G.R. No.

161817

July 30, 2004

DANIEL D. CELINO, petitioner, vs. HEIRS OF ALEJO and TERESA SANTIAGO, respondents.

RESOLUTION

TINGA, J.: Before us is a petition for review of the Decision1 of the Court of Appeals promulgated on 28 October 2002 and itsResolution2 promulgated on 14 January 2004 denying petitioner's Motion for Reconsideration. The case stemmed from an action for Quieting of Title, Recovery of Possession and Damages with Prayer for the Issuance of a Writ of Preliminary Mandatory Injunction filed by the heirs of Alejo and Teresa Santiago against herein petitioner Daniel Celino.3 Petitioner filed a Motion to Dismiss,4 alleging that complainant Juliet Santiago did not have the legal capacity to sue, since she did not have the corresponding written authority to represent her co-plaintiffs, and since the Complaint failed to state a cause of action. The trial court, presided by Judge Antonio C. Reyes, denied the said motion on the ground that the issues posed by petitioner could best be resolved during the trial.5 It likewise denied petitioner's motion for reconsideration.6 Thereafter, pre-trial was held. There, plaintiff Juliet Santiago presented through counsel, a copy of the Special Power of Attorney7 executed by Virginia S. Robertson and Gloria S. Tinoyan, two of the plaintiffs in the Complaint, authorizing counsels Juan Antonio R. Alberto III and Alexander A. Galpo to represent them in the pre-trial of the case. Likewise submitted was a Special Power of Attorney8 executed by Romeo Santiago, Juliet Santiago and Larry Santiago in favor of above-named counsels to represent them in the pre-trial conference.

Trial ensued and plaintiffs therein, now respondents, presented their evidence. Petitioner filed a Demurrer to Evidence,9 still on the ground of Juliet Santiago's alleged lack of legal capacity to sue. Petitioner claimed that the evidence presented by Santiago should not be admitted since she failed to present any evidence of authority to file the complaint for and in behalf of her co-plaintiffs. In an Order dated 29 April 2002,10 Judge Reyes denied theDemurrer, stating that Juliet Santiago had submitted the necessary authorization. On 10 July 2002, the Judge denied petitioner's Motion for Reconsideration11 for lack of merit.12 Petitioner thereafter filed a Petition For Review on Certiorari,13 seeking to nullify and set aside the 29 April 2002 and the 10 July 2002 orders of the trial court. In its Decision dated 28 October 2003, the Court of Appeals dismissed the petition, stating that petitioner's allegation of lack of legal capacity to sue is not the ground contemplated by the Rules of Court to support an adverse party's Demurrer to Evidence.14 Thereafter, petitioner filed his Motion for Reconsideration,15 which was denied for lack of merit.16 Petitioner now submits the following issues: I. WHETHER OR NOT A DEMURRER TO EVIDENCE UNDER RULE 33 OF THE REVISED RULES OF COURT MAY BE RESORTED TO WHEN CLEARLY THE COMPLAINT (SIC) HAS NO AUTHORITY TO SUE FOR AND IN BEHALF OF HER COPLAINTIFFS. II. WHETHER OR NOT THE COMPLAINT MAY BE DISMISSED FOR FAILURE OF CO-PLAINTIFFS TO EXECUTE AND SIGN THE CERTIFICATION AGAINST NON-FORUM SHOPPING.17 A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence and is presented after the plaintiff rests his case.18 It is an objection by one of the parties in an action, to the effect that the evidence which his adversary produced is insufficient in point of law, whether true or not, to make out a case or sustain the issue.19 The evidence contemplated by the rule on demurrer is that which pertains to the merits of the case.20Thus, as correctly held by the Court of Appeals, lack of legal capacity to sue is not a proper ground for a demurrer to evidence, pertaining as it does to a technical aspect, and it having nothing to do with the evidence on the merits of the complaint. Consequently,
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petitioner's Demurrer to Evidence and Motion for Reconsideration should be denied, as the trial court did. Anent the second issue, we hold that the Complaint may not be dismissed on account of the failure of the other plaintiffs to execute and sign the certification against non-forum shopping. Respondents herein are co-owners of two parcels of land owned by their deceased mother. The properties were allegedly encroached upon by the petitioner. As co-owners of the properties, each of the heirs may properly bring an action for ejectment,21 forcible entry and detainer,22 or any kind of action for the recovery of possession of the subject properties. 23 Thus, a co-owner may bring such an action, even without joining all the other coowners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all.24 However, if the action is for the benefit of the plaintiff alone, such that he claims the possession for himself and not for the coownership, the action will not prosper.25 It is clear from the Complaint that the same was made precisely to recover possession of the properties owned in common, and as such, will redound to the benefit of all the co-owners. Indeed, in the verification of the Complaint, Juliet Santiago claimed that she caused the preparation and the filing of the said pleading as a co-owner of the subject properties and as a representative of the other plaintiffs. Hence, the instant case may prosper even without the authorization from Juliet Santiago's co-plaintiffs. From the procedural perspective, the instant petition should also fail. Petitioner questioned Juliet Santiago's authority to sue in behalf of his coplaintiffs in his Motion to Dismiss dated 24 August 1999, which the lower court denied in its Order dated 16 March 2000. After filing a motion for reconsideration dated 30 March 2000, as well as a Supplemental to Motion for Reconsideration dated 11 April 2000,26 which the lower court denied in its Orderdated 02 May 2000, he did nothing until he filed the Demurrer to Evidence dated 11 February 2002. But that was after the pre-trial and trial on the merits were conducted and plaintiffs had presented their evidencein-chief. On the assumption that the lower court committed grave abuse of discretion in denying the Motion to Dismiss'petitioner as defendant should have filed the corresponding petition for certiorari under Rule 65 of the Revised Rules of Court with the Court of Appeals. He failed to do so within the period prescribed therefor, which is not later than sixty (60) days from
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notice of the order denying the motion for reconsideration.27 Thus, it is clear that even his petition under Rule 65 before the Court of Appeals was filed way out of time, it having been presented only on 31 July 2002.28 While the instant petition seeks only to resolve the above-stated issues, this Court will not close its eyes to any irregularity or defect in any decision or disposition, which, if tolerated, may result to confusion, and even injustice to any of the litigants.29 In the instant case, not only was the trial court miscreant in appreciating the documents presented before it, it was also injudicious in its understanding of the nature of a demurrer to evidence. Relying on the two Special Powers of Attorney presented by the plaintiff, the trial court denied petitioner'sDemurrer to Evidence in the following manner: "Considering that plaintiff Juliet Santiago has submitted the necessary Special Power of Authority from her co-plaintiffs authorizing her to institute the instant action against the defendant, the Demurrer to Evidence is denied for lack of merit."30 (emphasis supplied) As correctly pointed out by the petitioner, the said instruments were grants of authority to plaintiffs' counsel to represent them in the pre-trial conference and cannot in any way be constituted as a source of authority for Juliet Santiago to be the legal representative of her co-heirs. As such, plaintiff Juliet Santiago has not in fact presented any evidence supporting her claim that she is the duly constituted representative of the other named plaintiffs in the Complaint. Despite the very clear wording of the instruments, the trial court failed to appreciate the import of the same and equated the Special Powers of Attorney executed in favor of counsel to an authorization in favor of Juliet Santiago. In this regard, Judge Antonio Reyes of the Regional Trial Court of Cebu is well-advised to be prudent and meticulous in appreciating the documents and evidence presented before him. The duty to be well-informed of the law and legal procedures is ingrained in the position of court judge.

WHEREFORE, the instant Petition is DENIED for lack of merit. The assailed Decision dated 28 October 2002 and the Resolution dated 14 January 2004 are hereby AFFIRMED. Costs against the petitioner. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazarrio, JJ., concur. G.R. No. 161916 January 20, 2006

ARNELITO ADLAWAN, Petitioner, vs. EMETERIO M. ADLAWAN and NARCISA M. ADLAWAN, Respondents.

DECISION YNARES-SANTIAGO, J.: Assailed in this petition for review is the September 23, 2003 Decision1 of the Court of Appeals in CA-G.R. SP No. 74921 which set aside the September 13, 2002 Decision2 of the Regional Trial Court (RTC) of Cebu City, Branch 7, in Civil Case No. CEB-27806, and reinstated the February 12, 2002 Judgment3 of the Municipal Trial Court (MTC) of Minglanilla, Metro Cebu, in Civil Case No. 392, dismissing petitioner Arnelito Adlawans unlawful detainer suit against respondents Emeterio and Narcisa Adlawan. Likewise questioned is the January 8, 2004 Resolution4of the Court of Appeals which denied petitioners motion for reconsideration. The instant ejectment suit stemmed from the parties dispute over Lot 7226 and the house built thereon, covered by Transfer Certificate of Title No. 8842,5 registered in the name of the late Dominador Adlawan and located at Barrio Lipata, Municipality of Minglanilla, Cebu. In his complaint, petitioner claimed that he is an acknowledged illegitimate child6 of Dominador who died on May 28, 1987 without any other issue. Claiming to be the sole heir of Dominador, he executed an affidavit adjudicating to himself Lot 7226 and the house built thereon.7 Out of respect and generosity to respondents who are the siblings of his father, he granted their plea to occupy the subject property provided they would vacate the
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same should his need for the property arise. Sometime in January 1999, he verbally requested respondents to vacate the house and lot, but they refused and filed instead an action for quieting of title8 with the RTC. Finally, upon respondents refusal to heed the last demand letter to vacate dated August 2, 2000, petitioner filed the instant case on August 9, 2000.9 On the other hand, respondents Narcisa and Emeterio, 70 and 59 years of age, respectively,10 denied that they begged petitioner to allow them to stay on the questioned property and stressed that they have been occupying Lot 7226 and the house standing thereon since birth. They alleged that Lot 7226 was originally registered in the name of their deceased father, Ramon Adlawan11 and the ancestral house standing thereon was owned by Ramon and their mother, Oligia Maacap Adlawan. The spouses had nine12 children including the late Dominador and herein surviving respondents Emeterio and Narcisa. During the lifetime of their parents and deceased siblings, all of them lived on the said property. Dominador and his wife, Graciana Ramas Adlawan, who died without issue, also occupied the same.13 Petitioner, on the other hand, is a stranger who never had possession of Lot 7226. Sometime in 1961, spouses Ramon and Oligia needed money to finance the renovation of their house. Since they were not qualified to obtain a loan, they transferred ownership of Lot 7226 in the name of their son Dominador who was the only one in the family who had a college education. By virtue of a January 31, 1962 simulated deed of sale,14 a title was issued to Dominador which enabled him to secure a loan with Lot 7226 as collateral. Notwithstanding the execution of the simulated deed, Dominador, then single, never disputed his parents ownership of the lot. He and his wife, Graciana, did not disturb respondents possession of the property until they died on May 28, 1987 and May 6, 1997, respectively. Respondents also contended that Dominadors signature at the back of petitioners birth certificate was forged, hence, the latter is not an heir of Dominador and has no right to claim ownership of Lot 7226.15 They argued that even if petitioner is indeed Dominadors acknowledged illegitimate son, his right to succeed is doubtful because Dominador was survived by his wife, Graciana.16 On February 12, 2002, the MTC dismissed the complaint holding that the establishment of petitioners filiation and the settlement of the estate of
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Dominador are conditions precedent to the accrual of petitioners action for ejectment. It added that since Dominador was survived by his wife, Graciana, who died 10 years thereafter, her legal heirs are also entitled to their share in Lot 7226. The dispositive portion thereof, reads: In View of the foregoing, for failure to prove by preponderance of evidence, the plaintiffs cause of action, the above-entitled case is hereby Ordered DISMISSED. SO ORDERED.17 On appeal by petitioner, the RTC reversed the decision of the MTC holding that the title of Dominador over Lot 7226 cannot be collaterally attacked. It thus ordered respondents to turn over possession of the controverted lot to petitioner and to pay compensation for the use and occupation of the premises. The decretal portion thereof, provides: Wherefore, the Judgment, dated February 12, 2002, of the Municipal Trial Court of Minglanilla, Cebu, in Civil Case No. 392, is reversed. Defendantsappellees are directed to restore to plaintiff-appellant possession of Lot 7226 and the house thereon, and to pay plaintiff-appellant, beginning in August 2000, compensation for their use and occupation of the property in the amount of P500.00 a month. So ordered.18 Meanwhile, the RTC granted petitioners motion for execution pending appeal19 which was opposed by the alleged nephew and nieces of Graciana in their motion for leave to intervene and to file an answer in intervention.20 They contended that as heirs of Graciana, they have a share in Lot 7226 and that intervention is necessary to protect their right over the property. In addition, they declared that as co-owners of the property, they are allowing respondents to stay in Lot 7226 until a formal partition of the property is made. The RTC denied the motion for leave to intervene.21 It, however, recalled the order granting the execution pending appeal having lost jurisdiction over the case in view of the petition filed by respondents with the Court of Appeals.22

On September 23, 2003, the Court of Appeals set aside the decision of the RTC and reinstated the judgment of the MTC. It ratiocinated that petitioner and the heirs of Graciana are co-owners of Lot 7226. As such, petitioner cannot eject respondents from the property via an unlawful detainer suit filed in his own name and as the sole owner of the property. Thus WHEEFORE, premises considered, the appealed Decision dated September 13, 2002 of the Regional Trial Court of Cebu City, Branch 7, in Civil Case No. CEB-27806 is REVERSED and SET ASIDE, and the Judgment dated February 12, 2002 of the Municipal Trial Court of Minglanilla, Metro Cebu, in Civil Case No. 392 is REINSTATED. Costs against the respondent. SO ORDERED.23 Petitioners motion for reconsideration was denied. Hence, the instant petition. The decisive issue to be resolved is whether or not petitioner can validly maintain the instant case for ejectment. Petitioner averred that he is an acknowledged illegitimate son and the sole heir of Dominador. He in fact executed an affidavit adjudicating to himself the controverted property. In ruling for the petitioner, the RTC held that the questioned January 31, 1962 deed of sale validly transferred title to Dominador and that petitioner is his acknowledged illegitimate son who inherited ownership of the questioned lot. The Court notes, however, that the RTC lost sight of the fact that the theory of succession invoked by petitioner would end up proving that he is not the sole owner of Lot 7226. This is so because Dominador was survived not only by petitioner but also by his legal wife, Graciana, who died 10 years after the demise of Dominador on May 28, 1987.24 By intestate succession, Graciana and petitioner became co-owners of Lot 7226.25 The death of Graciana on May 6, 1997, did not make petitioner the absolute owner of Lot 7226 because the share of Graciana passed to her relatives by consanguinity and not to petitioner with whom she had no blood relations. The Court of Appeals thus correctly held that petitioner has no authority to institute the instant action as the sole owner of Lot 7226.

Petitioner contends that even granting that he has co-owners over Lot 7226, he can on his own file the instant case pursuant to Article 487 of the Civil Code which provides: ART. 487. Any one of the co-owners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession. Article 487 includes forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion).26 A co-owner may bring such an action without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to have been filed to benefit his co-owners. It should be stressed, however, that where the suit is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession of the litigated property, the action should be dismissed.27 The renowned civilist, Professor Arturo M. Tolentino, explained A co-owner may bring such an action, without the necessity of joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all. If the action is for the benefit of the plaintiff alone, such that he claims possession for himself and not for the co-ownership, the action will not prosper. (Emphasis added)28 In Baloloy v. Hular,29 respondent filed a complaint for quieting of title claiming exclusive ownership of the property, but the evidence showed that respondent has co-owners over the property. In dismissing the complaint for want of respondents authority to file the case, the Court held that Under Article 487 of the New Civil Code, any of the co-owners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession, including an accion publiciana and a reinvidicatory action. A co-owner may bring such an action without the necessity of joining all the other co-owners as co-plaintiffs because the suit is deemed to be instituted for the benefit of all. Any judgment of the court in favor of the co-owner will benefit the others but if such judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-owners. If the action is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession thereof, the action will not prosper unless he impleads the other co-owners who are indispensable parties.
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In this case, the respondent alone filed the complaint, claiming sole ownership over the subject property and praying that he be declared the sole owner thereof. There is no proof that the other co-owners had waived their rights over the subject property or conveyed the same to the respondent or such co-owners were aware of the case in the trial court. The trial court rendered judgment declaring the respondent as the sole owner of the property and entitled to its possession, to the prejudice of the latters siblings. Patently then, the decision of the trial court is erroneous. Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to implead his siblings, being co-owners of the property, as parties. The respondent failed to comply with the rule. It must, likewise, be stressed that the Republic of the Philippines is also an indispensable party as defendant because the respondent sought the nullification of OCT No. P-16540 which was issued based on Free Patent No. 384019. Unless the State is impleaded as party-defendant, any decision of the Court would not be binding on it. It has been held that the absence of an indispensable party in a case renders ineffective all the proceedings subsequent to the filing of the complaint including the judgment. The absence of the respondents siblings, as parties, rendered all proceedings subsequent to the filing thereof, including the judgment of the court, ineffective for want of authority to act, not only as to the absent parties but even as to those present.30 In the instant case, it is not disputed that petitioner brought the suit for unlawful detainer in his name alone and for his own benefit to the exclusion of the heirs of Graciana as he even executed an affidavit of selfadjudication over the disputed property. It is clear therefore that petitioner cannot validly maintain the instant action considering that he does not recognize the co-ownership that necessarily flows from his theory of succession to the property of his father, Dominador. In the same vein, there is no merit in petitioners claim that he has the legal personality to file the present unlawful detainer suit because the ejectment of respondents would benefit not only him but also his alleged co-owners. However, petitioner forgets that he filed the instant case to acquire possession of the property and to recover damages. If granted, he alone will gain possession of the lot and benefit from the proceeds of the award of damages to the exclusion of the heirs of Graciana. Hence, petitioner cannot successfully capitalize on the alleged benefit to his co-owners. Incidentally,
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it should be pointed out that in default of the said heirs of Graciana, whom petitioner labeled as "fictitious heirs," the State will inherit her share31 and will thus be petitioners co-owner entitled to possession and enjoyment of the property. The present controversy should be differentiated from the cases where the Court upheld the right of a co-owner to file a suit pursuant to Article 487 of the Civil Code. In Resuena v. Court of Appeals,32 and Sering v. Plazo,33 the co-owners who filed the ejectment case did not represent themselves as the exclusive owner of the property. InCelino v. Heirs of Alejo and Teresa Santiago,34 the complaint for quieting of title was brought in behalf of the co-owners precisely to recover lots owned in common.35 Similarly in Vencilao v. Camarenta,36 the amended complaint specified that the plaintiff is one of the heirs who co-owns the controverted properties. In the foregoing cases, the plaintiff never disputed the existence of a coownership nor claimed to be the sole or exclusive owner of the litigated lot. A favorable decision therein would of course inure to the benefit not only of the plaintiff but to his co-owners as well. The instant case, however, presents an entirely different backdrop as petitioner vigorously asserted absolute and sole ownership of the questioned lot. In his complaint, petitioner made the following allegations, to wit: 3. The plaintiff was the only son (illegitimate) and sole heir of the late DOMINADOR ADLAWAN who died intestate on 28 May 1987 without any other descendant nor ascendant x x x. xxxx 5. Being the only child/descendant and, therefore, sole heir of the deceased Dominador Adlawan, the plaintiff became the absolute owner, and automatically took POSSESSION, of the aforementioned house and lot x x x. (Emphasis added)37 Clearly, the said cases find no application here because petitioners action operates as a complete repudiation of the existence of co-ownership and not in representation or recognition thereof. Dismissal of the complaint is therefore proper. As noted by Former Supreme Court Associate Justice Edgrado L. Paras "[i]t is understood, of course, that the action [under Article 487 of the Civil Code] is being instituted for all. Hence, if the co11

owner expressly states that he is bringing the case only for himself, the action should not be allowed to prosper."38 Indeed, respondents not less than four decade actual physical possession of the questioned ancestral house and lot deserves to be respected especially so that petitioner failed to show that he has the requisite personality and authority as co-owner to file the instant case. Justice dictates that respondents who are now in the twilight years of their life be granted possession of their ancestral property where their parents and siblings lived during their lifetime, and where they, will probably spend the remaining days of their life. WHEREFORE, the petition is DENIED. The September 23, 2003 Decision of the Court of Appeals in CA-G.R. SP No. 74921 which reinstated the February 12, 2002 Judgment of the Municipal Trial Court of Minglanilla, Metro Cebu, dismissing petitioners complaint in Civil Case No. 392, and its January 8, 2004 Resolution, are AFFIRMED. SO ORDERED. CONSUELO YNARES-SANTIAGO Associate Justice WE CONCUR:

. R. No. 136773. June 25, 2003]

MILAGROS MANONGSONG, joined by her husband, CARLITO MANONGSONG, petitioners, vs. FELOMENA JUMAQUIO ESTIMO, EMILIANA JUMAQUIO, NARCISO ORTIZ, CELESTINO ORTIZ, RODOLFO ORTIZ, ERLINDA O. OCAMPO, PASTOR ORTIZ, JR., ROMEO ORTIZ BENJAMIN DELA CRUZ, SR., BENJAMIN DELA CRUZ, JR., AURORA NICOLAS, GLORIA RACADIO, ROBERTO DELA CRUZ, JOSELITO DELA CRUZ and LEONCIA S. LOPEZ, respondents. DECISION
CARPIO, J.:

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The Case Before this Court is a petition for review[1] assailing the Decision[2] of 26 June 1998 and the Resolution of 21 December 1998 of the Court of Appeals in CA-G.R. CV No. 51643. The Court of Appeals reversed the Decision dated 10 April 1995 of the Regional Trial Court of Makati City, Branch 135, in Civil Case No. 92-1685, partitioning the property in controversy and awarding to petitioners a portion of the property.

Antecedent Facts Spouses Agatona Guevarra (Guevarra) and Ciriaco Lopez had six (6) children, namely: (1) Dominador Lopez; (2) Enriqueta Lopez-Jumaquio, the mother of respondents Emiliana Jumaquio Rodriguez and Felomena Jumaquio Estimo (Jumaquio sisters); (3) Victor Lopez, married to respondent Leoncia Lopez; (4) Benigna LopezOrtiz, the mother of respondents Narciso, Celestino, Rodolfo, Pastor Jr. and Romeo Ortiz, and Erlinda Ortiz Ocampo; (5) Rosario Lopez-dela Cruz, married to respondent Benjamin dela Cruz, Sr. and the mother of respondents Benjamin Jr., Roberto, and Joselito, all surnamed dela Cruz, and of Gloria dela Cruz Racadio and Aurora dela Cruz Nicolas; and (6) Vicente Lopez, the father of petitioner Milagros Lopez Manongsong (Manongsong). The contested property is a parcel of land on San Jose Street, Manuyo Uno, Las Pias, Metro Manila with an area of approximately 152 square meters (Property). The records do not show that the Property is registered under the Torrens system. The Property is particularly described in Tax Declaration No. B-001-00390[3] as bounded in the north by Juan Gallardo, south by Calle Velay, east by Domingo Lavana and west by San Jose Street. Tax Declaration No. B-001-00390 was registered with the Office of the Municipal Assessor of Las Pias on 30 September 1984 in the name of Benigna Lopez, et al.[4] However, the improvements on the portion of the Property denominated as No. 831 San Jose St., Manuyo Uno, Las Pias were separately declared in the name of Filomena J. Estimo under Tax Declaration No. 90-001-02145 dated 14 October 1991.[5] Milagros and Carlito Manongsong (petitioners) filed a Complaint [6] on 19 June 1992, alleging that Manongsong and respondents are the owners pro indiviso of the Property. Invoking Article 494 of the Civil Code,[7] petitioners prayed for the partition and award to them of an area equivalent to one-fifth (1/5) of the Property or its prevailing market value, and for damages. Petitioners alleged that Guevarra was the original owner of the Property. Upon Guevarras death, her children inherited the Property. Since Dominador Lopez died without offspring, there were only five children left as heirs of Guevarra. Each of the five children, including Vicente Lopez, the father of Manongsong, was entitled to a fifth of the Property. As Vicente Lopez sole surviving heir, Manongsong claims her fathers 1/5 share in the Property by right of representation.
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There is no dispute that respondents, who are the surviving spouses of Guevarras children and their offspring, have been in possession of the Property for as long as they can remember. The area actually occupied by each respondent family differs, ranging in size from approximately 25 to 50 square meters. Petitioners are the only descendants not occupying any portion of the Property. Most respondents, specifically Narciso, Rodolfo, Pastor Jr., and Celestino Ortiz, and Erlinda Ortiz Ocampo (Ortiz family), as well as Benjamin Sr., Benjamin Jr., and Roberto dela Cruz, Aurora dela Cruz Nicolas and Gloria Dela Cruz Racadio (Dela Cruz family), entered into a compromise agreement with petitioners. Under the Stipulation of Facts and Compromise Agreement[8] dated 12 September 1992 (Agreement), petitioners and the Ortiz and Dela Cruz families agreed that each group of heirs would receive an equal share in the Property. The signatories to the Agreement asked the trial court to issue an order of partition to this effect and prayed further that those who have exceeded said one-fifth (1/5) must be reduced so that those who have less and those who have none shall get the correct and proper portion.[9] Among the respondents, the Jumaquio sisters and Leoncia Lopez who each occupy 50 square meter portions of the Property and Joselito dela Cruz, did not sign the Agreement.[10]However, only the Jumaquio sisters actively opposed petitioners claim. The Jumaquio sisters contended that Justina Navarro (Navarro), supposedly the mother of Guevarra, sold the Property to Guevarras daughter Enriqueta Lopez Jumaquio. The Jumaquio sisters presented provincial Tax Declaration No. 911 [11] for the year 1949 in the sole name of Navarro. Tax Declaration No. 911 described a residential parcel of land with an area of 172.51 square meters, located on San Jose St., Manuyo, Las Pias, Rizal with the following boundaries: Juan Gallardo to the north, I. Guevarra Street to the south, Rizal Street to the east and San Jose Street to the west. In addition, Tax Declaration No. 911 stated that the houses of "Agatona Lopez" and "Enriquita Lopez" stood on the Property as improvements. The Jumaquio sisters also presented a notarized KASULATAN SA BILIHAN NG LUPA[12] (Kasulatan) dated 11 October 1957, the relevant portion of which states:

AKO SI JUSTINA NAVARRO, sapat ang gulang, may asawa, Pilipino at naninirahan sa LAS PIAS, ay siyang nagma-may-ari at nagtatangkilik ng isang lagay na lupa na matatagpuan sa Manuyo, Las Pias, Rizal, lihis sa anomang pagkakautang lalong napagkikilala sa pamamagitan ng mga sumusunod na palatandaan: BOUNDARIES: NORTH: JUAN GALLARDO SOUTH: I. GUEVARRA ST. EAST: RIZAL ST., WEST: SAN JOSE ST., na may sukat na 172.51 metros cuadrados na may TAX DECLARATION BILANG 911.
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NA DAHIL AT ALANG ALANG sa halagang DALAWANG DAAN LIMANGPUNG PISO (P250.00), SALAPING PILIPINO, na sa akin ay kaliwang iniabot at ibinayad ni ENRIQUETA LOPEZ, may sapat na gulang, Pilipino, may asawa at naninirahan sa Las Pias, Rizal, at sa karapatang ito ay aking pinatutunayan ng pagkakatanggap ng nasabing halaga na buong kasiyahan ng aking kalooban ay aking IPINAGBILI, ISINALIN AT INILIPAT sa nasabing, ENRIQUETA LOPEZ, sa kanyang mga tagapagmana at kahalili, ang kabuuang sukat ng lupang nabanggit sa itaas nito sa pamamagitan ng bilihang walang anomang pasubali. Ang lupang ito ay walang kasama at hindi taniman ng palay o mais. Simula sa araw na ito ay aking ililipat ang pagmamay-ari at pagtatangkilik ng nasabing lupa kay ENRIQUETA LOPEZ sa kanilang/kanyang tagapagmana at kahalili x x x.
The Clerk of Court of the Regional Trial Court of Manila certified on 1 June 1994 that the KASULATAN SA BILIHAN NG LUPA, between Justina Navarro (Nagbili) and Enriqueta Lopez (Bumili), was notarized by Atty. Ruperto Q. Andrada on 11 October 1957 and entered in his Notarial Register xxx.[13] The certification further stated that Atty. Andrada was a duly appointed notary public for the City of Manila in 1957. Because the Jumaquio sisters were in peaceful possession of their portion of the Property for more than thirty years, they also invoked the defense of acquisitive prescription against petitioners, and charged that petitioners were guilty of laches. The Jumaquio sisters argued that the present action should have been filed years earlier, either by Vicente Lopez when he was alive or by Manongsong when the latter reached legal age. Instead, petitioners filed this action for partition only in 1992 when Manongsong was already 33 years old.

The Ruling of the Trial Court After trial on the merits, the trial court in its Decision[14] of 10 April 1995 ruled in favor of petitioners. The trial court held that the Kasulatan was void, even absent evidence attacking its validity. The trial court declared:

It appears that the ownership of the estate in question is controverted. According to defendants Jumaquios, it pertains to them through conveyance by means of a Deed of Sale executed by their common ancestor Justina Navarro to their mother Enriqueta, which deed was presented in evidence as Exhs. 4 to 4-A. Plaintiff Milagros Manongsong debunks the evidence as fake. The document of sale, in the observance of the Court, is however duly authenticated by means of a certificate issued by the RTC of the Manila Clerk of Court as duly notarized public document (Exh. 5). No countervailing proof was adduced by plaintiffs to overcome or impugn the documents legality or its validity.
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xxx The conveyance made by Justina Navarro is subject to nullity because the property conveyed had a conjugal character. No positive evidence had been introduced that it was solely a paraphernal property. The name of Justina Navarros spouse/husband was not mentioned and/or whether the husband was still alive at the time the conveyance was made to Justina Navarro. Agatona Guevarra as her compulsory heir should have the legal right to participate with the distribution of the estate under question to the exclusion of others. She is entitled to her legitime. The Deed of Sale [Exhs 4 & 4-1(sic)] did not at all provide for the reserved legitime or the heirs, and, therefore it has no force and effect against Agatona Guevarra and her six (6) legitimate children including the grandchildren, by right of representation, as described in the order of intestate succession. The same Deed of Sale should be declared a nullity ab initio. The law on the matter is clear. The compulsory heirs cannot be deprived of their legitime, except on (sic) cases expressly specified by law like for instance disinheritance for cause. xxx (Emphasis supplied)
Since the other respondents had entered into a compromise agreement with petitioners, the dispositive portion of the trial courts decision was directed against the Jumaquio sisters only, as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs and against the remaining active defendants, Emiliana Jumaquio and Felomena J. Estimo, jointly and severally, ordering: 1. That the property consisting of 152 square meters referred to above be immediately partitioned giving plaintiff Milagros Lopez-Manongsong her lawful share of 1/5 of the area in square meters, or the prevailing market value on the date of the decision; 2. Defendants to pay plaintiffs the sum of P10,000.00 as compensatory damages for having deprived the latter the use and enjoyment of the fruits of her 1/5 share; 3. Defendants to pay plaintiffs litigation expenses and attorneys fee in the sum of P10,000.00; and 4. Defendants to pay the costs of suit. SO ORDERED. (Emphasis supplied)
[15]

When the trial court denied their motion for reconsideration, the Jumaquio sisters appealed to the Court of Appeals.

The Ruling of the Court of Appeals

16

Petitioners, in their appellees brief before the Court of Appeals, presented for the first time a supposed photocopy of the death certificate [16] of Guevarra, which stated that Guevarras mother was a certain Juliana Gallardo. Petitioner also attached an affidavit[17] from Benjamin dela Cruz, Sr. attesting that he knew Justina Navarro only by name and had never met her personally, although he had lived for some years with Agatona Guevarra after his marriage with Rosario Lopez. On the basis of these documents, petitioners assailed the genuineness and authenticity of theKasulatan. The Court of Appeals refused to take cognizance of the death certificate and affidavit presented by petitioners on the ground that petitioners never formally offered these documents in evidence. The appellate court further held that the petitioners were bound by their admission that Navarro was the original owner of the Property, as follows:

Moreover, plaintiffs-appellees themselves admitted before the trial court that Justina Navarro and not Juliana Gallardo was the original owner of the subject property and was the mother of Agatona Navarro (sic). Plaintiffs-appellees in their ReplyMemorandum averred: As regards the existence of common ownership, the defendants clearly admit as follows:
xxx xxx xxx

History of this case tells us that originally the property was owned by JUSTINA NAVARRO who has a daughter by the name of AGATONA GUEVARRA who on the other hand has six children namely: xxx xxx xxx. which point-out that co-ownership exists on the property between the parties. Since this is the admitted history, facts of the case, it follows that there should have been proper document to extinguish this status of co-ownership between the common owners either by (1) Court action or proper deed of tradition, xxx xxx xxx. The trial court confirms these admissions of plaintiffs-appellees. The trial court held:
xxx xxx xxx

With the parties admissions and their conformity to a factual common line of relationship of the heirs with one another, it has been elicited ascendant Justina Navarro is the common ancestor of the heirs herein mentioned, however, it must be noted that the parties failed to amplify who was the husband and the number of compulsory heirs of Justina Navarro. xxx xxx xxx
17

Therefore, plaintiffs-appellees cannot now be heard contesting the fact that Justina Navarro was their common ancestor and was the original owner of the subject property.
The Court of Appeals further held that the trial court erred in assuming that the Property was conjugal in nature when Navarro sold it. The appellate court reasoned as follows:

However, it is a settled rule that the party who invokes the presumption that all property of marriage belongs to the conjugal partnership, must first prove that the property was acquired during the marriage. Proof of acquisition during the coveture is a condition sine qua non for the operation of the presumption in favor of conjugal ownership. In this case, not a single iota of evidence was submitted to prove that the subject property was acquired by Justina Navarro during her marriage. xxx The findings of the trial court that the subject property is conjugal in nature is not supported by any evidence. To the contrary, records show that in 1949 the subject property was declared, for taxation purposes under the name of Justina Navarro alone. This indicates that the land is the paraphernal property of Justina Navarro.
For these reasons, the Court of Appeals reversed the decision of the trial court, thus:

WHEREFORE, foregoing considered, the appealed decision is hereby REVERSED and SET ASIDE. A new one is hereby rendered DISMISSING plaintiffs-appellees complaint in so far as defendants-appellants are concerned. Costs against plaintiffs-appellees. SO ORDERED.
[18]

Petitioners filed a motion for reconsideration, but the Court of Appeals denied the same in its Resolution of 21 December 1998.[19] On 28 January 1999, petitioners appealed the appellate courts decision and resolution to this Court. The Court initially denied the petition for review due to certain procedural defects. The Court, however, gave due course to the petition in its Resolution of 31 January 2000.[20]

18

The Issues Petitioners raise the following issues before this Court:
1. WHETHER PETITIONER HAS NO COUNTERVAILING EVIDENCE ON THE ALLEGED SALE BY ONE JUSTINA NAVARRO; 2. WHETHER THERE IS PRETERITION AND THE ISSUES RAISED ARE REVIEWABLE; 3. WHETHER THERE IS CO-OWNERSHIP PRO INDIVISO; 4. WHETHER THE RULE OF THE MAJORITY CO-OWNERS ON THE LAND SHOULD PREVAIL; 5. WHETHER THE ALLEGED SALE IS VALID AND BINDS THE OTHER CO-HEIRS; 6. WHETHER PRESCRIPTION PETITIONERS.[21] APPLIES AGAINST THE SHARE OF

The fundamental question for resolution is whether petitioners were able to prove, by the requisite quantum of evidence, that Manongsong is a co-owner of the Property and therefore entitled to demand for its partition.

The Ruling of the Court The petition lacks merit. The issues raised by petitioners are mainly factual in nature. In general, only questions of law are appealable to this Court under Rule 45. However, where the factual findings of the trial court and Court of Appeals conflict, this Court has the authority to review and, if necessary, reverse the findings of fact of the lower courts.[22] This is precisely the situation in this case. We review the factual and legal issues of this case in light of the general rules of evidence and the burden of proof in civil cases, as explained by this Court in Jison v. Court of Appeals :[23]

xxx Simply put, he who alleges the affirmative of the issue has the burden of proof, and upon the plaintiff in a civil case, the burden of proof never parts. However, in the course of trial in a civil case, once plaintiff makes out a prima facie case in his favor, the duty or the burden of evidence shifts to defendant to controvert plaintiff's prima facie case, otherwise, a verdict must be returned in favor of plaintiff. Moreover, in civil cases, the party having the burden of proof must produce a preponderance of evidence thereon, with plaintiff having to rely on the strength of his own evidence and not upon the weakness of the defendants. The concept of preponderance of evidence refers to evidence which is of greater weight, or more convincing, that which is offered in opposition to it; at bottom, it means probability of truth.
19

Whether the Court of Appeals erred in affirming the validity of the Kasulatan sa Bilihan ng Lupa Petitioners anchor their action for partition on the claim that Manongsong is a coowner or co-heir of the Property by inheritance, more specifically, as the heir of her father, Vicente Lopez. Petitioners likewise allege that the Property originally belonged to Guevarra, and that Vicente Lopez inherited from Guevarra a 1/5 interest in the Property. As the parties claiming the affirmative of these issues, petitioners had the burden of proof to establish their case by preponderance of evidence. To trace the ownership of the Property, both contending parties presented tax declarations and the testimonies of witnesses. However, the Jumaquio sisters also presented a notarizedKASULATAN SA BILIHAN NG LUPA which controverted petitioners claim of co-ownership. The Kasulatan, being a document acknowledged before a notary public, is a public document and prima facie evidence of its authenticity and due execution. To assail the authenticity and due execution of a notarized document, the evidence must be clear, convincing and more than merely preponderant. [24] Otherwise the authenticity and due execution of the document should be upheld. [25] The trial court itself held that (n)o countervailing proof was adduced by plaintiffs to overcome or impugn the documents legality or its validity.[26] Even if the Kasulatan was not notarized, it would be deemed an ancient document and thus still presumed to be authentic. The Kasulatan is: (1) more than 30 years old, (2) found in the proper custody, and (3) unblemished by any alteration or by any circumstance of suspicion. It appears, on its face, to be genuine.[27] Nevertheless, the trial court held that the Kasulatan was void because the Property was conjugal at the time Navarro sold it to Enriqueta Lopez Jumaquio. We do not agree. The trial courts conclusion that the Property was conjugal was not based on evidence, but rather on a misapprehension of Article 160 of the Civil Code, which provides:

All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.
As the Court of Appeals correctly pointed out, the presumption under Article 160 of the Civil Code applies only when there is proof that the property was acquired during the marriage. Proof of acquisition during the marriage is an essential condition for the operation of the presumption in favor of the conjugal partnership.[28] There was no evidence presented to establish that Navarro acquired the Property during her marriage. There is no basis for applying the presumption under Article 160 of the Civil Code to the present case. On the contrary, Tax Declaration No. 911 showed that, as far back as in 1949, the Property was declared solely in Navarros name. [29] This tends to support the argument that the Property was not conjugal.

20

We likewise find no basis for the trial courts declaration that the sale embodied in the Kasulatan deprived the compulsory heirs of Guevarra of their legitimes. As opposed to a dispositioninter vivos by lucrative or gratuitous title, a valid sale for valuable consideration does not diminish the estate of the seller. When the disposition is for valuable consideration, there is no diminution of the estate but merely a substitution of values,[30] that is, the property sold is replaced by the equivalent monetary consideration. Under Article 1458 of the Civil Code, the elements of a valid contract of sale are: (1) consent or meeting of the minds; (2) determinate subject matter and (3) price certain in money or its equivalent.[31] The presence of these elements is apparent on the face of the Kasulatan itself. The Property was sold in 1957 for P250.00.[32]

Whether the Court of Appeals erred in not admitting the documents presented by petitioners for the first time on appeal We find no error in the Court of Appeals refusal to give any probative value to the alleged birth certificate of Guevarra and the affidavit of Benjamin dela Cruz, Sr. Petitioners belatedly attached these documents to their appellees brief. Petitioners could easily have offered these documents during the proceedings before the trial court. Instead, petitioners presented these documents for the first time on appeal without any explanation. For reasons of their own, petitioners did not formally offer in evidence these documents before the trial court as required by Section 34, Rule 132 of the Rules of Court.[33] To admit these documents now is contrary to due process, as it deprives respondents of the opportunity to examine and controvert them. Moreover, even if these documents were admitted, they would not controvert Navarros ownership of the Property. Benjamin dela Cruz, Sr.s affidavit stated merely that, although he knew Navarro by name, he was not personally acquainted with her.[34] Guevarras alleged birth certificate casts doubt only as to whether Navarro was indeed the mother of Guevarra. These documents do not prove that Guevarra owned the Property or that Navarro did not own the Property. Petitioners admitted before the trial court that Navarro was the mother of Guevarra. However, petitioners denied before the Court of Appeals that Navarro was the mother of Guevarra. We agree with the appellate court that this constitutes an impermissible change of theory. When a party adopts a certain theory in the court below, he cannot change his theory on appeal. To allow him to do so is not only unfair to the other party, it is also offensive to the basic rules of fair play, justice and due process.[35] If Navarro were not the mother of Guevarra, it would only further undermine petitioners case. Absent any hereditary relationship between Guevarra and Navarro, the Property would not have passed from Navarro to Guevarra, and then to the latters children, including petitioners, by succession. There would then be no basis for petitioners claim of co-ownership by virtue of inheritance from Guevarra. On the other hand, this would not undermine respondents position since they anchor their claim on the sale under the Kasulatan and not on inheritance from Guevarra.
21

Since the notarized Kasulatan is evidence of greater weight which petitioners failed to refute by clear and convincing evidence, this Court holds that petitioners were not able to prove by preponderance of evidence that the Property belonged to Guevarras estate. There is therefore no legal basis for petitioners complaint for partition of the Property. WHEREFORE, the Decision of 26 June 1998 of the Court of Appeals in CA-G.R. CV No. 51643, dismissing the complaint of petitioners against Felomena Jumaquio Estimo and Emiliana Jumaquio, is AFFIRMED. SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Azcuna, JJ., concur.

[1]

Under Rule 45 of the Rules of Court.

SECOND DIVISION G.R. No. 128338 March 28, 2005

TINING RESUENA, ALEJANDRA GARAY, LORNA RESUENA, ELEUTERIO RESUENA, EUTIQUIA ROSARIO and UNISIMA RESUENA, Petitioner, vs. HON. COURT OF APPEALS, 11th DIVISION and JUANITO BORROMEO, SR., Respondents. DECISION TINGA, J.: This is a Rule 45 Petition for Review on Certiorari of the Decision1 of the Court of Appeals affirming that of the Regional Trial Court (RTC) of Cebu,2 which in turn reversed that of the Metropolitan Trial Court (mtc) of Talisay, Cebu.3 The facts are as follows: Private respondent, the late Juanito Borromeo, Sr.4 (hereinafter, respondent), is the co-owner and overseer of certain parcels of land located in Pooc, Talisay, Cebu, designated as Lots Nos. 2587 and 2592 of the Talisay-Manglanilla Estate. Respondent owns six-eighths (6/8) of Lot
22

No. 2587 while the late spouses Inocencio Bascon and Basilisa Maneja (Spouses Bascon) own two-eights (2/8) thereof. On the other hand, Lot No. 2592 is owned in common by respondent and the heirs of one Nicolas Maneja. However, the proportion of their undivided shares was not determined a quo. Prior to the institution of the present action, petitioners Tining Resuena, Alejandra Garay, Lorna Resuena, Eleuterio Resuena, and Unisima Resuena resided in the upper portion of Lot No. 2587, allegedly under the acquiescence of the Spouses Bascon and their heir, Andres Bascon. On the other hand, petitioner Eutiquia Rosario occupied a portion of Lot No. 2592, allegedly with the permission of the heirs of Nicolas Maneja, one of the original co-owners of Lot No. 2587. Respondent claims that all petitioners have occupied portions of the subject property by virtue of his own liberality. Respondent developed portions of Lots Nos. 2587 and 2592 occupied by him into a resort known as the Borromeo Beach Resort. In his desire to expand and extend the facilities of the resort that he established on the subject properties, respondent demanded that petitioners vacate the property. Petitioners, however, refused to vacate their homes. On 16 February 1994, respondent filed a Complaint5 for ejectment with the MTC against the petitioners. After a summary proceeding, the MTC, in a Decision6 dated 10 October 1994, found that Lots Nos. 2587 and 2592 were owned in common by respondent with other persons. The MTC ruled that respondent did not have a preferential right of possession over the portions occupied by petitioners, since Lots Nos. 2587 and 2592 were not yet partitioned nor the disputed portions assigned to respondent as his determinate share. Thus, the MTC held that respondent had no right to evict petitioners therefrom. Consequently, respondents Complaint was dismissed. Notably, the MTC held that respondent and the spouses Bascon were the owners in common of Lot No. 2587 and their respective shares had not yet been determined by partition as proven by a testimony given by respondent in Civil Case No. R-14600, viz: Q. And the participation there of Inocencio Bascon is 2/8 of the said parcel of land?
23

A. Yes sir. Q. And until the present that parcel of land is undivided? A. It is not yet partitioned, but during the time of Basilisa Maneja we had already made some indications of the portions that we came to occupy. Q. That is the parcel of land where you have your beach resort? A. Yes, sir; and that was our agreement, verbally, that with respect to the portion of the land towards the sea-shore it will be my share and that portion of the land towards the upper part will be theirs."7 On appeal, the RTC reversed the Decision of the MTC. It held that Article 487 of the Civil Code, which allows any one of the co-owners to bring an action in ejectment, may successfully be invoked by the respondent because, in a sense, a co-owner is the owner and possessor of the whole, and that the suit for ejectment is deemed to be instituted for the benefit of all co-owners.8 The RTC also ruled that assuming petitioners were authorized to occupy a portion of the co-owned property, they could resume this occupation when the properties shall have been partitioned and allocated to the ones who gave them permission to reside therein. It thus held: WHEREFORE, judgment of the lower court is hereby reversed and the defendants are hereby directed to vacate the premises in question without prejudice to their going back to the land after partition shall have been effected by the coheirs and/or co-owners among themselves but to the specific portion or portions adjudicated to the person or persons who allegedly authorized them to occupy their portions by tolerance.9 The Court of Appeals affirmed the Decision of the RTC; hence, this petition which involves the following assignment of errors:10 1. That with grave abuse of discretion, amounting to excess of jurisdiction, the honorable eleventh division of the court of appeals erred in NOT APPLYING and/or in NOT DECLARING private respondent juanito borromeo estopped in filing this ejectment case against the herein six (6) petitioners.
24

2. That with grave abuse of discretion, the honorable eleventh division of the court of appeals erred in incorrectly applying the statute of frauds, considering that the verbal agreement entered into by and between spouses inocencio bascon and basilisa maneja on the one hand and juanito borromeo on the other more than twenty (20) years ago today, was already an EXECUTED CONTRACT. 3. That with grave abuse of discretion, amounting to excess of jurisdiction, the honorable eleventh division of the court of appeals erred in ignoring outright article 493 of the new civil code of the philippines, considering that the six (6) petitioners are only ASSIGNEES, pure and simple, of co-owners spouses ignacio bascon and basilisa maneja and/or andres bascon, the adopted son of the said spouses. 4. That granting arguendo that the herein six (6) petitioners have to be ejected, the eleventh division of the court of appeals erred in NOT remanding this case to the court of origin for the reception of evidence for damages, pursuant to and in accordance with art. 546, new civil code. The petition cannot prosper. At the outset it must be stated that petitioners ground their petition on respondents testimony in Civil Case No. R-14600 that he had agreed with co-owner, Basilisa Maneja, on the portions they each were to occupy in Lot No. 2587 prior to the partition of the property. However, respondents testimony and, consequently, the agreement alluded to therein pertains solely to Lot No. 2587which, admittedly, all of petitioners occupy, save for Eutiquia Rosario who occupies Lot No. 2592. No argument was presented in this petition as regards the latters claim. Having no basis to review Eutiquia Rosarios claim to be allowed to continue in her occupation of Lot No. 2592, this Court maintains the holding of the RTC on this matter, as affirmed by the Court of Appeals, that respondent has the right to eject petitioner Eutiquia Rosario from Lot No. 2592. With regard to the other five (5) petitioners, the Court notes that their first three assignments of errors are interrelated and built on each other. Petitioners allege that respondents testimony in Civil Case No. R-14600, expressing that the upper two-eighths (2/8) portion of Lot No. 2587 would
25

be occupied by Basilisa Maneja, constituting as it does a waiver of said portion, has estopped respondent from claiming the portion. Basilisa Maneja and her husband allegedly relied on this agreement when the spouses assigned the upper portion of Lot No. 2587 to petitioners. Moreover, petitioners claim that their occupation of the upper portion of Lot No. 2587 had consummated the verbal agreement between respondent and Basilisa Maneja and brought agreement beyond the purview of the Statute of Frauds. A careful perusal of the foregoing issues reveals that petitioners assumed the following as proven facts: (1) respondent had indicated to Basilisa Maneja the portions they were to occupy in Lot No. 2587; and (2) the Spouses Bascon assigned to petitioners their portions of Lot No. 2587. By claiming these as the bases for their assignment of errors, petitioners in essence are raising questions of fact.11 The issues raised by petitioners on the application of estoppel, statute of frauds, and the assignment of properties owned in common in their favor, while ostensibly raising questions of law, invite this Court to rule on questions of fact. This runs counter to the settled rule that only questions of law may be raised in a petition for review before the Court and the same must be distinctly set forth.12 It is not the function of this Court to weigh anew the evidence already passed upon by the Court of Appeals for such evidence is deemed final and conclusive and may not be reviewed on appeal. A departure from the general rule may be warranted, among others, where the findings of fact of the Court of Appeals are contrary to the findings and conclusions of the trial court, or when the same is unsupported by the evidence on record.13 In the instant case, the RTC and the Court of Appeals rendered judgment merely on questions of law as applied to the facts as determined by the MTC. Consequently this Court must proceed on the same set of facts without assuming, as petitioners have done, the veracity of claims which have been considered, but not accepted as facts, by the courts below. Guided by the foregoing, this Court finds in this case that filtered of the muddle from petitioners assignment of errors, it is unmistakable that respondent has a right to eject the petitioners from Lot No. 2587.

26

Article 487 of the Civil Code, which provides simply that "[a]ny one of the co-owners may bring an action in ejectment," is a categorical and an unqualified authority in favor of respondent to evict petitioners from the portions of Lot. No. 2587. This provision is a departure from Palarca v. Baguisi,14 which held that an action for ejectment must be brought by all the co-owners. Thus, a coowner may bring an action to exercise and protect the rights of all. When the action is brought by one co-owner for the benefit of all, a favorable decision will benefit them; but an adverse decision cannot prejudice their rights.15 Respondents action for ejectment against petitioners is deemed to be instituted for the benefit of all co-owners of the property16 since petitioners were not able to prove that they are authorized to occupy the same. Petitioners lack of authority to occupy the properties, coupled with respondents right under Article 487, clearly settles respondents prerogative to eject petitioners from Lot No. 2587. Time and again, this Court has ruled that persons who occupy the land of another at the latter's tolerance or permission, without any contract between them, are necessarily bound by an implied promise that they will vacate the same upon demand, failing in which a summary action for ejectment is the proper remedy against them.17 Petitioners pose the strange claim that respondent had estopped himself from filing an ejectment case against petitioners by his aforequoted testimony in Civil Case No. R-14600. Such testimony is irrelevant to the case at bar, as it does nothing to strengthen the claim of petitioners that they had a right to occupy the properties. This testimony merely indicates that there might have been an agreement between the Spouses Bascon and Borromeo as to which of them would occupy what portion of Lot No. 2587. Yet this averment hardly establishes a definitive partition, or moreover, any right of petitioners to dwell in any portion of Lot No. 2587. Besides, "[e]stoppel is effective only as between the parties thereto or their successors in interest;" thus, only the spouses Bascon or their successors in interest may invoke such "estoppel." A stranger to a transaction is neither bound by, nor in a position to take advantage of, an estoppel arising therefrom.18

27

For the same reason, it is of no moment whether indeed, as petitioners claim, there was a verbal contract between Basilisa Maneja and Borromeo when the latter indicated the portions they each were to occupy in Lot No. 2587. Such verbal contract, assuming there was one, does not detract from the fact that the common ownership over Lot No. 2587 remained inchoate and undivided, thus casting doubt and rendering purely speculative any claim that the Spouses Bascon somehow had the capacity to assign or transmit determinate portions of the property to petitioners. Thus, in order that the petition may acquire any whiff of merit, petitioners are obliged to establish a legal basis for their continued occupancy of the properties. The mere tolerance of one of the co-owners, assuming that there was such, does not suffice to establish such right. Tolerance in itself does not bear any legal fruit, and it can easily be supplanted by a sudden change of heart on the part of the owner. Petitioners have not adduced any convincing evidence that they have somehow become successors-ininterest of the Spouses Bascon, or any of the owners of Lot No. 2587. Indeed, there is no writing presented to evidence any claim of ownership or right to occupancy to the subject properties. There is no lease contract that would vest on petitioners the right to stay on the property. As discussed by the Court of Appeals,19 Article 1358 of the Civil Code provides that acts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property must appear in a public instrument. How then can this Court accept the claim of petitioners that they have a right to stay on the subject properties, absent any document which indubitably establishes such right? Assuming that there was any verbal agreement between petitioners and any of the owners of the subject lots, Article 1358 grants a coercive power to the parties by which they can reciprocally compel the documentation of the agreement.20 Thus, the appellate court correctly appreciated the absence of any document or any occupancy right of petitioners as a negation of their claim that they were allowed by the Spouses Bascon to construct their houses thereon and to stay thereon until further notice. On this note, this Court will no longer belabor petitioners allegation that their occupation of Lot No. 2587 is justified pursuant to the alleged but unproven permission of the Spouses Bascon.

