G.R. No.
L-32047 November 1, 1930 fixed by experts appointed by the parties, but that if the lessors should fail to take advantage of that privilege, the
MANUEL MELENCIO, MARIANO MELENCIO, PURA MELENCIO, and CARIDAD MELENCIO, plaintiffs-appellants,
vs.
DY TIAO LAY, defendant-appellee.
Jose V. Valladolid, Jose P. Melencio and Camus and Delgado for appellants.
Araneta and Zaragoza for appellee.
OSTRAND, J.:
On August 1,1927, the plaintiffs, Manuel, Mariano, Pura and Caridad Melencio, brought the present action against
the defendant-appellee, Dy Tiao Lay for the recovery of the possession of a parcel of land situated in the town of
Cabanatuan, Nueva Ecija, and containing an area of 4,628.25 square meters. The plaintiffs further demand a
monthly rental of P300 for the use and occupation of the parcel from May, 1926, until the date of the surrender to
them of the possession thereof; and that if it is found that the said appellee was occupying the said parcel of land
by virtue of a contract of lease, such contract should be declared null and void for lack of consent, concurrence,
and ratification by the owners thereof.
In his answer, the defendant pleaded the general issue, and as special defenses, he alleged in substance that he
was occupying the said tract of land by virtue of a contract of lease executed on July 24,1905, in favor of his
predecessor in interest, by Ruperta Garcia, Pedro Melencio, Juliana Melencio, and Ruperta Melencio under the
terms specified therein, and which contract is still in force; that Liberata Macapagal, the mother of the plaintiffs, in
her capacity as judicial administratrix of the estate of Ramon Melencio, one of the original coowners of the parcel
of land in question, actually recognized and ratified the existence and validity of the contract aforesaid by virtue of
the execution of a public document by her on or about November 27,1920, and by collecting from the assignees of
the original lessee the monthly rent for the premises until April 30, 1926; and that said defendant deposits with the
clerk of court the sum of P20.20 every month as rent thereof and that as a counterclaim, he seeks the recovery of
P272 for goods and money delivered by him to the plaintiffs.
The plaintiffs filed a reply to the answer alleging, among other things, that Ruperta Garcia was not one of the
coowners of the land in question; that the person who signed the alleged contract of lease never represented
themselves as being the sole and exclusive owners of the land subject to the lease as alleged by the defendant in
his answer; that the said contract of lease of July 24,1905, is null and void for being executed without the
intervention and consent of two coowners, Ramon Melencio and Jose P. Melencio, and without the marital consent
of the husbands of Juliana and Ruperta Melencio; that the lessee has repeatedly violated the terms and conditions
of the said contract; and that Liberata Macapagal, in her capacity as administratrix of the property of her
deceased husband, could not lawfully and legally execute a contract of lease with the conditions and terms similar
to that of the one under consideration, and that from this it follows that she could not ratify the said lease as
claimed by the defendant.
On January 21,1928, Liberata Macapagal Viuda de Melencio, duly appointed and qualified as administratrix of the
estate of her deceased husband, Ramon Melencio, filed a petition praying to be allowed to join the plaintiffs as
party to the present case, which petition was granted in open court on January 31,1928. Her amended complaint
of intervention of February 14,1928, contains allegations similar to those alleged in the complaint of the original
plaintiffs, and she further alleges that the defendant-appellee has occupied the land in question ever since
November, 1920, under and by virtue of a verbal contract of lease for a term from month to month. To this
complaint of intervention, the defendant-appellee filed an answer reproducing the allegations contained in his
answer reproducing the allegations contained in his answer to the complaint of the original plaintiffs and setting up
prescription as a further special defense.
It appears from the evidence that the land in question was originally owned by one Julian Melencio. He died prior
to the year 1905 leaving his widow, Ruperta Garcia, and his five children, Juliana, Ramon, Ruperta, Pedro R., and
Emilio Melencio. Emilio Melencio also died before 1905, his son Jose P. Melencio, then a minor, succeeding to his
interest in the said parcel of land by representation. A question has been raised as to whether the land was
community property of the marriage of Julian Melencio and Ruperta Garcia, but the evidence is practically
undisputed that Ruperta Garcia in reality held nothing but a widow's usufruct in the land.
On July 24,1905, Ruperta Garcia, Pedro R. Melencio, Juliana Melencio, and Ruperta Melencio executed a contract
of lease of the land in favor of one Yap Kui Chin, but neither Jose P. Melencio nor Ramon Melencio were mentioned
in the lease. The term of the lease was for twenty years, extendible for a like period at the option of the lessee. The
purpose of the lessee was to establish a rice mill on the land, with the necessary buildings for warehouses and for
quarters for the employees, and it was further stipulated that at the termination of the original period of the lease, or
the extension therof, the lessors might purchase all the buildings and improvements on the land at a price to be
lease would continue for another and further period of twenty years. The document was duly acknowledged but
was never recorded with the register of deeds. The original rent agreed upon was P25 per month, but by reason of
the construction of a street through the land, the monthly rent was reduced of P20.20.
Shortly after the execution of the lease, the lessee took possession of the parcel in question and erected the mill as
well as the necessary buildings, and it appears that in matters pertaining to the lease, he dealt with Pedro R.
Melencio, who from 1905 until his death in 1920, acted as manager of the property held in common by the heirs of
Julian Melencio and Ruperta Garcia. The original lessee, Yap Kui Chin, died in 1912, and the lease, as well as the
other property, was transferred to Uy Eng Jui who again transferred it to Uy Eng Jui & Co., an unregistered
partnership. Finally the lease came into the hands of Dy Tiao Lay, the herein defendant-appellee.
Ramon Melencio died in 1914, and his widow, Liberata Macapagal, was appointed administratrix of his estate. In
1913 the land which includes the parcel in question was registered under the Torrens system. The lease was not
mentioned in the certificate of title, but it was stated that one house and three warehouses on the land were the
property of Yap Kui Chin.
In 1920 the heirs of Julian Melencio made an extrajudicial partition of parts of the inheritance, and among other
things, the land here in question fell to the share of the children of Ramon Melencio, who are the original plaintiffs in
the present case. Their mother, Liberata Macapagal, as administratrix of the estate of her deceased husband,
Ramon, collected the rent for the lease at the rate of P20.20 per month until the month of May,1926, when she
demanded of the lessee that the rent should be increased to P300 per month, and she was then informed by the
defendant that a written lease existed and that according to the terms thereof, the defendant was entitled to an
extension of the lease at the original rental. The plaintiffs insisted that they never had any knowledge of the
existence of such a contract of lease and maintained that in such case the lease was executed without their
consent and was void. It may be noted that upon careful search, a copy of the contract of lease was found
among the papers of the deceased Pedro R, Melencio. Thereafter the present action was brought to set aside the
lease and to recover possession of the land. Upon trial, the court below rendered judgment in favor of the
defendant declaring the lease valid and ordering the plaintiffs to pay the P272 demanded by the defendant in his
counterclaim. From this judgment the plaintiffs appealed.
The contention of the appellants is that the aforesaid contract of lease (Exhibit C) is null and void for the following
reasons:
1. That Exhibit C calls for an alteration of the property in question and therefore ought to have
been signed by all the coowners as by law required in the premises.
2. That the validity and fulfillment of the said agreement of lease were made to depend upon
the will of the lessee exclusively.
3. That the said contract of lease being for a term of over six years, the same is null and void
pursuant to the provision of article 1548 of the Civil Code.
4. That the duration of the same is unreasonably long, thus being against public policy.
5. That the defendant-appellee and his predecessors in interest repeatedly violated the
provisions of the agreement.
The first proposition is based on article 397 of the Civil Code which provides that "none of the owners shall, without
the consent of the others, make any alterations in the common property even though such alterations might be
advantageous to all." We do not think that the alterations are of sufficient importance to nullify the lease, especially
so since none of the coowners objected to such alterations until over twenty years after the execution of the
contract of lease. The decision of this court in the case of Enriquez vs. A. S. Watson and Co. (22 Phil., 623), contains a
full discussion of the effect of alterations of leased community property, and no further discussion upon the point
need here be considered.
The second proposition is likewise of little merit. Under the circumstances, the provision in the contract that the
lessee, at any time before he erected any building on the land, might rescind the lease, can hardly be regarded as
a violation of article 1256 of the Civil Code.
The third and fourth proposition are, in our opinion, determinative of the controversy. The court below based its
decision principally on the case of Enriquez vs. A.S. Watson & Co. (22 Phil., 623), and on the resolution of the
Direccion General de los Registros dated April 26,1907. (Jurisprudencia Civil, vol.107, p. 222.) An examination of the
Enriquez case will show that it differs materially from the present. In that case all of the coowners of a lot and
building executed a contract of lease of the property for the term of eighteen years in favor of A. S. Watson & Co.;
one of the owners was minor, but he was represented by his legally appointed guardian, and the action of the
latter in signing the lease on behalf of the minor was formally approved by the Court of First Instance. In the present
case only a small majority of the coowners executed the lease here in question, and according to the terms of the
contract the lease might be given a duration of sixty years; that is widely different from a lease granted by all of the
coowners for a term of only eighteen years.
The resolution of April 26,1907, is more in point. It relates to the inscription or registration of a contract of lease of
some pasture grounds. The majority of the coowners of the property executed the lease for the term of twelve years
but when the lessees presented the lease for inscription in the registry of property, the registrar denied the inscription
on the ground that the term of the lease exceeded six years and that therefore the majority of the coowners lacked
authority to grant the lease. The Direccion General de los Registros held that the contract of lease for a period
exceeding six years, constitutes a real right subject to registry and that the lease in question was valid.
The conclusions reached by the Direccion General led to considerable criticism and have been overruled by a
decision of the Supreme Court of Spain dated June 1,1909. In that decision the court made the following statement
of the case (translation):
The joint owners of 511 out of 1,000 parts of the realty denominated El Mortero, leased out the
whole property for twelve years to Doña Josefa de la Rosa; whereupon the Count and
Countess Trespalacios together with other coowners brought this suit to annul the lease and, in
view of the fact that the land was indivisible, prayed for its sale by public auction and the
distribution of the price so obtained; they alleged that they neither took part nor consented to
the lease; that the decision of the majority of part owners referred to in article 398 of the Code,
implies a common deliberation on the step to be taken , for to do without it, would, even more
than to do without the minority, be nothing less than plunder; and that, even if this deliberation
were not absolutely necessary, the power of the majority would still be confined to decisions
touching the management and enjoyment of the common property, and would not include
acts of ownership, such as a lease for twelve years, which according to the Mortgage Law gives
rise to a real right, which must be recorded, and which can be performed only by the owners of
the property leased.
The part owners who had executed the contract prayed in reconvention that it held valid for all
the owners in common, and if this could not be, then for all those who had signed it, and for the
rest, for the period of six years; and the Audiencia of Caceres having rendered judgment
holding the contract null and void, and ordering the sale of the realty and the distribution of the
price, the defendants appealed alleging under the third and fourth assignments of error, that
the judgment was a violation of article 398 of the Civil Code, which is absolute and sets no limit
of time for the efficacy of the decisions arrived at by the majority of the part owners for the
enjoyment of the common property, citing the decisions of June 30th, 1897, of July 8th,1902,
and of October 30th, 1907; under the fifth assignments of error the appellants contended that in
including joint owners among those referred to in said article, which sets certain limits to the
power of leasing, in the course of the management of another's property, the court applied
article 1548 unduly; and by the seventh assignments of error, they maintained the judgment
appealed from also violated article 1727, providing that the principal is not bound where his
agent has acted beyond his authority; whence it may be inferred that if in order to hold the
contract null and void, the majority of the part owners are looked upon as managers or agents
exercising limited powers, it must at least be conceded that in so far as the act in question lies
within the scope of their powers, it is valid; the contract cannot be annulled in toto.
The Supreme Court held that the appeal from the decision of the Audiencia of Caceres was not well taken and
expressed the following consideranda:
Considering that, although as a rule the contract of lease constitutes an act of management,
as this court has several times held, cases may yet arise, either owing to the nature of the
subject matter, or to the period of duration, which may render it imperative to record the
contract in the registry of property, in pursuance of the Mortgage Law, where the contract of
lease may give rise to a real right in favor of the lessee, and it would then constitute such a
sundering of the ownership as transcends mere management; in such cases it must of necessity
be recognized that the part owners representing the greater portion of the property held in
common have no power to lease said property for a longer period than six years without the
consent of all the coowners, whose propriety rights, expressly recognized by the law, would by
contracts of long duration be restricted or annulled; and as under article 1548 of the Civil Code
such contracts cannot be entered into by the husband with respect to his wife's property, by
the parent or guardian with respect to that of the child or ward, and by the manager in default
of special power, since the contract of lease only produces personal obligations, and cannot
without the consent of all persons interested or express authority from the owner, be extended
to include stipulations which may alter its character, changing it into a contract of partial
alienation of the property leased;
Considering that, applying this doctrine to the case before us, one of the grounds upon which
the judgment appealed from, denying the validity of the lease made by the majority of the part
owners of the pasture land El Mortero is based, must be upheld; to wit, that the period of
duration is twelve years and the consent of all the coowners has not been obtained; hence, the
third, fourth. and fifth assignments of error are without merit; firstly, because article 398 of the
Civil Code, alleged to have been violated, refers to acts decided upon by the majority of the
part owners, touching the management and enjoyment of the common property, and does
not contradict what we have stated in the foregoing paragraph; secondly because although
the cases cited were such as arose upon leases for more than six years, yet this point was not
raised on appeal, and could not therefore be passed upon; and thirdly, because it cannot be
denied that there is an analogy between a manager without special authority, who is forbidden
by article 1548 of the Code to give a lease for a period of over six years, and the joint owners
constituting a legal majority, who may decide to lease out the indivisible property, with respect
to the shares of the other coowners; and having come to the conclusion that the contract is null
and void, there is no need to discuss the first two assignments of error which refer to another of
the bases adopted, however erroneously, by the trial court;
Considering that the sixth assignment of error is without merit, inasmuch as the joint ownership of
property is not a sort of agency and cannot be governed by the provisions relating to the latter
contract; whence, article 1727 of the Code alleged to have been violated, can no more be
applied, than, the question of the validity or nullity of the lease being raise, upon the contract as
celebrated, it would be allowable to modify a posteriori some one or other of the main
conditions stipulated, like that regarding the duration of the lease, for this would amount to a
novation; still less allowable would it be to authorize diverse periods for the different persons
unequally interested in the fulfillment.
Taking into consideration articles 398,1548, and 1713 of the Civil Code and following the aforesaid decision of June
1,1909, we hold that the contract of lease here in question is null and void.
It has been suggested that by reason of prescription and by acceptance of benefits under the lease, the plaintiffs
are estopped to question the authority for making the lease.To this we may answer that the burden of proof of
prescription devolved upon the defendant and that as far as we can find, there is no proof that Ramon Melencio
and his successors ever had knowledge of the existence of the lease in question prior to 1926. We cannot by mere
suspicion conclude that they were informed of the existence of the document and its terms; it must be
remembered that under a strict interpretation of the terms of the lease, the lessees could remain indefinitely in their
tenancy unless the lessors could purchase the mill and the buildings on the land. In such circumstances, better
evidence than that presented by the defendant in regard to the plaintiff's knowledge of the lease must be
required.
The fact that Ramon during his lifetime received his share of the products of land owned in common with his coheirs
is not sufficient proof of knowledge of the existence of the contract of lease when it is considered that the land in
question was only a small portion of a large tract which Pedro R. Melencio was administering in connection with
other community property.
The appealed judgment as to the validity of the lease is therefore reversed, and it is ordered that the possession of
the land in controversy be delivered to the intervenor Liberata Macapagal in her capacity as administratrix of the
estate of the deceased Ramon Melencio. It is further ordered that the defendant pay to said administratrix a
monthly rent of P50 for the occupation of the land from May 1st, 1926, until the land is delivered to the administratrix.
The sum of P272 demanded by the defendant in his counterclaim may be deducted from the total amount of the
rent due and unpaid. The building erected on the land by the defendant and his predecessors in interest may be
removed by him, or otherwise disposed of, within six months from the promulgation of this decision. Without costs. So
ordered.
G.R. No. 156536 October 31, 2006
JOSEPH CUA, petitioner,
vs.
GLORIA A. VARGAS, AURORA VARGAS, RAMON VARGAS, MARITES VARGAS, EDELINA VARGAS AND GEMMA
VARGAS, respondents.
DECISION
AZCUNA, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking the reversal of the decision1 dated March 26,
2002, and the resolution2 dated December 17, 2002, of the Court of Appeals in CA-G.R. SP No. 59869 entitled "Gloria
A. Vargas, Aurora Vargas, Ramon Vargas, Marites Vargas, Edelina Vargas and Gemma Vargas v. Joseph Cua."
The facts are as follows:
A parcel of residential land with an area of 99 square meters located in San Juan, Virac, Catanduanes was left
behind by the late Paulina Vargas. On February 4, 1994, a notarized Extra Judicial Settlement Among Heirs was
executed by and among Paulina Vargas' heirs, namely Ester Vargas, Visitacion Vargas, Juan Vargas, Zenaida V.
Matienzo, Rosario V. Forteza, Andres Vargas, Gloria Vargas, Antonina Vargas and Florentino Vargas, partitioning
and adjudicating unto themselves the lot in question, each one of them getting a share of 11 square meters.
Florentino, Andres, Antonina and Gloria, however, did not sign the document. Only Ester, Visitacion, Juan, Zenaida
and Rosario signed it. The Extra Judicial Settlement Among Heirs was published in the Catanduanes Tribune for three
consecutive weeks.3
On November 15, 1994, an Extra Judicial Settlement Among Heirs with Sale4 was again executed by and among the
same heirs over the same property and also with the same sharings. Once more, only Ester, Visitacion, Juan,
Zenaida and Rosario signed the document and their respective shares totaling 55 square meters were sold to
Joseph Cua, petitioner herein.
According to Gloria Vargas, the widow of Santiago Vargas and one of respondents herein, she came to know of
the Extra Judicial Settlement Among Heirs with Sale dated November 16, 1994 only when the original house built on
the lot was being demolished sometime in May 1995.5 She likewise claimed she was unaware that an earlier Extra
Judicial Settlement Among Heirs dated February 4, 1994 involving the same property had been published in the
Catanduanes Tribune.6
After knowing of the sale of the 55 square meters to petitioner, Gloria Vargas tried to redeem the property, with the
following letter7 sent to petitioner on her behalf:
29th June 1995
Mr. Joseph Cua
Capilihan, Virac, Catanduanes
Sir:
This is in behalf of my client, Ms. Aurora Vargas,8 (c/o Atty. Prospero V. Tablizo) one of the lawful
heirs of the late Paulina Vargas, original owner of Lot No. 214 of Virac, Poblacion covered by
ARP No. 031-0031 in her name.
I understand that a document "Extra Judicial Settlement Among Heirs with Sale" was executed
by some of my client's co-heirs and alleged representatives of other co-heirs, by virtue of which
document you acquired by purchase from the signatories to the said document, five (5) shares
with a total area of fifty-five square meters of the above-described land.
This is to serve you notice that my client shall exercise her right of legal redemption of said five
(5) shares as well as other shares which you may likewise have acquired by purchase. And you
are hereby given an option to agree to legal redemption within a period of fifteen (15) days
from your receipt hereof.
Should you fail to convey to me your agreement within said 15-day-period, proper legal action
shall be taken by my client to redeem said shares.
Thank you.
Very truly yours,
(Sgd.)
JUAN G. ATENCIA
When the offer to redeem was refused and after having failed to reach an amicable settlement at the barangay
level,9 Gloria Vargas filed a case for annulment of Extra Judicial Settlement and Legal Redemption of the lot with
the Municipal Trial Court (MTC) of Virac, Catanduanes against petitioner and consigned the amount of P100,000
which is the amount of the purchase with the Clerk of Court on May 20, 1996.10 Joining her in the action were her
children with Santiago, namely, Aurora, Ramon, Marites, Edelina and Gemma, all surnamed Vargas.
Subsequently, Carlos Gianan, Jr. and Gloria Arcilla, heirs of the alleged primitive owner of the lot in question, Pedro
Lakandula, intervened in the case.11
Respondents claimed that as co-owners of the property, they may be subrogated to the rights of the purchaser by
reimbursing him the price of the sale. They likewise alleged that the 30-day period following a written notice by the
vendors to their co-owners for them to exercise the right of redemption of the property had not yet set in as no
written notice was sent to them. In effect, they claimed that the Extra Judicial Settlement Among Heirs and the Extra
Judicial Settlement Among Heirs with Sale were null and void and had no legal and binding effect on them.12
After trial on the merits, the MTC rendered a decision13 in favor of petitioner, dismissing the complaint as well as the
complaint-in-intervention for lack of merit, and declaring the Deed of Extra Judicial Settlement Among Heirs with
Sale valid and binding. The MTC upheld the sale to petitioner because the transaction purportedly occurred after
the partition of the property among the co-owner heirs. The MTC opined that the other heirs could validly dispose of
their respective shares. Moreover, the MTC found that although there was a failure to strictly comply with the
requirements under Article 1088 of the Civil Code14 for a written notice of sale to be served upon respondents by
the vendors prior to the exercise of the former's right of redemption, this deficiency was cured by respondents'
actual knowledge of the sale, which was more than 30 days before the filing of their complaint, and their
consignation of the purchase price with the Clerk of Court, so that the latter action came too late. Finally, the MTC
ruled that respondents failed to establish by competent proof petitioner's bad faith in purchasing the portion of the
property owned by respondents' co-heirs.15
On appeal, the Regional Trial Court (RTC), Branch 42, of Virac, Catanduanes affirmed the MTC decision in a
judgment dated November 25, 1999. The matter was thereafter raised to the Court of Appeals (CA).
The CA reversed the ruling of both lower courts in the assailed decision dated March 26, 2002, declaring that the
Extra Judicial Settlement Among Heirs and the Extra Judicial Settlement Among Heirs with Sale, dated February 4,
1994 and November 15, 1994, respectively, were void and without any legal effect. The CA held that, pursuant to
Section 1, Rule 74 of the Rules of Court, 16 the extrajudicial settlement made by the other co-heirs is not binding
upon respondents considering the latter never participated in it nor did they ever signify their consent to the same.
His motion for reconsideration having been denied, petitioner filed the present petition for review.
The issues are:
Whether heirs are deemed constructively notified and bound, regardless of their failure to
participate therein, by an extrajudicial settlement and partition of estate when the extrajudicial
settlement and partition has been duly published; and,
Assuming a published extrajudicial settlement and partition does not bind persons who did not
participate therein, whether the written notice required to be served by an heir to his co-heirs in
connection with the sale of hereditary rights to a stranger before partition under Article 1088 of
the Civil Code17 can be dispensed with when such co-heirs have actual knowledge of the sale
such that the 30-day period within which a co-heir can exercise the right to be subrogated to
the rights of a purchaser shall commence from the date of actual knowledge of the sale.
