PROPERTY CASES

G.R. No. 166519               March 31, 2009

NIEVES PLASABAS and MARCOS MALAZARTE vs. COURT OF APPEALS (Special Former Ninth Division), DOMINADOR LUMEN, and AURORA AUNZO

NACHURA, J.:

Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court are the May 12, 2004 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 43085 and the December 1, 2004 Resolution2 denying reconsideration of the challenged decision.

The pertinent facts and proceedings follow.

In 1974, petitioners3 filed a complaint for recovery of title to property with damages before the Court of First Instance (now, Regional Trial Court [RTC]) of Maasin, Southern Leyte against respondents. The case was docketed as Civil Case No. R-1949. The property subject of the case was a parcel of coconut land in Canturing, Maasin, Southern Leyte, declared under Tax Declaration No. 3587 in the name of petitioner Nieves with an area of 2.6360 hectares.4 In their complaint, petitioners prayed that judgment be rendered confirming their rights and legal title to the subject property and ordering the defendants to vacate the occupied portion and to pay damages.5

Respondents, for their part, denied petitioners’ allegation of ownership and possession of the premises, and interposed, as their main defense, that the subject land was inherited by all the parties from their common ancestor, Francisco Plasabas.6

Revealed in the course of the trial was that petitioner Nieves, contrary to her allegations in the complaint, was not the sole and absolute owner of the land. Based on the testimonies of petitioners’ witnesses, the property passed on from Francisco to his son, Leoncio; then to Jovita Talam, petitioner Nieves’ grandmother; then to Antonina Talam, her mother; and then to her and her siblings—Jose, Victor and Victoria.7

After resting their case, respondents raised in their memorandum the argument that the case should have been terminated at inception for petitioners’ failure to implead indispensable parties, the other co-owners – Jose, Victor and Victoria.

In its April 19, 1993 Order,8 the trial court, without ruling on the merits, dismissed the case without prejudice, thus:

This Court, much as it wants to decide the instant case on the merits, being one of the old inherited cases left behind, finds difficulty if not impossibility of doing so at this stage of the proceedings when both parties have already rested their cases. Reluctantly, it agrees with the defendants in the observation that some important indispensable consideration is conspicuously wanting or missing.

It is not the Court’s wish to turn its back on the crucial part of the case, which is the pronouncement of the judgment to settle the issues raised in the pleadings of the parties once and for all, after all the time, effort and expense spent in going through the trial process.

But, rules are rules. They have to be followed, to arrive at a fair and just verdict. Section 7, Rule 3 of the Rules of Court provides:

"x x x Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants."

What the Court wants to say here is that the instant case should have been dismissed without prejudice a long time ago for lack of cause of action as the plaintiffs spouses Marcos Malazarte and Nieves Plasabas Malazarte have no complete legal personality to sue by themselves alone without joining the brothers and sisters of Nieves who are as INDISPENSABLE as the latter in the final determination of the case. Not impleading them, any judgment would have no effectiveness.

They are that indispensable that a final decree would necessarily affect their rights, so that the Court cannot proceed without their presence. There are abundant authorities in this regard. Thus –

"The general rule with reference to the making of parties in a civil action requires the joinder of all indispensable parties under any and all conditions, their presence being a sine qua non of the exercise of judicial power. (Borlasa v. Polistico, 47 Phil. 345, 348) For this reason, our Supreme Court has held that when it appears of record that there are other persons interested in the subject matter of the litigation, who are not made parties to the action, it is the duty of the court to suspend the trial until such parties are made either plaintiffs or defendants. (Pobre, et al. v. Blanco, 17 Phil. 156). x x x Where the petition failed to join as party defendant the person interested in sustaining the proceeding in the court, the same should be dismissed. x x x When an indispensable party is not before the court, the action should be dismissed. (People, et al. v. Rodriguez, et al., G.R. Nos. L-14059-62, September 30, 1959) (sic)

"Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. (Sec. 7, Rule 3, Rules of Court). The burden of procuring the presence of all indispensable parties is on the plaintiff. (39 Amjur [sic] 885). The evident purpose of the rule is to prevent the multiplicity of suits by requiring the person arresting a right against the defendant to include with him, either as co-plaintiffs or as co-defendants, all persons standing in the same position, so that the whole matter in dispute may be determined once and for all in one litigation. (Palarca v. Baginsi, 38 Phil. 177, 178).

"An indispensable party is a party who has such an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without inquiring or

affecting such interest; a party who has not only an interest of such a nature that a final decree cannot be made without affecting his interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience. (67 C.J.S. 892). Indispensable parties are those without whom no action can be finally determined." (Sanidad v. Cabataje, 5 Phil. 204)

WHEREFORE, IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, both the complaint and the counterclaim in the instant case are ordered DISMISSED without prejudice. No pronouncement as to costs.

SO ORDERED.9

Aggrieved, petitioners elevated the case to the CA. In the challenged May 12, 2004 Decision,10 the appellate court affirmed the ruling of the trial court. The CA, further, declared that the non-joinder of the indispensable parties would violate the principle of due process, and that Article 487 of the Civil Code could not be applied considering that the complaint was not for ejectment, but for recovery of title or a reivindicatory action.11

With their motion for reconsideration denied in the further assailed December 1, 2004 Resolution,12 petitioners filed the instant petition.

The Court grants the petition and remands the case to the trial court for disposition on the merits.

Article 487 of the Civil Code provides that any one of the co-owners may bring an action for ejectment.1avvphi1.zw+ The article covers all kinds of actions for the recovery of possession, including an accion publiciana and a reivindicatory action. A co-owner may file suit without necessarily joining all the other co-owners as co-plaintiffs because the suit is deemed to be instituted for the benefit of all. Any judgment of the court in favor of the plaintiff will benefit the other co-owners, but if the judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-owners.13

With this disquisition, there is no need to determine whether petitioners’ complaint is one for ejectment or for recovery of title. To repeat, Article 487 of the Civil Code applies to both actions.

Thus, petitioners, in their complaint, do not have to implead their co-owners as parties. The only exception to this rule is when the action is for the benefit of the plaintiff alone who claims to be the sole owner and is, thus, entitled to the possession thereof. In such a case, the action will not prosper unless the plaintiff impleads the other co-owners who are indispensable parties.14

Here, the allegation of petitioners in their complaint that they are the sole owners of the property in litigation is immaterial, considering that they acknowledged during the trial that the property is co-owned by Nieves and her siblings, and that petitioners have been authorized by the co-owners to pursue the case on the latter’s behalf.15Impleading the

other co-owners is, therefore, not mandatory, because, as mentioned earlier, the suit is deemed to be instituted for the benefit of all.

In any event, the trial and appellate courts committed reversible error when they summarily dismissed the case, after both parties had rested their cases following a protracted trial commencing in 1974, on the sole ground of failure to implead indispensable parties. The rule is settled that the non-joinder of indispensable parties is not a ground for the dismissal of an action. The remedy is to implead the non-party claimed to be indispensable. Parties may be added by order of the court on motion of the party or on its own initiative at any stage of the action and/or at such times as are just. If petitioner refuses to implead an indispensable party despite the order of the court, the latter may dismiss the complaint/petition for the plaintiff’s/petitioner's failure to comply therewith.16

WHEREFORE, premises considered, the instant petition is GRANTED, and the case is REMANDED to the trial court for appropriate proceedings. The trial court is further DIRECTED to decide on the merits of the civil case WITH DISPATCH. SO ORDERED.

                                                      

JOSE S. DAILISAN,                                  G.R. No. 176448                  Petitioner,                                                                                                    Present:                                                                    QUISUMBING, J.,       -  versus  -                                                    Chairperson,                                                                   CARPIO MORALES,

                                                         TINGA,          VELASCO, JR., and

COURT OF APPEALS and                       BRION,  JJ.THE HRS. OF THE “late” FEDERICO    PUGAO, namely:  FLORENTINA             Promulgated:       PUGAO, FLORIDA PUGAO-                       UBALDO, FE PUGAO-VILLANUEVA, July 28, 2008FERNANDO PUGAO and LUDOVICO  PUGAO,                 Respondents. x----------------------------------------------------------------------------x  D E C I S I O N TINGA, J.:             This is a Petition for Review[1] of the 25 May 2006 Decision[2] and 26 January 2007 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 82642, [4] which reversed and set aside the Decision[5] of the Regional Trial Court (RTC) of Quezon City, Branch 88, dated 3 September 2003.           On 8 July 1993, petitioner filed a Complaint [6] for partition before the RTC of Quezon City,[7] alleging that he purchased one-fourth (¼) of  the land of Federico Pugao(Federico) identified as Lot 16, Block NB 22 of subdivision Psd-57020 located in  Bago Bantay, Quezon City and covered by Transfer Certificate of Title No. No. 75133. 

According to petitioner,  he and Federico had initially agreed to the sale of one-half (1/2) portion of the same land for P12,000.00 and that he had paid Federico several installments from 1976 to 1979, which all in all totaled to P6,000.00, but was told to stop

further payments because per Federico’s representation  he could only  sell one-fourth ( ¼) of the lot.[8]   Federico could not deliver the title to him because the property was still mortgaged to a bank. When the mortgage was released,  petitioner  demanded the execution of a deed of absolute sale.  Instead of acceding, Federico proposed to mortgage the  property  to  petitioner as security for a  P10,000.00 loan,  payable in three (3) months, and upon payment of the loan the deed of absolute sale would be executed.  Petitioner agreed, and they executed a deed of real estate mortgage. [9]  The loan was paid after three (3) months, after which petitioner and Federico executed a deed of absolute sale on  5 February 1979.  Petitioner asked for the partition of the lot and caused a resurvey to expedite the partition.[10] However,  Federico still refused to  effect the partition and even sent a notice of eviction[11] against petitioner. 

According to Federico, petitioner is the  husband of his niece and that when the couple’s house was demolished during martial law, he allowed them out of pity to occupy one fourth (¼) of his lot.  While averring  that the property had been the subject of real estate mortgages in favor of other banks, he admitted that he executed in favor of petitioner a deed of real estate mortgage as security for a P10,000.00 loan. He was able to pay the said  loan which resulted in the cancellation of the mortgage, he added.[12]

           However, Federico denied  having voluntarily executed the deed of absolute sale, and instead alleged that when he was seriously ill in January of  1992, petitioner, with a certain Atty. Juanitas, made him  sign  pages  of   what  the  former  told him to be parts of the real estate mortgage he had earlier executed in favor of petitioner.   Federico filed a complaint  for falsification and ejectment against petitioner  before the barangay, but attempts at conciliation failed.  Due to his failing health, Federico failed to carry out his intention to file and pursue a formal complaint before the court.[13]

 Federico passed away while this case was pending before the trial court. [14] And

so he was substituted by his heirs, herein respondents.[15]

 On 3 September 2003, the trial court, finding that respondents failed to disprove

the validity of the deed of absolute sale, ruled in favor of petitioner and ordered the partition of the subject property.[16] The dispositive portion of the decision reads: 

         IN VIEW OF THE FOREGOING, judgment is rendered as follows:

  

1.           Ordering the partition of the said parcel of land mentioned and described in paragraph 3 of the complaint, adopting for the purpose of said partition, the survey plan prepared by the Geodetic Engineer;

 2.            Ordering the defendant to surrender and execute all the necessary

documents to effect the partition and issuance of separate Transfer Certificate of Title over the subject matter  of the Deed of Absolute Sale;

  3.            Ordering the defendants to pay the amount of fifty thousand pesos

(P50,000.00) as moral and exemplary damages; 4.            Ordering the defendant to pay attorney’s fees in the amount

of P30,000.00 and P500.00 per appearance, plus costs; 5.            Ordering the Register of Deeds of Quezon City to issue a Transfer

Certificate of Title to effect the partition in the name of plaintiff. 

SO ORDERED.[17]

 Respondents moved for the reconsideration of  the decision but their motion was denied by the trial court on 19 January 2004.[18] Hence, they  appealed the decision to the Court of Appeals.           The Court of Appeals granted the appeal. It noted that petitioner should have filed an action for specific performance to compel Federico to honor the deed of absolute sale;[19] yet the right to file such action, had already expired. [20] It further noted that petitioner “filed the instant action for partition simply because it is not barred by prescription.”[21] It ruled against the validity of the sale between Federico and petitioner, finding that there was no consent on Federico’s part and that there was no proof of payment of the price or consideration on the part of petitioner. [22]  It concluded that the deed of sale is fictitious and invalid, and hence could not serve as basis of any claim of ownership.[23]

           Petitioner filed a motion for reconsideration but his motion was denied for lack of merit.[24]

           Petitioner now claims that the appellate court’s decision is contrary to law.  He argues that his action is  “actually a case of ‘specific performance’ for the delivery/surrender of title in view of the duly executed ‘Deed of Absolute Sale,’ and thus,

the validity of the said deed cannot be collaterally attacked, but must be raised in an independent action.”[25] He insists that his action for specific performance has not prescribed because upon the execution of the deed of sale, ownership of the subject property has passed to him, the buyer, and an action for specific performance  is only incidental to his claim of ownership; on the contrary, it is respondents’ right   (duty)[26] to question the validity of the deed of sale, which they did not do despite knowledge of the existence of the said instrument as early as 1984.  Finally, he questions the specific findings of the Court of Appeals concerning the execution of the deed of absolute sale as not borne by the evidence.[27]

           For their part, respondents point out that this is the first time that petitioner alleged that his action for partition is actually a case of specific performance for the delivery/surrender of the title of the subject property. This being so, respondents believe that petitioner’s cause of action has already prescribed since more than ten (10) years have already lapsed since the execution of the deed of sale.  They add that in any case,  petitioner’s arguments and allegations are untrue, baseless and misleading. [28]

           We resolve to grant the petition.           The two determinative issues in this case are: (1) whether the deed of absolute sale is valid; and (2) what is the prescriptive period within which to file petitioner’s action.  

The  notarized deed of absolute sale is  a  public document, and has in its favor the presumption of regularity which may only be rebutted by evidence so clear, strong and convincing as to exclude all controversy as to the falsity of the certificate. [29] The burden of proof to overcome the presumption of due execution of a notarized document lies on the party contesting such execution.              First, a distinction must be made between void and voidable contracts.  A contract is inexistent and void from the very beginning when (i)  its cause, object or purpose is contrary to law, morals, good customs, public order or public policy; (ii) it is absolutely simulated or fictitious; (iii) its cause or object did not exist at the time of the transaction; (iv) its object is outside the commerce of men; (v) it contemplates an impossible service; (vi) the intention of the parties relative to the principal object of the contract cannot be ascertained; or (vii) it is expressly prohibited or declared void by law. [30]   The action or

defense for the declaration of the inexistence of a contract does not prescribe. [31]  On the other hand, a voidable or annullable  contract is one where (i) one of the parties is incapable of giving consent to a contract; or (ii) the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.[32]  The action for annulment must be brought within four (4) years from the time the intimidation, violence or undue influence ceases, or four (4) years from the time of the discovery of the mistake or fraud. [33]

 Respondents claim that the deed of sale “is not valid because there was

absolutely no consent on the part of” Federico “to said contract, which was in English,” considering that Federico “did not even finish Grade 2 of the elementary school level,”[34] and that he was only led to believe that the pages thereof corresponded to and were part of the real estate mortgage.  Basically, respondents’ claim is that the deed of sale is a voidable, and not void, contract and the ground to be raised is mistake and/or fraud because Federico was led to believe  that what he was signing was still part of the earlier deed of real estate mortgage. In that regard, respondents stress Federico’s low educational attainment and inability to understand the English language.   

Nevertheless, Florida Pugao, one of the respondents, testified that she became aware of the existence of the deed of sale way back in 1984. [35]   Despite this  knowledge, as well as   Federico’s and/or his other  heirs’  knowledge of the assailed deed even prior to 1984,  none of them took any action to annul the deed within the prescribed four (4)-year period which expired in 1988. 

 Anent Federico’s low educational attainment and unfamiliarity with English,

Article 1332 of the Civil  Code is the governing provision:          Art. 1332.  When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.

             

That Federico did not even reach Grade 2,  that he was unable to read or understand English, and that his consent was vitiated by  mistake or fraud, make  the situation fall under the above-quoted provision. Thus, it would have been incumbent upon petitioner to show that he fully explained the terms of the contract  to Federico if not for a crucial point.  Respondents failed to file an action for annulment of the deed of sale  on the ground of mistake or fraud within the four-year period provided by law.   Thus, they have lost both their right to file an action for annulment or to set up such nullity of the deed of sale as a defense in an action to enforce the same, [36]  which was the case filed by petitioner. Likewise, respondents failed to assign the matter of mistake or fraud as an error before the Court of Appeals.

 Anent the “inconsistencies” in the deed of sale, suffice it to say that they are

really not  inconsistencies  but rather trivial flaws appearing in the acknowledgment, and not in the body of the deed itself which contains the operative provisions. Moreover, there is no allegation that the signatures appearing in the deed were forged or falsified.

 All told, respondents were unable to overcome the presumption  of validity of the

deed of absolute sale as well as the regularity in its execution.                    With the issue of the deed of sale’s validity already settled, the question of prescription of action becomes easy to resolve.  We note that the Court of Appeals ruled that petitioner’s cause of action has prescribed following its conclusion that petitioner’s action is actually one for specific performance, not partition.  Interestingly, petitioner, after having triumphed in the trial court with his action for partition, suddenly changed tack and declared that his original action was indeed an action for specific performance.  He should not have gone that far and executed an apparent somersault. In light of the facts which impelled petitioner to seek judicial relief, there is no discernible change in the ultimate relief he seeks, as his complaint for partition is also an action for specific performance.  His objective is to make Federico honor their contract and perform his obligation to deliver a separate title covering the lot he sold to him but which can be done only after the portion is segregated from the rest of Federico’s property. [37]             Petitioner’s action before the trial court was properly captioned as one for partition because there are sufficient allegations in the complaint that he is a co-owner of  the property.  The regime of co-ownership exists when ownership of an undivided thing or right belongs to different persons.[38]   By the nature of a co-ownership, a co-owner

cannot point to a specific portion of the property owned in common as his own because his share therein remains intangible.[39]  The pertinent portion of the deed reads:

           2.  That for and in consideration of the sum of Six Thousand  (P6,000.00), Pesos, Philippine Currency, paid unto the VENDOR by the VENDEE, the VENDOR hereby SELLS, TRANSFERS, CEDES, and CONVEY unto the VENDEE, his heirs, successors or assigns an undivided ONE-FOURTH (1/4) portion (50 square meters, more or less, in the particular portion of the lot where the house of the VENDEE now stands) of the above-described residential lot together with all improvements thereon free from all liens and encumbrances. [40] (Emphasis supplied)  The description “undivided ONE-FOURTH (1/4) portion (50 square meters, more

or less, in the particular portion of the lot where the house of the VENDEE now stands)”   shows that the portion sold is  still undivided and not sufficiently identified. While the description  provides a guide  for identifying the location of the lot sold, there was no indication of its exact  metes and bounds.  This is the reason why petitioner was constrained to cause the survey of the property.[41] As a co-owner of the property, therefore, petitioner has the right to demand partition, a right which does not prescribe.[42]  

  Ownership of the thing sold is acquired only from the time of delivery thereof,

either actual or constructive.  Article 1498 of the Civil Code provides that when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot be inferred.[43]  The Court notes that Federico had already delivered the portion he sold to petitioner, subject of course to the execution of a technical survey, when he executed the deed of absolute sale, which is a public instrument.[44]  In view of the delivery in law, coupled with petitioner’s actual occupation of the portion where his house stands, all that is needed is its segregation from the rest of the property.           WHEREFORE, the petition is GRANTED. The  challenged Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 82642 are SET ASIDE, and the Decision of the  Regional Trial Court of Quezon City, Branch 98 is REINSTATED.

        SO ORDERED.

LEONOR B. CRUZ,

                                  Petitioner,

 

 

 

- versus -

 

 

 

 

TEOFILA M. CATAPANG,

                                  Respondent.

 G.R. No. 164110 

     Present:

 

     QUISUMBING, J., Chairperson,

     CARPIO,

     CARPIO MORALES,

     TINGA, and

     VELASCO, JR., JJ.

 

Promulgated:

 

February 12, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

This petition for review seeks the reversal of the Decision[1] dated September 16, 2003 and the Resolution[2] dated June 11, 2004 of the Court of Appeals in CA-G.R. SP No. 69250.  The Court of Appeals reversed the Decision[3] dated October 22, 2001 of the Regional Trial Court (RTC), Branch 86, Taal, Batangas, which had earlier affirmed the Decision[4] dated September 20, 1999 of the 7th Municipal Circuit Trial Court (MCTC) of Taal, Batangas ordering respondent to vacate and deliver possession of a portion of the lot co-owned by petitioner, Luz Cruz and Norma Maligaya.

The antecedent facts of the case are as follows.

Petitioner Leonor B. Cruz, Luz Cruz and Norma Maligaya are the co-owners of a parcel of land covering an area of 1,435 square meters located at Barangay Mahabang Ludlod, Taal, Batangas.[5]  With the consent of Norma Maligaya, one of the aforementioned co-owners, respondent Teofila M. Catapang built a house on a lot adjacent to the abovementioned parcel of land sometime in 1992.  The house intruded, however, on a portion of the co-owned property.[6]

In the first week of September 1995, petitioner Leonor B. Cruz visited the property and was surprised to see a part of respondent’s house intruding unto a portion of the co-owned property.  She then made several demands upon respondent to demolish the intruding structure and to vacate the portion encroaching on their property.  The respondent, however, refused and disregarded her demands.[7] 

On January 25, 1996, the petitioner filed a complaint [8] for forcible entry against respondent before the 7th MCTC of Taal, Batangas.  The MCTC decided in favor of petitioner, ruling that consent of only one of the co-owners is not sufficient to justify defendant’s construction of the house and possession of the portion of the lot in question.[9] The dispositive portion of the MCTC decision reads:

WHEREFORE, judgment is hereby rendered ordering the defendant or any person acting in her behalf to vacate and deliver the possession of the area illegally occupied to the plaintiff; ordering the defendant to pay plaintiff reasonable attorney’s fees of P10,000.00, plus costs of suit.