28

All six (6) petitioners claim the right to be reimbursed "necessary expenses" for the cost of constructing their houses in accordance with Article 546 of the Civil Code.21 It is well-settled that while the Article allows full reimbursement of useful improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. Verily, persons whose occupation of a realty is by sheer tolerance of its owners are not possessors in good faith.22 The lower courts have made a common factual finding that petitioners are occupying portions of Lots No. 2587 and 2592 by mere tolerance. Thus, petitioners have no right to get reimbursed for the expenses they incurred in erecting their houses thereon. WHEREFORE, premises considered, the Petition is DENIED and the Decision of the Court of Appeals AFFIRMED. Costs against petitioners. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur. G.R. No. 157954 March 24, 2006

PAZ GALVEZ, CARLOS TAM, and TYCOON PROPERTIES, INC., Petitioners, vs. HON. COURT OF APPEALS and PORFIRIO GALVEZ, Respondents. DECISION CHICO-NAZARIO, J.: The factual antecedents of this case reveal that Timotea F. Galvez died intestate on 28 April 1965.1 She left behind her children Ulpiano and Paz Galvez. Ulpiano, who died on 24 July 1959,2 predeceased Timotea and was survived by his son, Porfirio Galvez. Timotea left a parcel of land situated at Pagdaraoan, San Fernando, La Union, covered by Tax Declaration No. 396453 and more particularly described as follows:

29

A parcel of unirrigated riceland situated at Brgy. Pagdaraoan, San Fernando, La Union under Tax Declaration No. 39645, series of 1957, with an area of 4,304.5 square meters, more or less bounded on the North by Valentin and Isidoro Sobrepea; on the East by Nicolas Ducusin; on the South by Victor Ducusin; and on the West by the National Highway.4 Considering that all the other compulsory heirs of Timotea already received their respective shares,5 the property passed by succession, both to Timoteas daughter, Paz Galvez, and to the formers grandson, Porfirio, the latter succeeding by right of representation as the son of Ulpiano. Porfirio Galvez was surprised to discover that on 4 May 1970,6 Paz Galvez executed an affidavit of adjudication stating that she is the true and lawful owner of the said property. Tax Declarations No. 157497 and No. 123428were then issued in the name of Paz Galvez. On 22 June 1992, without the knowledge and consent of Porfirio Galvez, Paz Galvez sold the property to Carlos Tam for a consideration of Ten Thousand Pesos (P10,000.00) by way of a Deed of Absolute Sale.9 Carlos Tam thereafter filed an application for registration of said parcel of land under Land Registration Case No. 2278 before the Regional Trial Court (RTC) of San Fernando, La Union. On 21 January 1994, Original Certificate of Title No. 0-2602 of the Registry of Deeds of San Fernando, La Union, was issued in the name of Carlos Tam.10 Subsequently, on 27 September 1994, Carlos Tam sold the property to Tycoon Properties, Inc. through a Deed of Absolute Sale executed by the former in favor of the latter.11 As a result, the title of Carlos Tam over the property was cancelled and a new one, Transfer Certificate of Title (TCT) No. T-4039012 was issued in favor of Tycoon Properties, Inc. On 12 May 1994, Porfirio Galvez filed Civil Case No. 4895 before the RTC, Branch 26, of San Fernando, La Union, for Legal Redemption with Damages and Cancellation of Documents13 against Paz Galvez and Carlos Tam. The Complaint was later amended to implead as additional defendant, Tycoon Properties, Inc.14 When Tycoon Properties, Inc. filed its Answer, it also filed a cross-claim against Carlos Tam. In a decision15 dated 15 December 1999, the trial court held: WHEREFORE, in view of the foregoing, judgment is hereby rendered as follows:

30

1. declaring null and void the Affidavit of Adjudication executed by defendant PAZ GALVEZ dated May 4, 1970; 2. declaring null and void the Deed of Absolute Sale over the property originally covered by Tax Declaration No. 39645 executed by PAZ GALVEZ in favor of CARLOS TAM; 3. the Original Certificate of Title No. 0-2602, in the name of CARLOS TAM be considered cancelled; 4. The Deed of Sale between CARLOS TAM and TYCOON PROPERTIES, Inc. is hereby ordered cancelled with Transfer Certificate of Title No. T-40390, being null and void; 5. That CARLOS TAM shall receive from the Clerk of Court, San Fernando City, La Union the amount of Ten Thousand (P10,000.00) pesos, as redemption of the property pursuant to law; 6. That the property covered by Transfer Certificate of Title No. T40390, be reconveyed (whole property) to PORFIRIO GALVEZ, he having redeemed one-half () of the property from CARLOS TAM and other half of the property belongs to him as co-heir of TIMOTEA FLORES GALVEZ. 7. Defendant PAZ GALVEZ and CARLOS TAM shall be liable solidarily for the actual damages of the plaintiff in the amount of Ten Thousand (P10,000.00) pesos as well as moral damages in the amount of Fifty Thousand (P50,000.00) Pesos, together with attorney's fees in the amount of Ten Thousand (P10,000.00) Pesos acceptance fee and Five Hundred (P500.00) per appearance fee.16 Petitioners Paz Galvez, Carlos Tam and Tycoon Properties, Inc. appealed the decision to the Court of Appeals.17In a decision of the Court of Appeals dated 28 August 2002,18 the appellate court resolved to affirm the decision of the trial court. Petitioners filed a Motion for Reconsideration which was denied in a resolution dated 14 April 2003.19 Not contented with the decision of the Court of Appeals, petitioners are now before this Court via Petition for Review on Certiorari under Rule 45 of the Rules of Court.
31

Petitioners Carlos Tam and Tycoon Properties, Inc. separately filed their Memorandum20 but raised the same issues to wit: I THE HONORABLE COURT OF APPEALS ERRED WHEN IT REFUSED TO HOLD THAT RESPONDENT'S CLAIM OVER THE SUBJECT PROPERTY, WHICH IS BASED ON AN IMPLIED TRUST, HAS ALREADY PRESCRIBED BECAUSE THE ACTION WAS FILED 24 YEARS AFER PETITIONER REPUDIATED THE SAID TRUST. II THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO RECOGNIZE THAT RESPONDENT'S CLAIM IS ALREADY BARRED BY LACHES BECAUSE HE FAILED TO ASSERT HIS ALLEGED RIGHT FOR ALMOST TWENTY FOUR (24) YEARS. III THE HONORABLE COURT ERRED IN FAILING TO RECOGNIZE THAT PETITIONERS [CARLOS TAM AND] TYCOON PROPERTIES ARE BUYERS IN GOOD FAITH AND FOR VALUE AND HAS THE RIGHT TO RELY ON THE FACE OF THE TITLE.21 In assailing the decisions of the trial and appellate courts, petitioners cite Article 145122 of the Civil Code and claim that an implied or constructive trust which prescribes in ten years, was established between Paz Galvez and Porfirio Galvez. It is petitioners unflinching stand that the implied trust was repudiated when Paz Galvez executed an Affidavit of Self-Adjudication on 4 May 1970, registered the same before the Register of Deeds of La Union on 4 June 1970 and secured a new tax declaration in her name. From 4 May 1970 to the time the complaint was filed on 12 May 1994, 24 years have passed, hence, the action is clearly barred both by prescription and laches. We find the petition bereft of merit. Ostensibly, this case is governed by the rules on co-ownership23 since both Paz Galvez and Porfirio Galvez are obviously co-owners of the disputed property having inherited the same from a common ancestor. Article 494 of
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the Civil Code provides that "[a] prescription shall not run in favor of a coowner or co-heir against his co-owners or co-heirs as long as he expressly or impliedly recognizes the co-ownership." It is a fundamental principle that a co-owner cannot acquire by prescription the share of the other co-owners, absent any clear repudiation of the coownership.24 In Santos v. Santos,25 citing the earlier case of Adille v. Court of Appeals,26 this Court found occasion to rule that: Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation (of the co-ownership). The act of repudiation, in turn, is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners; (3) the evidence thereon is clear and conclusive; and (4) he has been in possession through open, continuous, exclusive, and notorious possession of the property for the period required by law. For title to prescribe in favor of a co-owner there must be a clear showing that he has repudiated the claims of the other co-owners and the latter has been categorically advised of the exclusive claim he is making to the property in question. The rule requires a clear repudiation of the coownership duly communicated to the other co-owners.27 It is only when such unequivocal notice has been given that the period of prescription will begin to run against the other co-owners and ultimately divest them of their own title if they do not seasonably defend it.28 To sustain a plea of prescription, it must always clearly appear that one who was originally a joint owner has repudiated the claims of his coowners, and that his co-owners were apprised or should have been apprised of his claim of adverse and exclusive ownership before the alleged prescriptive period began to run.29 In Salvador v. Court of Appeals,30 it was held that the possession of a coowner is like that of a trustee and shall not be regarded as adverse to the other co-owner but in fact beneficial to all of them. The case of Huang v. Court of Appeals31 is instructive on the creation of trust relationships.

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Trust is a fiduciary relationship with respect to property which involves the existence of equitable duties imposed upon the holder of the title to the property to deal with it for the benefit of another. A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary or cestui que trust. Trust is either express or implied. Express trust is created by the intention of the trustor or of the parties. Implied trust comes into being by operation of law. The latter kind is either constructive or resulting trust. A constructive trust is imposed where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it. The duty to convey the property arises because it was acquired through fraud, duress, undue influence or mistake, or through breach of a fiduciary duty, or through the wrongful disposition of anothers property. On the other hand, a resulting trust arises where a person makes or causes to be made a disposition of property under circumstances which raise an inference that he does not intend that the person taking or holding the property should have the beneficial interest in the property. It is founded on the presumed intention of the parties, and as a general rule, it arises where, and only where such may be reasonably presumed to be the intention of the parties, as determined from the facts and circumstances existing at the time of the transaction out of which it is sought to be established. Acts which may be considered adverse to strangers may not be considered adverse insofar as co-owners are concerned. Thus, Salvador v. Court of Appeals reiterated what acts constitute proof of exclusive ownership amounting to repudiation, emphasizing that the act must be borne out of clear and convincing evidence of acts of possession which unequivocably amounts to an ouster or deprivation of the right of the other co-owner. The case of Pangan v. Court of Appeals32 enumerated the following as constituting acts of repudiation: Filing by a trustee of an action in court against the trustor to quiet title to property, or for recovery of ownership thereof, held in possession by the former, may constitute an act of repudiation of the trust reposed on him by the latter. The issuance of the certificate of title would constitute an open and clear repudiation of any trust, and the lapse of more than 20 years, open and
34

adverse possession as owner would certainly suffice to vest title by prescription. An action for the reconveyance of land based on implied or constructive trust prescribes within 10 years. And it is from the date of the issuance of such title that the effective assertion of adverse title for purposes of the statute of limitation is counted. The prescriptive period may only be counted from the time petitioners repudiated the trust relation in 1955 upon the filing of the complaint for recovery of possession against private respondents so that the counterclaim of the private respondents contained in their amended answer wherein they asserted absolute ownership of the disputed realty by reason of the continuous and adverse possession of the same is well within the 10year prescriptive period. There is clear repudiation of a trust when one who is an apparent administrator of property causes the cancellation of the title thereto in the name of the apparent beneficiaries and gets a new certificate of title in his own name. It is only when the defendants, alleged co-owners of the property in question, executed a deed of partition and on the strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance of a new one wherein they appear as the new owners of a definite area each, thereby in effect denying or repudiating the ownership of one of the plaintiffs over his alleged share in the entire lot, that the statute of limitations started to run for the purposes of the action instituted by the latter seeking a declaration of the existence of the co-ownership and of their rights thereunder. In this case, we find that Paz Galvez effected no clear and evident repudiation of the co-ownership. The execution of the affidavit of selfadjudication does not constitute such sufficient act of repudiation as contemplated under the law as to effectively exclude Porfirio Galvez from the property. This Court has repeatedly expressed its disapproval over the obvious bad faith of a co-heir feigning sole ownership of the property to the exclusion of the other heirs essentially stating that one who acts in bad faith should not be permitted to profit from it to the detriment of others. In the cases of Adille33 and Pangan34 where, as in this case, a co-heir was
35

excluded from his legal share by the other co-heir who represented himself as the only heir, this Court held that the act of exclusion does not constitute repudiation. On the issue of prescription, while admittedly prescription operates as a bar to recovery of property, the ten-year period commenced to run from date of registration. In this case, Carlos Tam obtained his title to the property on 21 January 1994. Since the complaint of Porfirio Galvez was filed on 12 May 1994, the same was well within the ten-year period to file the action. On the matter of laches, it is hornbook doctrine that laches is a creation of equity and its application is controlled by equitable considerations. Laches cannot be used to defeat justice or perpetrate fraud and injustice. 35 Neither should its application be used to prevent the rightful owners of a property from recovering what has been fraudulently registered in the name of another.36 The equitable remedy of laches is, therefore, unavailing in this case. Finally, petitioners claim that if the sale would be nullified, the nullification should extend only to the one-half share of Porfirio Galvez37 but not to the share of Paz Galvez, who, by her overt act of selling the property, manifested her intention to dispose of her part. Notably, Porfirio Galvezs complaint was captioned "legal redemption with damages, cancellation of documents and reconveyance of share."38 In his prayer, he sought for the reconveyance of his one-half share in the property and at the same time be subrogated to the other half pertaining to Paz Galvez and sold to Carlos Tam after reimbursement of the amount which the latter paid for the property. The pertinent provisions of the Civil Code on legal redemption are as follows: ART. 1619. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title. ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are sold to a
36

third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. In the case of Hermoso v. Court of Appeals,39 this Court, in interpreting the provision of the law on legal redemption, held: The purpose of Article 1067 (of the old Civil Code, now Article 1088 of the present Civil Code) is to keep strangers to the family out of a joint ownership, if, as is often the case, the presence of outsiders be undesirable and the other heir or heirs be willing and in a position to repurchase the share sold (De Jesus vs. Manlapus, 81 Phil. 144). While there should be no question that an heir may dispose his right before partition (Rivero vs. Serrano [CA] 46 O.G. 642; Wenceslao vs. Calimon, 46 Phil. 906; Hernaez vs. Hernaez, 32 Phil. 214), a co-heir would have had to pay only the price for which the vendee acquired it (Hernaez vs. Hernaez, Ibid.). It is a one-way street. It is always in favor of the redemptioner since he can compel the vendee to sell to him but he cannot be compelled by the vendee to buy the alienated property. In another case, 40 this Court reiterated that: Legal redemption is in the nature of a privilege created by law partly for reasons of public policy and partly for the benefit and convenience of the redemptioner, to afford him a way out of what might be a disagreeable or [an] inconvenient association into which he has been thrust. (10 Manresa, 4th Ed., 317.) It is intended to minimize co-ownership. The law grants a coowner the exercise of the said right of redemption when the shares of the other owners are sold to a "third person." The rule on redemption is liberally construed in favor of the original owner of the property and the policy of the law is to aid rather than defeat him in the exercise of his right of redemption.41 Thus, petitioners cannot be accommodated in this respect and we agree with the trial court when it held:
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The provision of Art. 1088 of the Civil Code of the Philippines is very clear on the matter. Art. 1088, provides: "Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one (1) month from the time they were notified in writing of the sale by the vendor." There was no written notice sent to Porfirio Galvez by Paz Galvez when she sold her share over the land to Carlos Tam. Porfirio Galvez only discovered on May 12, 1994 that the land was sold to Carlos Tam. Art. 1620, Civil Code of the Philippines, provides: Art. 1620. "A co-owner of a thing may exercise the right of redemption in case the share of all the other co-owners or any of them are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one." No written notice of the sale was given by Paz Galvez (vendor) to Porfirio Galvez, the co-owner as required under Art. 1623 of the Civil Code. The written notice is mandatory. Hence, the right to redeem commenced when plaintiff sought to exercise it by instituting the complaint in the instant case on June 12, 1994. The complaint of legal redemption may be filed even several years after the consummation of sale (Zosima Verdad vs. Court of Appeals, et al.; G.R. No. 10972, April 29, 1996).42 As to petitioners Carlos Tam and Tycoon Properties, Inc.s claim that they are buyers in good faith, same fails to persuade. A purchaser in good faith and for value is one who buys the property without notice that some other person has a right to or interest in such property and pays its fair price before he has notice of the adverse claims and interest of another person in the same property. So it is that the "honesty of intention" which constitutes good faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry.43 Suffice it to state that both the trial and appellate courts found otherwise as "Tam did not exert efforts to determine the previous ownership of the property in question"44 and relied only on the tax declarations in the name of Paz Galvez.45 It must be noted that Carlos Tam received a copy of the
38

summons and the complaint on 22 September 1994. This notwithstanding, he sold the property to Tycoon Properties, Inc. on 27 September 1994. Significantly, Carlos Tam is also an owner of Tycoon Properties, Inc. to the extent of 45%.46 A notice of lis pendens dated 8 July 1997 filed with the Registry of Deeds of the Province of La Union was inscribed on TCT No. T40390.47 Despite the inscription, Tycoon Properties, Inc. mortgaged the land to Far East Bank and Trust Company for the sum ofP11,172,600.48 All these attendant circumstances negate petitioners claim of good faith. Wherefore, premises considered, the decision of the Court of Appeals dated 28 August 2002 and its Resolution dated 14 April 2003 are Affirmed. Costs against petitioners. SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice .R. No. 141501 July 21, 2006

ELINO RIVERA, DOMINADOR CLAUREN, SOLEDAD CLAUREN DE RIVERA, TEOFILA RIVERA and CECILIA RIVERA, petitioners, vs. HEIRS OF ROMUALDO VILLANUEVA* represented by MELCHOR VILLANUEVA, ANGELINA VILLANUEVA, VICTORIANO DE LUNA, CABANATUAN CITY RURAL BANK, INC. and REGISTER OF DEEDS OF NUEVA ECIJA,respondents. DECISION CORONA, J.: This petition for review on certiorari1 from a decision2 and a resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 51449 touches upon questions of filiation, presumptions of co-equal acquisition and res judicata. Petitioners are allegedly the half-brothers (Elino and Dominador), the halfsister-in-law (Soledad), and the children of a half-brother (Teofila and Cecilia) of the deceased Pacita Gonzales (hereinafter Gonzales). Respondents Catalino, Lucia, Purificacion and Melchor, all surnamed Villanueva, and Arnaldo V. Avendano are allegedly the siblings, full and
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half-blood of Romualdo Villanueva (hereinafter Villanueva).4 They are denominated as the heirs of Villanueva and are represented by Melchor. They were allowed to substitute for Villanueva upon his death.5The remaining respondents, Angelina Villanueva (hereinafter respondent Angelina) and husband Victoriano de Luna, are allegedly the daughter and the son-in-law, respectively, of the late Villanueva. From 1927 until her death in 1980, Gonzales cohabited with Villanueva without the benefit of marriage because the latter was married to one Amanda Musngi who died on April 20, 1963.6 In the course of their cohabitation, they acquired several properties including the properties contested in this case. The disputed properties are: (a) Lot No. 266-B-1, with an area of 1,787 square meters, more or less, and covered by Transfer Certificate of Title No. NT-21446 [in the names of Villanueva and Gonzales], together with the residential house erected thereon and other improvements; (b) Lot No. 266-B-3 [included in the coverage of transfer Certificate of Title No. NT-21446], with an area of 5,353 square meters, more or less, situated at Poblacion, Talavera, Nueva Ecija; (c) [Lot 801-A covered by] Transfer Certificate of Title No. NT-12201 [in the names of Villanueva and Gonzales], with [an] area of 15.400 hectares, more or less, situated at Llanera, Nueva Ecija; (d) [Lot 3-A covered by] Transfer Certificate of Title No. NT-51899 [in the names of Villanueva and Gonzales], with an area of 4.0019 hectares, more or less, situated at Calipahan, Talavera, Nueva Ecija; (e) [Lot No. 838 covered by] Transfer Certificate of Title No. NT17193 [in the names of Villanueva, Gonzales and one Soledad Alarcon vda. de Rivera], with an area of 3.8718 hectares, more or less, situated at Talavera, Nueva Ecija; (f) [Lot 884-B covered by] Transfer Certificate of Title No. NT-26670 [in the name of Gonzales], with an area of 3.5972 hectares, more or less, situated at Talavera, Nueva Ecija; (g) Subdivision lots situated at Talavera, Nueva Ecija, covered by Transfer Certificates of Title Nos. 106813 to 106931, inclusive,
40

although the land covered by TCT No. NT-106827 was already sold to one Pastor Barlaan; (h) Shares of stocks, tractor, jewelries and other chattels, with an approximate value of at least P100,000; and (i) Savings deposit with the [Philippine] National Bank, in the amount of P118,722.61.7 Gonzales died on July 3, 1980 without leaving a will. On August 8, 1980, Villanueva and respondent Angelina executed a deed of extrajudicial partition with sale,8 that is, an extrajudicial settlement of Gonzales' estate comprising a number of the aforementioned properties. In this document, Villanueva, for the amount of P30,000, conveyed his interests in the estate to Angelina. Petitioners (Gonzales' half-brothers, etc.) filed a case for partition of Gonzales' estate and annulment of titles and damages, with the Regional Trial Court (RTC) of Santo Domingo, Nueva Ecija, Branch 37. It was docketed as Civil Case No. SD-857 (SD-857). In dismissing the complaint, the RTC made two findings: (1) Gonzales was never married to Villanueva and (2) respondent Angelina was her illegitimate child by Villanueva and therefore her sole heir, to the exclusion of petitioners.9 Not satisfied with the trial court's decision, petitioners appealed to the CA which affirmed it. Hence, this petition. Petitioners contend that the RTC and CA erred in finding that respondent Angelina was Gonzales' illegitimate daughter despite the RTC's ruling in another case, Special Proceedings No. SD-144 (SD-144), entitled In the Matter of the Intestate Estate of the late Pacita C. Gonzales, Epifanio C. Rivera, petitioner, v. Romualdo Villanueva, oppositor, in which the trial court appointed Epifanio Rivera as administrator of Gonzales' estate.10 They argue that the trial court's decision in SD-144, to the effect that respondent Angelina was neither the adopted nor the illegitimate daughter of Gonzales, should have operated as res judicata on the matter of respondent Angelina's status.

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The first issue here is whether or not the findings regarding respondent Angelina's filiation in SD-144 are conclusive on SD-857 and therefore res judicata. The second is the determination of her real status in relation to Gonzales. Finally, there is the question of whether or not the real properties acquired by Villanueva and Gonzales were equally owned by them. We resolve the first issue in the negative. Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment." It sets forth the rule that an existing final judgment or decree rendered on the merits and without fraud or collusion by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.11 For res judicata to apply, the following elements must be present: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits and (4) there, must be as between the first and second action, identity of parties, subject matter and causes of action.12 A number of factors militate against the existence of res judicata. First, the parties in the two cases are different. Epifanio C. Rivera, who incidentally is not a party in this petition, filed SD-144 seeking letters of administration over his dead sister's estate. Villanueva was his lone opponent. On the other hand, although both Villanueva and respondent Angelina were parties in SD-857, Epifanio Rivera was not. Petitioners never alleged that Epifanio represented their interests, and vice versa. Furthermore, in SD-144, the trial court never actually acquired jurisdiction over respondent Angelina's person. She was not even a party there, given that Villanueva did not represent her interest when he opposed Epifanio Rivera's petition.

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Finally and most significantly, there was no identity of cause of action between the two suits. By their very nature, they were entirely distinct from each other. SD-144 was a special proceeding while SD-857 was an ordinary civil case. The former was concerned with the issuance of letters of administration in favor of Epifanio Rivera while the latter was for partition and annulment of titles, and damages. Clearly, then, there was no res judicata. Nevertheless, this still begged the question of whether or not it was proven, as the CA held, that respondent Angelina was the illegitimate daughter of the decedent Gonzales. On this issue, we find merit in the petition. Both the trial court and the CA ruled that respondent Angelina was the illegitimate daughter of the decedent, based solely on her birth certificate. According to the assailed decision, "the birth certificate clearly discloses that Pacita Gonzales was the mother of Angelina Villanueva while municipal treasurer Romualdo Villanueva was denominated therein as her father."13 The CA found this to be adequate proof that respondent Angelina was Gonzales' illegitimate child. However, a closer examination of the birth certificate14 reveals that respondent Angelina was listed as "adopted" by both Villanueva and Gonzales. As a general rule, the Supreme Court is not a trier of facts.15 However, one of the exceptions to this rule is when the judgment of the CA is based on a misapprehension of facts.16 We believe this to be just such an instance. In Benitez-Badua v. Court of Appeals,17 Marissa Benitez-Badua, in attempting to prove that she was the sole heir of the late Vicente Benitez, submitted a certificate of live birth, a baptismal certificate, income tax returns and an information sheet for membership in the Government Service Insurance System of the decedent naming her as his daughter, and her school records. She also testified that she had been reared and continuously treated as Vicente's daughter. By testimonial evidence alone, to the effect that Benitez-Badua's alleged parents had been unable to beget children, the siblings of Benitez-Badua's supposed father were able to rebut all of the documentary evidence indicating her filiation. One fact that was counted against Benitez-Badua was that her supposed mother Isabel Chipongian, unable to bear any
43

children even after ten years of marriage, all of a sudden conceived and gave birth to her at the age of 36. Of great significance to this controversy was the following pronouncement: But definitely, the mere registration of a child in his or her birth certificate as the child of the supposed parents is not a valid adoption, does not confer upon the child the status of an adopted child and the legal rights of such child, and even amounts to simulation of the child's birth or falsification of his or her birth certificate, which is a public document. (emphasis ours)18 Furthermore, it is well-settled that a record of birth is merely a prima facie evidence of the facts contained therein.19 It is not conclusive evidence of the truthfulness of the statements made there by the interested parties.20 Following the logic of Benitez, respondent Angelina and her codefendants in SD-857 should have adduced evidence of her adoption, in view of the contents of her birth certificate. The records, however, are bereft of any such evidence. There are several parallels between this case and Benitez-Badua that are simply too compelling to ignore. First, both Benitez-Badua and respondent Angelina submitted birth certificates as evidence of filiation. Second, both claimed to be children of parents relatively advanced in age. Third, both claimed to have been born after their alleged parents had lived together childless for several years. There are, however, also crucial differences between Benitez-Badua and this case which ineluctably support the conclusion that respondent Angelina was not Gonzales' daughter, whether illegitimate or adopted. Gonzales, unlike Benitez-Badua's alleged mother Chipongian, was not only 36 years old but 44 years old, and on the verge of menopause21 at the time of the alleged birth. Unlike Chipongian who had been married to Vicente Benitez for only 10 years, Gonzales had been living childless with Villanueva for 20 years. Under the circumstances, we hold that it was not sufficiently established that respondent Angelina was Gonzales' biological daughter, nor even her adopted daughter. Thus, she cannot inherit from Gonzales. Since she could not have validly participated in Gonzales' estate, the extrajudicial partition which she executed with Villanueva on August 8, 1980 was invalid.
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Finally, we come to the question of whether or not the properties acquired by Gonzales and Villanueva during their cohabitation were equally owned by them. According to the trial court in SD-857,22 Gonzales and Villanueva lived together without the benefit of marriage and therefore their property relations were governed by Article 144 of the Civil Code: Art. 144. When a man and a woman live together as husband and wife, but they are not married, or their marriage is void from the beginning, the property acquired by either or both of them through their work or industry or their wages and salaries shall be governed by the rules on co-ownership. However, the contending parties agreed that the relationship of Villanueva and Gonzales was adulterous, at least until the death of Amanda Musngi, Villanueva's legal wife, on April 20, 1963. In their appeal brief, petitioners made the following admission: From 1927 until her death, Pacita [Gonzales] lived together with defendant Romualdo Villanueva ("Romualdo") as husband and wife without the benefit of marriage. Earlier, or sometime in 1913 or 1914, Romualdo was married to Amanda Musngi (or "Amanda"). Amanda died on April 20, 1963.23(emphasis supplied) Respondent Angelina, in her memorandum in SD-857, actually agreed with petitioners on the nature of Villanueva's relationship with Gonzales:24 While Romualdo Villanueva claimed that he and Pacita C. Gonzales lived as husband and wife and that they were married, it turned out that he was not legally married to the latter, for then, his marriage in the year 1927, was still subsisting with one Amanda Musngi. (emphasis supplied) Because the cohabitation of Villanueva and Gonzales from 1927 to 1963 was adulterous, their property relations during those 36 years were not governed by Article 144 of the Civil Code which applies only if the couple living together is not in any way incapacitated from getting married.25 According to the doctrine laid down by Juaniza v. Jose,26 no coownership exists between parties to an adulterous relationship. In Agapay v. Palang,27 we expounded on this doctrine by declaring that in such a relationship, it is necessary for each of the partners to prove his or her actual contribution to the acquisition of property in order to be able to lay
45

claim to any portion of it. Presumptions of co-ownership and equal contribution do not apply. In Agapay, Miguel Palang and his paramour Erlinda Agapay bought a parcel of riceland in Pangasinan which they registered in their names. However, because Agapay failed to prove that she contributed money to the purchase price of the riceland, she could not rightfully claim coownership over the same. Here, the records show only four properties acquired by Villanueva and Gonzales between 1927 and 1963 which they registered in both their names.28 Following Agapay, these can only be apportioned according to the actual contributions of each. Unfortunately, the records are devoid of any evidence that Gonzales contributed anything to the acquisition of these properties. Petitioners merely asserted that she acquired these properties through her own industry29 without a shred of evidence to support the allegation. On the other hand, it was clearly demonstrated that Villanueva was the municipal treasurer of Talavera for many years and therefore the lone breadwinner. In accordance with Agapay, none of these four parcels of land should accrue to petitioners. There is only one parcel of land, covered by Transfer Certificate of Title (TCT) No. NT-26670,30 registered solely in Gonzales' name, which was acquired between 1927 and 1963.31 This fact of registration created a conclusiveness of title in favor of the person in whose name it was registered.32 In SD-857, although Villanueva sought to prove that he alone had purchased the properties and that only he could have done so during the period of cohabitation (since he was the sole breadwinner), he never actually challenged the validity of the registration in her name. Thus the efficacy of the title in Gonzales' name remained unrebutted. As Gonzales' sole property, this should accrue entirely to her heirs. The only property acquired after Musngi's death in 1963 and registered in the names of both Villanueva and Gonzales was Lot 3-A covered by TCT No. NT-51899.33 This was governed by the rules on co-ownership pursuant to Article 144 of the Civil Code. Half of it should pertain to Gonzales' heirs and the other half, to Villanueva. The rest of the properties registered solely in Gonzales' name were also acquired after the death of Amanda Musngi in 1963. The records show that
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the subdivision lots situated in Talavera, Nueva Ecija covered by TCTs Nos. 106813 to 106931 were acquired in 1971.34 These properties were governed by co-ownership under Article 144 of the Civil Code. Again, half should accrue to Gonzales' heirs and the other half, to Villanueva. Significantly, the trial court in SD-857 did not establish the exact relationship between petitioners and Gonzales, a relationship defendants therein (now respondents) vigorously denied. In view of this, there is a need to remand the case to the court of origin for the proper determination and identification of Gonzales' heirs. WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA-G.R. CV No. 51449 are reversed and set aside, and a new one entered ANNULLING the deed of extrajudicial partition with sale and REMANDING the case to the court of origin for the determination and identification of Pacita Gonzales' heirs and the corresponding partition of her estate. SO ORDERED. Puno, Chairperson, Sandoval-Gutierrez, Azcuna, Garcia, J.J., concur. G.R. No. 154322 August 22, 2006 EMILIA FIGURACION-GERILLA, Petitioner, vs. CAROLINA VDA. DE FIGURACION,* ELENA FIGURACIONANCHETA,* HILARIA A. FIGURACION, FELIPA FIGURACION-MANUEL, QUINTIN FIGURACION and MARY FIGURACION-GINEZ, Respondents. DECISION CORONA, J.: In this petition for review on certiorari,1 petitioner Emilia Figuracion-Gerilla challenges the decision2 and resolution3 of the Court of Appeals (CA) affirming the decision of the Regional Trial Court (RTC) of Urdaneta City, Pangasinan, Branch 49, which dismissed her complaint for partition. The properties involved are two parcels of land which belonged to her late father, Leandro Figuracion.
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The facts of the case follow.4 Spouses Leandro and respondent Carolina Figuracion (now both deceased) had six children: petitioner and respondents Elena FiguracionAncheta (now deceased), Hilaria Figuracion, Felipa Figuracion-Manuel, Quintin Figuracion and Mary Figuracion-Ginez. On August 23, 1955, Leandro executed a deed of quitclaim over his real properties in favor of his six children. When he died in 1958, he left behind two parcels of land: (1) Lot 2299 of the Cadastral Survey of Urdaneta consisting of 7,547 square meters with Transfer Certificate of Title (TCT) No. 4221-P in the name of "Leandro Figuracion, married to Carolina Adviento" and (2) Lot 705 of the Cadastral Survey of Urdaneta with an area of 2,900 sq. m. with TCT No. 4220-P also in the name of "Leandro Figuracion, married to Carolina Adviento." Leandro had inherited both lots from his deceased parents,5 as evidenced by Original Certificate of Title (OCT) Nos. 16731 and 16610, respectively, issued by the Register of Deeds of the Province of Pangasinan. Leandro sold a portion of Lot 2299 to Lazaro Adviento, as a result of which TCT No. 4221-P was cancelled and TCT No. 101331 was issued to "Lazaro Adviento, married to Rosenda Sagueped" as owner of the 162 sq. m. and "Leandro Figuracion, married to Carolina Adviento" as owner of 7,385 sq. m. This lot continued to be in the name of Leandro in Tax Declaration No. 616 for the year 1985. What gave rise to the complaint for partition, however, was a dispute between petitioner and her sister, respondent Mary, over the eastern half of Lot 707 of the Cadastral Survey of Urdaneta with an area of 3,164 sq. m. Lot 707 belonged to Eulalio Adviento, as evidenced by OCT No. 15867 issued on February 9, 1916. When Adviento died, his two daughters, Agripina Adviento (his daughter by his first wife) and respondent Carolina (his daughter by his second wife), succeeded him to it. On November 28, 1961, Agripina executed a quitclaim in favor of petitioner over the one-half eastern portion of Lot 707. Agripina died on July 28, 1963, single and without any issue. Before her half-sisters death, however, respondent Carolina adjudicated unto herself, via affidavit under Rule 74 of the Rules of Court, the entire Lot 707 which she later sold to respondents Felipa and Hilaria. The latter two immediately had OCT No. 15867 cancelled, on
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December 11, 1962. A new title, TCT No. 42244, was then issued in the names of Felipa and Hilaria for Lot 707. In February 1971, petitioner and her family went to the United States where they stayed for ten years. Returning in 1981,6 she built a house made of strong materials on the eastern half-portion of Lot 707. She continued paying her share of the realty taxes thereon. It was sometime later that this dispute erupted. Petitioner sought the extrajudicial partition of all properties held in common by her and respondents. On May 23, 1994, petitioner filed a complaint in the RTC of Urdaneta City, Branch 49, for partition, annulment of documents, reconveyance, quieting of title and damages against respondents, praying, among others, for: (1) the partition of Lots 2299 and 705; (2) the nullification of the affidavit of self-adjudication executed by respondent Carolina over Lot 707, the deed of absolute sale in favor of respondents Felipa and Hilaria, and TCT No. 42244; (3) a declaration that petitioner was the owner of one-half of Lot 707 and (4) damages. The case was docketed as Civil Case No. U-5826. On the other hand, respondents took the position that Leandros estate should first undergo settlement proceedings before partition among the heirs could take place. And they claimed that an accounting of expenses chargeable to the estate was necessary for such settlement. On June 26, 1997,7 the RTC8 rendered judgment nullifying Carolinas affidavit of self-adjudication and deed of absolute sale of Lot 707. It also declared Lots 2299 and 705 as exclusive properties of Leandro Figuracion and therefore part of his estate. The RTC, however, dismissed the complaint for partition, reconveyance and damages on the ground that it could not grant the reliefs prayed for by petitioner without any (prior) settlement proceedings wherein the transfer of title of the properties should first be effected. On appeal, the CA upheld the dismissal of petitioners action for partition for being premature. The CA reversed the decision, however, with respect to the nullification of the self-adjudication and the deed of sale. Upholding the validity of the affidavit of self-adjudication and deed of sale as to Carolinas one-half pro-indiviso share, it instead partitioned Lot 707. Dissatisfied, respondents elevated the CA decision to this Court in G.R. No.
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151334, entitledCarolina vda. de Figuracion, et al. v. Emilia FiguracionGerilla.9 The issue for our consideration is whether or not there needs to be a prior settlement of Leandros intestate estate (that is, an accounting of the income of Lots 2299 and 705, the payment of expenses, liabilities and taxes, plus compliance with other legal requirements, etc.) before the properties can be partitioned or distributed. Respondents claim that: (1) the properties constituting Leandros estate cannot be partitioned before his estate is settled and (2) there should be an accounting before anything else, considering that they (respondents) had to spend for the maintenance of the deceased Leandro Figuracion and his wife in their final years, which support was supposed to come from the income of the properties. Among other things, respondents apparently wanted petitioner to share in the expenses incurred for the care of their parents during the ten years she stayed in the United States, before she could get her part of the estate while petitioner apparently wanted her gross share, without first contributing to the expenses. In any event, there appears to be a complication with respect to the partition of Lot 705. The records refer to a case entitled Figuracion, et al. v. Alejo currently pending in the CA. The records, however, give no clue or information regarding what exactly this case is all about. Whatever the issues may be, suffice it to say that partition is premature when ownership of the lot is still in dispute.10 Petitioner faces a different problem with respect to Lot 2299. Section 1, Rule 69 of the Rules of Court provides: SECTION 1. Complaint in action for partition of real estate. A person having the right to compel the partition of real estate may do so as provided in this Rule, setting forth in his complaint the nature and extent of his title and an adequate description of the real estate of which partition is demanded and joining as defendants all other persons interested in the property. The right to an inheritance is transmitted immediately to the heirs by operation of law, at the moment of death of the decedent. There is no doubt that, as one of the heirs of Leandro Figuracion, petitioner has a legal interest in Lot 2299. But can she compel partition at this stage?
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There are two ways by which partition can take place under Rule 69: by agreement under Section 211 and through commissioners when such agreement cannot be reached, under Sections 3 to 6.12 Neither method specifies a procedure for determining expenses chargeable to the decedents estate. While Section 8 of Rule 69 provides that there shall be an accounting of the real propertys income (rentals and profits) in the course of an action for partition,13 there is no provision for the accounting of expenses for which property belonging to the decedents estate may be answerable, such as funeral expenses, inheritance taxes and similar expenses enumerated under Section 1, Rule 90 of the Rules of Court. In a situation where there remains an issue as to the expenses chargeable to the estate, partition is inappropriate. While petitioner points out that the estate is allegedly without any debt and she and respondents are Leandro Figuracions only legal heirs, she does not dispute the finding of the CA that "certain expenses" including those related to her fathers final illness and burial have not been properly settled.14 Thus, the heirs (petitioner and respondents) have to submit their fathers estate to settlement because the determination of these expenses cannot be done in an action for partition. In estate settlement proceedings, there is a proper procedure for the accounting of all expenses for which the estate must answer. If it is any consolation at all to petitioner, the heirs or distributees of the properties may take possession thereof even before the settlement of accounts, as long as they first file a bond conditioned on the payment of the estates obligations.15 WHEREFORE, the petition is hereby DENIED. The Court of Appeals decision and resolution in CA-G.R. CV No. 58290 are AFFIRMED in so far as the issue of the partition of Lots 2299 and 705 is concerned. But with respect to Lot 707, we make no ruling on the validity of Carolina vda. de Figuracions affidavit of self-adjudication and deed of sale in favor of Felipa and Hilaria Figuracion in view of the fact that Carolina vda. de Figuracion, et al. v. Emilia Figuracion-Gerilla (G.R. No. 151334) is still pending in this Division. Costs against petitioner.
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SO ORDERED. G.R. No. 152652 August 31, 2006 TEODORO STA. ANA, Petitioner, vs. LOURDES PANLASIGUE, JULIETA P. SANTIAGO and SPOUSES IRENEO STA. ANA and CANDIDA JARMIN,Respondents. DECISION CARPIO MORALES, J.: Two parcels of land situated at Barrio Pineda, Pasig City, Lots 13-A and 13-B, each containing an area of 225 square meters, were registered in the Registry of Deeds for the Province of Rizal in the name of Petronilo Sta. Ana (Petronilo), married to Anatolia dela Rosa (Anatolia), under Transfer Certificate of Title No. 389002. Petronilo died on March 22, 1980 leaving behind his widow Anatolia and ten children. In 1984, Nicolas, one of the ten children of the Sta Ana couple, died leaving behind two children, Annaliza and Andrea. On April 8, 1988, Anatolia, together with eight of her living children and Fe Sta Ana, the wife of her eldest child-herein petitioner Teodoro Sta. Ana (Teodoro) who was then abroad, executed a Deed of Sale covering Lot 13A in favor of herein respondents Lourdes Panlasigue (Lourdes) and Julieta P. Santiago (Julieta). On even date, Anatolia, together with the same eight children and Teodoros wife Fe, donated Lot 13-B to Ireneo Sta. Ana (Ireneo), one of the Sta. Ana children, via a "Deed of Extrajudicial Partition and Donation" 1 stating, inter alia, as follows, quoted verbatim: xxxx That they are the only legitimate surviving spouses and children who survive the deceased Petronilo Sta. Ana. That the said decedent [Petronilo Sta. Ana] died without leaving any will.

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That the deceased left no debts; xxxx That the deceased left a certain residential lot [Lot 13-B] situated at Pasig Metro Manila and more particularly described and bounded as follows: xxxx That for and in consideration of the love and affection which the aforenamed parties hereinafter referred to as DONORS, hold for IRENEO, hereinafter referred to as DONEE, the DONORS do hereby transfers and conveys, by way of donation, into the DONEE Lot 13-B of TCT No. 389002. That the DONORS do hereby state for the purpose of giving full effect to this donation, that they reserved unto themselves in full ownerships other properties sufficient to support them in a manner appropriate to their stations; That the DONEE does hereby state that he accept this donation and at the same time expresses his profound gratitude for this demonstration of affection and act of liberality on the part of the DONORS who by these presents also take notice of this acceptance; 2 The two documents were annotated on Petronilos title on May 6, 1988. On August 20, 1996, Teodoro filed a Complaint 3 before the Pasig Regional Trial Court (RTC) against herein respondents-vendees of Lot 13-A, Lourdes and Julieta, and his brother-donee Ireneo along with the latters wife Candida Jarmin, for recovery of ownership and damages, docketed as Civil Case No. 65860. In his complaint, Teodoro alleged that, inter alia, his "purported signature" in the Deed of Absolute Sale covering Lot 13-A as well as in the Deed of Extrajudicial Partition and Donation covering Lot 13-B was unauthorized and a forgery. He thus prayed for the court to order: 1. defendants Panlasigue and Santiago to reconvey unto the plaintiff his one-eighteenth (1/18) share in Lot 13-A;

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2. defendants Ireneo Sta. and Jasmin Jarmin to reconvey unto the plaintiff his one-eighteenth (1/18) share in Lot 13-B; 3. defendants Ireneo Sta. Ana and Jasmin Jarmin, jointly and severally, to indemnify the plaintiff for moral damages of at least P100,000.00; exemplary damages of at least P50,000.00 and for attorneys fees ofP50,000.00. 4 (Underscoring supplied) In their Answer 5 to the Complaint, the defendants claimed that the sale of Lot 13-A and the donation of Lot 13-B were the collective decision of Anatolia and the rest of her children-co-heirs including Teodoro; and that the proceeds of the sale were used to underwrite the hospitalization expenses of Anatolia and the expenses incurred by Ireneo who took care of Anatolia during her lifetime. On May 30, 1997, 6 Annaliza Sta. Ana and Andrea Sta Ana, children of Nicolas Sta. Ana (who, as earlier stated, died in 1984), filed a Complaint-InIntervention 7 along with their motion for leave to file the same which was granted, alleging that they, as co-heirs, did not participate in the execution of the Deed of Sale and Deed of Extrajudicial Partition and Donation nor were they informed about it. Hence, they prayed for judgment ordering 1. defendants Panlasigue and Santiago to convey unto plaintiffsintervenors their rightful share in the property now covered by Transfer Certificate of Title No. 66276 of the Register of Deeds in Pasig City, and 2. defendants Sps. Irineo and Candida Sta. Ana to convey unto plaintiffsintervenors their rightful share in the property now covered by Transfer Certificate of Title No. 66275 of the Register of Deeds in Pasig City. 8(Underscoring supplied) Answering the Complaint-In-Intervention, 9 the defendants proffered that "[t]here was a lot allotted to the deceased [Nicolas-]father of the intervenors which the latter could inherit by right of representation." 10 It appears that during the hearing of the cases, the defendants claimed that the properties of Petronilo had, before the execution of the challenged documents, been distributed among all his heirs and that Lot 13-A and Lot 13-B were the conjugal share of his wife Anatolia.

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Finding the extra-judicial partition a nullity for lack of conformity of other compulsory heirs Teodoro, Annaliza and Andrea, Branch 160 of the RTC Pasig, by Decision of October 15, 1999, 11 nullified the challenged documents. Thus it: 1) Declar[ed] the extrajudicial partition as null and void; 2) Declar[ed]the Deed of Absolute Sale between some of the heirs and defendants Panlasigue and Santiago as null and void and [ordered the latter] to reconvey the property subject of Deed of Absolute Sale in favor of "Estate of Deceased Petronilo Sta. Ana" without prejudice to defendants Panlasigue and Santiago pursuing their claims against the Estate; 3) Declar[ed]as null and void the Deed of Donation in favor of defendants Irineo Sta. Ana and Candida Jarmin-Sta. Ana and [ordered] them to reconvey the property likewise to the estate without prejudice to their filing of claim for whatever they have incurred for the hospitalization expenses and death of deceased mother Anatolia as provided by law. 12 (Underscoring supplied) Ireneo and his wife, Lourdes and Julieta, filed separate notices of appeal to the Court of Appeals. Ireneo and his wife faulted the trial court: . . . IN DECLARING THE EXTRAJUDICIAL PARTITION AS NULL AND VOID. . . . IN DECLARING THE DEED OF DONATION IN FAVOR OF DEFENDANT-APPELLANTS IRENEO STA. ANA AND CANDIDA JARMINSTA. ANA NULL AND VOID. . . . IN NOT ORDERING THE PLAINTIFF-APPELLEE TO PAY THE DEFENDANTS-APPELLANTS MORAL AND EXEMPLARY DAMAGES. On the other hand, Lourdes and Julieta ascribed to the trial court the following errors: I. . . . DECLARING THAT THERE WAS NO VALID PARTITION BETWEEN THE PARTIES.
13

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II. . . . DECLARING THE DEED OF SALE BETWEEN ANATOLIA STA. ANA AND DEFENDANT-APPELLANTS PANLASIGUE AND SANTIAGO NULL AND VOID. III. . . . NOT FINDING THAT THE RIGHT OF PLAINTIFF-APPELLEE TO QUESTION THE TITLE OF DEFENDANT-APPELLANTS PANLASIGUE AND SANTIAGO OVER THE SUBJECT PROPERTY HAS ALREADY PRESCRIBED. IV. . . . NOT DISMISSING THE COMPLAINT AND RENDERING JUDGMENT IN FAVOR OF DEFENDANT-APPELLANTS SANTIAGO AND PANLASIGUE AND AGAINST PLAINTIFF-APPELLEE UNDER THE FORMERS COUNTERCLAIM. 14 The appellate court discredited the defendants claim "that after the death of Petronilo Sta Ana but before 1988 [when the challenged documents were executed], his heirs consisting of his surviving wife and their [living] nine (9) children agreed orally to extrajudicially partition his estate and adjudicate to the mother Anatolia Lots 13-A and 13-B," 15 in light of the fact that Anatolias children participated in the execution of the documents as owners and donors. It thus held that the two lots were co-owned by Anatolia and her children. Applying Article 493 of the Civil Code which provides: Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and hemay 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. (Underscoring supplied), the appellate court held that the trial court erred in nullifying the assailed documents as in fact it noted that Teodoro and the intervenors-children of Nicolas merely prayed for reconveyance of their respective shares of the lots, and not for the declaration of nullity of said documents. The appellate court thus concluded:

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The [two lots] belonged to the heirs in the following proportion: one-half (1/2) share to Anatolia as her share in the conjugal partnership; whereas all nine (9) [sic] children plus Anatolia shared in the other one-half (1/2) belonging to Petronilo in shares of 1/10 each (Art. 996, Civil Code). Otherwise stated, all the heirs were entitled to one-twentieth (1/20) share of the property except Anatolia who was entitled to eleven-twentieth (11/20) share thereof. With regard to the intervenors, the 1/20 share of their deceased father shall be divided between them since they succeed by right of representation (Art. 974, Civil Code). And having affixed their signatures thereto, all the heirs are conclusively presumed to have admitted the regularity and validity of the deeds of sale and donation insofar as their respective portions were concerned. Needless to state, both the deed of sale and deed of partition with donation are valid. 16 (Underscoring supplied) Respecting the complaint of the intervenors, the appellate court held that they, as heirs of their father Nicolas, were not bound by the deeds, they not having participated therein, hence, they were entitled to their fathers "1/20[sic] share." Respecting Teodoros claim that he had no knowledge of the execution on his behalf by his wife of the two documents, the appellate court discredited the same, it noting that there was evidence that he had knowledge of the illness and treatment of his then sick mother, the expenses for which were shouldered by his brother Ireneo and his wife to thus necessitate the execution of the challenged documents. In another vein, the appellate court found plaintiff to be guilty of laches. Thus, applying Art. 1101 of the Civil Code which provides: Art. 1101. The heir who is sued shall have the option of indemnifying the plaintiff for the loss, or consenting to a new partition. Indemnity may be made by payment in cash or by the delivery of a thing of the same kind and quality as that awarded to the plaintiff. xxxx, the appellate court disposed as follows:

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WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE. In lieu thereof, judgment is renderedordering defendants to reconvey to intervenors-appellees their 1/20 share of the property or its equivalent in money. The case filed by plaintiff-appellee Teodoro Sta. Ana is DISMISSED. With costs against the plaintiff-appellee. 17 (Emphasis and underscoring supplied) Hence, the present petition for review on certiorari filed by Teodoro (hereafter petitioner), raising the following arguments: 1. The extra-judicial partition is null and void. 2. The deed of sale between Anatolia Sta. Ana and Respondents Panlasigue and Santiago is null and void. 3. The right of Petitioner to question the title of Respondents Panlasigue and Santiago over the subject property has neither prescribed nor been barred by laches. 18 The first and second arguments of petitioner fail. The finding of the appellate court that the challenged deeds are not null and void is in accordance with law and evidence, as reflected in the discussion above. Indeed, that the living children of Petronilo joined Anatolia in the execution of the documents clearly shows that they were co-owners of the lots. As such, they were at liberty to alienate their respective shares of the lots. Respecting the last argument on laches, petitioner maintains that he had "no knowledge of the execution on his behalf by his wife" of the challenged documents, he being then out of the country. At the witness stand, however, petitioner declared on direct examination as follows: Q. Mr. Sta. Ana, when you learned that lot 13-A was sold to defendant Lourdes Panlasique and Julieta Santiago, what did you do? A. I was abroad at that time and when I arrived what I saw was the house was being constructed already. 19 And on cross examination, he admitted that his wife signed for him in the documents but that she was forced to do so. 20
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In any event, petitioner contends that even assuming arguendo that he is guilty of laches, the case had not prescribed, he citing Mariategui v. Court of Appeals 21 which held: x x x Corollarily, prescription does not run against private respondents with respect to the filing of the action for partition so long as the heirs for whose benefit prescription is invoked, have not expressly or impliedly repudiated the co-ownership. In other words, prescription of an action for partition does not lie except when the co-ownership is properly repudiated by the co-owner. Otherwise stated, a co-owner cannot acquire by prescription the share of the other co-owners absent a clear repudiation of co-ownership duly communicated to the other co-owners. Furthermore, an action to demand partition is imprescriptible and cannot be barred by laches. x x x 22 (Emphasis and underscoring by petitioner) Petitioners citation of Mariategui is misplaced. His complaint is not one for partition, but for reconveyance. Jurisprudence of course dictates that the "[t]he doctrine of laches should never be applied earlier than the expiration of time limited for the commencement of actions, 23 unless, as a general rule, inexcusable delay in asserting a right and acquiescence in existing conditions are proven." 24 From the annotation on May 6, 1988 of the challenged documents on Petronilos title up to the filing by petitioner on August 20, 1996 of the complaint subject of the present case, a period of more than 8 years had elapsed. Gratuitously assuming that the action for reconveyance is based on implied trust, it prescribes in 10 years. Therefore, petitioners complaint had not prescribed when he filed his complaint. The facts and circumstances attendant to the case reflected above indicate, however, that there was inexcusable delay on the part of Teodoro in asserting his right and acquiescence in existing conditions.

