merely used the spouses names for whatever mileage he thought he could gain. It is thus clear from these cases that the commonality of interest is material in the relaxation of the Rules. Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-plaintiffs, we find no necessity to show such authority. Respondents herein are co-owners of the subject property. As such co-owners, each of the heirs may properly bring an action for ejectment, forcible entry and detainer, or any kind of action for the recovery of possession of the subject properties. Thus, a co-owner may bring such an action, even without joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the 32 benefit of all. We uphold the validity of the complaint because of the following circumstances: (1) the 33 caption of the instant case is Heirs of Enrique Santos v. Iglesia ni Cristo; (2) the opening statement of the complaint states that plaintiffs are the heirs of Enrique Santos and likewise 34 names the particular heirs of the latter who instituted the complaint below; (3) the case 35 involves a property owned by the predecessor-in-interest of plaintiffs therein; and (4) the verification signed by Enrique G. Santos clearly states that he is one of the children of the 36 late Enrique Santos and that he represents the heirs of said Enrique Santos. On the issue of prescription of action, petitioner avers that the action of respondents is one to quiet title and/or accion reinvindicatoria, and that respondents asserted ownership over the property and sought the recovery of possession of the subject parcel of land. It insists that the very nature of the action presupposes that respondents had not been in actual and material possession of the property, and that it was petitioner which had been in possession of the property since 1984 when it acquired title thereon. The action of respondent prescribed in ten

29

years from 1984 when petitioner allegedly dispossessed respondents, in accordance with Article 555(4) of the New Civil Code. The contention of petitioner has no merit. The nature of an action is determined by the material allegations of the complaint and the character of the relief sought by plaintiff, and the law in effect when the action was filed irrespective of whether he is entitled to all or only some 37 of such relief. As gleaned from the averments of the complaint, the action of respondents was one for quieting of title under Rule 64 of the Rules of Court, in relation to Article 476 of the New Civil Code. The latter provision reads: Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein. A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land appearing in some legal form but which is, in fact, unfounded, or which it would be 38 inequitable to enforce. An action for quieting of title is imprescriptible until the claimant is 39 ousted of his possession. The owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if, at the time of the commencement of his action, he was not in actual possession of real property. After all, under Article 477 of the New Civil Code, the owner need not be in possession of the property. If on the face of TCT No. 321744 under the name of plaintiff, its invalidity does not 40 appear but rests partly in pais, an action for quieting of title is proper. In the present case, respondents herein, as plaintiffs below, alleged in their complaint, that their father, Enrique Santos, was the owner of the property based on TCT No. 57272 issued on July 27, 1961; and that, after his death on February 9, 1970, they inherited the property; Enrique Santos, during his lifetime, and respondents, after the death of the former, had been in actual, continuous and peaceful possession of the property until 1994 when petitioner claimed ownership based on TCT No. 321744 issued on September 18, 1984 and barred respondents from fencing their property. Petitioners claim that it had been in actual or material possession of the property since 1984 when TCT No. 321744 was issued in its favor is belied by the allegations in the complaint that respondents had been in actual and material possession of the property since 1961 up to the time they filed their complaint on October 24, 2001.

Admittedly, respondents interposed the alternative reinvindicatory action against petitioner. An accion reinvindicatoria does not necessarily presuppose that the actual and material possession of the property is on defendant and that plaintiff seeks the recovery of such possession from defendant. It bears stressing that anaccion reinvindicatoria is a remedy seeking the recovery of ownership and includes jus possidendi, jus utendi, andjus fruendi as well. It is an action whereby a party claims ownership over a parcel of land and seeks 41 recovery of its full possession. Thus, the owner of real property in actual and material possession thereof may file an accion reinvindicatoria against another seeking ownership over a parcel of land including jus vindicandi, or the right to exclude defendants from the possession thereof. In this case, respondents filed an alternative reinvindicatory action claiming ownership over the property and the cancellation of TCT No. 321744 under the name of petitioner. In fine, they sought to enforce their jus utendi and jus vindicandi when petitioner claimed ownership and prevented them from fencing the property. Since respondents were in actual or physical possession of the property when they filed their complaint against petitioner on October 24, 2001, the prescriptive period for the reinvindicatory action had not even commenced to run, even if petitioner was able to secure TCT No. 321744 over the property in 1984. The reason for this is that x x x one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect 42 on his own title, which right can be claimed only by one who is in possession. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 72686 is AFFIRMED. Costs against petitioner. SO ORDERED.