SO ORDERED.[10]

On appeal, the RTC, Branch 86, Taal, Batangas, affirmed the MCTC’s ruling in a Decision dated October 22, 2001, the dispositive portion of which states:

Wherefore, premises considered, the decision [appealed] from is hereby affirmed in toto.

SO ORDERED.[11]

After her motion for reconsideration was denied by the RTC, respondent filed a petition for review with the Court of Appeals, which reversed the RTC’s decision.  The Court of Appeals held that there is no cause of action for forcible entry in this case because respondent’s entry into the property, considering the consent given by co-owner Norma Maligaya, cannot be characterized as one made through strategy or stealth which gives rise to a cause of action for forcible entry.[12]  The Court of Appeals’ decision further held that petitioner’s remedy is not an action for ejectment but an entirely different recourse with the appropriate forum.  The Court of Appeals disposed, thus:

WHEREFORE, premises considered, the instant Petition is hereby GRANTED.   The challenged Decision dated 22 October 2001 as well as the Order dated 07 January 2002 of the Regional Trial Court of Taal, Batangas, Branch 86, are hereby REVERSED and SET ASIDE and, in lieu thereof, another is entered DISMISSING the complaint for forcible entry docketed as Civil Case No. 71-T.

SO ORDERED.[13]

After petitioner’s motion for reconsideration was denied by the Court of Appeals in a Resolution dated June 11, 2004, she filed the instant petition.

Raised before us for consideration are the following issues:

I. WHETHER OR NOT THE KNOWLEDGE AND CONSENT OF CO-OWNER NORMA MALIGAYA IS A VALID LICENSE FOR THE RESPONDENT TO ERECT THE BUNGALOW HOUSE ON THE PREMISES OWNED PRO-INDIVISO SANS CONSENT FROM THE PETITIONER AND OTHE[R] CO-OWNER[.]

II. WHETHER OR NOT RESPONDENT, BY HER ACTS, HAS ACQUIRED EXCLUSIVE OWNERSHIP OVER THE PORTION OF THE LOT SUBJECT OF THE PREMISES PURSUANT TO THE CONSENT GRANTED UNTO HER BY CO-OWNER NORMA MALIGAYA TO THE EXCLUSION OF THE PETITIONER AND THE OTHER CO-OWNER.[14]

III. WHETHER OR NOT RESPONDENT IN FACT OBTAINED POSSESSION OF THE PROPERTY IN QUESTION BY MEANS OF SIMPLE STRATEGY.[15]

Petitioner prays in her petition that we effectively reverse the Court of Appeals’ decision.

Simply put, the main issue before us is whether consent given by a co-owner of a parcel of land to a person to construct a house on the co-owned property warrants the dismissal of a forcible entry case filed by another co-owner against that person.

In her memorandum,[16] petitioner   contends that   the   consent   and knowledge of co-owner Norma Maligaya cannot defeat the action for forcible entry since it is a basic principle in the law of co-ownership that no individual co-owner can claim title to any definite portion of the land or thing owned in common until partition.

On the other hand, respondent in her memorandum[17] counters that the complaint for forcible entry cannot prosper because her entry into the property was not through strategy or stealth due to the consent of one of the co-owners.  She further argues that since Norma Maligaya is residing in the house she built, the issue is not just possession de facto but also one of possession de jure since it involves rights of co-owners to enjoy the property.

As to the issue of whether or not the consent of one co-owner will warrant the dismissal of a forcible entry case filed by another co-owner against the person who was given the consent to construct a house on the co-owned property, we have held that a co-owner cannot devote common property to his or her exclusive use to the prejudice of the co-ownership.[18]  In our view, a co-owner cannot give valid consent to another to build a house on the co-owned property, which is an act tantamount to devoting the property to his or her exclusive use.

Furthermore, Articles 486 and 491 of the Civil Code provide:

Art. 486.    Each co-owner may use the thing owned in common, provided he does so in accordance with the purpose for which it is intended and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according to their rights.  The purpose of the co-ownership may be changed by agreement, express or implied.

Art. 491.    None of the co-owners shall, without the consent of the others, make alterations in the thing owned in common, even though benefits for all would result therefrom.  However, if the withholding of the consent by one or more of the co-owners is clearly prejudicial to the common interest, the courts may afford adequate relief.

Article 486 states each co-owner may use the thing owned in common provided he does so in accordance with the purpose for which it is intended and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according to their rights.  Giving consent to a third person to construct a house on the co-owned property will injure the interest of the co-ownership and prevent other co-owners from using the property in accordance with their rights.

Under Article 491, none of the co-owners shall, without the consent of the others, make alterations in the thing owned in common.  It necessarily follows that none of the co-owners can, without the consent of the other co-owners, validly consent to the making of an alteration by another person, such as respondent, in the thing owned in common. Alterations include any act of strict dominion or ownership and any encumbrance or disposition has been held implicitly to be an act of alteration.[19]  The construction of a house on the co-owned property is an act of dominion.  Therefore, it is an alteration falling under Article 491 of the Civil Code.  There being no consent from all co-owners, respondent had no right to construct her house on the co-owned property.  

Consent of only one co-owner will not warrant the dismissal of the complaint for forcible entry filed against the builder.  The consent given by Norma Maligaya in the absence of the consent of petitioner and Luz Cruz did not vest upon respondent any right to enter into the co-owned property.  Her entry into the property still falls under the classification “through strategy or stealth.” 

The Court of Appeals held that there is no forcible entry because respondent’s entry into the property was not through strategy or stealth due to the consent given to her by one of the co-owners.  We cannot give our imprimatur to this sweeping conclusion.  Respondent’s entry into the property without the permission of petitioner could appear to be a secret and clandestine act done in connivance with co-owner Norma Maligaya whom respondent allowed to stay in her house.  Entry into the land effected clandestinely without the knowledge of the other co-owners could be categorized as possession by stealth.[20]  Moreover, respondent’s act of getting only the

consent of one co-owner, her sister Norma Maligaya, and allowing the latter to stay in the constructed house, can in fact be considered as a strategy which she utilized in order to enter into the co-owned property.  As such, respondent’s acts constitute forcible entry.

          Petitioner’s filing of a complaint for forcible entry, in our view, was within the one-year period for filing the complaint.  The one-year period within which to bring an action for forcible entry is generally counted from the date of actual entry to the land.  However, when entry is made through stealth, then the one-year period is counted from the time the petitioner learned about it.[21]  Although respondent constructed her house in 1992, it was only in September 1995 that petitioner learned of it when she visited the property. Accordingly, she then made demands on respondent to vacate the premises.  Failing to get a favorable response, petitioner filed the complaint on January 25, 1996, which is within the one-year period from the time petitioner learned of the construction.

WHEREFORE, the petition is GRANTED.  The Decision dated September 16, 2003 and the Resolution dated June 11, 2004 of the Court of Appeals in CA-G.R. SP No. 69250 are REVERSED and SET ASIDE.  The Decision dated October 22, 2001 of the Regional Trial Court, Branch 86, Taal, Batangas is REINSTATED.  Costs against respondent.

SO ORDERED.

 

 

G.R. No. 163744             February 29, 2008

METROPOLITAN BANK AND TRUST CO. vs. NICHOLSON PASCUAL a.k.a. NELSON PASCUAL

D E C I S I O N

VELASCO, JR., J.:

Respondent Nicholson Pascual and Florencia Nevalga were married on January 19, 1985. During the union, Florencia bought from spouses Clarito and Belen Sering a 250-square meter lot with a three-door apartment standing thereon located in Makati City. Subsequently, Transfer Certificate of Title (TCT) No. S-101473/T-510 covering the purchased lot was canceled and, in lieu thereof, TCT No. 1562831 of the Registry of Deeds of Makati City was issued in the name of Florencia, "married to Nelson Pascual" a.k.a. Nicholson Pascual.

In 1994, Florencia filed a suit for the declaration of nullity of marriage under Article 36 of the Family Code, docketed as Civil Case No. Q-95-23533. After trial, the Regional Trial Court (RTC), Branch 94 in Quezon City rendered, on July 31, 1995, a Decision,2 declaring the marriage of Nicholson and Florencia null and void on the ground of psychological incapacity on the part of Nicholson. In the same decision, the RTC, inter alia, ordered the dissolution and liquidation of the ex-spouses’ conjugal partnership of gains. Subsequent events saw the couple going their separate ways without liquidating their conjugal partnership.

On April 30, 1997, Florencia, together with spouses Norberto and Elvira Oliveros, obtained a PhP 58 million loan from petitioner Metropolitan Bank and Trust Co. (Metrobank). To secure the obligation, Florencia and the spouses Oliveros executed several real estate mortgages (REMs) on their properties, including one involving the lot covered by TCT No. 156283. Among the documents Florencia submitted to procure the loan were a copy of TCT No. 156283, a photocopy of the marriage-nullifying RTC decision, and a document denominated as "Waiver" that Nicholson purportedly executed on April 9, 1995. The waiver, made in favor of Florencia, covered the conjugal properties of the ex-spouses listed therein, but did not incidentally include the lot in question.

Due to the failure of Florencia and the spouses Oliveros to pay their loan obligation when it fell due, Metrobank, on November 29, 1999, initiated foreclosure proceedings under Act No. 3135, as amended, before the Office of the Notary Public of Makati City. Subsequently, Metrobank caused the publication of the notice of sale on three issues of Remate.3 At the auction sale on January 21, 2000, Metrobank emerged as the highest bidder.

Getting wind of the foreclosure proceedings, Nicholson filed on June 28, 2000, before the RTC in Makati City, a Complaint to declare the nullity of the mortgage of the disputed property, docketed as Civil Case No. 00-789 and eventually raffled to Branch 65 of the court. In it, Nicholson alleged that the property, which is still conjugal property, was mortgaged without his consent.

Metrobank, in its Answer with Counterclaim and Cross-Claim,4 alleged that the disputed lot, being registered in Florencia’s name, was paraphernal. Metrobank also asserted having approved the mortgage in good faith.

Florencia did not file an answer within the reglementary period and, hence, was subsequently declared in default.

The RTC Declared the REM Invalid

After trial on the merits, the RTC rendered, on September 24, 2001, judgment finding for Nicholson. The falloreads:

PREMISES CONSIDERED, the Court renders judgment declaring the real estate mortgage on the property covered by [TCT] No. 156283 of the Registry of Deeds for the City of Makati as well as all proceedings thereon null and void.

The Court further orders defendants [Metrobank and Florencia] jointly and severally to pay plaintiff [Nicholson]:

1. PhP100,000.00 by way of moral damages;

2. PhP75,000.00 by way of attorney’s fees; and

3. The costs.

SO ORDERED.5

Even as it declared the invalidity of the mortgage, the trial court found the said lot to be conjugal, the same having been acquired during the existence of the marriage of Nicholson and Florencia. In so ruling, the RTC invoked Art. 116 of the Family Code, providing that "all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved." To the trial court, Metrobank had not overcome the presumptive conjugal nature of the lot. And being conjugal, the RTC concluded that the disputed property may not be validly encumbered by Florencia without Nicholson’s consent.

The RTC also found the deed of waiver Florencia submitted to Metrobank to be fatally defective. For let alone the fact that Nicholson denied executing the same and that the signature of the notarizing officer was a forgery, the waiver document was allegedly

executed on April 9, 1995 or a little over three months before the issuance of the RTC decision declaring the nullity of marriage between Nicholson and Florencia.

The trial court also declared Metrobank as a mortgagee in bad faith on account of negligence, stating the observation that certain data appeared in the supporting contract documents, which, if properly scrutinized, would have put the bank on guard against approving the mortgage. Among the data referred to was the date of execution of the deed of waiver.

The RTC dismissed Metrobank’s counterclaim and cross-claim against the ex-spouses.

Metrobank’s motion for reconsideration was denied. Undeterred, Metrobank appealed to the Court of Appeals (CA), the appeal docketed as CA-G.R. CV No. 74874.

The CA Affirmed with Modification the RTC’s Decision

On January 28, 2004, the CA rendered a Decision affirmatory of that of the RTC, except for the award therein of moral damages and attorney’s fees which the CA ordered deleted. The dispositive portion of the CA’s Decision reads:

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED WITH MODIFICATION with respect to the award of moral damages and attorney’s fees which is hereby DELETED.

SO ORDERED.6

Like the RTC earlier held, the CA ruled that Metrobank failed to overthrow the presumption established in Art. 116 of the Family Code. And also decreed as going against Metrobank was Florencia’s failure to comply with the prescriptions of the succeeding Art. 124 of the Code on the disposition of conjugal partnership property. Art. 124 states:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by the wife for proper remedy x x x.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse

or authorization by the court before the offer is withdrawn by either or both offerors.

As to the deletion of the award of moral damages and attorney’s fees, the CA, in gist, held that Metrobank did not enter into the mortgage contract out of ill-will or for some fraudulent purpose, moral obliquity, or like dishonest considerations as to justify damages.

Metrobank moved but was denied reconsideration by the CA.

Thus, Metrobank filed this Petition for Review on Certiorari under Rule 45, raising the following issues for consideration:

a. Whether or not the [CA] erred in declaring subject property as conjugal by applying Article 116 of the Family Code.

b. Whether or not the [CA] erred in not holding that the declaration of nullity of marriage between the respondent Nicholson Pascual and Florencia Nevalga ipso facto dissolved the regime of community of property of the spouses.

c. Whether or not the [CA] erred in ruling that the petitioner is an innocent purchaser for value.7

Our Ruling

A modification of the CA’s Decision is in order.

The Disputed Property is Conjugal

It is Metrobank’s threshold posture that Art. 160 of the Civil Code providing that "[a]ll property of the marriage is presumed to belong to the conjugal partnership, unless it be prove[n] that it pertains exclusively to the husband or to the wife," applies. To Metrobank, Art. 116 of the Family Code could not be of governing application inasmuch as Nicholson and Florencia contracted marriage before the effectivity of the Family Code on August 3, 1988. CitingManongsong v. Estimo,8 Metrobank asserts that the presumption of conjugal ownership under Art. 160 of the Civil Code applies when there is proof that the property was acquired during the marriage. Metrobank adds, however, that for the presumption of conjugal ownership to operate, evidence must be adduced to prove that not only was the property acquired during the marriage but that conjugal funds were used for the acquisition, a burden Nicholson allegedly failed to discharge.

To bolster its thesis on the paraphernal nature of the disputed property, Metrobank cites Francisco v. Court of Appeals9 and Jocson v. Court of Appeals,10 among other cases, where this Court held that a property registered in the name of a certain person with a description of being married is no proof that the property was acquired during the spouses’ marriage.

On the other hand, Nicholson, banking on De Leon v. Rehabilitation Finance Corporation11 and Wong v. IAC,12contends that Metrobank failed to overcome the legal presumption that the disputed property is conjugal. He asserts that Metrobank’s arguments on the matter of presumption are misleading as only one postulate needs to be shown for the presumption in favor of conjugal ownership to arise, that is, the fact of acquisition during marriage. Nicholson dismisses, as inapplicable, Francisco and Jocson, noting that they are relevant only when there is no indication as to the exact date of acquisition of the property alleged to be conjugal.

As a final point, Nicholson invites attention to the fact that Metrobank had virtually recognized the conjugal nature of the property in at least three instances. The first was when the bank lumped him with Florencia in Civil Case No. 00-789 as co-mortgagors and when they were referred to as "spouses" in the petition for extrajudicial foreclosure of mortgage. Then came the published notice of foreclosure sale where Nicholson was again designated as co-mortgagor. And third, in its demand-letter13 to vacate the disputed lot, Metrobank addressed Nicholson and Florencia as "spouses," albeit the finality of the decree of nullity of marriage between them had long set in.

We find for Nicholson.

First, while Metrobank is correct in saying that Art. 160 of the Civil Code, not Art. 116 of the Family Code, is the applicable legal provision since the property was acquired prior to the enactment of the Family Code, it errs in its theory that, before conjugal ownership could be legally presumed, there must be a showing that the property was acquired during marriage using conjugal funds. Contrary to Metrobank’s submission, the Court did not, inManongsong,14 add the matter of the use of conjugal funds as an essential requirement for the presumption of conjugal ownership to arise. Nicholson is correct in pointing out that only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal. Indeed, if proof on the use of conjugal is still required as a necessary condition before the presumption can arise, then the legal presumption set forth in the law would veritably be a superfluity. As we stressed in Castro v. Miat:

Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of the marriage is presumed to be conjugal partnership, unless it be prove[n] that it pertains exclusively to the husband or to the wife." This article does not require proof that the property was acquired with funds of the partnership. The presumption applies even when the manner in which the property was acquired does not appear.15 (Emphasis supplied.)

Second, Francisco and Jocson do not reinforce Metrobank’s theory. Metrobank would thrust on the Court, invoking the two cases, the argument that the registration of the property in the name of "Florencia Nevalga, married to Nelson Pascual" operates to describe only the marital status of the title holder, but not as proof that the property was acquired during the existence of the marriage.

Metrobank is wrong. As Nicholson aptly points out, if proof obtains on the acquisition of the property during the existence of the marriage, then the presumption of conjugal ownership applies. The correct lesson of Franciscoand Jocson is that proof of acquisition during the marital coverture is a condition sine qua non for the operation of the presumption in favor of conjugal ownership. When there is no showing as to when the property was acquired by the spouse, the fact that a title is in the name of the spouse is an indication that the property belongs exclusively to said spouse.16

The Court, to be sure, has taken stock of Nicholson’s arguments regarding Metrobank having implicitly acknowledged, thus being in virtual estoppel to question, the conjugal ownership of the disputed lot, the bank having named the former in the foreclosure proceedings below as either the spouse of Florencia or her co-mortgagor. It is felt, however, that there is no compelling reason to delve into the matter of estoppel, the same having been raised only for the first time in this petition. Besides, however Nicholson was designated below does not really change, one way or another, the classification of the lot in question.

Termination of Conjugal Property Regime doesnot ipso facto End the Nature of Conjugal Ownership

Metrobank next maintains that, contrary to the CA’s holding, Art. 129 of the Family Code is inapplicable. Art. 129 in part reads:

Art. 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall apply:

x x x x

(7) The net remainder of the conjugal partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements or unless there has been a voluntary waiver or forfeiture of such share as provided in this Code.

Apropos the aforequoted provision, Metrobank asserts that the waiver executed by Nicholson, effected as it were before the dissolution of the conjugal property regime, vested on Florencia full ownership of all the properties acquired during the marriage.

Nicholson counters that the mere declaration of nullity of marriage, without more, does not automatically result in a regime of complete separation when it is shown that there was no liquidation of the conjugal assets.

We again find for Nicholson.

While the declared nullity of marriage of Nicholson and Florencia severed their marital bond and dissolved the conjugal partnership, the character of the properties acquired before such declaration continues to subsist as conjugal properties until and after the liquidation and partition of the partnership. This conclusion holds true whether we apply Art. 129 of the Family Code on liquidation of the conjugal partnership’s assets and liabilities which is generally prospective in application, or Section 7, Chapter 4, Title IV, Book I (Arts. 179 to 185) of the Civil Code on the subject, Conjugal Partnership of Gains. For, the relevant provisions of both Codes first require the liquidation of the conjugal properties before a regime of separation of property reigns.

In Dael v. Intermediate Appellate Court, we ruled that pending its liquidation following its dissolution, the conjugal partnership of gains is converted into an implied ordinary co-ownership among the surviving spouse and the other heirs of the deceased.17

In this pre-liquidation scenario, Art. 493 of the Civil Code shall govern the property relationship between the former spouses, where:

Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. (Emphasis supplied.)

In the case at bar, Florencia constituted the mortgage on the disputed lot on April 30, 1997, or a little less than two years after the dissolution of the conjugal partnership on July 31, 1995, but before the liquidation of the partnership. Be that as it may, what governed the property relations of the former spouses when the mortgage was given is the aforequoted Art. 493. Under it, Florencia has the right to mortgage or even sell her one-half (1/2) undivided interest in the disputed property even without the consent of Nicholson. However, the rights of Metrobank, as mortgagee, are limited only to the 1/2 undivided portion that Florencia owned. Accordingly, the mortgage contract insofar as it covered the remaining 1/2 undivided portion of the lot is null and void, Nicholson not having consented to the mortgage of his undivided half.

The conclusion would have, however, been different if Nicholson indeed duly waived his share in the conjugal partnership. But, as found by the courts a quo, the April 9, 1995 deed of waiver allegedly executed by Nicholson three months prior to the dissolution of the marriage and the conjugal partnership of gains on July 31, 1995 bore his forged signature, not to mention that of the notarizing officer. A spurious deed of waiver does not transfer any right at all, albeit it may become the root of a valid title in the hands of an innocent buyer for value.