Petitioner argues, as follows:
Firstly, the acquisition by petitioner of the subject property subsequent to the extrajudicial partition was valid
because the partition was duly published. The publication of the same constitutes due notice to respondents and
signifies their implied acquiescence thereon. Respondents are therefore estopped from denying the validity of the
partition and sale at this late stage. Considering that the partition was valid, respondents no longer have the right to
redeem the property.
Secondly, petitioner is a possessor and builder in good faith.
Thirdly, the MTC had no jurisdiction over the complaint because its subject matter was incapable of pecuniary
estimation. The complaint should have been filed with the RTC.
Fourthly, there was a non-joinder of indispensable parties, the co-heirs who sold their interest in the subject property
not having been impleaded by respondents.
Fifthly, the appeal to the CA should have been dismissed as it was not properly verified by respondents. Gloria
Vargas failed to indicate that she was authorized to represent the other respondents (petitioners therein) to initiate
the petition. Moreover, the verification was inadequate because it did not state the basis of the alleged truth
and/or correctness of the material allegations in the petition.
The petition lacks merit.
The procedure outlined in Section 1 of Rule 74 is an ex parte proceeding. The rule plainly states, however, that
persons who do not participate or had no notice of an extrajudicial settlement will not be bound thereby.18 It
contemplates a notice that has been sent out or issued before any deed of settlement and/or partition is agreed
upon (i.e., a notice calling all interested parties to participate in the said deed of extrajudicial settlement and
partition), and not after such an agreement has already been executed19 as what happened in the instant case
with the publication of the first deed of extrajudicial settlement among heirs.
The publication of the settlement does not constitute constructive notice to the heirs who had no knowledge or did
not take part in it because the same was notice after the fact of execution. The requirement of publication is
geared for the protection of creditors and was never intended to deprive heirs of their lawful participation in the
decedent's estate. In this connection, the records of the present case confirm that respondents never signed either
of the settlement documents, having discovered their existence only shortly before the filing of the present
complaint. Following Rule 74, these extrajudicial settlements do not bind respondents, and the partition made
without their knowledge and consent is invalid insofar as they are concerned.
This is not to say, though, that respondents' co-heirs cannot validly sell their hereditary rights to third persons even
before the partition of the estate. The heirs who actually participated in the execution of the extrajudicial
settlements, which included the sale to petitioner of their pro indiviso shares in the subject property, are bound by
the same. Nevertheless, respondents are given the right to redeem these shares pursuant to Article 1088 of the Civil
Code. The right to redeem was never lost because respondents were never notified in writing of the actual sale by
their co-heirs. Based on the provision, there is a need for written notice to start the period of redemption, thus:
Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the
co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of
the sale, provided they do so within the period of one month from the time they were notified in
writing of the sale by the vendor. (Emphasis supplied.)
It bears emphasis that the period of one month shall be reckoned from the time that a co-heir is notified in writing
by the vendor of the actual sale. Written notice is indispensable and mandatory,20 actual knowledge of the sale
acquired in some other manner by the redemptioner notwithstanding. It cannot be counted from the time
advance notice is given of an impending or contemplated sale. The law gives the co-heir thirty days from the time
written notice of the actual sale within which to make up his or her mind and decide to repurchase or effect the
redemption.21
Though the Code does not prescribe any particular form of written notice nor any distinctive method for written
notification of redemption, the method of notification remains exclusive, there being no alternative provided by
law.22 This proceeds from the very purpose of Article 1088, which is to keep strangers to the family out of a joint
ownership, if, as is often the case, the presence of outsiders be undesirable and the other heir or heirs be willing and
in a position to repurchase the share sold.23
It should be kept in mind that the obligation to serve written notice devolves upon the vendor co-heirs because the
latter are in the best position to know the other co-owners who, under the law, must be notified of the sale.24 This will
remove all uncertainty as to the fact of the sale, its terms and its perfection and validity, and quiet any doubt that
the alienation is not definitive.25 As a result, the party notified need not entertain doubt that the seller may still
contest the alienation. 26
Considering, therefore, that respondents' co-heirs failed to comply with this requirement, there is no legal
impediment to allowing respondents to redeem the shares sold to petitioner given the former's obvious willingness
and capacity to do so.
Likewise untenable is petitioner's contention that he is a builder in good faith. Good faith consists in the belief of the
builder that the land the latter is building on is one's own without knowledge of any defect or flaw in one's title.27
Petitioner derived his title from the Extra Judicial Settlement Among Heirs With Sale dated November 15, 1994. He
was very much aware that not all of the heirs participated therein as it was evident on the face of the document
itself. Because the property had not yet been partitioned in accordance with the Rules of Court, no particular
portion of the property could have been identified as yet and delineated as the object of the sale. This is because
the alienation made by respondents' co-heirs was limited to the portion which may be allotted to them in the
division upon the termination of the co-ownership. Despite this glaring fact, and over the protests of respondents,
petitioner still constructed improvements on the property. For this reason, his claim of good faith lacks credence.
As to the issue of lack of jurisdiction, petitioner is estopped from raising the same for the first time on appeal.
Petitioner actively participated in the proceedings below and sought affirmative ruling from the lower courts to
uphold the validity of the sale to him of a portion of the subject property embodied in the extrajudicial settlement
among heirs. Having failed to seasonably raise this defense, he cannot, under the peculiar circumstances of this
case, be permitted to challenge the jurisdiction of the lower court at this late stage. While it is a rule that a
jurisdictional question may be raised at any time, an exception arises where estoppel has already supervened.
Estoppel sets in when a party participates in all stages of a case before challenging the jurisdiction of the lower
court. One cannot belatedly reject or repudiate its decision after voluntarily submitting to its jurisdiction, just to
secure affirmative relief against one's opponent or after failing to obtain such relief. The Court has, time and again,
frowned upon the undesirable practice of a party submitting a case for decision and then accepting the judgment,
only if favorable, and attacking it for lack of jurisdiction when adverse.28
Petitioner's fourth argument, that there is a non-joinder of indispensable parties, similarly lacks merit. An
indispensable party is a party-in-interest without whom there can be no final determination of an action and who is
required to be joined as either plaintiff or defendant.29 The party's interest in the subject matter of the suit and in the
relief sought is so inextricably intertwined with the other parties that the former's legal presence as a party to the
proceeding is an absolute necessity. Hence, an indispensable party is one whose interest will be directly affected by
the court's action in the litigation. In the absence of such indispensable party, there cannot be a resolution of the
controversy before the court which is effective, complete, or equitable.30
In relation to this, it must be kept in mind that the complaint filed by respondents ultimately prayed that they be
allowed to redeem the shares in the property sold by their co-heirs. Significantly, the right of the other heirs to sell
their undivided share in the property to petitioner is not in dispute. Respondents concede that the other heirs acted
within their hereditary rights in doing so to the effect that the latter completely and effectively relinquished their
interests in the property in favor of petitioner. Petitioner thus stepped into the shoes of the other heirs to become a
co-owner of the property with respondents. As a result, only petitioner's presence is absolutely required for a
complete and final determination of the controversy because what respondents seek is to be subrogated to his
rights as a purchaser.
Finally, petitioner contends that the petition filed by respondents with the CA should have been dismissed because
the verification and certificate of non-forum shopping appended to it were defective, citing specifically the failure
of respondent Gloria Vargas to: (1) indicate that she was authorized to represent her co-respondents in the petition,
and (2) state the basis of the alleged truth of the allegations.
The general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs or petitioners in a
case and the signature of only one of them is insufficient.31 Nevertheless, the rules on forum shopping, which were
designed to promote and facilitate the orderly administration of justice, should not be interpreted with such
absolute literalness as to subvert their own ultimate and legitimate objective. Strict compliance with the provisions
regarding the certificate of non-forum shopping merely underscores its mandatory nature in that the certification
cannot be altogether dispensed with or its requirements completely disregarded.32 Under justifiable circumstances,
the Court has relaxed the rule requiring the submission of such certification considering that although it is obligatory,
it is not jurisdictional.33
Thus, when all the petitioners share a common interest and invoke a common cause of action or defense, the
signature of only one of them in the certification against forum shopping substantially complies with the rules.34 The
co-respondents of respondent Gloria Vargas in this case were her children. In order not to defeat the ends of
justice, the Court deems it sufficient that she signed the petition on their behalf and as their representative.
WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner.
SO ORDERED.
 April 20, 2016
G.R. No. 200274
MELECIO DOMINGO, Petitioner,
vs.
SPOUSES GENARO MOLINA and ELENA B. MOLINA, substituted by ESTER MOLINA, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by the petitioner Melecio Domingo (Melecio) assailing the
August 9, 2011 decision2 and January 10, 2012 resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 94160.
THE FACTS
In June 15, 1951, the spouses Anastacio and Flora Domingo bought a property in Camiling, Tarlac, consisting of a
one-half undivided portion over an 18, 164 square meter parcel of land. The sale was annotated on the Original
Certificate of Title (OCT) No. 16354 covering the subject property.
During his lifetime, Anastacio borrowed money from the respondent spouses Genaro and Elena Molina (spouses
Molina). On September 10, 1978 or 10 years after Flora’s death4, Anastacio sold his interest over the land to the
spouses Molina to answer for his debts. The sale to the spouses Molina was annotated at the OCT of the subject
property.5 In 1986, Anastacio died.6
In May 19, 1995, the sale of Anastacio’s interest was registered under Transfer Certificate of Title (TCT) No. 272967[[7
]]and transferred the entire one-half undivided portion of the land to the spouses Molina.
Melecio, one of the children of Anastacio and Flora, learned of the transfer and filed a Complaint for Annulment of
Title and Recovery of Ownership (Complaint) against the spouses Molina on May 17, 1999.8
Melecio claims that Anastacio gave the subject property to the spouses Molina to serve as collateral for the money
that Anastacio borrowed. Anastacio could not have validly sold the interest over the subject property without
Flora’s consent, as Flora was already dead at the time of the sale.
Melecio also claims that Genaro Molina must have falsified the document transferring Anastacio and Flora’s one-
half undivided interest over the land. Finally, Melecio asserts that he occupied the subject property from the time of
Anastacio’s death up to the time he filed the Complaint.9
Melecio presented the testimonies of the Records Officer of the Register of Deeds of Tarlac, and of Melecio’s
nephew, George Domingo (George).10
The Records Officer testified that he could not locate the instrument that documents the transfer of the subject
property ownership from Anastacio to the spouses Molina. The Records Officer also testified that the alleged sale
was annotated at the time when Genaro Molina’s brother was the Register of Deeds for Camiling, Tarlac.11
George, on the other hand, testified that he has been living on the subject property owned by Anastacio since
1986. George testified, however, that aside from himself, there were also four other occupants on the subject
property, namely Jaime Garlitos, Linda Sicangco, Serafio Sicangco and Manuel Ramos.12
The spouses Molina asserted that Anastacio surrendered the title to the subject property to answer for his debts and
told the spouses Molina that they already own half of the land. The spouses Molina have been in possession of the
subject property before the title was registered under their names and have religiously paid the property’s real
estate taxes.
The spouses Molina also asserted that Melecio knew of the disputed sale since he accompanied Anastacio several
times to borrow money. The last loan was even used to pay for Melecio’s wedding. Finally, the spouses Molina
asserted that Melecio built his nipa hut on the subject property only in 1999, without their knowledge and consent.13
The spouses Molina presented Jaime Garlitos (Jaime) as their sole witness and who is one of the occupants of the
subject lot.
Jaime testified that Elena Molina permitted him to build a house on the subject property in 1993. Jaime, together
with the other tenants, planted fruit bearing trees on the subject property and gave portions of their harvest to
Elena Molina without any complaint from Melecio. Jaime further testified that Melecio never lived on the subject
property and that only George Domingo, as the caretaker of the spouses Molina, has a hut on the property.
Meanwhile, the spouses Molina died during the pendency of the case and were substituted by their adopted son,
Cornelio Molina.14
THE RTC RULING
The Regional Trial Court (RTC) dismissed15 the case because Melecio failed to establish his claim that Anastacio did
not sell the property to the spouses Molina.
The RTC also held that Anastacio could dispose of conjugal property without Flora’s consent since the sale was
necessary to answer for conjugal liabilities.
The RTC denied Melecio’s motion for reconsideration of the RTC ruling. From this ruling, Melecio proceeded with his
appeal to the CA.
THE CA RULING
In a decision dated August 9, 2011, the CA affirmed the RTC ruling in toto.
The CA held that Melecio failed to prove by preponderant evidence that there was fraud in the conveyance of the
property to the spouses Molina. The CA gave credence to the OCT annotation of the disputed property sale.
The CA also held that Flora’s death is immaterial because Anastacio only sold his rights, excluding Flora’s interest,
over the lot to the spouses Molina.1âwphi1 The CA explained that "[t]here is no prohibition against the sale by the
widower of real property formerly belonging to the conjugal partnership of gains"16.
Finally, the CA held that Melecio’s action has prescribed. According to the CA, Melecio failed to file the action
within one year after entry of the decree of registration.
Melecio filed a motion for reconsideration of the CA Decision. The CA denied Melecio’s motion for reconsideration
for lack of merit.17
THE PETITION
Melecio filed the present petition for review on certiorari to challenge the CA ruling.
Melecio principally argues that the sale of land belonging to the conjugal partnership without the wife’s consent is
invalid.
Melecio also claims that fraud attended the conveyance of the subject property and the absence of any
document evidencing the alleged sale made the transfer null and void. Finally, Melecio claims that the action has
not yet prescribed.
The respondents, on the other hand, submitted and adopted their arguments in their Appeal Brief18.
First, Melecio’s counsel admitted that Anastacio had given the lot title in payment of the debt amounting to
Php30,000.00. The delivery of the title is constructive delivery of the lot itself based on Article 1498, paragraph 2 of
the Civil Code.
Second, the constructive delivery of the title coupled with the spouses Molina’s exercise of attributes of ownership
over the subject property, perfected the sale and completed the transfer of ownership.
THE ISSUES
The core issues of the petition are as follows: (1) whether the sale of a conjugal property to the spouses Molina
without Flora’s consent is valid and legal; and (2) whether fraud attended the transfer of the subject property to the
spouses Molina.
OUR RULING
We deny the petition.
It is well settled that when the trial court’s factual findings have been affirmed by the CA, the findings are generally
conclusive and binding upon the Court and may no longer be reviewed on Rule 45 petitions.19 While there are
exceptions20 to this rule, the Court finds no applicable exception with respect to the lower courts’ finding that the
subject property was Anastacio and Flora’s conjugal property. Records before the Court show that the parties did
not dispute the conjugal nature of the property.
Melecio argues that the sale of the disputed property to the spouses Molina is void without Flora’s consent.
We do not find Melecio’s argument meritorious.
Anastacio and Flora’s
conjugal partnership was
dissolved upon Flora’s death.
There is no dispute that Anastacio and Flora Domingo married before the Family Code’s effectivity on August 3,
1988 and their property relation is a conjugal partnership.21
Conjugal partnership of gains established before and after the effectivity of the Family Code are governed by the
rules found in Chapter 4 (Conjugal Partnership of Gains) of Title IV (Property Relations Between Husband and Wife)
of the Family Code. This is clear from Article 105 of the Family Code which states:
x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between
spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with
the Civil Code or other laws, as provided in Article 256.
The conjugal partnership of Anastacio and Flora was dissolved when Flora died in 1968, pursuant to Article 175 (1) of
the Civil Code22 (now Article 126 (1) of the Family Code).
Article 130 of the Family Code requires the liquidation of the conjugal partnership upon death of a spouse and
prohibits any disposition or encumbrance of the conjugal property prior to the conjugal partnership liquidation, to
quote:
Article 130. Upon the termination of the marriage by death, the conjugal partnership property shall be liquidated in
the same proceeding for the settlement of the estate of the deceased.
If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the conjugal partnership
property either judicially or extrajudicially within one year from the death of the deceased spouse. If upon the lapse
of the six month period no liquidation is made, any disposition or encumbrance involving the conjugal partnership
property of the terminated marriage shall be void. x x x (emphases supplied)
While Article 130 of the Family Code provides that any disposition involving the conjugal property without prior
liquidation of the partnership shall be void, this rule does not apply since the provisions of the Family Code shall be
"without prejudice to vested rights already acquired in accordance with the Civil Code or other laws."23
An implied co-ownership
among Flora’s heirs governed
the conjugal properties
pending liquidation and
partition.
In the case of Taningco v. Register of Deeds of Laguna,24
we held that the properties of a dissolved conjugal
partnership fall under the regime of co-ownership among the surviving spouse and the heirs of the deceased
spouse until final liquidation and partition. The surviving spouse, however, has an actual and vested one-half
undivided share of the properties, which does not consist of determinate and segregated properties until liquidation
and partition of the conjugal partnership.
An implied ordinary co-ownership ensued among Flora’s surviving heirs, including Anastacio, with respect to Flora’s
share of the conjugal partnership until final liquidation and partition; Anastacio, on the other hand, owns one-half of
the original conjugal partnership properties as his share, but this is an undivided interest.
Article 493 of the Civil Code on co-ownership provides:
Article 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto,
and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except
when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners,
shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.
(399) (emphases supplied)
Thus, Anastacio, as co-owner, cannot claim title to any specific portion of the conjugal properties without an actual
partition being first done either by agreement or by judicial decree. Nonetheless, Anastacio had the right to freely
sell and dispose of his undivided interest in the subject property.
The spouses Molina became
co-owners of the subject
property to the extent of
Anastacio’s interest.
The OCT annotation of the sale to the spouses Molina reads that "[o]nly the rights, interests and participation of
Anastacio Domingo, married to Flora Dela Cruz, is hereby sold, transferred, and conveyed unto the said vendees for
the sum of ONE THOUSAND PESOS (P1,000.00) which pertains to an undivided one-half (1/2) portion and subject to
all other conditions specified in the document x x x"25 (emphases supplied). At the time of the sale, Anastacio’s
undivided interest in the conjugal properties consisted of: (1) one-half of the entire conjugal properties; and (2) his
share as Flora’s heir on the conjugal properties.
Anastacio, as a co-owner, had the right to freely sell and dispose of his undivided interest, but not the interest of his
co-owners. Consequently, Anastactio’s sale to the spouses Molina without the consent of the other co-owners was
not totally void, for Anastacio’s rights or a portion thereof were thereby effectively transferred, making the spouses
Molina a co-owner of the subject property to the extent of Anastacio’s interest. This result conforms 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).26
The spouses Molina would be a trustee for the benefit of the co-heirs of Anastacio in respect of any portion that
might belong to the co-heirs after liquidation and partition. The observations of Justice Paras cited in the case of
Heirs of Protacio Go, Sr. V. Servacio27 are instructive:
x x x [I]f it turns out that the property alienated or mortgaged really would pertain to the share of the surviving
spouse, then said transaction is valid. If it turns out that there really would be, after liquidation, no more conjugal
assets then the whole transaction is null and void. But if it turns out that half of the property thus alienated or
mortgaged belongs to the husband as his share in the conjugal partnership, and half should go to the estate of the
wife, then that corresponding to the husband is valid, and that corresponding to the other is not. Since all these can
be determined only at the time the liquidation is over, it follows logically that a disposal made by the surviving
spouse is not void ab initio. Thus, it has been held that the sale of conjugal properties cannot be made by the
surviving spouse without the legal requirements. The sale is void as to the share of the deceased spouse (except of
course as to that portion of the husband’s share inherited by her as the surviving spouse). The buyers of the property
that could not be validly sold become trustees of said portion for the benefit of the husband’s other heirs, the cestui
que trust ent. Said heirs shall not be barred by prescription or by laches.
Melecio’s recourse as a co-owner of the conjugal properties, including the subject property, is an action for
partition under Rule 69 of the Revised Rules of Court. As held in the case of Heirs of Protacio Go, Sr., "it is now settled
that the appropriate recourse of co-owners in cases where their consent were not secured in a sale of the entire
property as well as in a sale merely of the undivided shares of some of the co-owners is an action for PARTITION
under Rule 69 of the Revised Rules of Court."28
The sale of the subject
property to the spouses Molina
was not attended with fraud.
On the issue of fraud, the lower courts found that there was no fraud in the sale of the disputed property to the
spouses Molina.
The issue of fraud would require the Court to inquire into the weight of evidentiary matters to determine the merits of
the petition and is essentially factual in nature. It is basic that factual questions cannot be cannot be entertained in
a Rule 45 petition, unless it falls under any of the recognized exceptions29 found in jurisprudence. The present
petition does not show that it falls under any of the exceptions allowing factual review.
The CA and RTC conclusion that there is no fraud in the sale is supported by the evidence on record.
Melecio' s argument that no document was executed for the sale is negated by the CA finding that there was a
notarized deed of conveyance executed between Anastacio and the spouses Molina, as annotated on the OCT of
the disputed property.
Furthermore, Melecio's belief that Anastacio could not have sold the property without his knowledge cannot be
considered as proof of fraud to invalidate the spouses Molina's registered title over the subject property.30
Prevailing jurisprudence uniformly holds that findings of facts of the trial court, particularly when affirmed by the
Court of Appeals, are binding upon t his court. 31
Considering these findings, we find no need to discuss the other issues raised by Melecio.
WHEREFORE, we hereby DENY the petition for review on certiorari. The decision dated August 9, 2011 of the Court of
Appeals in CA-G.R. CV No. 94160 is AFFIRMED.
SO ORDERED.
G.R. No. 176598 July 9, 2014
PETRONIO CLIDORO, DIONISIO CLIDORO, LOLITA CLIDORO, CALIXTO CARD ANO, JR., LOURDES CLIDORO-LARIN,
MATEO CLIDORO and MARLIZA CLIDORO-DE UNA, Petitioners,
vs.
AUGUSTO JALMANZAR, GREGORIO CLIDORO, JR., SENECA CLIDORO-CIOCSON, MONSERAT CLIDORO-QUIDAY,
CELESTIAL CLIDORO-BINASA, APOLLO CLIDORO, ROSALIE CLIDORO-CATOLICO, SOPHIE CLIDORO, and JOSE
CLIDORO, JR., Respondents.
DECISION
PERALTA, J.:
This deals with the Petition for Review on Certiorari under Rule 45 of the Rules of Court praying that the Decision1 of
the Court of Appeals (CA), dated October 17, 2006, and its Resolution2 dated February 6, 2007, denying herein
petitioner's motion for reconsideration of the Decision, be reversed and set aside.
The antecedent facts, as set forth in the CA Decision, are undisputed, to wit:
The instant appeal stemmed from a complaint, docketed as Civil Case No. T-2275 for revival of judgment filed by
Rizalina Clidoro, et al. against Onofre Clidoro, et al., praying that the Decisiondated November 13, 1995 of the Court
of Appeals (CA) in CA-G.R. CV No. 19831, which affirmed with modification the RTC Decision dated March 10, 1988
in Civil Case No. T-98 for partition, berevived and that the corresponding writ of execution be issued. The dispositive
portion ofthe CA Decision reads:
The estate of the late Mateo Clidoro, excepting that described in paragraph (i) of the Complaint, is hereby ordered
partitioned in the following manner:
1. One-fifth portion to the Plaintiffs-Appellees, by right of representation to the hereditary share of Gregorio Clidoro,
Sr.;
2. One-fifth portion to Defendant-Appellant Antonio Clidoro or his legal heirs;
3. One-fifth portion to Appellant Josaphat Clidoro;
4. One-fifth portion to Appellant Aida Clidoro; 5. One-tenth portion to Gregoria Clidoro, as her legitime in the
hereditary share of Onofre Clidoro; and
6. One-tenth portion to Catalino Morate, as successor-ininterest to the legitime of Consorcia Clidoro.
SO ORDERED.