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ARCADIO and CARANDANG, Petitioners,

MARIA

LUISA

G.R. No. 160347

increase and P43,125 for the March 3, 1989 Capital Stock increase or a total of P336,375.Thus, on March 31, 1992, [de Guzman] sent a demand letter to [the spouses Carandang] for the payment of said total amount. [The spouses Carandang] refused to pay the amount, contending that a pre-incorporation agreement was executed between [Arcadio Carandang] and [de Guzman], whereby the latter promised to pay for the stock subscriptions of the former without cost, in consideration for [Arcadio Carandang's ] technical expertise, his newly purchased equipment, and his skill in repairing and upgrading radio/communication equipment therefore, there is no indebtedness on their part [sic]. On June 5, 1992, [de Guzman] filed his complaint, seeking to recover the P336,375 together with damages.After trial on the merits, the trial court disposed of the case in this wise: WHEREFORE, premises considered, judgment is hereby rendered in favor of [de Guzman].Accordingly, [the spouses Carandang] are ordered to jointly and severally pay [de Guzman], to wit: (1) P336,375.00 representing Carandang's ] loan to de Guzman; [the spouses

Present: -versusPANGANIBAN, C.J. Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ.

HEIRS OF QUIRINO A. DE GUZMAN, namely:MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN, CYNTHIA G. RAGASA and QUIRINO DE GUZMAN, JR., cralawRespondents.

Promulgated:

November 29, 2006 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - -x DECISION CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari assailing the Court of Appeals Decision[1] and Resolution affirming the Regional Trial Court (RTC) Decision rendering herein petitioners Arcadio and Luisa Carandang [hereinafter referred to as spouses Carandang] jointly and severally liable for their loan to Quirino A. de Guzman. The Court of Appeals summarized the facts as follows: [Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as corporate officers of Mabuhay Broadcasting System (MBS for brevity), with equities at fifty four percent (54%) and forty six percent (46%) respectively. On November 26, 1983, the capital stock of MBS was increased, fromP500,000 to P1.5 million and P345,000 of this increase was subscribed by [the spouses Carandang].Thereafter, on March 3, 1989, MBS again increased its capital stock, from P1.5 million to P3 million, [the spouses Carandang] yet again subscribed to the increase.They subscribed to P93,750 worth of newly issued capital stock. [De Guzman] claims that, part of the payment for these subscriptions were paid by him, P293,250 for the November 26, 1983 capital stock

(2) interest on the preceding amount at the rate of twelve percent (12%) per annum from June 5, 1992 when this complaint was filed until the principal amount shall have been fully paid; (3) P20,000.00 as attorney's fees; (4) Costs of suit.

The spouses Carandang appealed the RTC Decision to the Court of Appeals, which affirmed the same in the 22 April 2003 assailed Decision: WHEREFORE, in view of all the foregoing the assailed Decision is hereby AFFIRMED.No costs.[2]chanroblesvirtuallawlibrary

The Motion for Reconsideration filed by the spouses Carandang was similarly denied by the Court of Appeals in the 6 October 2003 assailed Resolution:

31

WHEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and our Decision of April 22, 2003, which is based on applicable law and jurisprudence on the matter is hereby AFFIRMED and REITERATED.[3]chanroblesvirtuallawlibrary

Whether or not the RTC Decision is void for failing to comply with Section 16, Rule 3 of the Rules of Court