Upon the foregoing perspective, Metrobank’s right, as mortgagee and as the successful bidder at the auction of the lot, is confined only to the 1/2 undivided portion thereof

heretofore pertaining in ownership to Florencia. The other undivided half belongs to Nicholson. As owner pro indiviso of a portion of the lot in question, Metrobank may ask for the partition of the lot and its property rights "shall be limited to the portion which may be allotted to [the bank] in the division upon the termination of the co-ownership."18 This disposition is in line with the well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so––quando res non valet ut ago, valeat quantum valere potest.19

In view of our resolution on the validity of the auction of the lot in favor of Metrobank, there is hardly a need to discuss at length whether or not Metrobank was a mortgagee in good faith. Suffice it to state for the nonce that where the mortgagee is a banking institution, the general rule that a purchaser or mortgagee of the land need not look beyond the four corners of the title is inapplicable.20 Unlike private individuals, it behooves banks to exercise greater care and due diligence before entering into a mortgage contract. The ascertainment of the status or condition of the property offered as security and the validity of the mortgagor’s title must be standard and indispensable part of the bank’s operation.21 A bank that failed to observe due diligence cannot be accorded the status of a bona fide mortgagee,22 as here.

But as found by the CA, however, Metrobank’s failure to comply with the due diligence requirement was not the result of a dishonest purpose, some moral obliquity or breach of a known duty for some interest or ill-will that partakes of fraud that would justify damages.

WHEREFORE, the petition is PARTLY GRANTED. The appealed Decision of the CA dated January 28, 2004, upholding with modification the Decision of the RTC, Branch 65 in Makati City, in Civil Case No. 00-789, isAFFIRMED with the MODIFICATION that the REM over the lot covered by TCT No. 156283 of the Registry of Deeds of Makati City is hereby declared valid only insofar as the pro indiviso share of Florencia thereon is concerned.

As modified, the Decision of the RTC shall read:

PREMISES CONSIDERED, the real estate mortgage on the property covered by TCT No. 156283 of the Registry of Deeds of Makati City and all proceedings thereon are NULL and VOID with respect to the undivided 1/2 portion of the disputed property owned by Nicholson, but VALID with respect to the other undivided 1/2 portion belonging to Florencia.

The claims of Nicholson for moral damages and attorney’s fees are DENIED for lack of merit.

No pronouncement as to costs.

SO ORDERED.

 JOAQUIN QUIMPO, SR., substituted

by Heirs of Joaquin Quimpo, Sr.,

                                 Petitioners,

 

 

 

          - versus -

 

 

 

CONSUELO ABAD VDA. DE

BELTRAN, IRENEO ABAD,

DANILO ABAD, MARITES

ABAD, ANITA and HELEN ABAD,

Respondents.

G.R. No. 160956 

Present:

 

YNARES-SANTIAGO, J.,

   Chairperson,

AUSTRIA-MARTINEZ,

CORONA,*

NACHURA, and

REYES, JJ.

 

 

Promulgated:

 

February 13, 2008  

x-----------------------------------------------------------------------------------------x

 RESOLUTION

 NACHURA, J.:

            This Petition for Review on Certiorari assails the July 22, 2003 Decision[1] of the Court of Appeals in CA-G.R. CV No. 56187, and the October 16, 2003 Resolution denying the motion for its reconsideration.

 Eustaquia Perfecto-Abad (Eustaquia) was the owner of several parcels of land in Goa, Camarines Sur, described as follows:

 Parcel I - Residential land situated at Abucayan, Goa, Camarines Sur covering an area of 684 square-meters;

 

Parcel II – Coconut land situated at Abucayan, Goa, Camarines Sur covering an area of 4.3731 hectares;

 Parcel III – Residential land situated at San Jose Street, Goa, Camarines Sur covering an area of 1,395 square meters; and

 Parcel IV – Abaca and coconut land situated at Abucayan, Goa, Camarines Sur covering an area 42.6127 hectares.[2]

   

Eustaquia died intestate in 1948 leaving these parcels of land to her grandchild and great grandchildren, namely, Joaquin Quimpo and respondents Consuelo, Ireneo, Danilo, Marites, Anita and Helen, all surnamed Abad. 

 In 1966, Joaquin and respondents undertook an oral partition of parcel III (San Jose property) and parcel IV.  Half of the properties was given to Joaquin and the other half to the respondents.  However, no document of partition was executed, because Joaquin refused to execute a deed.  Consuelo and Ireneo occupied their respective shares in theSan Jose property, and installed several tenants over their share in parcel IV.  Joaquin, on the other hand, became the administrator of the remaining undivided properties and of the shares of respondents Danilo, Marites, Anita and Helen, who were still minors at that time.

 In 1989, Danilo, Marites, Anita and Helen wanted to take possession of the portions allotted to them, but Joaquin prevented them from occupying the same.  Joaquin also refused to heed respondents’ demand for partition of parcels I and II, prompting respondents to file a complaint for judicial partition and/or recovery of possession with accounting and damages with the Regional Trial Court (RTC) of Camarines Sur.[3]

Joaquin denied the material allegations in the complaint, and averred, as his special and affirmative defenses, lack of cause of action and prescription.  He asserted absolute ownership over parcels III and IV, claiming that he purchased these lands from Eustaquia in 1946, evidenced by deeds of sale executed on August 23, 1946 and December 2, 1946.  He, likewise, claimed continuous, peaceful and adverse possession of these lots since 1946, and alleged that Consuelo’s occupation of the portion of the San Jose property was by mere tolerance.[4]

During the pendency of the case, Joaquin died.  Accordingly, he was substituted by his wife, Estela Tena-Quimpo and his children, namely, Jose, Adelia, Joaquin, Anita, Angelita, Amelia, Arlene, Joy and Aleli, all surnamed Quimpo (the Quimpos).

 On December 12, 1996, the RTC rendered a Decision[5] in favor of respondents, declaring them

as co-owners of all the properties left by Eustaquia.  It rejected Joaquin’s claim of absolute

ownership over parcels III and IV, and declared void the purported deeds of sale executed by

Eustaquia for lack of consideration and consent.  The court found that at the time of the

execution of these deeds, Joaquin was not gainfully employed and had no known source of

income, which shows that the deeds of sale state a false and fictitious consideration.  Likewise,

Eustaquia could not have possibly given her consent to the sale because she was already 91

years old at that time.  The RTC also sustained the oral partition among the heirs in

1966.  According to the trial court, the possession and occupation of land by respondents

Consuelo and Ireneo, and Joaquin’s acquiescence for 23 years, furnish sufficient evidence that

there was actual partition of the properties.  It held that Joaquin and his heirs are

now estopped from claiming ownership over the entireSan Jose property as well as over parcel

IV. 

 The RTC disposed, thus:

 WHEREFORE, decision is hereby rendered in favor of the plaintiffs Consuelo Vda. de Beltran, Ireneo Abad, Marites Abad, Danilo Abad, Anita Abad and Helen Abad and against defendant Joaquin Quimpo, substituted by the latter’s wife Estela Tena and their children, Amparo, Jose, Amelia, Joaquin Jr., Adelia, Arlene, Anita, Joy, Angelita and Aleli, all surnamed Quimpo, as follows:

 1.      Ordering the above-named substituted defendants, and the plaintiffs to execute their written agreement of partition with respect to parcel Nos. III and IV more particularly described in paragraph 7 of the complaint, and for them to execute an agreement of partition with respect to parcel Nos. I and II, both parcels are more particularly described in paragraph 7 of the complaint;

 2.      Declaring the plaintiffs Danilo Abad, Marites Abad, Anita Abad and Helen Abad the owner of six (6) hectares a portion included in parcel No. IV also described in paragraph 7 of the complaint, and therefore, entitled to its possession and ordering the said substituted defendants to deliver that portion to them as their share thereto;

 3.      Ordering the above-named substituted defendants to pay plaintiffs the sum of Six Thousand Pesos (P6,000.00), Philippine Currency, as reasonable attorney’s fees and the sum of One Thousand Pesos (P1,000.00) also of Philippine Currency, as litigation expenses and for the said defendants to pay the costs.

The counterclaim, not being proved, the same is hereby ordered dismissed.

SO ORDERED.[6]    

On appeal, the CA affirmed the RTC ruling.  Sustaining the RTC, the CA declared that it was plausible that Eustaquia’s consent was vitiated because she was then 91 years old and sickly.  It was bolstered by the fact that the deeds of sale only surfaced 43 years after its alleged execution and 23 years from the time of the oral partition.  The CA also rejected petitioners’ argument that the action was barred by prescription and laches, explaining that prescription does not run against the heirs so long as the heirs, for whose benefit prescription is invoked, have not expressly or impliedly repudiated the co-ownership. The CA found no repudiation on Joaquin’s part.  It, therefore, concluded that respondents’ action could not be barred by prescription or laches.

          The Quimpos, thus, filed the instant petition for review on certiorari imputing the following errors to the CA:

 1) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS DID NOT ACQUIRE OWNERSHIP OVER [THE] SUBJECT PARCELS OF LAND BY WAY OF DEEDS OF ABSOLUTE SALE EXECUTED IN THEIR FAVOR;

2) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT CO-OWNERSHIP EXISTS AMONG PETITIONERS AND RESPONDENTS OVER THE SUBJECT PARCELS OF LAND;

3) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS HAVE PROVEN THEIR FILIATION TO THE ORIGINAL OWNER OF THE SUBJECT PARCELS OF LAND BY MERE SCANT EVIDENCE;

4) THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT LACHES HAS TIME–BARRED THE RESPONDENTS FROM ASSAILING THE ABSOLUTE OWNERSHIP OF PETITIONERS OVER THE SUBJECT PARCELS OF LAND; AND

5) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS ARE ENTITLED TO ATTORNEY’S FEES.[7]    

The Quimpos insist on the validity of the deeds of sale between Joaquin and Eustaquia.  They assail the probative value and weight given by the RTC and the CA in favor of the respondents’ pieces of evidence while refusing to give credence or value to the documents they presented.  Specifically, they contend that the notarized deeds of sale and the tax declarations should have adequately established Joaquin’s ownership of parcels III and IV.

The contention has no merit.  Well-entrenched is the rule that the Supreme Court’s role in a petition under Rule 45 is limited to reviewing or reversing errors of law allegedly committed by the appellate court.  Factual findings of the trial court, especially when affirmed by the Court of Appeals, are conclusive on the parties.  Since such findings are generally not reviewable, this Court is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below, unless the factual findings complained of are devoid of support from the evidence on record or the assailed judgment is based on a misapprehension of facts.[8]

Petitioners fail to convince us that the CA committed reversible error in affirming the trial

court and in giving no weight to the pieces of evidence they presented.

The stated consideration for the sale are P5,000.00 and P6,000.00, respectively, an amount which was so difficult to raise in the year 1946.  Respondents established that at the time of the purported sale Joaquin Quimpo was not gainfully employed.  He was studying in Manila and Eustaquia was the one supporting him; that when Eustaquia died two (2) years later, Joaquin was not able to continue his studies.  The Quimpos failed to override this.  Except for the incredible and unpersuasive testimony of Joaquin’s daughter, Adelia Magsino, no other testimonial or documentary evidence was offered to prove that Joaquin was duly employed and had the financial capacity to buy the subject properties in 1946.

          In Rongavilla v. Court of Appeals,[9] reiterated in Cruz v. Bancom Finance Corp,[10] we held that a deed of sale, in which the stated consideration has not been, in fact, paid is a false contract; that it is void    ab initio.   Furthermore, Ocejo v. Flores,[11] ruled that a contract of purchase and sale is null and void and produces no effect whatsoever where it appears that the same is without cause or consideration which should have

been the motive thereof, or the purchase price which appears thereon as paid but which in fact has never been paid by the purchaser to the vendor.

Likewise, both the trial court and the CA found that Eustaquia was 91 years old, weak and senile, at the time the deeds of sale were executed.   In other words, she was already mentally incapacitated by then, and could no longer be expected to give her consent to the sale.  The RTC and CA cannot, therefore, be faulted for not giving credence to the deeds of sale in favor of Joaquin.

Petitioners also presented Tax Declaration Nos. 3650,[12] 3708,[13] and 3659[14] to substantiate Joaquin’s claim of absolute dominion over parcels III and IV.  But we note that these tax declarations are all in the name of Eustaquia Perfecto-Abad.  These documents, therefore, do not support their claim of absolute dominion since 1946, but enervate it instead.  Besides, the fact that the disputed property may have been declared for taxation purposes in the name of Joaquin Quimpo does not necessarily prove ownership for it is well settled that a tax declaration or tax receipts are not conclusive evidence of ownership.[15] The CA, therefore, correctly found this proof inadequate to establish Joaquin’s claim of absolute dominion.

For forty-three (43) years, Consuelo and Ireneo occupied their portions of the San Jose property and significantly, Joaquin never disturbed their possession.  They also installed tenants in parcel IV, and Joaquin did not prevent them from doing so, nor did he assert his ownership over the same.  These unerringly point to the fact that there was indeed an oral partition of parcels III and IV.

 In Maglucot-aw v. Maglucot,[16] we held, viz.: 

[P]artition may be inferred from circumstances sufficiently strong to support the presumption.  Thus, after a long possession in severalty, a deed of partition may be presumed. It has been held that recitals in deeds, possession and occupation of land, improvements made thereon for a long series of years, and acquiescence for 60 years, furnish sufficient evidence that there was an actual partition of land either by deed or by proceedings in the probate court, which had been lost and were not recorded. 

 Furthermore, in Hernandez v. Andal,[17] we explained that: On general principle, independent and in spite of the statute of frauds, courts of equity have enforced oral partition when it has been completely or partly performed.

 Regardless of whether a parol partition or agreement to

partition is valid and enforceable at law, equity will in proper cases, where the parol partition has actually been consummated by the taking of possession in severalty and the exercise of ownership by the parties of the respective portions set off to each, recognize and enforce such parol partition and the rights of the parties thereunder.  Thus, it has been held or stated in a number of cases involving an oral partition under which the parties went into possession, exercised acts of ownership, or otherwise partly performed the partition agreement, that equity will confirm such partition and in a proper case decree title in accordance with the possession in severalty.

 In numerous cases it has been held or stated that parol

partitions may be sustained on the ground of estoppel of the parties to assert the rights of a tenant in common as to parts of land divided by parol partition as to which possession in severalty was taken and acts of individual ownership were exercised.  And a court of equity will recognize the agreement and decree it to be valid and effectual for the purpose of concluding the right of the parties as between each other to hold their respective parts in severalty.

 A parol partition may also be sustained on the ground that

the parties thereto have acquiesced in and ratified the partition by taking possession in severalty, exercising acts of ownership with respect thereto, or otherwise recognizing the existence of the partition.

A number of cases have specifically applied the doctrine of part performance, or have stated that a part performance is necessary, to take a parol partition out of the operation of the statute of frauds.  It has been held that where there was a partition in fact between tenants in common, and a part performance, a court of equity would have regard to and enforce such partition agreed to by the parties.

The CA, therefore, committed no reversible error in sustaining the oral partition over parcels III and IV and in invalidating the deeds of sale between Eustaquia and Joaquin.

Similarly, we affirm the CA ruling that respondents are co-owners of the subject four (4) parcels of land, having inherited the same from a common ancestor – Eustaquia Perfecto-Abad.  Petitioners’ assertion that respondents failed to prove their relationship to the late Eustaquia deserves scant consideration.

          During the pre-trial, Joaquin Quimpo admitted that:

          Eustaquia Perfecto Abad and Diego Abad had two (2) children by the names of Leon Abad and Joaquin Abad; that Leon Abad has three (3) children namely: Anastacia, Wilfredo and Consuelo, all surnamed Abad; that Joaquin Abad has only one (1) child, a daughter by the name of Amparo; that Wilfredo has four (4) children, namely, Danilo, Helen, Marites and Anita; Amparo has one child, son Joaquin Quimpo, x x x [18]

 Consuelo was the grandchild of Eustaquia, while respondents Danilo, Helen, Marites, Anita and also Joaquin Quimpo were Eustaquia’s great grandchildren.  As such, respondents can rightfully ask for the confirmation of the oral partition over parcels III and IV, and the partition of parcels I and II.  Jurisprudence is replete with rulings that any co-owner may demand at any time the partition of the common property unless a co-owner has repudiated the co-ownership.  This action for partition does not prescribe and is not subject to laches.[19] 

 Finally, petitioners challenge the attorney’s fees in favor of respondents.

 The grant of attorney’s fees depends on the circumstances of each case and lies within the discretion of the court.  It may be awarded when a party is compelled to litigate or to incur expenses to protect its interest by reason of an unjustified act by the other,[20] as in this case.  In fine, we find no reversible error in the assailed rulings of the Court of Appeals.

           WHEREFORE, the petition is DENIED.  The Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 56187, are AFFIRMED.      SO ORDERED.

 

ARNELITO ADLAWAN,                         G.R. No. 161916

                             Petitioner,                                                                    Present:

                                 Panganiban, C.J. (Chairman),

          - versus -                                               Ynares-Santiago,

                                                                      Austria-Martinez,

   Callejo, Sr., and

   Chico-Nazario, JJ.

EMETERIO M. ADLAWAN and

NARCISA M. ADLAWAN,                       Promulgated:

Respondents.

                                                                      January 20, 2006

 

x ---------------------------------------------------------------------------------------- x

 DECISION

 YNARES-SANTIAGO, J.:

           Assailed in this petition for review is the September 23, 2003 Decision [1] of the Court of Appeals in CA-G.R. SP No. 74921 which set aside the September 13, 2002 Decision[2] of the Regional Trial Court (RTC) of Cebu City, Branch 7, in Civil Case No. CEB-27806, and reinstated the February 12, 2002 Judgment [3] of the Municipal Trial Court (MTC) of Minglanilla, Metro Cebu, in Civil Case No. 392, dismissing petitioner Arnelito Adlawan’s unlawful detainer suit against respondents Emeterio and Narcisa Adlawan.  Likewise questioned is the January 8, 2004 Resolution [4] of the Court of Appeals which denied petitioner’s motion for reconsideration.

          The instant ejectment suit stemmed from the parties’ dispute over Lot 7226 and the house built thereon, covered by Transfer Certificate of Title No. 8842, [5] registered in the name of the late Dominador Adlawan and located at Barrio Lipata, Municipality of Minglanilla, Cebu.   In his complaint, petitioner claimed that he is an acknowledged illegitimate child[6] of Dominador who died on May 28, 1987 without any other issue.   Claiming to be the sole heir of Dominador, he executed an affidavit adjudicating to

himself Lot 7226 and the house built thereon. [7]  Out of respect and generosity to respondents who are the siblings of his father, he granted their plea to occupy the subject property provided they would vacate the same should his need for the property arise. Sometime in January 1999, he verbally requested respondents to vacate the house and lot, but they refused and filed instead an action for quieting of title [8] with the RTC.  Finally, upon respondents’ refusal to heed the last demand letter to vacate dated August 2, 2000, petitioner filed the instant case on August 9, 2000. [9]

 On the other hand, respondents Narcisa and Emeterio, 70 and 59 years of age, respectively,[10] denied that they begged petitioner to allow them to stay on the questioned property and stressed that they have been occupying Lot 7226 and the house standing thereon since birth.  They alleged that Lot 7226 was originally registered in the name of their deceased father, Ramon Adlawan [11] and the ancestral house standing thereon was owned by Ramon and their mother, Oligia Mañacap Adlawan.  The spouses had nine[12]children including the late Dominador and herein surviving respondents Emeterio and Narcisa.  During the lifetime of their parents and deceased siblings, all of them lived on the said property.  Dominador and his wife, Graciana Ramas Adlawan, who died without issue, also occupied the same. [13]  Petitioner, on the other hand, is a stranger who never had possession of Lot 7226.

Sometime in 1961, spouses Ramon and Oligia needed money to finance the renovation of their house.  Since they were not qualified to obtain a loan, they transferred ownership of Lot 7226 in the name of their son Dominador who was the only one in the family who had a college education.  By virtue of a January 31, 1962 simulated deed of sale,[14] a title was issued to Dominador which enabled him to secure a loan with Lot 7226 as collateral.  Notwithstanding the execution of the simulated deed, Dominador, then single, never disputed his parents’ ownership of the lot.   He and his wife, Graciana, did not disturb respondents’ possession of the property until they died on May 28, 1987 and May 6, 1997, respectively.

          Respondents also contended that Dominador’s signature at the back of petitioner’s birth certificate was forged, hence, the latter is not an heir of Dominador and has no right to claim ownership of Lot 7226.[15]  They argued that even if petitioner is indeed Dominador’s acknowledged illegitimate son, his right to succeed is doubtful because Dominador was survived by his wife, Graciana.[16]

         

          On February 12, 2002, the MTC dismissed the complaint holding that the establishment of petitioner’s filiation and the settlement of the estate of Dominador are conditions precedent to the accrual of petitioner’s action for ejectment.  It added that since Dominador was survived by his wife, Graciana, who died 10 years thereafter, her legal heirs are also entitled to their share in Lot 7226.  The dispositive portion thereof, reads:

            In View of the foregoing, for failure to prove by preponderance of evidence, the plaintiff’s cause of action, the above-entitled case is hereby Ordered DISMISSED.            SO ORDERED.[17]

On appeal by petitioner, the RTC reversed the decision of the MTC holding that the title of Dominador over Lot 7226 cannot be collaterally attacked.  It thus ordered respondents to turn over possession of the controverted lot to petitioner and to pay compensation for the use and occupation of the premises.  The decretal portion thereof, provides:

Wherefore, the Judgment, dated February 12, 2002, of the Municipal Trial Court of Minglanilla, Cebu, in Civil Case No. 392, is reversed.  Defendants-appellees are directed to restore to plaintiff-appellant possession of Lot 7226 and the house thereon, and to pay plaintiff-appellant, beginning in August 2000, compensation for their use and occupation of the property in the amount of P500.00 a month.