On September 3, 2003, defendants-appellees except Gregoria Clidoro-Palanca, moved to dismiss the said
complaint on the following grounds: "1.) The petition, not being brought up against the real partiesin-interest, is
dismissible for lack of cause of action; 2.) The substitution of the parties defendant is improper and is not in
accordance with the rules; 3.) Even if the decision is ordered revived, the same cannot be executed since the legal
requirements of Rule 69, Section 3 of the 1997 Rules of Civil Procedure has not been complied with; and 4.) The
Judgment of the Honorable Court ordering partition is merely interlocutory as it leaves something more to be done
to complete the disposition of the case."
After the filing of plaintiffs-appellants' Comment/Opposition to the Motion to Dismiss, defendants-appellees' Reply,
plaintiffs-appellants' Rejoinder and defendants-interestedparties' Sur-Rejoinder, the RTC issued the assailed Order
dated December 8, 2003 dismissing the instant complaint for lack of cause of action, the pertinent portion of which
reads:
"xxx
The complaint shows that most of the parties-plaintiffs, partiesdefendants and interested parties are already
deceased and have no more natural or material existence. This is contrary to the provision of the Rules (Sec. 1, Rule
3, 1997 Rules of Civil Procedure). They could no longer be considered as the real parties-in-interest. Besides, pursuant
to Sec. 3, Rule 3 (1997 Rules of Civil Procedure), where the action is allowed to be prosecuted or defended by a
representative or someone acting in fiduciary capacity, the beneficiary shall be included in the title of the case. In
the instant case the beneficiaries are already deceased persons. Also, the Complaint states thatthey were the
original parties in Civil Case No. T-98 for Partition, but this is not so (paragraph 2). Some of the parties are actually not
parties to the original case, but representing the original parties who are indicated as deceased.
From the foregoing, the Court finds the instant complaint to be flawed in form and substance. The suit is not brought
by the real parties-ininterest, thus a motion to dismiss on the ground that the complaint states no cause of action is
proper (Section 1(g), Rule 16).
WHEREFORE, the instant complaint is ordered DISMISSED for lack of cause of action.
SO ORDERED."
Plaintiffs-appellants moved for reconsideration of the foregoing Order with prayer to admit the attached Amended
Complaint impleading the additional heirs of the interested party Josaphat Clidoro and the original plaintiffs Rizalina
Clidoro-Jalmanzar, Cleneo Clidoro and Aristoteles Clidoro. The same was,however, denied in the second assailed
order. x x x3
Respondents then appealed to the CA, and on October 17, 2006, the CA promulgated its Decision reversing and
setting aside the Orders of the RTC, and remanding the case to the RTC for further proceedings. Petitioners’ motion
for reconsideration of the Decision was denied per Resolution dated February 6, 2007.
Hence, the present petition where the following issues are raised:
A. THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER THAT THERE WAS NO PROPER SUBSTITUTION OF PARTIES
IN THE INSTANT ACTION FOR REVIVAL OF JUDGMENT.
B. THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING THE RESPONDENTS AS WELL AS THE PETITIONERS AS
THE REAL PARTIES-IN-INTEREST.
C. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT AMENDMENT TO PLEADINGS WAS PROPERLY MADE
AND IS APPLICABLE TO THE INSTANT ACTION.
D. THE HONORABLE COURT OFAPPEALS ERRED IN RULING THAT THERE WAS MERE MISJOINDER OF PARTIES IN THE
INSTANT ACTION.4
The petition deserves scant consideration.
Reduced to its essence, the pivotal issue here is whether the complaint for revival of judgment may be dismissed for
lack of cause of action as it was not brought by or against the real parties-in-interest.
First of all, the Court emphasizes that lack of cause of action is not enumerated under Rule 16 of the Rules of Court
as one of the grounds for the dismissal of a complaint. As explained in Vitangcol v. New Vista Properties, Inc.,5 to wit:
Lack of cause of action is, however, not a ground for a dismissal of the complaint through a motion to dismiss under
Rule 16 of the Rules of Court, for the determination of a lack of cause of action can only be made during and/or
after trial. What is dismissible via that mode is failure of the complaint to state a cause of action. Sec. 1(g) of Rule 16
of the Rules of Court provides that a motion may be made on the ground "that the pleading asserting the claim
states no cause of action."
The rule is that in a motion to dismiss, a defendant hypothetically admits the truth ofthe material allegations of the
ultimate facts contained in the plaintiff's complaint. When a motion to dismiss is grounded on the failure tostate a
cause of action, a ruling thereon should, as rule, be based only on the facts alleged in the complaint.x x x
xxxx
In a motion to dismiss for failureto state a cause of action, the focus is on the sufficiency, not the veracity, of the
material allegations. The test of sufficiency of facts alleged in the complaint constituting a cause of action lies on
whether or not the court, admitting the facts alleged, could render a valid verdict in accordance with the prayer of
the complaint.x x x6
Again, in Manaloto v. Veloso III,7 the Court reiterated as follows:
When the ground for dismissal is that the complaint states no cause of action, such fact can be determined only
from the facts alleged in the complaint and fromno other, and the court cannot consider other matters aliunde. The
test, therefore, is whether, assuming the allegations of fact in the complaint to be true, a valid judgment could be
rendered in accordance withthe prayer stated therein.8
In this case, it was alleged in the complaint for revival of judgment that the parties therein were also the parties
inthe action for partition. Applying the foregoing test of hypothetically admitting this allegation in the complaint,
and not looking into the veracity of the same, it would then appear that the complaint sufficiently stated a cause of
action as the plaintiffs in the complaint for revival of judgment (hereinafter respondents), as the prevailing parties in
the action for partition, had a right to seek enforcement of the decision in the partition case.
It should be borne in mind that the action for revival of judgment is a totally separate and distinct case from the
original Civil Case No. T-98 for Partition. As explained in Saligumba v. Palanog,9 to wit:
An action for revival of judgment is no more than a procedural means of securing the execution of a previous
judgment which has become dormant after the passage of five years without it being executed upon motion of the
prevailing party. It isnot intended to re-open any issue affecting the merits of the judgment debtor's case nor the
propriety or correctness of the first judgment. An action for revival of judgment is a new and independent action,
different and distinct fromeither the recovery of property case or the reconstitution case [in this case, the original
action for partition], wherein the cause of action is the decision itself and not the merits of the action upon which On the other hand, the parties to the original case for partition are named as follows:
the judgment sought to be enforced is rendered. x x x10 [[reference - http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/july2014/176598.pdf]]
With the foregoing in mind, it is understandable that there would be instances where the parties in the original case
and in the subsequent action for revival of judgment would not be exactly the same. The mere fact that the names PLAINTIFFS DEFENDANTS
appearing as parties in the the complaint for revival of judgment are different from the names of the parties in the
original case would not necessarily mean that theyare not the real parties-in-interest. What is important is that, as
provided in Section 1, Rule 3 of the Rules of Court, they are "the party who stands to be benefited or injured by the 1. Rizalina Clidoro 1. Onofre Clidoro
judgment in the suit, or the party entitled to the avails of the suit." Definitely, as the prevailing parties in the previous
case for partition, the plaintiffs in the case for revival of judgment would be benefited by the enforcement of the
decision in the partition case. 2. Gregorio Clidoro, Jr. 2. Antonio Clidoro
Moreover, it would appear that petitioners are mistaken in alleging that respondents are not the real parties-in-
interest. The complaint for revival of judgment impleaded the following parties: 3. Sofia Cerdena INTERESTED PARTIES
[[reference - http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/july2014/176598.pdf]]
4. Urbana Costales 1. Aida Clidoro
PLAINTIFFS DEFENDANTS

5. Cleneo Seneca 2. Josaphat Clidoro

1. Rizalina Clidoro (deceased) 1. Onofre Clidoro (deceased) rep.
rep. herein by Augusto Jalmanzar by Gregoria Clidoro-Palanca
6. Monserrat Clidoro
(daughter)

7. Celestial Clidoro
2. Gregorio Clidoro, Jr. 2. Antonio Clidoro (deceased)
herein rep. by Petronio Clidoro,
8. Aristoteles Clidoro

3. Urbana Costales (deceased) 3. Carmen Clidoro-Cardano, rep.

9. Apollo Clidoro
by Calixto Cardano, Jr. (husband)

10. Rosalie Clidoro

4. Cleneo Clidoro (deceased) 4. Dionisio Clidoro
A comparison of the foregoing would show that almost all of the plaintiffs in the original case for partition, in whose
5. Seneca Clidoro Ciocson 5. Lourdes Clidoro-Lari favor the court adjudged certain shares in the estate of deceased Mateo Clidoro, are also the plaintiffs in the
action for revival of judgment. Meanwhile, the defendants impleaded in the action for revival are allegedly the
representatives of the defendants in the original case, and this appears to hold water, as Gregoria ClidoroPalanca,
6. Monserrat Clidoro 6. Lolita Clidoro named as the representative of defendant Onofre Clidoro in the complaint for revival of judgment, was also
mentioned and awarded a portion of the estate in the judgment in the original partition case. In fact, the trial court
itself stated in its Order11 of dismissal dated December 8, 2003, that "[s]ome of the parties are actually not parties to
7. Celestial Clidoro 7. Mateo Clidoro the original case, but representing the original parties who are indicated as deceased."
In Basbas v. Sayson,12 the Court pointed out that even just one of the co-owners, by himself alone, can bring an
8. Aristoteles Clidoro (deceased) INTERESTED PARTIES action for the recovery of the coowned property, even through an action for revival of judgment, because the
enforcement of the judgment would result in such recovery of property. Thus, as in Basbas, it is not necessary in this
case that all of the parties, in whose favor the case for partition was adjudged, be made plaintiffs to the action for
9. Apollo Clidoro 1. AidaClidoro (deceased) revival of judgment. Any which one of said prevailing parties, who had an interest in the enforcement of the
decision, may file the complaint for revival of judgment, even just by himself.
Verily, the trial court erred in dismissing the complaint for revival of judgment on the ground of lack of, or failure to
10. Rosalie Clidoro 2. Josaphat Clidoro (deceased),
state a cause of action. The allegations in the complaint, regarding the parties' interest in having the decision in the
herein rep. by Marliza Clidoro-De partition case executed or implemented, sufficiently state a cause of action. The question of whether respondents
Una were the real partiesin-interest who had the right to seek execution of the final and executory judgment in the
partition case should have been threshed out in a full-blown trial.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals, dated October 17, 2006, and its Resolution
11. Sophie Clidoro dated February 6, 2007 in CA-G.R. No. 82209, are hereby AFFIRMED in toto.
SO ORDERED.
12. Jose Clidoro, Jr.
G.R. No. L-3404 April 2, 1951
ANGELA I. TUASON, plaintiff-appellant,
vs.
ANTONIO TUASON, JR., and GREGORIO ARANETA, INC., defendants-appellees.
Alcuaz & Eiguren for appellant.
Araneta & Araneta for appellees.
MONTEMAYOR, J.:
In 1941 the sisters Angela I. Tuason and Nieves Tuason de Barreto and their brother Antonio Tuason Jr., held a parcel
of land with an area of 64,928.6 sq. m. covered by Certificate of Title No. 60911 in Sampaloc, Manila, in common,
each owning an undivided 1/3 portion. Nieves wanted and asked for a partition of the common property, but
failing in this, she offered to sell her 1/3 portion. The share of Nieves was offered for sale to her sister and her brother
but both declined to buy it. The offer was later made to their mother but the old lady also declined to buy, saying
that if the property later increased in value, she might be suspected of having taken advantage of her daughter.
Finally, the share of Nieves was sold to Gregorio Araneta Inc., a domestic corporation, and a new Certificate of Title
No. 61721 was issued in lieu of the old title No. 60911 covering the same property. The three co-owners agreed to
have the whole parcel subdivided into small lots and then sold, the proceeds of the sale to be later divided among
them. This agreement is embodied in a document (Exh. 6) entitled "Memorandum of Agreement" consisting of ten
pages, dated June 30, 1941.
Before, during and after the execution of this contract (Exh. 6), Atty. J. Antonio Araneta was acting as the attorney-
in-fact and lawyer of the two co-owners, Angela I. Tuason and her brother Antonio Tuason Jr. At the same time he
was a member of the Board of Director of the third co-owner, Araneta, Inc.
The pertinent terms of the contract (Exh. 6) may be briefly stated as follows: The three co-owners agreed to improve
the property by filling it and constructing roads and curbs on the same and then subdivide it into small lots for sale.
Araneta Inc. was to finance the whole development and subdivision; it was prepare a schedule of prices and
conditions of sale, subject to the subject to the approval of the two other co-owners; it was invested with authority
to sell the lots into which the property was to be subdivided, and execute the corresponding contracts and deeds
of sale; it was also to pay the real estate taxes due on the property or of any portion thereof that remained unsold,
the expenses of surveying, improvements, etc., all advertising expenses, salaries of personnel, commissions, office
and legal expenses, including expenses in instituting all actions to eject all tenants or occupants on the property;
and it undertook the duty to furnish each of the two co-owners, Angela and Antonio Tuason, copies of the
subdivision plans and the monthly sales and rents and collections made thereon. In return for all this undertaking
and obligation assumed by Araneta Inc., particularly the financial burden, it was to receive 50 per cent of the gross
selling price of the lots, and any rents that may be collected from the property, while in the process of sale, the
remaining 50 per cent to be divided in equal portions among the three co-owners so that each will receive 16.33
per cent of the gross receipts.
Because of the importance of paragraphs 9, 11 and 15 of the contract (Exh. 6), for purposes of reference we are
reproducing them below:
(9) This contract shall remain in full force and effect during all the time that it may be necessary for the
PARTY OF THE SECOND PART to fully sell the said property in small and subdivided lots and to fully collect
the purchase prices due thereon; it being understood and agreed that said lots may be rented while
there are no purchasers thereof;
(11) The PARTY OF THE SECOND PART (meaning Araneta Inc.) is hereby given full power and authority to
sign for and in behalf of all the said co-owners of said property all contracts of sale and deeds of sale of
the lots into which this property might be subdivided; the powers herein vested to the PARTY OF THE
SECOND PART may, under its own responsibility and risk, delegate any of its powers under this contract to
any of its officers, employees or to third persons;
(15) No co-owner of the property subject-matter of this contract shall sell, alienate or dispose of his
ownership, interest or participation therein without first giving preference to the other co-owners to
purchase and acquire the same under the same terms and conditions as those offered by any other
prospective purchaser. Should none of the co-owners of the property subject-matter of this contract
exercise the said preference to acquire or purchase the same, then such sale to a third party shall be
made subject to all the conditions, terms, and dispositions of this contract; provided, the PARTIES OF THE
FIRST PART (meaning Angela and Antonio) shall be bound by this contract as long as the PARTY OF THE
SECOND PART, namely, the GREGORIO ARANETA, INC. is controlled by the members of the Araneta
family, who are stockholders of the said corporation at the time of the signing of this contract and/or their
lawful heirs;
On September 16, 1944, Angela I. Tuason revoked the powers conferred on her attorney-in-fact and lawyer, J.
Antonio Araneta. Then in a letter dated October 19, 1946, Angela notified Araneta, Inc. that because of alleged
breach of the terms of the "Memorandum of Agreement" (Exh. 6) and abuse of powers granted to it in the
document, she had decided to rescind said contract and she asked that the property held in common be
partitioned. Later, on November 20, 1946, Angela filed a complaint in the Court of First Instance of Manila asking the
court to order the partition of the property in question and that she be given 1/3 of the same including rents
collected during the time that the same including rents collected during the time that Araneta Inc., administered
said property.
The suit was administered principally against Araneta, Inc. Plaintiff's brother, Antonio Tuason Jr., one of the co-
owners evidently did not agree to the suit and its purpose, for he evidently did not agree to the suit and its purpose,
for he joined Araneta, Inc. as a co-defendant. After hearing and after considering the extensive evidence
introduce, oral and documentary, the trial court presided over by Judge Emilio Peña in a long and considered
decision dismissed the complaint without pronouncement as to costs. The plaintiff appealed from that decision,
and because the property is valued at more than P50,000, the appeal came directly to this Court.
Some of the reasons advanced by appellant to have the memorandum contract (Exh. 6) declared null and void or
rescinded are that she had been tricked into signing it; that she was given to understand by Antonio Araneta acting
as her attorney-in-fact and legal adviser that said contract would be similar to another contract of subdivision of a
parcel into lots and the sale thereof entered into by Gregorio Araneta Inc., and the heirs of D. Tuason, Exhibit "L", but
it turned out that the two contracts widely differed from each other, the terms of contract Exh. "L" being relatively
much more favorable to the owners therein the less favorable to Araneta Inc.; that Atty. Antonio Araneta was more
or less disqualified to act as her legal adviser as he did because he was one of the officials of Araneta Inc., and
finally, that the defendant company has violated the terms of the contract (Exh. 6) by not previously showing her
the plans of the subdivision, the schedule of prices and conditions of the sale, in not introducing the necessary
improvements into the land and in not delivering to her her share of the proceeds of the rents and sales.
We have examined Exh. "L" and compared the same with the contract (Exh. 6) and we agree with the trial court
that in the main the terms of both contracts are similar and practically the same. Moreover, as correctly found by
the trial court, the copies of both contracts were shown to the plaintiff Angela and her husband, a broker, and both
had every opportunity to go over and compare them and decide on the advisability of or disadvantage in entering
into the contract (Exh. 6); that although Atty. Antonio Araneta was an official of the Araneta Inc.; being a member
of the Board of Directors of the Company at the time that Exhibit "6" was executed, he was not the party with which
Angela contracted, and that he committed no breach of trust. According to the evidence Araneta, the pertinent
papers, and sent to her checks covering her receive the same; and that as a matter of fact, at the time of the trial,
Araneta Inc., had spent about P117,000 in improvement and had received as proceeds on the sale of the lots the
respectable sum of P1,265,538.48. We quote with approval that portion of the decision appealed from on these
points:
The evidence in this case points to the fact that the actuations of J. Antonio Araneta in connection with
the execution of exhibit 6 by the parties, are above board. He committed nothing that is violative of the
fiduciary relationship existing between him and the plaintiff. The act of J. Antonio Araneta in giving the
plaintiff a copy of exhibit 6 before the same was executed, constitutes a full disclosure of the facts, for
said copy contains all that appears now in exhibit 6.
Plaintiff charges the defendant Gregorio Araneta, Inc. with infringing the terms of the contract in that the
defendant corporation has failed (1) to make the necessary improvements on the property as required by
paragraphs 1 and 3 of the contract; (2) to submit to the plaintiff from time to time schedule of prices and
conditions under which the subdivided lots are to be sold; and to furnish the plaintiff a copy of the
subdivision plans, a copy of the monthly gross collections from the sale of the property.
The Court finds from the evidence that he defendant Gregorio Araneta, Incorporated has substantially
complied with obligation imposed by the contract exhibit 6 in its paragraph 1, and that for improvements
alone, it has disbursed the amount of P117,167.09. It has likewise paid taxes, commissions and other
expenses incidental to its obligations as denied in the agreement.
With respect to the charged that Gregorio Araneta, Incorporated has failed to submit to plaintiff a copy
of the subdivision plains, list of prices and the conditions governing the sale of subdivided lots, and
monthly statement of collections form the sale of the lots, the Court is of the opinion that it has no basis.
The evidence shows that the defendant corporation submitted to the plaintiff periodically all the data
relative to prices and conditions of the sale of the subdivided lots, together with the amount
corresponding to her. But without any justifiable reason, she refused to accept them. With the indifferent
attitude adopted by the plaintiff, it was thought useless for Gregorio Araneta, Incorporated to continue
sending her statement of accounts, checks and other things. She had shown on various occasions that
 she did not want to have any further dealings with the said corporation. So, if the defendant corporation
proceeded with the sale of the subdivided lots without the approval of the plaintiff, it was because it was
under the correct impression that under the contract exhibit 6 the decision of the majority co-owners is
binding upon all the three.
The Court feels that recission of the contract exhibit 6 is not minor violations of the terms of the agreement,
the general rule is that "recission will not be permitted for a slight or casual breach of the contract, but
only for such breaches as are so substantial and fundamental as to defeat the object of the parties in
making the agreement" (Song Fo & Co. vs. Hawaiian-Philippine Co., 47 Phil. 821).
As regards improvements, the evidence shows that during the Japanese occupation from 1942 and up to 1946, the
Araneta Inc. although willing to fill the land, was unable to obtain the equipment and gasoline necessary for filling
the low places within the parcel. As to sales, the evidence shows that Araneta Inc. purposely stopped selling the lots
during the Japanese occupantion, knowing that the purchase price would be paid in Japanese military notes; and
Atty. Araneta claims that for this, plaintiff should be thankfull because otherwise she would have received these
notes as her share of the receipts, which currency later became valueles.
But the main contention of the appellant is that the contract (Exh. 6) should be declared null and void because its
terms, particularly paragraphs 9, 11 and 15 which we have reproduced, violate the provisions of Art. 400 of the Civil
Code, which for the purposes of reference we quote below:
ART. 400. No co-owner shall be obliged to remain a party to the community. Each may, at any time,
demand the partition of the thing held in common.
Nevertheless, an agreement to keep the thing undivided for a specified length of time, not exceeding ten
years, shall be valid. This period may be a new agreement.
We agree with the trial court that the provisions of Art. 400 of the Civil Code are not applicable. The contract (Exh.,
6) far from violating the legal provision that forbids a co-owner being obliged to remain a party to the community,
precisely has for its purpose and object the dissolution of the co-ownership and of the community by selling the
parcel held in common and dividing the proceeds of the sale among the co-owners. The obligation imposed in the
contract to preserve the co-ownership until all the lots shall have been sold, is a mere incident to the main object of
dissolving the co-owners. By virtue of the document Exh. 6, the parties thereto practically and substantially entered
into a contract of partnership as the best and most expedient means of eventually dissolving the co-ownership, the
life of said partnership to end when the object of its creation shall have been attained.
This aspect of the contract is very similar to and was perhaps based on the other agreement or contract (Exh. "L")
referred to by appellant where the parties thereto in express terms entered into partnership, although this object is
not expressed in so many words in Exh. 6. We repeat that we see no violation of Art. 400 of the Civil Code in the
parties entering into the contract (Exh. 6) for the very reason that Art. 400 is not applicable.