The spouses Carandang then filed before this Court the instant Petition for Review onCertiorari, bringing forth the following issues: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THERE IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRESS PROVISIONS OF BOOK IV, TITLE XI, OF THE NEW CIVIL CODE PERTAINING TO LOANS. III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF THE REVISED RULES ON EVIDENCE. IV. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. V. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE PURPORTED LIABILITY OF PETITIONERS ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE NEW CIVIL CODE.[4]chanroblesvirtuallawlibrary

The spouses Carandang claims that the Decision of the RTC, having been rendered after the death of Quirino de Guzman, is void for failing to comply with Section 16, Rule 3 of the Rules of Court, which provides: SEC. 16. Death of party; duty of counsel. ' Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives.Failure of counsel to comply with this duty shall be a ground for disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order the legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased.The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs.

The spouses Carandang posits that such failure to comply with the above rule renders void the decision of the RTC, in adherence to the following pronouncements inVda. de Haberer v. Court of Appeals[5] and Ferreria v. Vda. de Gonzales[6]: Thus, it has been held that when a party dies in an action that survives and no order is issued by the court for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no substitution has ever been effected, the trial held by the court without such legal representatives or heirs and the judgment rendered

32

after such trial are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and judgment would be binding.[7]chanroblesvirtuallawlibrary In the present case, there had been no court order for the legal representative of the deceased to appear, nor had any such legal representative appeared in court to be substituted for the deceased; neither had the complainant ever procured the appointment of such legal representative of the deceased, including appellant, ever asked to be substituted for the deceased.As a result, no valid substitution was effected, consequently, the court never acquired jurisdiction over appellant for the purpose of making her a party to the case and making the decision binding upon her, either personally or as a representative of the estate of her deceased mother.[8]chanroblesvirtuallawlibrary

can only be asserted by the persons whose rights are claimed to have been violated, namely the heirs to whom the adverse judgment is sought to be enforced. Care should, however, be taken in applying the foregoing conclusions.In People v. Florendo,[13] where we likewise held that the proceedings that took place after the death of the party are void, we gave another reason for such nullity: 'the attorneys for the offended party ceased to be the attorneys for the deceased upon the death of the latter, the principal x x x.Nevertheless, the case at bar had already been submitted for decision before the RTC on 4 June 1998, several months before the passing away of de Guzman on 19 February 1999.Hence, no further proceedings requiring the appearance of de Guzman's counsel were conducted before the promulgation of the RTC Decision.Consequently, de Guzman's counsel cannot be said to have no authority to appear in trial, as trial had already ceased upon the death of de Guzman. In sum, the RTC Decision is valid despite the failure to comply with Section 16, Rule 3 of the Rules of Court, because of the express waiver of the heirs to the jurisdiction over their persons, and because there had been, before the promulgation of the RTC Decision, no further proceedings requiring the appearance of de Guzman's counsel. Before proceeding with the substantive aspects of the case, however, there is still one more procedural issue to tackle, the fourth issue presented by the spouses Carandang on the noninclusion in the complaint of an indispensable party. Whether or not the RTC should have dismissed the case for failure to state a cause of action, considering that Milagros de Guzman, allegedly an indispensable party, was not included as a partyplaintiff

However, unlike jurisdiction over the subject matter which is conferred by law and is not subject to the discretion of the parties,[9] jurisdiction over the person of the parties to the case may be waived either expressly or impliedly.[10]Implied waiver comes in the form of either voluntary appearance or a failure to object.[11]chanroblesvirtuallawlibrary In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the heirs of the deceased party, and therefore the judgment cannot be made binding upon them.In the case at bar, not only do the heirs of de Guzman interpose no objection to the jurisdiction of the court over their persons; they are actually claiming and embracing such jurisdiction.In doing so, their waiver is not even merely implied (by their participation in the appeal of said Decision), but express (by their explicit espousal of such view in both the Court of Appeals and in this Court).The heirs of de Guzman had no objection to being bound by the Decision of the RTC. Thus, lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only be asserted by the party who can thereby waive it by silence. It also pays to look into the spirit behind the general rule requiring a formal substitution of heirs.The underlying principle therefor is not really because substitution of heirs is a jurisdictional requirement, but because non-compliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected by the decision rendered therein.[12]Such violation of due process