So ordered.[18]

Meanwhile, the RTC granted petitioner’s motion for execution pending appeal[19] which was opposed by the alleged nephew and nieces of Graciana in their motion for leave to intervene and to file an answer in intervention. [20] They contended that as heirs of Graciana, they have a share in Lot 7226 and that intervention is necessary to protect their right over the property.  In addition, they declared that as co-owners of the property, they are allowing respondents to stay in Lot 7226 until a formal partition of the property is made. 

The RTC denied the motion for leave to intervene. [21]  It, however, recalled the order granting the execution pending appeal having lost jurisdiction over the case in view of the petition filed by respondents with the Court of Appeals. [22]

 

On September 23, 2003, the Court of Appeals set aside the decision of the RTC and reinstated the judgment of the MTC.  It ratiocinated that petitioner and the heirs of Graciana are co-owners of Lot 7226.  As such, petitioner cannot eject respondents from the property via an unlawful detainer suit filed in his own name and as the sole owner of the property. Thus –

WHEEFORE, premises considered, the appealed Decision dated September 13, 2002 of the Regional Trial Court of Cebu City, Branch 7, in Civil Case No. CEB-27806 is REVERSED and SET ASIDE, and the Judgment dated February 12, 2002 of the Municipal Trial Court of Minglanilla, Metro Cebu, in Civil Case No. 392 is REINSTATED.  Costs against the respondent. SO ORDERED.[23]

Petitioner’s motion for reconsideration was denied.  Hence, the instant petition. 

The decisive issue to be resolved is whether or not petitioner can validly maintain the instant case for ejectment.

Petitioner averred that he is an acknowledged illegitimate son and the sole heir of Dominador.  He in fact executed an affidavit adjudicating to himself the controverted property.  In ruling for the petitioner, the RTC held that the questioned January 31, 1962 deed of sale validly transferred title to Dominador and that petitioner is his acknowledged illegitimate son who inherited ownership of the questioned lot.   The Court notes, however, that the RTC lost sight of the fact that the theory of succession invoked by petitioner would end up proving that he is not the sole owner of Lot 7226.  This is so because Dominador was survived not only by petitioner but also by his legal wife, Graciana, who died 10 years after the demise of Dominador on May 28, 1987. [24]  By intestate succession, Graciana and petitioner became co-owners of Lot 7226. [25]  The death of Graciana on May 6, 1997, did not make petitioner the absolute owner of Lot 7226 because the share of Graciana passed to her relatives by consanguinity and not to petitioner with whom she had no blood relations.  The Court of Appeals thus correctly held that petitioner has no authority to institute the instant action as the sole owner of Lot 7226.

Petitioner contends that even granting that he has co-owners over Lot 7226, he can on his own file the instant case pursuant to Article 487 of the Civil Code which provides:

 

ART. 487.  Any one of the co-owners may bring an action in ejectment.

This article covers all kinds of actions for the recovery of possession.  Article 487 includes forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion).[26]  A co-owner may bring such an action without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to have been filed to benefit his co-owners.  It should be stressed, however, that where the suit is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession of the litigated property, the action should be dismissed.[27]

The renowned civilist, Professor Arturo M. Tolentino, explained –

A co-owner may bring such an action, without the necessity of joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all.  If the action is for the benefit of the plaintiff alone, such that he claims possession for himself and not for the co-ownership, the action will not prosper. (Emphasis added)[28]

In Baloloy v. Hular,[29] respondent filed a complaint for quieting of title claiming exclusive ownership of the property, but the evidence showed that respondent has co-owners over the property.  In dismissing the complaint for want of respondent’s authority to file the case, the Court held that –

Under Article 487 of the New Civil Code, any of the co-owners may bring an action in ejectment.  This article covers all kinds of actions for the recovery of possession, including an accion publiciana and a reinvidicatory action.  A co-owner may bring such an action without the necessity of joining all the other co-owners as co-plaintiffs because the suit is deemed to be instituted for the benefit of all.  Any judgment of the court in favor of the co-owner will benefit the others but if such judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-owners.  If the action is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession thereof, the action will not prosper unless he impleads the other co-owners who are indispensable parties. 

In this case, the respondent alone filed the complaint, claiming sole ownership over the subject property and praying that he be declared the sole owner thereof.  There is no proof that the other co-owners had

waived their rights over the subject property or conveyed the same to the respondent or such co-owners were aware of the case in the trial court.  The trial court rendered judgment declaring the respondent as the sole owner of the property and entitled to its possession, to the prejudice of the latter’s siblings.  Patently then, the decision of the trial court is erroneous.

 

Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to implead his siblings, being co-owners of the property, as parties.  The respondent failed to comply with the rule.  It must, likewise, be stressed that the Republic of the Philippines is also an indispensable party as defendant because the respondent sought the nullification of OCT No. P-16540 which was issued based on Free Patent No. 384019. Unless the State is impleaded as party-defendant, any decision of the Court would not be binding on it.  It has been held that the absence of an indispensable party in a case renders ineffective all the proceedings subsequent to the filing of the complaint including the judgment.  The absence of the respondent’s siblings, as parties, rendered all proceedings subsequent to the filing thereof, including the judgment of the court, ineffective for want of authority to act, not only as to the absent parties but even as to those present.[30]

In the instant case, it is not disputed that petitioner brought the suit for unlawful detainer in his name alone and for his own benefit to the exclusion of the heirs of Graciana as he even executed an affidavit of self- adjudication over the disputed property.  It is clear therefore that petitioner cannot validly maintain the instant action considering that he does not recognize the co-ownership that necessarily flows from his theory of succession to the property of his father, Dominador. 

In the same vein, there is no merit in petitioner’s claim that he has the legal personality to file the present unlawful detainer suit because the ejectment of respondents would benefit not only him but also his alleged co-owners.  However, petitioner forgets that he filed the instant case to acquire possession of the property and to recover damages.  If granted, he alone will gain possession of the lot and benefit from the proceeds of the award of damages to the exclusion of the heirs of Graciana.    Hence, petitioner cannot successfully capitalize on the alleged benefit to his co-owners.  Incidentally, it should be pointed out that in default of the said heirs of Graciana, whom petitioner labeled as “fictitious heirs,” the State will inherit her share [31] and will thus be petitioner’s co-owner entitled to possession and enjoyment of the property.

The present controversy should be differentiated from the cases where the Court upheld the right of a co-owner to file a suit pursuant to Article 487 of the Civil Code.   InResuena v. Court of Appeals,[32] and Sering v. Plazo,[33] the co-owners who filed the ejectment case did not represent themselves as the exclusive owner of the property.  InCelino v. Heirs of Alejo and Teresa Santiago,[34] the complaint for quieting of title was brought in behalf of the co-owners precisely to recover lots owned in common. [35]  Similarly in Vencilao v. Camarenta,[36] the amended complaint specified that the plaintiff is one of the heirs who co-owns the controverted properties.

In the foregoing cases, the plaintiff never disputed the existence of a co-ownership nor claimed to be the sole or exclusive owner of the litigated lot.   A favorable decision therein would of course inure to the benefit not only of the plaintiff but to his co-owners as well.  The instant case, however, presents an entirely different backdrop as petitioner vigorously asserted absolute and sole ownership of the questioned lot.  In his complaint, petitioner made the following allegations, to wit:

3.         The plaintiff was the only son (illegitimate) and sole heir of the late DOMINADOR ADLAWAN who died intestate on 28 May 1987 without any other descendant nor ascendant x x x.

x x x x

5.         Being the only child/descendant and, therefore, sole heir of the deceased Dominador Adlawan, the plaintiff became the absolute owner, and automatically took POSSESSION, of the aforementioned house and lot x x x.  (Emphasis added)[37]

Clearly, the said cases find no application here because petitioner’s action operates as a complete repudiation of the existence of co-ownership and not in representation or recognition thereof.  Dismissal of the complaint is therefore proper.  As noted by Former Supreme Court Associate Justice Edgrado L. Paras “[i]t is understood, of course, that the action [under Article 487 of the Civil Code] is being instituted for all.   Hence, if the co-owner expressly states that he is bringing the case only for himself, the action should not be allowed to prosper.” [38]

Indeed, respondents’ not less than four decade actual physical possession of the questioned ancestral house and lot deserves to be respected especially so that petitioner failed to show that he has the requisite personality and authority as co-owner to file the instant case.  Justice dictates that respondents who are now in the twilight

years of their life be granted possession of their ancestral property where their parents and siblings lived during their lifetime, and where they, will probably spend the remaining days of their life.

WHEREFORE, the petition is DENIED.  The September 23, 2003 Decision of the Court of Appeals in CA-G.R. SP No. 74921 which reinstated the February 12, 2002 Judgment of the Municipal Trial Court of Minglanilla, Metro Cebu, dismissing petitioner’s complaint in Civil Case No. 392, and its January 8, 2004 Resolution, are AFFIRMED.

SO ORDERED.

ADLAWAN VS ADLAWAN

A co-owner by virtue of Art. 487 is allowed to bring an action without necessity of including all the co-owners as plaintiffs for it is presumed to be for the benefit of all BUT if the action of the plaintiff alone, the action should be dismissed.

FACTS:

A house and lot (lot 7226) was registered in the name of Dominador Adlawan, the father of (petitioner) Arnelito Adlawan. He is the acknowledged illegitimate child of Dominador who is claiming that he is the sole heir. He then adjudicated to himself the said house and lot to himself and out of generosity allowed the siblings of his father to occupy the property provided that they vacate when asked. Time came when he demanded that they vacate and when they refused he filed an ejectment suit against them.

His aunt and uncle on the other hand, Narcisa (70) and Emeterio (59) denied his allegations claiming that the said lot was registered in their parents name and they had been living in the said house and lot since birth. The only reason why the said house and lot was transferred in Dominador’s name was when their parents were in need of money for renovating their house, their parents were not qualified to obtain a loan and since Dominador was the only one who had a college education, they executed a simulated deed of sale in favor of Dominador.

The MTC dismissed the complaint holding that Arnelito’s filiation and the settlement of the estate are conditions precedent for the accrual of the suit. And since Dominador was survived by his wife, Graciana, her legal heirs are entitled to their share in the lot. The RTC ordered Narcisa and Emeterio to turn over the possession of the lot to Arnelito. It also granted the motion of execution which was opposed by the nephew and nieces of Graciana who claim that they have a share in the lot.

The CA reinstated the decision of the MTC holding that Arnelito and the heirs of

Graciana are co-heirs thus he cannot eject them from the property via unlawful detainer. Thus the case at bar.

ISSUE:

Whether or not Arnelito can validly maintain the ejectment suit

HELD:

NO. The theory of succession invoked by Arnelito would prove that he is not the sole heir of Dominador. Since he was survived was his wife, upon his death, Arnelito and Graciana became co-owners of the lot. Upon her death, her share passed on to her relatives by consanguinity thus making them co-owners as well.

Petitioner contends that Art. 487 allows him to file the instant petition. (Art. 487. Any one of the co-owners may bring an action in ejectment.) It is true that a co-owner may bring such an action w/o necessity of joining all the co-owners as plaintiffs because it is presumed to be instituted for the benefit of all BUT if the action is for the benefit of the plaintiff alone, the action should be dismissed.Since petitioner brought the suit in his name and for his benefit alone and his repudiation of the ownership of the other heirs, the instant petition should be dismissed.

G.R. No. 160347             November 29, 2006

ARCADIO and MARIA LUISA CARANDANG, Petitioners, vs.HEIRS OF QUIRINO A. DE GUZMAN, namely: MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN, CYNTHIA G. RAGASA and QUIRINO DE GUZMAN, JR., Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari assailing the Court of Appeals Decision1 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, from P500,000 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 increase and P43,125 for the March 3, 1989 Capital Stock increase or a total ofP336,375. 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 [the spouses Carandang’s] loan to de Guzman;

(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

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

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

The spouses Carandang then filed before this Court the instant Petition for Review on Certiorari, 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.

IV. 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

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 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 in Vda. de Haberer v. Court of Appeals5 and Ferreria v. Vda. de Gonzales6 :

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 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

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

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.10Implied waiver comes in the form of either voluntary appearance or a failure to object.11

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 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 non-inclusion 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 party-plaintiff

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

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."

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

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."18However, 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 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 on 3 August 1988. As they did not execute any marriage settlement, the regime of conjugal partnership of gains govern their property relations.19

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.20Credits 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 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: the pro-forma 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.

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.26The non-joinder of a spouse does not warrant dismissal as it is merely a formal requirement which may be cured by amendment.27

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.

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-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. Hular28 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 co-owners 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

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

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

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. "B’s" 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

The spouses Carandang are mistaken. If indeed a Mr. "A" decides to pay for a Mr. "B’s" 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.

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 Carandang40touched on matters other than the existence and substance of the pre-incorporation 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.

Worse, 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:

a. With respect to the testimony of Ma. Luisa Carandang

Q: Now, 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: We have paid already, so, we are not liable for anything payment (sic).41

b. With respect to the testimony of Arcadio Carandang

"Q: How much?

A: P40,000.00 to P50,000.00 per month.

Q: The 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).

I’m 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: I paid for those shares."42

There being no testimony or documentary evidence proving the existence of the pre-incorporation 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.

Paragraphs 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.

2. 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.

3. 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.

4. 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.

5. 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.

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 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

Meanwhile, 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 Mabuhay Broadcasting 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 in paragraph 14 of the Answer.44

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 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 pre-incorporation 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.1âwphi1

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:

"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

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 following MODIFICATION: The spouses Carandang are ORDERED to pay the following amounts from their conjugal partnership properties:

(1) P336,375.00 representing the spouses Carandang’s loan to Quirino de Guzman; and

(2) 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

(3) P20,000.00 as attorney’s fees.

No costs.

SO ORDERED.

                                       SECOND DIVISION  REYNALDO BALOLOY and                   G.R. No. 157767ADELINA BALOLOY-HIJE,                              Petitioners, 

                                       Present:                                                                                         PUNO, J., Chairman,                  -   versus   -                                    AUSTRIA-MARTINEZ,*                                                                       CALLEJO, SR.,                                                                       TINGA, and

    CHICO-NAZARIO, JJ.                                                                     Promulgated:ALFREDO HULAR,                             Respondent.                             September 9, 2004x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  - - - - - - - - - - - - - - x                   D E C I S I O N  CALLEJO, SR., J.:  

          Before us is a petition for review on certiorari under Rule 45 of the  Revised Rules

of Court, as amended, of the Decision[1] of the Court of Appeals in CA-G.R. CV No.

51081, which affirmed the Decision[2] of the Regional Trial Court of Sorsogon, Branch

51, in Civil Case No. 93-5871. 

          The antecedents are as follows:  

          On May 11, 1993, respondent Alfredo Hular filed a complaint for quieting of title of

real property with damages against the children and heirs of Iluminado Baloloy, namely,

Anacorita, Antonio, and petitioners Reynaldo and Adelina, all surnamed Baloloy.  The

respondent alleged, inter alia, in his complaint that his father, Astrologo Hular, was the

owner of a parcel of residential land located in Sitio Pagñe, Biriran, Juban, Sorsogon,

with an area of 287 square meters, and that such lot was part of Lot No. 3347 of the

Juban Cadastre. The respondent alleged that Iluminado Baloloy, the petitioners’

predecessor-in-interest, was able to secure a Free Patent over the property through

fraud on March 1, 1968, on the basis of which the Register of Deeds issued Original

Certificate of Title (OCT) No. P-16540 in his name. The respondent later discovered that

in the cadastral survey of lands in Juban, the property of his father, which actually

consisted of 1,405 square meters was made to form part of Lot No. 3353, the property

of Iluminado Baloloy. According to the respondent, even if the residential land was

made to form part of Lot No. 3353 registered under the name of Iluminado Baloloy, he

had acquired ownership of the property by acquisitive prescription, as he and his

predecessors had been in continuous, uninterrupted and open possession of the

property in the concept of owners for more than 60 years.  

The respondent prayed for alternative reliefs that, after due hearing, judgment be

rendered in his favor, thus: a)      Declaring the plaintiff as the absolute owner of the land in question; b)      Ordering the defendants to perpetually refrain from disturbing

plaintiff in his peaceful possession in the land in question; 

c)      Ordering the defendants to remove their houses in the land in question, and to declare OCT No. P-16540, and whatever paper, form, document or proceeding the defendants may have, as null and void and without any effect whatsoever as far as the land in question is concerned as they cast cloud upon the title of the plaintiff;

 d)      In the alternative, defendants be ordered to reconvey the title in

favor of the plaintiff as far as the land in question is concerned; 

e)      Ordering the defendants to jointly and severally pay the plaintiff the amount of P50,000.00 as moral damages; P5,000.00 as attorney’s fee plus P500.00 for every appearance or hearing of his lawyer in court; P1,500.00 as consultation fee; P5,000.00 as incidental litigation expenses; P20,000.00 as exemplary damages; and to pay the costs.

       Plaintiff further prays for such other relief [as are] just and equitable in the premises.[3]

  The Evidence of the Respondent         

The respondent adduced evidence that the Spouses Lino and Victoriana Estopin

were the original owners of a parcel of land located in Barangay Biriran, Juban,

Sorsogon, designated as Lot No. 3347 of the Juban Cadastre.  A major portion of the

property, where a house of strong materials was constructed, was agricultural, while the

rest was residential. The respondent also averred that the Spouses Estopin declared

the property in their names under Tax Declaration No. 4790.  On the north of the

agricultural portion of the property was the road leading to Biriran, while north of the

residential portion was a creek (canal) and the property of Iluminado. 

         

When Lino Estopin died intestate, his widow, Victoriana Lagata, executed a Deed

of Absolute Sale[4] on November 11, 1961 over the agricultural portion of Lot No. 3347,

which had an area of 15,906 square meters, more or less, in favor of Astrologo Hular,

married to Lorenza Hular. Shortly thereafter, on November 25, 1961, Lagata executed a

Deed of Absolute Sale[5] over the residential portion of the property with an area of 287

square meters, including the house constructed thereon, in favor of Hular.  Hular and

his family, including his son, the respondent, then resided in the property.  In 1961 or

thereabouts, Iluminado asked Hular’s permission to construct a house on a portion of

Lot No. 3347 near the road, and the latter agreed.  In l977, Lorenza Hular, wife of

Astrologo, declared the residential land in the latter’s name under Tax Declaration No.

6841.[6]

 

          Earlier, or on August 14, 1945, Irene Griarte had executed a Deed of Absolute

Sale over a coconut land located in Barangay Biriran, Juban, with an area of 6,666

square meters in favor of Martiniano Balbedina, with the following boundaries: North,

Alejandro Gruta; South, Lino Estopin; East, River Pagñe; West, Pedro Grepal and

Esteban Grepal.[7]  Subsequently, after a cadastral survey was conducted on lands in

Juban, the property of Balbedina was designated as Lot No. 3353, with the following

boundaries: North: Lot No. 3353 (portion), Alejandro Gruta; South: Lino Estopin; West:

Lot No. 3349; East: creek.  A trail was then established between Lot No. 3353 and Lot

No. 3347 resulting in the decrease of Lot No. 3353 owned by Balbedina to 4,651 square

meters.  He declared the property under his name under Tax Declaration No. 191 with

the following boundaries: North: Lot No. 3353 (portion) Alejandro Gruta; South: trail;

East: creek; West: Lot No. 3349.[8]

 

On June 4, 1951, Balbedina executed a Deed of Absolute Sale over Lot No.

3353 with an area of only 4,651 square meters in favor of Iluminado. [9]  The latter

declared the property in his name under Tax Declaration No. 5359. [10] Iluminado filed an

application with the Bureau of Lands for a free patent over the entirety of Lot No. 3353

on January 5, 1960.[11]  He indicated in his application that the property was not

occupied by any person and was disposable or alienable public land.  In support

thereof, he executed an affidavit wherein he declared that he purchased about one-half

portion of the property in 1951 based on a deed of absolute sale attached to said

affidavit; that in 1957, he purchased the other one-half portion, but “for economic

reasons,” no deed of sale was executed by the parties. He also alleged that the

improvements on the land consisted of coconut trees. [12]  The Bureau of Lands

processed the application in due course. 

          In the meantime, Iluminado constructed his house on a portion of Lot No. 3353

near the trail (road) leading to Biriran.  He and his family, including his children, forthwith

resided in said house. 

On March 1, 1968, the Secretary of Agricultural and Natural Resources approved

Iluminado’s application and issued Free Patent No. 384019 covering Lot No. 3353 with

an area of 9,302 square meters, on the basis of which OCT No. P-16540 was thereafter

issued by the Register of Deeds on March 1, 1968.[13]  

On August 2, 1975, Alejandro Gruta had executed a deed of absolute sale over a

portion of Lot No. 3353 with an area of 4,651 square meters in favor of Estelito Hije, the

husband of petitioner Adelina Baloloy, one of Iluminado’s children. [14]

 

          Before he left for employment in Saudi Arabia in 1979, respondent Hular had his

house constructed near the trail (road) on Lot No. 3347, which, however, occupied a big

portion of Lot No. 3353.[15]

 

          Iluminado died intestate on November 29, 1985. His widow and their children

continued residing in the property, while petitioner Reynaldo Baloloy, one of Iluminado’s

children, later constructed his house near that of his deceased father.  When Astrologo

died intestate on December 25, 1989, he was survived by his children, Jose, Romeo,

Anacleto, Elena, Leo, Teresita, and the respondent, among others, [16] who continued to

reside in their house.[17]

                         

Sometime in l991, the respondent’s house helper was cleaning the backyard, but

was prevented from doing so by petitioner Adelina Baloloy who claimed that their father

Iluminado owned the land where the respondent’s house was located.   To determine

the veracity of the claim, the respondent had Lot No. 3353 surveyed by Geodetic

Engineer Rodolfo Cunanan on February 16, 1993, in the presence of Balbedina,

Antonio Baloloy and petitioner Reynaldo Baloloy.  Cunanan prepared a Special Sketch

Plan of Lot No. 3353[18] showing that the house of Iluminado was constructed on Lot No.