Looking at the case from a practical standpoint as did the trial court, we find no valid ground for the partition
insisted upon the appellant. We find from the evidence as was done by the trial court that of the 64,928.6 sq. m.
which is the total area of the parcel held in common, only 1,600 sq. m. or 2.5 per cent of the entire area remained
unsold at the time of the trial in the year 1947, while the great bulk of 97.5 per cent had already been sold. As well
observed by the court below, the partnership is in the process of being dissolved and is about to be dissolved, and
even assuming that Art. 400 of the Civil Code were applicable, under which the parties by agreement may agree
to keep the thing undivided for a period not exceeding 10 years, there should be no fear that the remaining 1,600
sq. m. could not be disposed of within the four years left of the ten-years period fixed by Art. 400.
We deem it unnecessary to discuss and pass upon the other points raised in the appeal and which counsel for
appellant has extensively and ably discussed, citing numerous authorities. As we have already said, we have
viewed the case from a practical standpoint, brushing aside technicalities and disregarding any minor violations of
the contract, and in deciding the case as we do, we are fully convinced that the trial court and this Tribunal are
carrying out in a practical and expeditious way the intentions and the agreement of the parties contained in the
contract (Exh. 6), namely, to dissolve the community and co-ownership, in a manner most profitable to the said
parties.
In view of the foregoing, the decision appealed from is hereby affirmed. There is no pronouncement as to costs.
So ordered.
G.R. No. L-47996 May 9, 1941
ENGRACIA LAVADIA Y OTROS, demandantes y apelados,
vs.
ROSARIO COSME DE MENDOZA Y OTROS, demandados y apelantes.
Sres. L. Fernandez Lavadia y Aurelio Palileo en representacion de los apelados.
Sres. Ortega y Ortega en representacion de los apelantes.
DIAZ, J.:
Objeto de litigo entre los demandantes y los demandados en el Juzgado de Primera Instancia de Laguna, fueron
la posesion y custodia de ciertas alhajas que unas seis señoras piadosas del municipio de Pagsanjan, Laguna,
llamadas Martina, Matea, Isabel, Paula, Pia y Engracia apellidadas todas Lavadia, habian mandado
confeccionaren 1880, con dinero propio, para adornor y engalanar con ellas la Imagende Nuestra Señora de
Guadalupe, patrona del mencionado municipio, reteniendo ellas para si, la propiedad de las mismas no cediendo
sino solamente su uso a la referida Imagen, para el indicado fin. Los demandantes y los demandados, con
excepcion de Engracia Lavadia que era una de las seis, son descendientes de las otras cinco primitivas dueñas de
las alhajas de que se trata. Porque la demandada Rosario Cosme de Mendoza que es una de las descendientes
de Paula Lavadia, que tuvo ultimamente la custodia de aquellas, quiso entragar la corona que constituia parte de
las mismas, al Obispo Catolico de Lipa, para que la tuviese en su poder pero sujeta al uso de la Imagen de Nuestra
Señora de Guadalupe, segun la voluntad de sus dueñas, los descendientes de las tres, (Isabel Lavadia, Matea
Lavadia y Martina Lavadia), Engracia Lavadia que son los demandantes, promovieron esta causa en el Juzgado
de su procedencia, para reclamar la posesion y custodia de todas las referidas alhajas. Estas no son otras que las
descritas en el parrafo 3 de la demanda.
El Juzgado decidio la causa en contra de los demandados, declarando que siendo los demandantes dueños de
cuatro sextas partes proindiviso de las alhajas objeto de cuestion, y los demandados, de dos sextas partes
solamente, aquellos tenian perfecto derecho a determiar quien debia encargarse de su custodia; y que, habiendo
ellos decidido encomendar esta esta a Engracia Lavadia, una de las primitiva dueñas, ordeno que la demandada
Rosario Cosme de Mendoza haga entrega de todas ellas a dicha demandante. Contra esta decision del Juzgado,
interpusieron apelacion los demandados, creyendo que el Juzgado erro (1) al declarar que la apelante Rosario
Cosme de Mendoza, y sus anticesores en la posesion de las referidas alhajas, no actuaron sino solamente como
depositarios, y no fiduciarios; (2) al declarar que los apelados son dueños de cuatro sextas partes de aquellas, y
que les compete por dicha razon ejercer el derecho de designar a la persona a quien encomendar sucustodia; (3)
al dejar de declarar que la apelante Rosario Cosme de Mendoza, siendo condueña y fiduciaria de dichas alhajas
no puede ser privada de su administracion y custodia, excepto por razones que le incapacitan para ello, cuales
son la de ejecutar actos contrarios a la voluntad de sus primitivas dueñas, y la de disponer de las mencionadas
alhajas a su antojo; (4) al dejar de declarar que Pia Lavadia y sus descendientes, hasta llegar a Rosario Cosme de
Mendoza, que habian tenido la custodia y posesion de las referidas alhajas, han desempeñado con fidelidad su
cometido; y finalmente (5) al denegarles su peticion para una nueva vista.
Para tener una idea cabal de los hechos, expongamoslos a continuacion, siguiendo el relato que de los mismos
hace el Juzgado a quo en su decision apelada, ya que no los discuten ni los apelantes ni los apelados:
El objeto de las causa son las joyas de la imagen de la Virgen de Ntra. Sra. De Guadalupe, en el
municipio de Pagsanjan, Laguna, y consisten en una corona de oro incrustado con diamantes y
brillantes, una gargantilla de diamentes y brillantes, un cinturon incrustado tambien con brillantes y
diamantes, un collar de oro tambien completamente incrustado con brillantes, una pulsera de oro
incrustado con brillantes y diamentes, una plancha de plata dorada en donde se colocan las joyas
arriba mencionadas, y otras vairas piezas de oro o de plata dorada para la decoracion de las
indumentarias de dicha imagen de Ntra. Sra. de Guadalupe. Todas estas joyas estan actualmente
depositadas bajo llave en el Banco de las Islas Filipinas pues alli las habia depositado la demandada
Rosario Cosme de Mendoza.
La corona y las joyas arriba descritas fueron confeccionadas hacia el año 1880 a costa de seis damas
residentes del municipio de Pagsanjan, Laguna. Ellas eran las hermanas Paula Lavadia y Pia Lavadia, las
hermanas Martina Lavadia y Matea Lavadia, y las hermanas Isabel Lavadia y Engracia Lavadia. Estas
señoras contribuyeron alhajas que ellas tenian para la confecion de la corona y con ellasse
confeccionaron las joyas arriba descritas, contribuyendo tambien el dinero con que se costeo la
confecion de las mismas. Todas estas señoras y han fallecido, con excepcion de la demandante Doña
Engracia Lavadia Vda. De Fernandez. Los otros demandantes son los herederos legales de Isabel
Lavadia, Matea Lavadia y Martina Lavadia, mientras que la demandada Rosario Cosme de Mendoza y
sus codemandados son herederos legitimos y descendientes de Paula Lavadia.
La corona y las joyas se mandaron confeccionar para el uso de la patrona titular del municipio de
Pagasanjan, Ntra.Sra. de Guadalupe. Cuando ya se habian terminado de confeccionar, sus duenas
convinieron en que dichas joyas se quedarian con la contribuyente Pia Lavadia. Esta tuvo bajo su
custodia dichas joyas hasta su muerte en 1882, cuando su hermana Paula Lavadia le sucedio en la
custodia de las mismas. A la muerte de paula Lavadia, de sucedio en el cuidado, conservacion y
custodia de dichas joyas sumarido Pedro Rosales, y muerto este, su hija Paz Rosales, a su vez le sucedio
en dicha custodia, conservacion y cuidado. A la muerte de Paz Rosales, la corona y las joyas pasaron a
la custodia de su marido Baldomero Cosme. Despues de Baldomero Cosme, dichas joyas pasaron a
Manuel Soriano quien, a su vez, fue sucedido en la custodia, conservacion y administracion por la aqui
demandada Rosario Cosme de Mendoza. Todos los años desde 1880 hasta la fecha, las joyas en
cuestion se usaban para decorar la imagen de Ntra. Sra. de Guadalupe en Pagsanjan, y ninguno de los
que han estado guardando o custodiando dichas joyas habia pretendido poseerlas como dueño
exclusivo. La demandada Rosario Cosme de Mendoza y sus codemandados no pretenden ser dueños
de las referidas alhajas. En efecto, en el intestado del finado Baldomero Cosme, actuacion especial No.
5494 de este Juzgado de Primera Instancia, dicha demandada y sus codemandados han manifestado al
Juzgado de que nunca han tenido pretensiones de reclamar el dominio de dichas joyas ni parte alguna
de las mismas. (Veanse Exhibitos B-2 by B-3.)
El 9 de febrero de 1938, la demandada Rosario Cosme de Mendoza, en su capacidad de administradora
del intestado del finado Baldomero Cosme, notifico a todas las personas interesadas en dichas joyas que
queria hacer entrega formal de dichas joyas al Sr. Obispo de Lina el dia sabado siguiente, o sea, el 12 de
febrero de 1938, informandolas que presenciaran el acto de la entrega (Vease Exhibito 4). En efecto, el
12 de febrero de 1938, la demandada y su esposo hicieron entrega formal de las joyas, otorgando el
documento correspondiente a dicho efecto, documento quese presento como Exhibit E de los
demandantes y 2 de los demandados. No estando los demandantes conformes con dicha entrega, unas
seis personas y las demandantes en esta causa otorgaron un documento, designando a la demandante
Engracia Lavadia como recamadora, quien tendria a su cuidado la corona y las alhajas en cuestion
(Vease Exhibito 3). Habiendo surgido la cuestion de quien debe tener bajo su custodia la corona y las
joyas en cuestion, y habiendo llegado este hecho a conocimiento del Obispo de Lipa, este, a su vez, en
21 de junio de 1938, otorgo una escritura renunciandola custodia y administracion de dichas corona y
alhajas (Veanse Exhibito D de los demandantes y 1 de los demandados).
Fundandose en los hechos relatados, el Juzgado declaro que el contrato habido entre las primitivas dueñas de las
alhajas en litigio y las primeras de ellas que tuvieron la custodia de las mismas, fue el de deposito, segun queda de
finido esta contrato en los articulos 1758 y siguientes del Codigo Civil. Pia Lavadia primeramente, y despues Paula
Lavadia y los descendientes de esta ultima siendo una de ellos la apelante Rosario Cosme Mendoza, recibieron y
poseyeron, unos despues de otros, las referidas, solamente para fines de custodia; pues, como lo hace resaltar el
Juzgado en su decision, ni aquellas ni los ultimos usaron las mismas para su propio beneficio. Si fue en virtud de un
contrato de deposito como fueron recibidas las alhajas objeto de cuestion, primeramente por Pia y Paula, y
despues por los descendientes de la ultima incluyendo la apelante Rosario Cosme de Mendoza, es claro que hay
la obligacion de parte de esta de restituir las mismas a sus dueños en cuanto las reclamen. Lo dispone asi el
articulo 1766 del Codigo Civil que dice:
El depositario esta obligado a guardar la cosa y restuirla, cuando le sea pedida, al depositante, o a sus
causa habientes, o a la persona que hubiese sido designada en el contrato. Su responsabilidad en
cuanto a la guarda y la perdida de la cosa, se regira por lo dispuesto en el tit. I de este libro.
La restitucion debe hacerse con todos los frutos y las accesiones de la cosa depositada, si los tiene, sin que le sea
dado al depositario retenerla, como comenta Sanchez Roman, (IV Sanchez Roman, 885), aun bajo el prexto de
obtener compensacion de otros creditos o de indemnizarse de gastos hechos para su conservacion.
Las dueñas primitavas de las alhajas de que se trata, convinieron en encomendar la custodia de las mismas a
algunasde ellas, reservandose experesamente para si su propiedad. Esto viene a demostrar que la teoria de los
apelantes de que el contrato que aquellas tuvieron no es de deposito por que despues de todo, como dicen, no
pueden considerarse las alhajas como de pertenencia ajena con respecto a Rosario Cosme de Mendoza, porque
ella desciende de una de susprimitivas dueñas, no tiene fuerza, porque aun entre comuneros de una cosa, uno de
ellos puede ser depositario, y cuando lo es, esta sujeto a las mismas obligaciones impuestas por la ley a todo
depositario, respecto a la conservacion de la cosa con el cuidado, diligencia e interes de un buen padre de
familia.
Joint owner. The fact that the depositary is a joint owner of the res does not alter the degree of diligence
required of him. (18 C.J., 570).
Los apelados son descendientes y herederos legales de Isabel Lavadia, Matea Lavadia y Martina Lavadia; y
Engracia Lavadia, a quien designaron par hacerse cargo de la custodia de las alhajas objeto de cuestion, es una
de las primitivas dueñas de las mismas; y los apelantes son a su vez los descendientes y herederos de Pia Lavadia y
PaulaLavadia. No constando en ninguna parte due las seis primitivasdueñas no contibuyeron en la confeccion o
adquisicion de las alhajas tantas veces mencionadas, en la misma proporcion, la conclusion mas razonable es — y
esto sostenido por una presuncion de ley, (Art, 393, Codigo Civil) —, que todas ellas prorratearon el costa de las
mismas pagando cada una, una cuota iqual. Si esto es cierto, entonces debemos aceptar la conclusion del
Juzgado de que los apelados son dueños de cuatro sextas partes de dicha alhajas, y quelos apelantes no lo son
sino solamente de las dos sextas partesrestantes. Por consiquiente, habiendo decidido la mayoria que la
constituyen los apelados, encomendar la custodia y administracion de dichas alhajas para poder dar fiel
cumplimiento a la voluntad de sus primitivas dueñas, a la apelada Engracia Lavadia, la unica superviviente de las
mismas, su decision debe respetarse, porque para la administracion y mejor disfrute de la cosa comun, segun el
articulo 398 del Codigo Civil, son obligatorios los acuerdos de la mayoria de los participes.
El argumento de que Rosario Cosme de Mendoza y sus antecesores han estado desempeñando con fidelidad su
cometidocomo depositarios, no arguye en favor de la proposicion de que no se le debe retirar el deposito, porque
el contrato de deposito es tal que permite al depositante retirar del depositario la cosa depositada, en cualquier
momento que quisiese, sobre todo, cuando el ultimo, como en el caso de Rosario Cosme de Mendoza, ha
ejecutado un acto contrario al encargo recibido, encomendando o tratando de encomendar a otro, la custodia
y administracion de la cosa depositada, por su propia cuenta y sin el consentimiento de los depositantes o sus
herederos.
No habiendo hallado error alguno en la decision apelada del Juzgado a quo, por la presente, la confirmamos,
condenando a los apelantes a pagar las costas. Asi se ordena.
 July 12, 2017
G.R. No. 213192
TERESA R. IGNACIO, Petitioner
vs.
RAMON REYES, FLORENCIO REYES, JR., ROSARIO R. DU and CARMELITA R. PASTOR, Respondents
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari filed by petitioner Teresa R. Ignacio (Teresa) challenging the
Decision1 and Resolution,2 dated March 27, 2014 and June 27, 2014, respectively, of the Court of Appeals (CA),
which annulled and set aside the Orders dated April 13, 2004 and June 14, 2012 of the Regional Trial Court (RTC) of
Pasig City, Branch 151.
The facts follow:
On July 11, 1967, Angel Reyes (Angel) and Oliva3 R. Arevalo (Oliva) filed before the then Court of First Instance of
Rizal (now RTC of Pasig City, Branch 151) (intestate court) a Petition4 for Letters of Administration of the Estate of their
father Florencio Reyes, Sr. (Florencio Sr.) who died on June 23, 1967, and enumerated therein the surviving heirs,
namely: Oliva, Francisca Vda. de Justiniani (Francisca), Angel, Amparo R. Avecilla (Amparo), Ramon Reyes
(Ramon), Teresa, Rosario R. Du (Rosario), Jose Reyes (Reyes), Soledad Reyes (Soledad), Carmelita5 R. Pastor
(Carmelita), and Florencio Reyes, Jr. (Florencio Jr.). On July 15, 1967, the intestate court appointed Oliva as the
special administratrix of the estate of Florencio Sr. (Florencio Sr. estate), and then as the regular administratrix in an
Order dated November 23, 1967.6 Florencio, Jr. replaced Oliva in 1982. Thereafter, Teresa became the administratrix
of the Florencio Sr. estate on August 8, 1994.7
On December 5, 1994, Teresa executed a lease contract over a 398 square meters (sq. m.) parcel of land located
at Magsaysay Avenue, Baguio City covered by Transfer Certificate of Title (TCT) No. T-59201 (Magsaysay property) in
favor of Gonzalo Ong, Virginia Lim, Nino Yu, Francisco Lim and Simona Go.8 In an Order9 dated July 15, 1996, the
intestate court approved the lease contract upon Teresa's motion dated June 4, 1996.
Likewise, on September 26, 1996, the intestate court allowed Teresa to enter into a lease contract over the parcel of
land located at ·session Road, Baguio City with a total area of 646 sq. m. covered by TCT No. T-26769 (Session Road
property) to Famous Realty Corporation (FRC).10Thus, on October 29, 1996, Teresa leased the Session Road property
to FRC for the period of July 1, 1996 to June 30, 2003, with a monthly rental of ₱135,000.00.11
Sometime in January 1997, Teresa also leased the properties located at Loakan Road, Baguio City covered by TCT
Nos. T-26770 and T-26772 (Loakan and Military Cut-off properties), in favor of ATC Wonderland, Inc. and,
subsequently, to Gloria de Guzman and Sonshine Pre-School for a period often years, effective September 1, 1996
to August 31, 2006.12
On September 25, 2001, herein respondents Ramon, Florencio Jr., Rosario and Carmelita, and the Heirs of Amparo,
Intestate Estate of Soledad, Jose and Intestate Estate of Angel (plaintiffs) filed before the RTC of Baguio City, Branch
3 (Baguio RTC), three complaints for partition, annulment of lease contract, accounting and damages with prayer
for the issuance of a writ of preliminary injunction against Teresa and the lessees of the subject Baguio properties.13
The plaintiffs alleged in their Complaints14 that, with the exception of the lessees, the parties and the Florencio Sr.
estate own one-tenth (1/10) of each of the Session Road, Loakan and Military Cut-off, and Magsaysay properties.
They claimed that Teresa misrepresented that the Florencio Sr. estate is the sole owner of the properties and leased
the same to the other parties without their conformity. They also asserted in one of their complaints that the
Florencio Sr. estate is different from the Heirs of Florencio Sr. and Heirs of Salud.
They averred that, as co-owners, they have not received their share in the monthly rentals of the properties
aforementioned due to Teresa's failure to duly account for the same. Thus, they are asking for the partition of the
properties, for the accounting of all the rentals, income or profits derived, and deliver the same to the plaintiffs, for
the annulment of the lease contracts and order the lessees to vacate the premises, and for the payment of
damages.15
Thereafter, the Baguio RTC directed and commissioned a team of auditors with Leticia Clemente as the head
accountant to conduct an accounting of the properties. Based on the Report,16 Teresa, as administratrix of the
Florencio Sr. estate, had a total cash accountability amounting to Fifteen Million Two Hundred Thirty-Eight Thousand
Sixty-Six Pesos and Fifty-One Centavos (₱15,238,066.51). In an Order17 dated August 27, 2003, the Baguio RTC
manifested that it shall await a Request Order from the intestate court regarding the possible distribution of the
subject properties.18
Subsequently, on January 19, 2004, respondents and the others filed a motion19 before the intestate court praying
for the issuance of an order allowing the distribution of the heirs' aliquot shares in the co-owned properties' net
income, and the partition of the said properties by the Baguio RTC. However, the intestate court denied the motion
in an Order20 dated April 13, 2004, a portion of which reads:
x x x This Court cannot allow the Baguio Court to partition the property of the estate because this Court already has
jurisdiction over the matter. In fact, this Court is wondering why actions for partition are being entertained in other
jurisdictions when such can be readily addressed by this Court as an estate court.
WHEREFORE, finding no merit in the instant motion, the Court hereby DENIES the same.
SO ORDERED.21
In an Order dated June 14, 2012, the intestate court denied respondents' motion for reconsideration dated May 12,
2004, thus:
Thus finding no sufficient reasons to reverse and set aside this court's Order dated April 13, 2004 considering the
pendency before this court of the other incidents involving the Baguio properties including the sale of Session Road
property covered by TCT No. 26769 and even the distribution of the proceeds of the sale thereof with hearings
conducted on the Financial Report (Re: Proceeds of the Sale of the Property at Session Road in Baguio City), and
recently with the filing of the Proposed Project of Partition/ Amended Proposed Project of Partition, as such, the
Motion for Reconsideration dated May 12, 2004 is DENIED.
The continuation of presentation of evidence for the ·Heirs of Carmelita Clara Pastor et. (sic) al. re: Removal of
Adminstratix/ Motion to Liquidate and Reimburse Cash Advances is previously set on August 15, 2012 at 1:30 in the
afternoon.
SO ORDERED.22
Thereafter, the respondents filed before the CA a petition for certiorari assailing the Orders dated April 13, 2004 and
June 14, 2012 of the intestate court disallowing the partition of the Baguio properties.
In a Decision dated March 27, 2014, the CA granted the petition and annulled and set aside the assailed Orders of
the intestate court. The dispositive portion of the Decision states:
WHEREFORE, the instant Petition is GRANTED. The Assailed Orders of the Regional Trial Court of Pasig City, Branch
151, dated April 13, 2004 and June 14, 2012 are ANNULLED and SET ASIDE. Petitioners' motion to allow partition and
distribution of shares over properties Co-Owned by the Estate and the Heirs [l]ocated in Baguio City, is GRANTED.
On the other hand, the Regional Trial Court of Baguio City, Branch 3, before which court Special Civil Actions Nos.
5055-R, 5056-R, and 5057-R are pending, is DIRECTED to partition the Baguio Properties among the registered co-
owners thereof.
SO ORDERED.23
Upon denial of her motion for reconsideration, Teresa filed before this Court the instant petition raising the following
issues:
I. THERE IS AN APPEAL OR OTHER PLAIN, SPEEDY AND [ADEQUATE] REMEDY IN THE ORDINARY COURSE OF LAW
[AVAILABLE] TO THE RESPONDENTS.
II. RESPONDENTS ARE, IN EFFECT, ASKING THE TRIAL COURT TO VIOLATE THE RULES OF COURT.
III. IN LEGAL CONTEMPLATION, THE CHALLENGED ORDERS WERE NOT ISSUED WITH GRAVE ABUSE OF DISCRETION.
The Court finds the instant petition without merit.
Teresa argues that there is an appeal or other plain, speedy and adequate remedy in the ordinary course of law
available. She maintains that the intestate court asserted its jurisdiction and authority over the subject properties
and proceeded to conduct hearings to resolve the issues of accounting, payment of advances, and distribution of
assets and the proceeds of the sale of the estate properties. The Baguio R TC opted to defer and not to proceed
with the cases. Thus, it is logical and proper that the respondents ask the Baguio RTC to proceed with the case and
then appeal the same if denied.24 Teresa further avers that it is not disputed that the obligations enumerated in
Section 1,25 Rule 90 of the Rules of Court has not yet been fully paid. Thus, it would be premature for the trial court to
allow the advance distribution of the estate. A partial and premature distribution of the estate may only be done
upon posting of a bond, conditioned upon the full payment of the obligations, which was not done in the present
case.