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The same situation does not hold true with respect to Nicolas heirscomplainants-in-intervention. Hence, laches cannot be attributed to them and, therefore, they are entitled to a reconveyance of their fathers share. The share of the father of complainants-in-intervention in each of the two lots should be 1/11 of representing the share of each of the 10 siblings who were co-owners of said , along with their mother Anatolia. A modification of the sharing indicated in the decision of the appellate court is thus in order. A further modification of the decision would also have been called for. For respondents-vendees had already paid for Lot 13-A, hence, no obligation for them to reconvey anything to the complainants-in-intervention arises. They, however, did not appeal the appellate courts decision ordering all the defendants, including them - respondents-vendees, "to reconvey to intervenors-appellees" their share of the lot sold or its equivalent. Hence, they are bound by said decision which constitutes the law of the case. WHEREFORE, the decision of the Court of Appeals is, in light of the foregoing discussions, AFFIRMED withMODIFICATION in that respondentspouses Ireneo Sta. Ana are ORDERED to contribute to the 1/11 share to be reconveyed to complainants-in-intervention in each of the two lots subject of the case representing the share of Nicolas Sta. Ana. Costs against petitioner. G.R. No. 148376. March 31, 2005 LEONARDO ACABAL and RAMON NICOLAS, Petitioners, vs. VILLANER ACABAL, EDUARDO ACABAL, SOLOMON ACABAL, GRACE ACABAL, MELBA ACABAL, EVELYN ACABAL, ARMIN ACABAL, RAMIL ACABAL, and BYRON ACABAL, Respondents. DECISION CARPIO MORALES, J.:

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Before this Court is a Petition for Review on Certiorari of the February 15, 2001 Decision1 of the Court of Appeals reversing that of the Regional Trial Court (RTC) of Dumaguete City, Branch 35.2 In dispute is the exact nature of the document3 which respondent Villaner Acabal (Villaner) executed in favor of his godson-nephew-petitioner Leonardo Acabal (Leonardo) on April 19, 1990. Villaners parents, Alejandro Acabal and Felicidad Balasabas, owned a parcel of land situated in Barrio Tanglad, Manjuyod, Negros Oriental, containing an area of 18.15 hectares more or less, described in Tax Declaration No. 15856.4 By a Deed of Absolute Sale dated July 6, 1971,5 his parents transferred for P2,000.00 ownership of the said land to him, who was then married to Justiniana Lipajan.6 Sometime after the foregoing transfer, it appears that Villaner became a widower. Subsequently, he executed on April 19, 1990 a deed7 conveying the same property8 in favor of Leonardo. Villaner was later to claim that while the April 19, 1990 document he executed now appears to be a "Deed of Absolute Sale" purportedly witnessed by a Bais City trial court clerk Carmelo Cadalin and his wife Lacorte, what he signed was a document captioned "Lease Contract"9 (modeled after a July 1976 lease agreement10 he had previously executed with previous lessee, Maria Luisa Montenegro11) wherein he leased for 3 years the property to Leonardo at P1,000.00 per hectare12 and which was witnessed by two women employees of one Judge Villegas of Bais City. Villaner thus filed on October 11, 1993 a complaint13 before the Dumaguete RTC against Leonardo and Ramon Nicolas to whom Leonardo in turn conveyed the property, for annulment of the deeds of sale. At the witness stand, Villaner declared: Q: It appears, Mr. Acabal, that you have signed a document of sale with the defendant Leonardo Acabal on April 19, 1990, please tell the court whether you have really agreed to sell this property to the defendant on or before April 19, 1990?
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A: We had some agreement but not about the selling of this property. Q: What was your agreement with the defendant Leonardo Acabal? A: Our agreement [was] that he will just rent.14 xxx Q: Now, please tell the court how were you able to sign this document on April 19, 1990? A: I do not know why I signed that, that is why I am puzzled. Q: Why, did you not read the contents of this document? A: I have not read that. I only happened to read the title of the Lease Contract. Q: And do you recall who were the witnesses of the document which you signed in favor of Leonardo Acabal? A: Employees of Judge Villegas of Bais City. Q: Did you see them sign that document? A: Yes, sir. Q: These signatures appearing in this document marked as Exhibit "C" for the plaintiff and Exhibit "1" for the defendant, please examine over (sic) these signatures if these were the signatures of these witnesses who signed this document? A: These are not the signatures of the two women. Q: And after signing this document on April 19, 1990, did you appear before a notary public to have this notarized? A: No, I went home to San Carlos.15 xxx

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Q: According to this document, you sell (sic) this property at P10,000.00, did you sell this property to Leonardo Acabal? A: No, sir. Q: How about after April 19, 1990, did you receive this amount from Leonardo Acabal? A: No, sir.16 xxx Q: Now you said that on May 25, 1990, Leonardo Acabal did not pay the amount that he promised to you, what did you do of (sic) his refusal to pay that amount? A: I went to Mr. [Carmelo] Mellie Cadalin because he was the one who prepared the papers and to ask Leonardo Acabal why he will not comply with our agreement. Q: By the way, who is this Mellie Cadalin? A: Mellie Cadalin is also working in the sala of Judge Villegas. Q: Who requested Mellie Cadalin to prepare this document? A: Maybe it was Leonardo Acabal. Q: By the way, when for the first time did you talk to Leonardo Acabal regarding your agreement to lease this property to him? A: March 14, 1990, in San Carlos. Q: And what document did you give to him in order that that document will be prepared? A: I have given (sic) some papers and contract of lease that I have signed to (sic) Mrs. Montenegro.17(Emphasis and underscoring supplied) xxx

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Q: Now, Carmelo Cadalin ["Mellie"] also testified before this court that in fact he identified the document marked as Exhibit "C" for the plaintiff that what you executed on April 19, 1990 was a deed of sale and not a contract of lease, what can you say to that statement? A: That is a lie. Q: And whats the truth then? A: What really (sic) I have signed was the document of lease contract. Q: Now, can you explain to the Honorable Court why it so happened that on April 19, you were able to sign a deed of sale? A: What I can see now is that perhaps those copies of the deed of sale were placed by Mr. Cadalin under the documents which I signed the lease contract. But why is it that it has already a deed of sale when what I have signed was only the lease of contract or the contract of lease. Q: Now, Mr. Cadalin also stated before this court that he handed over to you this Deed of Sale marked as Exhibit "C" and according to him you read this document, what can you say to this statement? A: Yes, there was a document that he gave me to read it (sic)but it was a contract of lease. Q: How sure are you that what you signed on April 19, 1990 was really a contract of lease and not a contract of sale? A: Because when I signed the contract of lease the witnesses that witnessed my signing the document were the employees of Judge Villegas and then I am now surprised why in the deed of sale which I purportedly signed are witnessed by Carmelo Cadalin and his wife Lacorte.18 (Emphasis and underscoring supplied) On the other hand, Leonardo asserts that what Villaner executed was a Deed of Absolute Sale for a consideration of P10,000.00 which he had already paid,19 and as he had become the absolute owner of the property, he validly transferred it to Ramon Nicolas on May 19, 1990.20

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Carmelo Cadalin who admittedly prepared the deed of absolute sale and who appears as a witness, along with his wife, to the execution of the document corroborated Leonardos claim: Q: Mr. Cadalin, do you know the plaintiff Villaner Acabal? A: Yes, I know.21 xxx Q: And I would like to ask you Mr. witness why do you know Villaner Acabal? A: At the time that he went to our house together with Leonardo Acabal he requested me to prepare a deed of sale as regards to a sale of the property.22 xxx Q: And after they requested you to prepare a document of sale, what did you do? A: At first I refused to [do] it because I have so many works to do, but then they insisted so I prepared the deed. Q: After you prepared the document, what did you do? A: After I prepared it I gave it to him so that he could read the same. Q: When you say "him," whom do you refer to? A: Villaner Acabal. Q: And did Villaner Acabal read the document you prepared? A: Yes, he read it. Q: And after reading it what did Villaner Acabal do? A: He signed the document.

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Q: Showing to you a document which is marked Exhibit C for the plaintiff and Exhibit 1 for the defendants, please tell the Honorable Court what relation this document has to the document which you described earlier? COURT INTERPRETER: Witness is confronted with the said document earlier marked as Exhibit C for the prosecution and Exhibit 1 for the defense. A: Yes, this is the one.23 xxx Q: Also stated in the document is the phrase "Signed in the presence of" and there is a number and then two signatures, could you please examine the document and say whether these signatures are familiar to you? A: Yes, number one is my signature and number 2 is the signature of my wife as witness.24 xxx Q: After Villaner Acabal signed the document, what did Villaner Acabal do? A: He was given the payment by Leonardo Acabal.25 xxx Q: Aside from the document, deed of absolute sale, that you mentioned earlier that you prepared for Villaner Acabal and Leonardo Acabal, what other documents, if any, did you prepare for them? A: Affidavit of non-tenancy and aggregate area.26 (Emphasis and underscoring supplied) The complaint was later amended27 to implead Villaners eight children as party plaintiffs, they being heirs of his deceased wife.

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By Decision of August 8, 1996, the trial court found for the therein defendants-herein petitioners Leonardo and Ramon Nicolas and accordingly dismissed the complaint. Villaner et al. thereupon brought the case on appeal to the Court of Appeals which reversed the trial court, it holding that the Deed of Absolute Sale executed by Villaner in favor of Leonardo was simulated and fictitious."28 Hence, Leonardo and Ramon Nicolas present petition for review on certiorari,29 anchored on the following assignments of error: I. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT RULED THAT RESPONDENT VILLANER ACABAL WAS DECEIVED INTO SIGNING THE DEED OF ABSOLUTE SALE WHEN THE LATTER KNOWINGLY, FREELY AND VOLUNTARILY EXECUTED THE SAME IN FAVOR OF PETITIONER LEONARDO ACABAL. II. THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE CONSIDERATION OF THE DEED OF ABSOLUTE SALE IN THE AMOUNT OF TEN THOUSAND PESOS (P10,0000.00) WAS "UNUSUALLY LOW AND INADEQUATE," ESPECIALLY TAKING INTO ACCOUNT THE LOCATION OF THE SUBJECT PROPERTY. III. THE COURT OF APPEALS ERRED WHEN IT FAILED TO CONSIDER WHY RESPONDENT VILLANER ACABAL ONLY QUESTIONED THE POSSESSION AND OWNERSHIP OF PETITIONER RAMON NICOLAS IN COURT AFTER THE LATTER WAS IN OPEN, CONTINUOUS AND PEACEFUL POSSESSION OF THE SUBJECT PROPERTY FOR ALMOST THREE (3) YEARS. IV. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN LAW WHEN IT FAILED TO DECLARE PETITIONER RAMON NICOLAS
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AS A BUYER IN GOOD FAITH AS THE LATTER TOOK THE NECESSARY STEPS AN ORDINARY AND PRUDENT MAN WOULD HAVE TAKEN BEFORE BUYING THE QUESTIONED PROPERTY. V. THE COURT OF APPEALS ERRED IN RULING IN FAVOR OF RESPONDENT VILLANER ACABAL WHEN THE LATTER DID NOT PRESENT A SINGLE WITNESS TO TESTIFY ON THE ALLEGED CONTRACT OF LEASE WHICH HE ALLEGEDLY SIGNED AND WITNESSED BY THE EMPLOYEES OF JUDGE VILLEGAS. VI. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN LAW WHEN IT RULED THAT RULE 8, SECTION 8 OF THE 1987 (sic) RULE (sic) OF CIVIL PROCEDURE IS NOT APPLICABLE IN THE CASE AT BAR, CONTRARY TO THE RULING OF THE LOWER COURT. VII. THE COURT OF APPEALS ERRED WHEN IT ORDERED PETITIONERS TO PAY RESPONDENTS "JOINTLY AND SEVERALLY BY WAY OF RENTAL THE SUM OF P10,000.00 PER YEAR FROM 1990 UP TO THE TIME THEY VACATE THE PREMISES."30 Procedurally, petitioners contend that the Court of Appeals erred when it failed to apply Section 8, Rule 8 of the Rules of Court, respondent Villaner having failed to deny under oath the genuineness and due execution of the April 19, 1990 Deed of Absolute Sale. Petitioners contention does not persuade. The failure to deny the genuineness and due execution of an actionable document does not preclude a party from arguing against it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, and want of consideration.31 On the merits, this Court rules in petitioners favor. It is a basic rule in evidence that the burden of proof lies on the party who makes the allegations32 ei incumbit probatio, qui dicit, non qui negat; cum
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per rerum naturam factum negantis probatio nulla sit.33 If he claims a right granted by law, he must prove it by competent evidence, relying on the strength of his own evidence and not upon the weakness of that of his opponent. More specifically, allegations of a defect in or lack of valid consent to a contract by reason of fraud or undue influence are never presumed but must be established not by mere preponderance of evidence but by clear and convincing evidence.34 For the circumstances evidencing fraud and misrepresentation are as varied as the people who perpetrate it in each case, assuming different shapes and forms and may be committed in as many different ways.35 In the case at bar, it was incumbent on the plaintiff-herein respondent Villaner to prove that he was deceived into executing the Deed of Absolute Sale. Except for his bare allegation that the transaction was one of lease, he failed to adduce evidence in support thereof. His conjecture that "perhaps those copies of the deed of sale were placed by Mr. Cadalin under the documents which I signed the contract of lease,"36 must fail, for facts not conjectures decide cases. Attempting to seek corroboration of his account, Villaner presented Atty. Vicente Real who notarized the document. While on direct examination, Atty. Real virtually corroborated Villaners claim that he did not bring the document to him for notarization,37 on cross-examination, Atty. Real conceded that it was impossible to remember every person who would ask him to notarize documents: Q: And in the course of your notarization, can you remember each and every face that come (sic) to you for notarization? A: No, it is impossible. Q: In the case of Villaner Acabal which you have his document notarized (sic) in 1990, can you remember his face when he came to you? A: No.

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Q: And can you also say, if a person who came to you having a document to be notarized and if he will appear again after a month, can you remember whether he was the one who came to you? A: Not so much because everyday there are many people who appear with documents to be notarized, Q: So, it is safe to say that if Villaner Acabal came to you on April 25 or rather April 16, 1990 andhave (sic) his document notarized if he comes back in, say May 25, can you still remember if he was the one who came to you? A: I cannot be sure but at least, there are times I can remember persons because he seems to be close to me already. Q: Is this Villaner close to you? A: Because he has been frequenting the house/asking for a copy of the document. Q: So, he became close to you after you notarized the document? A: Yes.38 (Emphasis and underscoring supplied) On Villaners claim that two women employees of Judge Villegas signed as witnesses to the deed39 but that the signatures appearing thereon are not those of said witnesses,40 the same must be discredited in light of his unexplained failure to present such alleged women employee-witnesses. In another vein, Villaner zeroes in on the purchase price of the property P10,000.00 which to him was unusually low if the transaction were one of sale. To substantiate his claim, Villaner presented Tax Declarations covering the property for the years 1971,41 1974,42 1977,43 1980,44 1983,45 1985,46 as well as a Declaration of Real Property executed in 1994.47 It bears noting, however, that Villaner failed to present evidence on the fair market value of the property as of April 19, 1990, the date of execution of the disputed deed. Absent any evidence of the fair market value of a land as of the time of its sale, it cannot be concluded that the price at which it

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was sold was inadequate.48 Inadequacy of price must be proven because mere speculation or conjecture has no place in our judicial system.49 Victor Ragay, who was appointed by the trial court to conduct an ocular inspection50 of the property and to investigate matters relative to the case,51 gave an instructive report dated December 3, 1994,52 the pertinent portions of which are hereby reproduced verbatim: a) Only three (3) to four (4) hectares of the eighteen (18) were planted to sugar cane, the rest was never cultivated; b) the soil is reddish and somewhat sandy in composition; c) the soil contains so much limestones (rocks consisting mainly of calcium carbonate); d) no part of the land in question is plain or flat, contrary to claim of the plaintiff that almost 10 hectares of the land in question is plain or flat; e) some areas, eastward of and adjacent of the land in question (mistakenly to be owned by the defendant Nicolas) were planted to sugar cane by the owners Kadusales; f) the road going to the land in question (as claimed to be the road) is no longer passable because it has been abandoned and not maintained by anyone, thus it makes everything impossible for anybody to get and haul the sugar cane from the area; g) the Commissioner has discovered some stockpiles of abandoned harvested sugar canes left to rot, along the side of the road, undelivered to the milling site because of the difficulty in bringing up trucks to the scene of the harvest; h) the sugarcanes presently planted on the land in question at the time of the ocular inspection were three (3) feet in height and their structural built was thin or lean; i) Most of the part of the 18 hectares is not planted or cultivated because the same is too rocky and not suitable for planting to sugarcane.53

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Additionally, Ragay reported that one Anatolio Cabusog recently purchased a 6-hectare property adjoining that of the subject property for only P1,600.0054 or P266.67 per hectare. Given that, had the 18-hectare subject property been sold at about the same time, it would have fetched the amount of P4,800.00,55 hence, the P10,000.00 purchase price appearing in the questioned April 19, 1990 document is more than reasonable. Even, however, on the assumption that the price of P10,000.00 was below the fair market value of the property in 1990, mere inadequacy of the price per se will not rule out the transaction as one of sale. For the price must begrossly inadequate or shocking to the conscience such that the mind revolts at it and such that a reasonable man would neither directly nor indirectly be likely to consent to it.56 Still in another vein, Villaner submits that Leonardos transfer of the property to Nicolas in a span of one month for a profit of P30,000.00 conclusively reflects Leonardos fraudulent intent. This submission is a non sequitur. As for Villaners argument that the sale of the property to Leonardo and the subsequent sale thereof to Nicolas are void for being violative of the retention limits imposed by Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law, the same fails. The pertinent provisions of said law read: SECTION 6. Retention Limits. Except as otherwise provided in this Act, no person may retain, directly or indirectly, any public or agricultural land, the size of which may vary according to factors governing a viable familysized farm, such as commodity produced, terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall retention by the landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the following qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is tilling the land or directly managing the farm: Provided, That landowners whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the areas originally retained by them thereunder:57 Provided further, That original homestead grantees or direct compulsory heirs who still own the original

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homestead at the time of the approval of this Act shall retain the same areas as long as they continue to cultivate said homestead. xxx Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of possession of private lands executed by the original landowner in violation of this Act shall be null and void: Provided, however, that those executed prior to this Act shall be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act. Thereafter, all Registers of Deeds shall inform the DAR within thirty (30) days of any transaction involving agricultural lands in excess of five (5) hectares. xxx SECTION 70. Disposition of Private Agricultural Lands. The sale or disposition of agricultural lands retained by a land owner as a consequence of Section 6 hereof shall be valid as long as the total landholdings that shall be owned by the transferee thereof inclusive of the land to be acquired shall not exceed the landholding ceilings provided for in this Act. Any sale or disposition of agricultural lands after the effectivity of this Act found to be contrary to the provisions hereof shall be null and void. Transferees of agricultural lands shall furnish the appropriate Register of Deeds and the BARC an affidavit attesting that his total landholdings as a result of the said acquisition do not exceed the landholding ceiling. The Register of Deeds shall not register the transfer of any agricultural land without the submission of his sworn statement together with proof of service of a copy thereof to the BARC. (Emphasis and underscoring supplied) As the above-quoted provisions of the Comprehensive Agrarian Reform Law show, only those private lands devoted to or suitable for agriculture are covered by it.58 As priorly related, Victor Ragay, who was appointed by the trial court to conduct an ocular inspection of the property, observed in his report that only three (3) to four (4) hectares were planted with sugarcane while the rest of the property was not suitable for planting as the soil was full of limestone.59 He also remarked that the sugarcanes were
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only 3 feet in height and very lean,60 whereas sugarcanes usually grow to a height of 3 to 6 meters (about 8 to 20 feet) and have stems 2 to 5 centimeters (1-2 inches) thick.61 It is thus gathered that the property was not suitable for agricultural purposes. In any event, since the area devoted to the planting of sugarcane, hence, suitable for agricultural purposes, comprises only 4 hectares at the most, it is less than the maximum retention limit prescribed by law. There was then no violation of the Comprehensive Agrarian Reform Law. Even assuming that the disposition of the property by Villaner was contrary to law, he would still have no remedy under the law as he and Leonardo were in pari delicto, hence, he is not entitled to afirmative relief one who seeks equity and justice must come to court with clean hands. In pari delicto potior est conditio defendentis.62 The proposition is universal that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or the money agreed to be paid, or damages for its violation. The rule has sometimes been laid down as though it were equally universal, that where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other.63 (Emphasis and underscoring supplied) The principle of pari delicto is grounded on two premises: first, that courts should not lend their good offices to mediating disputes among wrongdoers;64 and second, that denying judicial relief to an admitted wrongdoer is an effective means of deterring illegality.65 This doctrine of ancient vintage is not a principle of justice but one of policy as articulated in 1775 by Lord Mansfield in Holman v. Johnson:66 The objection, that a contract is immoral or illegal as between the plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may so say. The principle of public policy is this; ex dolo malo non oritur actio.67 No court will lend its aid to a man who founds his
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cause of action upon an immoral or an illegal act. If, from the plaintiffs own stating or otherwise, the cause of action appears to arise ex turpi causa,68 or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and the defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it; for where both are equally in fault potior est conditio defendentis.69 Thus, to serve as both a sanction and as a deterrent, the law will not aid either party to an illegal agreement and will leave them where it finds them. The principle of pari delicto, however, is not absolute, admitting an exception under Article 1416 of the Civil Code. ART. 1416. When the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designed for the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or delivered. Under this article, recovery for what has been paid or delivered pursuant to an inexistent contract is allowed only when the following requisites are met: (1) the contract is not illegal per se but merely prohibited; (2) the prohibition is for the protection of the plaintiffs; and (3) if public policy is enhanced thereby.70 The exception is unavailing in the instant case, however, since the prohibition is clearly not for the protection of the plaintiff-landowner but for the beneficiary farmers.71 In fine, Villaner is estopped from assailing and annulling his own deliberate acts.72 More. Villaner cannot feign ignorance of the law, nor claim that he acted in good faith, let alone assert that he is less guilty than Leonardo. Under Article 3 of the Civil Code, "ignorance of the law excuses no one from compliance therewith." And now, Villaners co-heirs claim that as co-owners of the property, the Deed of Absolute Sale executed by Villaner in favor of Leonardo does not bind them as they did not consent to such an undertaking. There is no
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question that the property is conjugal. Article 160 of the Civil Code73 provides: ART. 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.74 The presumption, this Court has held, applies to all properties acquired during marriage. For the presumption to be invoked, therefore, the property must be shown to have been acquired during the marriage.75 In the case at bar, the property was acquired on July 6, 1971 during Villaners marriage with Justiniana Lipajan. It cannot be seriously contended that simply because the tax declarations covering the property was solely in the name of Villaner it is his personal and exclusive property. In Bucoy v. Paulino76 and Mendoza v. Reyes77 which both apply by analogy, this Court held that registration alone of the properties in the name of the husband does not destroy the conjugal nature of the properties.78 What is material is the time when the land was acquired by Villaner, and that was during the lawful existence of his marriage to Justiniana. Since the property was acquired during the existence of the marriage of Villaner and Justiniana, the presumption under Article 160 of the Civil Code is that it is the couples conjugal property. The burden is on petitioners then to prove that it is not. This they failed to do. The property being conjugal, upon the death of Justiniana Lipajan, the conjugal partnership was terminated.79With the dissolution of the conjugal partnership, Villaners interest in the conjugal partnership became actual and vested with respect to an undivided one-half portion.80 Justiniana's rights to the other half, in turn, vested upon her death to her heirs81 including Villaner who is entitled to the same share as that of each of their eight legitimate children.82 As a result then of the death of Justiniana, a regime of co-ownership arose between Villaner and his coheirs in relation to the property.83 With respect to Justinianas one-half share in the conjugal partnership which her heirs inherited, applying the provisions on the law of succession, her eight children and Villaner each receives one-ninth (1/9) thereof.
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Having inherited one-ninth (1/9) of his wifes share in the conjugal partnership or one eighteenth (1/18)84 of the entire conjugal partnership and is himself already the owner of one half (1/2) or nine-eighteenths (9/18), Villaners total interest amounts to ten-eighteenths (10/18) or five-ninths (5/9). While Villaner owns five-ninths (5/9) of the disputed property, he could not claim title to any definite portion of the community property until its actual partition by agreement or judicial decree. Prior to partition, all that he has is an ideal or abstract quota or proportionate share in the property.85 Villaner, however, as a co-owner of the property has the right to sell his undivided share thereof. The Civil Code provides so: 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 coownership. Thus, every co-owner has absolute ownership of his undivided interest in the co-owned property and is free to alienate, assign or mortgage his interest except as to purely personal rights. While a co-owner has the right to freely sell and dispose of his undivided interest, nevertheless, as a coowner, he cannot alienate the shares of his other co-owners nemo dat qui non habet.86 Villaner, however, sold the entire property without obtaining the consent of the other co-owners. Following 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 potest87 the disposition affects only Villaners share pro indiviso, and the transferee gets only what corresponds to his grantors share in the partition of the property owned in common.88 As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale. This is because under the aforementioned codal provision, the sale or other disposition
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affects only his undivided share and the transferee gets only what would correspond to this grantor in the partition of the thing owned in common. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment thereof. From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred., thereby making the buyer a co-owner of the property. The proper action in cases like this is not for the nullification of the sale or the recovery of possession of the thing owned in common from the third person who substituted the co-owner or co-owners who alienated their shares, but the DIVISION of the common property as if it continued to remain in the possession of the co-owners who possessed and administered it.89 Thus, 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. Neither recovery of possession nor restitution can be granted since the defendant buyers are legitimate proprietors and possessors in joint ownership of the common property claimed.90 (Italics in the original; citations omitted; underscoring supplied) This Court is not unmindful of its ruling in Cruz v. Leis91 where it held: It is conceded that, as a rule, a co-owner such as Gertrudes could only dispose of her share in the property owned in common. Article 493 of the Civil Code provides: xxx Unfortunately for private respondents, however, the property was registered in TCT No. 43100 solely in the name of "Gertrudes Isidro,
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widow." Where a parcel of land, forming part of the undistributed properties of the dissolved conjugal partnership of gains, is sold by a widow to a purchaser who merely relied on the face of the certificate of title thereto, issued solely in the name of the widow, the purchaser acquires a valid title to the land even as against the heirs of the deceased spouse. The rationale for this rule is that "a person dealing with registered land is not required to go behind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or the certificate of title. To require him to do more is to defeat one of the primary objects of the Torrens system."92 (Citation omitted) Cruz, however, is not applicable for the simple reason that in the case at bar the property in dispute is unregistered. The issue of good faith or bad faith of a buyer is relevant only where the subject of the sale is a registered land but not where the property is an unregistered land.93 One who purchases an unregistered land does so at his peril.94 Nicolas claim of having bought the land in good faith is thus irrelevant.95 WHEREFORE, the petition is GRANTED. The Court of Appeals February 15, 2001 Decision in CA-G.R. CV No. 56148 is REVERSED and SET ASIDE and another is rendered declaring the sale in favor of petitioner Leonardo Acabal and the subsequent sale in favor of petitioner Ramon Nicolas valid but only insofar as five-ninths (5/9) of the subject property is concerned. No pronouncement as to costs. SO ORDERED. Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Garcia, JJ., concur. G.R. No. 133638 April 15, 2005

PERPETUA VDA. DE APE, Petitioner, vs. THE HONORABLE COURT OF APPEALS and GENOROSA CAWIT VDA. DE LUMAYNO, Respondents. DECISION
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CHICO-NAZARIO, J.: Before Us is a petition for review on certiorari of the Decision1 of the Court of Appeals in CA-G.R. CV No. 45886 entitled, "Generosa Cawit de Lumayno, accompanied by her husband Braulio Lumayno v. Fortunato Ape, including his wife Perpetua de Ape." The pertinent facts are as follows: Cleopas Ape was the registered owner of a parcel of land particularly known as Lot No. 2319 of the Escalante Cadastre of Negros Occidental and covered by Original Certificate of Title (OCT) No. RP 1379 (RP-154 [300]).2Upon Cleopas Ape's death sometime in 1950, the property passed on to his wife, Maria Ondoy, and their eleven (11) children, namely: Fortunato, Cornelio, Bernalda, Bienvenido, Encarnacion, Loreta, Lourdes, Felicidad, Adela, Dominador, and Angelina, all surnamed Ape. On 15 March 1973, Generosa Cawit de Lumayno (private respondent herein), joined by her husband, Braulio,3instituted a case for "Specific Performance of a Deed of Sale with Damages" against Fortunato and his wife Perpetua (petitioner herein) before the then Court of First Instance of Negros Occidental. It was alleged in the complaint that on 11 April 1971, private respondent and Fortunato entered into a contract of sale of land under which for a consideration of P5,000.00, Fortunato agreed to sell his share in Lot No. 2319 to private respondent. The agreement was contained in a receipt prepared by private respondent's son-in-law, Andres Flores, at her behest. Said receipt was attached to the complaint as Annex "A" thereof and later marked as Exhibit "G" for private respondent. The receipt states: April 11, 1971 TO WHOM IT MAY CONCERN: This date received from Mrs. Generosa Cawit de Lumayno the sum of THIRTY PESOS ONLY as Advance Payment of my share in Land Purchased, for FIVE THOUSAND PESOS LOT #2319. (Signed)
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FORTUNATO APE P30.00 WITNESS: (Illegible)4 As private respondent wanted to register the claimed sale transaction, she supposedly demanded that Fortunato execute the corresponding deed of sale and to receive the balance of the consideration. However, Fortunato unjustifiably refused to heed her demands. Private respondent, therefore, prayed that Fortunato be ordered to execute and deliver to her "a sufficient and registrable deed of sale involving his one-eleventh (1/11) share or participation in Lot No. 2319 of the Escalante Cadastre; to pay P5,000.00 in damages; P500.00 reimbursement for litigation expenses as well as additional P500.00 for every appeal made; P2,000.00 for attorney's fees; and to pay the costs.5 Fortunato and petitioner denied the material allegations of the complaint and claimed that Fortunato never sold his share in Lot No. 2319 to private respondent and that his signature appearing on the purported receipt was forged. By way of counterclaim, the defendants below maintained having entered into a contract of lease with respondent involving Fortunato's portion of Lot No. 2319. This purported lease contract commenced in 1960 and was supposed to last until 1965 with an option for another five (5) years. The annual lease rental was P100.00 which private respondent and her husband allegedly paid on installment basis. Fortunato and petitioner also assailed private respondent and her husband's continued possession of the rest of Lot No. 2319 alleging that in the event they had acquired the shares of Fortunato's co-owners by way of sale, he was invoking his right to redeem the same. Finally, Fortunato and petitioner prayed that the lease contract between them and respondent be ordered annulled; and that respondent be ordered to pay them attorney's fees; moral damages; and exemplary damages.6 In their reply,7 the private respondent and her husband alleged that they had purchased from Fortunato's co-owners, as evidenced by various written instruments,8 their respective portions of Lot No. 2319. By virtue of these sales, they insisted that Fortunato was no longer a co-owner of Lot No. 2319 thus, his right of redemption no longer existed.

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Prior to the resolution of this case at the trial court level, Fortunato died and was substituted in this action by his children named Salodada, Clarita, Narciso, Romeo, Rodrigo, Marieta, Fortunato, Jr., and Salvador, all surnamed Ape.9 During the trial, private respondent testified that she and her husband acquired the various portions of Lot No. 2319 belonging to Fortunato's coowners. Thereafter, her husband caused the annotation of an adverse claim on the certificate of title of Lot No. 2319.10 The annotation states: Entry No. 123539 Adverse claim filed by Braulio Lumayno. Notice of adverse claim filed by Braulio Lumayno affecting the lot described in this title to the extent of 77511.93 square meters, more or less, the aggregate area of shares sold to him on the basis of (alleged) sales in his possession. Doc. No. 157, Page No. 33, Book No. XI, Series of 1967 of Alexander Cawit of Escalante, Neg. Occ. Date of instrument. June 22, 1967 at 8:30 a.m. (SGD) FEDENCIORRAZ, Actg. Register of Deeds.11 In addition, private respondent claimed that after the acquisition of those shares, she and her husband had the whole Lot No. 2319 surveyed by a certain Oscar Mascada who came up with a technical description of said piece of land.12 Significantly, private respondent alleged that Fortunato was present when the survey was conducted.13 Also presented as evidence for private respondent were pictures taken of some parts of Lot No. 2319 purportedly showing the land belonging to Fortunato being bounded by a row of banana plants thereby separating it from the rest of Lot No. 2319.14 As regards the circumstances surrounding the sale of Fortunato's portion of the land, private respondent testified that Fortunato went to her store at the time when their lease contract was about to expire. He allegedly demanded the rental payment for his land but as she was no longer interested in renewing their lease agreement, they agreed instead to enter into a contract of sale which Fortunato acceded to provided private respondent bought his portion of Lot No. 2319 for P5,000.00. Thereafter, she asked her son-in-law Flores to prepare the aforementioned receipt. Flores read the document to Fortunato and asked the latter whether he had any objection thereto. Fortunato then went on to affix his signature on the receipt.
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For her part, petitioner insisted that the entire Lot No. 2319 had not yet been formally subdivided;15 that on 11 April 1971 she and her husband went to private respondent's house to collect past rentals for their land then leased by the former, however, they managed to collect only thirty pesos;16 that private respondent made her (petitioner's) husband sign a receipt acknowledging the receipt of said amount of money;17 and that the contents of said receipt were never explained to them.18 She also stated in her testimony that her husband was an illiterate and only learned how to write his name in order to be employed in a sugar central.19 As for private respondent's purchase of the shares owned by Fortunato's co-owners, petitioner maintained that neither she nor her husband received any notice regarding those sales transactions.20 The testimony of petitioner was later on corroborated by her daughter-in-law, Marietta Ape Dino.21 After due trial, the court a quo rendered a decision22 dismissing both the complaint and the counterclaim. The trial court likewise ordered that deeds or documents representing the sales of the shares previously owned by Fortunato's co-owners be registered and annotated on the existing certificate of title of Lot No. 2319. According to the trial court, private respondent failed to prove that she had actually paid the purchase price of P5,000.00 to Fortunato and petitioner. Applying, therefore, the provision of Article 1350 of the Civil Code,23 the trial court concluded that private respondent did not have the right to demand the delivery to her of the registrable deed of sale over Fortunato's portion of the Lot No. 2319. The trial court also rejected Fortunato and petitioner's claim that they had the right of redemption over the shares previously sold to private respondent and the latter's husband, reasoning as follows: Defendants in their counterclaim invoke their right of legal redemption under Article 1623 of the New Civil Code in view of the alleged sale of the undivided portions of the lot in question by their co-heirs and co-owners as claimed by the plaintiffs in their complaint. They have been informed by the plaintiff about said sales upon the filing of the complaint in the instant case as far back as March 14, 1973. Defendant themselves presented as their very own exhibits copies of the respective deeds of sale or conveyance by their said co-heirs and co-owners in favor of the plaintiffs or their predecessors-in-interest way back on January 2, 1992 when they formally offered their exhibits in the instant case; meaning, they themselves acquired possession of said documentary exhibits even before they
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formally offered them in evidence. Under Art. 1623 of the New Civil Code, defendants have only THIRTY (30) DAYS counted from their actual knowledge of the exact terms and conditions of the deeds of sale or conveyance of their co-heirs' and co-owners' share within which to exercise their right of legal redemption.24 Within the reglementary period, both parties filed their respective notices of appeal before the trial court with petitioner and her children taking exception to the finding of the trial court that the period within which they could invoke their right of redemption had already lapsed.25 For her part, private respondent raised as errors the trial court's ruling that there was no contract of sale between herself and Fortunato and the dismissal of their complaint for specific performance.26 The Court of Appeals, in the decision now assailed before us, reversed and set aside the trial court's dismissal of the private respondent's complaint but upheld the portion of the court a quo's decision ordering the dismissal of petitioner and her children's counterclaim. The dispositive portion of the appellate court's decision reads: WHEREFORE, the decision dated March 11, 1994, is hereby REVERSED and SET ASIDE insofar as the dismissal of plaintiffsappellants' complaint is concerned, and another one is entered ordering the defendant-appellant Fortunato Ape and/or his wife Perpetua de Ape and successors-in-interest to execute in favor of plaintiff-appellant Generosa Cawit de Lumayno a Deed of Absolute Sale involving the one-eleventh (1/11) share or participation of Fortunato Ape in Lot No. 2319, Escalante Cadastre, containing an area of 12,527.19 square meters, more or less, within (30) days from finality of this decision, and in case of non-compliance with this Order, that the Clerk of Court of said court is ordered to execute the deed on behalf of the vendor. The decision is AFFIRMED insofar as the dismissal of defendants-appellants' counterclaim is concerned. Without pronouncement as to costs.27 The Court of Appeals upheld private respondent's position that Exhibit "G" had all the earmarks of a valid contract of sale, thus: Exhibit G is the best proof that the P5,000.00 representing the purchase price of the 1/11th share of Fortunato Ape was not paid by the vendee on
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April 11, 1971, and/or up to the present, but that does not affect the binding force and effect of the document. The vendee having paid the vendor an advance payment of the agreed purchase price of the property, what the vendor can exact from the vendee is full payment upon his execution of the final deed of sale. As is shown, the vendee precisely instituted this action to compel the vendor Fortunato Ape to execute the final document, after she was informed that he would execute the same upon arrival of his daughter "Bala" from Mindanao, but afterwards failed to live up to his contractual obligation (TSN, pp. 11-13, June 10, 1992). It is not right for the trial court to expect plaintiff-appellant to pay the balance of the purchase price before the final deed is executed, or for her to deposit the equivalent amount in court in the form of consignation. Consignation comes into fore in the case of a creditor to whom tender of payment has been made and refuses without just cause to accept it (Arts. 1256 and 1252, N.C.C.; Querino vs. Pelarca, 29 SCRA 1). As vendee, plaintiff-appellant Generosa Cawit de Lumayno does not fall within the purview of a debtor. We, therefore, find and so hold that the trial court should have found that exhibit G bears all the earmarks of a private deed of sale which is valid, binding and enforceable between the parties, and that as a consequence of the failure and refusal on the part of the vendor Fortunato Ape to live up to his contractual obligation, he and/or his heirs and successors-in-interest can be compelled to execute in favor of, and to deliver to the vendee, plaintiff-appellant Generosa Cawit de Lumayno a registerable deed of absolute sale involving his one-eleventh (1/11th) share or participation in Lot No. 2319, Escalante Cadastre, containing an area of 12,527.19 square meters, more or less, within 30 days from finality of this decision, and, in case of non-compliance within said period, this Court appoints the Clerk of Court of the trial court to execute on behalf of the vendor the said document.28 The Court of Appeals, however, affirmed the trial court's ruling on the issue of petitioner and her children's right of redemption. It ruled that Fortunato's receipt of the Second Owner's Duplicate of OCT (RP) 1379 (RP-154 ([300]), containing the adverse claim of private respondent and her husband, constituted a sufficient compliance with the written notice requirement of Article 1623 of the Civil Code and the period of redemption under this provision had long lapsed.
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Aggrieved by the decision of the appellate court, petitioner is now before us raising, essentially, the following issues: whether Fortunato was furnished with a written notice of sale of the shares of his co-owners as required by Article 1623 of the Civil Code; and whether the receipt signed by Fortunato proves the existence of a contract of sale between him and private respondent. In her memorandum, petitioner claimed that the Court of Appeals erred in sustaining the court a quo's pronouncement that she could no longer redeem the portion of Lot No. 2319 already acquired by private respondent for no written notice of said sales was furnished them. According to her, the Court of Appeals unduly expanded the scope of the law by equating Fortunato's receipt of Second Owner's Duplicate of OCT (RP) 1379 (RP154 ([300]) with the written notice requirement of Article 1623. In addition, she argued that Exhibit "G" could not possibly be a contract of sale of Fortunato's share in Lot No. 2319 as said document does not contain "(a) definite agreement on the manner of payment of the price."29 Even assuming that Exhibit "G" is, indeed, a contract of sale between private respondent and Fortunato, the latter did not have the obligation to deliver to private respondent a registrable deed of sale in view of private respondent's own failure to pay the full purchase price of Fortunato's portion of Lot No. 2319. Petitioner is also of the view that, at most, Exhibit "G" merely contained a unilateral promise to sell which private respondent could not enforce in the absence of a consideration distinct from the purchase price of the land. Further, petitioner reiterated her claim that due to the illiteracy of her husband, it was incumbent upon private respondent to show that the contents of Exhibit "G" were fully explained to him. Finally, petitioner pointed out that the Court of Appeals erred when it took into consideration the same exhibit despite the fact that only its photocopy was presented before the court. On the other hand, private respondent argued that the annotation on the second owner's certificate over Lot No. 2319 constituted constructive notice to the whole world of private respondent's claim over the majority of said parcel of land. Relying on our decision in the case of Cabrera v. Villanueva,30 private respondent insisted that when Fortunato received a copy of the second owner's certificate, he became fully aware of the contracts of sale entered into between his co-owners on one hand and private respondent and her deceased husband on the other.

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Private respondent also averred that "although (Lot No. 2319) was not actually partitioned in a survey after the death of Cleopas Ape, the land was partitioned in a 'hantal-hantal' manner by the heirs. Each took and possessed specific portion or premises as his/her share in land, farmed their respective portion or premises, and improved them, each heir limiting his/her improvement within the portion or premises which were his/her respective share."31Thus, when private respondent and her husband purchased the other parts of Lot No. 2319, it was no longer undivided as petitioner claims. The petition is partly meritorious. Article 1623 of the Civil Code provides: The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. Despite the plain language of the law, this Court has, over the years, been tasked to interpret the "written notice requirement" of the above-quoted provision. In the case Butte v. Manuel Uy & Sons, Inc.,32 we declared that In considering whether or not the offer to redeem was timely, we think that the notice given by the vendee (buyer) should not be taken into account. The text of Article 1623 clearly and expressly prescribes that the thirty days for making the redemption are to be counted from notice in writing by the vendor. Under the old law (Civ. Code of 1889, Art. 1524), it was immaterial who gave the notice; so long as the redeeming co-owner learned of the alienation in favor of the stranger, the redemption period began to run. It is thus apparent that the Philippine legislature in Article 1623 deliberately selected a particular method of giving notice, and that method must be deemed exclusive. (39 Am. Jur., 237; Payne vs. State, 12 S.W. 2(d) 528). As ruled in Wampler vs. Lecompte, 150 Atl. 458 (affd. in 75 Law Ed. [U.S.] 275) why these provisions were inserted in the statute we are not informed, but we may assume until the contrary is shown, that a state
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of facts in respect thereto existed, which warranted the legislature in so legislating. The reasons for requiring that the notice should be given by the seller, and not by the buyer, are easily divined. The seller of an undivided interest is in the best position to know who are his co-owners that under the law must be notified of the sale. Also, the notice by the seller removes all doubts as to fact of the sale, its perfection; and its validity, the notice being a reaffirmation thereof, so that the party notified need not entertain doubt that the seller may still contest the alienation. This assurance would not exist if the notice should be given by the buyer.33 The interpretation was somehow modified in the case of De Conejero, et al. v. Court of Appeals, et al.34 wherein it was pointed out that Article 1623 "does not prescribe a particular form of notice, nor any distinctive method for notifying the redemptioner" thus, as long as the redemptioner was notified in writing of the sale and the particulars thereof, the redemption period starts to run. This view was reiterated in Etcuban v. The Honorable Court of Appeals, et al.,35 Cabrera v. Villanueva,36 Garcia, et al. v. Calaliman, et al.,37 Distrito, et al. v. The Honorable Court of Appeals, et al.,38 and Mariano, et al. v. Hon. Court of Appeals, et al.39 However, in the case of Salatandol v. Retes,40 wherein the plaintiffs were not furnished any written notice of sale or a copy thereof by the vendor, this Court again referred to the principle enunciated in the case of Butte. As observed by Justice Vicente Mendoza, such reversion is only sound, thus: Art. 1623 of the Civil Code is clear in requiring that the written notification should come from the vendor or prospective vendor, not from any other person. There is, therefore, no room for construction. Indeed, the principal difference between Art. 1524 of the former Civil Code and Art. 1623 of the present one is that the former did not specify who must give the notice, whereas the present one expressly says the notice must be given by the vendor. Effect must be given to this change in statutory language.41 In this case, the records are bereft of any indication that Fortunato was given any written notice of prospective or consummated sale of the portions of Lot No. 2319 by the vendors or would-be vendors. The thirty (30)-day redemption period under the law, therefore, has not commenced to run.

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Despite this, however, we still rule that petitioner could no longer invoke her right to redeem from private respondent for the exercise of this right "presupposes the existence of a co-ownership at the time the conveyance is made by a co-owner and when it is demanded by the other co-owner or co-owners."42 The regime of co-ownership exists when ownership of an undivided thing or right belongs to different persons.43 By the nature of a co-ownership, a co-owner cannot point to specific portion of the property owned in common as his own because his share therein remains intangible.44 As legal redemption is intended to minimize coownership,45 once the property is subdivided and distributed among the coowners, the community ceases to exist and there is no more reason to sustain any right of legal redemption.46 In this case, records reveal that although Lot No. 2319 has not yet been formally subdivided, still, the particular portions belonging to the heirs of Cleopas Ape had already been ascertained and they in fact took possession of their respective parts. This can be deduced from the testimony of petitioner herself, thus: Q When the plaintiffs leased the share of your husband, were there any metes and bounds? A It was not formally subdivided. We have only a definite portion. (hantal-hantal) Q This hantal-hantal of your husband, was it also separate and distinct from the hantal-hantal or the share of the brothers and sisters of your husband? A Well, this property in question is a common property.

Q To the north, whose share was that which is adjacent to your husband's assumed partition? A I do not know what [does] this "north" [mean].

COURT (To Witness) Q To the place from where the sun rises, whose share was that?
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A Q A Q

The shares of Cornelia, Loreta, Encarnacion and Adela. How could you determine their own shares? They were residing in their respective assumed portions. How about determining their respective boundaries?

A It could be determined by stakes and partly a row of banana plantations planted by my son-in-law. Q A Who is this son-in-law you mentioned? Narciso Ape.

ATTY. CAWIT (Continuing) Q You said that there were stakes to determine the hantal-hantal of your husband and the hantal-hantal of the other heirs, did I get you right? ATTY. TAN Admitted, Your Honor. ATTY. CAWIT Q Mrs. Ape, in 1960, Cleopas Ape was already dead, is that correct? A Certainly, since he died in 1950.

Q By the manifestation of your counsel that the entire land (13 hectares) of your father-in-law, Cleopas Ape, was leased to Generosa Lumayno, is this correct? A No, it is only the assumed portion of my husband [which] was leased to Generosa Lumayno.
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Q For clarification, it was only the share of your husband [which] was leased to Generosa Cawit Lumayno? A Yes.47

ATTY. CAWIT Q My question: is that portion which you said was leased by your husband to the Lumayno[s] and which was included to the lease by your mother-in-law to the Lumayno[s], when the Lumayno[s] returned your husband['s] share, was that the same premises that your husband leased to the Lumayno[s]? A The same.

Q In re-possessing this portion of the land corresponding to the share of your husband, did your husband demand that they should re-possess the land from the Lumayno[s] or did the Lumayno[s] return them to your husband voluntarily? A They just returned to us without paying the rentals.

COURT Q Was the return the result of your husband's request or just voluntarily they returned it to your husband? A No, sir, it was just returned voluntarily, and they abandoned the area but my husband continued farming.48 Similarly telling of the partition is the stipulation of the parties during the pre-trial wherein it was admitted that Lot No. 2319 had not been subdivided nevertheless, "Fortunato Ape had possessed a specific portion of the land ostensibly corresponding to his share."49 From the foregoing, it is evident that the partition of Lot No. 2319 had already been effected by the heirs of Cleopas Ape. Although the partition might have been informal is of no moment for even an oral agreement of partition is valid and binding upon the parties.50 Likewise, the fact that the respective shares of Cleopas Ape's heirs are still embraced in one and the same certificate of title and have not been technically apportioned does not
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make said portions less determinable and identifiable from one another nor does it, in any way, diminish the dominion of their respective owners.51 Turning now to the second issue of the existence of a contract of sale, we rule that the records of this case betray the stance of private respondent that Fortunato Ape entered into such an agreement with her. A contract of sale is a consensual contract, thus, it is perfected by mere consent of the parties. It is born from the moment there is a meeting of minds upon the thing which is the object of the sale and upon the price.52 Upon its perfection, the parties may reciprocally demand performance, that is, the vendee may compel the transfer of the ownership and to deliver the object of the sale while the vendor may demand the vendee to pay the thing sold.53For there to be a perfected contract of sale, however, the following elements must be present: consent, object, and price in money or its equivalent. In the case of Leonardo v. Court of Appeals, et al.,54 we explained the element of consent, to wit: The essence of consent is the agreement of the parties on the terms of the contract, the acceptance by one of the offer made by the other. It is the concurrence of the minds of the parties on the object and the cause which constitutes the contract. The area of agreement must extend to all points that the parties deem material or there is no consent at all. To be valid, consent must meet the following requisites: (a) it should be intelligent, or with an exact notion of the matter to which it refers; (b) it should be free and (c) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; spontaneity by fraud.55 In this jurisdiction, the general rule is that he who alleges fraud or mistake in a transaction must substantiate his allegation as the presumption is that a person takes ordinary care for his concerns and that private dealings have been entered into fairly and regularly.56 The exception to this rule is provided for under Article 1332 of the Civil Code which provides that "[w]hen one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former."

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In this case, as private respondent is the one seeking to enforce the claimed contract of sale, she bears the burden of proving that the terms of the agreement were fully explained to Fortunato Ape who was an illiterate. This she failed to do. While she claimed in her testimony that the contents of the receipt were made clear to Fortunato, such allegation was debunked by Andres Flores himself when the latter took the witness stand. According to Flores: ATTY. TAN Q A Mr. Witness, that receipt is in English, is it not? Yes, sir.

Q When you prepared that receipt, were you aware that Fortunato Ape doesn't know how to read and write English? A Yes, sir, I know.

Q Mr. Witness, you said you were present at the time of the signing of that alleged receipt of P30.00, correct? A Q A Yes, sir. Where, in what place was this receipt signed? At the store.

Q At the time of the signing of this receipt, were there other person[s] present aside from you, your mother-in-law and Fortunato Ape? A In the store, yes, sir.

Q When you signed that document of course you acted as witness upon request of your mother-in-law? A No, this portion, I was the one who prepared that document.

Q Without asking of (sic) your mother-in-law, you prepared that document or it was your mother-in-law who requested you to prepare that document and acted as witness?
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A She requested me to prepare but does not instructed (sic) me to act as witness. It was our opinion that whenever I prepared the document, I signed it as a witness. Q Did it not occur to you to ask other witness to act on the side of Fortunato Ape who did not know how to read and write English? A It occurred to me.

Q But you did not bother to request a person who is not related to your mother-in-law, considering that Fortunato Ape did not know how to read and write English? A The one who represented Fortunato Ape doesn't know also how to read and write English. One a maid. Q You mentioned that there [was another] person inside the store, under your previous statement, when the document was signed, there [was another] person in the store aside from you, your mother-in-law and Fortunato Ape, is not true? A That is true, there is one person, but that person doesn't know how to read also. Q Of course, Mr. Witness, since it occurred to you that there was need for other witness to sign that document for Fortunato Ape, is it not a fact that the Municipal Building is very near your house? A Quite (near).

Q But you could readily proceed to the Municipal Building and request one who is knowledgeable in English to act as witness? A I think there is no need for that small receipt. So I don't bother myself to go. Q You did not consider that receipt very important because you said that small receipt?