3353[19] near the road behind the houses owned by Astrologo and Alfredo. [20]  The

engineer discovered that the residential area deeded by Lagata to Hular had an area of

1,405 square meters, instead of 287 square meters only.[21]

 

          In their Answer to the complaint, the heirs of Iluminado Baloloy averred that

Iluminado’s house was built in 1962 on a portion of Lot No. 3353, which the latter

purchased from Balbedina, and not on a portion of Lot No. 3347 which Hular purchased

from Lagata.  They alleged that Hular constructed his house on a portion of Lot No.

3353 after securing the permission of their father Iluminado, and that the respondent

had no cause of action for the nullification of Free Patent No. 384019 and OCT No. P-

16540 because only  the State, through the Office of the Solicitor General, may file a

direct action to annul the said patent and title; and even if the respondent was the real

party in interest to file the action, such actions had long since prescribed.  The heirs of

Baloloy prayed that judgment be rendered in their favor, thus:            WHEREFORE, it is most respectfully prayed of the Honorable Court to DISMISS this case pursuant to paragraph 15, et seq., hereof, and/or DECIDE it in favor of the defendants by UPHOLDING the sanctity of OCT No. P-16540 and ordering plaintiff to: 1.      RESPECT defendants’ proprietary rights and interests on the

property in question covered by OCT No. P-16540;2.      VACATE it at his sole and exclusive expense, and never to set foot

on it ever again;3.      PAY defendants:

a)      MORAL DAMAGES at P50,000.00 EACH;b)      ACTUAL DAMAGES and UNREALIZED PROFITS

at P1,000.00/MONTH COMPUTED UP TO THE TIME OF PAYMENT PLUS LEGAL RATE OF INTEREST;

c)      EXEMPLARY DAMAGES of P50,000.00d)      ATTY’S FEES and LITIGATION EXPENSES

of P100,000.00; ande)      THE COSTS OF THIS SUIT. DEFENDANTS pray for all other reliefs and remedies consistent

with law and equity.[22]

  

The Evidence for the Petitioners

 

Sometime in 1982, Hular asked permission from Iluminado to construct his house

on Lot No. 3353 near the road leading to Biriran.  Iluminado agreed, in the presence of

his daughter, petitioner Adelina Baloloy.  As per the plan of Lot No. 3353 certified by a

Director of the Bureau of Lands on November 6, 1961, Lot No. 3353 had an area of

9,302 square meters.[23]    

As gleaned from the Sketch Plan of Lot Nos. 3347 and 3353 prepared on

February 7, 1991 by Geodetic Engineer Salvador Balilo, the houses of the Baloloy

siblings and those of Astrologo and Alfredo were located in Lot No. 3353. [24]  In the said

sketch plan, Lot No. 3353 had an area of 9,302 square meters, while Lot No. 3347 had

an area of 15,905 square meters. When apprised of Hular’s claim over the property, the

petitioners and their co-heirs filed a complaint for unlawful detainer with the Municipal

Trial Court of Juban, docketed as Civil Case No. 331. The case was, however,

dismissed for lack of jurisdiction. 

          On December 4, 1995, the trial court rendered judgment in favor of the

respondent.  The fallo of the decision reads: a/         Declaring plaintiff the absolute owner of the land in question,

consisting of 1,405 square meters, more or less, and entitled to the peaceful possession thereof;

 b/         Ordering the defendants to reconvey the title to the plaintiff as far

as the land in question is concerned within fifteen (15) days counted from the finality of the decision, failing in which, the Clerk of Court is hereby ordered to execute the necessary document of reconveyance of the title in favor of the plaintiff after an approved survey plan is made;

 c/         Ordering defendants to remove their houses from the land in

question at their own expense within fifteen (15) days after the decision has become final;

 d/         Ordering the defendants to pay jointly and severally plaintiff the

amount of P5,000.00 as attorney’s fees. P5,000.00 as incidental litigation expenses;

 e/         To pay the costs. 

SO ORDERED.[25]

   

          The trial court ruled that the property subject of the complaint, with an area of

1,405 square meters, was part of Lot No. 3347 which the Spouses Estopin owned, and

which they later sold to Astrologo Hular.  The trial court 

also held that Iluminado committed fraud in securing the free patent and the title for the

property in question,  and that when Victoriana Lagata executed the deed of absolute

sale on the residential portion of Lot No. 3347, she did not know that it formed part of

Lot  No. 3353.  It further held that the action of the plaintiff to nullify the title and patent

was imprescriptible. 

          The petitioners filed on December 8, 1995 a motion to reopen the case to admit

Tax Declaration Nos. 6957 and 4790 covering Lot No. 3347, under the names of

Astrologo Hular and Victoriana Lagata, respectively, in which it was declared that Lot

No. 3347 was coconut land.  The trial court ruled that the motion had been mooted by

its decision. 

          On appeal, the Court of Appeals rendered judgment affirming the decision of the

trial court, and thereafter denied the motion for reconsideration thereof. The Present Petition 

 

The petitioners, who are still residing on the subject property, filed their petition

for review on certiorari for the reversal of the decision and resolution of the Court of

Appeals. 

The issues for resolution are: 

(1) whether all the indispensable parties had been impleaded by the respondent

in the trial court;

(2) whether the said respondent had a cause of action against the petitioners for

the nullification of Free Patent No. 384019 and OCT No. P-16540; for reconveyance

and for possession of the subject property; and for damages; and

(3) whether the respondent had acquired ownership over the property through

acquisitive prescription. 

          The first issue, while not raised by the parties in the trial court and in the Court of

Appeals, is so interwoven with the other issues raised therein and is even decisive of

the outcome of this case; hence, such issue must be delved into and resolved by this

Court.[26]  

          We note that the action of the respondent in the trial court is for:

(a) reinvidicatoria, to declare the respondent the absolute owner of the subject property

and its reconveyance to him as a consequence of the nullification of Free Patent No.

384019 and OCT No. P-16540; (b) publiciana, to order the petitioners and the other

heirs of Iluminado Baloloy to vacate the property and deliver possession thereof to him;

and (c) damages and attorney’s fees. 

It is the contention of the respondent that the subject property was sold by

Lagata to his father, Astrologo Hular, in 1961.  He adduced evidence that when his

parents died intestate, they were survived by their children, the respondent and his

siblings Elena, Jose, Romeo, Anacleto, Leo, and Teresita. Article 1078 of the Civil Code

provides that where there are two or more heirs, the whole estate of the decedent is,

before partition, owned in common by such heirs, subject to the payment of the debts of

the deceased.  Until a division is made, the respective share of each cannot be

determined and every co-owner exercises, together with his co-participants, joint

ownership over the pro indiviso property, in addition to the use and enjoyment of the

same. 

Under Article 487 of the New Civil Code, any of the co-owners may bring an

action in ejectment.  This article covers all kinds of actions for the recovery of

possession, including an accion publiciana and a reinvidicatory action.  A co-owner may

bring such an action without the necessity of joining all the other co-owners as co-

plaintiffs because the suit is deemed to be instituted for the benefit of all. [27]  Any

judgment of the court in favor of the co-owner will benefit the others but if such

judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-

owners.  If the action is for the benefit of the plaintiff alone who claims to be the sole

owner and entitled to the possession thereof, the action will not prosper unless he

impleads the other co-owners who are indispensable parties.  

In this case, the respondent alone filed the complaint, claiming sole ownership

over the subject property and praying that he be declared the sole owner thereof.  There

is no proof that the other co-owners had waived their rights over the subject property or

conveyed the same to the respondent or such co-owners were aware of the case in the

trial court.  The trial court rendered judgment declaring the respondent as the sole

owner of the property and entitled to its possession, to the prejudice of the latter’s

siblings.  Patently then, the decision of the trial court is erroneous. 

Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to

implead his siblings, being co-owners of the property, as parties.  The respondent failed

to comply with the rule.  It must, likewise, be stressed that the Republic of the

Philippines is also an indispensable party as defendant because the respondent sought

the nullification of OCT No. P-16540 which was issued based on Free Patent No.

384019. Unless the State is impleaded as party-defendant, any decision of the Court

would not be binding on it. It has been held that the absence of an indispensable party

in a case renders ineffective all the proceedings subsequent to the filing of the

complaint including the judgment.[28] The absence of the respondent’s siblings, as

parties, rendered all proceedings subsequent to the filing thereof, including the

judgment of the court, ineffective for want of authority to act, not only as to the absent

parties but even as to those present.[29]    

Even if we glossed over the procedural lapses of the respondent, we rule that he

failed to prove the material allegations of his complaint against the petitioners; and that

he is not entitled to the reliefs prayed for. 

The burden of proof is on the plaintiff to establish his case by the

requisite quantum of evidence.  If he claims a right granted as created by law or under a

contract of sale, he must prove his claim by competent evidence.  He must rely on the

strength of his own evidence and not on the weakness or absence of the evidence of

that of his opponent.[30]  He who claims a better right to real estate property must prove

not only his ownership of the same but also the identity thereof. [31]  In Huy v. Huy,[32] we

held that where a property subject of controversy is duly registered under the Torrens

system, the presumptive conclusiveness of such title should be given weight and in the

absence of strong and compelling evidence to the contrary, the holder thereof should be

considered as the owner of the property until his title is nullified or modified in an

appropriate ordinary action.  A Torrens Certificate is evidence of an indefeasible title to

property in favor of the person in whose name appears therein. [33]  Such holder is

entitled to the possession of the property until his title is nullified.  

The petitioners aver that Lot No. 3347 owned by the Spouses Estopin was

coconut, and not residential, land.  The petitioners contend that, under the deed of

absolute sale, Victoriana Lagata executed on November 25, 1961 in favor of Astrologo

Hular, she sold the residential portion of Lot No. 3347; however, the latter constructed

his house on a portion of Lot No. 3353 which Iluminado had purchased from Balbedina,

now covered by OCT No. P-16540.  The petitioners assert that along with their mother

Anacorita and their brother Antonio Baloloy, they constructed their houses on a part of

Lot No. 3353, titled in the name of their father Iluminado; hence, they could not be

dispossessed of the said property.  The petitioners posit that, whether the house of

Hular was constructed on a portion of Lot No. 3353 of the property of Balbedina or

Gruta is irrelevant because both properties are now covered 

by OCT No. P-16540 under the name of Iluminado, their predecessor-in-interest. 

The Court of Appeals ruled that Victoriana Lagata owned the subject property,

which turned out to be 1,405 square meters, and sold the same to Hular.   In contrast,

the RTC declared in its decision that while under the deed of absolute sale executed by

Irene Griarte in favor of Balbedina, Lot No. 3353 had an area of 6,666 square meters,

Griarte actually owned only 4,651 square meters; a portion of the lot was actually

owned by Lino Estopin. Hence, Balbedina sold only 4,651 square meters to

Iluminado[34] because he was aware that he owned only 4,651 square meters of the

land.  It also held that, unknown to Lagata, a portion of Lot No. 3347 was declared as

part of Lot No. 3353 when the lands in Juban were surveyed.  The trial court concluded

that Lagata erroneously declared, under the deed of absolute sale executed on

November 25, 1961 in favor of Hular, that the property was part of Lot No. 3347. 

The trial and appellate courts erred in their decisions. 

 The evidence on record shows that Irene Griarte owned a parcel of land with an

area of 6,666 square meters, more or less.[35]  When she sold the property to Martiniano

Balbedina on August 14, 1945, it was bounded on the south by the property of Lino

Estopin.  There was no trail yet between the property of Griarte on the south and of Lino

Estopin on the north.  In the 

meantime, however, a road (trail) leading to Biriran was established between the

property of Balbedina on the south and that of Lino Estopin on the north.   Thereafter, a

cadastral survey of the lands in Juban was conducted by the Bureau of Lands.  The

property of Balbedina was designated as a portion of Lot No. 3353, while that of Estopin

was designated as Lot No. 3347.  The other portion of Lot No. 3353, with an area of

4,561 square meters, belonged to Alejandro Gruta.  Because of the construction of the

road, the property of Balbedina, which was a part of Lot No. 3353, was reduced to 4,651

square meters.  Balbedina declared, under Tax Declaration No. 391, that Lot No. 3353

had an area of 4,651 square meters and was coconut land [36] and that his property was

bounded on the south by a trail (road).  Lino Estopin declared Lot No. 3347 under his

name for taxation purposes, in which he stated that his property was bounded on the

north by the trail going to Biriran. [37]  Clearly, then, Lot No. 3353 and Lot No. 3347 had a

common boundary – the trail (road) going to Biriran. 

Balbedina sold his property, which was a portion of Lot No. 3353, with an area of

4,651 square meters to Iluminado Baloloy on June 4, 1951. [38]  Under the deed of

absolute sale, the property was bounded on the south by the trail (road) owned by Lino

Estopin.[39]  The English translation of the deed of sale attached as page 85 to the RTC

Records, which both the trial court and the appellate court relied upon, is incorrect.

The original deed of absolute sale, which is in Spanish, states that the boundary

of the property on the south is “con camino, Lino Estopin,” while  the English version of

the deed, indicates that the property is bounded “on the south by Lino Estopin.”   Being

an earlier document, the deed in Spanish signed by the parties therefore should

prevail. Conformably to such deed, Iluminado Baloloy declared in Tax Declaration No.

5359 under his name that the property is bounded on the south by a trail, [40] and not by

Lot No. 3347 owned by Lino Estopin. 

The respondent failed to adduce any documentary evidence to prove how the

Spouses Estopin acquired the disputed property.  The respondent’s reliance on the

testimonies of Melissa Estopin, the daughter of the Spouses Estopin, and on Porfirio

Guamos as well as the May 8, 1993 Affidavit of Martiniano Balbedina, and the deed of

sale executed by Victoriana Lagata on November 27, 1961 in favor of Astrologo Hular to

corroborate his claim over the lot in question, is misplaced. 

First.  Per the testimony of Porfirio Guamos, the witness of the respondent, Lino

Estopin purchased the disputed property in 1941 from Irene Griarte and insisted that

there was a deed of sale evidencing the sale: 

Atty. Dealca:Q         The area of the land in question is 1,405 sq. m., you claim that way

back in 1944 the owner of the land was Lino Estopin; ’41 to ’44?A         1941. Q         And you said that Lino Estopin was able to acquire the land by

purchase?A         That was very long time when Lino Estopin sold the property. Q         My question is whether you know because you testified earlier that

Lino Estopin was able to acquire the land by purchase; do you confirm that?

A         Yes, Sir. Q         From whom?A         From Irene Griarte. Q         Were you present when that sale was consummated?A         I was not there. Q         So you do not know how much was it bought by Lino Estopin from

Irene Griarte?A         No, Sir. Q         You do not know whether a document to that effect was actually

drafted and executed?A         There was. Q         Have you seen the document?A         I did not see but there was a document.Q         You maintain there was a document but you did not see a

document, is that it?A         In my belief there was a document. Q         In your belief, how did you organize that belief when you did not

see a document?A         I insist there was a document. Q         That is why, why are you insisting when you did not see a

document?A         Well, during the sale that document was used.

 Q         How was it used when you did not see that document?A         When the deed of sale was executed I did not see the document,

but I insist there was a document. Q         That’s why, how were you able to say before the court that there

was a document when you contend that you did not see any?A         There was basis in the sale … the sale was based on a

document.  You cannot sell a property without document? (sic) Q         Is that your belief?A         Yes, Sir. Q         But you did not see any document? Atty. Diesta:             Already answered. Witness: A         I did not see. 

Atty. Dealca: Q         You said that that document was used when the property was sold

by Lino Estopin to Alfredo Hular. . .A         In 1961.  Yes.[41]

  

However, the respondent failed to adduce in evidence the said deed or even an

authentic copy thereof.  The respondent did not offer any justification for his failure to

adduce the same in evidence.  As against the respondent’s verbal claim that his father

acquired the property from Lagata, the Torrens title of Iluminado Baloloy must prevail. [42]

         

Second.  The respondent even failed to adduce in evidence any tax declarations

over the disputed property under the name of Irene Griarte and/or Lino Estopin, or realty

tax payment receipts in their names from 1941 to November 1961. The documents are

circumstantial evidence to prove that Irene Griarte claimed ownership over the disputed

property and that Lino Estopin acquired the same from her.  After all, such tax

declarations and tax receipts can be strong evidence of ownership of land when

accompanied by possession for a period sufficient for acquisitive prescription. [43]

 

          Third. The respondent even failed to adduce in evidence Tax Declaration No.

4790 covering the two parcels of land under the name of Lino Estopin to prove his claim

that Lot No. 3347 consisted of agricultural and residential lands.  We note that the

petitioners appended a certified true copy of Tax Declaration No. 4790 under the name

of Victoriana Lagata over Lot No. 3347 to their Motion to Reopen the Case. In the said

declaration, Lot No. 3347 was described as coconut land; this is contrary to the

respondent’s claim that the said lot was then residential, and that the boundary of the

property on the north was the road to Biriran which, in turn, is consistent with the

petitioners’ claim.[44]  Unfortunately, the trial court denied the said motion on the ground

that it was mooted by its decision. 

          Fourth.  During the cadastral survey of lands in Juban, the lot of Gruta and that of

Balbedina, inclusive of the subject property, were designated as Lot No. 3353 with a

total area of 9,302 square meters under their names, while that of Lino Estopin was

designated as Lot No. 3347 with an area of 15,906 square meters.  Iluminado Baloloy

applied for a free patent over Lot No. 3353, including the disputed property, under his

name.  The respondent failed to adduce any evidence that the Spouses Estopin and/or

Astrologo Hular opposed Balbedina and/or Iluminado’s claim of ownership of Lot No.

3353 during the survey and after the filing of the application.   A propos is our ruling

in Urquiaga v. Court of Appeals: [45]

 As succinctly observed by respondent Court of Appeals in

assessing the totality of the evidence –             We do not agree with defendants that they are also the occupants and possessors of the subject lot just because it “is adjacent to their titled property.”  Precisely, the boundaries of defendants’ titled property were determined, delineated and surveyed during the cadastral survey of Dipolog and thereafter indicated in their certificate of title in order that the extent of their property will be known and fixed. Since the subject lot was already found to be outside their titled property, defendants have no basis in claiming it or other adjacent lots for that matter.  Otherwise, the very purpose of the cadastral survey as a process of determining the exact boundaries of adjoining properties will be defeated. 

            Defendants’ own title, O.C.T. No. 0-357 (in the names of Jose Aguirre and Cristina Gonzales), in fact belies their claim of occupation and possession over the adjacent subject lot.  Examining said title, we note that: (1) the cadastral survey of Dipolog was conducted from January, 1923 to November 1925; (2) defendants’ titled property was one of those lots surveyed and this was designated as Lot No. 2623; (3) during the survey, it was already determined and known that Lot No. 2623 is bounded on the northeast, southeast, southwest and west by Lot No. 4443 (as we have seen in our narration of facts, the subject lot is a subdivision lot of Lot No. 6552 which was originally identified as Lot No. 4443-B-1, Dipolog Cadastre 85 Ext.: hence, the subject lot is a portion of Lot No. 4443); and (4) O.C.T. No. 0-357 was issued on October 11, 1965 on the strength of the judgment rendered on July 31 (sic), 1941 by the then Court of First Instance of Zamboanga del Norte in Cadastral Case No. 6, LRC Cadastral Record No. 756.             From the foregoing facts, we find that as early as January, 1923 when the cadastral survey was started, the boundaries of Lot Nos. 2623 and 4443 were already determined and delineated.  Since the subject lot was surveyed to be part of Lot No. 4443, it means that during that time defendants’ predecessors-in-interest never claimed ownership or possession over the subject lot.  Otherwise, they would have complained so that the subject lot could be excluded from Lot No. 4443 and included in Lot No. 2623, they being adjacent lots.  It is obvious then that defendants’ predecessors only claimed Lot No. 2623 and they pursued their claim in Cadastral Case No. 6, LRC Cadastral Record No. 756 until O.C.T. No. 0-357 was issued to them.  The contention of defendants that they and their predecessors-in-interest occupied and possessed the subject lot since time immemorial therefore is not true.[46]

          

Fifth.  Under the deed of absolute sale dated November 25, 1961, Lagata sold to

Astrologo Hular Lot No. 3347, and not Lot No. 3353.  In Veterans Federation of the Philippines v. Court of Appeals,[47] we ruled that:

 Petitioner VFP maintains that the deed of sale was valid and

enforceable and that it was perfected at the very moment that the parties agreed upon the thing which was the object of the sale and upon the price.  The parties herein had agreed on the parcel of land that petitioner would purchase from respondent PNR, and the same was described therein; thus, petitioner VFP cannot conveniently set aside the technical description in this agreement and insist that it is the legal owner of the property erroneously described in the certificate of title.  Petitioner can only claim right of ownership over the parcel of land that was the object of the deed of sale and nothing else.[48]

          

Sixth.  Under the said deed of sale dated November 11, 1961, Victoriana Lagata

sold Lot No. 3347 which had an area of 15,906 square meters and covered by Tax

Declaration No. 4790.  The deed does not state that what was sold was only a portion of

Lot No. 3347, excluding therefrom the disputed property.  This is understandable, since

the subject property is a portion of Lot No. 3353 owned by Alejandro Gruta and

Iluminado Baloloy, and not of Lino Estopin and/or Victoriana Lagata.  Lagata could not

have sold a portion of Lot No. 3353 which she does not own.  As the Latin adage

goes:  “NEMO DAT QUOD NON HABET.”         