We note, however, that in her Partial Motion to Dismiss26 dated July 1, 2016 before this Court, Teresa now agrees with
the findings of the CA that the Magsaysay property is co-owned by the parties, and should not be covered by the
estate proceedings.27
As a rule, a petition for certiorari under Rule 65 of the Rules of Court is valid only when the question involved is an
error of jurisdiction, or when there is grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of the court or tribunals exercising quasi-judicial functions.28 In this case, the propriety of the special civil action for
certiorari as a remedy depended on whether the assailed orders of the RTC were final or interlocutory in nature.29
This Court has distinguished the interlocutory and final orders, as follows:
A "final" judgment or order is one that finally disposes of a case, leaving nothing more to be done by the Court in
respect thereto, e.g., an adjudication on the merits which, on the basis of the evidence presented at the trial,
declares categorically what the rights and obligations of the parties are and which party is in the right~ or a
judgment or order that dismisses an action on the ground, for instance, of res judicata or prescription. Once
rendered, the task of the Court is ended, as far as deciding the controversy or determining the rights and liabilities of
the litigants is concerned. Nothing more remains to be done by the Court except to await the parties' next move
(which among others, may consist of the filing of a motion for new trial or reconsideration, or the taking of an
appeal) and ultimately, of course, to cause the execution of the judgment once it becomes "final" or, to use the
established and more distinctive term, "final and executory."
xxx xxx xxx
Conversely, an order that does not finally dispose of the case, and does not end the Court's task of adjudicating the
parties' contentions and determining their rights and liabilities as regards each other, but obviously indicates that
other things remain to be done by the Court, is "interlocutory" e.g., an order denying a motion to dismiss under Rule
16 of the Rules, or granting a motion for extension of time to file a pleading, or authorizing amendment thereof, or
granting or denying applications for postponement, or production or inspection of documents or things, etc. Unlike
a "final" judgment or order, which is appealable, as above pointed out, an "interlocutory" order may not be
questioned on appeal except only as part of an appeal that may eventually be taken from the final judgment
rendered in the case.30
The assailed April 13, 2004 and June 14, 2012 Orders denying respondents' motion to allow the distribution of the
estate's and co-owners' shares in the subject properties were interlocutory. This is because such denial was not a
final determination of their alleged co-ownership. In fact, the intestate court merely asserted its jurisdiction over the
properties which were allegedly co-owned with the Florencio Sr. estate.
Jurisprudence teaches that jurisdiction of the trial court as an intestate court is special and limited as it relates only
to matters having to do with the probate of the will and/or settlement of the estate of deceased persons, but does
not extend to the determination of questions of ownership that arise during the proceedings. This is true whether or
not the property is alleged to belong to the estate.31
Furthermore, the doctrine that "in a special proceeding for the probate of a will, the question of ownership is an
extraneous matter which the probate court cannot resolve with finality" applies with equal force to an intestate
proceeding as in the case at bar.32 Thus:
"[A] probate court or one in charge of proceedings whether testate or intestate cannot adjudicate or determine
title to properties claimed to be a part of the estate and which are claimed to belong to outside parties. All that the
said court could do as regards said properties is to determine whether they should or should not be included in the
inventory or list of properties to be administered by the administrator. If there is not dispute, well and good, but if
there is, then the parties, the administrator, and the opposing parties have to resort to an ordinary action for a final
determination of the conflicting claims of title because the probate court cannot do so."33
Corollarily, in the case of Agtarap v. Agtarap, et al. 34 the Court enumerated the instances when the intestate
court may pass upon the issue of ownership, to wit:
However, this general rule is subject to exceptions as justified by expediency and convenience.
First, the probate court may provisionally pass upon in an intestate or a testate proceeding the question of inclusion
in, or exclusion from, the inventory of a piece of property without prejudice to the final determination of ownership
in a separate action. Second, if the interested parties are all heirs to the estate, or the question is one of collation or
advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third
parties are not impaired, then the probate court is competent to resolve issues on ownership. Verily, its jurisdiction
extends to matters incidental or collateral to the settlement and distribution of the estate, such as the determination
of the status of each heir and whether the property in the inventory is conjugal or exclusive property of the
deceased spouse.35
From the foregoing, this Court holds that the general rule on the limited jurisdiction of the RTC as intestate court is
applicable in Special Civil Action Nos. 5.055-R and 5056-R. As to the Magsaysay property in Special Civil Action No.
5057-R, it is evident from the certificate of title that the rights of parties other than the heirs of Florencio Sr. will be
impaired should the intestate court decide on the ownership of the property.
We note that respondents presented certificates of title of the properties registered under their names and the
Florencio Sr. estate, and their respective shares.36 As pronounced in Bolisay v. Judge Alcid:37
In regard to such incident of inclusion or exclusion, We hold that if a property covered by Torrens Title is involved, the
presumptive conclusiveness of such title should be given due weight, and in the absence of strong compelling
evidence to the contrary, the holder thereof should be considered as the owner of the property in controversy until
his title is nullified or modified in an appropriate ordinary action, particularly, when as in the case at bar, possession
of the property itself is in the persons named in the title.38
As such, they are considered the owners of the properties until their title is nullified or modified in an appropriate
ordinary action. The co-ownership of the said properties by virtue of the certificates of title is a common issue in the
complaints for partition filed before the Baguio RTC. Thus, the intestate court committed grave abuse of discretion
when it asserted jurisdiction over the subject properties since its jurisdiction relates only to matters having to do with
the settlement of the estate of deceased persons. Any decision that the intestate court would render on the title of
the properties would at best be merely provisional in character, and would yield to a final determination in a
separate action.
An action for partition under Rule 69 of the Rules of Court is typically brought by a person claiming to be the owner
of a specified property against a defendant or defendants whom the plaintiff recognizes to be his co-owners,39 and
is premised on the existence or non-existence of co-ownership between the parties.40 As discussed in Lim De Mesa
v. Court of Appeals,41the determination of the existence of co-ownership is the first stage to accord with the remedy
of judicial partition, thus:
The first stage of an action for judicial partition and/or accounting is concerned with the determination of whether
or not a co-ownership in fact exists and a partition is proper, that is, it is not otherwise legally proscribed and may be
made by voluntary agreement of all the parties interested in the property. This phase may end in a declaration that
plaintiff is not entitled to the desired partition either because a co-ownership does nut exist or a partition is legally
prohibited. It may also end, on the other hand, with an adjudgment that a co-ownership does in truth exist, that
partition is proper in the premises, and that an accounting of rents and profits received by the defendant from the
real estate in question is in order. In the latter case, "the parties may, if they are able to agree, make partition
among themselves by proper instruments of conveyance, and the court shall confirm the partition so agreed upon
by all the parties." In either case, whether the action is dismissed or partition and/or accounting is decreed, the
order is a final one and may be appealed by any party aggrieved thereby.
In this regard, the Baguio RTC shirked from its duty when it deferred the trial to await a request order from the
intestate court regarding the possible distribution. In fact, it has not yet made a definite ruling on the existence of
co-ownership. There was no declaration of entitlement to the desired partition either because a co-ownership exists
or a partition is not legally prohibited. As this Court is not a trier of facts, it is for the trial court to proceed and
determine once and for all if there is co-ownership and to partition the subject properties if there is no legal
prohibition. It is also best for the Baguio RTC to settle whether the respondents are claiming ownership over the
properties by virtue of their title adverse to that of their late father and his estate and not by any right of inheritance.
WHEREFORE, the petition for review on certiorari filed by petitioner Teresa R. Ignacio is hereby DENIED. The Decision
and Resolution; dated March 27, 2014 and June 27, 2014, respectively, of the Court of Appeals in CA-G.R. SP No.
127151 are hereby AFFIRMED with MODIFICATION, such that the Regional Trial Court of Baguio City, Branch 3 is
DIRECTED to RESUME trial on the merits in Special Civil Action Nos. 5055-R, 5056-R, and 5057-R to determine the
ownership of the subject properties and to partition as co-owners, if proper.
SO ORDERED.

G.R. No. 193551 November 19, 2014
HEIRS OF GREGORIO LOPEZ, represented by Rogelia Lopez, et al., Petitioners,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES [Now substituted by Philippine Investment Two (SPVAMC), Inc.],
Respondents.
DECISION
LEONEN, J.:
This case involves the application of the doctrine on innocent purchaser or mortgagee for value. It also involves the
application of the doctrines on sales by persons who are not owners of the property.
This is a Rule 45 petition1 filed on October 15, 2010, assailing the Court of Appeals May 8, 2009 decision2 and August
16, 2010 resolution.3 The Court of Appeals reversed and set aside the Regional Trial Court's December 27, 2005
decision,4 which ordered the nullification of the affidavit of self-adjudication executed by Enrique Lopez, and the
documents relating
to the sale and mortgage of the property to respondent Development Bank of the Philippines.
Gregoria Lopez owned a 2,734-square-meter property in Bustos, Bulacan.5 She died on March 19, 19226 and was
survived by her three sons: Teodoro Lopez, Francisco Lopez, and Carlos Lopez.7 Tax Declaration No. 613 was issued
under the names of Teodoro, Francisco, and Carlos.8
Teodoro, Francisco, and Carlos died.9 Only Teodoro was survived by children: Gregorio, Enrique, Simplicio, and
Severino.10
Petitioners in this case are Simplicio substituted by his daughter Eliza Lopez, and the heirs of Gregorio and Severino.11
Enrique is deceased.12
Petitioners discovered that on November 29, 1990, Enrique executed an affidavit of self-adjudication declaring
himself to be Gregoria Lopez’s only surviving heir, thereby adjudicating upon himself the land in Bulacan.13 He sold
the property to Marietta Yabut.14
Petitioners demanded from Marietta the nullification of Enrique’s affidavit of self-adjudication and the deed of
absolute sale.15 They also sought to redeem Enrique’s one-fourth share.16 Marietta, who was already in possession of
the property, refused.17
Sometime in 1993, Marietta obtained a loan from Development Bank of the Philippines (DBP) and mortgaged the
property to DBP as security.18 At the time of the loan, the property was covered by Tax Declaration No. 18727, with
the agreement that the land shall be brought under the Torrens system.19 On July 26, 1993, an original certificate of
title was issued in Marietta’s name.20 Marietta and DBP "executed a supplemental document dated 28 February
1995 placing the subject [property]within the coverage of the mortgage."21 The mortgage was annotated to the
title.22
Sometime between 1993 and 1994, petitioners filed a complaint23 and an amended complaint24 with the Regional
Trial Court for the annulment of document, recovery of possession, and reconveyance of the property. They prayed
that judgment be rendered, ordering the annulment of Enrique’s affidavit of self-adjudication, the deed of sale
executed by Enrique and Marietta, and the deed of real estate mortgage executed by Marietta in favor of DBP.25
Petitioners also prayed for the reconveyance of their three-fourth share in the property, their exercise of their right of
redemption of Enrique’s one-fourth share, as well as attorney’s fees and costs of suit.26
Petitioners caused the annotation of a notice of lis pendens at the back of the original certificate of title.27 The
annotation was inscribed on June 27, 1994.28
Marietta failed to pay her loan to DBP.29 "DBP instituted foreclosure proceedings on the . . . land."30 It was "awarded
the sale of the [property] as the highest bidder."31 "The Certificate of Sale was registered with the Register of Deeds .
. . on 11 September 1996."32 Marietta failed to redeem the property.33 The title to the property was "consolidated in
favor of DBP."34
On December 27, 2005, the Regional Trial Court ruled in favor of petitioners.35 The Regional Trial Court found that the
affidavit of self-adjudication and the deed of absolute sale did not validly transfer to Marietta the title to the
property.36 Enrique could not transfer three-fourths of the property since this portion belonged to his co-heirs.37 The
Regional Trial Court also found that Marietta was not an innocent purchaser for value because when the deed of
absolute sale was executed, the property was only covered by a tax declaration in the name of the heirs of
Gregoria Lopez,38 thus:
[Marietta] should have looked further into the veracity of vendor Enrique Lopez’ claim of ownership over the subject
property considering that he has not presented her any other proof of his ownership when the said Deed of
Absolute Sale was executed other than his mere allegation of ownership thereof.39
Hence, the issuance of the original certificate of title would not protect Marietta. Title is not vested through a
certificate.40 At best, Marietta’s ownership over the subject property would cover only Enrique’s share.41
The Regional Trial Court also found that DBP was not a mortgagee in good faith because at the time of the
execution of the mortgage contract, a certificate of title was yet to be issued in favor of Marietta.42 Marietta’s title
at that time was still based on a tax declaration.43 Based on jurisprudence, a tax declaration is not a conclusive
proof of ownership.44 The DBP should have exerted due diligence in ascertaining Marietta’s title to the property.45
The Regional Trial Court ordered the nullification of Enrique’s affidavit of self-adjudication, the sale of the three-
fourth portion of the subject property in favor of Marietta, the reconveyance of the three-fourth share of the
property in favor of petitioners, the nullification of the real estate mortgage executed in favor of DBP, and the
surrender of possession of the property to petitioners.46 The trial court also ordered DBP to pay attorney’s fees.
DBP, substituted by Philippine Investment Two (PI Two), appealed to the Court of Appeals.47 The Court of Appeals
reversed the decision of the Regional Trial Court in the decision48 promulgated on May 8, 2009. It held that DBP was
a mortgagee in good faith:
[W]ith the absence of any evidence to show that the DBP was ever privy to the fraudulent execution of the late
Enrique Lopez’ [sic] affidavit of Adjudication over the subject land, the right of the former over the same must be
protected and respected by reason of public policy.49
The dispositive portion of the Court of Appeals’ decision reads:
WHEREFORE, the appeal is GRANTED. The 27 December 2005 Decision of the Regional Trial Court is hereby REVERSED
and SET ASIDE as to defendant-appellant Development Bank of the Philippines and dismissing the complaint against
the latter [now substituted by Philippine Investment Two (SPV-AMC), Inc.]50
The Court of Appeals denied petitioners’ motion for reconsideration on August 16, 2010.51 Petitioners filed a Rule 45
petition52 before this court on October 15, 2010.
The issue in this case is whether the property was validly transferred to Marietta and, eventually, to DBP.
Petitioners argued that the Court of Appeals erred in its application of the doctrine on "innocent purchaser for
value."53 DBP should have exercised diligence in ascertaining Marietta’s claim of ownership since at the time of the
mortgage, the property was only covered by a tax declaration under Marietta’s name.54 As a financial institution of
which "greater care and prudence"55 is required, DBP should not have relied on the face of a certificate of title to
the property.56
On the other hand, DBP’s position, citing Blanco v. Esquierdo,57 was that since its participation in Enrique’s execution
of the affidavit of self-adjudication was not shown on record, it could not have been aware that there was any
irregularity in the sale in favor of Marietta and in her title to the property.58 Moreover, Marietta was in possession of
the property at the time of the contract with DBP.59 Therefore, DBP should enjoy the protection accorded to
innocent purchasers for value.60
We find merit in the petition.
I
Validity of Enrique’s affidavit and the sale to Marietta
We have consistently upheld the principle that "no one can give what one does not have."61 A seller can only sell
what he or she owns, or that which he or she does not own but has authority to transfer, and a buyer can only
acquire what the seller can legally transfer.62
This principle is incorporated in our Civil Code. It provides that in a contract of sale, the seller binds himself to transfer
the ownership of the thing sold, thus:
Art. 1458. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
The seller cannot perform this obligation if he or she does not have a right to convey ownership of the thing. Hence,
Article 1459 of the Civil Code provides:
Art. 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is
delivered.
Title or rights to a deceased person’s property are immediately passed to his or her heirs upon death.63 The heirs’
rights become vested without need for them to be declared "heirs."64 Before the property is partitioned, the heirs are
co-owners of the property.65
In this case, the rights to Gregoria Lopez’s property were automatically passed to her sons — Teodoro, Francisco,
and Carlos — when she died in 1922.66 Since only Teodoro was survived by children, the rights to the property
ultimately passed to them when Gregoria Lopez’s sons died.67 The children entitled to the property were Gregorio,
Simplicio, Severino, and Enrique.
Gregorio, Simplicio, Severino, and Enrique became co-owners of the property, with each of them entitled toan
undivided portion of only a quarter of the property. Upon their deaths, their children became the co-owners of the
property, who were entitled to their respective shares, such that the heirs of Gregorio became entitled to Gregorio’s
one-fourth share, and Simplicio’s and Severino’s respective heirs became entitled to their corresponding onefourth
shares in the property.68 The heirs cannot alienate the shares that do not belong to them. Article 493 of the Civil
Code provides:
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and
he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be
limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.
Since Enrique’s right to the property was limited to his one-fourth share, he had no right to sell the undivided portions
that belonged to his siblings or their respective heirs. Any sale by one heir of the rest of the property will not affect
the rights of the other heirs who did not consent to the sale. Such sale is void with respect to the shares of the other
heirs.
Regardless of their agreement, Enrique could only convey to Marietta his undivided one-fourth share of the
property, and Marietta could only acquire that share. This is because Marietta obtained her rights from Enrique who,
in the first place, had no title or interest over the rest of the property that he could convey.
This is despite Enrique’s execution of the affidavit of self-adjudication wherein he declared himself to be the only
surviving heir of Gregoria Lopez. The affidavit of self-adjudication is invalid for the simple reason that it was false. At
the time of its execution, Enrique’s siblings were still alive and entitled to the three-fourth undivided share of the
property. The affidavit of self-adjudication did not have the effect of vesting upon Enrique ownership or rights to the
property.
The issuance of the original certificate of title in favor of Marietta does not cure Enrique’s lack of title or authority to
convey his co-owners’ portions of the property. Issuance of a certificate of title is not a grant of title over petitioners’
undivided portions of the property.69 The physical certificate of title does not vest in a person ownership or right over
a property.70 It is merely an evidence of such ownership or right.71
Marietta could acquire valid title over the whole property if she were an innocent purchaser for value. An innocent
purchaser for value purchases a property without any notice of defect or irregularity as to the right or interest of the
seller.72 He or she is without notice that another person holds claim to the property being purchased.73
As a rule, an ordinary buyer may rely on the certificate of title issued in the name of the seller.74 He or she need not
look "beyond what appears on the face [of the certificate of title]."75 However, the ordinary buyer will not be
considered an innocent purchaser for value if there is anything on the certificate of title that arouses suspicion, and
the buyer failed to inquire or take steps to ensure that there is no cloud on the title, right, or ownership of the
property being sold.
Marietta cannot claim the protection accorded by law to innocent purchasers for value because the
circumstances do not make this available to her.
In this case, there was no certificate of title to rely on when she purchased the property from Enrique. At the time of
the sale, the property was still unregistered. What was available was only a tax declaration issued under the name
of "Heirs of Lopez."
"The defense of having purchased the property in good faith may be availed of only where registered land is
involved and the buyer had relied in good faith on the clear title of the registered owner."76 It does not apply when
the land is not yet registered with the Registry of Deeds.
At the very least, the unregistered status of the property should have prompted Marietta to inquire further as to
Enrique’s right over the property. She did not. Hence, she was not an innocent purchaser for value. She acquired no
title over petitioners’ portions of the property.
II
Validity of the mortgage
One of the requisites of a valid mortgage contract is ownership of the property being mortgaged.77 Article 2085 of
the Civil Code enumerates the requisites of a mortgage contract: Art. 2085. The following requisites are essential to
the contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfilment of a principal obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;
(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in
the absence thereof, that they be legally authorized for the purpose.
Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their
own property.
Applying this provision and having established that Marietta acquired no valid title or ownership from Enrique over
the undivided portions of the property, this court finds that no valid mortgage was executed over the same
property in favor of DBP. Without a valid mortgage, there was also no valid foreclosure sale and no transfer of
ownership of petitioners’ undivided portions to DBP. In other words, DBP acquired no right over the undivided
portions since its predecessor-in-interest was not the owner and held no authority to convey the property.
As in sales, an exception to this rule is if the mortgagee is a "mortgagee in good faith."78 This exception was
explained in Torbela v. Rosario:
Under this doctrine, even if the mortgagor is not the owner of the mortgaged property, the mortgage contract and
any foreclosure sale arising therefrom are given effect by reason of public policy. This principle is based on the rule
that all persons dealing with property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not
required to go beyond what appears on the face of the title. This is the same rule that underlies the principle of
"innocent purchasers for value." The prevailing jurisprudence is that a mortgagee has a right to rely in good faith on
the certificate of title of the mortgagor to the property given as security and in the absence of any sign that might
arouse suspicion, has no obligation to undertake further investigation. Hence, even if the mortgagor is not the
rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee in good faith is,
nonetheless, entitled to protection.79
DBP claims that it is covered by this exception. DBP is mistaken. The exception applies when, at the time of the
mortgage, the mortgagor has already obtained a certificate of title under his or her name.80 It does not apply
when, as in this case, the mortgagor had yet to register the property under her name.81
The facts show that DBP disregarded circumstances that should have aroused suspicion. For instance, at the time of
the mortgage with DBP, Marietta only had a tax declaration under her name to show that she was the owner of the
property. A tax declaration, by itself, neither proves ownership of property nor grants title. Yet, DBP agreed to
accept the property as security even though Marietta’s claim was supported only by the tax declaration, and a
certificate of title was yet to be issued under her name.
Granting that Marietta was in possession of the property, DBP should have inquired further as to Marietta’s rights
over the property since no certificate of title was issued to her. DBP took the risks attendant to the absence of a
certificate of title. It should bear the burden of checking the ownership as well as the validity of the deed of sale.
This is despite the eventual issuance of a certificate of title in favor of Marietta.
The rule on "innocent purchasers or [mortgagees] for value" is applied more strictly when the purchaser or the
mortgagee is a bank.1âwphi1 Banks are expected to exercise higher degree of diligence in their dealings, including
those involving lands. Banks may not rely simply on the face of the certificate of title.
Thus, in Cruz v. Bancom Finance Corporation,82 this court ruled that:
Respondent . . . is not an ordinary mortgagee; it is a mortgagee-bank. As such, unlike private individuals, it is
expected to exercise greater care and prudence in its dealings, including those involving registered lands. A
banking institution is expected to exercise due diligence before entering into a mortgage contract. The
ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and
indispensable part of its operations.83 (Citations omitted)
DBP failed to exercise the degree of diligence required of banks when it accepted the unregistered property as
security for Marietta’s loan despite circumstances that should have aroused its suspicion.
Citing Blanco v. Esquierdo, DBP argued that since it did not participate in the dealings between Enrique and
Marietta, it should be considered as an innocent mortgagee for value.