The spouses Carandang claim that, since three of the four checks used to pay their stock subscriptions were issued in the name of Milagros de Guzman, the latter should be considered an indispensable party.Being such, the spouses Carandang claim, the failure to join Mrs. de Guzman as a party-plaintiff should cause the dismissal of the action because (i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action.[14]chanroblesvirtuallawlibrary

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The Court of Appeals held: We disagree.The joint account of spouses Quirino A de Guzman and Milagros de Guzman from which the four (4) checks were drawn is part of their conjugal property and under both the Civil Code and the Family Code the husband alone may institute an action for the recovery or protection of the spouses' conjugal property. Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that 'x x x Under the New Civil Code, the husband is the administrator of the conjugal partnership.In fact, he is the sole administrator, and the wife is not entitled as a matter of right to join him in this endeavor.The husband may defend the conjugal partnership in a suit or action without being joined by the wife. x x x Under the Family Code, the administration of the conjugal property belongs to the husband and the wife jointly.However, unlike an act of alienation or encumbrance where the consent of both spouses is required, joint management or administration does not require that the husband and wife always act together.Each spouse may validly exercise full power of management alone, subject to the intervention of the court in proper cases as provided under Article 124 of the Family Code. x x x.

parties are considered as real parties in interest, since both classes of parties stand to be benefited or injured by the judgment of the suit. Quirino and Milagros de Guzman were married before the effectivity of the Family Code on3 August 1988.As they did not execute any marriage settlement, the regime of conjugal partnership of gains govern their property relations.[19]chanroblesvirtuallawlibrary All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.[20]Credits are personal properties,[21] acquired during the time the loan or other credit transaction was executed.Therefore, credits loaned during the time of the marriage are presumed to be conjugal property. Consequently, assuming that the four checks created a debt for which the spouses Carandang are liable, such credits are presumed to be conjugal property.There being no evidence to the contrary, such presumption subsists. As such, Quirino de Guzman, being a co-owner of specific partnership property,[22] is certainly a real party in interest.Dismissal on the ground of failure to state a cause of action, by reason that the suit was allegedly not brought by a real party in interest, is therefore unwarranted. So now we come to the discussion concerning indispensable and necessary parties.When an indispensable party is not before the court, the action should likewise be dismissed.[23]The absence of an indispensable party renders all subsequent actuations of the court void, for want of authority to act, not only as to the absent parties but even as to those present.[24]On the other hand, the non-joinder of necessary parties do not result in the dismissal of the case.Instead, Section 9, Rule 3 of the Rules of Court provides for the consequences of such non-joinder: Sec. 9.Non-joinder of necessary parties to be pleaded. ' Whenever in any pleading in which a claim is asserted a necessary party is not joined, the pleader shall set forth his name, if known, and shall state why he is omitted.Should the court find the reason for the omission unmeritorious, it may order the inclusion of the omitted necessary party if jurisdiction over his person may be obtained. The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver of the claim against such party.

The Court of Appeals is correct.Petitioners erroneously interchange the terms 'real party in interest and 'indispensable party.A real party in interest is the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit.[15]On the other hand, an indispensable party is a party in interest without whom no final determination can be had of an action,[16] in contrast to a necessary party, which is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action.[17]chanroblesvirtuallawlibrary The spouses Carandang are indeed correct that '(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action.[18]However, what dismissal on this ground entails is an examination of whether the parties presently pleaded are interested in the outcome of the litigation, and not whether all persons interested in such outcome are actually pleaded.The latter query is relevant in discussions concerning indispensable and necessary parties, but not in discussions concerning real parties in interest.Both indispensable and necessary