Seventh.  The Balbedina’s Affidavit dated May 8, 1993 offered by the respondent

to prove the contents thereof is inadmissible in evidence against the petitioners.

Balbedina did not testify; as such, the petitioners were deprived of their right to cross-

examine him. The said affidavit is thus hearsay and barren of probative weight.  The

affidavit varies the contents of the deed of absolute sale which he (Balbedina) executed

in favor of  Iluminado more than forty years earlier.  In the said affidavit, it was made to

appear that Balbedina sold to Iluminado on June 4, 1951 only a portion of Lot 3353 with

an area of 3,333 square meters, when under the said deed of absolute sale, the

property that was sold consisted of 4,651 square meters. The affidavit is proscribed by

Section 9, Rule 130 of the Rules of Court, which provides:Section 9.  Evidence of written agreements. -  When the terms of

an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.

. . . 

 It bears stressing that the deed of absolute sale executed by Balbedina in favor

of Baloloy was notarized by the Justice of the Peace who was an Ex-Officio Notary

Public; hence, entitled to full probative weight. 

          Eighth.  The Special Sketch Plan of Lot No. 3353 prepared by Geodetic Engineer

Rodolfo P. Cunanan[49] cannot prevail over OCT No. P-16540.  In fact, the plan even

buttressed the case for the petitioners because it shows that the subject property is a

portion of Lot No. 3353, and not of Lot No. 3347, covered by OCT No. P-16540 under

the name of Iluminado Baloloy, the deceased father of the petitioners. 

          Ninth.  The conclusion of the RTC that Lagata in fact sold a portion of Lot No.

3347 under the deed of absolute sale dated November 25, 1961, unaware that the

property was a part of Lot No. 3353, is based on mere speculations and surmises. 

          Iluminado Baloloy included in his application for a free patent the property of

Alejandro Gruta, and was able to secure a free patent over said property in addition to

his own.  As such, Gruta, not the respondent, is the proper party to assail such free

patent, as well as OCT No. P-16540 which was issued based thereon.  

          IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.  The decisions

of the Regional Trial Court and the Court of 

Appeals are REVERSED and SET ASIDE. The complaint of the respondent

is DISMISSED.   No costs.           SO ORDERED.  

FIRST DIVISION

[G.R. No. 120864.  October 8, 2003]

MANUEL T. DE GUIA, petitioner, vs. COURT OF APPEALS (Former Sixth Division) and JOSE B. ABEJO, represented by his Attorney-in-Fact,Hermenegilda Abejo-Rivera, respondents.

D E C I S I O NCARPIO, J.:

The Case

This is a Petition for Review on Certiorari[1] assailing the 22 August 1994 Decision[2] as well as the 27 June 1995 Resolution of the Court of Appeals in CA-G.R. CV No. 39875.  The Court of Appeals affirmed the Decision[3] of the Regional Trial Court (“trial court”) of Malolos, Bulacan, Branch 16, in Civil Case No. 8796-M.  The trial court’s Decision ordered petitioner Manuel T. De Guia (“DE GUIA”) to turn over to private respondent Jose B. Abejo (“ABEJO”) possession of the one half (½) undivided portion of a fishpond and to pay actual damages and attorney’s fees.

The Antecedents

On 12 May 1986, ABEJO[4] instituted an action for recovery of possession with damages against DE GUIA.  In his complaint, ABEJO alleged that he is the owner of the ½ undivided portion of a property used as a fishpond (“FISHPOND”) situated in Meycauayan, Bulacan and covered by TCT No. T-6358 of the Bulacan Register of Deeds.  He alleged ownership over approximately 39,611 square meters out of the FISHPOND’s total area of 79,220 square meters.  ABEJO further averred that DE GUIA continues to possess and use the FISHPOND without any contract and without paying rent to ABEJO’s damage and prejudice.  ABEJO also complained that DE GUIA refuses to surrender ownership and possession of the FISHPOND despite repeated demands to do so after DE GUIA’s sublease contract over the FISHPOND had expired.   ABEJO asked the trial court to order DE GUIA to vacate an approximate area of 39,611 square meters as well as pay damages.

DE GUIA, a lawyer by profession, appeared on his own behalf.  He filed his Answer on 12 January 1990 after the Court of Appeals resolved several issues concerning the validity of the service of summons on him.  In his Answer, DE GUIA alleged that the

complaint does not state a cause of action and has prescribed.  He claimed that the FISHPOND was originally owned by Maxima Termulo who died intestate with Primitiva Lejano as her only heir.  According to him, ABEJO is not the owner of the entire FISHPOND but the heirs of Primitiva Lejano who authorized him to possess the entire FISHPOND.  He assailed ABEJO’s ownership of the ½ undivided portion of the FISHPOND as void and claimed ownership over an undivided half portion of the FISHPOND for himself.   DE GUIA sought payment of damages and reimbursement for the improvements he introduced as a builder in good faith.

The trial court set the pre-trial and required the parties to file their pre-trial briefs.  ABEJO filed his pre-trial brief[5] on 05 April 1990.  DE GUIA filed his pre-trial brief[6] on 31 July 1990.  DE GUIA’s pre-trial brief raised as the only issue in the case the amount of damages in the form of rent that DE GUIA should pay ABEJO.  DE GUIA also submitted an Offer to Compromise,[7] offering to settle ABEJO’s claim for P300,000 and  to lease the entire FISHPOND  to any party of ABEJO’s choice. 

Hearing commenced on 30 July 1990.  ABEJO rested his case on 4 December 1990.  DE GUIA’s last witness completed her testimony on 22 November 1991. The trial court summarized the evidence presented by ABEJO and DE GUIA as follows:

Evidence adduced from plaintiff shows that there are two parcels of land covering  a fishpond with a total area of 79,220 sq. m. more or less, situated at Ubihan, Meycauayan, Bulacan and  covered  by TCT No. 6358 equally  owned by Primitiva Lejano and Lorenza Araniego married to Juan Abejo (Exh. A).  The one half undivided portion owned by Lorenza Araniego corresponding to 39,611 sq. m. was later purchased by plaintiff from his father Teofilo Abejo (Exh. B), the only heir of the original owner on November 22, 1983.  Prior to this sale on July 30, 1974 the whole fishpond (79,220) was the subject of a “Salin ng Pamumusisyong ng Palaisdaan” executed by the heirs of Primitiva Lejano with the knowledge and consent of Teofilo A. Abejo in favor of one Aniano Victa and defendant.  The contract provided that the period of lease shall be until November 30, 1979. When the contract expired and defendant failed to surrender the fishpond, written demands the last of which was on November 27, 1983 were made for defendants to pay back rental and to vacate the premises in question (Exh. D & E).  Defendant refused to deliver possession and also to pay the rentals due.  In anticipation, however, that defendant will vacate the fishpond, plaintiff, on December 21, 1983 entered into a two year “Kasunduan ng Buwisan ng Palaisdaan” with Ruperto C. Villarico for a consideration of P50,000.00 (Exh. G). This contract, despite its execution and even already notarized, had to be cancelled and the amount ofP50,000.00 returned  by plaintiff to Villarico when the defendant did not heed the demand to vacate the fishpond.  For unpaid rental, actual as well as moral and exemplary damages, plaintiff asks payment of P450,000.00 and P20,000.00 attorney’s fees.

On the other hand, defendant’s evidence tends to show that the entire fishpond with an area of 79,200 sq. m. was leased to him by the heirs of Primitiva Lejano.  Subsequently, defendant became the absolute owner of one half of the undivided area of the fishpond and he questioned plaintiffs ownership of the other half as void and fraudulent.  As to

the area pertaining to plaintiff, defendant claimed that he introduced improvements worthP500,000 and being in good faith, he asked  that  he should be reimbursed by plaintiff.  In his pre-trial brief, however, defendant raised the only issue which is the amount of damages plaintiff is entitled to in the form of rental.  Hence, the thrust of the testimonies of defendant’s witnesses particularly Ben Ruben Camargo and Marta Fernando Peña was the amount of rental of fishponds in the same locality as the fishpond in question at a given time.  However, the documentary evidence (Exhs. 1 and 2) in support of their testimony were not offered as evidence.[8]

The trial court rendered its decision on 8 June 1992, disposing as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant and hereby orders that:

1.            Defendant shall turn over possession to plaintiff one half undivided portion of the 79,200 sq. m. fishpond who shall enjoy the benefits and fruits in equal share with the defendant effective  immediately until such time that partition of the property is effected;

2.            Defendant shall pay to plaintiff the amount of P262,500.00 by way of actual or compensatory damages;

3             Defendant shall pay plaintiff P20,000.00 as and for attorney’s fees; and

4.            To pay the costs.

SO ORDERED.[9]

Aggrieved, DE GUIA went to the Court of Appeals insisting the trial court erred in ordering him to vacate and surrender possession of the ½ undivided portion of the FISHPOND and to pay actual damages and attorney’s fees.  The Court of Appeals found DE GUIA’s appeal without merit and affirmed the trial court’s decision.  Upon DE GUIA’s motion for reconsideration, the appellate court reduced the compensatory damages from P262,500 to P212,500.

Hence, the instant petition.

The undisputed facts as found by the trial court and adopted in toto by the Court of Appeals are restated as follows:

1.  The subject of the dispute are two undivided parcels of land used as a fishpond situated in Barrio Ubihan, Meycauayan, Bulacan, originally co-owned by Primitiva Lejano and Lorenza Araniego married to Juan Abejo.

2.  The FISHPOND is registered under the names of Primitiva Lejano and Lorenza Araniego under TCT No. 6358 of the Bulacan Register of Deeds as follows:

PRIMITIVA LEJANO, Filipina, of legal age, single - ½ share; and LORENZA ARANIEGO, Filipina, of legal age, married to Juan Abejo, ½ share, ---

3.  The FISHPOND has a total land area of approximately 79,220 square meters.  ABEJO is seeking to recover possession of the ½ undivided portion of the FISHPOND containing 39,611 square meters.

4.  DE GUIA (along with a certain Aniano Victa) acquired possession of the entire FISHPOND by virtue of a document captioned Salin ng Pamumusisyong ng Palaisdaan (“Lease Contract”) executed between him and the heirs of Primitiva Lejano.  The Lease Contract was  effective from 30 July 1974 up to 30 November 1979 for a consideration of P100,000. 

5.  The Lease Contract was executed with the knowledge and consent of Teofilo Abejo, sole heir of Lorenza Araniego Abejo.  Teofilo Abejo acquired Lorenza Araniego Abejo’s ½ undivided share in the FISHPOND by intestate succession.

6.  Teofilo Abejo (now deceased) sold his ½ undivided share in the FISHPOND  to his son,  ABEJO,  on 22 November 1983.

7.  DE GUIA  continues to possess the entire FISHPOND and to derive income  from the property  despite the expiration of the Lease Contract and several demands to vacate made by Teofilo Abejo and by his successor-in-interest, ABEJO.  The last demand letter was dated 27 November 1983.

8.  ABEJO filed his complaint for recovery of possession with damages against DE GUIA on 12 May 1986.

9.  DE GUIA’s claim of ownership over the other ½ undivided portion of the  FISHPOND has not been finally adjudicated for or against him.

DE GUIA offers the verified Complaint for Annulment of Real Estate Mortgage and Contract of Lease with Preliminary Injunction signed by the heirs of Primitiva Lejano as proof of his ownership of the other undivided half portion of the FISHPOND. Records show that DE GUIA filed the complaint for himself and as attorney-in fact of the heirs of Primitiva Lejano (“Lejano Heirs”)[10] against Spouses Teofilo Morte and Angelina Villarico, Spouses Ruperto and Milagros Villarico, et al. (“Defendants”).  The case was raffled to Branch 12 of the Regional Trial Court of Malolos, Bulacan, and docketed as Civil Case. No. 86-27-M.  The complaint alleged that DE GUIA acquired his ½ undivided share in the FISHPOND from the Lejano Heirs in February 1986.  DE GUIA and the Lejano Heirs sought to annul the Kasulatan ng Sanglaan and Kasulatan ng Pagbubuwis ng Palaisdaan, executed on 10 November 1979 by Primitiva Lejano in favor of the Defendants.  DE GUIA and the Lejano Heirs claimed that Primitiva Lejano signed these documents under duress and without consideration. 

The trial court rendered judgment[11] on 28 February 1992 against DE GUIA and the Lejano Heirs as follows:

WHEREFORE, the evidence having shown the plaintiffs, particularly Manuel De Guia, their successor-in-interest, not entitled upon the facts and the law to the relief prayed for in the amended complaint, the same is hereby DISMISSED with costs against said plaintiff.  Instead, as prayed for by defendants, judgment is hereby rendered:

1.                  –  Declaring the “Kasulatan ng Sanglaan” (Exhs. “A” & “1”) dated November 10, 1979, and the “Kasulatan ng Pagbubuwis ng Palaisdaan” (Exhs. “C” &”3”) also dated November 10, 1979, as valid for all legal intents and purposes;

2.                  –   Ordering the Ex-Officio Sheriff, RTC, Bulacan, to proceed with the extrajudicial foreclosure of the subject real estate mortgage; and

3.                  –   Ordering plaintiffs to pay defendants attorney’s fees in the amount of P20,000.00.

SO ORDERED.[12]

The Court of Appeals affirmed the trial court in a Decision dated 30 August 2002 in CA-G.R. CV No. 38031.  The Court of Appeals found the claim of force and intimidation in the execution of the documents  as highly improbable since Primitiva Lejano’s son, Renato Davis, witnessed the signing of the documents and found nothing irregular at the time.  The appellate court also held that assuming Defendants threatened DE GUIA and the Lejano Heirs with immediate foreclosure, Defendants were merely exercising their legitimate right of foreclosing the mortgaged property for non-payment of the loan.  In addition, Primitiva Lejano’s lawyer and notary public, Atty. Mamerto Abaño, testified that the parties appeared before him to affirm the contents of the documents.  He also stated that he was present when Defendants paid Primitiva Lejano Davis and her son Renato.  As of this writing, DE GUIA has a pending motion for reconsideration before the Court of Appeals.  In the event the Court of Appeals’ Decision attains finality, DE GUIA may lose whatever right he claims over the FISHPOND.

The Trial Court’s Ruling

The trial court ruled that ABEJO has the right to demand that DE GUIA vacate and surrender an area equivalent to ABEJO’s ½ undivided share in the FISHPOND.  The trial court explained that DE GUIA’s sublease contract expired in 1979 and ABEJO acquired his father’s share in 1983.  However, the trial court pointed out that ABEJO failed to present evidence of the judicial or extra-judicial partition of the FISHPOND.  The identification of the specific area pertaining to ABEJO and his co-owner is vital in an action to recover possession of real property.  Nevertheless, the trial court declared that pending partition, it is only just that DE GUIA pay ABEJO a reasonable amount as rental for the use of ABEJO’s share in the FISHPOND.  DE GUIA

admitted this obligation when he raised as sole issue in his pre-trial brief how much rent he should pay ABEJO.  DE GUIA even proposed P300,000 as the reasonable amount  but under certain conditions which ABEJO found unacceptable.

In determining the reasonable rent due to ABEJO, the trial court considered the Lease Contract between  ABEJO and  a certain  Ruperto C. Villarico which provided for a yearly rent ofP25,000 for ½ undivided  portion of the FISHPOND.  The trial court declared that the total amount of rent due is P212,500, computed from November 1983 when ABEJO became a co-owner of the FISHPOND up to 1991 [13] or a period of eight and one half years.  The trial court further ordered DE GUIA to pay an additional P50,000 which represents the amount ABEJO returned to Ruperto C. Villarico when they cancelled the Lease Contract between them due to DE GUIA’s  refusal to vacate the FISHPOND.

Lastly, the trial court ruled that pending partition, ABEJO as co-owner has the right to possess the FISHPOND and to receive an equal share in the benefits from the FISHPOND effective immediately.  Until there is a partition, and while there is no contract of lease, the Civil Code provisions on co-ownership shall govern the rights of the parties.

The Court of Appeals’ Ruling

The Court of Appeals affirmed the trial court’s decision.  The Court of Appeals debunked DE GUIA’s claim that partition and not recovery of possession was the proper remedy under the circumstances.  The Court of Appeals pointed out that DE GUIA’s failure to respect ABEJO’s right over his ½ undivided share in the FISHPOND justifies the action for recovery of possession. The trial court’s decision effectively enforces ABEJO’s right over the property which DE GUIA violated by possession and use without paying   compensation.  According to the Court of Appeals, partition would constitute a mechanical aspect of the decision just like accounting when necessary.  

The Court of Appeals likewise rejected DE GUIA’s claim that the award of compensatory damages of P242,000, computed based on  the rent stipulated in the Lease Contract between ABEJO and Ruperto C. Villarico, is grossly exorbitant.  The Court of Appeals clarified that the amount the trial court awarded was P262,500 and not P242,000 as erroneously alleged by DE GUIA.  The Court of Appeals pointed out that the notarized Lease Contract between ABEJO and Ruperto C. Villarico carries more evidentiary weight than the testimonies of DE GUIA’s witnesses, Ben Ruben Camargo and Marta Fernando Peña.  The Court of Appeals also upheld the award of attorney’s fees since the parties could have avoided litigation had DE GUIA heeded the justifiable demands of ABEJO.

On motion for reconsideration, the Court of Appeals reduced the compensatory damages from P262,500 to P212,500.  The Court of Appeals explained that the trial court correctly computed the total amount of rent due at P212,500.  The trial court erred, however, in adding the sum of P50,000 representing the rent for 1983 and 1984 which ABEJO returned to Ruperto C. Villarico.  The appellate court clarified that the sum

of P212,500 was arrived at by multiplying the rent of P25,000 by 8½ years.  The 8½ year period already included the two months rent received from and then subsequently reimbursed to Ruperto C. Villarico.

The Issues

DE GUIA raises the following issues in his Memorandum:

I.THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S DECISION DENYING PETITIONER’S PLEA FOR DISMISSAL OF THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION; 

II.THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S ORDER DIRECTING PETITIONER TO TURN OVER THE ONE-HALF UNDIVIDED PORTION OF THE FISHPOND WHICH IS STILL UNDER A STATE OF CO-OWNERSHIP;

 III.

THE COURT OF APPEALS ERRED IN AFFIRMING, IN PART, THE AWARD OF ACTUAL OR COMPENSATORY DAMAGES DESPITE LACK OF CREDIBLE EVIDENCE TO SUPPORT THE SAME;

 IV.

THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF ATTORNEY’S FEES IN PRIVATE RESPONDENT’S FAVOR.[14]

In essence, this Court is asked to resolve: (1) whether an action for recovery of possession and turn-over of the ½ undivided portion of a common property is proper before partition; and (2) whether there is sufficient basis for the award of compensatory damages and attorney’s fees.

The Court’s Ruling

The petition is partly meritorious.

First and Second Issues:  Cause of Action and Turn-Over of Possession

DE GUIA contends that a co-owner cannot claim a definite portion from the property owned in common until there is a partition.  DE GUIA argues that ABEJO should have filed an action for partition instead of recovery of possession since the court cannot implement any decision in the latter case without first a partition.  DE GUIA contends that an action for recovery of possession cannot prosper when the property subject of the action is part of an undivided, co-owned property.  The procedural mode adopted by ABEJO, which is recovery of possession, makes enforcement difficult if not impossible since there is still no partition of the subject property.

Under Article 484 of the Civil Code, “there is co-ownership whenever the ownership of an undivided thing or right belongs to different persons.” A co-owner of an undivided parcel of land 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 abstract.”[15] On the other hand, there is no co-ownership when the different portions owned by different people are already concretely determined and separately identifiable, even if not yet technically described.[16]

Article 487 of the Civil Code provides, “[a]ny one of the co-owners may bring an action in ejectment.” This article covers all kinds of actions for the recovery of possession.  Article 487 includes forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion).  The summary actions of forcible entry and unlawful detainer seek the recovery of physical possession only.  These actions are brought before municipal trial courts within one year from dispossession.  However, accion publiciana, which is a plenary action for recovery of the right to possess, falls under the jurisdiction of the proper regional trial court when the dispossession has lasted for more than one year. Accion de reivindicacion, which seeks the recovery of ownership, also falls under the jurisdiction of the proper regional trial court.[17]

Any co-owner may file an action under Article 487 not only against a third person, but also against another co-owner who takes exclusive possession and asserts exclusive ownership of the property.[18]  In the latter case, however, the only purpose of the action is to obtain recognition of the co-ownership.  The plaintiff cannot seek exclusion of the defendant from the property because as co-owner he has a right of possession.  The plaintiff cannot recover any material or determinate part of the property.[19]

In Hermogena   G.   Engreso   with Spouse Jose   Engreso   v.   Nestoria   De La Cruz and   Herminio   De La Cruz ,[20] we reiterated the rule that a co-owner cannot recover a material or determinate part of a common property prior to partition as follows:

It is a basic principle in civil law that before a property owned in common is actually partitioned, all that the co-owner has is an ideal or abstract quota or proportionate share in the entire property.  A co-owner has no right to demand a concrete, specific or determinate part of the thing owned in common because until division is effected his right over the thing is represented only by an ideal portion.