Blanco involves an alleged widow of the deceased who adjudicated to herself the deceased’s property and
thereafter mortgaged the property to DBP.84 The brothers and sisters of the deceased filed an action for the
annulment of the affidavit executed by the alleged widow and the cancellation of the certificate of title under her
name.85 The trial court ordered the cancellation of the certificate of title issued to the alleged widow, including the
registration of the mortgage deed.86
In Blanco, this court declared that DBP was a mortgagee in good faith, thus:
The trial court, in the decision complained of, made no finding that the defendant mortgagee bank was a party to
the fraudulent transfer of the land to Fructuosa Esquierdo. Indeed, there is nothing alleged in the complaint which
may implicate said defendant mortgagee in the fraud, or justify a finding that it acted in bad faith. On the other
hand, the certificate of title was in the name of the mortgagor Fructuosa Esquierdo when the land was mortgaged
by her to the defendant bank. Such being the case, the said defendant bank, as mortgagee, had the right to rely
on what appeared in the certificate and, in the absence of anything to excite suspicion, was under no obligation to
look beyond the certificate and investigate the title of the mortgagor appearing on the face of said certificate. (De
Lara, et al. vs. Ayroso, 95 Phil., 185; 50 Off. Gaz., [10] 4838; Joaquin vs. Madrid, et al., 106 Phil., 1060). Being thus an
innocent mortgagee for value, its right or lien upon the land mortgaged must be respected and protected, even if
the mortgagor obtained her title thereto thru fraud.87
DBP's reliance on Blanco is misplaced. In Blanco, the certificate of title had already been issued under the name of
the mortgagor when the property was mortgaged to DBP. This is not the situation in this case.
To reiterate, the protection accorded to mortgagees in good faith cannot be extended to mortgagees of
properties that are not yet registered or registered but not under the mortgagor's name.
Therefore, the Regional Trial Court did not err in ordering the nullification of the documents of sale and mortgage.
Contracts involving the sale or mortgage of unregistered property by a person who was not the owner or by an
unauthorized person are void.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated May 8, 2009 and its resolution
dated August 16, 2010 are reversed and SET ASIDE. The December 27, 2005 decision of the Regional Trial Court is
REINSTATED.
SO ORDERED.
G.R. No. 210252 June 16, 2014
VILMA QUINTOS, represented by her Attorney-in-Fact FIDEL I. QUINTOS, JR.; FLORENCIA I. DANCEL, represented by
her Attorney-in-Fact FLOVY I. DANCEL; and CATALINO L. IBARRA, Petitioners,
vs.
PELAGIA I. NICOLAS, NOLI L. IBARRA, SANTIAGO L. IBARRA, PEDRO L. IBARRA, DAVID L. IBARRA, GILBERTO L. IBARRA,
HEIRS OF AUGUSTO L. IBARRA, namely CONCHITA R., IBARRA, APOLONIO IBARRA, and NARCISO IBARRA, and the
spouses RECTO CANDELARIO and ROSEMARIE CANDELARIO, Respondents.
DECISION
VELASCO, JR., J.:
The Case
Before the Court is a Petition for Review on Certiorari filed under Rule 45 challenging the Decision1 and Resolution2
of the Court of Appeals (CA) in CA-G.R. CV No. 98919 dated July 8, 2013 and November 22, 2013, respectively. The
challenged rulings affirmed the May 7, 2012 Decision3 of the Regional Trial Court (RTC), Branch 68 in Camiling, Tarlac
that petitioners and respondents are co-owners of the subject property, which should be partitioned as per the
subdivision plan submitted by respondent spouses Recto and Rosemarie Candelario.
The Facts
As culled from the records, the facts of the case are as follows:
Petitioners Vilma Quintos, Florencia Dancel, and Catalino Ibarra, and respondents Pelagia Nicolas, Noli Ibarra,
Santiago Ibarra, Pedro Ibarra, David Ibarra, Gilberto Ibarra, and the late Augusto Ibarra are siblings. Their parents,
Bienvenido and Escolastica Ibarra, were the owners of the subject property, a 281 sqm. parcel of land situated
along Quezon Ave., Poblacion C, Camiling, Tarlac, covered by Transfer Certificate Title (TCT) No. 318717.
By 1999, both Bienvenido and Escolastica had already passed away, leaving to their ten (10) children ownership
over the subject property. Subsequently, sometime in 2002, respondent siblings brought an action for partition
against petitioners. The case was docketed as Civil Case No. 02-52 and was raffled to the RTC, Branch 68, Camiling,
Tarlac. However, in an Order4 dated March 22, 2004, the trial court dismissed the case disposing as follows:
For failure of the parties, as well as their counsels, to appear despite due notice, this case is hereby DISMISSED.
SO ORDERED.
As neither set of parties appealed, the ruling of the trial court became final, as evidenced by a Certificate of
Finality5 it eventually issued on August 22, 2008.
Having failed to secure a favorable decision for partition, respondent siblings instead resorted to executing a Deed
of Adjudication6 on September 21, 2004 to transfer the property in favor of the ten (10) siblings. As a result, TCT No.
318717 was canceled and in lieu thereof, TCT No. 390484 was issued in its place by the Registry of Deeds of Tarlac in
the names of the ten (10) heirs of the Ibarra spouses.
Subsequently, respondent siblings sold their 7/10 undivided share over the property in favor of their co-respondents,
the spouses Recto and Rosemarie Candelario. By virtue of a Deed of Absolute Sale7 dated April 17, 2007 executed
in favor of the spouses Candelario and an Agreement of Subdivision8 purportedly executed by them and
petitioners, TCT No. 390484 was partially canceled and TCT No. 434304 was issued in the name of the Candelarios,
covering the 7/10portion.
On June 1, 2009, petitioners filed a complaint for Quieting of Title and Damages against respondents wherein they
alleged that during their parents’ lifetime, the couple distributed their real and personal properties in favor of their
ten (10) children. Upon distribution, petitioners alleged that they received the subject property and the house
constructed thereon as their share. They likewise averred that they have been in adverse, open, continuous, and
uninterrupted possession of the property for over four (4) decades and are, thus, entitled to equitable title thereto.
They also deny any participation in the execution of the aforementioned Deed of Adjudication dated September
21, 2004 and the Agreement of Subdivision. Respondents countered that petitioners’ cause of action was already
barred by estoppel when sometime in 2006, one of petitioners offered to buy the 7/10 undivided share of the
respondent siblings. They point out that this is an admission on the part of petitioners that the property is not entirely
theirs. In addition, they claimed that Bienvenido and Escolastica Ibarra mortgaged the property but because of
financial constraints, respondent spouses Candelario had to redeem the property in their behalf. Not having been
repaid by Bienvenido and Escolastica, the Candelarios accepted from their co-respondents their share in the
subject property as payment. Lastly, respondents sought, by way of counterclaim, the partition of the property.
Docketed as Civil Case No. 09-15 of the RTC of Camiling, Tarlac, the quieting of title case was eventually raffled to
Branch 68 of the court, the same trial court that dismissed Civil Case No. 02-52. During pre-trial, respondents, or
defendants a quo, admitted having filed an action for partition, that petitioners did not participate in the Deed of
Adjudication that served as the basis for the issuance of TCT No. 390484, and that the Agreement of Subdivision that
led to the issuance of TCT No. 434304 in favor of respondent spouses Candelario was falsified.9 Despite the
admissions of respondents, however, the RTC, through its May 27, 2012 Decision, dismissed petitioners’ complaint.
The court did not find merit in petitioners’ asseverations that they have acquired title over the property through
acquisitive prescription and noted that there was no document evidencing that their parents bequeathed to them
the subject property. Finding that respondent siblings were entitled to their respective shares in the property as
descendants of Bienvenido and Escolastica Ibarra and as co-heirs of petitioners, the subsequent transfer of their
interest in favor of respondent spouses Candelario was then upheld by the trial court. The dispositive portion of the
Decision reads:
WHEREFORE, premises considered, the above-entitled case is hereby Dismissed.
Also, defendants-spouses Rosemarie Candelario and Recto Candelario are hereby declared as the absolute
owners of the 7/10 portion of the subject lot.
Likewise, the court hereby orders the partition of the subject lots between the herein plaintiffs and the defendants-
spouses Candelarios.
SO ORDERED.
Aggrieved, petitioners appealed the trial court’s Decision to the CA, pleading the same allegations they averred in
their underlying complaint for quieting of title. However, they added that the partition should no longer be allowed
since it is already barred by res judicata, respondent siblings having already filed a case for partition that was
dismissed with finality, as admitted by respondents themselves during pre-trial.
On July 8, 2013, the CA issued the assailed Decision denying the appeal. The fallo reads: WHEREFORE, premises
considered, the Decision dated May 7, 2012 of the Regional Trial Court of Camiling, Tarlac, Branch 68, in Civil Case
No. 09-15, is hereby AFFIRMED.
SO ORDERED.
Similar to the trial court, the court a quo found no evidence on record to support petitioners’ claim that the subject
property was specifically bequeathed by Bienvenido and Escolastica Ibarra in their favor as their share in their
parents’ estate. It also did not consider petitioners’ possession of the property as one that is in the concept of an
owner. Ultimately, the appellate court upheld the finding that petitioners and respondent spouses Candelario co-
own the property, 30-70 in favor of the respondent spouses.
As regards the issue of partition, the CA added:
x x x Since it was conceded that the subject lot is now co-owned by the plaintiffs-appellants, (with 3/10 undivided
interest) and defendants-appellees Spouses Candelarios (with 7/10 undivided interest) and considering that
plaintiffs-appellants had already constructed a 3-storey building at the back portion of the property, then partition,
in accordance with the subdivision plan (records, p. 378) undertaken by defendants-appellants [sic] spouses, is in
order.10
On November 22, 2013, petitioners’ Motion for Reconsideration was denied. Hence, the instant petition.
Issues
In the present petition, the following errors were raised:
I. THE COURT OF APPEALS MANIFESTLY OVERLOOKED RELEVANT AND UNDISPUTED FACTS WHICH, IF
PROPERLY CONSIDERED, WOULD JUSTIFY PETITIONERS’ CLAIM OF EQUITABLE TITLE.
II. THE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE ORDER OF PARTITION DESPITE THE FACT THAT THE
COUNTERCLAIM FOR PARTITION, BASED ON THE DEED OF ABSOLUTE SALE EXECUTED IN 2007, IS BARRED BY
LACHES.
III. THE COURT OF APPEALS RENDERED A SUBSTANTIALLY FLAWED JUDGMENT WHEN IT NEGLECTED TO RULE
ON PETITIONERS’ CONTENTION THAT THE COUNTERCLAIM FOR PARTITION IS ALSO BARRED BY PRIOR
JUDGMENT, DESPITE ITS HAVING BEEN SPECIFICALLY ASSIGNED AS ERROR AND PROPERLY ARGUED IN THEIR
BRIEF, AND WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY THE DISMISSAL OF THE COUNTERCLAIM.
IV. THE COURT OF APPEALS ERRED WHEN IT ORDERED PARTITION IN ACCORDANCE WITH THE SUBDIVISION
PLAN MENTIONED IN ITS DECISION, IN CONTRAVENTION OF THE PROCEDURE ESTABLISHED IN RULE 69 OF THE
RULES OF CIVIL PROCEDURE.11
To simplify, the pertinent issues in this case are as follows:
1. Whether or not the petitioners were able to prove ownership over the property;
 2. Whether or not the respondents’ counterclaim for partition is already barred by laches or res judicata;
and
3. Whether or not the CA was correct in approving the subdivision agreement as basis for the partition of
the property.
The Court’s Ruling
The petition is meritorious in part.
Petitioners were not able to prove equitable title or ownership over the property
Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to real
property.12 For an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff
or complainant has a legal or equitable title to or interest in the real property subject of the action; and (2) the
deed, claim, encumbrance, or proceeding claimed to be casting cloud on the title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or efficacy.13 In the case at bar, the CA
correctly observed that petitioners’ cause of action must necessarily fail mainly in view of the absence of the first
requisite.
At the outset, it must be emphasized that the determination of whether or not petitioners sufficiently proved their
claim of ownership or equitable title is substantially a factual issue that is generally improper for Us to delve into.
Section 1, Rule 45 of the Rules of Court explicitly states that the petition for review on certiorari "shall raise only
questions of law, which must be distinctly set forth." In appeals by certiorari, therefore, only questions of law may be
raised, because this Court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during the trial.14 Although there are exceptions15 to this general rule
as eloquently enunciated in jurisprudence, none of the circumstances calling for their application obtains in the
case at bar. Thus, We are constrained to respect and uphold the findings of fact arrived at by both the RTC and the
CA.
In any event, a perusal of the records would readily show that petitioners, as aptly observed by the courts below,
indeed, failed to substantiate their claim. Their alleged open, continuous, exclusive, and uninterrupted possession of
the subject property is belied by the fact that respondent siblings, in 2005, entered into a Contract of Lease with the
Avico Lending Investor Co. over the subject lot without any objection from the petitioners.16 Petitioners’ inability to
offer evidence tending to prove that Bienvenido and Escolastica Ibarra transferred the ownership over the property
in favor of petitioners is likewise fatal to the latter’s claim. On the contrary, on May 28, 1998, Escolastica Ibarra
executed a Deed of Sale covering half of the subject property in favor of all her 10 children, not in favor of
petitioners alone.17
The cardinal rule is that bare allegation of title does not suffice. The burden of proof is on the plaintiff to establish his
or her case by preponderance of evidence.18 Regrettably, petitioners, as such plaintiff, in this case failed to
discharge the said burden imposed upon them in proving legal or equitable title over the parcel of land in issue. As
such, there is no reason to disturb the finding of the RTC that all 10 siblings inherited the subject property from
Bienvenido and Escolastica Ibarra, and after the respondent siblings sold their aliquot share to the spouses
Candelario, petitioners and respondent spouses became co-owners of the same.
The counterclaim for partition is not barred by prior judgment
This brings us to the issue of partition as raised by respondents in their counterclaim. In their answer to the
counterclaim, petitioners countered that the action for partition has already been barred by res judicata.
The doctrine of res judicata provides that the judgment in a first case is final as to the claim or demand in
controversy, between the parties and those privy with them, not only as to every matter which was offered and
received to sustain or defeat the claim or demand, but as to any other admissible matter which must have been
offered for that purpose and all matters that could have been adjudged in that case.19 It precludes parties from
relitigating issues actually litigated and determined by a prior and final judgment.20 As held in Yusingco v. Ong Hing
Lian:21
It is a rule pervading every well-regulated system of jurisprudence, and is put upon two grounds embodied in
various maxims of the common law; the one, public policy and necessity, which makes it to the interest of the state
that there should be an end to litigation — republicae ut sit finis litium; the other, the hardship on the individual that
he should be vexed twice for the same cause — nemo debet bis vexari et eadem causa. A contrary doctrine
would subject the public peace and quiet to the will and neglect of individuals and prefer the gratitude
identification of a litigious disposition on the part of suitors to the preservation of the public tranquility and
happiness.22
The rationale for this principle is that a party should not be vexed twice concerning the same cause. Indeed, res
judicata is a fundamental concept in the organization of every jural society, for not only does it ward off endless
litigation, it ensures the stability of judgment and guards against inconsistent decisions on the same set of facts.23
There is res judicata when the following requisites are present: (1) the formal judgment or order must be final; (2) it
must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or
stipulations submitted by the parties at the trial of the case; (3) it must have been rendered by a court having
jurisdiction over the subject matter and the parties; and (4) there must be, between the first and second actions,
identity of parties, of subject matter and of cause of action.24
In the case at bar, respondent siblings admit that they filed an action for partition docketed as Civil Case No. 02-52,
which the RTC dismissed through an Order dated March 22, 2004 for the failure of the parties to attend the
scheduled hearings. Respondents likewise admitted that since they no longer appealed the dismissal, the ruling
attained finality. Moreover, it cannot be disputed that the subject property in Civil Case No. 02-52 and in the
present controversy are one and the same, and that in both cases, respondents raise the same action for partition.
And lastly, although respondent spouses Candelario were not party-litigants in the earlier case for partition, there is
identity of parties not only when the parties in the case are the same, but also between those in privity with them,
such as between their successors-in-interest.25
With all the other elements present, what is left to be determined now is whether or not the dismissal of Civil case
No. 02-52 operated as a dismissal on the merits that would complete the requirements of res judicata.
In advancing their claim, petitioners cite Rule 17, Sec. 3 of the Rules of Court, to wit:
Section 3. Dismissal due to fault of plaintiff. — If, for no justifiable cause, the plaintiff fails to appear on the date of
the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of
time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the
defendant or upon the court’s own motion, without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the
merits, unless otherwise declared by the court.
The afore-quoted provision enumerates the instances when a complaint may be dismissed due to the plaintiff's
fault: (1) if he fails to appear on the date for the presentation of his evidence in chief on the complaint; (2) if he fails
to prosecute his action for an unreasonable length of time; or (3) if he fails to comply with the Rules or any order of
the court. The dismissal of a case for failure to prosecute has the effect of adjudication on the merits, and is
necessarily understood to be with prejudice to the filing of another action, unless otherwise provided in the order of
dismissal. Stated differently, the general rule is that dismissal of a case for failure to prosecute is to be regarded as
an adjudication on the merits and with prejudice to the filing of another action, and the only exception is when the
order of dismissal expressly contains a qualification that the dismissal is without prejudice.26 In the case at bar,
petitioners claim that the Order does not in any language say that the dismissal is without prejudice and, thus, the
requirement that the dismissal be on the merits is present.
Truly, We have had the occasion to rule that dismissal with prejudice under the above-cited rule amply satisfies one
of the elements of res judicata.27 It is, thus, understandable why petitioners would allege res judicata to bolster their
claim. However, dismissal with prejudice under Rule 17, Sec. 3 of the Rules of Court cannot defeat the right of a co-
owner to ask for partition at any time, provided that there is no actual adjudication of ownership of shares yet.
Pertinent hereto is Article 494 of the Civil Code, which reads:
Article 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time
the partition of the thing owned in common, insofar as his share is concerned.
Nevertheless, an agreement to keep the thing undivided for a certain period of time, not exceeding ten years, shall
be valid. This term may be extended by a new agreement.
A donor or testator may prohibit partition for a period which shall not exceed twenty years. Neither shall there be
any partition when it is prohibited by law. No prescription shall run in favor of a co-owner or co-heir against his co-
owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership. (emphasis supplied)
From the above-quoted provision, it can be gleaned that the law generally does not favor the retention of co-
ownership as a property relation, and is interested instead in ascertaining the co-owners’ specific shares so as to
prevent the allocation of portions to remain perpetually in limbo. Thus, the law provides that each co-owner may
demand at any time the partition of the thing owned in common.
Between dismissal with prejudice under Rule 17, Sec. 3 and the right granted to co-owners under Art. 494 of the Civil
Code, the latter must prevail. To construe otherwise would diminish the substantive right of a co-owner through the
promulgation of procedural rules. Such a construction is not sanctioned by the principle, which is too well settled to
require citation, that a substantive law cannot be amended by a procedural rule.28 This further finds support in Art.
496 of the New Civil Code, viz:
Article 496.Partition may be made by agreement between the parties or by judicial proceedings.1âwphi1 Partition
shall be governed by the Rules of Court insofar as they are consistent with this Code.
Thus, for the Rules to be consistent with statutory provisions, We hold that Art. 494, as cited, is an exception to Rule
17, Sec. 3 of the Rules of Court to the effect that even if the order of dismissal for failure to prosecute is silent on
whether or not it is with prejudice, it shall be deemed to be without prejudice.
This is not to say, however, that the action for partition will never be barred by res judicata. There can still be res
judicata in partition cases concerning the same parties and the same subject matter once the respective shares of
the co-owners have been determined with finality by a competent court with jurisdiction or if the court determines
that partition is improper for co-ownership does not or no longer exists.
declined to assert it.30 The principle is a creation of equity which, as such, is applied not really to penalize neglect or
sleeping upon one’s right, but rather to avoid recognizing a right when to do so would result in a clearly inequitable
situation. As an equitable defense, laches does not concern itself with the character of the petitioners’ title, but only
with whether or not by reason of the respondents’ long inaction or inexcusable neglect, they should be barred from
asserting this claim at all, because to allow them to do so would be inequitable and unjust to petitioners.31
As correctly appreciated by the lower courts, respondents cannot be said to have neglected to assert their right
over the subject property. They cannot be considered to have abandoned their right given that they filed an
action for partition sometime in 2002, even though it was later dismissed. Furthermore, the fact that respondent
siblings entered into a Contract of Lease with Avico Lending Investor Co. over the subject property is evidence that
they are exercising rights of ownership over the same.
The CA erred in approving the Agreement for Subdivision

So it was that in Rizal v. Naredo,29 We ruled in the following wise: There is merit, however, in petitioners’ contention that the CA erred in approving the proposal for partition
submitted by respondent spouses. Art. 496, as earlier cited, provides that partition shall either be by agreement of
Article 484 of the New Civil Code provides that there is co-ownership whenever the ownership of an undivided thing the parties or in accordance with the Rules of Court. In this case, the Agreement of Subdivision allegedly executed
or right belongs to different persons. Thus, on the one hand, a co-owner of an undivided parcel of land is an owner by respondent spouses Candelario and petitioners cannot serve as basis for partition, for, as stated in the pre-trial
of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a order, herein respondents admitted that the agreement was a falsity and that petitioners never took part in
portion which is truly abstract. On the other hand, there is no co-ownership when the different portions owned by preparing the same. The "agreement" was crafted without any consultation whatsoever or any attempt to arrive at
different people are already concretely determined and separately identifiable, even if not yet technically mutually acceptable terms with petitioners. It, therefore, lacked the essential requisite of consent. Thus, to approve
described. the agreement in spite of this fact would be tantamount to allowing respondent spouses to divide unilaterally the
Pursuant to Article 494 of the Civil Code, no co-owner is obliged to remain in the co-ownership, and his proper property among the co-owners based on their own whims and caprices. Such a result could not be countenanced.
remedy is an action for partition under Rule 69 of the Rules of Court, which he may bring at anytime in so far as his To rectify this with dispatch, the case must be remanded to the court of origin, which shall proceed to partition the
share is concerned. Article 1079 of the Civil Code defines partition as the separation, division and assignment of a property in accordance with the procedure outlined in Rule 69 of the Rules of Court.
thing held in common among those to whom it may belong. It has been held that the fact that the agreement of
partition lacks the technical description of the parties’ respective portions or that the subject property was then still WHEREFORE, premises considered, the petition is hereby PARTLY GRANTED. The assailed Decision and Resolution of
embraced by the same certificate of title could not legally prevent a partition, where the different portions allotted the Court of Appeals in CA-G.R. CV No. 98919 dated July 8, 2013 and November 22, 2013, respectively, are hereby
AFFIRMED with MODIFICATION. The case is hereby REMANDED to the RTC, Branch 68 in Camiling, Tarlac for purposes
to each were determined and became separately identifiable.
of partitioning the subject property in accordance with Rule 69 of the Rules of Court.
The partition of Lot No. 252 was the result of the approved Compromise Agreement in Civil Case No. 36-C, which
was immediately final and executory. Absent any showing that said Compromise Agreement was vitiated by fraud, SO ORDERED.
mistake or duress, the court cannot set aside a judgment based on compromise. It is axiomatic that a compromise
agreement once approved by the court settles the rights of the parties and has the force of res judicata. It cannot
be disturbed except on the ground of vice of consent or forgery.