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Yes, I know.57

As can be gleaned from Flores's testimony, while he was very much aware of Fortunato's inability to read and write in the English language, he did not bother to fully explain to the latter the substance of the receipt (Exhibit "G"). He even dismissed the idea of asking somebody else to assist Fortunato considering that a measly sum of thirty pesos was involved. Evidently, it did not occur to Flores that the document he himself prepared pertains to the transfer altogether of Fortunato's property to his mother-inlaw. It is precisely in situations such as this when the wisdom of Article 1332 of the Civil Code readily becomes apparent which is "to protect a party to a contract disadvantaged by illiteracy, ignorance, mental weakness or some other handicap."58 In sum, we hold that petitioner is no longer entitled to the right of redemption under Article 1632 of the Civil Code as Lot No. 2319 had long been partitioned among its co-owners. This Court likewise annuls the contract of sale between Fortunato and private respondent on the ground of vitiated consent. WHEREFORE, premises considered, the decision dated 25 March 1998 of the Court of Appeals is hereby REVERSED and SET ASIDE and the decision dated 11 March 1994 of the Regional Trial Court, Branch 58, San Carlos City, Negros Occidental, dismissing both the complaint and the counterclaim, is hereby REINSTATED. No costs. SO ORDERED. G.R. No. 150707 April 14, 2004

APOLONIA LL. OCAMPO Now Substituted by MARIANO O. QUIEN, AMELITA Q. TAN, MILOVAN O. QUIEN, LUISA OCAMPO-LLORIN, MELITA F. OCAMPO, FELIX OCAMPO JR., RAMON OCAMPO, MIGUEL OCAMPO, JUANA OCAMPO, ANDRES OCAMPO SR., VIOLETA OCAMPO, MERCEDITA OCAMPO, ANTONIA OCAMPO, ELISA OCAMPO, BEATRIZ OCAMPO, JUAN JOHNNY OCAMPO, JONAS OCAMPO, MARIA DOLORES OCAMPO, REBECCA OCAMPO, FIDELA OCAMPO, LUIS OCAMPO JR. and ERNESTO O. FORTUNO,petitioners, vs. FIDELA LL. OCAMPO, FELICIDAD LL. OCAMPO, BELEN OCAMPO95

BARRITO, VICENTE BARRITO, NEMESIO LL. OCAMPO, IMELDA OCAMPO and JOSE OCAMPO, respondents. DECISION PANGANIBAN, J.: Basic is the rule that the party making an allegation in a civil case has the burden of proving it by a preponderance of evidence. In an action involving property, petitioners should rely on the strength of their own title and not on the alleged weakness of respondents claim. The Case Before this Court is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the October 31, 2001 Decision2 of the Court of Appeals (CA) in CA-GR CV No. 56941. The decretal portion of the Decision reads as follows: "WHEREFORE, with the sole modification that the awards for damages and attorneys fees are hereby deleted, the judgment appealed from is, in all other respects, AFFIRMED. Without costs."3 The CA affirmed the Regional Trial Court (RTC) Decision,4 rendered on October 30, 1996, which decreed thus: "WHEREFORE, premises considered, the Court finds, holds and declares that defendant Belen Ocampo-Barrito, married to Vicente Barrito, are the true and lawful exclusive owners of the following properties, namely: (a) A parcel of residential/commercial land situated in the poblacion of Nabua, Camarines Sur, bounded on the NE by Carmen Ocampo and Alberto Espiritu, on the SE by the Burgos Street, on the SW by a street, and on the NW by Julian Ocampo and Carmen Ocampo, containing an area of 1,119 square meters, more or less, presently covered by TCT No. 13654 in the name of Belen Ocampo-Barrito, married to Vicente Barrito and previously covered by TCT No. RT-4389(983) in the name of Fidela Ocampo, declared under TD No. 18856 and assessed at P17,240.00.
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(b) A parcel of residential land situated at San Luis, Nabua, Camarines Sur, bounded on the North and East by a barrio road, on the South by a creek, and on the West by Lot 237, with an area of about 300 square meters, declared under TD No. 19639 with an assessed value of P6,240.00. (c) A parcel of land situated at Sto. Domingo, Nabua, Camarines Sur, bounded on the North by Lot 10323, on the East by Lot 9543, on the South by Lot 10325, and on the West by Lot 10322, with an area of about 4884 square meters, declared under TD No. 35122 and assessed at P6780.00 as described and referred to in paragraph 9, sub-paragraphs (a), (b) and (c) of the original complaint and it is hereby ordered that: 1. The complaint and supplemental complaint are dismissed for failure of the plaintiffs to prove their cause/causes of action by preponderance of evidence and on the added ground of prescription; 2. The plaintiffs are ordered to pay as their joint and several obligation, to defendants Fidela Ll. Ocampo, Belen Ocampo-Barrito and Vicente Barrito, the total sum of P15,000.00 for attorneys fees and other expenses of litigation and P50,000.00 for moral damages; 3. The plaintiffs jointly and severally pay the cost of this suit. 4. Upon the finality of this decision, the notice of lis pendens annotated at plaintiffs behest in the Certificates of Title covering the properties in question, of defendants be cancelled; and the plaintiffs, their agents and representatives as well as successors-in-interest are ordered to respect the right of ownership of said defendants thereto, and to vacate and restore the lawful possession of all portions of said properties to herein defendants, their agents, representatives and successorsin-interest."5
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The Facts The CA adopted the RTCs summation of facts as follows: "Notwithstanding its somewhat deficient grammar and syntax, the following summation of the relevant and material antecedents of the case by the court a quo, is substantially correct -This is a civil suit for partition and damages filed by plaintiffs against the defendants. The complaint alleges that during the lifetime of the spouses Jose Ocampo and Juana Llander-Ocampo, they begot ten (10) children, namely: Fidela, Felix, Andres, Nemesio, Jose, Apolonia, Felicidad, Luisa, Rosario, and Luis. Of the aforementioned children, the following are already dead, namely: Felix, who is survived by his widow, Melita F. Ocampo and children Felix, Jr., Ramon and Miguel; Andres, who is survived by Juana Ocampo and children Jose, Andres, Imelda, Violeta and Mercedita; Jose, who is survived by his children Antonia, Elias and Juan (Johnny); Rosario, who is survived by Ernesto O. Fortuno; Luis, who is survived by his children Rose, Ricardo, Jonas, Maria Dolores, Rebecca, Fidela and Luis, Jr.; and Luisa, who is survived by Carlos Llorin and children Mecita, Manuel, Carlos, Jr., Carmelita and Marilou L. Arellano. The complaint further alleges that during the lifetime of the spouses Jose Ocampo and Luisa Llander-Ocampo, they acquired several parcels of land and, upon their death, left the following properties, namely: (a) A parcel of residential/ commercial land situated in the poblacion of Nabua, Camarines Sur, bounded on the NE by Carmen Ocampo and Alberto Espiritu, on the SE by the Burgos Street, on the SW by a Street, and on the NW by Julian Ocampo and Carmen Ocampo, containing an area of 1,119 square meters, more or less, presently covered by TCT No. RT-4389(983) in the name of Fidela Ocampo, declared under TD No. 18856 and assessed at P17,240.00;
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(b) A parcel of residential land situated at San Luis, Nabua, Camarines Sur, bounded on the North and East by a barrio road, on the South by a creek, and on the West by Lot 237, with an area of about 300 square meters, declared under TD No. 19639 with an assessed value ofP6,240.00; and (c) A parcel of land situated at Sto. Domingo, Nabua, Camarines Sur, bounded on the North by Lot 10323, on the East by Lot 9543, on the South by Lot 10325, and on the West by Lot 10322, with an area of about 4,884 square meters, declared under TD No. 35122 and assessed at P6,780.00. that all the above named parcels of land are actually owned in common by the children of the late spouses Jose Ocampo and Juana Llander Ocampo although the land denominated as parcel (a) of the complaint is ostensibly registered in the name of Fidela Ocampo alone but acknowledged by her as a property owned in common by all of them, brothers and sisters; that plaintiffs desire to partition said properties but defendants Fidela Ocampo and Felicidad unlawfully and unreasonably refuse to do so and moved by a common purpose, both of them mortgaged to the PNB the land denominated as parcel (a) of the complaint to secure the payment of a P110,000.00 loan, the proceeds of which were x x x exclusively to the benefit of said defendants only; that the same defendants Fidela Ocampo and Felicidad Ocampo have been receiving the fruits of the properties to the exclusion of their co-heirs amounting to not less than P2,000.00 a year; and, that because of their relationship, they undertook earnest efforts to amicably settle this controversy but because of defendants Fidela Ocampo and Felicidad Ocampo[s] utterly unreasonable and unjustified actuations, the same failed. xxx xxx xxx

In their complaint, plaintiffs pray that judgment be rendered ordering the partition of the properties described in paragraph 9 of the complaint; ordering defendants Fidela Ocampo and
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Felicidad Ocampo, to release or otherwise cancel any and all encumbrances on TCT No. RT-4389(983) which they had caused to be annotated thereon, particularly, the mortgage in favor of the PNB; requiring Fidela Ocampo and Felicidad Ocampo to refrain from further encumbering said properties or otherwise subjecting the same to any lien and for that purpose, a writ of preliminary injunction to be issued against them to enjoin the commission of such acts; ordering defendants Fidela Ocampo and Felicidad Ocampo to submit an accounting of the fruits and other produce they had received from said properties; further ordering Fidela Ocampo and Felicidad Ocampo to indemnify plaintiffs the sum of not less than P15,000.00 by way of attorneys fees and related expenses of litigation, plus the costs of the suit; and, further granting plaintiffs such other remedies as may be just and equitable in the premises. xxx xxx xxx

On 17 December 1987, counsel for plaintiffs filed a Motion to Admit Supplemental Complaint dated 2 December 1987 which was granted by the Court as there was no opposition to it. The Supplemental Complaint alleges that defendants Helen Ocampo-Barrito and Vicente Barrito are spouses; that on 30 September 1987, TCT No. RT-4389(983) in the name of defendant Fidela Ocampo and covering the lot described as parcel (a) in paragraph 9 of the original complaint was cancelled and, in lieu thereof, TCT No. 1364 was issued to defendant Belen Ocampo-Barrito, married to defendant Vicente Barrito, on the strength of an allege[d] Deed of Donation Inter Vivos ostensibly executed by defendant Fidela Ll. Ocampo in their favor on 13 January 1984; that at the time the Deed of Donation Inter Vivos was presented for registration and when TCT No. 1364, Registry of Camarines Sur, was issued to defendant Belen Ocampo-Barrito, both the donor and donees were notoriously aware that said parcel of land was among the lots subject of this Civil Case No. IR-1867 of which the donor Fidela Ll. Ocampo and the mother of the donees, Felicidad Ll. Ocampo, are defendants, that said properties were owned by the Ocampo brothers and sisters, and that the donor Fidela Ll.
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Ocampo was not the exclusive owner thereof; that the transfer of defendants Fidela Ll. Ocampo and Belen Ocampo-Barrito of the ownership over said property now subject of this partition is tainted with fraud, actual and deliberate, to deprive plaintiffs of their legitimate share therein, knowing as they do that the same are a co-ownership of the original parties plaintiffs and defendants herein; that defendants Fidela Ll. Ocampo and the spouses Belen Ocampo-Barrito and Vicente Barrito have not acted in good faith, deliberately causing damage and injury to the plaintiffs by their avaricious desire to obtain sole ownership of said properties through dubious and illegal means that the defendant spouses Belen Ocampo-Barrito and Vicente Barrito, through dubious means and undue influence over Fidela Ll. Ocampo, a very old spinster whom they have lately taken into their custody, succeeded in having the latter execute this supposed deed of donation inter vivos; that defendants have not acted with justice, honesty and good faith, causing injury to plaintiffs rights in a manner inconsistent with morals and good customs, hence, are liable for moral damages of not less than P50,000.00; and that to set an example for the public good and to deter others similarly minded from doing so, defendants should be assessed exemplary damages of not less than P50,000.00. Plaintiffs pray that judgment be rendered (a) declaring the Deed of Donation Inter Vivos allegedly executed by Fidela Ll. Ocampo in favor of Belen Ocampo-Barrito and Vicente Barrito be declare[d] null and void, (b) ordering defendants Belen Ocampo-Barrito and Vicente Barrito to reconvey so much of the property subject thereof as pertain to the plaintiffs, (c) directing defendants, jointly and severally, to indemnify plaintiffs such amounts as this Honorable Court may consider fair and reasonable by way of actual, moral and exemplary damages, inclusive of attorneys fees and related expenses of litigation, and (d) granting plaintiffs such other remedies as may be just and equitable in the premises. xxx xxx xxx

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As Special Defenses, defendant Belen Ocampo-Barrito allege that the original defendant Fidela Ll. Ocampo, her predecessorin-interest, since 1949 has been the absolute owner in fee simple of the property by virtue of the issuance of the certificate of title in her name; that her predecessor-in-interest held the same certificate of title to the same parcel of land (TCT No. RT4389(983) free of all encumbrances and adverse claims and was in notorious, public, and actual possession of the property in concept of absolute owner from 1949 until 13 January 1984, when said predecessor-in-interest validly conveyed the property by donation inter vivos which she accepted in the same public instrument; that TCT No. 1364 was issued to defendant Belen Ocampo-Barrito on the strength of the donation inter vivos executed in her favor by her predecessor-in-interest and has since 30 September 1987, been the absolute owner thereof; that since 1949 none of the plaintiffs ever questioned the absolute ownership and title of defendant Belen OcampoBarritos predecessor-in-interest over the property making the decree of registration incontrovertible; that it is fatal for plaintiffs cause of action to allege that defendants exerted undue influence over Fidela Ll. Ocampo for the latter to execute the deed of donation while clearly admitting in both the original and supplemental complaints that defendants are residents of Mindoro Occidental a far away place from Nabua, Camarines Sur, the place where the same predecessor-in-interest admittedly resides; and, that Belen Ocampo-Barritos title cannot be collaterally attacked in these supposed partition proceedings. xxx xxx xxx

Defendants pray that the case be dismissed for utter lack of merit and plaintiffs be ordered to pay defendants the sum of P200,000.00 for moral damages, P50,000.00 for exemplary damages,P100,000.00 as compensatory damages, to pay attorneys fees in the amount of P15,000.00, and for other just and equitable remedies. xxx xxx xxx

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As the Special and/or Affirmative Defenses, defendant Fidela Ll. Ocampo alleges that she is the true and absolute owner of the real properties described in paragraph 9 of the original complaint having acquired the same by lucrative title and has, since becoming owner thereof, been in actual possession thereof excepting the portion of the lot described in paragraph 9 (a) of the complaint and covered by Torrens title which was and is still being unlawfully occupied by plaintiffs Quiens; that the properties have been declared for assessment in defendants name as exclusive owner thereof and since her acquisition of said properties, has paid the taxes thereon; that defendant had exercised continuously all the legal incidents of ownership on said lands to the exclusion of and adversely to the public, plaintiffs herein included; that the [D]eed of Donation Inter Vivos and the subsequent transfer of the property mentioned in paragraph 9 of the complaint to other defendants Belen Ocamp[o]-Barrito is valid conveyance which binds the said property; and, that assuming that plaintiffs have a cause of action, the same is barred by laches. xxx xxx xxx

Defendant Fidela Ll. Ocampo prays that judgment be rendered dismissing the complaint and ordering plaintiffs to indemnify such sum as will be proved as well as [s]uch amount as this Court may assess by way of moral and exemplary damages and costs, including necessary expenses for litigation, and for just and equitable reliefs."6 Ruling of the Court of Appeals According to the appellate court, other than the Acknowledgment of Coownership7 executed by Respondent Fidela Ocampo, no documentary evidence was offered to establish petitioners claim of co-ownership. The CA held that this piece of documentary evidence could not prevail over the array of testimonial and documentary evidence that had been adduced by respondents to prove their defenses. Communal ownership of the property in question was supposedly not proven, either, by the ancient photograph showing Spouses Chino Jose and Juana Llander Ocampo with their ten

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children in front of the disputed property; or by another picture showing the name "Oniang Ocampo -- 1-15-61" engraved on the said house or building. The court a quo rejected the argument of petitioners that the title to the subject property had been placed in the name of Fidela, because their parents followed the Chinese custom of placing properties in the name of the eldest son or daughter who was single. Petitioners explained that upon the death of the eldest sibling, the properties would revert to the younger brothers and sisters. According to the CA, however, not a shred of evidence was adduced to prove that such a Chinese custom existed or was observed in that place. The CA also dismissed petitioners contention that common ownership was indicated by the fact that some of the children of Spouses Ocampo stayed and lived on the subject property. It ruled that fraternal affection could have been the motive that impelled respondents to allow their relatives to use it. In contrast to the arguments of petitioners, the CA said that respondents were able to give clear proof of their ownership of the property: the Transfer Certificate of Title and the corresponding Tax Declaration in the name of Fidela, and later of Belen Ocampo-Barrito. Nevertheless, the CA eliminated the awards for damages and attorneys fees, because the trial court had failed to cite the factual, the legal and the equitable bases therefor. Hence, this Petition.8 The Issues Petitioners raise the following issues for our consideration: "1. Where the evidence presented, oral and documentary, on the question of co-ownership, is overwhelming as it is unopposed, unrebutted and unimpeached, has co-ownership been proved? "2. Where co-ownership is confirmed by long, public possession by co-owners, did the courts commit grave abuse of discretion in holding that there is no co-ownership?

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"3. Where the evidence of respondents is weak, puerile and inconsistent, did the courts commit a grave misapprehension of facts when they gave credence to it? "4. Where a deed of donation intervivos entered in bad faith deprives the heirs of their hereditary shares, is said deed valid? "5. Where a declaration against interest has not been opposed, assailed, rebutted or impeached, did the courts commit grave abuse of discretion in holding there is no such declaration?"9 At bottom, the question to be resolved in this case is who owns the disputed property? The Court's Ruling The Petition has no merit. Main Issue: Ownership of the Subject Property At the outset, we clarify that although there were three (3) properties originally involved in the litigation brought before the RTC, petitioners appeal dealt only with the first one, referred to in the Statement of Facts above -- a parcel of residential/commercial land situated in the poblacion of Nabua, Camarines Sur. In their CA appeal, petitioners declared that "the focus of this case is on the first [property] which is located at downtown Poblacion of Nabua and therefore a valuable piece of property, 1,119 square meters in all."10 Because petitioners had not questioned the RTC Decision with regard to the other properties, then the adjudication of these matters became final. Thus, only one property is left for resolution in the present proceedings.11 Since the original Complaint was an action for partition, this Court cannot order a division of the property, unless it first makes a determination as to the existence of a co-ownership.12 The settlement of the issue of ownership is the first stage in an action for partition.13 This action will not lie if the claimant has no rightful interest in the subject property. Parties filing the action are in fact required by the Rules of Court14 to set forth in their complaint the nature and the extent of their title to the property. It would be
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premature to effect a partition thereof until and unless the question of ownership is first definitely resolved.15 Basic is the rule that the party making an allegation in a civil case has the burden of proving it by a preponderance of evidence.16 Petitioners chief evidence of co-ownership of the property in question is simply the Acknowledgement of Co-ownership executed by Fidela. As mentioned earlier, both the trial and the appellate courts were correct in finding that this piece of documentary evidence could not prevail over the array of testimonial and documentary evidence that were adduced by respondents, as will be expounded below. Petitioners failed to trace the successive transfers of ownership of the questioned property that eventually led to them. Allegedly, it was originally owned by their parents -- Spouses Ocampo -- whose deaths passed it on to the children. Petitioners, however, presented absolutely no proof of ownership of their predecessors-in-interest. In insisting that it was so transferred and thus co-owned, the former rely on the Acknowledgement of Co-ownership executed by Fidela, their eldest sibling. On the other hand, Belen clearly traced the basis of her alleged sole ownership of the property and presented preponderant proof of her claim. First, she presented a Deed of Absolute Sale of Residential Land,17 referring to the subject property, executed between Adolfo Ocampo as seller and Felix Ocampo as buyer. The document dated July 6, 1948, was signed in the presence of two witnesses and acknowledged before Juan B. Ballecer, a notary public. The theory of petitioners is completely demolished by this document, which they never contested. According to them, the land in question was the conjugal property of their parents; and that upon the latters deaths, the former inherited it in common. If indeed the land was the conjugal property of Spouses Ocampo, then petitioners should have presented evidence to prove such ownership by their alleged predecessors-in-interest. Since the former failed to do so, how then can they prove the transfer to them of ownership that has not been established in the first place? It is axiomatic that no one can transfer to another a right greater than that which one has;18 thus, the legal truism that the spring cannot rise higher than its source.19
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Likewise, in this Deed of Absolute Sale, Adolfo Ocampo declared his "exclusive ownership" of the property, "having been acquired by purchase[;] and [having] been in [his] continuous, public, peaceful, adverse and material possession for more than 50 years together with [his] predecessors in rights and interest, in [the] concept of owner without any claim of other persons."20 Second, Respondent Belen proved that on February 10, 1953, this property had been sold to Fidela by Felix Ocampo for a valuable consideration; and that Fidela had entered the property, actually occupied it, and exercised all powers of dominion over it to the exclusion of petitioners. As proofs of ownership of the property by Fidela, Belen presented Transfer Certificate of Title No. RT-4389 (983),21 which named the former as owner in fee simple; and a Declaration of Real Property,22 evidencing payment of real property taxes, also by Fidela as owner. To prove further that Fidela had exercised dominion over the property, Belen also presented a Real Estate Mortgage23 executed by the former as absolute owner. Fidela had executed it in favor of her sister Apolonia Ocampo, one of the original petitioners in this case, who is now represented by her heirs. Belen correctly argues that in agreeing to be a mortgagee, Apolonia admitted and recognized Fidela as the true owner of the land in question. The Civil Code provides that an essential requisite of a contract of mortgage is that the mortgagor be the absolute owner of the thing mortgaged.24 Co-ownership cannot be presumed even if only a portion of the property was mortgaged to Apolonia, because a co-owner may dispose only of ones interest in the ideal or abstract part of the undivided thing coowned with others.25 The effect of a mortgage by a co-owner shall be limited to the portion that may be allotted to that person upon the termination of the co-ownership.26 In this case, Fidela mortgaged adefinite portion of the property and thus negated any acknowledgement of co-ownership. Third, Belen then presented a Deed of Donation Inter Vivos27 executed on January 13, 1984, between herself as donee and Fidela as donor. This act shows the immediate source of the formers claim of sole ownership of the property.
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A donation as a mode of acquiring ownership results in an effective transfer of title to the property from the donor to the donee.28 Petitioners stubbornly rely on the Acknowledgement of Co-ownership allegedly executed by Fidela in favor of her siblings. What they overlook is the fact that at the time of the execution of the Acknowledgement -- assuming that its authenticity and due execution were proven -- the property had already been donated to Belen. The Deed of Donation, which is the prior document, is clearly inconsistent with the document relied upon by petitioners. We agree with the RTCs ratiocination: "On the claim of plaintiffs that defendant Fidela Ll. Ocampo herself made a written acknowledgement for her co-ownership over all the properties disputed with plaintiffs in this case, the same cannot be considered as a declaration against Fidelas interest since the alleged acknowledgement was written and executed on 24 December 1985 when she was no longer the owner of the property as the year previous, on 13 January 1984, she had already donated all her properties to defendant Belen Ocampo-Barrito, so that, in effect, she had no more properties with which she can have an interest to declare against."29 Petitioners argue that the Acknowledgement of Co-ownership may be considered as a declaration against interest. A statement may be admissible as such a declaration if it complies with the following requisites: 1) the declarant is dead or unable to testify; 2) it relates to a fact against the interest of the declarant; 3) at the time of the declaration, the declarant was aware that it was contrary to his or her interest; and 4) the declarant had no motive to falsify and believed the declaration to be true.30 As correctly found by the trial court, however, the Acknowledgement of Coownership could not be a fact against the interest of the declarant, since her right over the property had already been extinguished by the prior act of donation. Thus, at the time of the declaration, Fidela could not have acknowledged co-ownership, as she had no more property against which she had an interest to declare. Finally, Belen presented Transfer Certificate of Title No. 1365431 as proof of her ownership of the property. To be sure, the best proof of ownership of the land is the Certificate of Title (TCT). Hence, more than a bare allegation is required to defeat the face value of respondents TCT, which enjoys a
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legal presumption of regularity of issuance.32 It is quite surprising that despite the process of transfers and titling of the subject property -commencing in 1948 and eventually leading to the sole ownership of Belen in 198433 -- it was only after 1984 that petitioners started asserting their claim of co-ownership thereof. We are not unmindful of our ruling that the mere issuance of a certificate of title does not foreclose the possibility that the real property may be under co-ownership with persons not named therein.34 But given the circumstances of this case, the claim of co-ownership by petitioners has no leg to stand on. Again, we stress, Belen clearly traced the source of her sole ownership of the property in question and thereby foreclosed the unproven and unsubstantiated allegation of co-ownership thereof. In addition to the TCT presented, Belen offered as evidence the Tax Declaration35 indicating that she, as owner, had been paying real estate taxes on the property, all to the exclusion of petitioners. On the other hand, petitioners could not show any title, tax receipt or document to prove their ownership. Having filed an action involving property, they should have relied on the strength of their own title and not on the alleged weakness of respondents claim.36 Petitioners assert that their claim of co-ownership of the property was sufficiently proved by their witnesses -- Luisa Ocampo-Llorin and Melita Ocampo. We disagree. Their testimonies cannot prevail over the array of documents presented by Belen. A claim of ownership cannot be based simply on the testimonies of witnesses; much less on those of interested parties, self-serving as they are. As to the photographs presented by petitioners to bolster their claim of coownership, we affirm the CAs disposition showing the flimsiness of their claim as follows: "The other piece of documentary evidence presented by appellants really proved nothing. The ancient photograph showing the spouses Chino Jose and Juana Llander Ocampo together with their ten children, simply proved that there was such a picture taking of the spouses with their children. But the photograph does not prove communal ownership by appellants over the disputed parcels of land; neither does it prove that the said properties were indeed owned by
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the spouses Chino Jose and Juana Ocampo, and then later on transferred to and commonly owned by their children. By the same token, the picture exhibited by appellant showing the name Oniang Ocampo -- 1-15-61 (or Apolonia Ocampo, one of the children of the spouses Chino Jose and Juana) engraved in the house or building, does not prove communal ownership of the properties in question. At best, it is susceptible of various meanings, like: that of Oniang Ocampo was born on 1-15-61, or that she got married on that date, or that she was celebrating a special event on the date mentioned, or that she even died on the date mentioned. And even assuming ex gratia argumenti, that the said engraving proved ownership over the disputed building, some such fact can only work to the prejudice of herein appellants. Why? Because it would mean that only Oniang (or Apolonia) was the owner of the building and that the building is not, therefore, a communal property of the children of the late spouses Chino Jose and Juana. Adverting to this piece of evidence, the Trial Court postulated -The engravings on the house ONIANG OCAMPO BLDG. -- 115-61 cannot serve as evidence that the property is of common ownership. At most, this can only establish the fact that said building was constructed for a certain Oniang on 15 January 1961. If, indeed, the property is of common ownership, there could not have been any difficulty to engrave thereon HEIRS OF JOSE OCAMPO and JUANA LLANDER-OCAMPO -- 1-1561 instead of ONIANG OCAMPO BLDG. -- 1-15-61."37 Neither can we accept petitioners contention that co-ownership is shown by the fact that some of the children of Spouses Ocampo stayed, lived, and even put up businesses on the property. The appellate court correctly found that since the litigants in this case were blood relatives, fraternal affection could have been a good motive that impelled either Belen or Fidela to allow petitioners to use the property. Without any proof, however, co-ownership among the parties cannot be presumed. Neither are we persuaded by the contention that Spouses Ocampo placed the subject property in the name of only one person in accordance with a Chinese custom. As mentioned earlier, that custom consisted of placing properties of parents in the name of the eldest unmarried son or daughter,

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with the implicit understanding that ownership thereof would later revert to the siblings. In contrast to the failure of petitioners to prove that such custom existed and was practiced in that place,38 Belen presented evidence that clearly negated any claim of ownership by the formers predecessors-in-interest. Having shown that the property in question was originally owned by one Adolfo Ocampo -- not by Spouses Ocampo, from whom petitioners derive their right -- the claim of custom becomes immaterial. The fact that Fidela was not presented in court will not necessarily favor petitioners and prove that the property in question is indeed co-owned. If they felt that her testimony would prove their cause, then they could have easily called her as an adverse or a hostile witness.39 But since respondents were confident in the documents they presented in court, they did not see any need to call her as a witness. Petitioners also question the motives of Fidela for donating her properties, when she is still alive and needs money in her old age. They clearly overlook the nature of a donation. Donation is an act of liberality whereby a person gratuitously disposes of a thing or a right in favor of another who accepts it.40 Once perfected, a donation is final; its revocation or rescission cannot be effected, absent any legal ground therefor.41 A donation may in fact comprehend the entire property of the donor.42 At any rate, the law provides that donors should reserve, in full ownership or in usufruct, sufficient means for their own support and that of all their relatives who, at the time of the acceptance of the donation, are by law entitled to be supported by them.43 In questioningG.R. No. 161720 November 22, 2005 HEIRS OF FLORES RESTAR namely: ESMENIA R. RESTAR, BERNARDITA R. RENTINO, LUCIA RESTAR, RODOLFO RESTAR, JANET R. RELOJERO, LORNA R. RAMOS, MANUEL RESTAR, NENITA R. BELLEZA, MIRASOL R. DELA CRUZ, ROSELLE R. MATORRE, POLICARPIO RESTAR and ADOLFO RESTAR, Petitioners, vs. HEIRS OF DOLORES R. CICHON, namely: RUDY R. CICHON, NORMA C. LACHICA, NILDA C. JUMAYAO, LYDIA C. SANTOS, and NELSON R. CICHON; HEIRS OF PERPETUA R. STA. MARIA, namely GEORGE
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STA. MARIA, LILIA M. MANIAGO, DERLY M. CONCEPCION, GERVY STA. MARIA, DORY M. INDULO; HEIRS OF MARIA R. ROSE, namely: TERESITA R. MALOCO, ROLANDO ROSE, EDELYN R. PALACIO and MINERVA R. PASTRANA, DOMINICA RESTAR-RELOJERO and PACIENCIA RESTAR MANARES, Respondents. DECISION CARPIO MORALES, J.: In 1935, Emilio Restar (Restar) died intestate, leaving eight (8) childrencompulsory heirs, namely: Flores Restar, Dolores Restar-Cichon, Perpetua Restar-Sta. Maria, Paciencia Restar-Manares, Dominica Restar-Relojero, Policarpio Restar, Maria Restar-Rose and Adolfo Restar. In 1960, Restars eldest child, Flores, on the basis of a July 12, 1959 Joint Affidavit1 he executed with one Helen Restar, caused the cancellation of Tax Declaration No. 66962 in Restars name covering a 5,9183 square meter parcel of land, Lot 3177 (the lot), located at Barangay Carugdog, Lezo, Aklan which was among the properties left by Restar, and the issuance of Tax Declaration No. 11134 in his name. Flores died on June 10, 1989. On November 5, 1998, the co-heirs of Flores discovered the cancellation of Restars Tax Declaration No. 6696 and the issuance in lieu thereof of Tax Declaration No. 111344 in his name. On January 21, 1999, the heirs of Flores sisters Dolores R. Cichon, Perpetua Sta. Maria, and Maria Rose who had in the meantime died, together with Flores surviving sisters Dominica Restar-Relojero and Paciencia Restar-Manares, filed a Complaint5 against Flores heirs for "partition [of the lot], declaration of nullity of documents, ownership with damages and preliminary injunction" before the Regional Trial Court (RTC) of Aklan. Flores brothers Policarpio and Adolfo were impleaded also as defendants, they being unwilling co-plaintiffs. The plaintiffs, herein respondents, alleged that, inter alia, during the lifetime of Flores, they were given their shares of palay from the lot and even after
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Flores death up to 1991; after Flores death in 1989, his widow Esmenia appealed to them to allow her to hold on to the lot to finance the education of her children, to which they (the plaintiffs) agreed on the condition that after the children had finished their education, it would be divided into eight (8) equal parts; and upon their demand for partition of the lot, the defendants Heirs of Flores refused, they claiming that they were the lawful owners thereof as they had inherited it from Flores. By Answer6 filed February 23, 1999, the defendants-herein petitioners Heirs of Flores claimed that they had been in possession of the lot in the concept of owner for more than thirty (30) years and have been paying realty taxes since time immemorial. And they denied having shared with the plaintiffs the produce of the lot or that upon Flores death in 1989, Esmenia requested the plaintiffs to allow her to hold on to it to finance her childrens education, they contending that by 1977, the children had already finished their respective courses.7 The defendants Heirs of Flores further claimed that after World War II and under the "new Tax Declaration in 1945," Flores caused the transfer of parcels of ricelands situated in Carugdog, Lezo, Aklan to his siblings as their shares from the estate of their father Restar;8 and an extra-judicial partition was subsequently executed on September 28, 1973 by Restars heirs, which was notarized by one Atty. Jose Igtanloc, dividing and apportioning among themselves four (4) parcels of land. 9 The defendant Adolfo Restar, by separate Answer,10 alleged that the complaint did not state a cause of action as against him for he interposed no objection to the partition of the lot among the heirs of Restar. As for the defendant Policarpio Restar, he in his Amended Answer11 acknowledged Flores as the owner of the lot but claimed that a portion of it, 1,315 square meters, was sold to him as shown by a Deed of Absolute Sale dated May 14, 1981.12 He thus prayed that, among other things, an order for the partition of the lot among Restars heirs be issued excluding, however, that portion sold to him by Flores.13 After trial, Branch 3 of the RTC of Kalibo, Aklan held that Flores share in Restars estate was not the lot but that covered by Cadastral Lot No. 3183. Nevertheless, the trial court, holding that Flores and his heirs had

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performed acts sufficient to constitute repudiation of the co-ownership, concluded that they had acquired the lot by prescription.14 Respecting the defendant Policarpios claim that a portion of the lot was sold to him, the trial court discredited the same upon noting that Flores signature in the purported Deed of Sale differed from those appearing in other documents submitted by the parties; in 1981, when the said Deed of Sale was alleged to have been executed, Flores was admittedly paralyzed and bedridden and could not have written his name in a "straight" manner, as in fact his signature appearing in at least two documents dated 1980 was "crooked," and there existed discrepancies in the spelling of Flores wifes signature which read "Esmea" in the deed, and not as "Esmenia."15 The trial court thus dismissed the complaint by Decision of June 30, 1999.16 On appeal by the defendants Heirs of Flores and Policarpio Restar, the appellate court, by Decision of October 29, 2002.17 reversed the decision of the trial court, it finding that the defendants Heirs of Flores failed to prove that their possession of the lot excluded their co-owners or that they derived title to it from a separate conveyance to them by Restar. The appellate court further found that there was no adequate notice by Flores to his other co-heirs/co-owners of the repudiation of the coownership and neither was there a categorical assertion by the defendants of their exclusive right to the entire lot that barred the plaintiffs claim of ownership.18 And the appellate court found it credible for the plaintiffs to have failed to immediately take legal action to protect their rights on account of forbearance towards their eldest brother who had asked them to continue cultivating the lot to support his childrens education.19 Respecting the defendant Policarpios claim that part of the lot had been sold to him by Flores, the appellate court sustained the trial courts rejection thereof. Accordingly, the appellate court disposed: WHEREFORE, in view of all the foregoing, the appeal is hereby GRANTED in so far as plaintiffs-appellants Heirs of Dolores Cichon, et al., are
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concerned and DENIED in so far as defendant-appellant Policarpio Restar. The decision of the Regional Trial Court of Kalibo, Aklan, Branch 3, dated June 30, 1999 is MODIFIED. The ruling of the said court that the heirs of Flores Restar have acquired ownership by adverse possession of the land in question, Cadastral Lot No. 6686, is hereby REVERSED. SO ORDERED. (Emphasis in the original) The appellate court having denied reconsideration of its decision, only the defendants Heirs of Flores filed the present petition, assigning the following errors: A. THE COURT OF APPEALS PATENTLY ERRED IN REVERSING THE RULING OF THE LOWER COURT THAT THE PETITIONERS AS HEIRS OF FLORES RESTAR HAVE ACQUIRED OWNERSHIP BY ADVERSE POSSESSION OF THE LAND IN QUESTION. B. THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING THAT THERE WAS ACQUISITIVE PRESCRIPTION ON THE LAND IN QUESTION NOTWITHSTANDING THAT THE LAND IN QUESTION HAS BEEN DECLARED IN THE NAME OF FLORES RESTAR, FATHER OF PETITIONERS, AS EARLY AS 1960 AND THAT PETITIONERS AND THEIR PREDECESSOR-IN-INTEREST HAVE BEEN IN OPEN, CONTINUOUS, EXCLUSIVE AND NOTORIOUS POSSESSION OF THE LAND IN QUESTION IN THE CONCEPT OF OWNER FOR MORE THAN THIRTY (30) YEARS.20 The petition is impressed with merit. Article 494 of the New Civil Code expressly provides: ART. 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concerned. xxx No prescription shall run in favor of a co-owner or co-heir against his coowners or co-heirs so long as he expressly or impliedly recognizes the coownership.
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While the action to demand partition of a co-owned property does not prescribe, a co-owner may acquire ownership thereof by prescription21 where there exists a clear repudiation of the co-ownership, and the co-owners are apprised of the claim of adverse and exclusive ownership.22 Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession of things in good faith and with just title for a period of ten years. Without good faith and just title, acquisitive prescription can only be extraordinary in character which requires uninterrupted adverse possession for thirty years. Thus, the New Civil Code provides: ART. 1117. Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time fixed by law. ART. 1134. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years. ART. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession thereof for thirty years, without need of title or of good faith. Resolving the main issue of whether petitioners acquired ownership over the lot by extraordinary prescription, the appellate court held in the negative. While this Court is not a trier of facts, if the inference drawn by the appellate court from the facts is manifestly mistaken, it may, in the interest of justice, review the evidence in order to arrive at the correct factual conclusions based on the record.23 Contrary to the findings of the appellate court, the records of the case amply support petitioners claim that the requirements for extraordinary prescription had been duly met.

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When Restar died in 1935, his eight children became pro indiviso coowners of the lot by intestate succession. Respondents never possessed the lot, however, much less asserted their claim thereto until January 21, 1999 when they filed the complaint for partition subject of the present petition. In contrast, Flores took possession of the lot after Restars death and exercised acts of dominion thereon tilling and cultivating the land, introducing improvements, and enjoying the produce thereof. The statutory period of prescription, however, commenced not in 1935 but in 1960 when Flores, who had neither title nor good faith, secured a tax declaration in his name and may, therefore, be said to have adversely claimed ownership of the lot. And respondents were also deemed to have been on said date become aware of the adverse claim.24 Flores possession thus ripened into ownership through acquisitive prescription after the lapse of thirty years in accordance with the earlier quoted Article 1137 of the New Civil Code. The following observations of the trial court thus merit this Courts approval. The evidence proved that as far back as 1959, Flores Restar adjudicated unto himself the whole land in question as his share from his father by means of a joint affidavit which he executed with one Helen Restar, and he requested the Provincial Treasurer/Assessor to have the land declared in his name. It was admitted by the parties during the pre-trial that this affidavit was the basis of the transfer of Tax Declaration No. 6686 from Emilio Restar to Flores Restar. So that from 1960 the land was declared in the name of Flores Restar (Exhibit 10). This was the first concrete act of repudiation made by Flores of the co-ownership over the land in question. x xx Plaintiffs did not deny that aside from the verbal partition of one parcel of land in Carugdog, Lezo, Aklan way back in 1945, they also had an amicable partition of the lands of Emilio Restar in Cerrudo and Palale, Banga Aklan on September 28, 1973 (exhibit "20"). If they were able to demand the partition, why then did they not demand the inclusion of the land in question in order to settle once and for all the inheritance from their father Emilio Restar, considering that at that time all of the brothers and
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sisters, the eight heirs of Emilio Restar, were still alive and participated in the signing of the extra-judicial partition? Also it was admitted that Flores died only in 1989. Plaintiffs had all the chances (sic) to file a case against him from 1960, or a period of 29 years when he was still alive, yet they failed to do so. They filed the instant case only on January 22, 1999, almost ten (10) years after Flores death. From the foregoing evidence, it can be seen that the adverse possession of Flores started in 1960, the time when the tax declaration was transferred in his name. The period of acquisitive prescription started to run from this date. Hence, the adverse possession of Flores Restar from 1960 vested in him exclusive ownership of the land considering the lapse of more than 38 years. Acquisitive prescription of ownership, laches and prescription of the action for partition should be considered in favor of Flores Restar and his heirs. 25 While tax declarations and receipts are not conclusive evidence of ownership and do not prove title to the land, nevertheless, when coupled with actual possession, they constitute evidence of great weight26 and can be the basis of a claim of ownership through prescription.27 As for respondents claim that they have been receiving shares from the produce of the land, it was correctly discredited by the trial court. [P]laintiffs claim that Flores Restar gave them five to eight gantas each as their shares in the produce cannot be sustained. A few gantas cannot be considered one-eight share of sixty (60) cavans of palay produced per cropping. One eight of sixty cavans would be at least six cavans, not merely gantas after excluding expenses for cultivation and production. If plaintiffs were to be believed, their whole 7/8 share of the produce would total two cavans, six gantas only at the usual rate of 25 gantas per cavan.28 Unless there are strong and impelling reasons to disturb the trial courts findings of facts which must, as a matter of judicial policy, be accorded with the highest respect, they must remain. Respondents have not, however, proffered any reason warranting the disturbance of the trial courts findings of facts. Indeed, the following acts of Flores show possession adverse to his coheirs: the cancellation of the tax declaration certificate in the name of
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Restar and securing another in his name; the execution of a Joint Affidavit stating that he is the owner and possessor thereof to the exclusion of respondents; payment of real estate tax and irrigation fees without respondents having ever contributed any share therein; and continued enjoyment of the property and its produce to the exclusion of respondents. And Flores adverse possession was continued by his heirs. The appellate courts crediting of respondents justification for failing to immediately take legal action to protect their rights forbearance toward Flores and/or his wife who asked to be allowed to cultivate the land to support their childrens education does not impress. For assuming such justification to be true, why did not any of respondents assail Flores continuous possession after his children completed their college education in 1977? The trial courts finding and conclusion that Flores and his heirs had for more than 38 years possessed the land in open, adverse and continuous possession in the concept of owner which length of possession had never been questioned, rebutted or disputed by any of respondents, being thus duly supported by substantial evidence, he and his heirs have become owner of the lot by extraordinary prescription. It is unfortunate that respondents slept on their rights. Dura lex sed lex. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is REVERSED and SET ASIDE and the June 30, 1999 decision of the trial court is REINSTATED. No pronouncement as to costs. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice all the terms agreed upon; and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.45 Petitioners did not question the consent of Fidela to the donation. Never was there any intimation that she had either been coerced or defrauded
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into entering into it. As all the essential elements of a donation -- consent, subject matter and cause46 -- have been satisfied, we see no reason to entertain any doubt about the Deed pertaining thereto. The question of why the land was registered several years after the donation is purely speculative. What is important is that there was a duly proven Deed of Donation, which formed the basis of Belens claim and led to the registration of the property in her name. Petitioners also question Fidelas filing of an unlawful detainer suit after the date of the Deed of Donation. Again, we remind petitioners that because this action involves property, they should rely on the strength of their own title, not on the alleged weakness of the claim of respondents. At any rate, the burden of proof of the claim of co-ownership rests on the former. Moreover, the final resolution of this case entails the review of factual findings of the courts below. It is a settled doctrine that in a civil case, final and conclusive are the factual findings of the trial court, if supported by clear and convincing evidence on record. Usually, the Supreme Court does not review those findings -- especially when affirmed by the Court of Appeals, as in this case.47 From the records of the present case, no cogent evidence appears that would impel us to apply the above doctrine differently. The courts below have not overlooked essential facts that, if considered, may produce a different outcome. The trial court correctly explained thus: "This Court from the outset had the opportunity to see and hear the tell-tale [signs] of truthfulness or perjury like the flush of face, or the tone of voice, or the dart of eyes, or the fearful pause [--] and finds that credibility is with the defendants [herein respondents]. Moreover, the preponderance of evidence is with defendants whose testimonial evidences are buttressed by their documentary evidences."48 Finally, we agree with the CA in eliminating the awards for damages and attorneys fees for respondents failure to show any factual, legal or equitable bases therefor.49 WHEREFORE, the Petition is hereby DENIED, and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED.
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.R. No. 141993

March 17, 2006

NARCISA AVILA, assisted by her husband Bernardo Avila, Spouses JANUARIO N. ADLAWAN and NANETTE A. ADLAWAN, NATIVIDAD MACAPAZ, assisted by her husband EMILIO MACAPAZ, FRANCISCA N. ADLAWAN and LEON NEMEO, Petitioners, vs. Spouses BENJAMIN BARABAT and JOVITA BARABAT, Respondents. DECISION CORONA, J.: This petition for review on certiorari under Rule 45 of the Rules of Court assails the July 30, 1999 decision1 and January 19, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 50899. The subject of this controversy is a portion of a 433-square meter parcel of land located in Poblacion, Toledo City, Cebu. The entire property is designated as cadastral lot no. 348 registered in the name of Anunciacion Bahenavda. de Nemeo. Upon her death, ownership of the lot was transferred by operation of law to her five children, petitioners Narcisa Avila, Natividad Macapaz, Francisca Adlawan, Leon Nemeo and Jose Bahena. These heirs built their respective houses on the lot. In 1964, respondent Benjamin Barabat leased a portion of the house owned by Avila. His co-respondent, Jovita Barabat, moved in with him in 1969 when they got married. Avila subsequently relocated to Cagayan de Oro City. She came back to Toledo City in July 1979 to sell her house and share in the lot to her siblings but no one showed interest in it. She then offered it to respondents who agreed to buy it. Their agreement was evidenced by a private document dated July 17, 1979 which read: ALANG SA KASAYURAN SA TANAN: Nga ako, NARCISA AVILA, nagpuyo sa siyudad sa Cagayan de Oro, 52 aos ang panu-igon, minyo ug may mga anak magatimaan ning maong kasulatan nga akong guibaligya sa kantidad nga walo ka libo ka pesos (P8,000.00) ang bahin nga balay ug yuta nga sinunod ko sa akong mga
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ginikanan ngadto sa magtiayon nga Benjamin ug Jovita Barabat, mga lumulupyo sa siyudad sa Toledo. Nga ang maong lote ug balay ana-a mahimutang sa Poblacion, Toledo City kansang mga utlanan mao kining musunod: Atubangan ---------- N. Rafols Street Dapit sa Tuo ---------- yuta ug mga panimalay sa Magsuong Natividad Macapaz, Francisca Adlawan, Jose Bahena ug Leoning Nemeno Dapit sa wala ---------- kanal sa tubig Dapit sa luyo ---------- lote nga kumon sa magsuong Nemeno Tiniman-an: (Sgd.) Narcisa Avila2 Respondents stopped paying rentals to Avila and took possession of the property as owners. They also assumed the payment of realty taxes on it. Sometime in early 1982, respondents were confronted by petitioner Januario Adlawan who informed them that they had until March 1982 only to stay in Avilas place because he was buying the property. Respondents replied that the property had already been sold to them by Avila. They showed Adlawan the July 17, 1979 document executed by Avila. On January 6, 1983, respondents received a letter from Atty. Joselito Alo informing them that Avila had sold her house and share in lot no. 348 to his clients, the spouses Januario and Nanette Adlawan. Considering the sale to the spouses Adlawan as prejudicial to their title and peaceful possession of the property, they demanded that Avila execute a public document evidencing the sale of the property to them but Avila refused. Respondents filed a complaint for quieting of title with the Regional Trial Court (RTC) of Toledo City, Branch 29.3Docketed as Civil Case No. T-53, the complaint was subsequently amended to include annulment of the deed of sale to the spouses Adlawan, specific performance, partition and damages as additional causes of action. Respondents anchored their claim

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over the property to the July 17, 1979 private document which they presented as Exhibit "A." Avila denied having offered to sell her property to respondents. She claimed that respondents gave her an P8,000 loan conditioned on her signing a document constituting her house and share in lot no. 348 as security for its payment. She alleged that she innocently affixed her signature on Exhibit "A" which was prepared by respondents and which they now claim as a private deed of sale transferring ownership to them. The trial court rendered its May 9, 1995 decision in favor of respondents. It declared Exhibit "A" as a valid and lawful deed of sale. It nullified the subsequent deed of sale between Avila and the spouses Adlawan. Avila was ordered to execute a formal and notarized deed of sale in favor of respondents. It also held petitioners liable for moral damages and attorneys fees. Aggrieved, petitioners filed an appeal with the Court of Appeals. In its July 30, 1999 decision, the appellate court affirmed the decision of the RTC in toto. Petitioners sought a reconsideration but it was denied. Hence, this petition. Petitioners claim that the appellate court erred in ruling that the transaction between respondents and Avila was an absolute sale, not an equitable mortgage. They assert that the facts of the case fell within the ambit of Article 1602 in relation to Article 1604 of the Civil Code on equitable mortgage because they religiously paid the realty tax on the property and there was gross inadequacy of consideration. In this connection, Articles 1602 and 1604 provide: Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
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(4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes of the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. xxxxxxxxx Art. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale. They also claim that the court erred in denying them the right to redeem the property and in ruling that there was implied partition by the acts of the parties. We rule in favor of respondents. For Articles 1602 and 1604 to apply, two requisites must concur: (1) the parties entered into a contract denominated as a contract of sale and (2) their intention was to secure an existing debt by way of mortgage.4Here, both the trial and appellate courts found that Exhibit "A" evidenced a contract of sale. They also agreed that the circumstances of the case show that Avila intended her agreement with respondents to be a sale. Both courts were unanimous in finding that the subsequent acts of Avila revealed her intention to absolutely convey the disputed property. It was only after the perfection of the contract, when her siblings began protesting the sale, that she wanted to change the agreement. Furthermore, contrary to petitioners claim, the trial court found that it was respondents who took over the payment of real property taxes after the execution of Exhibit "A." There is no reason to depart from these factual findings because, as a rule, factual findings of the trial court, when adopted and confirmed by the Court of Appeals, are binding and conclusive on the
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Court and generally will not be reviewed on appeal to us.5 There is no reason for us to deviate from this rule. Petitioners claim of gross inadequacy of selling price has no basis. They failed to introduce evidence of the correct price at the time the land was sold to respondents in 1979. How can we therefore conclude that the price was grossly inadequate? In the absence of evidence as to the fair market value of a parcel of land at the time of its sale, we cannot reasonably conclude that the price at which it was sold was inadequate.6 Petitioners rely on Article 1623 in relation to Article 1620 of the Civil Code to justify their right of redemption. This is incorrect. These provisions state: Art. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. xxxxxxxxx Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners. Petitioners right to redeem would have existed only had there been coownership among petitioners-siblings. But there was none. For this right to be exercised, co-ownership must exist at the time the conveyance is made by a co-owner and the redemption is demanded by the other co-owner or co-owner(s).7 However, by their own admission, petitioners were no longer
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co-owners when the property was sold to respondents in 1979. The coownership had already been extinguished by partition. The regime of co-ownership exists when the ownership of an undivided thing or right belongs to different persons.8 By the nature of co-ownership, a co-owner cannot point to any specific portion of the property owned in common as his own because his share in it remains intangible and ideal.9 Every act intended to put an end to indivision among co-heirs is deemed to be a partition.10 Here, the particular portions pertaining to petitioners had been ascertained and they in fact already took possession of their respective parts. The following statement of petitioners in their amended answer11 as one of their special and affirmative defenses was revealing: F-8. That all defendants [i.e., petitioners] in this case who are co-owners of lot 348 have their own respective buildings constructed on the said lot in which case it can be safely assumed that that their respective shares in the lot have been physically segregated although there is no formal partition of the land among themselves.12(emphasis supplied) Being an express judicial admission, it was conclusive on petitioners unless it was made through palpable mistake or that no such admission was in fact made.13 Petitioners proved neither and were therefore bound by it. The purpose of partition is to separate, divide and assign a thing held in common among those to whom it belongs.14 By their own admission, petitioners already segregated and took possession of their respective shares in the lot. Their respective shares were therefore physically determined, clearly identifiable and no longer ideal. Thus, the co-ownership had been legally dissolved. With that, petitioners right to redeem any part of the property from any of their former co-owners was already extinguished. As legal redemption is intended to minimize coownership,15 once a property is subdivided and distributed among the coowners, the community ceases to exist and there is no more reason to sustain any right of legal redemption.16 Under the law, subject to certain conditions, owners of adjoining urban land have the pre-emptive right to a lot before it is sold to third parties, or the redemptive right if it has already been sold. In particular, Article 1622 of the Civil Code provides:
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Art. 1622. Whenever a piece of urban land is so small and so situated in that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation, is about to be re-sold, the owner of any adjoining land has a right of pre-emption at a reasonable price. If the re-sale has been perfected, the owner of the adjoining land shall have a right of redemption, also at a reasonable price. When two or more owners of adjoining lands wish to exercise the rights of pre-emption or redemption, the owner whose intended use of the land in question appears best justified shall be preferred. However, this provision does not apply here. Aside from the fact that petitioners never raised it as an issue, the conditions provided for its application were not met. While the property may be considered as urban land, it was not shown or even alleged that its area and location would render a major portion of no practical use within a reasonable time. Neither was there any allegation to the effect that the disputed property was bought merely for speculation. WHEREFORE, the petition is hereby DENIED. The July 30, 1999 decision and January 19, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 50899 are AFFIRMED. Costs against petitioners. G.R. No. 160994 July 27, 2006

WILFREDO and SWARNIE AROMIN, petitioners, vs. PAULO FLORESCA, VICTOR FLORESCA, JUANITO FLORESCA and LILIA FLORESCA-ROXAS, respondents. DECISION CALLEJO, SR., J.: Before the Court is the petition for review on certiorari filed by the spouses Wilfredo and Swarnie Aromin seeking the reversal of the Decision1 dated June 6, 2003 of the Court of Appeals in CA-G.R. CV No. 69651. The
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assailed decision reversed and set aside the joint decision of the Regional Trial Court (RTC) of Bauang, La Union, Branch 67. Likewise sought to be reversed and set aside is the Resolution dated October 24, 2003 of the appellate court denying reconsideration of the assailed decision. The present case arose from three civil cases pending before the Regional Trial Court (RTC) of Bauang, La Union, Branch 67 (court a quo) involving the same property and parties, namely: the spouses Wilfredo and Swarnie Aromin, Paulo Floresca and his brother's children, Lilia (now surnamed Roxas), Victor and Juanito Floresca. The first case, Civil Case No. 921-BG, was an action for specific performance filed by the spouses Aromin against Paulo. In their complaint, the spouses Aromin alleged that Paulo was the owner of the following properties: a) A parcel of unirrigated riceland situated at Taberna, Bauang, La Union under Cad. Lot No. 4894-pt, with a total area of 68,658 square meters, more or less. x x x Covered by Tax Declaration No. 26377; b) A parcel of unirrigated riceland situated at Taberna, Bauang, La Union under Cad. Lot No. 4894, with a total area of 34,456 square meters, more or less. x x x Covered by Tax Declaration No. 25257.2 On different dates from 1990 up to 1992, Paulo sold to the spouses Aromin several portions of the above-mentioned properties as follows: 1. Deed of Sale dated November 22, 1990 covering 12,214 square meters; 2. Deed of Sale dated June [undated] 1991 covering 25,656 square meters; 3. Deed of Sale dated June 26, 1991 covering 1,656 square meters; 4. Deed of Sale dated February 7, 1992 covering 30,313 square meters; 5. Deed of Sale dated February 19, 1992 covering 9,436 square meters;