As such, the only effect of an action brought by a co-owner against a co-owner will be to obtain recognition of the co-ownership; the defendant cannot be excluded from a specific portion of the property because as a co-owner he has a right to possess and the plaintiff cannot recover any material or determinate part of the property.  Thus, the courts a quo erred when they ordered the delivery of one-half (½) of the building in favor of private respondent. 

Indisputably, DE GUIA has been in exclusive possession of the entire FISHPOND since July 1974.  Initially, DE GUIA disputed ABEJO’s claim of ownership over the ½ undivided portion of the FISHPOND.  Subsequently, he implicitly recognized ABEJO’s ½ undivided share by offering to settle the case for P300,000 and to vacate the property.  During the trial proper, neither DE GUIA nor ABEJO asserted or manifested a claim of absolute and exclusive ownership over the entire FISHPOND.  Before this Court, DE GUIA limits the issues to the propriety of bringing an action for recovery of possession and the recovery of compensatory damages.

Following the inherent and peculiar features of co-ownership, while ABEJO and DE GUIA have equal shares in the FISHPOND quantitatively speaking, they have the same right in a qualitative sense as co-owners.  Simply stated, ABEJO and DE GUIA are owners of the whole and over the whole, they exercise the right of dominion.  However, they are at the same time individual owners of a ½ portion, which is truly abstract because until there is partition, such portion remains indeterminate or unidentified. [21]  As co-owners, ABEJO and DE GUIA may jointly exercise the right of dominion over the entire FISHPOND until they partition the FISHPOND by identifying or segregating their respective portions.

Since a co-ownership subsists between ABEJO and DE GUIA, judicial or extra-judicial partition is the proper recourse. An action to demand partition is imprescriptible and not subject to laches.[22] Each co-owner may demand at any time the partition of the common property unless a co-owner has repudiated the co-ownership under certain conditions.[23] Neither ABEJO nor DE GUIA has repudiated the co-ownership under the conditions set by law.

To recapitulate, we rule that a co-owner may file an action for recovery of possession against a co-owner who takes exclusive possession of the entire co-owned property.  However, the only effect of such action is a recognition of the co-ownership.  The courts cannot proceed with the actual partitioning of the co-owned property.  Thus, judicial or extra-judicial partition is necessary to effect physical division of the FISHPOND between ABEJO and DE GUIA. An action for partition is also the proper forum for accounting the profits received by DE GUIA from the FISHPOND. However, as a necessary consequence of such recognition, ABEJO shall exercise an equal right to possess, use and enjoy the entire FISHPOND.

DE GUIA further claims that the trial and appellate courts erred when they ordered the recovery of rent when the exact identity of the portion in question had not yet been clearly defined and delineated.  According to DE GUIA, an order to pay damages in the form of rent is premature before partition.

We disagree.

The right of enjoyment by each co-owner is limited by a similar right of the other co-owners.  A co-owner cannot devote common property to his exclusive use to the prejudice of the co-ownership.[24] Hence, if the subject is a residential house, all the co-owners may live there with their respective families to the extent possible.  However, if one co-owner alone occupies the entire house without opposition from the other co-owners, and there is no lease agreement, the other co-owners cannot demand the payment of rent.  Conversely, if there is an agreement to lease the house, the co-owners can demand rent from the co-owner who dwells in the house.

The co-owners can either exercise an equal right to live in the house, or agree to lease it.  If they fail to exercise any of these options, they must bear the consequences.  It would be unjust to require the co-owner to pay rent after the co-owners by their silence have allowed him to use the property.[25]

In case the co-owners agree to lease a building owned in common, a co-owner cannot retain it for his use without paying the proper rent. [26] Moreover, where part of the property is occupied exclusively by some co-owners for the exploitation of an industry, the other co-owners become co-participants in the accessions of the property and should share in its net profits.[27]

The Lejano Heirs and Teofilo Abejo agreed to lease the entire FISHPOND to DE GUIA.  After DE GUIA’s lease expired in 1979, he could no longer use the entire FISHPOND without paying rent.  To allow DE GUIA to continue using the entire FISHPOND without paying rent would prejudice ABEJO’s right to receive rent, which would have accrued to his ½ share in the FISHPOND had it been leased to others.[28] Since ABEJO acquired his ½ undivided share in the FISHPOND on 22 November 1983, DE GUIA should pay ABEJO reasonable rent for his possession and use of ABEJO’s portion beginning from that date.  The compensatory damages of P25,000 per year awarded to ABEJO is the fair rental value or the reasonable compensation for the use and occupation of the leased property,[29] considering the circumstances at that time.  DE GUIA shall continue to pay ABEJO a yearly rent of P25,000 corresponding to ABEJO’s ½ undivided share in the FISHPOND.  However, ABEJO has the option either to exercise an equal right to occupy the FISHPOND, or to file a new petition before the trial court to fix a new rental rate in view of changed circumstances in the last 20 years.

ABEJO made an extrajudicial demand on DE GUIA by sending the 27 November 1983 demand letter. Thus, the rent in arrears should earn interest at 6% per annum from 27 November 1983until finality of this decision pursuant to Article 2209 [30] of the Civil Code.  Thereafter, the interest rate is 12% per annum from finality of this decision until full payment.[31] 

Third Issue:  Lack of Credible Evidence to Support Award of  Compensatory Damages

DE GUIA contends the P212,500 in rent awarded to ABEJO is exorbitant. He assails as doubtful and self-serving evidence the Lease Contract between ABEJO and

Ruperto C. Villarico that served as basis for the yearly rent of P25,000 for ABEJO’s share in the FISHPOND.

DE GUIA says the trial and appellate courts should have given credence to the testimonies of his witnesses, Ben Ruben Camargo (“Camargo”) and Marta Fernando Peña (“Peña”) that rentals of fishponds in the same vicinity are for much lesser considerations.

This issue involves calibration of the whole evidence considering mainly the credibility of witnesses.  As a rule, a party may raise only questions of law in an appeal by certiorari under Rule 45 of the Rules of Court.  The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings below. [32] More so in the instant case, where the Court of Appeals affirmed the factual findings of the trial court.[33]

It is not true that the trial court disregarded the testimonies of Camargo and Peña because DE GUIA failed to present documentary evidence to support their testimonies.  Actually, the trial and appellate courts found the testimonies of Camargo and Peña unconvincing.  Judges cannot be expected to rely on the testimonies of every witness.  In ascertaining the facts, they determine who are credible and who are not.  In doing so, they consider all the evidence before them.[34]

We find no cogent reason to overturn the trial and appellate courts’ evaluation of the witnesses’ testimonies.  We likewise find reasonable the P25,000 yearly compensation for ABEJO’s ½ undivided share in the FISHPOND.  Indeed, being a question of fact, it is for the trial and appellate courts to decide and this Court will not disturb their findings unless clearly baseless or irrational. The exception does not obtain in this case.

Fourth Issue:  Attorney’s Fees

The trial court did not err in imposing attorney’s fees of P20,000.  Attorney’s fees can be awarded in the cases enumerated in Article 2208 of the Civil Code specifically:

xxx

(2)            Where the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

xxx

DE GUIA is a lawyer and he should have known that a co-owner could not take exclusive possession of a common property.  Although DE GUIA offered to settle the case out of court, such offer was made under conditions not acceptable to ABEJO.  Certainly, ABEJO was still put to unnecessary expense and trouble to protect his interest under paragraph (2), Article 2208 of the Civil Code.

WHEREFORE, the Decision dated 22 August 1994 and Resolution dated 27 June 1995 of the Court of Appeals in CA-G.R. CV No. 39875 is AFFIRMED with respect to

that portion ordering Manuel T. De Guia to pay Jose B. Abejo compensatory damages of P212,500 and attorney’s fees of P20,000, and  MODIFIED as follows:

1.  The co-ownership between Manuel T. De Guia and Jose B. Abejo over the entire FISHPOND covered by TCT No. 6358 of the Bulacan Register of Deeds is recognized without prejudice to the outcome of CA–G.R. CV No. 38031 pending before the Court of Appeals and other cases involving the same property;

2.  Manuel T. De Guia and Jose B. Abejo shall equally enjoy possession and use of the entire FISHPOND prior to partition;

3.  The compensatory damages of P25,000 per annum representing rent from 27 November 1983  until May 1992 shall earn interest at 6% per annum from 27 November 1983 until finality of this decision, and thereafter at 12% per annum until full payment;

4.  Manuel T. de Guia shall pay Jose B. Abejo a yearly rent of P25,000 from June 1992 until finality of this decision,  with interest at 6% per annum during the same period, and thereafter at 12% interest per annum until full payment;

5.  After finality of this decision and for as long as Manuel T. de Guia exclusively possesses the entire FISHPOND, he shall pay Jose B. Abejo a yearly rental of P25,000 for the latter’s ½ undivided share in the FISHPOND, unless Jose B. Abejo secures from the proper court an order fixing a different rental rate in view of possible changed circumstances.

SO ORDERED.

FIRST DIVISION

[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. LexjÓ uris

D E C I S I O N

KAPUNAN, J.:

Private respondents, the heirs of spouses Adriano Leis and Gertrudes Isidro, [1] filed an action before the Regional Trial Court (RTC) of Pasig seeking the nullification of the contracts of sale over a lot executed by Gertrudes Isidro in favor of petitioner Alexander Cruz, as well as the title subsequently issued in the name of the latter. Private respondents claimed that the contracts were vitiated by fraud as Gertrudes was illiterate and already 80 years old at the time of the execution of the contracts; that the price for the land was insufficient as it was sold only for P39,083.00 when the fair market value of the lot should be P1,000.00 per square meter, instead of P390.00, more or less; and that the property subject of the sale was conjugal and, consequently, its sale without the knowledge and consent of private respondents was in derogation of their rights as heirs.

The facts that gave rise to the complaint: JuriÓ smis

Adriano and Gertrudes were married on 19 April 1923. On 27 April 1955, Gertrudes acquired from the then Department of Agriculture and Natural Resources (DANR) a parcel of land with an area of one hundred (100) square meters, situated at Bo. Sto. Niño, Marikina, Rizal and covered by Transfer Certificate of Title (TCT) No. 42245. The Deed of Sale described Gertrudes as a widow. On 2 March 1956, TCT No. 43100 was issued in the name of "Gertrudes Isidro," who was also referred to therein as a "widow."

On 2 December 1973, Adriano died. It does not appear that he executed a will before his death.

On 5 February 1985, Gertrudes obtained a loan from petitioners, the spouses Alexander and Adelaida Cruz, in the amount of P15,000.00 at 5% interest, payable on or before 5 February 1986. The loan was secured by a mortgage 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." Jjjä uris

For failure of Gertrudes to repurchase the property, ownership thereof was consolidated in the name of Alexander Cruz in whose name TCT No. 130584 was issued on 21 April 1987, canceling TCT No. 43100 in the name of Gertrudes Isidro.

On 9 June 1987, Gertrudes Isidro died. Thereafter, her heirs, herein private respondents, received demands to vacate the premises from petitioners, the new owners of the property. Private respondents responded by filing a complaint as mentioned at the outset.

On the basis of the foregoing facts, the RTC rendered a decision in favor of private respondents. The RTC held that the land was conjugal property since the evidence presented by private respondents disclosed that the same was acquired during the marriage of the spouses and that Adriano contributed money for the purchase of the property. Thus, the court concluded, Gertrudes could only sell to petitioner spouses her one-half share in the property.

The trial court also ruled that no fraud attended the execution of the contracts. Nevertheless, the "Kasunduan," providing for a sale con pacto de retro, had superseded the "Kasunduan ng Tuwirang Bilihan," the deed of absolute sale. The trial court did not consider the pacto de retro sale an equitable mortgage, despite the allegedly insufficient price. Nonetheless, the trial court found for private respondents. It rationalized that petitioners failed to comply with the provisions of Article 1607 of the Civil Code requiring a judicial order for the consolidation of the ownership in the vendee a retro to be recorded in the Registry of Property.

The dispositive portion of the RTC's Decision reads: lex

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

1. Declaring Exhibit G – "Kasunduan ng Tuwirang Bilihan" Null and Void and declar[ing] that the title issued pursuant thereto is likewise Null and Void;

2. Declaring the property in litigation as conjugal property;

3. Ordering the Registry of Deeds of Marikina Branch to reinstate the title of Gertrudes Isidro;

4. Ordering the plaintiff[s] [sic] to comply with the provision[s] of Article 1607 in relation to Article 1616 of the Civil Code;

5. Ordering the defendant[s] to pay plaintiff[s] P15,000.00 nominal damages for the violation of plaintiffs’ rights;

6. Ordering the defendant[s] to pay plaintiff[s] the sum of P8,000.00 as and for attorney’s fees;

7. Dismissing defendant[s'] counterclaim; and

8. Ordering defendant[s] to pay the cost of suit. Jksm

SO ORDERED.[2]

Petitioners appealed to the Court of Appeals in vain. The Court of Appeals affirmed the decision of the Regional Trial Court, holding that since the property was acquired during the marriage of Gertrudes to Adriano, the same was presumed to be conjugal property under Article 160 of the Civil Code. The appellate court, like the trial court, also noted that petitioner did not comply with the provisions of Article 1607 of the Civil Code.

Petitioners are now before this Court seeking the reversal of the decision of the Court of Appeals. First, they contend that the subject property is not conjugal but is owned exclusively by Gertrudes, who was described in the Deed of Sale between Gertrudes and the DANR as well as in TCT No. 43100 as a widow. Second, assuming the land was conjugal property, petitioners argue that the same became Gertrudes’ exclusively when, in 1979, she mortgaged the property to the Daily Savings Bank and Loan Association. The bank later foreclosed on the mortgage in 1981 but Gertrudes redeemed the same in 1983. Chief

The paraphernal or conjugal nature of the property is not determinative of the ownership of the disputed property. If the property was paraphernal as contended by petitioners, Gertrudes Isidro would have the absolute right to dispose of the same, and absolute title and ownership was vested in petitioners upon the failure of Gertrudes to redeem the property. On the other hand, if the property was conjugal, as private respondents maintain, upon the death of Adriano Leis, the conjugal partnership was terminated,[3] entitling Gertrudes to one-half of the property.[4] Adriano’s rights to the other half, in turn, were transmitted upon his death to his heirs,[5] which includes his widow Gertrudes, who is entitled to the same share as that of each of the legitimate children. [6]Thus, as a result of the death of Adriano, a regime of co-ownership arose between Gertrudes and the other heirs in relation to the property.

Incidentally, there is no merit in petitioners’ contention that Gertrudes’ redemption of the property from the Daily Savings Bank vested in her ownership over the same to the exclusion of her co-owners. We dismissed the same argument by one of the petitioners in Paulmitan vs. Court of Appeals,[7] where one of the petitioners therein claimed ownership of the entire property subject of the case by virtue of her redemption thereof after the same was forfeited in favor of the provincial government for non-payment of taxes. We held, however, that the redemption of the land "did not terminate the co-

ownership nor give her title to the entire land subject of the co-ownership." We expounded, quoting our pronouncement in Adille vs. Court of Appeals: [8]

The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common? Esmsc

Essentially, it is the 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 retro the right to demand redemption of the entire property.

There is no merit in this petition.

The right of repurchase may be exercised by a co-owner with respect to his share alone (CIVL CODE, art. 1612; CIVIL CODE (1889), art. 1514.). While the records show that petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership (Supra, Art. 489). There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: Esmmis

Art. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership.

The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name (Supra, art. 1607). But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership.

It is conceded that, as a rule, a co-owner such as Gertrudes could only dispose of her share in the property owned in common. Article 493 of the Civil Code provides:

ART. 493. Each co-owner shall have the full ownership of his part of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its

enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. Es-mso

Unfortunately for private respondents, however, the property was registered in TCT No. 43100 solely in the name of "Gertrudes Isidro, widow." Where a parcel of land, forming part of the undistributed properties of the dissolved conjugal partnership of gains, is sold by a widow to a purchaser who merely relied on the face of the certificate of title thereto, issued solely in the name of the widow, the purchaser acquires a valid title to the land even as against the heirs of the deceased spouse. The rationale for this rule is that "a person dealing with registered land is not required to go behind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or the certificate of title. To require him to do more is to defeat one of the primary objects of the Torrens system." [9]

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: Ms-esm

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. 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 the determination is being made.[10]E-xsm

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 consolidated title.[11]

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.

SO ORDERED.

CRUZ v LEIS- Redemption and Co-ownership

Redemption by a co-owner doesn't terminate the co-ownership nor give her title to the whole property subject of the co-ownership

FACTS:

Leis and Isidro married each other in 1923. Isidro subsequently acquired from the Department of Agriculture and Natural Resources a parcel of land, which was titled in her name, with the description that she was a “widow”. Leis only passed away in 1973 without executing a will.

Isidro then secured a loan from Cruz (PhP 15,000, with 5% interest) secured by a mortgage on the land from DANR, but failed to pay on due date. Isidro executed 2 contracts in favor of Cruz: an Deed of Absolute Sale and a Contract indicating a pacto de retro sale. Isidro still failed to repurchase the property within 1 year, so she consolidated the ownership of the land in favor of Cruz.

When Isidro died, Cruz demanded her heirs to vacate the premises. The heirs then filed a complaint with the RTC averring that the land was conjugal property having been purchased during their marriage. The RTC found in favor of the heirs. The case was appealed to the CA, but the CA merely affirmed the ruling because Cruz failed to get a judicial order to have the land consolidated in his name after failure of Isidro to comply with the requirements of the right to repurchase (Art. 1607).

ISSUE:

Whether or not the land in question is conjugal property, and therefore subject to the rules on co-ownership?

HELD:

Although the land was purchased during the marriage, upon Leis’ death, the conjugal property regime ceased, and gave Isidro an equal portion of Leis’ half of the property to be divided among his legitimes. Co-ownership of the land then began.

However, upon failure of Isidro the heirs to exercise the right to repurchase, the ownership of the land transferred to Cruz. Despite the TCT being void for non-compliance with 1607, the ownership did not transfer back to the heirs, for compliance with 1607 is merely for purposes of registering the title in the Torrens System.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-4656            November 18, 1912

RICARDO PARDELL Y CRUZ and VICENTA ORTIZ Y FELIN DE PARDELL, plaintiffs-appellees, vs.GASPAR DE BARTOLOME Y ESCRIBANO and MATILDE ORTIZ Y FELIN DE BARTOLOME, defendants-appellants.

Gaspar de Bartolome, in his own behalf.B. Gimenez Zoboli, for appellees.

 

TORRES, J.:

This is an appeal by bill of exceptions, from the judgment of October 5, 1907, whereby the Honorable Dionisio Chanco, judge, absolved the defendants from the complaint, and the plaintiff from a counterclaim, without special finding as to costs.

Counsel for the spouses Ricardo y Cruz and Vicente Ortiz y Felin de Pardell, the first of whom, absent in Spain by reason of his employment, conferred upon the second sufficient and ample powers to appear before the courts of justice, on June 8, 1905, in his written complaint, alleged that the plaintiff, Vicente Ortiz, and the defendant, Matilde Ortiz, are the duly recognized natural daughters of the spouses Miguel Ortiz and Calixta Felin y Paula who died in Vigan, Ilocos Sur, in 1875 and 1882, respectively; that Calixta Felin, prior to her death, executed on August 17, 1876, a nuncupative will in Vigan whereby she made her four children, named Manuel, Francisca, Vicenta, and Matilde, surnamed Ortiz y Felin, her sole and universal heirs of all her property; that, of the persons enumerated, Manuel died before his mother and Francisca a few years after her death, leaving no heirs by force of law, and therefore the only existing heirs of the said testatrix are the plaintiff Vicenta Ortiz and the defendant Matilde Ortiz; that, aside from some personal property and jewelry already divided among the heirs, the testatrix possessed, at the time of the execution of her will, and left at her death the real properties which, with their respective cash values, are as follows:

1. A house of strong material, with the lot on which it is built, situated on Escolta Street, Vigan, and valued at P6,000.00

2. A house of mixed material, with the lot on which it stands, at No. 1,500.00

88 Washington Street, Vigan; valued at

3. A lot on Magallanes Street, Vigan; valued at 100.00

4. A parcel of rice land, situated in the barrio of San Julian, Vigan; valued at 60.00

5. A parcel of rice land in the pueblo of Santa Lucia; valued at 86.00

6. Three parcels of land in the pueblo of Candon; valued at 150.00

Total 7,896.00

That, on or about the first months of the year 1888, the defendants, without judicial authorization, nor friendly or extrajudicial agreement, took upon themselves the administration and enjoyment of the said properties and collected the rents, fruits, and products thereof, to the serious detriment of the plaintiffs' interest; that, notwithstanding the different and repeated demands extrajudicially made upon Matilde Ortiz to divide the aforementioned properties with the plaintiff Vicente and to deliver to the latter the one-half thereof, together with one-half of the fruits and rents collected therefrom, the said defendant and her husband, the self-styled administrator of the properties mentioned, had been delaying the partition and delivery of the said properties by means of unkept promises and other excuses; and that the plaintiffs, on account of the extraordinary delay in the delivery of one-half of said properties, or their value in cash, as the case might be, had suffered losses and damages in the sum of P8,000. Said counsel for the plaintiffs therefore asked that judgment be rendered by sentencing the defendants, Gaspar de Bartolome, and Matilde Ortiz Felin de Bartolome, to restore and deliver to the plaintiffs one-half of the total value in cash, according to appraisal, of the undivided property specified, which one-half amounted approximately to P3,948, or if deemed proper, to recognize the plaintiff Vicenta Ortiz to be vested with the full and absolute right of ownership to the said undivided one-half of the properties in question, as universal testamentary heir thereof together with the defendant Matilde Ortiz, to indemnify the plaintiffs in the sum of P8,000, for losses and damages, and to pay the costs.