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The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Non-compliance with the order for the inclusion of a necessary party would not warrant the dismissal of the complaint.This is an exception to Section 3, Rule 17 which allows the dismissal of the complaint for failure to comply with an order of the court, as Section 9, Rule 3 specifically provides for the effect of such non-inclusion: it shall not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party.Section 11, Rule 3 likewise provides that the non-joinder of parties is not a ground for the dismissal of the action. Other than the indispensable and necessary parties, there is a third set of parties: theproforma parties, which are those who are required to be joined as co-parties in suits by or against another party as may be provided by the applicable substantive law or procedural rule.[25]An example is provided by Section 4, Rule 3 of the Rules of Court: Sec. 4.Spouses as parties. ' Husband and wife shall sue or be sued jointly, except as provided by law.

Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang, seems to be either an indispensable or a necessary party.If she is an indispensable party, dismissal would be proper.If she is merely a necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section 9, Rule 3. Article 108 of the Family Code provides: Art. 108.The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements.

This provision is practically the same as the Civil Code provision it superceded: Art. 147.The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter. In this connection, Article 1811 of the Civil Code provides that '[a] partner is a co-

Pro-forma parties can either be indispensable, necessary or neither indispensable nor necessary.The third case occurs if, for example, a husband files an action to recover a property which he claims to be part of his exclusive property.The wife may have no legal interest in such property, but the rules nevertheless require that she be joined as a party. In cases of pro-forma parties who are neither indispensable nor necessary, the general rule under Section 11, Rule 3 must be followed: such non-joinder is not a ground for dismissal.Hence, in a case concerning an action to recover a sum of money, we held that the failure to join the spouse in that case was not a jurisdictional defect.[26]The non-joinder of a spouse does not warrant dismissal as it is merely a formal requirement which may be cured by amendment.[27]chanroblesvirtuallawlibrary Conversely, in the instances that the pro-forma parties are also indispensable or necessary parties, the rules concerning indispensable or necessary parties, as the case may be, should be applied.Thus, dismissal is warranted only if the pro-forma party not joined in the complaint is an indispensable party.

owner with the other partners of specific partnership property.Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for petitioners' stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit. Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof.In the fairly recent cases of Baloloy v. Hular[28] and Adlawan v. Adlawan,[29] we held that, in a co-ownership, co-owners may bring actions for the recovery of co-owned property without the necessity of joining all the other coowners as co-plaintiffs because the suit is presumed to have been filed for the benefit of his co-owners.In the latter case and in that of De Guia v. Court of Appeals,[30]we also held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment, covers all kinds of action for the recovery of possession.[31]chanroblesvirtuallawlibrary cralaw

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In sum, in suits to recover properties, all co-owners are real parties in interest.However, pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an action, any kind of action, for the recovery of co-owned properties.Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto.The other co-owners are not indispensable parties.They are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners.[32]chanroblesvirtuallawlibrary We therefore hold that Milagros de Guzman is not an indispensable party in the action for the recovery of the allegedly loaned money to the spouses Carandang.As such, she need not have been impleaded in said suit, and dismissal of the suit is not warranted by her not being a party thereto. Whether or not respondents were able to prove the loan sought to be collected from petitioners In the second and third issues presented by the spouses Carandang, they claim that the de Guzmans failed to prove the alleged loan for which the spouses Carandang were held liable.As previously stated, spouses Quirino and Milagros de Guzman paid for the stock subscriptions of the spouses Carandang, amounting to P336,375.00.The de Guzmans claim that these payments were in the form of loans and/or advances and it was agreed upon between the late Quirino de Guzman, Sr. and the spouses Carandang that the latter would repay him.Petitioners, on the other hand, argue that there was an oral pre-incorporation agreement wherein it was agreed that Arcardio Carandang would always maintain his 46% equity participation in the corporation even if the capital structures were increased, and that Quirino de Guzman would personally pay the equity shares/stock subscriptions of Arcardio Carandang with no cost to the latter. On this main issue, the Court of Appeals held: [The spouses Carandang] aver in its ninth assigned error that [the de Guzmans] failed to prove by preponderance of evidence, either the existence of the purported loan or the non-payment thereof. Simply put, preponderance of evidence means that the evidence as a whole adduced by one side is superior to that of the other.The concept of preponderance of evidence refers to evidence that is of greater weight, or