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6. Deed of Sale dated February 19, 1992 covering 9,759 square meters; 7. Deed of Sale dated February 19, 1992 covering 9,123 square meters.3 All these deeds of sale were not registered with the Register of Deeds. On September 29, 1992, Paulo executed a receipt acknowledging that he received from the spouses Aromin a total amount of P1,462,000.00 in consideration for the sale of a total of 98,257 square meters of Cad. Lot No. 4894. In their complaint, the spouses Aromin sought to compel Paulo to formally execute the corresponding deed of sale covering the entire property. The siblings Victor, Juanito and Lilia filed a Motion for Leave to Intervene4 in Civil Case No. 921-BG alleging that the properties subject thereof actually comprised only one parcel of land designated as Cad. Lot No. 4894 and, although declared in the name of Paulo alone in the tax declarations, it was actually owned in common by him and the siblings. It was further alleged that the said land was the subject of an action for partition involving them (Paulo and the siblings) before the Regional Trial Court of Bauang, La Union, Branch 33. The case was docketed as Civil Case No. 832-BG and a Notice of Lis Pendens to the said effect was filed with the Register of Deeds, San Fernando, La Union. Thereafter, on February 10, 1993, a judgment based on compromise agreement was rendered by the said RTC (Branch 33) in Civil Case No. 832-BG. The share of Paulo with respect to Cad. Lot No. 4894 based on the said judgment was allegedly as follows: one-half of the swampland, one-half of the sandy land, and one-half of the riceland which comprised the said lot.5 The second case, Civil Case No. 938-BG, was an action for quieting of title filed by the spouses Aromin against Victor, Juanito, Lilia, and Paulo. In their complaint, the spouses Aromin alleged that they are the owners and in actual physical possession of the subject property which they purchased from Paulo. Further, they just discovered that a judgment based on compromise agreement in Civil Case No. 832-BG had been rendered and that the said case involved the same property as that in Civil Cases Nos. 921-BG and 938-BG. They alleged that the said judgment based on compromise agreement is not binding on them as they were not parties to Civil Case No. 832-BG. They prayed for an injunction to restrain the
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enforcement of the writ of execution in the said case and instead to declare them as the lawful owners of the subject property. Victor, Juanito, and Lilia filed their joint answer substantially denying the material allegations of the complaint for quieting of title. They raised the affirmative defense that the judgment based on compromise agreement in Civil Case No. 832-BG had already become final and executory. The said judgment declared them owners of one-half of the land designated as Cad. Lot No. 4894 while Paulo was declared the owner of the other half. The spouses Aromin allegedly had no cause of action because they have not acquired any legal title over the portions of the subject property sold to them by Paulo. Prior to the partition as embodied in the judgment based on compromise agreement, Paulo did not allegedly own a specific portion thereof. Hence, any sale he made to the spouses Aromin was subject to the outcome of the partition in Civil Case No. 832-BG. In his answer, Paulo alleged that he had yet to determine which parcels of land he had sold to the spouses Aromin. However, he maintained that if he had sold properties to them, such sale pertained only to properties exclusively belonging to him. He also impugned the judgment based on compromise agreement rendered in Civil Case No. 832-BG claiming that he did not understand the import of the said agreement. He was not allegedly assisted by counsel when he agreed thereto. The third case, Civil Case No. 965-BG, was an action for the annulment of sale filed by Victor, Juanito, and Lilia against their uncle Paulo and the spouses Aromin. The siblings alleged that their father Alberto, his sister Josefa, and his brother Paulo were the co-owners of the subject property as they acquired the same upon the death of their parents Juan and Cornelia Floresca. In 1966, the said co-owners caused the preparation of the survey thereof and, subsequently, the subject property was designated as Cad. Lot No. 4894 with an area of 105,991 square meters. In July 1973, Alberto died leaving his share in the co-ownership to his children Victor, Juanito, and Lilia. On the other hand, Josefa became ill and left the administration of the subject property to Paulo. She died on June 18, 1988, unmarried, and without any child. Victor, Juanito, and Lilia alleged that Paulo was able to fraudulently secure Tax Declaration No. 25246 in his name as purported owner of the north portion of the subject property to the exclusion of Victor, Juanito, and Lilia.
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Using another fraudulent means, Paulo was likewise allegedly able to secure Tax Declaration No. 25244 in his name as purported owner of the south portion of the subject property. Thereafter, with Tax Declarations Nos. 25246 and 25244 in his name, Paulo allegedly obtained Tax Declaration Nos. 25257 and 26377 covering the entire Cad. Lot No. 4894 purportedly as the sole owner thereof. Victor, Juanito, and Lilia alleged that they filed the complaint for partition in Civil Case No. 832-BG and, during the proceedings therein, they and Paulo entered into a compromise agreement which they submitted to the trial court. On February 10, 1993, acting thereon, the said court rendered the judgment based on compromise agreement and partitioned Cad. Lot No. 4894, thus: "one-half of the area of the riceland, one-half of the area of the sandy land, and one-half of the area of the swampland" belonged to Victor, Juanito, and Lilia while the other half of the said areas belonged to Paulo. The said judgment became final and executory and its execution was pending resolution by the trial court. The spouses Aromin allegedly knew of this fact. Nonetheless, on February 10, 1994, Paulo and the spouses Aromin allegedly executed a Deed of Sale where the former, purportedly as the true and absolute owner of the subject property, conveyed to the latter the ownership of the same. The said deed was allegedly part of the compromise agreement entered into between Paulo and the spouses Aromin in Civil Case No. 921-BG and which they submitted for the trial court's approval. Victor, Juanito, and Lilia opposed the approval of the said compromise agreement. They likewise prayed for the annulment of the Deed of Sale dated February 10, 1994, executed by Paulo in favor of the spouses Aromin covering the entire subject property. In their joint answer, Paulo and the spouses Aromin alleged that the subject property was sold under the deed of sale executed between them on February 10, 1994. The spouses Aromin raised the defense that they were buyers in good faith as they believed that Paulo was the sole owner of the subject property. The spouses Aromin further alleged that they have been in actual and physical possession thereof, and have been actually appropriating for themselves the fruits thereof for the past years. They have also allegedly introduced improvements thereon.
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These three civil cases (Civil Cases Nos. 921-BG, 938-BG and 965-BG) were jointly tried before the court a quo. Incidentally, while the case was pending resolution, Paulo died and was accordingly substituted by his heirs, namely, Jose Floresca, Angelina Floresca-Dumpit, Eliseo Floresca, Consolacion Floresca, and Cecilio Floresca. During the pre-trial of the cases, the parties stipulated on the following facts: 1. Both parties stipulated and admitted that there is a Decision in Civil Case No. 832-BG dated February 10, 1993 at RTC, Br. 33, Bauang, La Union; 2. Both parties stipulated and admitted that Wilfredo and Swarnie Aromin are not parties to Civil Case No. 832-BG; 3. Both parties stipulated and admitted the fact that there is a Notice of Lis Pendens duly registered on August 16, 1991; 4. Both parties stipulated and admitted that Wilfredo and Swarnie Aromin, and Dr. Paulo J. Floresca were not given that notice of lis pendens; 5. Both parties stipulated and admitted the existence of seven (7) Deeds of Sale executed between the Aromins and Dr. Paulo J. Floresca, all unregistered and the last four (4) Deeds of Sale were allegedly executed after the date of the institution of Civil Case No. 832-BG; 6. Both parties stipulated and admitted that the acknowledgment receipt of March 9, 1993 and the Deed of Sale of February 24, 1994, all came after the institution of Civil Case No. 832-BG; 7. Both parties stipulated and admitted the existence of a Deed of Sale dated February 10, 1994, executed by and between Dr. Paulo J. Floresca and the Aromins which covers the entire lot 4894; 8. Both parties stipulated and admitted that the Aromins never obtained a [t]ax declaration of the property either in parts or in whole over Cadastral lot 4894;
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9. Both parties stipulated and admitted that the Deed of Sale was the basis of the Compromise Agreement.6 After due trial, the court a quo rendered the Decision dated September 15, 2000 on the consolidated Civil Cases Nos. 921-BG, 938-BG and 965-BG in favor of the spouses Aromin. The court a quo disbelieved the claim of Victor, Juanito, and Lilia that they were co-owners of the subject property. Instead, it gave credence to Paulo's testimony that when he signed the compromise agreement in Civil Case No. 832-BG, which was made the basis of the judgment thereof, he was of the belief that the said agreement did not include those properties that he had already disposed of. The court a quo likewise noted that Paulo was not assisted by counsel when he entered into the said agreement. It opined that Victor, Juanito, and Lilia surreptitiously prepared the compromise agreement and that they took advantage of Paulo's advanced age and weak mental faculties during the execution thereof. The court a quo found that the subject property was Paulo's share in the estate of their parents and, thus, was exclusively owned by him. Alberto, Paulo's brother, and the father of Victor, Juanito, and Lilia, no longer had a share therein because his own share consisted in the properties situated in San Agustin, Bauang, La Union. Relying on the testimonies of tenants who stated that they delivered the produce of the subject property to Paulo and not to the siblings Victor, Juanito, and Lilia, the court a quo concluded that this proved that Paulo was the sole owner thereof. Moreover, it believed Paulo's claim that the subject property was previously declared for tax purposes in the name of his sister Josefa but she subsequently donated the same to his daughter Angelina Floresca Dumpit who, in turn, donated it to him. On the other hand, the court a quo rejected the allegation that the spouses Aromin acted in bad faith. This was the contention of Victor, Juanito, and Lilia pointing out that some of the transactions of the spouses Aromin with Paulo involving the subject property were made after the institution of the complaint for partition in Civil Case No. 832-BG and a notice of lis pendens had been recorded. According to the court a quo, the siblings failed to adduce any evidence to support their contention that the spouses Aromin were purchasers in bad faith. On the other hand, it gave credence to Wilfredo Aromin's testimony that he and his spouse Swarnie did not have any knowledge about Civil Case No. 832-BG.
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It is the view of the court a quo that the spouses Aromin rightfully relied on Paulo's assurance that he was the sole owner of the subject property on the basis of the tax declarations in his name. The first sale was made between Paulo and the spouses Aromin on November 12, 1990 covering an area of 12,314 square meters of the subject property and forthwith the latter built their house thereon. The failure of the Floresca siblings to take any action against this act of adverse possession was interpreted by the court a quo as indicative of their recognition of Paulo's right to dispose his own property. The court a quo posited that Victor, Juanito, and Lilia were claiming coownership over the subject property only because its value has considerably increased by reason of the improvements introduced thereon by the spouses Aromin. It also faulted the siblings for not impleading the spouses Aromin as parties to Civil Case No. 832-BG despite their knowledge that several portions of the subject property had already been sold to the latter. Moreover, the notice of lis pendens in the said case was not served on either Paulo or the spouses Aromin. The court a quo declared the spouses Aromin as buyers in good faith of the subject property. It likewise held that the Deed of Sale dated February 10, 1994 entered into by the said spouses and Paulo prevailed over the judgment on compromise agreement in Civil Case No. 832-BG. The dispositive portion of the court a quo's decision reads: WHEREFORE, in view of the foregoing, judgment is hereby rendered: 1. Declaring the decision in Civil Case No. 832-BG not binding upon the Spouses Wilfredo and Swarnie Aromin and has no legal effect upon said spouses; 2. Declaring that the Spouses Wilfredo and Swarnie Aromin being buyers in good faith, are the owners of the whole property sold to them by Dr. Paulo J. Floresca; 3. No pronouncement as to the amount of damages as Spouses Aromin failed to adduce evidence in support thereto; 4. With costs.
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SO ORDERED.7 On appeal by Victor, Juanito, and Lilia, the Court of Appeals (CA) rendered the assailed Decision dated June 6, 2003 reversing the court a quo's decision. With respect to the issue of co-ownership, the appellate court ruled that it was erroneous for the court a quo to impugn the judgment based on compromise agreement rendered by the RTC (Branch 33) in Civil Case No. 832-BG. Under the terms thereof, the subject property had been partitioned such that one-half of the riceland, sandy land, and swampland belonged to Paulo while the other half of the said areas belonged to the siblings Victor, Juanito, and Lilia. The appellate court explained that "a judicial compromise has the effect of res judicata and is immediately executory and not appealable unless a motion to set aside the same is filed on the ground of fraud, mistake, or duress, in which event an appeal may be filed from an order denying the same. A court cannot set aside a judgment based on compromise without having declared in an incidental hearing that such a compromise is vitiated by any of the grounds for nullity enumerated in Article 2038 of the Civil Code."8 Following these precepts, the appellate court stated that it was not within the ambit of the court a quo's judicial power to disturb, much more to nullify, absent any appeal or motion to set aside the judgment, the co-ownership of the subject property between Paulo and the siblings which was the subject of the judgment based on compromise agreement rendered by the RTC (Branch 33) in Civil Case No. 832-BG. It was also noted that Paulo himself recognized the existence of the said co-ownership because in his answer with compulsory counterclaim in Civil Case No. 921-BG, he admitted the sale of the subject property to the spouses Aromin "only to the extent of his share in the parcels described therein, considering that the said parcels are not owned exclusively by defendant (referring to Paulo) but co-owned with his deceased brother and sister Alberto Floresca and Josefa Floresca, respectively x x x."9 The claim of the spouses Aromin that they were buyers in good faith was not given credence by the appellate court. It found that when portions of the subject property were being offered for sale, the spouses Aromin merely
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relied on the representations made by Paulo that he was the sole owner thereof. The appellate court faulted them for not making any inquiries with the Register of Deeds or the Assessor's Office in their province about the ownership of the subject property. According to the appellate court, when the three deeds of sale pertaining to some portions of the subject property were executed in November 1990 and June 1991,10 the spouses Aromin already knew of the existence of the co-ownership over the subject property. This knowledge should have impelled them to verify the extent of Paulo's ownership rights. Their failure to do so, the appellate court held, indicated negligence on their part and such negligence precluded them from claiming that they were buyers in good faith. With respect to the other four deeds of sale that were executed in February 1992,11 the appellate court observed that Civil Case No. 832-BG had already been filed at the time and, in connection therewith, a notice of lis pendenshad also been filed with the register of deeds. These facts should have put the spouses Aromin on notice that the lots they were buying were not solely owned by Paulo. Addressing the spouses Aromin's argument that they should have been served with a copy of the notice of lis pendens, the appellate court stated that the said notice filed with the register of deeds already constituted constructive notice to all. Moreover, there is nothing in Section 14,12 Rule 13 of the Rules of Court that requires the parties to a pending case to furnish a copy of the complaint and of the notice of lis pendens to any person, other than the register of deeds of the municipality or province where the property is situated. Despite the absence of good faith, the sale made by Paulo in favor of the spouses Aromin was declared valid but only to the extent of his one-half share of the subject property. The appellate court cited the settled rule that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale.13 The appellate court held Paulo liable to pay moral damages and attorney's fees to Victor, Juanito, and Lilia. It mentioned that it was likewise inclined to direct Paulo to reimburse to the spouses Aromin the amount equivalent to one-half of the total purchase price that they paid to him corresponding to the one-half portion of the subject property which must be returned to the
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siblings, as co-owners thereof. The appellate court nonetheless did not so because the spouses Aromin did not appeal from the decision of the court a quo, hence, were not entitled to any relief. The dispositive portion of the assailed CA decision reads: WHEREFORE, PREMISES CONSIDERED, the assailed Decision is hereby REVERSED and judgment is hereby rendered: 1. Declaring the Decision in Civil Case No. 832-Bg binding upon Spouses Wilfredo and Swarnie Aromin; 2. Declaring that the Spouses Wilfredo and Swarnie Aromin are not buyers in good faith and their ownership over the subject properties must be limited to the one-half share of Paulo Floresca as stipulated by the appellants in Civil Case No. 832-Bg; 3. Ordering the Spouses Wilfredo and Swarnie Aromin to restore the ownership and possession over one-half of the subject properties in favor of the appellants [referring to Victor, Juanito and Lilia] who are the owners thereof as stipulated by the appellants in Civil Case No. 832-Bg; 4. Adjudging Paulo Floresca liable for moral damages in favor of the appellants in the amount of P250,000.00 and attorney's fees of P50,000.00. 5. With costs against Paulo Floresca. SO ORDERED.14 The spouses Aromin sought to reconsider the said decision but the appellate court, in the assailed Resolution dated October 24, 2003, denied their motion for reconsideration. Hence, the recourse to this Court. In support of their petition for review on certiorari, the spouses Aromin (the petitioners) allege that the judgment based on compromise agreement rendered in Civil Case No. 832-BG does not bind them because they were not parties to the said case. In the same manner, the principle of res judicata does not apply because the element of identity of parties is not present. The petitioners insist that as to the effects and scope of the
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judgment based on compromise agreement, its effectivity is limited to the parties thereto. The petitioners posit that assuming arguendo that the subject property is co-owned, they should have been impleaded as parties in Civil Case No. 832-BG. They invoke Article 49715 of the Civil Code of the Philippines contending that when the complaint for partition in Civil Case No. 832-BG was filed by Victor, Juanito and Lilia, the petitioners were already assignees of Paulo and, as such, deemed to be co-owners of the subject property. Victor, Juanito, and Lilia therefore should have allegedly notified the petitioners about the partition and impleaded them as parties in Civil Case No. 832-BG. The petitioners likewise invoke Article 49916 of the Civil Code as they argue that the partition under the judgment based on compromise agreement did not prejudice their rights as owners of the subject property. They point out that when the said judgment was registered on June 9, 1993, the entire subject property had already been sold to them by Paulo. The petitioners characterize themselves as indispensable parties within the meaning of Section 1,17 Rule 69 of the Rules of Court. Since they were not impleaded as parties in Civil Case No. 832-BG, the judgment based on compromise agreement therein cannot allegedly attain finality. Further, the said judgment could not have the effect of res judicata on the issue of ownership of the subject property. The petitioners maintain that the CA's findings that the subject property is co-owned by Paulo and the siblings cannot be given weight. On the other hand, the petitioners submit that the court a quo's finding that Paulo is the sole owner of the subject property is correct as it is based on the latter's testimony that the same is his share from the estate of their parents. His testimony was allegedly corroborated by the testimonies of the tenants that they delivered the produce of the subject property to Paulo. The CA's finding that they were purchasers in bad faith was also impugned by the petitioners. Quoting extensively from the court a quo's decision, they insist that its finding that they were purchasers in good faith should be accorded respect. It is also their submission that the registration of the notice of lis pendens and, subsequently, the judgment based on compromise agreement in the register of deeds did not prejudice their right
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because they acquired the ownership of the subject property even before the said registration. On this point, the petitioners cite Section 11318 of Presidential Decree No. 1529 and the commentary of Noblejas thereon that "the registration of any instrument under this system shall be understood to be without prejudice to a third party with a better right." By way of conclusion, the petitioners aver that in the event that they are obliged to return one-half of the subject property to Victor, Juanito, and Lilia, in the interest of justice and equity, the heirs of Paulo should be directed to reimburse to the petitioners the amount equivalent thereto. The contentions of the petitioners shall be addressed in seriatim. The petitioners vigorously assert that they are not bound by the judgment based on compromise agreement rendered in Civil Case No. 832-BG. The said judgment was rendered when Victor, Juanito, and Lilia, as plaintiffs therein, and Paulo, as defendant therein, agreed to the settlement of the case. The pertinent judgment based on compromise agreement provided, in part, as follows: xxxx SETTLEMENT OF THE THIRD CAUSE OF ACTION: 1. The parcel of land, Lot No. 4894, declared under Tax Declaration No. 26377 which cancelled No. 25236, and Tax Declaration No. 25257 (both Tax Declarations bear the same descriptions) consisting of riceland, sandyland, and swampland is partitioned between the plaintiffs and the defendant as follows: 2. Share of the plaintiffs: The share of the plaintiffs is one-half of the area of the riceland, one-half of the area of the sandyland, and onehalf of the area of the swampland. 3. Share of the defendant: The share of the defendant is also onehalf of the area of the riceland, one-half of the area of the sandy land, and one-half of the area of the swampland. 4. That within a reasonable time from the execution of this settlement the plaintiffs and the defendant, or at the instance of either of them but both sharing in the cost, a land survey be made and sketch plan
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be prepared to determine the exact boundaries and definite limits of their respective one-half share of the riceland, one-half share of the sandyland, and one-half share of the swampland. 5. That in consideration of this settlement, the defendant waives, quitclaim, and renounce forever, absolutely and unconditionally, unto the plaintiffs, their heirs and assigns, their above-stated one-half share of the riceland, one-half share of the sandyland, and one-half share of the swampland. That with this COMPROMISE AGREEMENT, the plaintiffs and the defendant have waived and renounce[d] forever any and all claims that each of them have or may have against each of them in this instant case, monetary or otherwise, and both agreed to work jointly for the issuance to them of their respective shares' tax declaration and other documents. That the plaintiffs and the defendant executed this COMPROMISE AGREEMENT freely, voluntarily, with their sound minds, without any force, duress, threat, intimidation, mistake or undue influence exerted upon them from anyone, in the presence of the Honorable Claudio de Guzman, Barangay Captain of Barangay Central West, Bauang, La Union. Two barangay councilmen signed as witnesses. That in their earnest and sincere desire to terminate this case the soonest, the plaintiffs and the defendant agreed to submit this COMPROMISE AGREEMENT to this Honorable Court even without the concurrence of their respective counsels. A copy for each is furnished for their information. WHEREFORE, the plaintiffs and the defendant most respectfully submit this COMPROMISE AGREEMENT to this Honorable Court and pray for its kind approval and the rendition of a judgment based on the same." x x x the terms and conditions of which are not contrary to law, morals and public policy, the Court hereby approves the same, renders judgment in accordance therewith and enjoins the parties to comply with their respective undertakings. SO ORDERED.19
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Contrary to their claim, the petitioners, even if they were not parties to Civil Case No. 832-BG, are bound by the judgment based on compromise agreement rendered therein under the principle of res judicata. It is well settled that a judicial compromise has the effect of res judicata and is immediately executory and not appealable unless set aside on grounds of nullity under Article 203820 of the Civil Code.21 Further, a judgment based on a compromise agreement is a judgment on the merits, wherein the parties have validly entered into stipulations and the evidence was duly considered by the trial court that approved the agreement.22 The principle of res judicata is embodied in Section 47, Rule 39 of the Rules of Court thus: Sec. 47. Effect of judgments or final orders. The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows: (a) In case of a judgment or final order against a specific thing, or in respect to the probate of a will, or the administration of the estate of the deceased person, or in respect to the personal, political or legal condition or status of a particular person or his relationship to another, the judgment or final order is conclusive upon the title to the thing, the will or administration, or the condition, status or relationship of the person; however, the probate of a will or granting of letters of administration shall only be prima facie evidence of the death of the testator or intestate; (b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears

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upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. The doctrine of res judicata embraces two concepts: the first is "bar by prior judgment" under paragraph (b) of Section 47, Rule 39, and the second is "conclusiveness of judgment" under paragraph (c) thereof. In the present case, the second concept conclusiveness of judgment applies. The said concept is explained in this manner: x x x conclusiveness of judgment states that a fact or question which was in issue in a former suit and there was judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. Identity of cause[s] of action is not required but merely identity of issues.23 The question on the co-ownership of the subject property was already settled in the judgment based on compromise agreement in Civil Case No. 832-BG which categorically stated that the subject property, "consisting of a riceland, sandy land and swampland," is partitioned such that one-half of the said areas belongs to Victor, Juanito and Lilia while the other half belongs to Paulo. The petitioners are bound by the said judgment based on compromise agreement, particularly on the question of the co-ownership of the subject property by Paulo, on one hand, and the siblings, on the other, as they (the petitioners) are privies-in-interest or successors-in-interest of Paulo. Case

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law, both here and in the United States, recognizes privity of interest under the following situations: The historic and most common situation in which privity is upheld exists when a person acquires an interest in the subject matter of the suit after it was filed or decided. Successors-in-interest, whether they obtain their interests by virtue of an assignment, by inheritance or by law are bound along with their predecessors by the rules of res judicata and collateral estoppel. This is necessary in order to preserve the finality of judgments; otherwise a person confronted with an adverse decision might subject the winning party to the prospect of continual litigation simply by transferring his interest in the subject matter of the suit to another who could begin the suit anew. A second well-defined privity relationship arises when legal appointed representative parties, such as trustees and executors, are involved; those individuals are deemed in privity with those whom they represent. Since parties litigating in representative capacity have no interests of their own, but either sued or are sued on behalf of the beneficiaries whom they serve. Privity also has been universally recognized when it is determined that the newly named party in the second suit actually controlled or participated in litigating the first action. Although the non-party will not be bound by res judicata because different claims are involved, identical issues that were necessarily and actually litigated will be precluded. Having received one opportunity to defend or prosecute those issues, he may not be allowed another.24 The petitioners fall under the first category, i.e., they are Paulo's privies-ininterest or successors-in-interest who acquired most of the portions of the subject property after the filing of the complaint in Civil Case No. 832-BG on August 13, 1991. In connection with their complaint for partition against Paulo in the said case, Victor, Juanito, and Lilia likewise filed a notice of lis pendens with the register of deeds on August 16, 1991 and the said notice was annotated on the face of Tax Declarations Nos. 26377 and 25257 covering the subject property. As shown earlier, four out of the seven deeds of sale25 were executed by Paulo in favor of the petitioners in February 1992 or after the filing of the complaint for partition in Civil Case No. 832-BG. Consequently, the petitioners are Paulo's privies-in-interest or
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successors-in-interest and, as such, are bound by the judgment based on compromise agreement rendered therein. As persons whose interest over the subject property is deemed in privity to the interest of Paulo, the petitioners could not be considered indispensable parties to Civil Case No. 832-BG. The following discussion on who is or is not an indispensable party is apropos: An indispensable party is one whose interest will be affected by the court's action in the litigation, and without whom no final determination of the case can be had. The party's interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties' that his legal presence as a party to the proceeding is an absolute necessity. In his absence there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable. Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to the parties in court. He is not indispensable if his presence would merely permit complete relief between him and those already parties to the action or will simply avoid multiple litigation.26 With respect to Civil Case No. 832-BG, Paulo was an indispensable party thereto as well as the siblings Victor, Juanito, and Lilia as it involved the subject property which they acquired from their ascendants, the deceased parents of Paulo and Alberto. It was, in fact, a partition of the estate of their ascendants. Paulo and, in representation of their father Alberto, Victor, Juanito, and Lilia, as the heirs, may be properly considered indispensable parties thereto. Indeed, a final determination could be had therein even without the petitioners as their claim of interest was merely derived from Paulo's interest. In other words, they merely stepped into his shoes as his successors-in-interest. To invoke res judicata, absolute identity of parties is not required. A substantial identity of parties is sufficient. And there is substantial identity of parties when there is a community of interest between a party in the first case and that in the second one, even if the latter party was not impleaded
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in the first.27 As his privies-in-interest or successors-in-interest, the petitioners clearly had a community of interest with that of Paulo who was party to Civil Case No. 832-BG. Res judicata applies and the petitioners' argument that the judgment based on compromise agreement rendered in Civil Case No. 832-BG was null and void because they were not impleaded as indispensable parties thereto must perforce fail. Thus, the appellate court correctly held that it was not within the court a quo's power to disturb, much more nullify, the stipulation on the coownership of the subject property as contained in the judgment based on compromise agreement in Civil Case No. 832-BG absent any appeal or motion to set aside the said judgment. As explained earlier, the said judgment based on compromise agreement constitutes res judicata particularly on the question or issue of the co-ownership of the subject property among Paulo and the siblings. Moreover, the petitioners' claim that they were purchasers in good faith is untenable. The issue of good faith or bad faith of a buyer is relevant only where the subject of the sale is a registered land but not where the property is an unregistered land. One who purchases an unregistered land does so at his peril.28 It bears noting that when the petitioners bought portions of the subject property from Paulo, it was not a registered land.29 In fact, in the deeds of sale covering portions of the subject property, it was referred to as Cad. Lot No. 4894 and covered by tax declarations in Paulo's name. In other words, the petitioners bought portions of the subject land even if Paulo never presented to them a title over the same in his name. The petitioners' claim of having bought the subject property in good faith is thus irrelevant. In any case, the petitioners are clearly not buyers in good faith of the subject property as revealed from petitioner Wilfredo's own testimony. During cross-examination, he admitted to having prior knowledge that the subject property was co-owned by Paulo, his brother Alberto and sister Josefa but, relying solely on Paulo's word that the subject property became exclusively his, the petitioners bought the subject property from him piece by piece. Petitioner Wilfredo testified, thus: ATTY. ESTIGOY: Cross-examination:
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Continuing: Q And you know then, Mr. Aromin that that property was owned by the brothers of Dr. Floresca, sister of Dr. Floresca and Dr. Floresca himself? A Yes, Sir. Q So you know then that it being a co-ownership, Mr. Aromin, it will be subject to a partition, is that right? A Well, that is really hard to answer because Dr. Floresca told me that he is already the sole owner of those properties and I also believed it because I was out of the country for a long time and it might be divided already and he is the sole owner. Q Alright, Mr. Aromin, when you executed - when Dr. Floresca executed the Deeds of Sale which were presented by you as Exhibits "A" to "F", you were already aware that the case for partition was being tried in this Honorable Court? Is that right? A I did not under[stand] the question, Sir. Will you please repeat? Q When you executed with Dr. Floresca the Deed of Sale, particularly the Deeds of Sale which [were] executed only in 1992 ATTY. LIBATIQUE: No, misleading, Your Honor. The Deeds of Sale [were] executed in 1990 and 1991. ATTY. ESTIGOY: Well, let us see, Exhibits "A" to "F." COURT: You see the date, what is Exhibit "A"? ATTY. ESTIGOY: Yes, Exhibit "A" is dated 1992, your honor.
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ATTY. LABATIQUE: Exhibit "A" is the Acknowledgment Receipt, it is not a Deed of Sale. The Deed of Sale is Exhibit "B" up to Exhibit "B". ATTY. ESTIGOY: Cross-examination: Continuing: Q Alright, Mr. Aromin, it seems that your Exhibit "B" which had been executed by you and Dr. Floresca is in blank date in 1991 COURT: Q How about the month? A It is June and with blank date, Your Honor, of 1991. Cross-examination: Continuing: Q Which refers to a portion of Lot 4894, were you aware at the time that Dr. Floresca is not the true owner alone of the property? A Not really, he told me what he told me is that, he is the sole owner of the property. Q No, what I mean is, since you are a no you said a while ago, Mr. Aromin, that you actually worked on that land? A Yes, I worked on that land long time ago and passed it to my nieces and nephews when I started working outside the country, that is, in 1963. Q You know then that it was formerly a co-ownership? A Yes, but that was a long time back. What I know is, they have shared already. They have already divided their properties that before
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he sold me this property, he is already the sole owner as that was what he told me; that is it. Q And you know that that lot was covered by Cadastral Lot No. 4894, is that correct? A Yes, Sir, I am sure and Q And you did not know that A I got the number, but I do not know the meaning of these numbers. Q I see. And did you not know, as a tenant of that property, that this Lot 4894 is a co-ownership of the three (3) brothers and sisters? A I told you before, Sir, that I was a tenant before. I know that it was a co-ownership but I was away a long time and when I came back he offered me to buy this lot and he told me about that, that he is the sole owner already. Q And did you not inquire from the Register of Deeds or the Assessor's Office before you bought this property, whether this property is still a co-ownership? A My Attorney [has] been the one dealing on it, Sir. Q So, you answer the question, Mr. Witness. A I passed it on to Atty. Hipol to deal on it, Sir. COURT: No, this refers to the question, you answer the question. ATTY. LIBATIQUE: There is no question yet, Sir. ATTY. ESTIGOY: No, there is no answer yet to my question, Your Honor.
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COURT: That is why I am asking him to answer the question, - did you not, before you bought this property, this parcel of land, [and] executed a Deed of Sale without date, in June 1991, did you not inquire from the Register of Deeds or from the Assessor's Office whether this property is a co-ownership? Witness: A Well, I took the word of Dr. Paulo J. Floresca, Your Honor. COURT: You answer with "yes" or "no." WITNESS: A No, Sir.30 An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in that same property, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person's claim. The honesty of intention that constitutes good faith implies freedom from knowledge of circumstances that ought to put a prudent person on inquiry.31 The petitioners' knowledge that the subject property was, at one time, coowned by Paulo, his brother Alberto and sister Josefa should have impelled them to inquire and investigate, as any prudent vendee should, about the status of the co-ownership before buying the subject property. The petitioners' reliance on Paulo's word alone that he was the sole owner of the subject property when they bought the same, despite their knowledge of facts that should have put them on guard, constitutes gross negligence amounting to bad faith. They cannot therefore rightfully claim that they are buyers in good faith. Having established that the subject property was owned in common by Paulo and the siblings, it necessarily follows that Paulo could only dispose to the petitioners his share in the subject property. Article 493 of the Civil Code provides that "[e]ach co-owner shall have the full ownership of his
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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." Under the said provision, while a co-owner has the right to freely sell and dispose of his undivided interest, nevertheless, as a co-owner he cannot alienate the shares of his other co-owners nemo dat qui non habet.32Paulo, however, sold the entire subject property to the petitioners without the consent of the co-owners. Following 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 potest33 - the disposition affects only Paulo's sharepro indiviso, and the transferee, in this case the petitioners, gets only what corresponds to Paulo's share in the partition of the subject property, i.e., one-half of the areas described as riceland, sandy land and swampland which constitute the subject property. Finally, the Court cannot accede to the petitioners' plea that, in the interest of equity and justice, the heirs of Paulo should be directed to reimburse to them the amount equivalent to one-half of the total purchase price of the subject property. Under the circumstances, the petitioners have no one else to blame for the consequences of their imprudent purchase of the subject property. They did so at their peril and the consequences would have to be borne by them alone because, unfortunately for them, Paulo had already passed away. It would be unfair to Paulo's heirs if they themselves would be required to reimburse the petitioners the amount equivalent to one-half of the purchase price that Paulo received for the subject property absent any showing that they had received any amount for the transactions between the petitioners and Paulo. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated June 6, 2003 and Resolution dated October 24, 2003 of the Court of Appeals in CA-G.R. CV No. 69651 are AFFIRMED in toto. SO ORDERED. R. No. 146294 July 31, 2006
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JOHN ABING, petitioner, vs. JULIET WAEYAN, respondent. DECISION GARCIA, J.: In this appeal by way of a petition for review under Rule 45 of the Rules of Court, petitioner John Abing (John, hereafter) seeks to set aside the Decision1 dated October 24, 2000 of the Court of Appeals (CA) in CA-G.R. SP No. 48675, reversing that of the Regional Trial Court (RTC) of Benguet, Branch 64, which affirmed an earlier decision of the Municipal Trial Court (MTC) of Mankayan, Benguet in an ejectment suit thereat commenced by the petitioner against the respondent. In the main, the controversy is between a man and a woman who, during the good old days, lived together as husband and wife without the benefit of marriage. During their cohabitation, they acquired properties. Later, they parted ways, and with it this litigation between them involving one of their common properties. The facts: Sometime in 1986, John and respondent Juliet Waeyan (Juliet, for short) met and fell in love with each other. In time, the duo cohabited as husband and wife without the benefit of marriage. Together, the couple bought a 2storey residential house from one Benjamin Macua which was erected on a lot owned by a certain Alejandro Dio on Aurora Street, Mankayan, Benguet. Consequent to the purchase, the tax declaration of the 2-storey house was transferred in the name of Juliet. On December 2, 1991, Juliet left for overseas employment in Korea. She would send money to John who deposited the same in their joint bank account. In 1992, the original 2-storey residential house underwent renovation. To it was annexed a new structure which housed a sari-sari store. This new structure and the sari-sari store thereat are the properties involved in this case.
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In 1994, Juliet returned from Korea and continued to live with John. She managed the sari-sari store while John worked as a mine employee of the Lepanto Consolidated Mining, Inc. In 1995, the relationship between the two turned from bad to worse. Hence, they decided to partition their properties. For the purpose, they executed on October 7, 1995 a Memorandum of Agreement. Unfortunately, the document was left unsigned by the parties although signed by the witnesses thereto. Under their unsigned agreement, John shall leave the couples' dwelling with Juliet paying him the amount of P428,870.00 representing John's share in all their properties. On the same date October 7, 1995 Juliet paid John the sum ofP232,397.66 by way of partial payment of his share, with the balance of P196,472.34 to be paid by Juliet in twelve monthly installment beginning November 1995. Juliet, however, failed to make good the balance. On account thereof, John demanded of her to vacate the annex structure housing the sari-sari store. Juliet refused, prompting John to file an ejectment suit against her before the MTC of Mankayan, Benguet. In his complaint, John alleged that he alone spent for the construction of the annex structure with his own funds and thru money he borrowed from his relatives. In fact, he added that the tax declaration for the structure was under his name. On this premise, John claimed exclusive ownership of the subject structure, which thereby gave him the right to eject Juliet therefrom upon the latter's failure to pay the agreed balance due him under the aforementioned Memorandum of Agreement. In her answer, Juliet countered that their original house was renovated thru their common funds and that the subject structure annexed thereto was merely an attachment or an extension of their original residential house, hence the same pertained to the two of them in common. In a decision2 dated March 15, 1997, the MTC, on its finding that the money used in the construction of the structure in question solely came from John, ruled that the same exclusively pertained to the latter, and accordingly ordered Juliet's eviction therefrom, including the sari-sari store thereat, and required her to surrender possession thereof to John, thus: WHEREFORE, judgment is rendered in favor of the plaintiff (John) and against the defendant (Juliet).
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Defendant is hereby ordered to vacate the premises of the store in litigation covered by Tax Declaration No. 96-001-00445 in the name of the Plaintiff and turn over possession thereof to the latter. Defendant is hereby further ordered to pay the Plaintiff the sum of P2,500.00 a month from the time she withheld possession of the store in litigation in June 1996 until she vacates the same and turn over possession thereof to the Plaintiff. Defendant is finally ordered, to pay the sum of P5,000.00 to the Plaintiff by way of Attorney's fees; and to pay the costs. SO ORDERED. On Juliet's appeal to the RTC, the latter, in its decision of July 29, 1995, affirmed that of the MTC. Undaunted, Juliet then went to the CA in CA-G.R. SP No. 48675. As stated at the threshold hereof, the CA, in its Decision of October 24, 2000,3 reversed that of the RTC, to wit: WHEREFORE, the petition is GRANTED. The assailed decision of the Regional Trial Court is hereby reversed and set aside. Petitioner, Juliet Waeyan is entitled to possess the property and maintain therein her business. SO ORDERED. Partly says the CA in its reversal disposition: It is undisputed that the parties lived together as husband and wife without the benefit of marriage from 1986 to 1995 and that they acquired certain properties which must be divided between them upon the termination of their common law relationship. xxx xxx xxx

. . . their property relations cannot be governed by the provision of the Civil Code on conjugal partnership... but by the rule on co-ownership. xxx xxx xxx
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. . . the parties' share in respect of the properties they have accumulated during their cohabitation shall be equal unless there is proof to the contrary. To the CA, John's evidence failed to establish that he alone spent for the construction of the annex structure. Hence, the same pertained to both, and being a co-owner herself, Juliet cannot be evicted therefrom, adding that if ever, John's cause of action should have been for a sum of money "because he claims that Juliet still owes him the payment for the extension." According to the CA, ejectment cannot lie against Juliet because Juliet's possession of the premises in dispute was not by virtue of a contract, express or implied, nor did she obtain such possession thru force, intimidation, threat, strategy or stealth. Hence, John's present recourse, submitting that the CA erred in 1. not giving effect to the parties' Memorandum of Agreement which should have been binding between them albeit unsigned by both; 2. in holding that the subject premises (annex structure housing the sari-sari store) is owned by the two of them in common; 3. in ruling that the parties should settle their common properties in a separate action for partition even as the community character of the subject premises has not been proven. We AFFIRM with modification. Essentially, the issues raised center on the core question of whether or not the property subject of the suit pertains to the exclusive ownership of petitioner, John. Departing from the factual findings of the two courts before it, the CA found that the premises in dispute is owned in common by Juliet and John, the latter having failed to establish by the required quantum of proof that the money spent for the construction thereof solely came from him. Being a co-owner of the same structure, Juliet may not be ejected therefrom. While the question raised is essentially one of fact, of which the Court normally eschews from, yet, given the conflicting factual findings of the three courts below, the Court shall go by the exception4 to the general rule and proceed to make its own assessment of the evidence.
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First and foremost, it is undisputed that the parties hereto lived together as husband and wife from 1986 to 1995 without the benefit of marriage. Neither is it disputed that sometime in December 1991, Juliet left for Korea and worked thereat, sending money to John which the latter deposited in their joint account. In fact, Juliet was still in Korea when the annex structure was constructed in 1992. Other than John's bare allegation that he alone, thru his own funds and money he borrowed from his relatives, spent for the construction of the annex structure, evidence is wanting to support such naked claim. For sure, John even failed to reveal how much he spent therefor. Neither did he divulge the names of the alleged relatives from whom he made his borrowings, let alone the amount of money he borrowed from them. All that petitioner could offer by way of reinforcing his claim of spending his own funds and borrowed money in putting up the subject structure was the affidavit executed by a certain Manuel Macaraeg to the effect that petitioner borrowedP30,000.00 from him. Even then, Macaraeg stated in his affidavit that it was sometime in 1990 when John borrowed said amount from him. With the petitioner's own admission that the subject structure was constructed only in 1992, or two years after he borrowed P30,000.00 from Macaraeg, it is even doubtful whether the amount he allegedly borrowed from the latter went into the construction of the structure in dispute. More, it is noted that while petitioner was able to present in evidence the Macaraeg affidavit, he failed to introduce similar affidavits, if any, of his close relatives from whom he claimed to have made similar borrowings. For sure, not a single relative came forward to confirm petitioner's tale. In short, there is a paucity of evidence, testimonial or documentary, to support petitioner's selfserving allegation that the annex structure which housed the sari-sari store was put up thru his own funds and/or money borrowed by him. Sure, petitioner has in his favor the tax declaration covering the subject structure. We have, however, ruled time and again that tax declarations do not prove ownership but at best an indicia of claims of ownership.5 Payment of taxes is not proof of ownership, any more than indicating possession in the concept of an owner.6 Neither tax receipts nor declaration of ownership for taxation purposes are evidence of ownership or of the right to possess realty when not supported by other effective proofs.7 In this connection, Article 147 of the Family Code is instructive. It reads:

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Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership. In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the former's efforts consisted in the care and maintenance of the family and of the household. The law is clear. In the absence, as here, of proofs to the contrary, any property acquired by common-law spouses during their period of cohabitation is presumed to have been obtained thru their joint efforts and is owned by them in equal shares. Their property relationship is governed by the rules on co-ownership. And under this regime, they owned their properties in common "in equal shares." Being herself a co-owner of the structure in question, Juliet, as correctly ruled by the CA, may not be ejected therefrom. True it is that under Article 4878 of the Civil Code, a co-owner may bring an action for ejectment against a co-owner who takes exclusive possession and asserts exclusive ownership of a common property. It bears stressing, however, that in this case, evidence is totally wanting to establish John's or Juliet's exclusive ownership of the property in question. Neither did Juliet obtain possession thereof by virtue of a contract, express or implied, or thru intimidation, threat, strategy or stealth. As borne by the record, Juliet was in possession of the subject structure and the sari-sari store thereat by virtue of her being a co-owner thereof. As such, she is as much entitled to enjoy its possession and ownership as John. We, however, disagree with the ruling of the CA that the subject Memorandum of Agreement, being unsigned by Juliet and John, has no binding effect between them.

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It is a matter of record that pursuant to said Agreement, Juliet did pay John the amount of P232,397.66, as initial payment for John's share in their common properties, with the balance of P196,472.34 payable in twelve monthly installments beginning November 1995. It is also a matter of record that the Agreement was signed by the witnesses thereto. Hence, the irrelevant circumstances that the Agreement was left unsigned by Juliet and John cannot adversely affect its binding force or effect between them, as evidently, Juliet's initial payment ofP232,397.66 to John was in fulfillment of what the parties had agreed upon thereunder. However, and as correctly held by the CA, Juliet's failure to pay John the balance of the latter's share in their common properties could at best give rise to an action for a sum of money against Juliet, or for rescission of the said agreement and not for ejectment. WHEREFORE, the petition is DENIED and the assailed CA Decision is AFFIRMED, except that portion thereof denying effect to the parties' Memorandum of Agreement for being unsigned by both. Costs against petitioner. SO ORDERED. Puno, Chairperson, Sandoval-Gutierrez, Corona, Azcuna, J.J., concur. G.R. No. 161136 November 16, 2006

WILFREDO T. VAGILIDAD and LOLITA A. VAGILIDAD, Petitioners, vs. GABINO VAGILIDAD, Jr. and DOROTHY VAGILIDAD, Respondents. DECISION PUNO, J.: This is a Petition for Review on Certiorari of the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. No. CV-68318 dated March 19, 2003 and November 13, 2003, respectively, reversing and setting aside the decision of the Regional Trial Court of Antique, Sixth Judicial Region, Branch II, in Civil Case No. 2825 dated January 26, 1999.
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The facts are stated in the assailed Decision3 of the appellate court, viz.: A parcel of land, Lot No. 1253, situated in Atabay, San Jose, Antique, measuring 4,280 square meters, was owned by Zoilo [Labiao] (hereafter ZOILO) as per Original Certificate of Title No. RO-2301 issued on March 3, 1931. Sometime in 1931, ZOILO died. Subsequently, on May 12, 1986, Loreto Labiao (hereafter LORETO), son of ZOILO, sold to Gabino Vagilidad Jr. (hereafter GABINO JR.) a portion of Lot No. 1253 (hereafter Lot 1253B), measuring 1,604 square meters as evidenced by the Deed of Absolute Sale executed by LORETO. In view of the death of ZOILO, his children, LORETO, Efren Labiao (hereafter EFREN) and Priscilla Espanueva (hereafter PRISCILLA) executed an Extrajudicial x x x Settlement of Estate dated January 20, 1987, adjudicating the entire Lot No. 1253, covering 4,280 square meters, to LORETO. On January 29, 1987, Transfer Certificate of Title (TCT) No. T16693 was issued in favor of LORETO, EFREN and PRISCILLA, but on even date, TCT No. T-16693 was cancelled and TCT No. T-16694, covering the said property, was issued in the name of LORETO alone. On July 31, 1987, GABINO JR., as petitioner, filed a Petition for the Surrender of TCT No. T-16694, covering Lot No. 1253, with the Regional Trial Court of San Jose City, Sixth Judicial Region, against LORETO, docketed as Cadastral Case No. 87-731-A. The plaintiff alleged that, being the owner of x x x Lot No. 1253-B, under TCT No. T-16694, by virtue of the sale that took place on May 12, 1986, he is entitled to ask for the surrender of the owners copy of TCT No. T-16694 to the Register of Deeds of Antique in order to effect the transfer of title to the name of the petitioner. However, as per motion of both counsels[,] since the parties seemed to have already reached an amicable settlement without the knowledge of their counsels, the trial court issued an Order dated March 21, 1994 sending the case to the archives. On September 21, 1988, [GABINO JR.] paid real estate taxes on the land he bought from LORETO as per Tax Declaration No. 1038 where the property was specified as Lot No. 1253-B. GABINO JR. thereafter sold the same lot to Wilfredo Vagilidad (hereafter WILFREDO) as per Deed of Absolute Sale dated December 7, 1989. On even date, Deed of Absolute Sale of a Portion of Land involving the opt-described property was also executed by LORETO in favor of WILFREDO. The aforementioned deeds,
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which were both executed on December 7, 1989 [and] notarized by Atty. Warloo Cardenal[,] [appear] to have been given the same entry number in his notarial books as both contained the designation "Document No. 236, Page No. 49, Book No. XI, Series of 1989[."] Corollarily, on February 14, 1990, the sale of Lot No. 1253-B to WILFREDO was registered with the Registry of Deeds of the Province of Antique under Entry No. 180425. Consequently, TCT No. T-18023, cancelling TCT No. 16694, was issued in favor of WILFREDO pursuant to the Deed of Absolute Sale dated December 7, 1989. On October 24, 1991, spouses WILFREDO and LOLITA obtained a loan from the Philippine National Bank (PNB for brevity) in the amount of P150,000.00 and mortgaged Lot No. 1253-B as collateral of the said loan and the transaction was inscribed at the back of TCT No. 18023 as Entry No. 186876. Subsequently, the xxx real estate mortgage was cancelled under Entry No. 191053 as per inscription dated November 17, 1992 in xxx TCT No. 18023. Subsequently, WILFREDO obtained another loan from Development Bank of the Philippines (DBP for brevity) in the amount of P200,000.00 and mortgaged Lot No. 1253-B as collateral of the xxx loan and the transaction was inscribed at the back of TCT No. 18023 as Entry No. 196268. The said loan was paid and, consequently, the mortgage was cancelled as Entry No. 202500. On September 29, 1995, spouses GABINO and Ma. Dorothy Vagilidad (hereafter DOROTHY), as plaintiffs, filed a Complaint for Annulment of Document, Reconveyance and Damages, with the Regional Trial Court of Antique, Sixth Judicial Region, Branch 11, against spouses WILFREDO and Lolita Vagilidad (hereafter LOLITA), docketed as Civil Case No. 2825. The plaintiffs claimed that they are the lawful owners of Lot No. 1253-B which was sold to him by LORETO in 1986. They alleged that [GABINO JR.] is a nephew of defendant WILFREDO. They likewise raised that when GABINO SR. died, defendant WILFREDO requested GABINO JR. to transfer the ownership of Lot No. 1253-B in defendant WILFREDOs name for loaning purposes with the agreement that the land will be returned when the plaintiffs need the same. They added that, pursuant to the mentioned agreement, plaintiff GABINO JR., without the knowledge and consent of his spouse, DOROTHY, executed the Deed of Sale dated December 7, 1989
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in favor of defendant WILFREDO receiving nothing as payment therefor. They pointed out that after defendant WILFREDO was able to mortgage the property, plaintiffs demanded the return of the property but the defendants refused to return the same. The plaintiffs claimed that the same document is null and void for want of consideration and the same does not bind the non-consenting spouse. They likewise prayed that the defendant be ordered to pay the plaintiffs not less than P100,000.00 as actual and moral damages, P10,000.00 as attorneys fees and P5,000.00 as litigation expenses. For their part, the defendants, on January 15, 1996, filed their Answer, denying the material allegations of the plaintiffs. Defendants claimed that they are the lawful owners of Lot No. 1253-B. They alleged that LORETO, with conformity of his wife, sold to them Lot No. 1253 on December 7, 1989 for P5,000.00 and the transaction was registered with the Register of Deeds of the Province of Antique under Entry No. 180425. They added that, subsequently, TCT No. T-18023, covering Lot No. 1253-B, was issued in favor of the defendants. Hence, they claimed that the plaintiffs be directed to pay the defendants P200,000.00 as moral damages, P50,000.00 as exemplary damages, P20,000.00 as attorneys fees and P30,000.00 for litigation expenses.4 The trial court ruled in favor of petitioners WILFREDO and LOLITA and held that LORETO did not validly convey Lot No. 1253-B to GABINO, JR. on May 12, 1986 since at that time, the heirs of ZOILO had not partitioned Lot No. 1253.5 It ruled that LORETO could only sell at that time his aliquot share in the inheritance. He could not have sold a divided part thereof designated by metes and bounds. Thus, it held that LORETO remained the owner of the subject lot when he sold it to WILFREDO on December 7, 1989. It further found that there was no proof that WILFREDO knew of the sale that took place between LORETO and GABINO, JR. on May 12, 1986. The dispositive portion of the decision states: WHEREFORE, in view of the foregoing pronouncements and a preponderance of evidence, judgment is hereby rendered: 1. FINDING the defendants WILFREDO VAGILIDAD and LOLITA VAGILIDAD to have duly acquired ownership of Lot No. 1253-B containing an area of 1,604 square meters, more or less, situated in San Jose, Antique;
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2. SUSTAINING the validity of Transfer Certificate of Title No. T18023 covering the subject Lot No. 1253-B and issued in the name of the defendant WILFREDO VAGILIDAD, married to the defendant LOLITA VAGILIDAD; 3. DISMISSING the complaint of the plaintiffs GABINO VAGILIDAD, JR. and MA. DOROTHY VAGILIDAD, as well as the counterclaims of the defendants WILFREDO VAGILIDAD and LOLITA VAGILIDAD and of the defendants LORETO LABIAO and FRANCISCA LABIAO; and 4. PRONOUNCING no cost.6 GABINO, JR. and DOROTHY filed an appeal with the Court of Appeals. The appellate court reversed and set aside the decision of the court a quo, viz.: WHEREFORE, premises considered, the Decision dated January 26, 1999 of the Regional Trial Court of Antique, Sixth Judicial Region, Branch 11, in Civil Case No. 2825, is hereby REVERSED and SET ASIDE and a new one is entered: (1) declaring the Deed of Absolute Sale [of Portion of Land] dated December 7, 1989 executed by appellee LORETO in favor of appellee WILFREDO null and void; (2) ordering the defendants-appellees WILFREDO and LOLITA to reconvey Lot No. 1253-B to plaintiffs-appellants GABINO, JR. and DOROTHY; and (3) ordering the defendants-appellees to pay the plaintiffs-appellants P100,000.00 as moral damages, P10,000.00 as attorneys fees and P5,000.00 as litigation expenses.7 The appellate court ruled that the sale made by LORETO in favor of GABINO, JR. on May 12, 1986 is valid. The rights of LORETO to succession are transmitted from the moment of ZOILOs death in 1931. Thus, when LORETO sold the 1,604-square meter portion of Lot No. 1253 to GABINO JR., he already had the right as co-owner to his share to Lot No. 1253, even if at that time the property had not yet been partitioned. Consequently, the sale made by LORETO in favor of WILFREDO on December 7, 1989 is void because LORETO and FRANCISCA were no longer the owners of Lot No. 1253-B as of that time. The appellate court also held WILFREDO and LOLITA liable for moral damages for falsifying the fictitious deeds of sale on December 7, 1989.