Of equal significance is the fact that the compromise judgment in Civil Case No. 36-C settled as well the question of
which specific portions of Lot No. 252 accrued to the parties separately as their proportionate shares therein.
Through their subdivision survey plan, marked as Annex "A" of the Compromise Agreement and made an integral
part thereof, the parties segregated and separately assigned to themselves distinct portions of Lot No. 252. The
partition was immediately executory, having been accomplished and completed on December 1, 1971 when
judgment was rendered approving the same. The CA was correct when it stated that no co-ownership exist when
the different portions owned by different people are already concretely determined and separately identifiable,
even if not yet technically described. (emphasis supplied)
In the quoted case, We have held that res judicata applied because after the parties executed a compromise
agreement that was duly approved by the court, the different portions of the owners have already been
ascertained. Thus, there was no longer a co-ownership and there was nothing left to partition. This is in contrast with
the case at bar wherein the co-ownership, as determined by the trial court, is still subsisting 30-70 in favor of
respondent spouses Candelario. Consequently, there is no legal bar preventing herein respondents from praying for
the partition of the property through counterclaim.
The counterclaim for partition is not barred by laches
We now proceed to petitioners’ second line of attack. According to petitioners, the claim for partition is already
barred by laches since by 1999, both Bienvenido and Escolastica Ibarra had already died and yet the respondent
siblings only belatedly filed the action for partition, Civil Case No. 02-52, in 2002. And since laches has allegedly
already set in against respondent siblings, so too should respondent spouses Candelario be barred from claiming
the same for they could not have acquired a better right than their predecessors-in-interest.
The argument fails to persuade.
Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which––by the
exercise of due diligence––could or should have been done earlier. It is the negligence or omission to assert a right
within a reasonable period, warranting the presumption that the party entitled to assert it has either abandoned or
G.R. No. 123552 February 27, 2003
TWIN TOWERS CONDOMINIUM CORPORATION, petitioner,
vs.
THE COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT CORPORATION, ANTONIO LITONJUA and SECURITIES
AND EXCHANGE COMMISSION, respondents.
DECISION
CARPIO, J.:
The Case
Before us is a petition for review on
certiorari1 to
nullify the Decision2 dated August 31, 1995 of the Court of Appeals
and its Resolution3 dated January 16, 1996 denying petitioner’s motion for reconsideration. The Court of Appeals
dismissed petitioner’s appeal from the Decision en banc4 of the Securities and Exchange Commission, which
reversed the order of the SEC Hearing Officer.5 The Court of Appeals dismissed the appeal for lack of merit and for
non-compliance with the requirement on certification of non-forum shopping.6
The Antecedent Facts
On June 30, 1988, petitioner Twin Towers Condominium Corporation ("petitioner" for brevity) filed a complaint7 with
the Securities and Exchange Commission ("SEC" for brevity) against respondents ALS Management & Development
Corporation ("ALS" for brevity) and Antonio Litonjua ("Litonjua" for brevity). The complaint prayed that ALS and
Litonjua be ordered to pay solidarily the unpaid condominium assessments and dues with interests and penalties
covering the four quarters of 1986 and 1987 and the first quarter of 1988.
The complaint alleged, among others, that petitioner, a non-stock corporation, is organized for the sole purpose of
holding title to and managing the common areas of Twin Towers Condominium ("Condominium" for brevity).
Membership in petitioner corporation is compulsory and limited to all registered owners of units in the Condominium.
ALS, as registered owner of Unit No. 4-A ("Unit" for brevity) of the Condominium, is a member of petitioner. Litonjua,
who is the corporate president of ALS, occupies the Unit.
Petitioner collects from all its members quarterly assessments and dues as authorized by its Master Deed and
Declaration of Restrictions ("Master Deed" for brevity) and its By-Laws. As of the filing of the complaint with the SEC,
petitioner’s records of account show that ALS failed to pay assessments and dues starting 1986 up to the first quarter
of 1988. Petitioner claimed against both ALS and Litonjua P118,923.20 as unpaid assessments and dues. This amount
includes accrued interests of P30,808.33 and penalty charges of P7,793.34, plus P 1,500.00 as unpaid contingency
fund assessment for 1987.8
In their joint Answer with Counterclaim, ALS and Litonjua asserted that petitioner failed to state a cause of action
against Litonjua. ALS and Litonjua argued that petitioner’s admission that ALS and not Litonjua is the registered
owner of the Unit and member of petitioner exonerates Litonjua from any liability to petitioner. While ALS is a juridical
person that cannot by itself physically occupy the Unit, the natural person who physically occupies the Unit does
not assume the liability of ALS to petitioner. Neither does the agent who acts for the corporation become personally
liable for the corporation’s obligation.
As counterclaim, ALS claimed damages against petitioner arising from petitioner’s act of repeatedly preventing
ALS, its agents and guests from using the parking space, swimming pool, gym, and other facilities of the
Condominium. In addition, Litonjua claimed damages against petitioner for the latter’s act of including Litonjua’s
name in the list of delinquent unit owners which was posted on petitioner’s bulletin board.9
On December 11, 1991, the SEC Hearing Officer ordered petitioner to pay Litonjua moral and exemplary damages
for maliciously including Litonjua’s name in the list of delinquent unit owners and for impleading him as a
respondent. On the other hand, the SEC Hearing Officer ordered ALS to pay the assessments and dues to
petitioner.10 However, the Hearing Officer did not determine the exact amount to be paid by ALS because
petitioner failed to lay down the basis for computing the unpaid assessments and dues.11 The dispositive portion of
the decision reads thus:
"WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Ordering respondent ALS to pay the legal assessments/dues due the complainant within thirty (30) days
from finality of this Decision; and
2. Ordering the complainant to pay respondent Antonio Litonjua the sum of THREE HUNDRED THOUSAND
PESOS (P300,000.00) as moral damages, FIFTY THOUSAND PESOS (P50,000.00) as exemplary damages, and
TWO HUNDRED THOUSAND PESOS (P200,000.00) as and by way of attorney’s fees.
SO ORDERED."12
Not satisfied with the SEC Hearing Officer’s decision, both parties filed their respective appeals to the SEC en
banc.13 Petitioner assailed the award of moral and exemplary damages as well as attorney’s fees in favor of
Litonjua. On the other hand, ALS appealed that portion of the decision ordering it to pay to petitioner the
assessments and dues.
In a decision dated July 30, 1993, the SEC en banc nullified the award of damages and attorney’s fees to Litonjua
on the ground that the SEC had no jurisdiction over Litonjua. The SEC en banc held that there is no intra-corporate
relationship between petitioner and Litonjua who is not the registered owner of the Unit and thus, not a member of
petitioner. The SEC en banc stated that petitioner could not invoke the doctrine of piercing the veil of ALS’
corporate fiction since disregarding the corporate entity is a function of the regular courts.
Furthermore, the SEC en banc remanded the case to the Hearing Officer to determine the value of the services
petitioner failed to render to ALS because of the latter’s non-use of the Condominium facilities. The SEC en banc
ruled that the value of these services could be deducted from the unpaid assessments and dues that ALS owes
petitioner.
Thus, the SEC en banc declared:
"WHEREFORE, in view of the foregoing, the order appealed from is hereby reversed insofar as it awards moral and
exemplary damages and attorney’s fees to respondent Litonjua as the same is null and void for lack of jurisdiction of
this Commission over the said party.14
As regards that portion of the appealed Order directing respondent ALS to pay the legal assessment/dues to the
complainant TTC within thirty (30) [days] from finality of the said decision, the same is hereby modified by remanding
the case to the hearing officer for determination of the value of the services withheld by the complainant TTC from
respondent ALS in order that the same may be deducted from the amount of legal assessments and dues which
the respondent corporation shall pay to the complainant.
SO ORDERED."15 (Emphasis supplied)
Petitioner appealed the SEC en banc Decision to the Court of Appeals contending grave error or grave abuse of
discretion by the SEC en banc.
The Ruling of the Court of Appeals
The Court of Appeals dismissed petitioner’s appeal on both procedural and substantive grounds. Procedurally, the
Court of Appeals found the petition defective for failure to contain a sworn certification of non-forum shopping as
required by Section 6 of Administrative Circular No. 1-95 and Section 2 of Revised Circular No. 28-91.
On the merits, the Court of Appeals substantially affirmed the decision of the SEC en banc that there is no ground to
pierce the veil of ALS’ corporate fiction. The Court of Appeals held that there is nothing in the records to show that
ALS is engaged in unlawful, business or that Litonjua is using ALS to defraud third parties. The fact alone that ALS is in
arrears in paying its assessments and dues does not make ALS or Litonjua guilty of fraud which would warrant
piercing the corporate veil of ALS. Thus, it was improper for petitioner to post Litonjua’s name instead of ALS’ in the
list of delinquent unit owners since Litonjua is not a member of petitioner.
The Court of Appeals also sustained the claim of petitioner against ALS for unpaid assessments and dues but found
that petitioner failed to substantiate by preponderance of evidence the basis for computing the unpaid
assessments and dues. Thus, the Court of Appeals remanded the case to the SEC Hearing Officer for further
reception of evidence and for determination of the exact amount of ALS’ liability to petitioner. The Court of
Appeals, however, directed the SEC Hearing Officer to deduct from ALS’ unpaid assessments and dues the value of
the services denied to ALS because of the latter’s non-use of the Condominium facilities. In allowing the deduction,
the Court of Appeals declared the Condominium’s House Rule 26.3 as ultra vires. House Rule 26.3, which petitioner
claims as its basis for denying the use of the Condominium facilities to ALS, authorizes withholding of the use of the
Condominium facilities from delinquent unit owners. The Court of Appeals, however, ruled that petitioner is not
expressly authorized by its Master Deed and By-Laws to prohibit delinquent members from using the facilities of the
Condominium.
The Court of Appeals went further and declared the interest and penalty charges prescribed by House Rule 26.516
on delinquent accounts as exorbitant or grossly excessive, although this was not raised as an issue. While in its
complaint, petitioner sought to recover P118,923.20 as unpaid assessments and dues, in its amended petition for
review, petitioner sought P994,529.75, more than eight times the amount it originally claimed from ALS.17
In the dispositive portion of its assailed decision, the Court of Appeals declared:
"WHEREFORE, the instant petition is hereby DENIED and is accordingly DISMISSED."18
Hence, this petition.
The Issues
In its Memorandum, petitioner assigns the following errors in the decision of the Court of Appeals:
1. "IN DISMISSING THE PETITION ALLEGEDLY BECAUSE OF PETITIONER’S FAILURE TO COMPLY WITH THE
PERTINENT PROVISIONS OF SUPREME COURT CIRCULAR NOS. 1-95 AND 28-91 ON THE CERTIFICATION
AGAINST FORUM SHOPPING;"
2. "IN ORDERING A REMAND OF THE CASE BACK TO THE HEARING OFFICER FOR THE RECEPTION OF
EVIDENCE FOR SERVICES SUPPOSEDLY NOT RENDERED BY PETITIONER;"
3. "IN DECLARING HOUSE RULE NO. 26.3 AS ULTRA VIRES;"
4. "IN FINDING THE PENALTIES AND INTERESTS PRESCRIBED IN HOUSE RULE 26.519 AS EXORBITANT AND
GROSSLY EXCESSIVE;"
5. "IN REFUSING TO RECOGNIZE THE FACT THAT RESPONDENT LITONJUA AND NOT ALS IS THE REAL OWNER
OF APARTMENT UNIT 4-A;" and
6. "IN FAILING TO FIND THAT THERE IS ON RECORD OVERWHELMING EVIDENCE TO SHOW THE BASIS OF THE
DUES AND ASSESSMENTS BEING COLLECTED FROM THE PRIVATE RESPONDENTS."20
The Ruling of the Court
The petition is partly meritorious.
A perusal of the foregoing issues readily reveals that petitioner raises two aspects of the case for consideration - the
procedural aspect and the substantive aspect.
We will discuss the procedural aspect first.
Non-compliance with Supreme Court Circular No. 1-95 and Revised Circular No. 28-91.
Petitioner submits that the Court of Appeals erred in dismissing its appeal for non-compliance with Supreme Court
Circular No. 1-95 and Revised Circular No. 28-91. Petitioner asserts that when it filed its petition, both circulars were
not yet in full force.
Petitioner filed its petition for review with the Court of Appeals on August 18, 1993 and its amended petition on
September 3, 1993. Both the original and amended petitions were filed before the effectivity of Revised
Administrative Circular No. 1-95 on June 1, 1995. However, contrary to petitioner’s claim, before the issuance of
Revised Administrative Circular No. 1-95, there was already an existing circular requiring a sworn certification of non-
forum shopping from a party filing a petition for review with the Court of Appeals.1a\^/phi1.net
Circular No. 28-91, which took effect on January 1, 1992, required a sworn certification of non-forum shopping in
cases filed with the Court of Appeals and the Supreme Court. Circular No. 28-91 specifically provides for summary
dismissal of petitions which do not contain a sworn certification of non-forum shopping. Sections 2 and 3 of Circular
No. 28-91 state:
"2. Certification - The party must certify under oath that he has not commenced any other action or proceeding
involving the same issues in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other
tribunal or agency, and that to the best of his knowledge, no such action or proceeding is pending in the Supreme
Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency. If there is any action
pending, he must state the status of the same.1awphi1.nét If he should learn that a similar action or proceeding has
been filed or is pending before the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other
tribunal or agency, he should notify the court, tribunal or agency within five (5) days from such notice.
3. Penalties -
a. Any violation of this Circular shall be a cause for the summary dismissal of the multiple petition or complaint.
x x x."
Clearly, petitioner cannot claim that at the time of the filing of its petitions with the Court of Appeals, it was not
required under any existing Supreme Court Circular to include in its petitions a sworn certification of non-forum
shopping. Circular No. 28-91 applies in the instant case, being the Circular in force at the time. Petitioner cannot
even feign ignorance of Circular No. 28-91 as its petitions were filed more than one year after the Circular’s
effectivity. The rule against forum shopping has long been established and Circular No. 28-91 merely formalized the
prohibition and provided the appropriate penalties against violators.21
The Court of Appeals did not err in dismissing the petition for this procedural lapse. However, special circumstances
or compelling reasons may justify relaxing the rule requiring certification on non-forum shopping.22 Technical rules of
procedure should be used to promote, not frustrate justice. While the swift unclogging of court dockets is a
laudable objective, granting substantial justice is an even more urgent ideal.23 The certificate of non-forum
shopping is a mandatory requirement. Nonetheless, this requirement must not be interpreted too literally to defeat
the ends of justice.24
In the instant case, the merits of petitioner’s case should be considered special circumstances or compelling
reasons that justify tempering the hard consequence of the procedural requirement on non-forum shopping. In the
interest of justice, we reinstate the petition.
Essentially, the substantive issues for resolution in the instant petition can be summarized into four, as follows:
1. Whether petitioner can collect assessments and dues despite its denial to ALS of the use of the
Condominium facilities pursuant to House Rule 26.3;
2. Whether ALS can validly offset against its unpaid assessments and dues the value of the services
withheld by petitioner;
3. Whether a remand of the case to the proper trial court is necessary to determine the amounts involved;
and
4. Whether the penalties prescribed in House Rule 26.2 are grossly excessive and exorbitant.
First Issue: Payment of assessments and dues.
Petitioner’s authority to assess dues.
Petitioner was organized to hold title to the common areas of the Condominium and to act as its management
body. The Condominium Act, the law governing condominiums, states that:
"Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a
corporation specially formed for the purpose (hereinafter known as the "condominium corporation") in which the
holders of separate interests shall automatically be members or shareholders, to the exclusion of others, in
proportion to the appurtenant interest of their respective units in the common areas. xxx"25
The Condominium Act provides that the Master Deed may authorize the condominium corporation to collect
"reasonable assessments to meet authorized expenditures."26 For this purpose, each unit owner "may be assessed
separately for its share of such expenditures in proportion (unless otherwise provided) to its owner’s fractional interest
in the common areas."27 Also, Section 20 of the Condominium Act declares:
"Section 20. An assessment upon any condominium made in accordance with a duly registered declaration of
restrictions shall be an obligation of the owner thereof at the ‘time the assessment is made. xxx" (Emphasis supplied)
Petitioner is expressly authorized by its Master Deed to impose reasonable assessments on its members to maintain
the common areas and facilities of the Condominium. Section 4, Part II of petitioner’s Master Deed provides:
"Section 4. ASSESSMENTS. From and after date Ayala Investment & Development Corporation formally conveys the
condominium project to the Condominium Corporation, the owner of each unit shall be proportionately liable for
the common expenses of the condominium project, which shall be assessed against each unit owner in the project
and paid to the Condominium Corporation as provided in Part I Section 8 (b) hereof at such times and in such
manner as shall be provided in the By-Laws of the Condominium Corporation,
a.) Regular assessments for such amounts as shall be necessary to meet the operating expenses of the
Condominium Corporation as well as such amounts, determined in accordance with the provisions of the
By-Laws, to be made for the purpose of creating and maintaining a special fund for capital expenditures
on the common areas of the project; including the cost of extraordinary repairs, reconstruction or
restoration necessitated by damage, depreciation, obsolescence, expropriation or condemnation of the
common areas or part thereof, as well as the cost of improvements or additions thereto authorized in
accordance with the provisions of the By-Laws;
b.) xxx
c.) There may be assessed against the unit owners, in the manner prescribed herein or in the By-Laws of
the Condominium Corporation, such other assessments as are not specifically provided for herein;
d.) The amount of any such assessment, plus interest penalties, attorney’s fees and other charges incurred
for the collection of such assessment, shall constitute a lien upon the unit and on the appurtenant interest
of the unit owner in the Condominium Corporation. Such lien shall be constituted in the manner provided
in the By-Laws of the Condominium Corporation. The foreclosure, transfer of conveyance, as well as
redemption of the unit shall include the unit owner’s appurtenant interest in the Condominium
Corporation. The Condominium Corporation shall have the power to bid at the foreclosure sale."28
Thus, petitioner’s right to collect assessments and dues from its members and the corollary obligation of its members
to pay are beyond dispute.
There is also no question that ALS is a member of petitioner considering that ALS is the registered owner of the Unit.
Under the automatic exclusive membership clause in the Master Deed,29 ALS became a regular member of
petitioner upon its acquisition of a unit in the Condominium.
As a member of petitioner, ALS assumed the compulsory obligation to share in the common expenses of the
Condominium. This compulsory obligation is further emphasized in Section 8, paragraph c, Part I of the Master Deed,
to wit:
"Each member of the Condominium Corporation shall share in the common expenses of the condominium project
in the same sharing or percentage stated xxx"30 (Emphasis supplied)
Undoubtedly, as a member of petitioner, ALS is legally bound to pay petitioner assessments and dues LO maintain
the common areas and facilities of the Condominium. ALS’ obligation arises from both the law and its contract with
the Condominium developer and other unit owners.
Petitioner’s Master Deed provides that a member of the Condominium corporation shall share in the common
expenses of the condominium project.31 This obligation does not depend on the use or non-use by the member of
the common areas and facilities of the Condominium. Whether or not a member uses the common areas or
facilities, these areas and facilities will have to be maintained. Expenditures must be made to maintain the common
areas and facilities whether a member uses them frequently, infrequently or never at all.
ALS asserts that the denial by petitioner to ALS and Litonjua of the use of the Condominium facilities deprived
petitioner of any right to demand from ALS payment of any condominium assessments and dues. ALS contends that
the right to demand payment of assessments and dues carries with it the correlative obligation to allow the use of
the Condominium facilities. ALS is correct if it had not defaulted on its assessment and dues before the denial of the
use of the facilities. However, the records clearly show that petitioner denied ALS and Litonjua the use of the
facilities only after ALS had defaulted on its obligation to pay the assessments and dues. The denial of the use of the
facilities was the sanction for the prior default incurred by ALS.
In essence, what ALS wants is to use its own prior non-payment as a justification for its future non-payment of its
assessments and dues. Stated another way, ALS advances the argument that a contracting party who is guilty of
first breaching his obligation is excused from such breach if the other party retaliates by refusing to comply with his
own obligation.
This obviously is not the law. In reciprocal obligations, when one party’ fulfills his obligation, and the other does not,
delay by the other begins. Moreover, when one party does not comply with his obligation, the other party does not
incur delay if he does not perform his own reciprocal obligation because of the first party’s non-compliance. This is
embodied in Article 1169 of the Civil Code, the relevant provision of which reads:
"In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by
the other begins."
Thus, before ALS incurred its arrearages, petitioner allowed ALS to use the facilities. However, ALS subsequently
defaulted and thus incurred delay. It was only then that petitioner disallowed ALS and Litonjua from using the
facilities. Clearly, petitioner’s denial to ALS of the Condominium facilities, after ALS had defaulted, does not
constitute a valid ground on the part of ALS to refuse paying its assessments and dues.
Validity of House Rule 26.3.
Petitioner’s House Rules and Regulations ("House Rules" for brevity) expressly authorize denial of the use of
condominium facilities to delinquent members. Specifically, House Rule 26.3 provides that:
"26. ASSESSMENTS:
xxx
26.3 Names of unit owners with delinquent accounts who fail to pay two consecutive quarters shall be posted in the
bulletin board. Unit owners with delinquent accounts, their tenants, guests/visitors and relatives shall not be allowed
the use of all facilities of the condominium such as the swimming pool, gym, social hall, etc." (Emphasis supplied)
The issue on the validity of House Rule 26.3 was raised for the first time on appeal. It is settled that an issue not raised
during trial could not be raised for the first time on appeal as to do so would be offensive to the basic rules of fair
play, justice, and due process.32 Nonetheless, the Court of Appeals opted to address this issue.
Petitioner justifies House Rule 26.3 by invoking Section 36, paragraph 11 of the Corporation Code which grants every
corporation the power "to exercise such powers as may be essential or necessary to carry out its purpose or
purposes as stated in its Articles of Incorporation." Petitioner was organized for the main purpose of holding title to
and managing the common areas of the Condominium. Petitioner claims that there is here implied the power to
enact such measures as may be necessary to carry out the provisions of the Articles of Incorporation, By-Laws and
Master Deed to deal with delinquent members. This, asserts petitioner, includes the power to enact House Rule 26.3
to protect and safeguard the interests not only of petitioner but also of its members.
For their part, ALS and Litonjua assail the validity of House Rule 26.3 alleging that it is ultra vires. ALS and Litonjua
maintain that neither the Master Deed nor the By-Laws of petitioner expressly authorizes petitioner to prohibit
delinquent members from using the Condominium facilities. Being ultra vires, House Rule 26.3 binds no one. Even
assuming that House Rule 26.3 is intra vires, the same is iniquitous, unconscionable, and contrary to morals, good
customs and public policy. Thus, ALS claims it can validly deduct the value of the services withheld from the
assessments and dues since it was barred from using the Condominium facilities for which the assessments and dues
were being collected.