more convincing, than that which is offered in opposition to it; it means probability of truth. [The spouses Carandang] admitted that it was indeed [the de Guzmans] who paid their stock subscriptions and their reason for not reimbursing the latter is the alleged pre-incorporation agreement, to which they offer no clear proof as to its existence. It is a basic rule in evidence that each party must prove his affirmative allegation.Thus, the plaintiff or complainant has to prove his affirmative allegations in the complaints and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaims.[33]chanroblesvirtuallawlibrary

The spouses Carandang, however, insist that the de Guzmans have not proven the loan itself, having presented evidence only of the payment in favor of the Carandangs.They claim: It is an undeniable fact that payment is not equivalent to a loan.For instance, if Mr. 'A decides to pay for Mr. 'Bs' obligation, that payment by Mr. 'A cannot, by any stretch of imagination, possibly mean that there is now a loan by Mr. 'B to Mr. 'A.There is a possibility that such payment by Mr. 'A is purely out of generosity or that there is a mutual agreement between them.As applied to the instant case, that mutual agreement is the pre-incorporation agreement (supra) existing between Mr. de Guzman and the petitioners --- to the effect that the former shall be responsible for paying stock subscriptions of the latter.Thus, when Mr. de Guzman paid for the stock subscriptions of the petitioners, there was no loan to speak of, but only a compliance with the pre-incorporation agreement.[34]chanroblesvirtuallawlibrary

The spouses Carandang are mistaken.If indeed a Mr. A decides to pay for a Mr. 'Bs' obligation, the presumption is that Mr. 'B is indebted to Mr. 'A for such amount that has been paid.This is pursuant to Articles 1236 and 1237 of the Civil Code, which provide: Art. 1236.The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Whoever pays for another may demand from the debtor what he has paid,except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.

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Art. 1237.Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guarantee, or penalty.

Articles 1236 and 1237 are clear that, even in cases where the debtor has no knowledge of payment by a third person, and even in cases where the third person paid against the will of the debtor, such payment would produce a debt in favor of the paying third person.In fact, the only consequences for the failure to inform or get the consent of the debtor are the following: (1) the third person can recover only insofar as the payment has been beneficial to the debtor; and (2) the third person is not subrogated to the rights of the creditor, such as those arising from a mortgage, guarantee or penalty.[35] We say, however, that this is merely a presumption.By virtue of the parties' freedom to contract, the parties could stipulate otherwise and thus, as suggested by the spouses Carandang, there is indeed a possibility that such payment by Mr. 'A was purely out of generosity or that there was a mutual agreement between them.But such mutual agreement, being an exception to presumed course of events as laid down by Articles 1236 and 1237, must be adequately proven. The de Guzmans have successfully proven their payment of the spouses Carandang's stock subscriptions.These payments were, in fact, admitted by the spouses Carandang.Consequently, it is now up to the spouses Carandang to prove the existence of the pre-incorporation agreement that was their defense to the purported loan. Unfortunately for the spouses Carandang, the only testimony which touched on the existence and substance of the pre-incorporation agreement, that of petitioner Arcardio Carandang, was stricken off the record because he did not submit himself to a cross-examination of the opposing party.On the other hand, the testimonies of Romeo Saavedra,[36] Roberto S. Carandang,[37] Gertrudes Z. Esteban,[38] Ceferino Basilio,[39]and Ma. Luisa Carandang[40]touched on matters other than the existence and substance of the preincorporation agreement.So aside from the fact that these witnesses had no personal knowledge as to the alleged existence of the pre-incorporation agreement, the testimonies of these witnesses did not even mention the existence of a pre-incorporation agreement.