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WILFREDO and LOLITA moved for reconsideration but the motion was denied in the questioned Resolution dated November 13, 2003. Hence, this petition for review on certiorari raising the following errors: I THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING ARTICLE 1349 AND ARTICLE 1460 OF THE NEW CIVIL CODE IN THE CASE AT BAR. II THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING THE PROVISION OF ARTICLE 1544 OF THE NEW CIVIL CODE AND THE DOCTRINE OF DOUBLE SALE THAT THE BUYER WHO IS IN POSSESSION OF THE TORRENS TITLE AND HAD THE DEED OF SALE REGISTERED MUST PREVAIL. III THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING ARTICLE 1391 OF THE NEW CIVIL CODE AND THE DOCTRINE THAT IN CASE OF FRAUD, ACTION FOR RECONVEYANCE MUST BE BROUGHT WITHIN FOUR (4) YEARS FROM THE DISCOVERY OF THE FRAUD. IV THE HONORABLE COURT OF APPEALS ERRED IN AWARDING PRIVATE RESPONDENT MORAL DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES.8 We deny the petition. I First, petitioners contend that the Deed of Absolute Sale between LORETO and GABINO, JR. does not have a determinate object. They anchor their claim on the following discrepancies: (1) the object of the Deed of Absolute Sale between LORETO and GABINO, JR. is Lot No. 1253 with an area of 1,604 square meters; (2) the object of the Deed of Absolute Sale of Portion
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of Land between LORETO and WILFREDO is a portion of Lot No. 1253, known as Lot No. 1253-B, also with an area of 1,604 square meters;9 (3) the Deed of Absolute Sale between LORETO and GABINO, JR. shows that its object, Lot No. 1253, is not registered under the Land Registration Act nor under the Spanish Mortgage Law; and (4) the property subject of this action, Lot No. 1253-B, was taken from Lot No. 1253 containing an area of 4,280 square meters previously registered in the name of ZOILO under Original Certificate of Title (OCT) No. RO-2301.10 With these discrepancies, petitioners contend that either the Deed of Absolute Sale between LORETO and GABINO, JR. does not have a determinate object or that Lot No. 1253-B, the subject parcel, is not the object thereof. Hence, absent a determinate object, the contract is void. They rely on Articles 1349 and 1460 of the Civil Code, viz.: Art. 1349. The object of every contract must be determinate, as to its kind. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new contract between the parties. Art. 1460. A thing is determinate when it is particularly designated or physically segregated from all others of the same class. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the parties. Petitioners err. The evidence on record shows that Lot No. 1253-B, the subject parcel, and the lot described as Lot No. 1253 in the Deed of Absolute Sale of May 12, 1986 between LORETO and GABINO, JR., are the same. In the Deed of Absolute Sale, Lot No. 1253 is described, viz.: A parcel of land (Lot No. 1253 of the Cadastral Survey of San Jose), with the improvements thereon. Bounded on the North [by] 1254 and 1255; on the South by road; on the East by 1253 and road on the West by 1240Angel Salazar; containing an area of 1,604 square meters more or less declared under Tax Declaration No. 4159.11 In the Deed of Absolute Sale of Portion of Land of December 7, 1989 between LORETO and WILFREDO, the subject parcel is described, viz.:

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A parcel of land (Lot No. 1253. Ap-06-00271) of the Cadastral Survey of San Jose, LRC Cad. Rec. No. 936), situated at Atabay, San Jose, Antique. Bounded on the N. and E. along lines 1-2-3 by lot 1255; San Jose Cadastre; on the S. along line 3-4 by Road; on the W. along line 4-5 by Lot 1240; San Jose Cadastre; and on the N. along line 5-1 by Lot 1254, San Jose Cadastre containing an area of [Four] Thousand Two Hundred Eighty (4,280) square meters, more or less. of which a portion of land subject of this sale is hereinbelow (sic) particularly described as follows, to wit: A portion of Lot No. 1253-B of the Cadastral Survey of San Jose, situated at Atabay, San Jose, Antique. Bounded on the North by Lot No. 1254; South by Road; West by Lot 1253-A; and on the East by Lot No. 1253-C; containing an area of 1,604 square meters, more or less.12 The description of Lot No. 1253, the object of the Deed of Absolute Sale, as "not registered under Act No. 196[,] otherwise known as the Land Registration Act, nor under the Spanish Mortgage Law"13 is a stray description of the subject parcel. It is uncorroborated by any evidence in the records. This description solely appears on the Deed of Absolute Sale and the discrepancy was not explained by LORETO who signed the Deed of Absolute Sale as vendor. LORETO does not, in fact, deny the existence of the Deed of Absolute Sale. He merely counters that the Deed of Absolute Sale was purportedly a mortgage. However, LORETOs claim that it was one of mortgage is clearly negated by a Certification14 issued by the Bureau of Internal Revenue dated May 12, 1986. It certified that LORETO was not required to pay the capital gains tax on the transfer of Lot No. 1253 to GABINO, JR. because the property was classified as an ordinary asset. To be sure, petitioners could have easily shown that LORETO owned properties other than Lot No. 1253 to bolster their claim that the object of the Deed of Absolute Sale was different from Lot No. 1253-B which is the object described in the Deed of Absolute Sale of Portion of Land. They did not proffer any evidence. The trial court itself comprehensively traced the origin of Lot No. 1253-B. It clearly demonstrated that the subject parcel was originally part of the registered lot of ZOILO. It also showed how the subject parcel was eventually bounded by Lot No. 1253-A on the West and by Lot No. 1253-C
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on the East, as the lot would be later described in the Deed of Absolute Sale of Portion of Land. The trial court found that ZOILO previously owned Lot No. 1253 under OCT No. RO-2301 issued on March 3, 1931. On November 14, 1986, Entry No. 167922 was inscribed in the certificate of title, per Order dated March 30, 1978 of Judge Noli Ma. Cortes of the then Court of First Instance of Antique, stating that it was a reconstituted certificate of title.15 Lot No. 1253 was subdivided by virtue of a subdivision plan dated June 19, 1987. On January 20, 1987, an Extrajudicial Settlement of Estate executed by LORETO, EFREN and PRISCILLA was entered as Entry No. 170722. The OCT of ZOILO was cancelled by TCT No. T-16693 in the names of LORETO, EFREN and PRISCILLA on January 29, 1987. TCT No. T-16693 was cancelled on the same day by TCT No. T-16694 in the name of LORETO alone. The TCT was partially cancelled by the issuance of TCTs covering Lot Nos. 1253-A, 1253-C and 1253-D. The TCT of Lot No. 1253-B was issued in the name of WILFREDO married to LOLITA on February 15, 1990. WILFREDOs TCT No. T-18023 appears to be a transfer from LORETOs TCT No. T-16694. II Next, petitioners contend that the appellate court should have upheld the title of WILFREDO under Article 1544 of the Civil Code and the doctrine of double sale where the buyer who is in possession of the Torrens Title must prevail.16 First, petitioners title was issued pursuant to the purported Deed of Absolute Sale of Portion of Land dated December 7, 1989. Second, WILFREDO did not see any encumbrance at the back of the title of the subject lot when he purchased it from LORETO on December 7, 1989. Thus, since he is not bound to go beyond the certificate of title, he has acquired the subject property in due course and in good faith. We disagree. Article 1544 of the Civil Code states, viz.: Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith recorded it in the Registry of Property.
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Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. Petitioners reliance on Article 1544 is misplaced. While title to the property was issued in WILFREDOs name on February 15, 1990, the following circumstances show that he registered the subject parcel with evident bad faith. First, the Deed of Absolute Sale of Portion of Land dated December 7, 1989 between LORETO and WILFREDO is tainted with blatant irregularities. It is a fact that the Deed of Absolute Sale of Portion of Land and the Deed of Absolute Sale between GABINO, JR. and WILFREDO are of even date. Both Deeds had the same object Lot No. 1253-B. Both deeds were notarized by Atty. Warloo Cardenal and bear the same entry in his notarial register: Document No. 236, Page No. 49, Book No. XI, Series of 1989. Second, the testimony of a disinterested witness, Febe Mabuhay, established the irregularity. Mabuhay used to work as secretary for Atty. Cardenal and co-signed as witness in both Deeds. She stated that Atty. Cardenal instructed her to prepare the two documents in the last week of November 1989. She was present when GABINO, JR. signed the Deed of Absolute Sale. She testified that after GABINO, JR. left, LORETO and his wife FRANCISCA arrived and signed the Deed of Absolute Sale of Portion of Land.17 The Decision of the court a quo further states,viz.: [Mabuhay testified that when she prepared the two documents, she] noticed the similarity of Lot No. 1253 as technically described in both documents but she did not call the attention of Atty. Warlo[o] Cardenal. [She likewise stated that Atty. Cardenal] specifically instructed her to assign the same document number to the two documents notarized on December 7, 1989.18 Third, the testimony of Atty. Ernesto Estoya, then Clerk of Court of the Regional Trial Court of Antique, supports the claim that there was bad faith in the execution of the Deed of Absolute Sale of Portion of Land. Atty. Estoya brought the notarial record of Atty. Cardenal for the year 1989 pursuant to a subpoena. He stated that he had not brought both Deeds as required in the subpoena because "Doc. No. 236; Page No. 49; Book No.
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XI; Series of 1989" as entered in the notarial register of Atty. Cardenal could not be found in the files. He further explained that the last document on page 48 of the notarial register of Atty. Cardenal is Document No. 235, while the first document on page 49 is Document No. 239, leaving three unexplained gaps for document numbers 236, 237 and 238. Atty. Estoya stated that he was not the one who received the 1989 notarial register of Atty. Cardenal when the latter surrendered it since he assumed office only in 1994.19 Fourth, we give credence to the testimony of GABINO, JR. that LORETO and WILFREDO had employed the scheme to deprive him and his wife of their lawful title to the subject property. The facts speak for themselves. WILFREDO knew that he could not use the Deed of Absolute Sale executed in his favor by GABINO, JR. because the latter had no title to transfer. Without a title, WILFREDO could not use the subject property as collateral for a bank loan. Hence, LORETO, who had refused to surrender the title to GABINO, JR. and in whose name the land remained registered, had to execute the Deed of Absolute Sale of Portion of Land in favor of WILFREDO. Hence, it was convenient for WILFREDO to deny the existence of the Deed of Absolute Sale of December 7, 1989 between him and GABINO, JR. But the evidence on record shows that after he was able to register the subject property in his name on February 15, 1990, WILFREDO used the title as collateral in the loans that he contracted with the Philippine National Bank on October 24, 1991 and the Development Bank of the Philippines on December 1, 1993. This supports the claim of GABINO, JR. that WILFREDO needed the lot for loaning purposes. With these corroborating circumstances and the following irrefragable documents on record, the evidence preponderates in favor of GABINO, JR. One, he acquired Lot No.1253-B from LORETO on May 12, 198620 by virtue of the Deed of Absolute Sale. Two, the Bureau of Internal Revenue issued a Certification, also on May 12, 1986, for the exemption from the payment of capital gains tax when LORETO sold to him the subject parcel. Three, GABINO, JR. paid the real estate tax on the subject parcel in 1987. Four, he filed a Petition for the Surrender of LORETOs title on July 31, 1987 so he could transfer the title of the property in his name. Petitioners likewise err in their argument that the contract of sale between LORETO and GABINO, JR. is void on the ground that at the time of the sale on May 12, 1986, LORETO had a right to dispose only an aliquot part
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of the yet undivided property of ZOILO. The subject parcel, being an inherited property, is subject to the rules of co-ownership under the Civil Code. Co-ownership is the right of common dominion which two or more persons have in a spiritual part of a thing, not materially or physically divided.21 Before the partition of the property held in common, no individual or co-owner can claim title to any definite portion thereof. All that the coowner has is an ideal or abstract quota or proportionate share in the entire property.22 LORETO sold the subject property to GABINO, JR. on May 12, 1986 as a co-owner. LORETO had a right, even before the partition of the property on January 19, 1987,23 to transfer in whole or in part his undivided interest in the lot even without the consent of his co-heirs. This right is absolute in accordance with the well-settled doctrine that a co-owner has full ownership of his pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute another person for its enjoyment.24 Thus, what GABINO, JR. obtained by virtue of the sale on May 12, 1986 were the same rights as the vendor LORETO had as co-owner, in an ideal share equivalent to the consideration given under their transaction.25 LORETO sold some 1,604 square meters of Lot No. 1253 to GABINO, JR. Consequently, when LORETO purportedly sold to WILFREDO on December 7, 1989 the same portion of the lot, he was no longer the owner of Lot No. 1253-B. Based on the principle that "no one can give what he does not have,"26 LORETO could not have validly sold to WILFREDO on December 7, 1989 what he no longer had. As correctly pointed out by the appellate court, the sale made by LORETO in favor of WILFREDO is void as LORETO did not have the right to transfer the ownership of the subject property at the time of sale. III Petitioners contend that since the subdivision plan of Lot No. 1253 was only approved on January 19, 1987, the appellate court can not presume that the aliquot part of LORETO was the parcel designated as Lot 1253-B.27 Petitioners err. The mere fact that LORETO sold a definite portion of the co-owned lot by metes and bounds before partition does not, per se, render
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the sale a nullity. We held in Lopez v. Vda. De Cuaycong28 that the fact that an agreement purported to sell a concrete portion of a co-owned property does not render the sale void, for it is well-established that the binding force of a contract must be recognized as far as it is legally possible to do so.29 In the case at bar, the contract of sale between LORETO and GABINO, JR. on May 12, 1986 could be legally recognized. At the time of sale, LORETO had an aliquot share of one-third of the 4,280-square meter property or some 1,42630 square meters but sold some 1,604 square meters to GABINO, JR. We have ruled that if a co-owner sells more than his aliquot share in the property, the sale will affect only his share but not those of the other co-owners who did not consent to the sale.31 Be that as it may, the co-heirs of LORETO waived all their rights and interests over Lot No. 1253 in favor of LORETO in an Extrajudicial Settlement of Estate dated January 20, 1987. They declared that they have previously received their respective shares from the other estate of their parents ZOILO and PURIFICACION.32 The rights of GABINO, JR. as owner over Lot No. 1253B are thus preserved. These rights were not effectively transferred by LORETO to WILFREDO in the Deed of Absolute Sale of Portion of Land. Nor were these rights alienated from GABINO, JR. upon the issuance of the title to the subject property in the name of WILFREDO. Registration of property is not a means of acquiring ownership.33 Its alleged incontrovertibility cannot be successfully invoked by WILFREDO because certificates of title cannot be used to protect a usurper from the true owner or be used as a shield for the commission of fraud.34
1wphi1

IV On the issue of prescription, petitioners contend that the appellate court failed to apply the rule that an action for reconveyance based on fraud prescribes after the lapse of four years.35 They cite Article 139136 of the Civil Code and the case of Gerona v. De Guzman.37 We disagree. This Court explained in Salvatierra v. Court of Appeals,38 viz.: An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule.
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Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the property. The only discordant note, it seems, is Balbin v. Medalla, which states that the prescriptive period for a reconveyance action is four years. However, this variance can be explained by the erroneous reliance on Gerona v. de Guzman. But in Gerona, the fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190 was applied, the New Civil Code not coming into effect until August 30, 1950 xxx. It must be stressed, at this juncture, that Article 1144 and Article 1456 are new provisions. They have no counterparts in the old Civil Code or in the old Code of Civil Procedure, the latter being then resorted to as legal basis of the four-year prescriptive period for an action for reconveyance of title of real property acquired under false pretenses.39 [Thus,] under the present Civil Code, xxx just as an implied or constructive trust is an offspring of xxx Art. 1456, xxx so is the corresponding obligation to reconvey the property and the title thereto in favor of the true owner. In this context, and vis--vis prescription, Article 1144 of the Civil Code is applicable[, viz.:] Art. 1144. The following actions must be brought within ten years from the time the right of action accrues: 1) Upon a written contract; 2) Upon an obligation created by law; 3) Upon a judgment.40 (emphases supplied) Thus, in the case at bar, although the TCT of WILFREDO became indefeasible after the lapse of one year from the date of registration, the attendance of fraud in its issuance created an implied trust in favor of GABINO, JR. under Article 145641 of the Civil Code. Being an implied trust, the action for reconveyance of the subject property therefore prescribes within a period of ten years from February 15, 1990. Thus, when respondents filed the instant case with the court a quo on September 26, 1995, it was well within the prescriptive period. V
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On the issue of damages, petitioners contend that the grant is erroneous and the alleged connivance between Atty. Cardenal and WILFREDO lacks basis. We disagree. The evidence on record is clear that petitioners committed bad faith in the execution of the purported Deed of Absolute Sale of Portion of Land dated December 7, 1989 between LORETO and WILFREDO. As stated by the appellate court, viz.: xxxx From the series of events, it can be reasonably inferred that appellees WILFREDO, LORETO and Atty. Cardenal connived in attempting to deprive appellants of Lot No. 1253-B, hence, the appellants entitlement to moral damages. Further, it is a well-settled rule that attorneys fees are allowed to be awarded if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party for whom it is sought. xxxx To protect themselves, the appellants engaged the services of counsel and incurred expenses in the course of litigation. Hence, we deem it equitable to award attorneys fees to the appellant xxx.42 IN VIEW WHEREOF, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. No. CV-68318 dated March 19, 2003 and November 13, 2003, respectively, are AFFIRMED in toto. Costs against petitioners. SO ORDERED. REYNATO S. PUNO Associate Justice .R. No. 160347 November 29, 2006

ARCADIO and MARIA LUISA CARANDANG, Petitioners, vs. HEIRS OF QUIRINO A. DE GUZMAN, namely: MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN, CYNTHIA G. RAGASA and QUIRINO DE GUZMAN, JR., Respondents. DECISION CHICO-NAZARIO, J.:
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This is a Petition for Review on Certiorari assailing the Court of Appeals Decision1 and Resolution affirming the Regional Trial Court (RTC) Decision rendering herein petitioners Arcadio and Luisa Carandang [hereinafter referred to as spouses Carandang] jointly and severally liable for their loan to Quirino A. de Guzman. The Court of Appeals summarized the facts as follows: [Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as corporate officers of Mabuhay Broadcasting System (MBS for brevity), with equities at fifty four percent (54%) and forty six percent (46%) respectively. On November 26, 1983, the capital stock of MBS was increased, from P500,000 to P1.5 million and P345,000 of this increase was subscribed by [the spouses Carandang]. Thereafter, on March 3, 1989, MBS again increased its capital stock, from P1.5 million to P3 million, [the spouses Carandang] yet again subscribed to the increase. They subscribed to P93,750 worth of newly issued capital stock. [De Guzman] claims that, part of the payment for these subscriptions were paid by him, P293,250 for the November 26, 1983 capital stock increase and P43,125 for the March 3, 1989 Capital Stock increase or a total ofP336,375. Thus, on March 31, 1992, [de Guzman] sent a demand letter to [the spouses Carandang] for the payment of said total amount. [The spouses Carandang] refused to pay the amount, contending that a pre-incorporation agreement was executed between [Arcadio Carandang] and [de Guzman], whereby the latter promised to pay for the stock subscriptions of the former without cost, in consideration for [Arcadio Carandangs] technical expertise, his newly purchased equipment, and his skill in repairing and upgrading radio/communication equipment therefore, there is no indebtedness on their part [sic]. On June 5, 1992, [de Guzman] filed his complaint, seeking to recover the P336,375 together with damages. After trial on the merits, the trial court disposed of the case in this wise: "WHEREFORE, premises considered, judgment is hereby rendered in favor of [de Guzman]. Accordingly, [the spouses Carandang] are ordered to jointly and severally pay [de Guzman], to wit:
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(1) P336,375.00 representing [the spouses Carandangs] loan to de Guzman; (2) interest on the preceding amount at the rate of twelve percent (12%) per annum from June 5, 1992 when this complaint was filed until the principal amount shall have been fully paid; (3) P20,000.00 as attorneys fees; (4) Costs of suit. The spouses Carandang appealed the RTC Decision to the Court of Appeals, which affirmed the same in the 22 April 2003 assailed Decision: WHEREFORE, in view of all the foregoing the assailed Decision is hereby AFFIRMED. No costs.2 The Motion for Reconsideration filed by the spouses Carandang was similarly denied by the Court of Appeals in the 6 October 2003 assailed Resolution: WHEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and our Decision of April 22, 2003, which is based on applicable law and jurisprudence on the matter is hereby AFFIRMED and REITERATED.3 The spouses Carandang then filed before this Court the instant Petition for Review on Certiorari, bringing forth the following issues: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THERE IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO
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EXPRESS PROVISIONS OF BOOK IV, TITLE XI, OF THE NEW CIVIL CODE PERTAINING TO LOANS. III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF THE REVISED RULES ON EVIDENCE. IV. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. V. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE PURPORTED LIABILITY OF PETITIONERS ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE NEW CIVIL CODE.4 Whether or not the RTC Decision is void for failing to comply with Section 16, Rule 3 of the Rules of Court The spouses Carandang claims that the Decision of the RTC, having been rendered after the death of Quirino de Guzman, is void for failing to comply with Section 16, Rule 3 of the Rules of Court, which provides: SEC. 16. Death of party; duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or

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administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order the legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The spouses Carandang posits that such failure to comply with the above rule renders void the decision of the RTC, in adherence to the following pronouncements in Vda. de Haberer v. Court of Appeals5 and Ferreria v. Vda. de Gonzales6 : Thus, it has been held that when a party dies in an action that survives and no order is issued by the court for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no substitution has ever been effected, the trial held by the court without such legal representatives or heirs and the judgment rendered after such trial are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and judgment would be binding.7 In the present case, there had been no court order for the legal representative of the deceased to appear, nor had any such legal representative appeared in court to be substituted for the deceased; neither had the complainant ever procured the appointment of such legal representative of the deceased, including appellant, ever asked to be substituted for the deceased. As a result, no valid substitution was effected, consequently, the court never acquired jurisdiction over appellant for the purpose of making her a party to the case and making the decision binding upon her, either personally or as a representative of the estate of her deceased mother.8 However, unlike jurisdiction over the subject matter which is conferred by law and is not subject to the discretion of the parties,9 jurisdiction over the
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person of the parties to the case may be waived either expressly or impliedly.10Implied waiver comes in the form of either voluntary appearance or a failure to object.11 In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the heirs of the deceased party, and therefore the judgment cannot be made binding upon them. In the case at bar, not only do the heirs of de Guzman interpose no objection to the jurisdiction of the court over their persons; they are actually claiming and embracing such jurisdiction. In doing so, their waiver is not even merely implied (by their participation in the appeal of said Decision), but express (by their explicit espousal of such view in both the Court of Appeals and in this Court). The heirs of de Guzman had no objection to being bound by the Decision of the RTC. Thus, lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only be asserted by the party who can thereby waive it by silence. It also pays to look into the spirit behind the general rule requiring a formal substitution of heirs. The underlying principle therefor is not really because substitution of heirs is a jurisdictional requirement, but because noncompliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected by the decision rendered therein.12 Such violation of due process can only be asserted by the persons whose rights are claimed to have been violated, namely the heirs to whom the adverse judgment is sought to be enforced. Care should, however, be taken in applying the foregoing conclusions. In People v. Florendo,13 where we likewise held that the proceedings that took place after the death of the party are void, we gave another reason for such nullity: "the attorneys for the offended party ceased to be the attorneys for the deceased upon the death of the latter, the principal x x x." Nevertheless, the case at bar had already been submitted for decision before the RTC on 4 June 1998, several months before the passing away of de Guzman on 19 February 1999. Hence, no further proceedings requiring the appearance of de Guzmans counsel were conducted before the promulgation of the RTC Decision. Consequently, de Guzmans

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counsel cannot be said to have no authority to appear in trial, as trial had already ceased upon the death of de Guzman. In sum, the RTC Decision is valid despite the failure to comply with Section 16, Rule 3 of the Rules of Court, because of the express waiver of the heirs to the jurisdiction over their persons, and because there had been, before the promulgation of the RTC Decision, no further proceedings requiring the appearance of de Guzmans counsel. Before proceeding with the substantive aspects of the case, however, there is still one more procedural issue to tackle, the fourth issue presented by the spouses Carandang on the non-inclusion in the complaint of an indispensable party. Whether or not the RTC should have dismissed the case for failure to state a cause of action, considering that Milagros de Guzman, allegedly an indispensable party, was not included as a party-plaintiff The spouses Carandang claim that, since three of the four checks used to pay their stock subscriptions were issued in the name of Milagros de Guzman, the latter should be considered an indispensable party. Being such, the spouses Carandang claim, the failure to join Mrs. de Guzman as a party-plaintiff should cause the dismissal of the action because "(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action."14 The Court of Appeals held: We disagree. The joint account of spouses Quirino A de Guzman and Milagros de Guzman from which the four (4) checks were drawn is part of their conjugal property and under both the Civil Code and the Family Code the husband alone may institute an action for the recovery or protection of the spouses conjugal property. Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that "x x x Under the New Civil Code, the husband is the administrator of the conjugal partnership. In fact, he is the sole administrator, and the wife is not entitled as a matter of right to join him in this endeavor. The husband may defend the conjugal partnership in a suit or action without being joined by the wife. x x x Under the Family Code, the administration of the conjugal
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property belongs to the husband and the wife jointly. However, unlike an act of alienation or encumbrance where the consent of both spouses is required, joint management or administration does not require that the husband and wife always act together. Each spouse may validly exercise full power of management alone, subject to the intervention of the court in proper cases as provided under Article 124 of the Family Code. x x x." The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest" and "indispensable party." A real party in interest is the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit.15 On the other hand, an indispensable party is a party in interest without whom no final determination can be had of an action,16 in contrast to a necessary party, which is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action.17 The spouses Carandang are indeed correct that "(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action."18However, what dismissal on this ground entails is an examination of whether the parties presently pleaded are interested in the outcome of the litigation, and not whether all persons interested in such outcome are actually pleaded. The latter query is relevant in discussions concerning indispensable and necessary parties, but not in discussions concerning real parties in interest. Both indispensable and necessary parties are considered as real parties in interest, since both classes of parties stand to be benefited or injured by the judgment of the suit. Quirino and Milagros de Guzman were married before the effectivity of the Family Code on 3 August 1988. As they did not execute any marriage settlement, the regime of conjugal partnership of gains govern their property relations.19 All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.20Credits are personal properties,21 acquired during the time the loan or other credit transaction was executed. Therefore, credits loaned during the time of the marriage are presumed to be conjugal property.
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Consequently, assuming that the four checks created a debt for which the spouses Carandang are liable, such credits are presumed to be conjugal property. There being no evidence to the contrary, such presumption subsists. As such, Quirino de Guzman, being a co-owner of specific partnership property,22 is certainly a real party in interest. Dismissal on the ground of failure to state a cause of action, by reason that the suit was allegedly not brought by a real party in interest, is therefore unwarranted. So now we come to the discussion concerning indispensable and necessary parties. When an indispensable party is not before the court, the action should likewise be dismissed.23 The absence of an indispensable party renders all subsequent actuations of the court void, for want of authority to act, not only as to the absent parties but even as to those present.24 On the other hand, the non-joinder of necessary parties do not result in the dismissal of the case. Instead, Section 9, Rule 3 of the Rules of Court provides for the consequences of such non-joinder: Sec. 9. Non-joinder of necessary parties to be pleaded. Whenever in any pleading in which a claim is asserted a necessary party is not joined, the pleader shall set forth his name, if known, and shall state why he is omitted. Should the court find the reason for the omission unmeritorious, it may order the inclusion of the omitted necessary party if jurisdiction over his person may be obtained. The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver of the claim against such party. The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Non-compliance with the order for the inclusion of a necessary party would not warrant the dismissal of the complaint. This is an exception to Section 3, Rule 17 which allows the dismissal of the complaint for failure to comply with an order of the court, as Section 9, Rule 3 specifically provides for the effect of such non-inclusion: it shall not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Section 11, Rule 3 likewise provides that the non-joinder of parties is not a ground for the dismissal of the action.

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Other than the indispensable and necessary parties, there is a third set of parties: the pro-forma parties, which are those who are required to be joined as co-parties in suits by or against another party as may be provided by the applicable substantive law or procedural rule.25 An example is provided by Section 4, Rule 3 of the Rules of Court: Sec. 4. Spouses as parties. Husband and wife shall sue or be sued jointly, except as provided by law. Pro-forma parties can either be indispensable, necessary or neither indispensable nor necessary. The third case occurs if, for example, a husband files an action to recover a property which he claims to be part of his exclusive property. The wife may have no legal interest in such property, but the rules nevertheless require that she be joined as a party. In cases of pro-forma parties who are neither indispensable nor necessary, the general rule under Section 11, Rule 3 must be followed: such nonjoinder is not a ground for dismissal. Hence, in a case concerning an action to recover a sum of money, we held that the failure to join the spouse in that case was not a jurisdictional defect.26The non-joinder of a spouse does not warrant dismissal as it is merely a formal requirement which may be cured by amendment.27 Conversely, in the instances that the pro-forma parties are also indispensable or necessary parties, the rules concerning indispensable or necessary parties, as the case may be, should be applied. Thus, dismissal is warranted only if the pro-forma party not joined in the complaint is an indispensable party. Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang, seems to be either an indispensable or a necessary party. If she is an indispensable party, dismissal would be proper. If she is merely a necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section 9, Rule 3. Article 108 of the Family Code provides: Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements.
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This provision is practically the same as the Civil Code provision it superceded: Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter. In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other partners of specific partnership property." Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for petitioners stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit. Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof. In the fairly recent cases of Baloloy v. Hular28 and Adlawan v. Adlawan,29 we held that, in a coownership, co-owners may bring actions for the recovery of co-owned property without the necessity of joining all the other co-owners as coplaintiffs because the suit is presumed to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of Appeals,30 we also held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment, covers all kinds of action for the recovery of possession.31 In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an action, any kind of action, for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners.32 We therefore hold that Milagros de Guzman is not an indispensable party in the action for the recovery of the allegedly loaned money to the spouses Carandang. As such, she need not have been impleaded in said suit, and dismissal of the suit is not warranted by her not being a party thereto.
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Whether or not respondents were able to prove the loan sought to be collected from petitioners In the second and third issues presented by the spouses Carandang, they claim that the de Guzmans failed to prove the alleged loan for which the spouses Carandang were held liable. As previously stated, spouses Quirino and Milagros de Guzman paid for the stock subscriptions of the spouses Carandang, amounting to P336,375.00. The de Guzmans claim that these payments were in the form of loans and/or advances and it was agreed upon between the late Quirino de Guzman, Sr. and the spouses Carandang that the latter would repay him. Petitioners, on the other hand, argue that there was an oral pre-incorporation agreement wherein it was agreed that Arcardio Carandang would always maintain his 46% equity participation in the corporation even if the capital structures were increased, and that Quirino de Guzman would personally pay the equity shares/stock subscriptions of Arcardio Carandang with no cost to the latter. On this main issue, the Court of Appeals held: [The spouses Carandang] aver in its ninth assigned error that [the de Guzmans] failed to prove by preponderance of evidence, either the existence of the purported loan or the non-payment thereof. Simply put, preponderance of evidence means that the evidence as a whole adduced by one side is superior to that of the other. The concept of preponderance of evidence refers to evidence that is of greater weight, or more convincing, than that which is offered in opposition to it; it means probability of truth. [The spouses Carandang] admitted that it was indeed [the de Guzmans] who paid their stock subscriptions and their reason for not reimbursing the latter is the alleged pre-incorporation agreement, to which they offer no clear proof as to its existence. It is a basic rule in evidence that each party must prove his affirmative allegation. Thus, the plaintiff or complainant has to prove his affirmative allegations in the complaints and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaims.33

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The spouses Carandang, however, insist that the de Guzmans have not proven the loan itself, having presented evidence only of the payment in favor of the Carandangs. They claim: It is an undeniable fact that payment is not equivalent to a loan. For instance, if Mr. "A" decides to pay for Mr. "Bs" obligation, that payment by Mr. "A" cannot, by any stretch of imagination, possibly mean that there is now a loan by Mr. "B" to Mr. "A". There is a possibility that such payment by Mr. "A" is purely out of generosity or that there is a mutual agreement between them. As applied to the instant case, that mutual agreement is the pre-incorporation agreement (supra) existing between Mr. de Guzman and the petitioners --- to the effect that the former shall be responsible for paying stock subscriptions of the latter. Thus, when Mr. de Guzman paid for the stock subscriptions of the petitioners, there was no loan to speak of, but only a compliance with the pre-incorporation agreement.34 The spouses Carandang are mistaken. If indeed a Mr. "A" decides to pay for a Mr. "Bs" obligation, the presumption is that Mr. "B" is indebted to Mr. "A" for such amount that has been paid. This is pursuant to Articles 1236 and 1237 of the Civil Code, which provide: Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor. Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guarantee, or penalty. Articles 1236 and 1237 are clear that, even in cases where the debtor has no knowledge of payment by a third person, and even in cases where the third person paid against the will of the debtor, such payment would produce a debt in favor of the paying third person. In fact, the only consequences for the failure to inform or get the consent of the debtor are the following: (1) the third person can recover only insofar as the payment has been beneficial to the debtor; and (2) the third person is not subrogated
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to the rights of the creditor, such as those arising from a mortgage, guarantee or penalty.35 We say, however, that this is merely a presumption. By virtue of the parties freedom to contract, the parties could stipulate otherwise and thus, as suggested by the spouses Carandang, there is indeed a possibility that such payment by Mr. "A" was purely out of generosity or that there was a mutual agreement between them. But such mutual agreement, being an exception to presumed course of events as laid down by Articles 1236 and 1237, must be adequately proven. The de Guzmans have successfully proven their payment of the spouses Carandangs stock subscriptions. These payments were, in fact, admitted by the spouses Carandang. Consequently, it is now up to the spouses Carandang to prove the existence of the pre-incorporation agreement that was their defense to the purported loan. Unfortunately for the spouses Carandang, the only testimony which touched on the existence and substance of the pre-incorporation agreement, that of petitioner Arcardio Carandang, was stricken off the record because he did not submit himself to a cross-examination of the opposing party. On the other hand, the testimonies of Romeo Saavedra,36 Roberto S. Carandang,37 Gertrudes Z. Esteban,38 Ceferino Basilio,39 and Ma. Luisa Carandang40touched on matters other than the existence and substance of the pre-incorporation agreement. So aside from the fact that these witnesses had no personal knowledge as to the alleged existence of the pre-incorporation agreement, the testimonies of these witnesses did not even mention the existence of a pre-incorporation agreement. Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa Carandang even contradicted the existence of a pre-incorporation agreement because when they were asked by their counsel regarding the matter of the check payments made by the late Quirino A. de Guzman, Sr. in their behalf, they said that they had already paid for it thereby negating their own defense that there was a pre-incorporation agreement excusing themselves from paying Mr. de Guzman the amounts he advanced or loaned to them. This basic and irrefutable fact can be gleaned from their testimonies which the private respondents are quoting for easy reference:

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a. With respect to the testimony of Ma. Luisa Carandang Q: Now, can you tell this Honorable Court how do you feel with respect to the Complaint of the plaintiff in this case charging you that you paid for this year and asking enough to paid (sic) your tax? A: We have paid already, so, we are not liable for anything payment (sic).41 b. With respect to the testimony of Arcadio Carandang "Q: How much? A: P40,000.00 to P50,000.00 per month. Q: The plaintiff also claimed thru witness Edgar Ragasa, that there were receipts issued for the payment of your shares; which receipts were marked as Exhibits "G" to "L" (Plaintiff). Im showing to you these receipts so marked by the plaintiff as their exhibits which were issued in the name of Ma. Luisa Carandang, your wife; and also, Arcadio M. Carandang. Will you please go over this Official Receipt and state for the records, who made for the payment stated in these receipts in your name? A: I paid for those shares."42 There being no testimony or documentary evidence proving the existence of the pre-incorporation agreement, the spouses Carandang are forced to rely upon an alleged admission by the original plaintiff of the existence of the pre-incorporation agreement. Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted the existence of the pre-incorporation agreement by virtue of paragraphs 13 and 14 of their Answer and paragraph 4 of private respondents Reply. Paragraphs 13 and 14 of petitioners Answer dated 7 July 1992 state in full: 13. Sometime in November, 1973 or thereabout, herein plaintiff invited defendant Arcadio M. Carandang to a joint venture by pooling together their technical expertise, equipments, financial resources and franchise. Plaintiff proposed to defendant and mutually agreed on the following:
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1. That they would organize a corporation known as Mabuhay Broadcasting Systems, Inc. 2. Considering the technical expertise and talent of defendant Arcadio M. Carandang and his new equipments he bought, and his skill in repairing and modifying radio/communication equipments into high proficiency, said defendant would have an equity participation in the corporation of 46%, and plaintiff 54% because of his financial resources and franchise. 3. That defendant would always maintain his 46% equity participation in the corporation even if the capital structures are increased, and that plaintiff would personally pay the equity shares/stock subscriptions of defendant with no cost to the latter. 4. That because of defendants expertise in the trade including the marketing aspects, he would be the President and General Manager, and plaintiff the Chairman of the Board. 5. That considering their past and trustworthy relations, they would maintain such relations in the joint venture without any mental reservation for their common benefit and success of the business. 14. Having mutually agreed on the above arrangements, the single proprietorship of plaintiff was immediately spun-off into a corporation now known as Mabuhay Broadcasting System, Inc. The incorporators are plaintiff and his family members/nominees controlling jointly 54% of the stocks and defendant Arcadio M. Carandang controlling singly 46% as previously agreed.43 Meanwhile, paragraphs 3 and 4 of private respondents Reply dated 29 July 1992 state in full: 3. Plaintiffs admits the allegation in paragraph 13.1 of the Answer only insofar the plaintiff and defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcasting Systems, Inc. Plaintiff specifically denies the other allegations in paragraph 13 of the Answer, the same being devoid of any legal or factual bases. The truth of the matter is that defendant Arcadio M. Carandang was not able to pay plaintiff the agreed amount of the lease for a number of months forcing the plaintiff to terminate lease. Additionally, the records would show that it was the
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defendant Arcadio M. Carandang who proposed a joint venture with the plaintiff. It appears that plaintiff agreed to the formation of the corporation principally because of a directive of then President Marcos indicating the need to broaden the ownership of radio broadcasting stations. The plaintiff owned the franchise, the radio transmitter, the antenna tower, the building containing the radio transmitter and other equipment. Verily, he would be placed in a great disadvantage if he would still have to personally pay for the shares of defendant Arcadio M. Carandang. 4. Plaintiff admits the allegations in paragraph 14 of the Answer.44 In effect, the spouses Carandang are relying on the fact that Quirino de Guzman stated that he admitted paragraph 14 of the Answer, which incidentally contained the opening clause "(h)aving mutually agreed on the above arrangements, x x x." Admissions, however, should be clear and unambiguous. This purported admission by Quirino de Guzman reeks of ambiguity, as the clause "(h)aving mutually agreed on the above arrangements," seems to be a mere introduction to the statement that the single proprietorship of Quirino de Guzman had been converted into a corporation. If Quirino de Guzman had meant to admit paragraph 13.3, he could have easily said so, as he did the other paragraphs he categorically admitted. Instead, Quirino de Guzman expressly stated the opposite: that "(p)laintiff specifically denies the other allegations of paragraph 13 of the Answer."45 The Reply furthermore states that the only portion of paragraph 13 which Quirino de Guzman had admitted is paragraph 13.1, and only insofar as it said that Quirino de Guzman and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc.46 All the foregoing considered, we hold that Quirino de Guzman had not admitted the alleged pre-incorporation agreement. As there was no admission, and as the testimony of Arcardio Carandang was stricken off the record, we are constrained to rule that there was no pre-incorporation agreement rendering Quirino de Guzman liable for the spouses Carandangs stock subscription. The payment by the spouses de Guzman of the stock subscriptions of the spouses Carandang are therefore by way of loan which the spouses Carandang are liable to pay.
1w phi1

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Whether or not the liability of the spouses Carandang is joint and solidary Finally, the Court of Appeals also upheld the RTC Decision insofar as it decreed a solidary liability. According to the Court of Appeals: With regards (sic) the tenth assigned error, [the spouses Carandang] contend that: "There is absolutely no evidence, testimonial or documentary, showing that the purported obligation of [the spouses Carandang] is joint and solidary. x xx "Furthermore, the purported obligation of [the spouses Carandang] does not at all qualify as one of the obligations required by law to be solidary x x x." It is apparent from the facts of the case that [the spouses Carandang] were married way before the effectivity of the Family Code hence; their property regime is conjugal partnership under the Civil Code. It must be noted that for marriages governed by the rules of conjugal partnership of gains, an obligation entered into by the husband and wife is chargeable against their conjugal partnership and it is the partnership, which is primarily bound for its repayment. Thus, when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors, such that the concept of joint and solidary liability, as between them, does not apply.47 The Court of Appeals is correct insofar as it held that when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors. Hence, either of them may be sued for the whole amount, similar to that of a solidary liability, although the amount is chargeable against their conjugal partnership property. Thus, in the case cited by the Court of Appeals, Alipio v. Court of Appeals, 48 the two sets of defendant-spouses therein were held liable for P25,300.00 each, chargeable to their respective conjugal partnerships. WHEREFORE, the Decision of the Court of Appeals, affirming the judgment rendered against the spouses Carandang, is hereby AFFIRMED
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with the following MODIFICATION: The spouses Carandang are ORDERED to pay the following amounts from their conjugal partnership properties: (1) P336,375.00 representing the spouses Carandangs loan to Quirino de Guzman; and (2) Interest on the preceding amount at the rate of twelve percent (12%) per annum from 5 June 1992 when the complaint was filed until the principal amount can be fully paid; and (3) P20,000.00 as attorneys fees. No costs. SO ORDERED. G.R. No. 141613 December 16, 2005 SENEN B. AGUILAR, Petitioner, vs. VIRGILIO B. AGUILAR and ANGEL B. AGUILAR, Respondents, x-----------------------------------------------x ALEJANDRO C. SANGALANG, Intervenor-Respondent. DECISION SANDOVAL-GUTIERREZ, J.: Assailed in this petition for review on certiorari are the Decision1 and Resolution2 of the Court of Appeals, dated June 11, 1999 and January 11, 2000, respectively, in CA-G.R. CV No. 55750. The parties in this case are brothers, except Alejandro Sangalang, herein intervenor-respondent. As will be subsequently discussed, this is the second time that the brothers Aguilar seek the intervention of this Court regarding the same facts and the same subject matter. The first was in Aguilar v. Court of Appeals, G.R. No. 76351 decided on October 29,
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1993 against Senen B. Aguilar.3 It is time to writ finis to this family wrangling. On October 28, 1993, Senen and Virgilio purchased a house and lot located in Paraaque City, Metro Manila for the benefit of their father, Maximiano Aguilar (now deceased). The brothers wanted their father to enjoy his retirement in a quiet neighborhood. On February 23, 1970, they executed a written agreement stipulating that their shares in the house and lot would be equal; and that Senen would live with their father on condition that he would pay the Social Security System (SSS) the remaining loan obligation of the former owners. In 1974, their father died. Virgilio then demanded that Senen vacate the house and that the property be sold, the proceeds to be divided between them. Senen refused to comply with Virgilios demand. On January 12, 1979, Virgilio filed a complaint with the Court of First Instance (now Regional Trial Court) of Rizal at Pasay City for specific performance. Virgilio prayed that Senen be compelled to sell the property so that the proceeds could be divided between them. However, during the pre-trial, neither Senen nor his counsel appeared. Thus, Senen was declared as in default by the trial court and Virgilio was allowed to present his evidence ex-parte. On July 26, 1979, the trial court rendered its Decision, declaring the brothers co-owners of the house and lot and are entitled to equal shares; and ordering that the property be sold, the proceeds to be divided equally between them. The trial court also ordered Senen to vacate the property and to pay Virgilio rentals with interests corresponding to the period from January 1975 until he leaves the premises. On appeal, docketed as CA-G.R. CV No. 03933, the Court of Appeals reversed the trial courts Decision. Virgilio then filed with this Court a petition for review on certiorari, docketed as G.R. No. 76351. On October 29, 1993, this Court rendered its Decision, the dispositive portion of which reads:
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"WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated 16 October 1986 is REVERSED and SET ASIDE. The decision of the trial court in Civil Case No. 6912-P dated 26 July 1971 is REINSTATED, with the modification that respondent Senen B. Aguilar is ordered to vacate the premises in question within ninety (90) days from receipt of this decision, and to pay petitioner Virgilio B. Aguilar, a monthly rental of P1,200.00 with interest at the legal rate from the time he received the decision of the trial court directing him to vacate until he effectively leaves the premises. The trial court is further directed to take immediate steps to implement this decision, conformably with Art. 498 of the Civil Code and the Rules of Court. This decision is final and executory. SO ORDERED." On March 27, 1995, Senen filed with the Regional Trial Court, Branch 260, Paraaque City, an action for legal redemption against Virgilio and another brother, Angel, docketed as Civil Case No. 95-039. In his complaint, Senen alleged that while he knows that Virgilio sold his share of the property to Angel in January 1989, however, he (Senen) was not furnished any written notice of the sale. Consequently, as a co-owner, he has the right to redeem the property. Meanwhile, on November 27, 1995, pursuant to this Courts Decision in G.R. No. 76351, the property was sold at public auction to Alejandro C. Sangalang, intervenor-respondent herein. Virgilio then received his share of the proceeds as well as the rental payments due from Senen. By then, Virgilio had moved to California, USA. It was only on January 25, 1997 that he was served, through the Philippine Consulate in San Francisco, a copy of Senens complaint in Civil Case No. 95-039. On February 24, 1997, Virgilio filed a motion to dismiss the complaint for lack of cause of action and forum shopping. In an Order dated June 27, 1997, the trial court dismissed Civil Case No. 05-039 on the ground of laches, holding that Senen incurred a delay of seven (7) years before asserting his right to redeem the property in question.
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On appeal, the Court of Appeals affirmed the assailed Order of the trial court. Hence, the instant petition for review on certiorari. The sole issue for our resolution is whether the Court of Appeals erred in holding that Senens complaint for legal redemption in Civil Case No. 05039 is barred by laches. Legal redemption (retracto legal de comuneros) is a privilege created by law, partly by reason of public policy and partly for the benefit of the redemptioner to afford him a way out of a disagreeable or inconvenient association into which he has been thrust.4 With respect to redemption by co-owners, in case the share of a co-owner is sold to a third person, the governing law is Article 1620 of the Civil Code which provides: "ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable rate. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common." The purpose behind Article 1620 is to provide a method for terminating the co-ownership and consolidating the dominion in one sole owner.5 Article 1623 of the same Code also provides: "ART. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendee, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendee that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners."

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From the above provisions, the following are the requisites for the exercise of legal redemption: (1) There must be a co-ownership; (2) one of the coowners sold his right to a stranger; (3) the sale was made before the partition of the co-owned property; (4) the right of redemption must be exercised by one or more co-owners within a period of thirty days to be counted from the time that he or they were notified in writing by the vendee or by the co-owner vendor; and (5) the vendee must be reimbursed for the price of the sale. In this case, the sale took place in January 1989. Petitioner admits that he has actual knowledge of the sale. However, he only asserted his right to redeem the property in March 1995 by filing the instant complaint. Both the trial court and the Appellate Court ruled that this was seven (7) years late. Petitioner, however, now contends that there being no written notice to him of the sale by the vendee or vendor, the thirty-day redemption period has not prescribed. Petitioners contention lacks merit. The old rule is that a written notice of the sale by the vendor to his co-owners is indispensable for the latter to exercise their retracto legal de comuneros.6 More recently, however, we have relaxed the written notice requirement. Thus, in Si v. Court of Appeals,7 we ruled that a co-owner with actual notice of the sale is not entitled to a written notice for such would be superfluous. The law does not demand what is unnecessary. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which could or should have been done earlier through the exercise of due diligence.8 Otherwise stated, laches is the negligence or omission to assert a right within a reasonable time warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it.9 Its elements are: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation for which the complaint seeks a remedy; (2) delay in asserting the complainants rights, the complainant having had knowledge or notice of the defendants conduct as having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which he bases his suit; and (4) injury or prejudice to the defendant in the event, relief is accorded to the complainant, or the suit is not held barred.10
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Petitioner has actual knowledge of the sale of Virgilios share to Angel in 1989. As provided by Article 1623, he has thirty days from such actual knowledge within which to exercise his right to redeem the property. Inexplicably, petitioner did not take any action. He waited for seven (7) years before filing his complaint. Definitely, such an unexplained delay is tantamount to laches. To be sure, to uphold his right would unduly cause injury to respondent-intervenor, a purchaser in good faith and for value. Moreover, by the time Senen filed Civil Case No. 95-039 for legal redemption, his right was no longer available to him. We have held that after a property has been subdivided and distributed among the co-owners, the community has terminated and there is no reason to sustain any right of pre-emption or redemption.11 WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 55750 are AFFIRMED. Costs against petitioner. SO ORDERED. ANGELINA SANDOVAL-GUTIERREZ Associate Justice R. No. 152195 January 31, 2005

PEDRO SEPULVEDA, SR., substituted by SOCORRO S. LAWAS, Administratrix of His Estate, petitioner, vs. ATTY. PACIFICO S. PELAEZ, respondent. DECISION CALLEJO, SR., J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 43758 affirming the decision of the Regional Trial Court (RTC) of Danao City, Branch 25, in Civil Case No. SF-175.

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On December 6, 1972, private respondent Atty. Pacifico Pelaez filed a complaint against his granduncle, Pedro Sepulveda, Sr., with the then Court of First Instance (CFI) of Cebu, for the recovery of possession and ownership of his one-half (1/2) undivided share of several parcels of land covered by Tax Declaration (T.D.) Nos. 28199, 18197, 18193 and 28316; his undivided one-third (1/3) share in several other lots covered by T.D. Nos. 28304, 35090, 18228, 28310, 26308, 28714, 28311, 28312 and 28299 (all located in Danao, Cebu); and for the partition thereof among the co-owners. The case was docketed as Civil Case No. SF-175. The eleven (11) lots were among the twenty-five (25) parcels of land which the private respondents mother, Dulce Sepulveda, inherited from her grandmother, Dionisia Sepulveda under the Project of Partition2 dated April 16, 1937 submitted by Pedro Sepulveda, Sr. as the administrator of the formers estate, duly approved by the then CFI of Cebu in Special Proceeding No. 778-0. Under the said deed, Pedro Sepulveda, Sr. appeared to be the owner of an undivided portion of Lot No. 28199, while his brother and Dulces uncle Santiago Sepulveda, was the undivided owner of one-half (1/2) of the parcels of land covered by T.D. Nos. 18197, 18193 and 28316. Dulce and her uncles, Pedro and Santiago, were likewise indicated therein as the co-owners of the eleven other parcels of land, each with an undivided one-third (1/3) share thereof. In his complaint, the private respondent alleged that his mother Dulce died intestate on March 2, 1944, and aside from himself, was survived by her husband Rodolfo Pelaez and her mother Carlota Sepulveda. Dulces grandfather Vicente Sepulveda died intestate on October 25, 1920,3 and Dulce was then only about four years old. According to the private respondent, his grandmother Carlota repeatedly demanded the delivery of her mothers share in the eleven (11) parcels of land, but Pedro Sepulveda, Sr. who by then was the Municipal Mayor of Tudela, refused to do so. Dulce, likewise, later demanded the delivery of her share in the eleven parcels of land, but Pedro Sepulveda, Sr. still refused, claiming that he needed to continue to possess the property to reap the produce therefrom which he used for the payment of the realty taxes on the subject properties. The private respondent alleged that he himself demanded the delivery of his mothers share in the subject properties on so many occasions, the last of which was in 1972, to no avail.