Counsel for the defendants, in his answer denied the facts alleged in paragraphs 1, 4, 6, 7, and 8 thereof, inasmuch as, upon the death of the litigating sister's brother Manuel, their mother, who was still living, was his heir by force of law, and the defendants had never refused to give to the plaintiff Vicente Ortiz her share of the said properties; and stated that he admitted the facts alleged in paragraph 2, provided it be understood, however, that the surname of the defendant's mother was Felin, and not Feliu, and that Miguel Ortiz died in Spain, and not in Vigan; that he also admitted paragraph 3 of the complaint, with the difference that the said surname should be Felin, and likewise paragraph 5, except the part thereof relating to the personal property and the jewelry, since the latter had not yet been divided; that the said jewelry was in the possession of the plaintiffs and consisted of: one Lozada gold chronometer watch with a chain in the form of a bridle curb and a watch charm consisting of the engraving of a postage stamp

on a stone mounted in gold and bearing the initials M. O., a pair of cuff buttons made of gold coins, four small gold buttons, two finger rings, another with the initials M. O., and a gold bracelet; and that the defendants were willing to deliver to the plaintiffs, in conformity with their petitions, one-half of the total value in cash, according to appraisement, of the undivided real properties specified in paragraph 5, which half amounted to P3,948.

In a special defense said counsel alleged that the defendants had never refused to divide the said property and had in fact several years before solicited the partition of the same; that, from 1886 to 1901, inclusive, there was collected from the property on Calle Escolta the sum of 288 pesos, besides a few other small amounts derived from other sources, which were delivered to the plaintiffs with other larger amounts, in 1891, and from the property on Calle Washington, called La Quinta, 990.95 pesos, which proceeds, added together, made a total of 1,278.95 pesos, saving error or omission; that, between the years abovementioned, Escolta, and that on Calle Washington,La Quinta, 376.33, which made a total of 1,141.71, saving error or omission; that, in 1897, the work of reconstruction was begun of the house on Calle Escolta, which been destroyed by an earthquake, which work was not finished until 1903 and required an expenditure on the part of the defendant Matilde Ortiz, of 5,091.52 pesos; that all the collections made up to August 1, 1905, including the rent from the stores, amounted to only P3,654.15, and the expenses, to P6,252.32, there being, consequently, a balance of P2,598.17, which divided between the sisters, the plaintiff and the defendant, would make the latter's share P1,299.08; that, as shown by the papers kept by the plaintiffs, in the year 1891 the defendant Bartolome presented to the plaintiffs a statement in settlements of accounts, and delivered to the person duly authorized by the latter for the purpose, the sum of P2,606.29, which the said settlement showed was owing his principals, from various sources; that, the defendant Bartolome having been the administrator of the undivided property claimed by the plaintiffs, the latter were owing the former legal remuneration of the percentage allowed by law for administration; and that the defendants were willing to pay the sum of P3,948, one-half of the total value of the said properties, deducting therefrom the amount found to be owing them by the plaintiffs, and asked that judgment be rendered in their favor to enable them to recover from the latter that amount, together with the costs and expenses of the suit.

The defendants, in their counter claim, repeated each and all of the allegations contained in each of the paragraphs of section 10 of their answer; that the plaintiffs were obliged to pay to the administrator of the said property the remuneration allowed him by law; that, as the revenues collected by the defendants amounted to no more than P3,654.15 and the expenditures incurred by them, to P6,252.32, it followed that the plaintiffs owed the defendants P1,299.08, that is one-half of the difference between the amount collected from and that extended on the properties, and asked that judgment be therefore rendered in their behalf to enable them to collect this sum from the plaintiffs, Ricardo Pardell and Vicenta Ortiz, with legal interest thereon from December 7, 1904, the date when the accounts were rendered, together with the sums to which the defendant Bartolome was entitled for the administration of the undivided properties in question.

By a written motion of August 21, 1905, counsel for the plaintiffs requested permission to amend the complaint by inserting immediately after the words "or respective appraisal," fifth line of paragraph 5, the phrase "in cash in accordance with the assessed value," and likewise further to amend the same, in paragraph 6 thereof, by substituting the following word in lieu of the petition for the remedy sought: "By reason of all the foregoing, I beg the court to be pleased to render the judgment by sentencing the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de Bartolome, to restore and deliver to the plaintiffs an exact one-half of the total vale of the undivided properties described in the complaint, such value to be ascertained by the expert appraisal of two competent persons, one of whom shall be appointed by the plaintiffs and the other by the defendants, and, in case of disagreement between these two appointees such value shall be determined by a third expert appraiser appointed by the court, or, in a proper case, by the price offered at public auction; or, in lieu thereof, it is requested that the court recognize the plaintiff, Vicenta Ortiz, to be vested with a full and absolute right to an undivided one-half of the said properties; furthermore, it is prayed that the plaintiffs be awarded an indemnity of P8,000 for losses and damages, and the costs." Notwithstanding the opposition of the defendants, the said amendment was admitted by the court and counsel for the defendants were allowed to a period of three days within which to present a new answer. An exception was taken to this ruling.

The proper proceedings were had with reference to the valuation of the properties concerned in the division sought and incidental issues were raised relative to the partition of some of them and their award to one or the other of the parties. Due consideration was taken of the averments and statements of both parties who agreed between themselves, before the court, that any of them might at any time acquire, at the valuation fixed by the expert judicial appraiser, any of the properties in question, there being none in existence excluded by the litigants. The court, therefore, by order of December 28, 1905, ruled that the plaintiffs were entitled to acquire, at the valuation determined by the said expert appraiser, the building known as La Quinta, the lot on which it stands and the warehouses and other improvements comprised within the inclosed land, and the seeds lands situated in the pueblos of Vigan and Santa Lucia; and that the defendants were likewise entitled to acquire the house on Calle Escolta, the lot on Calle Magallanes, and the three parcels of land situated in the pueblo of Candon.

After this partition had been made counsel for the defendants, by a writing of March 8, 1906, set forth: That, having petitioned for the appraisement of the properties in question for the purpose of their partition, it was not to be understood that he desired from the exception duly entered to the ruling made in the matter of the amendment to the complaint; that the properties retained by the defendants were valued at P9,310, and those retained by the plaintiffs, at P2,885, one-half of which amounts each party had to deliver to the other, as they were pro indivisoproperties; that, therefore, the defendants had to pay the plaintiffs the sum of P3,212.50, after deducting the amount which the plaintiffs were obliged to deliver to the defendants, as one-half of the price of the properties retained by the former; that, notwithstanding that the amount of the counterclaim for the expenses incurred in the reconstruction of the pro indiviso property

should be deducted from the sum which the defendants had to pay the plaintiffs, the former, for the purpose of bringing the matter of the partition to a close, would deliver to the latter, immediately upon the signing of the instrument of purchase and sale, the sum of P3,212.50, which was one-half of the value of the properties alloted to the defendants; such delivery, however, was not to be understood as a renouncement of the said counterclaim, but only as a means for the final termination of the pro indiviso status of the property.

The case having been heard, the court on October 5, 1907, rendered judgment holding that the revenues and the expenses were compensated by the residence enjoyed by the defendant party, that no losses or damages were either caused or suffered, nor likewise any other expense besides those aforementioned, and absolved the defendants from the complaint and the plaintiffs from the counterclaim, with no special finding as to costs. An exception was taken to this judgment by counsel for the defendants who moved for a new trial on the grounds that the evidence presented did not warrant the judgment rendered and that the latter was contrary to law. This motion was denied, exception whereto was taken by said counsel, who filed the proper bill of exceptions, and the same was approved and forwarded to the clerk of this court, with a transcript of the evidence.

Both of the litigating sisters assented to a partition by halves of the property left in her will by their mother at her death; in fact, during the course of this suit, proceedings were had, in accordance with the agreement made, for the division between them of the said hereditary property of common ownership, which division was recognized and approved in the findings of the trial court, as shown by the judgment appealed from.

The issues raised by the parties, aside from said division made during the trial, and which have been submitted to this court for decision, concern: (1) The indemnity claimed for losses and damages, which the plaintiffs allege amount to P8,000, in addition to the rents which should have been derived from the house on Calle Escolta, Vigan; (2) the payment by the plaintiffs to the defendants of the sum of P1,299.08, demanded by way of counterclaim, together with legal interest thereon from December 7, 1904; (3) the payment to the husband of the defendant Matilde Ortiz, of a percentage claimed to be due him as the administrator of the property of common ownership; (4) the division of certain jewelry in the possession of the plaintiff Vicenta Ortiz; and (5) the petition that the amendment be held to have been improperly admitted, which was made by the plaintiffs in their written motion of August 21, 1905, against the opposition of the defendants, through which admission the latter were obliged to pay the former P910.50.lawphil.net

Before entering upon an explanation of the propriety or impropriety of the claims made by both parties, it is indispensable to state that the trial judge, in absolving the defendants from the complaint, held that they had not caused losses and damages to the plaintiffs, and that the revenues and the expenses were compensated, in view of the fact that the defendants had been living for several years in the Calle Escolta house, which was pro indivisoproperty of joint ownership.

By this finding absolving the defendants from the complaint, and which was acquiesced in by the plaintiffs who made no appeal therefrom, the first issue has been decided which was raised by the plaintiffs, concerning the indemnity for losses and damages, wherein are comprised the rents which should have been obtained from the upper story of the said house during the time it was occupied by the defendants, Matilde Ortiz and her husband, Gaspar de Bartolome.

Notwithstanding the acquiescence on the part of the plaintiffs, assenting to the said finding whereby the defendants were absolved from the complaint, yet, as such absolution is based on the compensation established in the judgment of the trial court, between the amounts which each party is entitled to claim from the other, it is imperative to determine whether the defendant Matilde Ortiz, as coowner of the house on Calle Escolta, was entitled, with her husband, to reside therein, without paying to her coowner, Vicenta Ortiz, who, during the greater part of the time, lived with her husband abroad, one-half of the rents which the upper story would have produced, had it been rented to a stranger.

Article 394 of the Civil Code prescribes:

Each coowner may use the things owned in common, provided he uses them in accordance with their object and in such manner as not to injure the interests of the community nor prevent the coowners from utilizing them according to their rights.

Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling, in the house of joint ownership; but the record shows no proof that, by so doing, the said Matilde occasioned any detriment to the interest of the community property, nor that she prevented her sister Vicenta from utilizing the said upper story according to her rights. It is to be noted that the stores of the lower floor were rented and accounting of the rents was duly made to the plaintiffs.

Each coowner of realty held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his coowners, for the reason that, until a division be made, the respective part of each holder can not be determined and every one of the coowners exercises, together with his other coparticipants, joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same.

As the hereditary properties of the joint ownership of the two sisters, Vicenta Ortiz, plaintiff, and Matilde Ortiz, defendant, were situated in the Province of Ilocos Sur, and were in the care of the last named, assisted by her husband, while the plaintiff Vicenta with her husband was residing outside of the said province the greater part of the time between 1885 and 1905, when she left these Islands for Spain, it is not at all strange that delays and difficulties should have attended the efforts made to collect the rents and proceeds from the property held in common and to obtain a partition of the latter, especially during several years when, owing to the insurrection, the country was in a

turmoil; and for this reason, aside from that founded on the right of coownership of the defendants, who took upon themselves the administration and care of the properties of joint tenancy for purposes of their preservation and improvement, these latter are not obliged to pay to the plaintiff Vicenta one-half of the rents which might have been derived from the upper of the story of the said house on Calle Escolta, and, much less, because one of the living rooms and the storeroom thereof were used for the storage of some belongings and effects of common ownership between the litigants. The defendant Matilde, therefore, in occupying with her husband the upper floor of the said house, did not injure the interests of her coowner, her sister Vicenta, nor did she prevent the latter from living therein, but merely exercised a legitimate right pertaining to her as coowner of the property.

Notwithstanding the above statements relative to the joint-ownership rights which entitled the defendants to live in the upper story of the said house, yet in view of the fact that the record shows it to have been proved that the defendant Matilde's husband, Gaspar de Bartolome, occupied for four years a room or a part of the lower floor of the same house on Calle Escolta, using it as an office for the justice of the peace, a position which he held in the capital of that province, strict justice, requires that he pay his sister-in-law, the plaintiff, one half of the monthly rent which the said quarters could have produced, had they been leased to another person. The amount of such monthly rental is fixed at P16 in accordance with the evidence shown in the record. This conclusion as to Bartolome's liability results from the fact that, even as the husband of the defendant coowner of the property, he had no right to occupy and use gratuitously the said part of the lower floor of the house in question, where he lived with his wife, to the detriment of the plaintiff Vicenta who did not receive one-half of the rent which those quarters could and should have produced, had they been occupied by a stranger, in the same manner that rent was obtained from the rooms on the lower floor that were used as stores. Therefore, the defendant Bartolome must pay to the plaintiff Vicenta P384, that is, one-half of P768, the total amount of the rents which should have been obtained during four years from the quarters occupied as an office by the justice of the peace of Vigan.

With respect to the second question submitted for decision to this court, relative to the payment of the sum demanded as a counterclaim, it was admitted and proved in the present case that, as a result of a serious earthquake on August 15, 1897, the said house on Calle Escolta was left in ruins and uninhabitable, and that, for its reconstruction or repair, the defendants had to expend the sum of P6,252.32. This expenditure, notwithstanding that it was impugned, during the trial, by the plaintiffs, was duly proved by the evidence presented by the defendants. Evidence, unsuccessfully rebutted, was also introduced which proved that the rents produced by all the rural and urban properties of common ownership amounted, up to August 1, 1905, to the sum of P3,654.15 which, being applied toward the cost of the repair work on the said house, leaves a balance of P2,598.17, the amount actually advanced by the defendants, for the rents collected by them were not sufficient for the termination of all the work undertaken on the said building, necessary for its complete repair and to replace it in a habitable condition. It is therefore lawful and just that the plaintiff Vicenta Ortiz, who was willing to sell to her sister Matilde for P1,500, her share in the house in question, when it was in a

ruinous state, should pay the defendants one-half of the amount expanded in the said repair work, since the building after reconstruction was worth P9,000, according to expert appraisal. Consequently, the counterclaim made by the defendants for the payment to them of the sum of P1,299.08, is a proper demand, though from this sum a reduction must be made of P384, the amount of one-half of the rents which should have been collected for the use of the quarters occupied by the justice of the peace, the payment of which is incumbent upon the husband of the defendant Matilde, as aforesaid, and the balance remaining, P915.08, is the amount which the plaintiff Vicenta must pay to the defendants.

The defendants claim to be entitled to the collection of legal interest on the amount of the counterclaim, from December 7, 1904. This contention can not be sustained, inasmuch as, until this suit is finally decided, it could not be known whether the plaintiffs would or would not be obliged to pay the sum whatever in reimbursement of expenses incurred by the plaintiffs in the repair work on the said house on Calle Escolta, whether or not the defendants, in turn, were entitled to collect any such amount, and, finally, what the net sum would be which the plaintiff's might have to pay as reimbursement for one-half of the expenditure made by the defendants. Until final disposal of the case, no such net sum can be determined, nor until then can the debtor be deemed to be in arrears. In order that there be an obligation to pay legal interest in connection with a matter at issue between the parties, it must be declared in a judicial decision from what date the interest will be due on the principal concerned in the suit. This rule has been established by the decisions of the supreme court of Spain, in reference to articles 1108, 1109, and 1110 of the Civil Code, reference on April 24, 1867, November 19, 1869, and February 22, 1901.

With regard to the percentage, as remuneration claimed by the husband of the defendant Matilde for his administration of the property of common ownership, inasmuch as no stipulation whatever was made in the matter by and between him and his sister-in-law, the said defendant, the claimant is not entitled to the payment of any remuneration whatsoever. Of his own accord and as an officious manager, he administered the said pro indivisoproperty, one-half of which belonged to his wife who held it in joint tenancy, with his sister-in-law, and the law does not allow him any compensation as such voluntary administrator. He is merely entitled to a reimbursement for such actual and necessary expenditures as he may have made on the undivided properties and an indemnity for the damages he may have suffered while acting in that capacity, since at all events it was his duty to care for and preserve the said property, half of which belonged to his wife; and in exchange for the trouble occasioned him by the administration of his sister-in-law's half of the said property, he with his wife resided in the upper story of the house aforementioned, without payment of one-half of the rents said quarters might have produced had they been leased to another person.

With respect to the division of certain jewelry, petitioned for by the defendants and appellants only in their brief in this appeal, the record of the proceedings in the lower court does not show that the allegation made by the plaintiff Vicenta is not true, to the effect that the deceased mother of the litigant sisters disposed of this jewelry during her

lifetime, because, had she not done so, the will made by the said deceased would have been exhibited in which the said jewelry would have been mentioned, at least it would have been proved that the articles in question came into the possession of the plaintiff Vicenta without the expressed desire and the consent of the deceased mother of the said sisters, for the gift of this jewelry was previously assailed in the courts, without success; therefore, and in view of its inconsiderable value, there is no reason for holding that the said gift was not made.

As regards the collection of the sum of P910.50, which is the difference between the assessed value of the undivided real properties and the price of the same as determined by the judicial expert appraiser, it is shown by the record that the ruling of the trial judge admitting the amendment to the original complaint, is in accord with the law and principles of justice, for the reason that any of the coowners of a pro indiviso property, subject to division or sale, is entitled to petition for its valuation by competent expert appraisers. Such valuation is not prejudicial to any of the joint owners, but is beneficial to their interests, considering that, as a general rule, the assessed value of a building or a parcel of realty is less than the actual real value of the property, and this being appraiser to determine, in conjunction with the one selected by the plaintiffs, the value of the properties of joint ownership. These two experts took part in the latter proceedings of the suit until finally, and during the course of the latter, the litigating parties agreed to an amicable division of the pro indiviso hereditary property, in accordance with the price fixed by the judicial expert appraiser appointed as a third party, in view of the disagreement between and nonconformity of the appraisers chosen by the litigants. Therefore it is improper now to claim a right to the collection of the said sum, the difference between the assessed value and that fixed by the judicial expert appraiser, for the reason that the increase in price, as determined by this latter appraisal, redounded to the benefit of both parties.

In consideration of the foregoing, whereby the errors assigned to the lower court have been duly refuted, it is our opinion that, with a partial reversal of the judgment appealed from, in so far as it absolves the plaintiffs from the counterclaim presented by the defendants, we should and hereby do sentence the plaintiffs to the payment of the sum of P915.08, the balance of the sum claimed by the defendants as a balance of the one-half of the amount which the defendants advanced for the reconstruction or repair of the Calle Escolta house, after deducting from the total of such sum claimed by the latter the amount of P384 which Gaspar de Bartolome, the husband of the defendant Matilde, should have paid as one-half of the rents due for his occupation of the quarters on the lower floor of the said house as an office for the justice of the peace court of Vigan; and we further find: (1) That the defendants are not obliged to pay one-half of the rents which could have been obtained from the upper story of the said house; (2) that the plaintiffs can not be compelled to pay the legal interest from December 7, 1904, on the sum expanded in the reconstruction of the aforementioned house, but only the interest fixed by law, at the rate of 6 per cent per annum, from the date of the judgment to be rendered in accordance with this decision; (3) that the husband of the defendant Matilde Ortiz is not entitled to any remuneration for the administration of the  pro indivisoproperty belonging to both parties; (4) that, neither is he entitled to collect from the plaintiffs the

sum of P910.50, the difference between the assessed valuation and the price set by the expert appraisal solicited by the plaintiffs in their amendment to the complaint; and, (5) that no participation shall be made of jewelry aforementioned now in the possession of the plaintiff Vicenta Ortiz. The said judgment, as relates to the points appealed, is affirmed, in so far as its findings agree with those of this decision, and is reversed, in so far as they do not. No special finding is made regarding the costs of both instances. So ordered.

Facts: Petitioner Vicenta Ortiz y Felin de Pardell and respondent Matilde Ortiz y Felin Bartolome were the existing heirs of the late Miguel Ortiz and Calixta Felin. On 1888, Matilde and co-defendant Gaspar de Bartolome y Escribano took it upon themselves without an judicial authorization or even extra judicial agreement the administration of the properties of the late Calixta and Miguel. These properties included a house in Escolta Street, Vigan, Ilocos Sur; a house in Washington Street, Vigan, Ilocos Sur; a lot in Magallanes Street, Vigan, Ilocos Sur; parcels of rice land in San Julian and Sta. Lucia; and parcels of land in Candon, Ilocos Sur. 

Vicenta filed an action in court asking that the judgement be rendered in restoring and returning to them one half of the total value of the fruits and rents, plus losses and damages from the aforementioned properties. However, respondent Matilde asserted that she never refused to give the plaintiff her share of the said properties. Vicenta also argued that Matilde and her husband, Gaspar are obliged to pay rent to the former for their occupation of the upper story of the house in Escolta Street. 

Issue: Whether or not Matilde and Gaspar are obliged to pay rent for their occupation of the said property 

Held: No. The Court ruled that the spouses are not liable to pay rent. Their occupation of the said property was a mere exercise of their right to use the same as a co-owner. One of the limitations on a co-owner’s right of use is that he must use it in such a way so as not to injure the interest of the other co-owners. In the case at bar, the other party failed to provide proof that by the occupation of the spouses Bartolome, they prevented Vicenta from utilizing the same