cralawWorse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa Carandang even contradicted the existence of a pre-incorporation agreement because when they were asked by their counsel regarding the matter of the check payments made by the late Quirino A. de Guzman, Sr. in their behalf, they said that they had already paid for it thereby negating their own defense that there was a pre-incorporation agreement excusing themselves from paying Mr. de Guzman the amounts he advanced or loaned to them.This basic and irrefutable fact can be gleaned from their testimonies which the private respondents are quoting for easy reference: cralawa. With respect to the testimony of Ma. Luisa Carandang Q:cralawNow, can you tell this Honorable Court how do you feel with respect to the Complaint of the plaintiff in this case charging you that you paid for this year and asking enough to paid (sic) your tax? A:cralawWe have paid already, so, we are not liable for anything payment (sic).[41]chanroblesvirtuallawlibrary

cralawb. With respect to the testimony of Arcadio Carandang

Q:cralawHow much? A:cralawP40,000.00 to P50,000.00 per month. Q:cralawThe plaintiff also claimed thru witness Edgar Ragasa, that there were receipts issued for the payment of your shares; which receipts were marked as Exhibits G to 'L (Plaintiff). cralawIm showing to you these receipts so marked by the plaintiff as their exhibits which were issued in the name of Ma. Luisa Carandang, your wife; and also, Arcadio M. Carandang.Will you please go over this Official Receipt and state for the records, who made for the payment stated in these receipts in your name? A: cralawI paid for those shares.[42]chanroblesvirtuallawlibrary

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There being no testimony or documentary evidence proving the existence of the preincorporation agreement, the spouses Carandang are forced to rely upon an alleged admission by the original plaintiff of the existence of the pre-incorporation agreement. Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted the existence of the pre-incorporation agreement by virtue of paragraphs 13 and 14 of their Answer and paragraph 4 of private respondents' Reply. cralawParagraphs 13 and 14 of petitioners' Answer dated 7 July 1992 state in full: 13.Sometime in November, 1973 or thereabout, herein plaintiff invited defendant Arcadio M. Carandang to a joint venture by pooling together their technical expertise, equipments, financial resources and franchise.Plaintiff proposed to defendant and mutually agreed on the following: 1. That they would organize a corporation known as Mabuhay Broadcasting Systems, Inc. Considering the technical expertise and talent of defendant Arcadio M. Carandang and his new equipments he bought, and his skill in repairing and modifying radio/communication equipments into high proficiency, said defendant would have an equity participation in the corporation of 46%, and plaintiff 54% because of his financial resources and franchise. That defendant would always maintain his 46% equity participation in the corporation even if the capital structures are increased, and that plaintiff would personally pay the equity shares/stock subscriptions of defendant with no cost to the latter. That because of defendant's expertise in the trade including the marketing aspects, he would be the President and General Manager, and plaintiff the Chairman of the Board. That considering their past and trustworthy relations, they would maintain such relations in the joint venture without any mental reservation for their common benefit and success of the business.

are plaintiff and his family members/nominees controlling jointly 54% of the stocks and defendant Arcadio M. Carandang controlling singly 46% as previously agreed.[43]chanroblesvirtuallawlibrary

cralawMeanwhile, paragraphs 3 and 4 of private respondents' Reply dated 29 July 1992 state in full: 3. Plaintiffs admits the allegation in paragraph 13.1 of the Answer only insofar the plaintiff and defendant Arcadio M. Carandang organized a corporation known as MabuhayBroadcasting Systems, Inc.Plaintiff specifically denies the other allegations in paragraph 13 of the Answer, the same being devoid of any legal or factual bases.The truth of the matter is that defendant Arcadio M. Carandang was not able to pay plaintiff the agreed amount of the lease for a number of months forcing the plaintiff to terminate lease.Additionally, the records would show that it was the defendant Arcadio M. Carandang who proposed a joint venture with the plaintiff. It appears that plaintiff agreed to the formation of the corporation principally because of a directive of then President Marcos indicating the need to broaden the ownership of radio broadcasting stations.The plaintiff owned the franchise, the radio transmitter, the antenna tower, the building containing the radio transmitter and other equipment.Verily, he would be placed in a great disadvantage if he would still have to personally pay for the shares of defendant Arcadio M. Carandang. 4. Plaintiff admits the allegations Answer.[44]chanroblesvirtuallawlibrary in paragraph 14 of the

2.