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The private respondent further narrated that his granduncle executed an affidavit4 on November 28, 1961, stating that he was the sole heir of Dionisia when she died intestate on June 5, 1921, when, in fact, the latter was survived by her three sons, Santiago, Pedro and Vicente. Pedro Sepulveda, Sr. also executed a Deed of Absolute Sale5 on July 24, 1968 over the property covered by T.D. No. 19804 (T.D. No. 35090) in favor of the City of Danao forP7,492.00. According to the private respondent, his granduncle received this amount without his (private respondents) knowledge. The private respondent prayed that, after due hearing, judgment be rendered in his favor, thus: ON THE FIRST CAUSE OF ACTION: 1. Declaring the plaintiff the absolute owner of ONE-HALF (1/2) portion of the TWO (2) parcels of land described in paragraph 2 of the complaint; 2. Declaring the plaintiff the absolute owner of the ONE-THIRD (1/3) portion of the NINE (9) parcels of land described in paragraph 3 of the complaint; 3. Ordering the defendant to deliver to the plaintiff the latters ONETHIRD (1/3) share of the SEVEN THOUSAND FOUR HUNDRED NINETY-TWO PESOS (P7,492.00) representing the purchase price of the parcel of land described in paragraph 3(a) of the complaint with interest thereon until the amount is fully paid; ON THE SECOND CAUSE OF ACTION: 1. Ordering the partition and segregation of the ONE-HALF (1/2) portion belonging to the plaintiff of the TWO (2) parcels of land described in paragraph 2 of the complaint; 2. Ordering the partition and segregation of the ONE-THIRD (1/3) portion belonging to the plaintiff of the remaining EIGHT (8) parcels of land described in paragraph 3 of the complaint; COMMON TO THE FIRST AND SECOND CAUSES OF ACTION:
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1. Ordering the defendant to pay the plaintiff the amount of FIFTY THOUSAND PESOS (P50,000.00) as moral damages; 2. Ordering the defendant to pay the plaintiff exemplary damages the amount of which is left to the discretion of this Honorable Court; 3. Ordering the defendant to deliver to the plaintiff the latters share of the fruits of the ELEVEN (11) parcels of land subject-matter of this complaint, the value of which will be proven during the trial; 4. Ordering the defendant to pay the plaintiff actual litigation expenses, the value of which will be proven during the trial; 5. Ordering the defendant to pay attorneys fee in the amount of TWELVE THOUSAND PESOS (P12,000.00); 6. Granting to the plaintiff such other reliefs and remedies as he may be entitled to in accordance with law and equity.6 In his answer to the complaint, Pedro Sepulveda, Sr. admitted having executed a deed of sale over the parcel of land covered by T.D. No. 19804 in favor of Danao City, but averred that the latter failed to pay the purchase price thereof; besides, the private respondent had no right to share in the proceeds of the said sale. He likewise denied having received any demand for the delivery of Dulces share of the subject properties from the latters mother Carlota, or from the private respondent. During the trial, Pedro Sepulveda, Sr. died intestate. A petition for the settlement of his estate was filed on May 8, 1975 with the RTC of Cebu, docketed as Special Proceeding No. SF-37. His daughter, petitioner Socorro Sepulveda Lawas, was appointed administratrix of his estate in July 1976. In compliance with the decision of this Court in Lawas v. Court of Appeals,7 docketed as G.R. No. L-45809 and promulgated on December 12, 1986, the deceased was substituted by the petitioner. To prove the delivery of Dulces share under the project of partition, the petitioner presented the Affidavit of Consolidation she executed in October 1940 covering thirteen (13) of the twenty-five (25) parcels of land which were deeded to her under the Project of Partition,8 as well as the Order9 dated March 24, 1962 of the then CFI in Special Proceeding No. 778-R, denying Carlotas motion for the reconstitution of the records of the
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said case, and for the delivery of Dulces share in the eleven parcels of land. The court likewise declared therein that Dulce, through her grandchildren and her mother, Carlota, had already received her share of the estate from Pedro Sepulveda, Sr. as early as January 10, 1938. According to the petitioner, Dulce and Pedro Sepulveda, Sr. had a verbal agreement wherein the eleven parcels of land covered by the complaint would serve as the latters compensation for his services as administrator of Dionisias estate. Thus, upon the termination of Special Proceeding No. 778-0, and subsequent to the distribution of the shares of Dionisias heirs, Pedro Sepulveda, Sr. then became the sole owner of Dulces shares. The petitioner likewise adduced evidence that Santiago Sepulveda died intestate and was survived by his wife, Paz Velez Sepulveda and their then minor children.10 It was pointed out that the private respondent failed to implead Paz Sepulveda and her minor children as parties-defendants in the complaint. It was further claimed that Pedro Sepulveda, Sr. declared the property covered by T.D. No. 1819911 under his name for taxation purposes since the beginning of 1948.12 It was likewise alleged that the eleven (11) parcels of land deeded to Dulce under the Project of Partition had been declared for taxation purposes under the name of Pedro Sepulveda since 1974, and that he and his heirs paid the realty taxes thereon.13 On June 7, 1993, the trial court rendered judgment14 in favor of the private respondent. The fallo of the decision reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and against the defendant by declaring that the plaintiff is legally and rightfully entitled to the one half (1/2) portion of the two (2) parcels of land described in paragraph 2 of the Complaint and to the one third (1/3) portion of the nine (9) parcels of land described in paragraph 3 of the complaint as co-owner thereof, and ordering the partition and segregation of the said one half (1/2) portion of the said two (2) parcels of land and of the said one third (1/3) portion of the nine (9) parcels of land, and in the partition thereof, the mechanics of partition outlined in Rule 69 of the Revised Rules of Court must be followed (Magallon vs. Montejo, 146 SCRA 282); ordering the defendant Socorro Lawas, as administratrix of the Estate of Pedro Sepulveda, Sr., to deliver to plaintiff the latters one third (1/3)
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share of theP7,492.00 representing the purchase price of the parcel of land sold to Danao City with interest of twelve [per] centum (12%) per annum (Reformina vs. Tomol, 139 SCRA 260) from the date of filing of the Complaint until the amount due to plaintiff is fully paid, to pay attorneys fees to plaintiffs attorney in the sum of P10,000.00, and to pay the costs. The counterclaim is hereby dismissed. SO ORDERED.15 The trial court ruled that the private respondents action for reconveyance based on constructive trust had not yet prescribed when the complaint was filed; that he was entitled to a share in the proceeds of the sale of the property to Danao City; and that the partition of the subject property among the adjudicatees thereof was in order. The petitioner appealed the decision to the CA, which rendered judgment on January 31, 2002, affirming the appealed decision with modification. The petitioner now comes to the Court via a petition for review on certiorari, contending that the appellate court erred as follows: 1. THE COURT OF APPEALS ERRED IN THE INCORRECT APPLICATION OF ART. 494 OF THE CIVIL CODE AND IN UPHOLDING THE REGIONAL TRIAL COURTS FINDING THAT A TRUST RELATIONSHIP WAS CREATED BETWEEN HEREIN RESPONDENT AND PEDRO SEPULVEDA [SR.]. 2. THE COURT OF APPEALS ERRED IN NOT APPLYING THE LAWS ON PRESCRIPTION AND LACHES TO THE FACTS AS PROVEN IN THE CASE AGAINST HEREIN RESPONDENT. 3. THE COURT OF APPEALS ERRED IN UPHOLDING THE FINDING OF THE REGIONAL TRIAL COURT, BRANCH 25 IN DANAO CITY THAT PAYMENT WAS MADE BY DANAO CITY FOR ONE (1) OF THE ELEVEN (11) PARCELS INVOLVED IN THE CASE AND OF WHICH HEREIN RESPONDENT SHOULD BE PAID BY PETITIONER ONE THIRD (1/3) OF THE PURCHASE PRICE. 4. THE COURT OF APPEALS ERRED IN AWARDING MORAL AND EXEMPLARY DAMAGES AND A SHARE IN THE RENTS AND PROFITS OF THE ELEVEN (11) PARCELS TO HEREIN RESPONDENT.
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5. THE COURT OF APPEALS ERRED IN UPHOLDING THE REGIONAL TRIAL COURTS FINDING THAT ATTORNEYS FEES ARE TO BE AWARDED AND EVEN INCREASING THE AMOUNT THEREOF.16 The petition is granted for the sole reason that the respondent failed to implead as parties, all the indispensable parties in his complaint. As gleaned from the material averments of the complaint and the reliefs prayed for therein, the private respondent, as plaintiff therein, sought the recovery of the ownership and possession of the ten (10) parcels of land and the partition thereof; and for the payment of his share in the proceeds of the sale of the property which Pedro Sepulveda, Sr. sold to Danao City amounting to P7,492.00, which Pedro Sepulveda, Sr. claimed was left unpaid. It appears that when the private respondent filed the complaint, his father, Rodolfo Pelaez, was still alive. Thus, when his mother Dulce Pelaez died intestate on March 2, 1944, she was survived by her husband Rodolfo and their son, the private respondent. Under Article 996 of the New Civil Code,17 Rodolfo Pelaez, as surviving spouse, is entitled to a portion in usufruct equal to that corresponding by way of legitime to each of the legitimate children who has not received any betterment. The rights of the usufructuary are provided in Articles 471 to 490 of the old Civil Code.18 In Gamis v. Court of Appeals,19 we held that: Under articles 807 and 834 of the old Civil Code the surviving spouse is a forced heir and entitled to a share in usufruct in the estate of the deceased spouse equal to that which by way of legitime corresponds or belongs to each of the legitimate children or descendants who have not been bettered or have not received any share in the one-third share destined for betterment. The right of the surviving spouse to have a share in usufruct in the estate of the deceased spouse is provided by law of which such spouse cannot be deprived and which cannot be ignored. Of course, the spouse may waive it but the waiver must be express. Section 1, Rule 69 of the Rules of Court provides that in an action for partition, all persons interested in the property shall be joined as defendants. Section 1. Complaint in action for partition of real estate.- A person having the right to compel the partition of real estate may do so as in this rule prescribed, setting forth in his complaint the nature and extent of his title
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and an adequate description of the real estate of which partition is demanded and joining as defendants all the other persons interested in the property. Thus, all the co-heirs and persons having an interest in the property are indispensable parties; as such, an action for partition will not lie without the joinder of the said parties.20 The mere fact that Pedro Sepulveda, Sr. has repudiated the co-ownership between him and the respondent does not deprive the trial court of jurisdiction to take cognizance of the action for partition, for, in a complaint for partition, the plaintiff seeks, first, a declaration that he is a co-owner of the subject property; and, second, the conveyance of his lawful shares.21 As the Court ruled in De Mesa v. Court of Appeals:22 The first stage of an action for judicial partition and/or accounting is concerned with the determination of whether or not a co-ownership in fact exists and a partition is proper, that is, it is not otherwise legally proscribed and may be made by voluntary agreement of all the parties interested in the property. This phase may end in a declaration that plaintiff is not entitled to the desired partition either because a co-ownership does not exist or a partition is legally prohibited. It may also end, on the other hand, with an adjudgment that a co-ownership does in truth exist, that partition is proper in the premises, and that an accounting of rents and profits received by the defendant from the real estate in question is in order. In the latter case, "the parties may, if they are able to agree, make partition among themselves by proper instruments of conveyance, and the court shall confirm the partition so agreed upon by all the parties." In either case, whether the action is dismissed or partition and/or accounting is decreed, the order is a final one and may be appealed by any party aggrieved thereby. The second stage commences when the parties are unable to agree upon the partition ordered by the court. In that event, partition shall be effected for the parties by the court with the assistance of not more than three (3) commissioners. This second phase may also deal with the rendition of the accounting itself and its approval by the Court after the parties have been accorded the opportunity to be heard thereon, and an award for the recovery by the party or parties thereto entitled of their just shares in the rents and profits of the real estate in question.23

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In the present action, the private respondent, as the plaintiff in the trial court, failed to implead the following indispensable parties: his father, Rodolfo Pelaez; the heirs of Santiago Sepulveda, namely, Paz Sepulveda and their children; and the City of Danao which purchased the property covered by T.D. 19804 (T.D. No. 35090) from Pedro Sepulveda, Sr. and maintained that it had failed to pay for the purchase price of the property. Rodolfo Pelaez is an indispensable party he being entitled to a share in usufruct, equal to the share of the respondent in the subject properties. There is no showing that Rodolfo Pelaez had waived his right to usufruct. Section 7, Rule 3 of the Rules of Court reads: SEC. 7. Compulsory joinder of indispensable parties. Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. Indeed, the presence of all indispensable parties is a condition sine qua non for the exercise of judicial power. It is precisely when an indispensable party is not before the court that the action should be dismissed. Thus, the plaintiff is mandated to implead all the indispensable parties, considering that the absence of one such party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present.24 One who is a party to a case is not bound by any decision of the court, otherwise, he will be deprived of his right to due process. Without the presence of all the other heirs as plaintiffs, the trial court could not validly render judgment and grant relief in favor of the private respondent. The failure of the private respondent to implead the other heirs as parties-plaintiffs constituted a legal obstacle to the trial court and the appellate courts exercise of judicial power over the said case, and rendered any orders or judgments rendered therein a nullity.25 To reiterate, the absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present.26 Hence, the trial court should have ordered the dismissal of the complaint.27 IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of the Court of Appeals in CA-G.R. CV No. 43758 and of the Regional Trial Court are SET ASIDE. The Regional Trial Court is
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ORDERED to dismiss the complaint without prejudice. No pronouncement as to costs. SO ORDERED. Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur. G.R. No. 122904 April 15, 2005

ADORACION E. CRUZ, THELMA DEBBIE E. CRUZ, GERRY E. CRUZ and NERISSA CRUZ-TAMAYO, Petitioner, vs. THE HONORABLE COURT OF APPEALS, SUMMIT FINANCING CORP., VICTOR S. STA. ANA, MAXIMO C. CONTRERAS, RAMON G. MANALASTAS, and VICENTE TORRES, Respondents. DECISION TINGA, J.: This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure. Petitioners are assailing the Decision1 of the Court of Appeals in CA-G.R.CV No. 41298 which reversed and set aside theDecision2 of the Regional Trial Court (RTC), Branch CLXIII, Pasig in Civil Case No. 49466 and dismissed petitioners' complaint therein for annulment of certain deeds, and the November 21, 1995 Resolution,3 which denied petitioners' motion for reconsideration. Herein petitioner Adoracion Cruz is the mother of her co-petitioners Thelma Cruz, Gerry Cruz and Nerissa Cruz Tamayo, as well as Arnel Cruz, who was one of the defendants in Civil Case No. 49466. Petitioners filed said case on February 11, 1983 against Arnel Cruz and herein private respondents Summit Financing Corporation ("Summit"), Victor S. Sta. Ana and Maximo C. Contreras, the last two in their capacities as deputy sheriff and ex-officio sheriff of Rizal, respectively, and Ramon G. Manalastas in his capacity as Acting Register of Deeds of Rizal. The Complaint4 alleged that petitioners and Arnel Cruz were co-owners of a parcel of land situated in Taytay, Rizal. Yet the property, which was then covered by Transfer Certificate of Title (TCT) No. 495225, was registered only in the name of Arnel Cruz. According to petitioners, the property was
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among the properties they and Arnel Cruz inherited upon the death of Delfin Cruz, husband of Adoracion Cruz. On August 22, 1977, petitioners and Arnel Cruz executed a Deed of Partial Partition,5 distributing to each of them their shares consisting of several lots previously held by them in common. Among the properties adjudicated to defendant Cruz was the parcel of land covered at the time by TCT No. 495225. It is the subject of this case. Subsequently, the same parties to the Deed of Partial Partition agreed in writing to share equally in the proceeds of the sale of the properties although they had been subdivided and individually titled in the names of the former co-owners pursuant to the Deed of Partial Partition. This arrangement was embodied in a Memorandum of Agreement<6 executed on August 23, 1977 or a day after the partition. The tenor of the Memorandum of Agreement was annotated at the back of TCT No. 495225 on September 1, 1977. Sometime in January 1983, petitioner Thelma Cruz discovered that TCT No. 495225 had already been cancelled by TCT No. 514477 which was issued on October 18, 1982 in the name of Summit. Upon further investigation, petitioners learned that Arnel Cruz had executed a Special Power of Attorney7 on May 16, 1980 in favor of one Nelson Tamayo, husband of petitioner Nerissa Cruz Tamayo, authorizing him to obtain a loan in the amount of One Hundred Four Thousand Pesos (P104,000.00) from respondent Summit, to be secured by a real estate mortgage on the subject parcel of land. On June 4, 1980, a Real Estate Mortgage8 was constituted on the disputed property then covered by TCT No. 495225 to secure the loan obtained by Arnel Cruz thru Nelson Tamayo from respondent Summit. Since the loan had remained outstanding on maturity, Summit instituted extrajudicial foreclosure proceedings, and at the foreclosure sale it was declared the highest bidder. Consequently, Sheriff Sta. Ana issued a Certificate of Sale9 to respondent Summit, which more than a year later consolidated its ownership of the foreclosed property. Upon presentation of the affidavit of consolidation of ownership, the Acting Register of Deeds of Rizal cancelled TCT No. 495225 and issued, in lieu thereof, TCT No. 514477 in the name of respondent Summit.

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In their complaint before the RTC, petitioners asserted that they co-owned the properties with Arnel Cruz, as evidenced by the Memorandum of Agreement. Hence, they argued that the mortgage was void since they did not consent to it. In ruling in favor of petitioners, the trial court declared that with the execution of the Memorandum of Agreement, petitioners and Arnel Cruz had intended to keep the inherited properties in a state of co-ownership. The trial court stated that respondent Summit should suffer the consequences of incorrectly assuming that Arnel Cruz was the exclusive owner of the mortgaged property. It found respondent Summit negligent in its failure to inquire further into the limitations of defendant Cruz's title. Thus, the trial court declared that only the undivided share of Cruz in the mortgaged property was validly transferred to respondent Summit although it granted petitioners' prayer for nullification, per the dispositive portion of its Decision, thus: WHEREFORE, judgment is hereby rendered, in favor of plaintiff and against defendants, as follows: 1. Declaring the "Special Power of Attorney," the Real Estate Mortgage, the "Public Auction Sale," the "Certificate of Sale," the "Affidavit of Consolidation," executed by defendant Summit Financing Corporation, and the Consolidation of Ownership null and void ab initio; 2. Ordering the Register of Deeds of Rizal, to cancel TCT No. 514477, and to issue, in lieu thereof another TCT, in the name of Arnel E. Cruz, with the same annotations on the Real Estate Mortgage inscribed on September 16, 1980 and thereafter. 3. Ordering defendants, jointly and severally, to pay to plaintiffs, the amount of P10,000.00, as reasonable attorney's fees, plus costs. 4. Dismissing defendants (sic) counterclaims, for lack of merit. SO ORDERED.10 With the exception of Arnel Cruz, the other defendants, who are herein private respondents, elevated the case to the Court of Appeals. Private
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respondents as appellants therein argued, among others, that the trial court erred in not holding Arnel Cruz as the sole and exclusive owner of the mortgaged property, in not holding petitioners in estoppel, and in not finding that under the Memorandum of Agreement the parties thereto merely agreed to share in the proceeds of the sale of the properties. Private respondents also questioned the trial court's nullification of the special power of attorney and its declaration that respondent Summit was grossly negligent in not verifying the capacity of Arnel Cruz.11 In the assailed Decision, the Court of Appeals reversed the trial court's decision. The appellate court stressed that the Memorandum of Agreement does not contain any proscription against the mortgage of the subject property although it provides that the parties thereto are entitled to share in the proceeds of the sale of the properties covered by it. In that regard, the appellate court noted that petitioner Adoracion Cruz had executed two other real estate mortgages on the other parcels of land, which were not objected to by her supposed co-owners. Thus, it upheld the validity of the real estate mortgage executed by Nelson Tamayo on behalf of Arnel Cruz, without prejudice to petitioners' right of action against Arnel Cruz for the collection of the proceeds of the loan.12 Petitioners moved for the reconsideration of the decision, but the Court of Appeals denied it in the assailedResolution dated November 21, 1995. Hence, the present petition which at the bottom presents the issue whether or not the real estate mortgage on the property then covered by TCT No. 495225 is valid. Resolution of the issue in turn depends on the determination of whether the mortgaged property was the exclusive property of Arnel Cruz when it was mortgaged. If answered in the affirmative, then there was nothing to prevent him from exercising ownership over the said property. Petitioners insist that the Memorandum of Agreement "expressly created a pro-indiviso co-ownership over the property."13 Thus, petitioners argue that the Court of Appeals erred in upholding the validity of the mortgage considering that it was executed without their knowledge and consent. On the other hand, private respondents rely on the provisions of the Deed of Partial Partition in claiming that defendant Cruz was already the exclusive owner of the disputed property at the time it was mortgaged. To
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further bolster their claim, private respondents assert that each of petitioners also executed real estate mortgages on the properties allocated to them in the partition deed as absolute owners in fee simple. This Court finds no merit in the petition. Co-ownership is terminated upon judicial or extra-judicial partition of the properties owned in common. Partition, in general, is the separation, division and assignment of a thing held in common among those to whom it may belong.14 Every act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition, although it should purport to be a sale, an exchange, a compromise, or any other transaction.15 From a reading of the following provisions of the Deed of Partial Partition, no other meaning can be gathered other than that petitioners and Arnel Cruz had put an end to the co-ownership, to wit: That the parties hereto are common co-owners pro-indiviso in equal shares of the following registered real properties . . . That there are no liens and encumbrance of whatsoever nature and kind on the above-described real properties except . . .; That the said liability was actually inscribed and annotated in the aforesaid titles on July 19, 1967 . . .; That since July 19, 1967 and up to this writing two years have already lapsed and no claim has been filed against the estate of said Delfin I. Cruz . . .; That the parties hereto mutually decided to end their common ownership pro-indiviso over the above-described properties and agreed to partition the same as follows: (1) (2) (3) To be adjudicated to THELMA E. CRUZ: . . . To be adjudicated to NERISSA CRUZ-TAMAYO: . . . To be adjudicated to ARNEL E. CRUZ:

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(a) (b) (c ) (d) (4) (5)

... Lot 1-C-2-B-2-B-4-P-4, (LRC) PSD-264936 ... ...

To be adjudicated to GERRY E. CRUZ: . . . To be adjudicated to ADORACION E. CRUZ: . . .

That the contracting parties warrant unto each other quiet and peaceful possession as owners and possessors of their respective shares in the partition . . . 16 (emphasis supplied) In the aforesaid deed, the shares of petitioners and Arnel Cruz's in the mass of co-owned properties were concretely determined and distributed to each of them. In particular, to Arnel Cruz was assigned the disputed property. There is nothing from the words of said deed which expressly or impliedly stated that petitioners and Arnel Cruz intended to remain as coowners with respect to the disputed property or to any of the properties for that matter. It is well-settled in both law and jurisprudence, that contracts are the law between the contracting parties and should be fulfilled, if their terms are clear and leave no room for doubt as to the intention of the contracting parties.17 To be considered a co-owner, one "must have a spiritual part of a thing which is not physically divided, or each of them is an owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract."18 In Dela Cruz v. Cruz, et al.,19 this Court denied the prayer for legal redemption of plaintiffappellant therein because "the portions of appellant-plaintiff and of the defendant spouses are concretely determined and identifiable, for to the former belongs the northern half, and to the latter belongs the remaining southern half, of the land."20 Petitioners do not question the validity or efficacy of the Deed of Partial Partition. In fact, they admitted its existence in their pleadings and submitted it as part of their evidence. Thus, the deed should be accorded its legal dire effect. Since a partition legally made confers upon each heir
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the exclusive ownership of the property adjudicated to him,21 it follows that Arnel Cruz acquired absolute ownership over the specific parcels of land assigned to him in the Deed of Partial Partition, including the property subject of this case. As the absolute owner thereof then, Arnel Cruz had the right to enjoy and dispose of the property,22 as well as the right to constitute a real estate mortgage over the same without securing the consent of petitioners. On the other hand, there is absolutely nothing in the Memorandum of Agreement which diminishes the right of Arnel Cruz to alienate or encumber the properties allotted to him in the deed of partition. The following provisions of the agreement, which recognize the effects of partition, negate petitioner's claim that their consent is required to make the mortgage in favor of respondent Summit valid, to wit: That the parties hereto are common co-owners pro-indiviso in equal shares of the following registered real properties . . . That as a result of said partial partition, the properties affected were actually partitioned and the respective shares of each party, adjudicated to him/her; That despite the execution of this Deed of Partial Partition and the eventual disposal or sale of their respective shares, the contracting parties herein covenanted and agreed among themselves and by these presents do hereby bind themselves to one another that they shall share alike and receive equal shares from the proceeds of the sale of any lot or lots allotted to and adjudicated in their individual names by virtue of this deed of partial partition; That this Agreement shall continue to be valid and enforceable among the contracting parties herein up to and until the last lot is covered by the deed of partial partition above adverted to shall have been disposed of or sold and the proceeds thereof equally divided and their respective shares received by each of them.23 (emphasis supplied) As correctly held by the Court of Appeals, the parties only bound themselves to share in the proceeds of the sale of the properties. The agreement does not direct reconveyance of the properties to reinstate the common ownership of the parties. To insist that the parties also intended to
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re-establish co-ownership after the properties had been partitioned is to read beyond the clear import of the agreement and to render nugatory the effects of partition, which is not the obvious or implied intent of the parties. Moreover, to ascertain the intent of the parties in a contractual relationship, it is imperative that the various stipulations provided for in the contracts be construed together, consistent with the parties' contemporaneous and subsequent acts as regards the execution of the contract.24 Subsequent to the execution of the Deed of Partitionand Memorandum of Agreement, the properties were titled individually in the names of the co-owners to which they were respectively adjudicated, to the exclusion of the other co-owners. Petitioners Adoracion Cruz and Thelma Cruz separately sold the properties distributed to them as absolute owners thereof. Being clear manifestations of sole and exclusive dominion over the properties affected, the acts signify total incongruence with the state of co-ownership claimed by petitioners. Thus, this Court holds that the real estate mortgage on the disputed property is valid and does not contravene the agreement of the parties. WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 41298 are hereby AFFIRMED. Costs against petitioners. SO ORDERED. Puno, (Chairman), Austria-Martinez, and Chico-Nazario, JJ., concur G.R. No. 164801 June 30, 2006

PHILIPPINE NATIONAL BANK, Petitioner, vs. HEIRS OF ESTANISLAO MILITAR AND DEOGRACIAS MILITAR, represented by TRANQUILINA MILITAR,Respondents. x---------------------------------x G.R. No. 165165 June 30, 2006

SPOUSES JOHNNY LUCERO AND NONA ARIETE, Petitioners, vs. HEIRS OF ESTANISLAO MILITAR, DEOGRACIAS MILITAR, and TRANQUILINA MILITAR (deceased), now represented by AZUCENA
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MILITAR, FREDDIE MILITAR, EDUARDO MILITAR, ROMEO L. MILITAR, NELLY LY BOLANIO, LETICIA LY and DELIA LY SI ASOYCO, Respondents. RESOLUTION YNARES-SANTIAGO, J.: Before us are the motions for reconsideration filed by petitioners Philippine National Bank (PNB) in G.R. No. 164801 and Spouses Johnny Lucero and Nona Ariete (Lucero Spouses) in G.R. No. 165165 seeking a reconsideration of our August 18, 2005 Decision in these consolidated cases which affirmed in toto the June 4, 2004 Decision and August 4, 2004 Resolution of the Court of Appeals in CA-G.R. CV No. 54831 holding that both petitioners PNB and the Lucero Spouses were not mortgagee and buyers in good faith, respectively. In their separate motions for reconsideration, both petitioners PNB and the Lucero Spouses in the main assert that they were mortgagee and buyers for value in good faith, respectively. Thus, the Lucero Spouses pray that we "take a second hard look at the facts and circumstances of the case." Respondents however argue that PNB cannot be considered a mortgagee in good faith as it failed to inspect the disputed property when offered to it as security for the loan, which could have led it to discover the forged instruments of sale. Similarly, the Lucero Spouses cannot be regarded as innocent purchasers for value, respondents claim, as they failed to inquire from the occupants of the disputed property the status of the property. Before revisiting the facts and circumstances of the instant case, a review of existing jurisprudence may be expedient in resolving the twin motions for reconsideration. In Cabuhat v. Court of Appeals, we said that "it is well-settled that even if the procurement of a certificate of title was tainted with fraud and misrepresentation, such defective title may be the source of a completely legal and valid title in the hands of an innocent purchaser for value. Thus Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under
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the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.1 Cabuhat was later invoked by Clemente v. Razo2 and Velasquez, Jr. v. Court of Appeals.3 Accordingly, in Lim v. Chuatoco we said that "it is a familiar doctrine that a forged or fraudulent document may become the root of a valid title, if the property has already been transferred from the name of the owner to that of the forger. This doctrine serves to emphasize that a person who deals with registered property in good faith will acquire good title from a forger and be absolutely protected by a Torrens title. In the final analysis, the resolution of this case depends on whether the petitioners are purchasers in good faith."4 In a litany of cases, we have defined a purchaser in good faith as one who buys property of another without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same at the time of such purchase or before he has notice of the claim or interest of some other person in the property.5 Thus, as a general rule, where the land sold is in the possession of a person other than the vendor, the purchaser must go beyond the certificate of title and make inquiries concerning the actual possessor. A buyer of real property which is in possession of another must be wary and investigate the rights of the latter. Otherwise, without such inquiry, the buyer cannot be said to be in good faith and cannot have any right over the property.6 We explained this principle in Consolidated Rural Bank (Cagayan Valley), Inc. v. Court of Appeals and also held therein that this rule likewise applies to mortgagees of real property7 As this Court explained in the case of Spouses Mathay v. Court of Appeals: Although it is a recognized principle that a person dealing on a registered land need not go beyond its certificate of title, it is also a firmly settled rule that where there are circumstances which would put a party on guard and prompt him to investigate or inspect the property being sold to him, such as the presence of occupants/tenants thereon, it is of course, expected from
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the purchaser of a valued piece of land to inquire first into the status or nature of possession of the occupants, i.e., whether or not the occupants possess the land en concepto de dueo, in the concept of the owner. As is the common practice in the real estate industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else other than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the purchaser to verify the extent of the occupants possessory rights. The failure of a prospective buyer to take such precautionary steps would mean negligence on his part and would thereby preclude him from claiming or invoking the rights of a "purchaser in good faith." This Rule equally applies to mortgagees of real property. In the case of Crisostomo v. Court of Appeals the Court held It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of his vendor or mortgagor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in the vendors or mortgagors title, will not make him an innocent purchaser or mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery had he acted with the measure of a prudent man in like situation. Accordingly, for a purchaser of a property in the possession of another to be in good faith, he must exercise due diligence, conduct an investigation, and weigh the surrounding facts and circumstances like what any prudent man in a similar situation would do. In Domalanta v. Commission on Elections8 we noted the use in other jurisdictions of the terms "man of reasonable caution"9 and "ordinarily prudent and cautious man."10 These terms, we said, are legally synonymous and their reference is not to a person with training in law such as a prosecutor or a judge but to the average man on the street. It ought to be emphasized that the average man weighs facts and circumstances without resorting to the calibration of our technical rules of evidence of which his knowledge is nil. Rather, he relies on the calculus of common sense of which all reasonable men have

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an abundance. And, "[b]y law and jurisprudence, a mistake upon a doubtful or difficult question of law may properly be the basis of good faith."11 On the other hand, a mortgagee, particularly a bank or financial institution whose business is impressed with public interest, is expected to exercise more care and prudence than a private individual in its dealings, even those involving registered lands.12 In Sunshine Finance and Investment Corp. v. Intermediate Appellate Court we presumed that an investment and financing corporation "is experienced in its business. Ascertainment of the status and condition of properties offered to it as security for loans it extends must be a standard and indispensable part of its operations. Surely, it cannot simply rely on an examination of a Torrens certificate to determine what the subject property looks like as its condition is not apparent in the document. The land might be in a depressed area. There might be squatters on it. It might be easily inundated. It might be an interior lot, without convenient access. These and other similar factors determine the value of the property and so should be of practical concern to the (investment and financing corporation)."13 In fine, the diligence with which the law requires the individual or a corporation at all times to govern a particular conduct varies with the nature of the situation in which one is placed, and the importance of the act which is to be performed.14 Similarly, in ascertaining good faith, or the lack of it, which is a question of intention, courts are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined. Good faith, or want of it, is capable of being ascertained only from the acts of one claiming its presence, for it is a condition of the mind which can be judged by actual or fancied token or signs.15 Good faith, or want of it, is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged by actual or fancied token or signs.16 Good faith connotes an honest intention to abstain from taking unconscientious advantage of another.17 Accordingly, in University of the East v. Jader we said that "[g]ood faith connotes an honest intention to abstain from taking undue advantage of another, even though the forms and technicalities of law, together with the absence of all information or belief of facts, would render the transaction unconscientious."18

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Withal, in Sigaya v. Mayuga the Court said that "good faith consists in the possessors belief that the person from whom he received the thing was the owner of the same and could convey his title. Good faith, while it is always to be presumed in the absence of proof to the contrary, requires a well founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. There is good faith where there is an honest intention to abstain from taking any unconscientious advantage of another. Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind which is manifested by the acts of the individual concerned."19 Contrastingly, in Magat, Jr. v. Court of Appeals the Court explained that "[b]ad faith does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud."20In Arenas v. Court of Appeals the Court held that the determination of whether one acted in bad faith is evidentiary in nature.21 Thus "[s]uch acts (of bad faith) must be substantiated by evidence."22 Indeed, the unbroken jurisprudence is that "[b]ad faith under the law cannot be presumed; it must be established by clear and convincing evidence.23 All told, the ascertainment of good faith, or lack of it, and the determination of whether due diligence and prudence were exercised or not, are questions of fact. And while settled is the principle that this Court is not a trier of facts24and the general rule is that the determination of whether or not a buyer or mortgagee is in good faith is generally outside the province of this Court to determine in a petition for review,25 inGabriel v. Spouses Mabanta we said that "[t]his rule, however, is not an iron-clad rule. In Floro v. Llenado we enumerated the various exceptions and one which finds application to the present case is when the findings of the Court of Appeals are contrary to those of the trial court."26 Thus, in Clemente v. Razo we held that "the issue of whether or not one is an innocent purchaser for value is a question of fact which, as a rule, is not for this Court to determine. In the same breath, however, there are recognized exceptions to such rule, not the least of which is when, as in this case, the findings of the Court of Appeals are contrary to that of the trial court."27 In the instant case, the trial court which had the sole opportunity to observe first hand the demeanor of witnesses and consider the relative weight of
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the evidence presented, concluded that "Philippine National Bank and Spouses Johnny Lucero and Nona Ariete are purchasers in good faith." Respondent appellate court however found that neither the PNB nor the Lucero Spouses can be regarded as buyers in good faith as they failed to inquire from the possessors the status of the disputed property. We thus go back to the records of the case and the substantiated allegations. We begin with petitioner PNB. While it may be true that the bank could not have known the forgery committed by the Jalbuna Spouses at the time the disputed property was mortgaged to it, still it could not be completely exonerated from any liability arising from its apparent omission, if not negligence, to further investigate the nature of the possession or the title of the respondents who were the alleged occupants of the property. PNB did not present any witness before the trial court who had personal knowledge of whether or not the bank had conducted the requisite ocular inspection or investigation before accepting the property as security for the loan of the Jalbuna Spouses. Perhaps PNB inordinately relied on the presumption of regularity in its compliance with the requirements for the Extrajudicial Foreclosure of Mortgage, such as the publication of the notice of auction sale, and assumed that the burden of proof was on the respondents to prove that the bank was remiss in its obligation. Perhaps too, the bank assumed that its presumed compliance with the foregoing requirements was sufficient to operate as a constructive notice to all those claiming ownership of or a right to possess the mortgaged property, or those who would be adversely affected by the impending foreclosure sale. It does not however alter the fact that the only witness presented by PNB merely inherited from his predecessor the records relating to the account of the Jalbuna Spouses, and hence had no personal knowledge of whether or not an ocular inspection was in fact conducted on the property. Thus Atty. Baares: Q Did you not know whether there was an inspector who made the inspection of the property? A I do not know.28 xxxx
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Q So, is it safe to conclude now that you do not know whether Philippine National Bank sent some inspectors to Lot 3017-B before the loan Court: Answered, he did not know. How will he know? Atty. Baares: That will be all, Your Honor.29 Indeed, had petitioner PNB conducted an ocular inspection as it claims, it would have found out that the mortgagors, Spouses Jalbuna, were not in actual possession of the property but herein respondents and their predecessors-in-interest, which information should have put it on inquiry as to the real status of the property. Consequently, petitioner PNB should have inquired into the circumstances of the possession by herein respondents and their predecessors in interest. In fine, there is no showing that petitioner PNB, a banking institution, which is expected to exercise more care and prudence in its dealings involving registered land, ascertained the status and condition of the property being offered to it as a security for the loan before it approved the loan. Hence, we therefore find that there is no reversible error committed by the Court of Appeals in finding that PNB could not be considered a mortgagee in good faith. We now go to petitioners Lucero Spouses. The Lucero Spouses knew from the very beginning that the disputed property was occupied by third parties. They resided in the adjoining property. Thus, they went beyond the title of petitioner PNB, and upon inquiry, were made to believe that the partial occupation by private respondents of the disputed property was merely being tolerated by the rightful owner. Accordingly, before the trial court, petitioner Nona A. Lucero testified that Atty. Posecion: Q Did your mother not tell you that the Militar family has been residing in the land so that it would be difficult if you buy the land?

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A No, because I will make (the) transaction (with) the Philippine National Bank, not (with) the Militars. Q So that you disregarded whatever right the Militars have over the land, right? A No, because the vendee/buyer has the authority to make expenses for all the squatters.30 The Lucero Spouses also knew that petitioner PNB had already acquired the property in a foreclosure sale and that petitioner PNB had in fact transferred the title to its name for almost five years already. Their belief that petitioner PNB thereafter had the right to transfer title over the disputed property was strengthened by the fact that they similarly consolidated their ownership over the adjoining property after buying it from respondent Romeo Militar and assuming his loan with petitioner PNB.31 The reliance of the Lucero Spouses, who never participated in the auction sale, on the right of petitioner PNB which had the title in its name for almost five years already is not totally misplaced. On June 5, 1975 the disputed property was mortgaged to petitioner PNB. Some three years later, on September 5, 1978, the mortgaged property was extrajudicially foreclosed when the mortgagors defaulted in the payment of their loan obligation, with petitioner PNB as the sole and highest bidder for P119,961.36. Some four years thereafter, or on November 11, 1982, a deed of sale was executed in favor of petitioner PNB after the mortgagors failed to redeem the disputed property. On December 6, 1982, title over the disputed property was issued to petitioner PNB. Thus, presented during trial were, among others, the Affidavit of Publication of Sheriffs Notice of Sale at Public Auction showing that petitioner PNB complied with the law on extrajudicial foreclosure of mortgage;32 the Certificate of Sale at Public Auction of September 5, 1978 issued in favor of petitioner PNB as the highest bidder in the auction sale of the lot covering the disputed property;33 and the Certification of September 27, 1994 issued by the Register of Deeds of Iloilo stating that title to the lot covering the disputed property was issued in favor of PNB.34 All told, it took almost eight years for petitioner PNB to consolidate its title over the disputed property from the time it was mortgaged to it.
lawphil.net

The Lucero Spouses purchased the disputed property from petitioner PNB as an acquired asset for P229,000.00 and only on November 9, 1987, or
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some nine years after it extrajudicially foreclosed the property, and some five years after title was transferred to it. Hence, we cannot really say that they acquired the property in bad faith; on the other hand, we are more convinced, if not for fairness, equity and justice, that they acquired the disputed property in good faith and for a valuable consideration on the basis of the clean title of the bank. And between the bank whose proof of ownership is the title acquired after years of foreclosure proceedings and sale, and the supposed tolerated occupation of herein respondents whose rights are dubious, and at best vague, petitioners Lucero Spouses cannot be faulted for considering petitioner PNB as having a better right over herein respondents and could very well rely on the title of the bank. After all, even this Court has "take(n) judicial notice of the uniform practice of financing institutions to investigate, examine and assess the real property offered as security for any loan application."35 It must be remembered that the prudence required of the Lucero Spouses is not that of a person with training in law, but rather that of an average man who "weighs facts and circumstances without resorting to the calibration of our technical rules of evidence of which his knowledge is nil."36 Hence, petitioners Lucero Spouses bought the disputed property with the honest belief that petitioner PNB was its rightful owner and could convey title to the property. They can therefore be considered as buyers in good faith as they have exercised due diligence required under the circumstances. Also, nowhere in the records does it show that the Lucero Spouses were in bad faith. Neither were private respondents able to prove it, much less were they able to establish it by clear and convincing evidence as required by the rules. On the contrary, the trial court found that the Lucero Spouses acted in good faith "since they bought the lot in question from defendant, Philippine National Bank."37 They could rely on what appears on the face of the Certificate of Title in light of the attendant circumstances, especially after considering that the requirements for the extrajudicial foreclosure of mortgage such as publication and notice appear to have been religiously complied with by PNB. In contrast, we find, after a meticulous scrutiny of the records, that the respondents are not entirely blameless. They have not established their right or interest in the property aside from their belated and unsubstantiated allegation that they were the successors-in-interest of Deogracias, Glicerio,
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Tomas and Caridad, all surnamed Militar. Deogracias died on March 17, 1964, Glicerio on March 22, 1939, Tomas on August 20, 1959, and Caridad on April 29, 1957. Since the deaths of their alleged predecessors-ininterest, respondents have not shown that they have taken even the initial steps to have the property registered in their names. Nor have they even alleged that they paid any real property tax on the disputed property like any real owner should do. For this would have put them on notice that the said property has been registered in the name of a third party. Thus, to reiterate for emphasis, the Deed of Sale which transferred the property to the Spouses Jalbuna was executed on April 24, 1975. Clearly, respondents had more than enough time and opportunity from the death of their ascendants to institute proceedings to have the property adjudicated to them, if indeed it was true that they were the lawful heirs of Deogracias, Glicerio, Tomas and Caridad, and were the new owners of the property by succession. This, they did not do. If they did, the forgery allegedly committed by the Jalbuna Spouses which resulted in the Deed of Absolute Sale of April 24, 1975 could not have been committed or pushed through and the Lucero Spouses, as a consequence, would not have been induced to buy the property. The Jalbuna Spouses acquired title to the property on April 29, 1975. From that time on the doctrine of "constructive notice" was already in effect against all persons claiming any title or interests in the property adverse to the registered owners.38 On June 5, 1975, the Spouses Jalbuna mortgaged the property to PNB. On the same date, the mortgage was registered with the Register of Deeds of Iloilo City. Again, from that date, the respondents were deemed to have "constructive notice" of the registration. Philippine National Bank foreclosed the mortgage on September 5, 1978. The Notice of Extrajudicial Foreclosure of Mortgage was published in a newspaper of general circulation. The publication likewise operated as "constructive notice" to all persons who would be adversely affected by the impending foreclosure of the property. A Certificate of Sale over the property was issued in favor of PNB as the highest bidder in the auction sale. The Certificate of Sale was again registered and annotated in the title of the property. Again, the respondents had "constructive notice" of the registration.
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On November 11, 1982, PNB consolidated its title to the property and a Deed of Sale was issued in its favor. On December 6, 1982, a Transfer Certificate of Title was issued in favor of PNB. Respondents should likewise be charged with notice of such fact. Since that time up to November 9, 1987 when the property was sold to the Lucero Spouses, or for five (5) long years, the property was an acquired asset of the bank. During this time it can be deduced that it was the bank who paid the real estate taxes and who appeared as owner in the tax declarations and other documents pertaining to the property. It would appear that it was PNB who exercised acts of ownership over the property during the five-year period, not the respondents who are now claiming to be the owners. There is no evidence of any act of ownership exercised by the respondents, such as payment of taxes and introduction of improvements which would have shown, by preponderance of evidence, the right of ownership to or interest in the property, aside form their occupation thereof by mere tolerance. Since the death of their predecessors, there has not even been a showing that respondents verified, inquired or investigated with the Register of Deeds or the Assessors Office as to the status of the property. If only respondents have been more vigilant in the enforcement of their alleged rights and interests, the property would not have been sold to third persons who paid valuable consideration thereto. Far from being vigilant, however, respondents have shown sheer disinterest in their claim to the property, thus leading to the well-founded conclusion that their claimed ownership rights are not anchored in reality. Vigilantibus sed non dormientibus jura subveniunt. The law aids the vigilant, not those who slumber on their rights.
1avv phil.net

More. On November 9, 1987, the property was sold by PNB to the petitioners Lucero Spouses and a Transfer Certificate of Title was issued in their name on November 11, 1987. The respondents however filed their Complaint for reconveyance and damages only on October 2, 1989, or nearly two (2) years after title to the property was issued in favor of the Lucero Spouses. Respondents in fact amended their complaint three (3) times, the last one on December 26, 1994. Clearly, the actuations of respondents were not normal for those claiming in good faith legitimate ownership over a parcel of land sufficient to make third persons conclude that their claim is well-founded as against the registered owner, in this case, PNB. Indeed, respondents were frozen in the shackles of inactivity for too long. They bestirred themselves for their long slumber after the
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Lucero Spouses started to recover possession of the property which is a mere incident to the ownership that they have already gained. In essence, the respondents slept on their rights, and hence, must suffer the consequences of their passivity and inaction. WHEREFORE, the August 18, 2005 Decision of this Court is hereby MODIFIED. The Motion for Reconsideration of the Philippine National Bank is DENIED WITH FINALITY. However, the Motion for Reconsideration of the Spouses Johnny Lucero and Nona Ariete is GRANTED, and the October 18, 1995 Decision of the Regional Trial Court of Iloilo, Br. 38, in Civil Case No. 18836 insofar as it holds Spouses Johnny Lucero and Nona Ariete as innocent purchasers for value in good faith is REINSTATED and their title to Lot 3017-B under TCT No. 76938 issued on November 11, 1987 is declared and so confirmed as VALID. SO ORDERED. CONSUELO YNARES-SANTIAGO Associate Justice WE CONCUR: G.R. No. 122249 January 29, 2004

REYNALDO, TELESFORO, REMEDIOS, ALFREDO and BELEN, all surnamed AGUIRRE, VICENTA, HORACIO and FLORENCIO, all surnamed MAGTIBAY and LEONILA, CECILIA, ANTONIO, and VENANCIO, all surnamed MEDRANO, and ZOSIMA QUIAMBAO, Petitioners, vs. COURT OF APPEALS and ELIAS, JOSE, ARSENIA and ROGELIO, all surnamed BALITAAN, and MARIA ROSALES, Respondents. DECISION AUSTRIA-MARTINEZ, J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision1 dated July 26, 1995 rendered by the Court of Appeals in CA-G.R. CV No. 42350 which set aside the Decision2 dated April 28, 1992 of the Regional Trial Court of Batangas City
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(Branch 2) in Civil Case No. 202,3 and declared private respondents Heirs of Tiburcio Balitaan, as owners of the parcel of unregistered land with an approximate area of 1,695 square meters, located at Aplaya, Bauan, Batangas. The facts of the case are as follows: In his lifetime, Leocadio Medrano was the owner and possessor of a parcel of residential land, situated in Aplaya, Bauan, Batangas, containing an area of 2,611 square meters.4 The parcel of land was conjugal property, having been acquired by Leocadio during his first marriage with one Emiliana Narito. Their union begot four children, namely: (a) Gertrudes Medrano, now deceased, represented in this case by her children, herein petitioners Telesforo, Reynaldo, Remedios, Alfredo, and Belen, all surnamed Aguirre; (b) Isabel Medrano, likewise deceased, represented by her children, herein petitioners Vicenta, Horacio, and Florencio, all surnamed Magtibay; (c) Placido Medrano, also deceased, represented by his only child, herein petitioner Zosima Quiambao; and (d) Sixto Medrano. After the death of his first wife, Leocadio contracted a second marriage with Miguela Cario. Their union bore four children, herein co-petitioners, namely: Venancio, Leonila, Antonio and Cecilia, all surnamed Medrano. Upon the death of Leocadio on March 19, 1945, the surviving heirs agreed that Sixto should manage and administer the subject property. Sixto died on May 17, 1974. It was only after his death that petitioners heard rumors that Sixto had, in fact, sold significant portions of the estate of Leocadio. It appears that on September 7, 1953, Sixto, without the knowledge and consent of the petitioners, executed an Affidavit of Transfer of Real Property stating therein that he was the only heir of Leocadio.5 Sixto declared that Leocadio died on September 16, 1949, instead of the actual date of his death on March 19, 1945. With the use of said affidavit and a survey plan,6 Tax Declaration No. 40105 in the name of Leocadio was cancelled and Tax Declaration No. 44984 was issued in the name of Sixto.7 On August 29, 1957, Sixto sold to Maria Bacong a 160square meter portion of the subject land.8 On September 28, 1959, Sixto sold to Tiburcio Balitaan a 1,695 square meter portion of the same land.9 Sometime in November 1967, Maria Bacong sold her property to Rosendo Bacong.10
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Petitioners demanded the reconveyance of the portions sold by Sixto but Tiburcio Balitaan, Maria Bacong and Rosendo Bacong refused to do so. Hence, petitioners filed against them before the Regional Trial Court of Batangas (Branch 2), a complaint for Declaration of Nullity of Documents, Partition, Malicious Prosecution and Damages, docketed as Civil Case No. 202.11 In their Answer, Maria Bacong and Rosendo Bacong contend that petitioners have no cause of action because they acquired their property thru a valid deed of sale dated August 29, 1957, executed by Sixto and, alternatively, petitioners' cause of action, if any, was barred by prescription and laches.12 In his Answer, Tiburcio Balitaan contends that petitioners have no cause of action since petitioners were well-aware of the sale of the property to him by Sixto; and that he was an innocent purchaser for value, in possession and enjoyment of the land in the concept of absolute owner, peacefully and publicly. He further echoed the contention of Maria and Rosendo Bacong that any cause of action petitioners may have was barred by prescription and laches.13 Maria Bacong died during the pendency of the suit in the trial court and she was substituted by her surviving heirs, namely, Lorenza, Elena, Felipa, Manuel, Marilou, Ricardo, Medel, Monchito and Milag, all surnamed Medrano.14Tiburcio Balitaan also died and was substituted by his heirs, herein private respondents, namely: his wife, Maria Rosales and their four children: Elias, Jose, Arsenia and Rogelio, all surnamed Balitaan.15 On July 28, 1989, petitioners and Rosendo Bacong, for himself and as attorney-in-fact of the heirs of Maria Bacong, entered into a compromise agreement to settle the case between them.16 The compromise agreement, as approved by the trial court, provided that Rosendo Bacong and the heirs of Maria Bacong agreed to payP30,000.00 to petitioners in recognition of petitioners' ownership of a 269-square meter portion17 and in consideration of which, petitioners recognized the full ownership, rights, interest and participation of the former over said land.18 The area of the subject land is thus reduced to 2,342 square meters (2,611 square meters minus 269 square meters).