The Court of Appeals sustained respondents’ argument and declared House Rule 26.3 ultra vires on the ground that
petitioner is not expressly authorized by its Master Deed or its By-Laws to promulgate House Rule 26.3.
House Rule 26.3 clearly restricts delinquent members from the use and enjoyment of the Condominium facilities. The
question is whether petitioner can validly adopt such a sanction to enforce the collection of Condominium
assessments and dues.
We rule that House Rule 26.3 is valid.
Section 45 of the Corporation Code provides:
"Sec. 45. Ultra vires acts of corporations. - No corporation under this code shall possess or exercise any corporate
powers except those conferred by this Code or by its articles of incorporation and except such as are necessary or
incidental to the exercise of the powers so conferred."
The term ultra vires refers to an act outside or beyond corporate powers, including those that may ostensibly be
within such powers but are, by general or special laws, prohibited or declared illegal.33 The Corporation Code
defines an ultra vires act as one outside the powers conferred by the Code or by the Articles of Incorporation, or
beyond what is necessary or incidental to the exercise of the powers so conferred. Moreover, special laws
governing certain classes of corporations, like the Condominium Act, also grant specific corporate powers to
corporations falling under such special laws.
The Condominium Act, petitioner’s By-Laws and the Master Deed expressly empower petitioner to promulgate
House Rule 26.3. Section 9 of the Condominium Act provides:
"Section 9. The owner of a project shall, prior to the conveyance of any condominium therein, register a declaration
of restrictions relating to such project, which restrictions xxx shall inure to and bind all condominium owners in the
project. xxx The Register of Deeds shall enter and annotate the declaration of restrictions upon the certificate of title
covering the land included within the project, if the land is patented or registered under the Land Registration or
Cadastral acts.
xxx
Such declaration of restrictions, among other things, may also provide:
(a) As to any management body-
1. For the powers thereof, Including power to enforce the provisions of the declaration of restrictions;
xxx
3. Provisions for maintenance xxx and other services benefiting the common areas, xxx" (Emphasis
supplied)
The Condominium Act clearly provides that the Master Deed may expressly empower the management body,
petitioner in the instant case, to enforce all provisions in the Master Deed and Declaration of Restrictions.
Pursuant to Section 9 (a) (1) and (3) of the Condominium Act, the Master Deed expressly authorizes petitioner to
exercise all the powers granted to the management body by the Condominium Act, petitioner’s Articles of
Incorporation and By-Laws, the Master Deed, and the Corporation Code. Section 3, Part II of the Master Deed
reads:
"Section 3. MANAGEMENT BODY. - The Condominium Corporation to be formed and organized pursuant to Section
7 of Part I, above, shall constitute the management body of the project. As such management body, the powers of
the Condominium Corporation shall be such as are provided by the Condominium Act, by the Articles of
Incorporation and the By-Laws of the Corporation, by this instrument and by the applicable provisions of the
Corporation Code as are not inconsistent with the Condominium Act. Among such powers but not by way of
limitation, it shall have the power to enforce the provisions thereof in accordance with the By-Laws of the
corporation." (Emphasis supplied)
Thus, the Master Deed clearly empowers petitioner to enforce the provisions of the Master Deed in accordance
with petitioner’s By-Laws.
Petitioner’s By-Laws expressly authorize petitioner’s Board of Directors to promulgate rules and regulations on the use
and enjoyment of the common areas. Thus, paragraph 2, Section 2 of petitioner’s By-Laws states:
"Without limiting the general nature of the foregoing powers, the Board of Directors shall have the power to enforce
the limitations, restrictions, and conditions contained in the Master Deed and Declaration of Restrictions of the
project; promulgate rules and regulations concerning the use, enjoyment and occupancy of the units, common
areas and other properties in the condominium project, to make and collect assessments against members as unit
owners to defray the costs and expenses of the condominium project and the corporation and to secure by legal
means the observance of the provisions of the Condominium Act, the Master Deed, the Articles of Incorporation,
these By-Laws, and the rules and regulations promulgated by it in accordance herewith. The members of the
corporation bind themselves to comply faithfully with all these provisions."34 (Emphasis supplied)
Evidently, the Condominium Act, the Master Deed and petitioner’s By-Laws grant petitioner the express power to
promulgate rules and regulations concerning the use, enjoyment and occupancy of the common areas.
Moreover, House Rule 26.3, which prohibits delinquent members from using the common areas, is necessary to
ensure maintenance of the common areas. Petitioner’s purpose in enacting House Rule 26.3 is to enforce
effectively the provisions of the Master Deed. House Rule 26.3 is well within the powers of petitioner to adopt as the
same is reasonably necessary to attain the purpose for which both petitioner and the Condominium project were
created. Thus, Section 7 of the Master Deed declares:
"Section 7. CONDOMINIUM CORPORATION. - A corporation to be known as THE TWIN TOWERS CONDOMINIUM
(hereinafter referred to as the "Condominium Corporation"), shall be formed and organized pursuant to the
Condominium Act and the Corporation Code to hold title to all the aforestated common areas of the
condominium project including the land, to manage THE TWIN TOWERS CONDOMINIUM and to do such other things
as may be necessary, incidental and convenient to the accomplishment of said purposes xxx"35 (Emphasis supplied)
Petitioner would be unable to carry out its main purpose of maintaining the Condominium common areas and
facilities if members refuse to pay their dues and yet continue to use these areas and facilities. To impose a
temporary ban on the use of the common areas and facilities until the assessments and dues in arrears are paid is a
reasonable measure that petitioner may undertake to compel the prompt payment of assessments and dues.
Second Issue: Offsetting the value of services withheld against ALS’ unpaid assessments and dues.
ALS’ claim for reduction of its assessments and dues because of its non-use of the Condominium facilities.
We rule that ALS has no right to a reduction of its assessments and dues to the extent of its non-use of the
Condominium facilities. ALS also cannot offset damages against its assessments and dues because ALS is not
entitled to damages for alleged injury arising from its own violation of its contract. Such a breach of contract
cannot be the source of rights or the basis of a cause of action.36 To recognize the validity of such claim would be
to legalize ALS’ breach of its contract.
ALS’ claim for unrendered repair services barred by estoppel.
ALS also justifies its non-payment of dues on the ground of the alleged failure of petitioner to repair the defects in
ALS’ Unit. However, this claim for unrendered repairs was never raised before the SEC Hearing Officer or the SEC en
banc. The issue on these alleged unrendered repairs, which supposedly caused ALS’ Unit to deteriorate, was raised
for the first time on appeal. The Court of Appeals did not pass upon the same.
Neither in the proceedings in the SEC nor in the appellate court did ALS present evidence to substantiate its
allegation that petitioner failed to render the repair services. Also, ALS failed to establish whether it claimed for the
costs of the repair because ALS advanced these expenses, or for the value of damages caused to the Unit by the
water leakage.
ALS is therefore barred at this late stage to interpose this claim. In Del Rosario v. Bonga,37 the Court held:
"As a rule, no question will be entertained on appeal unless it has been raised in the court below. Points of law,
theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not
be, considered by a reviewing court, as they cannot be raised for the first time at that late stage. Basic
considerations of due process impel this rule."
As this claim was a separate cause of action which should have been raised in ALS’ Answer with Counterclaim, ALS’
failure to raise this claim is deemed a waiver of the claim.
Third Issue: Remand of the case to the proper trial court.
Question of fact.
The Court of Appeals ruled that there is a need to remand the case considering that there is no sufficient evidence
on record to establish the amount of petitioner’s claim against ALS for unpaid assessments and dues.
The question of whether petitioner’s claim of P994,529.75 for unpaid assessments and dues against ALS is supported
by sufficient evidence is a purely factual issue and inevitably requires the weighing of evidence. This Court is not a
trier of facts, and it is not the function of this Court to re-examine the evidence submitted by the parties.38 In cases
brought before this Court from the Court of Appeals under Rule 45 of the Rules of Court, this Court’s jurisdiction is
limited to reviewing errors of law which must be distinctly set forth.39 In this mode of appeal, the findings of fact of
the Court of Appeals and other courts of origin are conclusive.40
Jurisprudence is settled that:
"(a)s a rule, the jurisdiction of this Court in cases brought to it from the Court of Appeals xxx is limited to the review
and revision of errors of law allegedly committed by the appellate court, as its findings of fact are deemed
conclusive. As such this Court is not duty-bound to analyze and weigh all over again the evidence already
considered in the proceedings below."41
This rule admits of several exceptions. This Court may review the findings of fact of the Court of Appeals:
"(a) where there is grave abuse of discretion; (b) when the finding is grounded entirely on speculations, surmises or
conjectures; (c) when the inference made is manifestly mistaken, absurd or impossible; (d) when the judgment of
the Court of Appeals was based on a misapprehension of facts; (e) when the factual findings are conflicting; (F)
when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee; (g) when the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion;
and, (h) where the findings of fact of the Court of Appeals are contrary to those of the trial court, or are mere
conclusions without citation of specific evidence, or where the facts set forth by the petitioner are not disputed by
the respondent, or where the findings of fact of the Court of Appeals are premised on the absence of evidence
and are contradicted by the evidence on record."42
However, none of these exceptions exists in the instant case.
The SEC Hearing Officer found that, while petitioner is entitled to collect the unpaid assessments and dues from ALS,
petitioner has failed to establish clearly the basis for computing the correct amount of the unpaid assessments and
dues. Indeed, there is no evidence laying down the basis of petitioner’s claim other than allegations of previous
demands and statements of accounts. Whether petitioner has sufficiently established its claim by preponderance of
evidence requires an examination of the probative weight of the evidence presented by the parties. Evidently, this
is a question of fact the resolution of which is beyond the purview of the petition for review where only errors of law
may be raised. On the other hand, the decision of the Court of Appeals, finding insufficient evidence on record,
was made under its power to review both questions of fact and law.
Remand to the proper trial court.
While we sustain the ruling of the Court of Appeals, the case can no longer be remanded to the SEC Hearing
Officer. Republic Act No. 8799, which took effect on August 8, 2000, transferred SEC’s jurisdiction over cases
involving intra-corporate disputes to courts of general jurisdiction or the appropriate regional trial courts. Section 5.2
of R.A. No. 8799 reads:
"5.2. The Commission’s jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is
hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court; Provided, That the
Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise
jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate
disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code.
The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June
2000 until finally disposed."
Based on the Resolution issued by this Court in AM No. 00-8-10-SC,43 the Court Administrator and the Securities and
Exchange Commission should cause the transfer of the records of SEC-AC Nos. 377 and 378 to the proper regional
trial court for further reception of evidence and computation of the correct amount of assessments and dues that
ALS shall pay to petitioner.
Fourth Issue: Penalties prescribed in House Rule 26.2.
ALS and Litonjua did not question before either the SEC or the Court of Appeals the validity of the penalties
prescribed in the Condominium’s House Rule 26.2. Nevertheless, the Court of Appeals ruled that House Rule 26.2
prescribes grossly excessive penalties and interests. The resolution of this issue is not necessary in arriving at a
complete and just resolution of this case. At any rate, we find the interest and penalties prescribed under House
Rule 26.2 reasonable considering the premier location of the Condominium at the heart of Makati City. It is
inevitable that ALS’ unpaid assessments and dues would escalate because ALS’ delinquency started since 1986.
House Rule 26.2 clearly provides for a 24% interest and an 8% penalty, both running annually, on the total amount
due in case of failure to pay, to wit:
"26.2. Late payment of accounts of members shall be charged an interest rate of 24% per annum. In addition, a
penalty at the rate of 8% per annum shall be charged on delinquent accounts. The 24% interest shall be imposed on
unpaid accounts starting with the 21st day of the quarter until fully paid."
To reiterate, the Condominium Act expressly provides that the Master Deed may empower the management body
of the Condominium "to enforce the provisions of the declaration of restrictions."44 The Master Deed authorizes
petitioner, as the management body, to enforce the provisions of the Master Deed in accordance with petitioner’s
By-Laws. Thus, petitioner’s Board of Directors is authorized to determine the reasonableness of the penalties and
interests to be imposed against those who violate the Master Deed. Petitioner has validly done this by adopting the
House Rules.
The Master Deed binds ALS since the Master Deed is annotated on the condominium certificate of title of ALS’ Unit.
The Master Deed is ALS’ contract with all Condominium members who are all co-owners of the common areas and
facilities of the Condominium. Contracts have the force of law between the parties and are to be complied with in
good faith.45 From the moment the contract is perfected, the parties are bound to comply with what is expressly
stipulated as well as with what is required by the nature of the obligation in keeping with good faith, usage and the
law.46 Thus, when ALS purchased its Unit from petitioner, ALS was bound by the terms and conditions set forth in the
contract, including the stipulations in the House Rules of petitioner, such as House Rule 26.2.
In sum, as a member of petitioner, ALS is indisputably bound by the Condominium’s House Rules which are
authorized by the By-Laws, the Master Deed and the Condominium Act.
Award of attorney’s fees.
The award of attorney’s fees as damages is the exception rather than the rule. The general rule is that attorney’s
fees cannot be recovered as part of damages because of the policy that no premium should be placed on the
right to litigate.47 Counsel’s fees are not awarded every time a party prevails in a suit.48 An award of attorney’s fees
and expenses of litigation is proper under the instances provided for in Article 2208 of the Civil Code, one of which is
where the defendant acted in gross and evident bad faith. In this case, however, we find no cogent reason to
award attorney’s fees in the absence of showing of gross and evident bad faith on the part of ALS in refusing to
satisfy petitioner’s claim.
WHEREFORE, the petition is GRANTED and the assailed Decision of the Court of Appeals is SET ASIDE. ALS
Management & Development Corporation is ordered to pay Twin Towers Condominium Corporation all overdue
assessments and dues, including interest and penalties from date of default, as shall be determined by the proper
Regional Trial Court in accordance with this Decision. The proper Regional Trial Court shall complete the
computation within sixty (60) days from its receipt of this Decision and the records of SEC-AC Nos. 377 and 378. Costs
of suit against ALS Management & Development Corporation.
SO ORDERED.
G.R. No. L-18009 January 10, 1923
EMILIO PUNSALAN, ET AL., plaintiffs-appellants,
vs.
C. BOOT LIAT, ET AL., defendants-appellants.
Yeager and Armstrong, C. A. Sobral and Lorenzo and Mañalac for plaintiffs-appellants.
Kincaid, Perkins and Kincaid and P. J. Moore for defendants-appellants.
AVANCEÑA, J.:
On or about the 13th of July, 1920, a Moro by the name of Tamsi saw from the Cawit-Cawit shores in the Province of
Zamboanga, a big bulky object in the distance which attracted his attention. Thereupon, together with another
Moro named Bayrula, he went in a small boat to investigation and found it to be a large fish. They then returned to
shore, where they met other Moros and requested their help to catch the fish. They went in three small boats, there
being then in one, seven in the other, and five in the third, twenty-two men, in all, twenty-one of whom are plaintiffs
herein, and the remaining one named Ahamad is defendant. After having arrived at the place where the fish was,
which was found to be a whale, they proceeded to pull it toward the shore up to the mouth of the river, where they
quartered it, having found in its abdomen a great quantity of ambergris, which was placed in three sacks, two of
which were full and the other half full, and taken to the house of Maharaja Butu, where they left it to the care of
Ahamad. Then the contents of the two full sacks were placed in three trunks. All of these twenty-two persons made
an agreement that they were to be the sole owners of this ambergris and that none of them could sell it without the
consent of the rest. As to the half sack of amber they agreed that some of them should take it to Zamboanga to sell
for the purpose of ascertaining the market price of the ambergris, in order that they might dispose of the rest
accordingly. Some of them, with Tamsi in charge, went to Zamboanga to sell the half sack of amber where they did
dispose of it to a Chinaman, Cheong Tong, for the sum of P2,700, which amount was distributed among all the
parties in interest. Then they offered to sell for the sum of P12,000 to the Chinamen, Cheong Tong and Lim Chiat, the
rest of the amber contained in the two sacks which had been left in the house of Maharaja Butu, for safekeeping,
and a document (Exhibit A) to this effect was executed by Lim Chiat and Cheong Tong, on the one hand, and
Tamsi, Imam Lumuyod, and Imam Asakil, on the other. Thereupon they went to Cawit-Cawit on board the launch
Ching-kang to get the amber so sold.
It appears that there were other people in Zamboanga who knew of the existence of this ambergris in the house of
Maharaja Butu. While the above related events were taking place, Mr. Henry E. Teck, who was one of those having
knowledge of the existence of this amber in Cawit-Cawit and of the fact that the launch Ching-kang had left for
Cawit-Cawit, proposed to the master of the revenue cutter Mindoro to go to Cawit-Cawit to seize some supposedly
contraband opium. After transmitting this information to the Collector of Customs, he, the master of the Mindoro,
immediately proceeded to Cawit-Cawit. There were on board the vessel Mr. Teck, some Chinamen, among whom
were C. Boon Liat, Ong Chua, and Go Tong, and some Moros who, according to Mr. Teck, were to assist in the
arrest of the smugglers. Upon the arrival of the Mindoro at Cawit-Cawit, the master, accompanied by Mr. Teck and
some Moros, went to the house of Maharaja Butu. As is to be presumed, this information about the supposed
contraband opium was but a trick to have the Mindoro at their disposal. The master proceeded to search the
house, stating that he had information to the effect that there was contraband opium and as a result of the search,
he found three large trunks containing a black substance which had a bad odor. He then asked the owner of the
house to whom those three trunks belonged, and the latter pointed to Ahamad who was present and who stated
that the contents came from the abdomen of a large fish. The master, however, said that it was opium and told
Ahamad that he would take the three trunks on board the ship. Then Ahamad and other Moros asked permission of
the master to accompany him on the voyage to Zamboanga, to which the master consented. When already on
board and during the voyage the master became convinced that the contents of the three trunks were not opium.
During the voyage, Mr. Teck offered to purchase the amber contained in the three trunks, but Ahamad refused to
sell it for the reason that he was not the sole owner thereof, but owned it in common with other persons who were in
Zamboanga. However Mr. Teck, aided by his companions who wielded some influence in Zamboanga, insisted that
Ahamad should sell them the amber, telling him not to be afraid of his companions, as he would answer for
whatever might happen. With this promise of protection, Ahamad decided to sell the amber for P7,500 and
received P2,500 as part payment on account of this price, a bill of sale having been signed by Ahamad, Maharaja
Butu and three Moros more. The balance of this price was paid later.
When Cheong Tong, Lim Chiat, and the Moros who had gone to Cawit-Cawit on board the launch Ching-kang
arrived at the house of Maharaja Butu, they found that the amber they had purchased from Tamsi and his
companions was no longer there.
The plaintiffs are twenty-one of the twenty-two Moros who had caught the whale, and Lim Chiat and Cheong Tong,
who had purchased from Tamsi and his companions the amber contained in the three trunks deposited in the
house of Maharaja Butu for safekeeping. They claim the 80-½ kilos of ambergris contained in three trunks, or its value
in the amount o P60,000, and damages in the sum of P20,000. This action is brought against C. Boon Liat, Ong Chua,
Go Tong, Henry E. Teck, and the Moro, Ahamad, the first four being the persons who purchased this same amber
from the one last named while on board the revenue cutter Mindoro.
It appears from the foregoing that the amber in question was the undivided common property of the plaintiffs (with
the exception of Lim Chiat and Cheong Tong) and the defendant Ahamad. This common ownership was acquired
by occupancy (arts. 609 and 610 of the Civil Code), so that neither Tamsi, Imam Lumuyod, or Imam Asakil had any
right to sell it, as they did, to Lim Chiat and Cheong Tong, nor had the Moro Ahamad any right to sell this same
amber, as he did, to C. Boon Liat, Ong Chua, Go Tong, and Henry E. Teck. There was an agreement between the
coowners not to sell this amber without the consent of all. Both sales having been made without the consent of all
the owners, the same have no effect, except as to the portion pertaining to those who made them (art. 399, Civil
Code).
Although the original complaint filed in this case was entitled as one for replevin, in reality, from its allegations, the
action herein brought is the ordinary one for the recovery of the title to, and possession of, this amber. It is no bar to
the bringing of this action that the defendant Ahamad is one of the coowners. The action for recovery which each
coowner has, derived from the right of ownership inherent in the coownership, may be exercised not only against
strangers but against the coowners themselves, when the latter perform, with respect to the thing held in common,
acts for their exclusive benefit, or of exclusive ownership, or which are prejudicial to, and in violation of, the right of
the community. (Decision of the supreme court of Spain of June 22, 1892.) In this case the selling of the amber by
the defendant Ahamad as his exclusive property and his attitude in representing himself to be the sole owner
thereof place him in the same position as the stranger who violates any right of the community. He is not sued in this
case as a coowner, for the cause of action is predicated upon the fact that he has acted not as a coowner, but as
an exclusive owner of the amber sold by him.
As to the sale made by Ahamad, it is urged that the purchaser acted in good faith. It is contended that the latter
did not know that the amber belonged to some others besides Ahamad. But the evidence shows otherwise. Henry
E. Teck himself admitted that on the occasion of the sale of the amber he really had promised Ahamad to protect
him, and although he said that the promise made by him had reference to the contingency of the amber proving
to be opium, as the master of the revenue cutter Mindoro believed, this is incredible, because he could not make
Ahamad such a promise, nor could such a promise, if made, have any influence on the mind of Ahamad, inasmuch
as the latter knew that the amber was not opium. If, as Henry E. Teck admits, he made Ahamad this promise of
protection, it should have been only on account of Ahamad's refusal to sell the amber due to the fact that he was
not the sole owner thereof.
With regard to the action of the trial court in not admitting Exhibits 1 and 2 offered by the defendants, we believed
that it was no error. These documents are affidavits signed by Paslangan, and the best evidence of their contents
was the testimony of Paslangan himself whom the plaintiffs had the right to cross-examine. Moreover, they are
substantially the same as the statements made by Paslangan at the trial when testifying as witness for the
defendants, and for this reason the ruling of the trial court excluding these documents would not, at all events,
affect the merits of the case.
In the complaint it is alleged that the value of the amber is P60,000. Upon the evidence adduced on this point, and
taking into account that the defendant, Henry E. Teck, himself, testifying as witness, has stated that this amber was
worth P1,200 per kilo, we accept this estimated value set forth in the complaint.
The decision of the court below contains the following order for judgment:
Wherefore, it is the judgment and order of the court that the defendants C. Boon Liat, Henry E. Teck,
Ahamad Ong Chua, and Go Tong deliver to the plaintiffs, Emilio Punsalan, Bayrula, Daring Gumuntol,
Mohamad, Insael, Dunkaland, Tahil, Dambul, Dagan, Sabay, Sahibul, Pingay, Mujahad, Amilol, Baraula,
Saraban, Lim Chiat, and Cheong Tong twenty-twenty-first (20/21) of the amber in question, or, in default
thereof, to pay them its value of twelve thousand pesos (P12,000), less one-twenty-first of said amount.
Therefore, the judgment appealed from is affirmed, with the only modification that the value of the amber which is
the subject-matter of this action shall be P60,000, without special finding as to the costs of this instance. So ordered.