3.

4.

In effect, the spouses Carandang are relying on the fact that Quirino de Guzman stated that he admitted paragraph 14 of the Answer, which incidentally contained the opening clause '(h)aving mutually agreed on the above arrangements, x x x. Admissions, however, should be clear and unambiguous.This purported admission by Quirino de Guzman reeks of ambiguity, as the clause '(h)aving mutually agreed on the above arrangements, seems to be a mere introduction to the statement that the single proprietorship of Quirino de Guzman had been converted into a corporation.If Quirino de Guzman had meant to admit paragraph 13.3, he could have easily said so, as he did the other paragraphs he categorically admitted.Instead, Quirino de Guzman expressly stated the opposite: that '(p)laintiff specifically denies the other allegations of paragraph 13 of the Answer.[45]The

5.

14.Having mutually agreed on the above arrangements, the single proprietorship of plaintiff was immediately spun-off into a corporation now known as Mabuhay Broadcasting System, Inc.The incorporators

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Reply furthermore states that the only portion of paragraph 13 which Quirino de Guzman had admitted is paragraph 13.1, and only insofar as it said that Quirino de Guzman and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc.[46] All the foregoing considered, we hold that Quirino de Guzman had not admitted the alleged pre-incorporation agreement.As there was no admission, and as the testimony of Arcardio Carandang was stricken off the record, we are constrained to rule that there was no preincorporation agreement rendering Quirino de Guzman liable for the spouses Carandang's stock subscription.The payment by the spouses de Guzman of the stock subscriptions of the spouses Carandang are therefore by way of loan which the spouses Carandang are liable to pay. Whether or not the liability of the spouses Carandang is joint and solidary Finally, the Court of Appeals also upheld the RTC Decision insofar as it decreed a solidary liability.According to the Court of Appeals: With regards (sic) the tenth assigned error, [the spouses Carandang] contend that:

The Court of Appeals is correct insofar as it held that when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors.Hence, either of them may be sued for the whole amount, similar to that of a solidary liability, although the amount is chargeable against their conjugal partnership property.Thus, in the case cited by the Court of Appeals, Alipio v. Court of Appeals,[48] the two sets of defendant-spouses therein were held liable for P25,300.00 each, chargeable to their respective conjugal partnerships. WHEREFORE, the Decision of the Court of Appeals, affirming the judgment rendered against the spouses Carandang, is hereby AFFIRMED with the followingMODIFICATION:The spouses Carandang are ORDERED to pay the following amounts from their conjugal partnership properties: (1) (2) P336,375.00 representing the spouses Carandang's loan to Quirino de Guzman; and Interest on the preceding amount at the rate of twelve percent (12%) per annum from 5 June 1992 when the complaint was filed until the principal amount can be fully paid; and P20,000.00 as attorney's fees.

(3) There is absolutely no evidence, testimonial or documentary, showing that the purported obligation of [the spouses Carandang] is joint and solidary. x x x Furthermore, the purported obligation of [the spouses Carandang] does not at all qualify as one of the obligations required by law to be solidary x x x. It is apparent from the facts of the case that [the spouses Carandang] were married way before the effectivity of the Family Code hence; their property regime is conjugal partnership under the Civil Code. It must be noted that for marriages governed by the rules of conjugal partnership of gains, an obligation entered into by the husband and wife is chargeable against their conjugal partnership and it is the partnership, which is primarily bound for its repayment.Thus, when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors, such that the concept of joint and solidary liability, as between them, does not apply.[47]chanroblesvirtuallawlibrary

No costs. cralawSO ORDERED.

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