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After trial on the merits, the trial court rendered judgment dated April 28, 1992, ruling that private respondents did not dispute, by any evidence, the falsity of the Affidavit of Transfer, as well as the fact that Sixto had coowners to the property. It found that private respondents' affirmative defense of laches and/or prescription are unavailing against a property held in co-ownership as long as the state of co-ownership is recognized. Consequently, the trial court upheld the sale made by Sixto in favor of private respondents only to the extent that Sixto is entitled to by virtue of his being a co-owner.19 In determining the area that Sixto could have validly sold to private respondents, the trial court, in its decision, provided for the manner of partition among the parties, based on the memorandum submitted by petitioners, thus: For the four (4) children of the first marriage, namely: (1) Gertrudes, who is already dead represented by her children Tefesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre - 399.42 square meters; (2) Isabel Medrano, who is already dead, represented by the plaintiffs, her children Vicenta, Horacio and Florencio, all surnamed Magtibay - 399.42 square meters; (3) Placido Medrano (dead), represented by his only child Zosima Medrano - 399.42 square meters; and (4) Sixto Medrano - 399.42 square meters only which he had the right to dispose of in favor of Tiburcio Balitaan and Maria Rosales. The above consist of undivided interest, shares and participations from the inheritance or succession to the conjugal estate of Leocadio Medrano and Emiliana Narito. For the children of the second marriage their shares in the inheritance from the property of Leocadio Medrano are as follows: (1) To Venancio Medrano - 138.32 square meters
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(2) To Leonila Medrano - 138.32 square meters (3) To Antonio Medrano - 138.32 square meters (4) To Cecilia Medrano - 138.32 square meters with all the above consisting of undivided shares, interest and participation in the estate. For the defendants Maria Rosales, surviving spouse of the deceased Tiburcio Balitaan and their Children, an area of 399.42 square meters, the only area and extent which Sixto Medrano could have legally dispensed of in their favor.20 Thus, the dispositive portion of the trial court's decision reads as follows: WHEREFORE, in view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendants, to wit: (a) Ordering the partition of the property in question among the plaintiffs and the defendants; and (b) Ordering the parties, plaintiffs and defendants, to make a partition among themselves by proper instruments of conveyance and to submit before this Court a project of partition should the parties be able to agree for the confirmation of the Court within two (2) months upon receipt of this decision, otherwise this Court will be constrained to appoint commissioners to make the partition in accordance with law. All other claims not having been duly proved are ordered dismissed. SO ORDERED.21 Aggrieved, private respondents appealed to the Court of Appeals.22 On July 26, 1995, the appellate court rendered judgment recognizing the validity of the sale only with respect to the undivided share of Sixto Medrano as co-owner; but nonetheless, declaring respondents as absolute owners of 1,695 square meters of the subject property, reasoning that:

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. . . Defendants-appellees have been in possession, in the concept of owner, of the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for more than ten years, seventeen years to be exact (19581975). Relying on the affidavit of transfer (Exhibit "B") the tax declaration (Exhibit "C") and the survey plan (Exhibit "D") shown to him by Sixto Medrano which indicate the latter as owner of the property in dispute, Tiburcio Balitaan believed transfer to him was effected. (TSN, April 17, 1991, pp. 14-17) and thus, entered the property as owner (Ibid. at p. 13) Tiburcio Balitaan, believing himself as the lawful transferee, in addition, caused Tax Declaration No. 51038 to be issued in his name (Exhibits "6", "6-A", "6-B", and "6-C"). Thus, although the sale of the co-owned property is only valid as to the undivided share of Sixto Medrano, defendants, by virtue of their open, adverse and uninterrupted possession from 1958 (Exhibit "G") to 1975, obtained title to the entire property and not just Sixto's undivided share. This is pursuant to Article 1134 (1957a) of the New Civil Code which provides that: Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years. ... Plaintiffs did not at all inquire as to the status of their property all this time and thus have been remiss of their duties as owners of the property. Plaintiffs waited until Sixto's death to learn more about their property. Even though the co-ownership is to be preserved in accordance with the wishes of the deceased, the plaintiffs should have taken it upon themselves to look into the status of the property once in a while, to assure themselves that it is managed well and that they are receiving what is due them as co-owners of the parcel of land or to at least manifest their continued interest in the property as normal owners would do. But the plaintiffs did not show any interest in the way Sixto Medrano was managing the property which in effect gave the latter carte blanche powers over the same. Such passivity is aggravated by the fact that one of the plaintiffs resides a mere 600 meters away from the disputed property (TSN, April 17, 1991, p. 13). By not showing any interest, the plaintiffs have, in fact, slept on their rights and thus, cannot now exercise a stale right.23 Petitioners sought reconsideration24 but the appellate court denied it in a Resolution dated October 5, 1995.25
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In their present recourse, petitioners take exception from the appellate court's findings that respondents have been in possession, in the concept of owner of the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for seventeen years (1958-1975), relying on the Affidavit of Transfer and Tax Declaration No. 51038 in the name of Sixto; and that Tiburcio acquired ownership of the whole property from Sixto through ordinary prescription for ten years. Petitioners submit that Tiburcio Balitaan was not a purchaser in good faith and for value since there are enough circumstances which should have put him on guard and prompted him to be more circumspect and inquire further about the true status of Sixto Medrano's ownership; that during his lifetime, Tiburcio was a neighbor of petitioners and was well-aware that Sixto had other siblings but Tiburcio chose to rely on the Affidavit of Transfer executed by Sixto Medrano declaring that he was the only heir of Leocadio; that the Court of Appeals should not have faulted them for failing to inquire about the status of the disputed property until after the death of Sixto Medrano; that they are not guilty of laches. It is settled that in the exercise of the Supreme Court's power of review, the findings of facts of the Court of Appeals are conclusive and binding on the Supreme Court.26 The exceptions to this rule are: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.27 Exceptions (4), (7), (10) and (11) are present in the instant case.
1wphi 1

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We find the petition meritorious.28 We agree with the petitioners that the Court of Appeals committed a reversible error in upholding the claim of petitioners that they acquired ownership of the subject property through prescription. Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time fixed by law;29 without good faith and just title, acquisitive prescription can only be extraordinary in character. Regarding real or immovable property, ordinary acquisitive prescription requires a period of possession of ten years,30 while extraordinary acquisitive prescription requires an uninterrupted adverse possession of thirty years.31 Ordinary acquisitive prescription demands that possession be "in good faith", which consists in the reasonable belief that the person from whom the thing is received has been the owner thereof and could thereby transmit that ownership.32 There is "just title" when the adverse claimant comes into possession of the property through any of the modes recognized by law for the acquisition of ownership or other real rights, but that the grantor is neither the owner nor in a position to transmit the right.33 Article 1130 of the Civil Code states that the "title for prescription must be true and valid." In Doliendo vs. Biarnesa,34 we elucidated on this provision, thus: We think that this contention is based on a misconception of the scope and effect of the provisions of this article of the Code in its application to "ordinary prescription." It is evident that by a "titulo verdadero y valido" in this connection we are not to understand a "titulo que por si solo tiene fuerza de transferir el dominio sin necesidad de la prescricion" (a title which of itself is sufficient to transfer the ownership without the necessity of the lapse of the prescription period); and we accept the opinion of a learned Spanish law writer who holds that the "titulo verdadero y valido" as used in this article of the code prescribes a "titulo Colorado" and not merely "putativo;" a "titulo Colorado" being one 'which a person has when he buys a thing, in good faith, from one whom he believes to be the owner,' and a "titulo putativo" "being one which is supposed to have preceded the acquisition of a thing, although in fact it did not, as might happen when one is in possession of a thing in the belief that it had been bequeathed to him." (Viso Derecho Civil, Parte Segunda, p. 541)35
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The requirements for ordinary acquisitive prescription as hereinabove described have not been met in this case. It must be remembered that the burden of proving the status of a purchaser in good faith lies upon him who asserts that status. It is not sufficient to invoke the ordinary presumption of good faith, that is, that everyone is presumed to have acted in good faith, since the good faith that is here essential is integral with the very status that must be established. 36 After a careful examination of the records, we find that private respondents failed to discharge the burden of proof that Tiburcio Balitaan was a purchaser in good faith. It is undisputed that Tiburcio practically lived his entire lifetime in the area where the property in dispute is located and had been a neighbor of petitioners. He knew that Sixto Medrano had other siblings because his son, Dr. Elias Balitaan, is the godson by baptism of spouses Jose Aguirre and Gertrudes Medrano, the latter being a deceased sister of Sixto. Thus, Tiburcio was not a complete stranger to the Medrano clan. Yet, he deliberately chose to close his eyes to said facts and despite his personal knowledge to the contrary, he purchased the disputed property from Sixto on the basis of the misrepresentation of the latter in his Affidavit of Transfer that he is the sole surviving heir of Leocadio. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor.37 Since the disputed property is an unregistered land, Tiburcio as buyer thereof did so at his peril. Private respondents' claim that Tiburcio bought the land in good faith, that is, without notice that some other person has a right to or interest in the property, would not protect them if it turns out, as it actually did in this case, that the seller, Sixto Medrano, did not own the entire property at the time of the sale, but only an undivided portion of the land as a co-owner. Private respondents failed to show that the petitioners were notified of the subject sale or that respondents gave their consent to the sale. Not being in "good faith", the ten-year period required for ordinary acquisitive prescription does not apply. Even the thirty-year period under extraordinary acquisitive prescription has not been met in this case. Private respondents claim to have been in possession, in the concept of owner, of the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for only seventeen years (1958-1975).
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In addition, as we have enunciated in Salvador vs. Court of Appeals,38 to wit: This Court has held that the possession of a co-owner is like that of a trustee and shall not be regarded as adverse to the other co-owners but in fact as beneficial to all of them. Acts which may be considered adverse to strangers may not be considered adverse insofar as co-owners are concerned. A mere silent possession by a co-owner, his receipt of rents, fruits or profits from the property, the erection of buildings and fences and the planting of trees thereon, and the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear and convincing evidence that he exercised acts of possession which unequivocably constituted an ouster or deprivation of the rights of the other co-owners. Thus, in order that a co-owner's possession may be deemed adverse to the cestui que trust or the other co-owners, the following elements must concur: (1) that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or the other co-owners; (2) that such positive acts of repudiation have been made known to the cestui que trust or the other co-owners; and (3) that the evidence thereon must be clear and convincing.39 (Emphasis supplied) Tested against these guidelines, respondents failed to present competent evidence that the acts of Sixto adversely and clearly repudiated the existing co-ownership among the heirs of Leocadio Medrano. Private respondents' reliance on the tax declaration in the name of Sixto Medrano is unworthy of credit since we have held on several occasions that tax declarations by themselves do not conclusively prove title to land.40Further, private respondents failed to show that the Affidavit executed by Sixto to the effect that he is the sole owner of the subject property was known or made known to the other co-heirs of Leocadio Medrano. Neither can we subscribe to the appellate court's view that petitioners are guilty of laches. Laches is the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it has abandoned it or declined to assert it.41 It does not involve mere lapse or passage of time, but is principally an impediment to the assertion
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or enforcement of a right, which has become under the circumstances inequitable or unfair to permit.42 The rule that each co-owner may demand at any time the partition of the common property implies that an action to demand partition is imprescriptible or cannot be barred by laches.43 We have consistently held that if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other coowners who did not consent to the sale.44 Article 493 of the Civil Code provides: Art. 493. Each co-owner shall have the full ownership of his part and 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 coownership. It clearly provides that the sale or other disposition affects only the seller's share pro indiviso, and the transferee gets only what corresponds to his grantor's share in the partition of the property owned in common. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void; only the rights of the co-owner/seller are transferred, thereby making the buyer a co-owner of the property.45 Accordingly, we held in BailonCasilao vs. Court of Appeals: From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one-co-owner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property. The proper action in cases like this is not for the nullification of the sale or for the recovery of possession of the thing owned in common from the third person who substituted the co-owner or co-owners who alienated their shares, but the DIVISION of the common property as if it continued to remain in the possession of the co-owners who possessed and administered it [Mainit v. Bandoy, supra].

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Thus, 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. Neither recovery of possession nor restitution can be granted since the defendant buyers are legitimate proprietors and possessors in joint ownership of the common property claimed [Ramirez v. Bautista, supra].46 It is clear therefore that the deed of sale executed by Sixto Medrano in favor of Tiburcio Balitaan is a valid conveyance only insofar as the share of Sixto Medrano in the co-ownership is concerned. Thus, the respondent court erred in declaring the ownership of the entire 1,695-square meter property sold by Sixto, in favor of the private respondents. The next question is what is the area of the pro indiviso share pertaining to Sixto Medrano that was sold to private respondents? The trial court endeavored to determine the same by ascertaining the inheritance of each of the heirs of Leocadio. However, the manner of partition as set out by the trial court in the text of its decision needs to be amended so as to conform to the laws on intestate succession under the Old Civil Code absent any allegation or showing that Leocadio left any last will and testament. It is not disputed that the 2,342-square meter property was a conjugal property of Leocadio and Emiliana. Upon the death of Emiliana, which occurred many years before the death of Leocadio in 1945, both deaths occurring before the enactment of the New Civil Code in 1950, all the four children of the first marriage and the four children of the second marriage shall share equally. The subject property should have been divided into eight equal parts, pursuant to Articles 921 and 931 of the old Civil Code,47 or 292.75 square meters each. The respective heirs of the now deceased children of Leocadio inherit by way of representation the respective shares of their respective parents, pursuant to Articles 933 and 934 of the Old Civil Code.48 At the time of death of Leocadio in 1945, Miguela was entitled only to the usufruct of the land pursuant to Article 834 of the Old Civil Code,49 which provides that "[i]f only one legitimate child or descendant survives, the widower or widow shall have the usufruct of the third available for betterment, such child or descendant to have the naked ownership until, on the death of the surviving spouse, the whole title is merged in him".
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Thus, to recapitulate, each of the heirs of Leocadio should inherit 292.75 square meters, pro-indiviso (2,342 square meters 8 = 292.75 square meters) after deducting from the original 2,611 square meters of the subject property the 269 square meters ceded to the heirs of Maria Bacong in a compromise agreement among the petitioners and the heirs of Maria Bacong. The deceased children of Leocadio are represented by their respective heirs by right of representation under Articles 933 and 934 of the Old Civil Code. Accordingly, the undivided shares of Leocadio's eight children or their heirs by right of representation, upon the death of Leocadio in 1945 are as follows: (1) Venancio Medrano - 292.75 square meters (2) Leonila Medrano - 292.75 square meters (3) Antonio Medrano - 292.75 square meters (4) Cecilia Medrano - 292.75 square meters (5) Heirs of Gertrudes M. Aguirre, Telesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre- - 292.75 square meters (6) Heirs of Isabel M. Magtibay, Vicenta, Horacio and Florencio, all surnamed Magtibay - 292.75 square meters (7) Heirs of Placido Medrano, plaintiff Zosima Medrano Quimbao 292.75 square meters (8) Sixto Medrano - 292.75 square meters During the pendency of the case in the trial court but after the death of Sixto, petitioners sold 460 square meters to one Mateo Castillo. Consequently, the 460 square meters should be charged against the shares of petitioners only and should not affect the 292.75 square meters undivided share of Sixto Medrano which he had sold in 1959.50 Accordingly, 460 square meters divided by 7 equals 65.71 square meters. Deducting said area from 292.75 square meters, the final undivided share of each of the seven heirs of Leocadio should be 227.04 square meters (292.75 65.71 = 227.04) and that pertaining to Sixto in 292.75 square meters.
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Thus, the manner of partition set forth by the trial court in its decision should be amended, as follows: (1) Gertrudes M. Aguirre, deceased, represented by her children, herein petitioners Telesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre - 227.04 square meters (2) Isabel M. Magtibay, deceased, represented by her children, herein petitioners Vicenta, Horacio and Florencio, all surnamed Magtibay 227.04 square meters (3) Placido Medrano, deceased, represented by his only child, Placido Medrano - 227.04 square meters (4) Private respondents Maria Rosales and heirs of Tiburcio Balitaan, namely: Elias, Jose, Arsenia and Rogelio all surnamed Balitaan (in lieu of Sixto Medrano) - 292.75 square meters (5) Venancio Medrano - 227.04 square meters (6) Leonila Medrano - 227.04 square meters (7) Antonio Medrano - 227.04 square meters (8) Cecilia Medrano - 227.04 square meters (9) Rosendo Bacong - 269 square meters (10) Mateo Castillo - 460 square meters WHEREFORE, we GRANT the petition. The assailed decision of the Court of Appeals in CA-G.R. CV No. 42350, dated July 26, 1995, is REVERSED and SET ASIDE. The decision of the Regional Trial Court is REINSTATED with the following MODIFICATIONS: The sale in favor of private respondents is declared VALID but only insofar as the 292.75 square meters undivided share of Sixto Medrano in the subject property is concerned. Let the parcel of land, located at Aplaya, Bauan, Batangas, consisting of 2,611 square meters, be partitioned and distributed as determined by the
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Court in the text of herein decision. Accordingly, let the records of the case be remanded to the Regional Trial Court of Batangas City (Branch 2) in Civil Case No. 202 for further appropriate proceedings under Rule 69 of the Rules of Court. No pronouncement as to costs. SO ORDERED. Puno, (Chairman), Quisumbing, Callejo Sr. and Tinga, JJ., concur. G.R. No. 158377 August 13, 2010

HEIRS OF JOSE REYES, JR., namely: MAGDALENA C. REYES, OSCAR C. REYES, GAMALIEL C. REYES, NENITA R. DELA CRUZ, RODOLFO C. REYES, and RODRIGO C. REYES, Petitioners, vs. AMANDA S. REYES, CONSOLACION S. REYES, EUGENIA R. ELVAMBUENA, LUCINA R. MENDOZA, PEDRITO S. REYES, MERLINDA R. FAMODULAN, EDUARDO S. REYES, and JUNE S. REYES, Respondents. DECISION BERSAMIN, J.: The petitioners1 assail the decision dated July 31, 2002 rendered in C.A.G.R. CV No. 53039,2 by which the Court of Appeals (CA) affirmed the decision dated May 21, 1996 of the Regional Trial Court (RTC), Branch 9, in Malolos, Bulacan.3 Antecedents Antonio Reyes and his wife, Leoncia Mag-isa Reyes (Leoncia), were owners of a parcel of residential land with an area of 442 square meters, more or less, located in Pulilan, Bulacan and covered by Tax Declaration No. 7590. On that land they constructed their dwelling. The couple had four children, namely: Jose Reyes, Sr. (Jose, Sr.), Teofilo Reyes (Teofilo), Jose Reyes, Jr. (Jose, Jr.) and Potenciana Reyes-Valenzuela (Potenciana). Antonio Reyes died intestate, and was survived by Leoncia and their three sons, Potenciana having predeceased her father. Potenciana also died
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intestate, survived by her children, namely: Gloria ReyesValenzuela, Maria Reyes Valenzuela, and Alfredo Reyes Valenzuela. Jose, Jr., and his family resided in the house of the parents, but Teofilo constructed on the property his own house, where he and his family resided. On July 9, 1955, Leoncia and her three sons executed a deed denominated Kasulatan ng Biling Mabibiling Muli,4whereby they sold the land and its existing improvements to the Spouses Benedicto Francia and Monica Ajoco (Spouses Francia) for P500.00, subject to the vendors' right to repurchase for the same amount sa oras na sila'y makinabang. Potenciana's heirs did not assent to that deed. Nonetheless, Teofilo and Jose, Jr. and their respective families remained in possession of the property and paid the realty taxes thereon. Leoncia and her children did not repay the amount of P500.00. The Spouses Francia both died intestate (i.e., Monica Ajoco on September 16, 1963, and Benedicto Francia on January 13, 1964). Alejandro Reyes (Alejandro), the son of Jose, Sr., first partially paid to the Spouses Francia the amount ofP265.00 for the obligation of Leoncia, his uncles and his father. Alejandro later paid the balance of P235.00. Thus, on August 11, 1970, the heirs of Spouses Francia executed a deed entitled Pagsasa-ayos ng Pag-aari at Pagsasalin,5 whereby they transferred and conveyed to Alejandro all their rights and interests in the property forP500.00. On August 21, 1970, Alejandro executed a Kasulatan ng Pagmemeari,6 wherein he declared that he had acquired all the rights and interests of the heirs of the Spouses Francia, including the ownership of the property, after the vendors had failed to repurchase within the given period. On the basis of the Kasulatan ng Pagmeme-ari,Tax Declaration No. 3703 covering the property7 was canceled by Tax Declaration No. 8715,8 effective 1971, issued to Alejandro. From then on, he had paid the realty taxes for the property. Nevertheless, on October 17, 1970, Alejandro, his grandmother (Leoncia), and his father (Jose, Sr.) executed aMagkakalakip na Salaysay,9 by which Alejandro acknowledged the right of Leoncia, Jose, Jr., and Jose, Sr. to repurchase the property at any time for the same amount of P500.00.
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On October 22, 1970, Leoncia died intestate.10 She was survived by Jose, Sr., Teofilo, Jose, Jr. and the heirs of Potenciana. Even after Leonica's death, Teofilo and Jose, Jr., with their respective families, continued to reside in the property. Subsequently, Tax Declaration 1228,11 under the name of Alejandro, was issued effective 1980. All of Leoncia's sons eventually died intestate, survived by their respective heirs, namely: Name of Decedent Teofilo Jose, Sr. Surviving Heirs Romeo Reyes, Leonardo Reyes, and Leonora C. Reyes Rodrigo Reyes, Nenita Reyes- dela Cruz, Rodolfo Reyes, Oscar Reyes, Gamaliel Reyes, Magdalena Reyes (petitioners herein), Efren Reyes and Amado Reyes dela Cruz Alejandro Reyes (respondents' predecessor)12

Jose, Sr.

On September 2, 1993, Alejandro also died intestate.13 Surviving him were his wife, Amanda Reyes, and their children, namely: Consolacion Reyes, Eugenia Reyes-Elvambuena, Luciana Reyes-Mendoza, Pedrito S. Reyes, Merlinda Reyes-Famodulan, Eduardo Reyes and June S. Reyes (respondents herein). In 1994, respondent Amanda Reyes asked the heirs of Teofilo and Jose, Jr., to vacate the property because she and her children already needed it. After the petitioners refused to comply, she filed a complaint against the petitioners in the barangay, seeking their eviction from the property. When no amicable settlement was reached, the Barangay Lupon issued a certification to file action to the respondents on September 26, 1994. 14 In the interim, petitioner Nenita R. de la Cruz and her brother Romeo Reyes also constructed their respective houses on the property.15 RTC Proceedings and Ruling On September 28, 1994, the respondents initiated this suit for quieting of title and reconveyance in the RTC.16The complaint, docketed as Civil Case No. 817-M-94 and entitled Amanda Reyes, et al. v. Heirs of Jose Reyes,
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Jr., et al., was later amended.17 They alleged that their predecessor Alejandro had acquired ownership of the property by virtue of the deed Pagsasa-ayos ng Pag-aari at Pagsasalin executed on August 11, 1970 by the heirs of the Spouses Francia; that on the basis of such deed of assignment, Alejandro had consolidated his ownership of the property via his Kasulatan ng Pagmeme-ari; and that under the Magkasanib na Salaysay, Alejandro had granted to Leoncia, his father Jose, Sr., and his uncles, Teofilo and Jose, Jr. the right to repurchase the property, but they had failed to do so. The respondents prayed for judgment in their favor, as follows: WHEREFORE, it is respectfully prayed that judgment be rendered: 1. Quieting the title to the property by declaring the plaintiffs (respondents herein) as the rightful and lawful owners thereof; 2. Ordering the defendants (petitioners herein) to vacate subject premises and reconvey and or surrender possession thereof to the plaintiffs; 3. Ordering the defendants to recognize the right of the plaintiffs as the lawful owners of subject property; 4. Ordering the defendants to pay plaintiffs the following: a. Moral damages in the amount of P50,000.00; b. Exemplary damages in the amount of P20,000.00; c. Attorney's fees of P20,000.00, acceptance fee of P10,000.00 and P500.00 per recorded Court appearance of counsel; d. The costs of this suit. Plaintiffs further pray for such other relief which the Honorable Court may deem just and equitable under the premises.18 In their answer,19 the petitioners averred that the Kasulatan ng Biling Mabibiling Muli was an equitable mortgage, not a pacto de retro sale; that the mortgagors had retained ownership of the property; that the heirs of the
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Spouses Francia could not have validly sold the property to Alejandro through the Pagsasaayos ng Pag-aari at Pagsasalin; that Alejandro's right was only to seek reimbursement of the P500.00 he had paid from the coowners, namely: Leoncia, Teofilo, Jose, Jr. and Jose, Sr. and the heirs of Potenciana; and that Alejandro could not have also validly consolidated ownership through the Kasulatan ng Pagmeme-ari, because a consolidation of ownership could only be effected via a court order. The petitioners interposed a counterclaim for the declaration of the transaction as an equitable mortgage, and of their property as owned in common by all the heirs of Leoncia, Teofilo, Jose, Jr. and Jose, Sr. On May 21, 1996, the RTC ruled in favor of the respondents, declaring that Alejandro had acquired ownership of the property in 1965 by operation of law upon the failure of the petitioners' predecessors to repurchase the property; that the joint affidavit executed by Alejandro, Leoncia and Jose, Jr. and Jose, Sr., to extend the period of redemption was inefficacious, because there was no more period to extend due to the redemption period having long lapsed by the time of its execution; and that the action should be dismissed insofar as the heirs of Potenciana were concerned, considering that Potenciana, who had predeceased her parents, had no successional rights in the property. Accordingly, the RTC decreed as follows: WHEREFORE, on the basis of the evidence adduced and the law/jurisprudence applicable thereon, judgment is hereby rendered: a) sustaining the validity of the "Kasulatan ng Biling Mabibiling Muli" (Exh. B/Exh. 1) executed on July 9, 1955 by Leoncia Mag-isa and her sons Teofilo, Jose, Sr. and Jose, Jr., all surnamed Reyes, in favor of Spouses Benedicto Francia and Monica Ajoco as well as the "Pagsasa-ayos ng Pag-aari at Pagsasalin"(Settlement of Estate and Assignment) [Exh. C/Exh. 4] executed on August 11, 1970 by the heirs of spouses Benedicto Francia and Monica Ajoco in favor of the spouses Alejandro Reyes and Amanda Salonga; b) declaring the aforementioned "Kasulatan Ng Biling Mabibili Muli" (Exh. B/ Exh. 1) to be a contract of sale with right to repurchase and not an equitable mortgage;
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c) confirming the consolidation of ownership, by operation of law, of spouses Alejandro M. Reyes and Amanda Salonga over the residential lot mentioned and referred to in Exhibit B/Exhibit 1 and Exhibit C/Exhibit 4; d) allowing the registration with the Registry of Deeds for the Province of Bulacan of the "Kasulatan ng Pagmeme-ari" (Document of Ownership) [Exh. E/Exh. 5] executed by Alejandro M. Reyes on August 21, 1970 or of any appropriate deed of consolidation of ownership over the residential lot covered by Exhibit E/Exhibit 5 which the plaintiffs, as eventual owners by succession of the aforementioned proeprty, may deem proper to execute; e) ordering the defendants and all persons claiming rights under them to vacate the residential lot subject of the above-entitled case and to restore possession thereof unto the plaintiffs; f) directing the defendants (except the heirs of Potenciana ReyesValenzuela) to pay unto the plaintiffs the amount of P20,000.00 as attorney's fees; and g) dismissing the complaint in so far as the defendant heirs of Potenciana Reyes-Valenzuela are concerned as well as their counterclaim for damages and attorney's fees.
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No pronouncement as to costs. SO ORDERED. 20 Aggrieved, the petitioners appealed to the CA. CA Ruling In the CA, the petitioners assailed the RTC's dispositions, except the dismissal of the complaint as against Potenciana's heirs. In its decision dated July 31, 2002, the CA ruled that the transaction covered by the Kasulatan ng Biling Mabibiling Muli was not a pacto de retro sale but an equitable mortgage under Article 1602 of the Civil Code; that even after the deed's execution, Leoncia, Teofilo, Jose, Jr. and their families had remained in possession of the property and continued paying
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realty taxes for the property; that the purported vendees had not declared the property for taxation purposes under their own names; and that such circumstances proved that the parties envisaged an equitable mortgage in the Kasulatan ng Biling Mabibiling Muli. The CA observed that the heirs of the Spouses Francia had themselves admitted in paragraph 5 of the Pagsasa-ayos ng Pag-aari at Pagsasalin that the property had been mortgaged to their predecessors-ininterest, viz: Na, sa oras ng kamatayan ay nakaiwan sila ng isang lagay na lupang nakasanla sa kanila na makikilala sa kasulatang kalakip nito sa halagang LIMANG DAANG PISO (P500.00). Ngunit nuong nabubuhay pa ang magasawang Benedicto Francia at Monica Ajoco ay nakatanggap na ng halagang P265.00 kay Alejandro Reyes - Filipino, kasal kay Amanda Salonga, may sapat na gulang at naninirahan sa Pulilan, Bulacan.21 However, the CA held that the appellants' (petitioners herein) failure to file an action for the reformation of theKasulatan ng Biling Mabibiling Muli to reflect the true intention of the parties within ten years from the deed's execution on July 9, 1955, pursuant to Article 1144 of the Civil Code,22 already barred them from claiming that the transaction executed between Leoncia and her children, on one hand, and the Spouses Francia, on the other hand, was an equitable mortgage. The CA agreed with the RTC that the Magkakalakip na Salaysay did not effectively extend the period for Leoncia and her children to repurchase the property, considering that the period to repurchase had long lapsed by the time the agreement to extend it was executed on October 17, 1970. Issues In this appeal, therefore, the petitioners insist that:23 I. The Honorable Court of Appeals erred in finding that respondents (were) already barred from claiming that the transaction entered into by their predecessors-in-interest was an equitable mortgage and not a pacto de retro sale; II.
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The Honorable Court of Appeals erred in affirming the findings of the court a quo that theMagkasanib na Salaysay (Joint Affidavit), executed by Alejandro, Leoncia and Jose, Jr., wherein Leoncia and her children were granted by Alejandro the right to repurchase the property at anytime for the amount of P500.00, was of no legal significance. Ruling of the Court The petition is meritorious. A. The CA correctly concluded that the true agreement of the parties vis--vis the Kasulatan ng Biling Mabibiling Muli was an equitable mortgage, not a pacto de retro sale. There was no dispute that the purported vendors had continued in the possession of the property even after the execution of the agreement; and that the property had remained declared for taxation purposes under Leoncia's name, with the realty taxes due being paid by Leoncia, despite the execution of the agreement. Such established circumstances are among the badges of an equitable mortgage enumerated in Article 1602, paragraphs 2 and 5 of the Civil Code, to wit: Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: xxx (2) When the vendor remains in possession as lessee or otherwise; xxx (5) When the vendor binds himself to pay the taxes on the thing sold; xxx The existence of any one of the conditions enumerated under Article 1602 of the Civil Code, not a concurrence of all or of a
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majority thereof, suffices to give rise to the presumption that the contract is an equitable mortgage.24 Consequently, the contract between the vendors and vendees (Spouses Francia) was an equitable mortgage. B. Are the petitioners now barred from claiming that the transaction under the Kasulatan ng Biling Mabibiling Muli was an equitable mortgage by their failure to redeem the property for a long period of time? The petitioners contend that prescription, if it must apply to them, should as well be applied to the respondents, who had similarly failed to enforce their right under the equitable mortgage within ten years from its execution on July 9, 1955. Consequently, they urge the upholding of the original intention of the parties to the Kasulatan ng Biling Mabibiling Muli, without taking prescription into account, because both parties did not enforce their respective rights within the ten-year prescriptive period, is more in keeping with fairness and equity. We agree with the petitioners. Considering that sa oras na sila'y makinabang, the period of redemption stated in theKasulatan ng Biling Mabibiling Muli, signified that no definite period had been stated, the period to redeem should be ten years from the execution of the contract, pursuant to Articles 1142 and 1144 of the Civil Code.25 Thus, the full redemption price should have been paid by July 9, 1955; and upon the expiration of said 10-year period, mortgagees Spouses Francia or their heirs should have foreclosed the mortgage, but they did not do so. Instead, they accepted Alejandro's payments, until the debt was fully satisfied by August 11, 1970. The acceptance of the payments even beyond the 10-year period of redemption estopped the mortgagees' heirs from insisting that the period to redeem the property had already expired. Their actions impliedly recognized the continued existence of the equitable mortgage. The conduct of the original
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parties as well as of their successors-in-interest manifested that the parties to the Kasulatan ng Biling Mabibiling Muli really intended their transaction to be an equitable mortgage, not a pacto de retro sale. In Cuyugan v. Santos,26 the purported buyer under a so-called contract to sell with right to repurchase also accepted partial payments from the purported seller. We held that the acceptance of partial payments was absolutely incompatible with the idea of irrevocability of the title of ownership of the purchaser upon the expiration of the term stipulated in the original contract for the exercise of the right of redemption. Thereby, the conduct of the parties manifested that they had intended the contract to be a mortgage, not a pacto de retro sale. C. When Alejandro redeemed the property on August 11, 1970, he did not thereby become a co-owner thereof, because his father Jose, Sr. was then still alive. Alejandro merely became the assignee of the mortgage, and the property continued to be coowned by Leoncia and her sons Jose, Sr., Jose Jr., and Teofilo. As an assignee of the mortgage and the mortgage credit, Alejandro acquired only the rights of his assignors, nothing more. He himself confirmed so in the Magkasanib na Salaysay, whereby he acknowledged the co-owners' right to redeem the property from him at any time (sa ano mang oras) for the same redemption price of P500.00. It is worthy to note that Alejandro's confirmation in the Magkasanib na Salaysay of the co-owners' right to redeem was made despite 15 years having meanwhile elapsed from the execution of the original Kasulatan ng Biling Mabibiling Muli (July 9, 1955) until the execution of the Magkasanib na Salaysay (August 21, 1970). D. Neither did the petitioners' failure to initiate an action for reformation within ten years from the execution of
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the Kasulatan ng Biling Mabibiling Muli bar them from insisting on their rights in the property. The records show that the parties in the Kasulatan ng Biling Mabibiling Muli had abided by their true agreement under the deed, to the extent that they and their successors-in-interest still deemed the agreement as an equitable mortgage despite the lapse of 15 years from the execution of the purported pacto de retro sale. Hence, an action for reformation of theKasulatan ng Biling Mabibiling Muli was unnecessary, if not superfluous, considering that the reason underlying the requirement for an action for reformation of instrument has been to ensure that the parties to a contract abide by their true intended agreement. The Kasulatan ng Pagmeme-ari executed by Alejandro on August 21, 1970 was ineffectual to predicate the exclusion of the petitioners and their predecessors in interest from insisting on their claim to the property. Alejandro's being an assignee of the mortgage did not authorize him or his heirs to appropriate the mortgaged property for himself without violating the prohibition against pactum commissorium contained in Article 2088 of the Civil Code, to the effect that "[t]he creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them[;] [a]ny stipulation to the contrary is null and void." Aptly did the Court hold in Montevirgen v. Court of Appeals:27 The declaration, therefore, in the decision of July 1, 1971 to the effect that absolute ownership over the subject premises has become consolidated in the respondents upon failure of the petitioners to pay their obligation within the specified period, is a nullity, for consolidation of ownership is an improper and inappropriate remedy to enforce a transaction declared to be one of mortgage. It is the duty of respondents, as mortgagees, to foreclose the mortgage if he wishes to secure a perfect title to the mortgaged property if he buys it in the foreclosure sale. Moreover, the respondents, as Alejandro's heirs, were entirely bound by his previous acts as their predecessors-in-interest. Thus, Alejandro's acknowledgment of the effectivity of the equitable mortgage agreement precluded the respondents from
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claiming that the property had been sold to him with right to repurchase.28 E. What was the effect of the Magkasanib na Salaysay? Both the trial court and the CA declared that the Magkasanib na Salaysay, which extended the redemption period of the mortgaged property, was inefficacious, because the period to redeem could no longer be extended after the original redemption period had already expired. In contrast, the petitioners submit that disregarding the Magkasanib na Salaysay made no sense,considering that the respondents' predecessorsin-interest admitted therein that the petitioners had a right to redeem the property. The respondents counter, however, that the Magkasanib na Salaysay, which acknowledged the other co-owners' right to redeem the property, was void; that the petitioners could no longer claim to be co-owners entitled to redeem the property, because the co-ownership had come to an end by Alejandro having openly repudiated the co-ownership; that Alejandro's acts of repudiation had consisted of: (a) redeeming the property from the Spouses Francia; (b) acquiring the property from the heirs of Spouses Francia by virtue of a deed of assignment denominated as Pag-aayos ng Pag-aari at Pagsasalin; (c) executing an affidavit of consolidation of ownership over the property (Kasulatan ng Pagmeme-ari); (d) applying for the cancellation of the tax declaration of property in the name of Leoncia, and the subsequent issuance of a new tax declaration in his name; (e) his continuous possession of the property from 1955, which possession the respondents as his heirs had continued up to the present time, or for a period of almost 50 years already; and (f) the payment of the taxes by Alejandro and the respondents for more than 30 years without any contribution from the petitioners; and that such repudiation established that Alejandro and his successors-in-interest had already acquired sole title over the property through acquisitive prescription. The respondents' and the lower courts' positions cannot be sustained. The provisions of the Civil Code governing equitable mortgages disguised as sale contracts, like the one herein, are primarily designed to curtail the
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evils brought about by contracts of sale with right to repurchase, particularly the circumvention of the usury law and pactum commissorium.29 Courts have taken judicial notice of the well-known fact that contracts of sale with right to repurchase have been frequently resorted to in order to conceal the true nature of a contract, that is, a loan secured by a mortgage. It is a reality that grave financial distress renders persons hard-pressed to meet even their basic needs or to respond to an emergency, leaving no choice to them but to sign deeds of absolute sale of property or deeds of sale with pacto de retro if only to obtain the much-needed loan from unscrupulous money lenders.30 This reality precisely explains why the pertinent provision of the Civil Code includes a peculiar rule concerning the period of redemption, to wit: Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: xxx (3)When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; xxx Ostensibly, the law allows a new period of redemption to be agreed upon or granted even after the expiration of the equitable mortgagor's right to repurchase, and treats such extension as one of the indicators that the true agreement between the parties is an equitable mortgage, not a sale with right to repurchase. It was indubitable, therefore, that the Magkasanib na Salaysay effectively afforded to Leoncia, Teofilo, Jose, Sr. and Jose, Jr. a fresh period within which to pay to Alejandro the redemption price of P500.00. F. Did Alejandro and his heirs (respondents herein) acquire the mortgaged property through prescription? It is true that Alejandro became a co-owner of the property by right of representation upon the death of his father, Jose Sr.31 As a co-owner,
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however, his possession was like that of a trustee and was not regarded as adverse to his co-owners but in fact beneficial to all of them.32 Yet, the respondents except to the general rule, asserting that Alejandro, having earlier repudiated the co-ownership, acquired ownership of the property through prescription. The Court cannot accept the respondents' posture. In order that a co-owner's possession may be deemed adverse to that of the cestui que trust or the other co-owners, the following elements must concur: 1. The co-owner has performed unequivocal acts of repudiation of the co-ownership amounting to an ouster of the cestui que trust or the other co-owners; 2. Such positive acts of repudiation have been made known to the cestui que trust or the other co-owners; 3. The evidence on the repudiation is clear and conclusive; and 4. His possession is open, continuous, exclusive, and notorious.33 The concurrence of the foregoing elements was not established herein. For one, Alejandro did not have adverse and exclusive possession of the property, as, in fact, the other co-owners had continued to possess it, with Alejandro and his heirs occupying only a portion of it. Neither did the cancellation of the previous tax declarations in the name of Leoncia, the previous co-owner, and the issuance of a new one in Alejandro's name, and Alejandro's payment of the realty taxes constitute repudiation of the coownership. The sole fact of a co-owner declaring the land in question in his name for taxation purposes and paying the land taxes did not constitute an unequivocal act of repudiation amounting to an ouster of the other coowner and could not constitute adverse possession as basis for title by prescription.34 Moreover, according to Blatero v. Intermediate Appellate Court,35 if a sale a retro is construed as an equitable mortgage, then the execution of an affidavit of consolidation by the purported buyer to consolidate ownership of the parcel of land is of no consequence and the "constructive possession" of the parcel of land will not ripen into ownership,
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because only possession acquired and enjoyed in the concept of owner can serve as title for acquiring dominion.36 In fine, the respondents did not present proof showing that Alejandro had effectively repudiated the co-ownership. Their bare claim that Alejandro had made oral demands to vacate to his co-owners was self-serving and insufficient. Alejandro's execution of the affidavit of consolidation of ownership on August 21, 197037 and his subsequent execution on October 17, 1970 of the joint affidavit38 were really equivocal and ambivalent acts that did not manifest his desire to repudiate the co-ownership. The only unequivocal act of repudiation was done by the respondents when they filed the instant action for quieting of title on September 28, 1994, nearly a year after Alejandro's death on September 2, 1993. However, their possession could not ripen into ownership considering that their act of repudiation was not coupled with their exclusive possession of the property. G. The respondents can only demand from the petitioners the partition of the co-owned property and the reimbursement from their co-owners of the amount advanced by Alejandro to repay the obligation. They may also seek from their co-owners the proportional reimbursement of the realty taxes paid for the property, pursuant to Article 488 of the Civil Code.39 In the alternative, they may opt to foreclose the equitable mortgage, considering that the petitioners' period to redeem the mortgaged property, which was ten years from the execution on October 17, 1970 of the Magkakasanib na Salaysay, had already long lapsed. We clarify, however, that the respondents may take these recourses only through the appropriate actions commenced in court. H. The petitioners' counterclaim for damages is dismissed for their failure to prove their entitlement to it.40 WHEREFORE, we grant the petition for review on certiorari. The decision dated July 31, 2002 rendered by the Court of Appeals is reversed and set aside, and another judgment is rendered:
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a) Upholding the validity of the Kasulatan ng Biling Mabibiling Muli (Deed of Sale with Right of Repurchase) executed on July 9, 1955 by Leoncia Mag-isa Reyes and her sons Teofilo, Jose, Sr. and Jose, Jr., all surnamed Reyes, in favor of the late Spouses Benedicto Francia and Monica Ajoco as well as the Pagsasa-ayos ng Pag-aari at Pagsasalin (Settlement of Estate and Assignment) executed on August 11, 1970 by the heirs of the late Spouses Benedicto Francia and Monica Ajoco in favor of the spouses Alejandro Reyes and Amanda Salonga; b) Declaring the Kasulatan ng Biling Mabibili Muli to be an equitable mortgage, not a contract of sale with right to repurchase;
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c) Finding the Magkakalakip na Salaysay executed on October 17, 1970 by and among Leoncia Mag-isa Reyes, Jose Reyes, Sr. and Alejandro Reyes valid and effective; c) Nullifying the Kasulatan ng Pagmeme-ari executed by Alejandro M. Reyes on August 21, 1970; and d) Dismissing the petitioners' counterclaim. Costs of suit to be paid by the respondents. SO ORDERED. LUCAS P. BERSAMIN Associate Justice G.R. No. 176858 September 15, 2010

HEIRS OF JUANITA PADILLA, represented by CLAUDIO PADILLA, Petitioners, vs. DOMINADOR MAGDUA, Respondent. DECISION CARPIO, J.: The Case
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Before the Court is a petition for review on certiorari1 assailing the Orders dated 8 September 20062 and 13 February 20073 of the Regional Trial Court (RTC) of Tacloban City, Branch 34, in Civil Case No. 2001-10-161. The Facts Juanita Padilla (Juanita), the mother of petitioners, owned a piece of land located in San Roque, Tanauan, Leyte. After Juanitas death on 23 March 1989, petitioners, as legal heirs of Juanita, sought to have the land partitioned. Petitioners sent word to their eldest brother Ricardo Bahia (Ricardo) regarding their plans for the partition of the land. In a letter dated 5 June 1998 written by Ricardo addressed to them, petitioners were surprised to find out that Ricardo had declared the land for himself, prejudicing their rights as co-heirs. It was then discovered that Juanita had allegedly executed a notarized Affidavit of Transfer of Real Property4 (Affidavit) in favor of Ricardo on 4 June 1966 making him the sole owner of the land. The records do not show that the land was registered under the Torrens system. On 26 October 2001, petitioners filed an action with the RTC of Tacloban City, Branch 34, for recovery of ownership, possession, partition and damages. Petitioners sought to declare void the sale of the land by Ricardos daughters, Josephine Bahia and Virginia Bahia-Abas, to respondent Dominador Magdua (Dominador). The sale was made during the lifetime of Ricardo. Petitioners alleged that Ricardo, through misrepresentation, had the land transferred in his name without the consent and knowledge of his co-heirs. Petitioners also stated that prior to 1966, Ricardo had a house constructed on the land. However, when Ricardo and his wife Zosima separated, Ricardo left for Inasuyan, Kawayan, Biliran and the house was leased to third parties. Petitioners further alleged that the signature of Juanita in the Affidavit is highly questionable because on 15 May 1978 Juanita executed a written instrument stating that she would be leaving behind to her children the land which she had inherited from her parents. Dominador filed a motion to dismiss on the ground of lack of jurisdiction since the assessed value of the land was within the jurisdiction of the Municipal Trial Court of Tanauan, Leyte.
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In an Order dated 20 February 2006,5 the RTC dismissed the case for lack of jurisdiction. The RTC explained that the assessed value of the land in the amount of P590.00 was less than the amount cognizable by the RTC to acquire jurisdiction over the case.6 Petitioners filed a motion for reconsideration. Petitioners argued that the action was not merely for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. Since actions to annul contracts are actions beyond pecuniary estimation, the case was well within the jurisdiction of the RTC. Dominador filed another motion to dismiss on the ground of prescription. In an Order dated 8 September 2006, the RTC reconsidered its previous stand and took cognizance of the case. Nonetheless, the RTC denied the motion for reconsideration and dismissed the case on the ground of prescription pursuant to Section 1, Rule 9 of the Rules of Court. The RTC ruled that the case was filed only in 2001 or more than 30 years since the Affidavit was executed in 1966. The RTC explained that while the right of an heir to his inheritance is imprescriptible, yet when one of the co-heirs appropriates the property as his own to the exclusion of all other heirs, then prescription can set in. The RTC added that since prescription had set in to question the transfer of the land under the Affidavit, it would seem logical that no action could also be taken against the deed of sale executed by Ricardos daughters in favor of Dominador. The dispositive portion of the order states: WHEREFORE, premises considered, the order of the Court is reconsidered in so far as the pronouncement of the Court that it has no jurisdiction over the nature of the action. The dismissal of the action, however, is maintained not by reason of lack of jurisdiction but by reason of prescription. SO ORDERED.7 Petitioners filed another motion for reconsideration which the RTC denied in an Order dated 13 February 2007 since petitioners raised no new issue. Hence, this petition. The Issue
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The main issue is whether the present action is already barred by prescription. The Courts Ruling Petitioners submit that the RTC erred in dismissing the complaint on the ground of prescription. Petitioners insist that the Affidavit executed in 1966 does not conform with the requirement of sufficient repudiation of coownership by Ricardo against his co-heirs in accordance with Article 494 of the Civil Code. Petitioners assert that the Affidavit became part of public records only because it was kept by the Provincial Assessors office for real property tax declaration purposes. However, such cannot be contemplated by law as a record or registration affecting real properties. Petitioners insist that the Affidavit is not an act of appropriation sufficient to be deemed as constructive notice to an adverse claim of ownership absent a clear showing that petitioners, as co-heirs, were notified or had knowledge of the Affidavit issued by their mother in Ricardos favor. Respondent Dominador, on the other hand, maintains that Juanita, during her lifetime, never renounced her signature on the Affidavit or interposed objections to Ricardos possession of the land, which was open, absolute and in the concept of an owner. Dominador contends that the alleged written instrument dated 15 May 1978 executed by Juanita years before she died was only made known lately and conveys the possibility of being fabricated. Dominador adds that the alleged highly questionable signature of Juanita on the Affidavit was only made an issue after 35 years from the date of the transfer in 1966 until the filing of the case in 2001. As a buyer in good faith, Dominador invokes the defense of acquisitive prescription against petitioners. At the outset, only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court. The factual findings of the lower courts are final and conclusive and may not be reviewed on appeal except under any of the following circumstances: (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the finding of absence of facts is contradicted by the presence of evidence on record; (8) the findings of
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the Court of Appeals are contrary to those of the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the Court of Appeals are beyond the issues of the case; and (11) such findings are contrary to the admissions of both parties.8 We find that the conclusion of the RTC in dismissing the case on the ground of prescription based solely on the Affidavit executed by Juanita in favor of Ricardo, the alleged seller of the property from whom Dominador asserts his ownership, is speculative. Thus, a review of the case is necessary. Here, the RTC granted the motion to dismiss filed by Dominador based on Section 1, Rule 9 of the Rules of Court which states: Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the case. (Emphasis supplied) The RTC explained that prescription had already set in since the Affidavit was executed on 31 May 1966 and petitioners filed the present case only on 26 October 2001, a lapse of more than 30 years. No action could be taken against the deed of sale made in favor of Dominador without assailing the Affidavit, and the action to question the Affidavit had already prescribed. After a perusal of the records, we find that the RTC incorrectly relied on the Affidavit alone in order to dismiss the case without considering petitioners evidence. The facts show that the land was sold to Dominador by Ricardos daughters, namely Josephine Bahia and Virginia Bahia-Abas, during the lifetime of Ricardo. However, the alleged deed of sale was not presented as evidence and neither was it shown that Ricardos daughters had any authority from Ricardo to dispose of the land. No cogent evidence was ever presented that Ricardo gave his consent to, acquiesced in, or ratified the sale made by his daughters to Dominador. In its 8 September 2006 Order,
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the RTC hastily concluded that Ricardos daughters had legal personality to sell the property: On the allegation of the plaintiffs (petitioners) that Josephine Bahia and Virginia Bahia-Abas had no legal personality or right to [sell] the subject property is of no moment in this case. It should be Ricardo Bahia who has a cause of action against [his] daughters and not the herein plaintiffs. After all, Ricardo Bahia might have already consented to or ratified the alleged deed of sale.9 Also, aside from the Affidavit, Dominador did not present any proof to show that Ricardos possession of the land had been open, continuous and exclusive for more than 30 years in order to establish extraordinary acquisitive prescription.10 Dominador merely assumed that Ricardo had been in possession of the land for 30 years based on the Affidavit submitted to the RTC. The petitioners, on the other hand, in their pleading filed with the RTC for recovery of ownership, possession, partition and damages, alleged that Ricardo left the land after he separated from his wife sometime after 1966 and moved to another place. The records do not mention, however, whether Ricardo had any intention to go back to the land or whether Ricardos family ever lived there. Further, Dominador failed to show that Ricardo had the land declared in his name for taxation purposes from 1966 after the Affidavit was executed until 2001 when the case was filed. Although a tax declaration does not prove ownership, it is evidence of claim to possession of the land. Moreover, Ricardo and petitioners are co-heirs or co-owners of the land. Co-heirs or co-owners cannot acquire by acquisitive prescription the share of the other co-heirs or co-owners absent a clear repudiation of the coownership, as expressed in Article 494 of the Civil Code which states: Art. 494. x x x No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs as long as he expressly or impliedly recognizes the co-ownership. Since possession of co-owners is like that of a trustee, in order that a coowners possession may be deemed adverse to the cestui que trust or other co-owners, the following requisites must concur: (1) that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or other co-owners, (2) that such positive acts of
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repudiation have been made known to the cestui que trust or other coowners, and (3) that the evidence thereon must be clear and convincing.11 In the present case, all three requisites have been met. After Juanitas death in 1989, petitioners sought for the partition of their mothers land. The heirs, including Ricardo, were notified about the plan. Ricardo, through a letter dated 5 June 1998, notified petitioners, as his co-heirs, that he adjudicated the land solely for himself. Accordingly, Ricardos interest in the land had now become adverse to the claim of his co-heirs after repudiating their claim of entitlement to the land. In Generosa v. Prangan-Valera,12 we held that in order that title may prescribe in favor of one of the co-owners, it must be clearly shown that he had repudiated the claims of the others, and that they were apprised of his claim of adverse and exclusive ownership, before the prescriptive period begins to run. However, in the present case, the prescriptive period began to run only from 5 June 1998, the date petitioners received notice of Ricardos repudiation of their claims to the land. Since petitioners filed an action for recovery of ownership and possession, partition and damages with the RTC on 26 October 2001, only a mere three years had lapsed. This threeyear period falls short of the 10-year or 30-year acquisitive prescription period required by law in order to be entitled to claim legal ownership over the land. Thus, Dominador cannot invoke acquisitive prescription. Further, Dominadors argument that prescription began to commence in 1966, after the Affidavit was executed, is erroneous. Dominador merely relied on the Affidavit submitted to the RTC that Ricardo had been in possession of the land for more than 30 years. Dominador did not submit any other corroborative evidence to establish Ricardos alleged possession since 1966. In Heirs of Maningding v. Court of Appeals,13 we held that the evidence relative to the possession, as a fact, upon which the alleged prescription is based, must be clear, complete and conclusive in order to establish the prescription. Here, Dominador failed to present any other competent evidence to prove the alleged extraordinary acquisitive prescription of Ricardo over the land. Since the property is an unregistered land, Dominador bought the land at his own risk, being aware as buyer that no title had been issued over the land. As a consequence, Dominador is not afforded protection unless he can manifestly prove his legal entitlement to his claim.

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With regard to the issue of the jurisdiction of the RTC, we hold that the RTC did not err in taking cognizance of the case. Under Section 1 of Republic Act No. 7691 (RA 7691),14 amending Batas Pambansa Blg. 129, the RTC shall exercise exclusive jurisdiction on the following actions: Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980", is hereby amended to read as follows: "Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction. "(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation; "(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; x x x On the other hand, Section 3 of RA 7691 expanded the jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts over all civil actions which involve title to or possession of real property, or any interest, outside Metro Manila where the assessed value does not exceed Twenty thousand pesos (P20,000.00). The provision states: Section 3. Section 33 of the same law is hereby amended to read as follows: "Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Trial Circuit Trial Courts shall exercise:
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xxx "(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots." In the present case, the records show that the assessed value of the land was P590.00 according to the Declaration of Property as of 23 March 2000 filed with the RTC. Based on the value alone, being way belowP20,000.00, the MTC has jurisdiction over the case. However, petitioners argued that the action was not merely for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. Since annulment of contracts are actions incapable of pecuniary estimation, the RTC has jurisdiction over the case.15
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Petitioners are correct. In Singson v. Isabela Sawmill,16 we held that: In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable by courts of first instance (now Regional Trial Courts). When petitioners filed the action with the RTC they sought to recover ownership and possession of the land by questioning (1) the due execution and authenticity of the Affidavit executed by Juanita in favor of Ricardo which caused Ricardo to be the sole owner of the land to the exclusion of
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petitioners who also claim to be legal heirs and entitled to the land, and (2) the validity of the deed of sale executed between Ricardos daughters and Dominador. Since the principal action sought here is something other than the recovery of a sum of money, the action is incapable of pecuniary estimation and thus cognizable by the RTC. Well-entrenched is the rule that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the party is entitled to all or some of the claims asserted.17 In sum, we find that the Affidavit, as the principal evidence relied upon by the RTC to dismiss the case on the ground of prescription, insufficiently established Dominadors rightful claim of ownership to the land. Thus, we direct the RTC to try the case on the merits to determine who among the parties are legally entitled to the land. WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE the Orders dated 8 September 2006 and 13 February 2007 of the Regional Trial Court of Tacloban City, Branch 34 in Civil Case No. 200110-161. SO ORDERED. ANTONIO T. CARPIO Associate Justice G.R. No. 183852 October 20, 2010

CARMELA BROBIO MANGAHAS, Petitioner, vs. EUFROCINA A. BROBIO, Respondent. RESOLUTION NACHURA, J.: This petition for review on certiorari seeks to set aside the Court of Appeals (CA) Decision1 dated February 21, 2008, which dismissed petitioners action to enforce payment of a promissory note issued by respondent, and Resolution2 dated July 9, 2008, which denied petitioners motion for reconsideration.
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The case arose from the following facts: On January 10, 2002, Pacifico S. Brobio (Pacifico) died intestate, leaving three parcels of land. He was survived by his wife, respondent Eufrocina A. Brobio, and four legitimate and three illegitimate children; petitioner Carmela Brobio Mangahas is one of the illegitimate children. On May 12, 2002, the heirs of the deceased executed a Deed of Extrajudicial Settlement of Estate of the Late Pacifico Brobio with Waiver. In the Deed, petitioner and Pacificos other children, in consideration of their love and affection for respondent and the sum of P150,000.00, waived and ceded their respective shares over the three parcels of land in favor of respondent. According to petitioner, respondent promised to give her an additional amount for her share in her fathers estate. Thus, after the signing of the Deed, petitioner demanded from respondent the promised additional amount, but respondent refused to pay, claiming that she had no more money.3 A year later, while processing her tax obligations with the Bureau of Internal Revenue (BIR), respondent was required to submit an original copy of the Deed. Left with no more original copy of the Deed, respondent summoned petitioner to her office on May 31, 2003 and asked her to countersign a copy of the Deed. Petitioner refused to countersign the document, demanding that respondent first give her the additional amount that she promised. Considering the value of the three parcels of land (which she claimed to be worth P20M), petitioner asked for P1M, but respondent begged her to lower the amount. Petitioner agreed to lower it to P600,000.00. Because respondent did not have the money at that time and petitioner refused to countersign the Deed without any assurance that the amount would be paid, respondent executed a promissory note. Petitioner agreed to sign the Deed when respondent signed the promissory note which read 31 May 2003 This is to promise that I will give a Financial Assistance to CARMELA B. MANGAHAS the amount of P600,000.00 Six Hundred Thousand only on June 15, 2003. (SGD)
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EUFROCINA A. BROBIO4 When the promissory note fell due, respondent failed and refused to pay despite demand. Petitioner made several more demands upon respondent but the latter kept on insisting that she had no money. On January 28, 2004, petitioner filed a Complaint for Specific Performance with Damages5 against respondent, alleging in part 2. That plaintiff and defendant are legal heirs of the deceased, Pacifico S. Brobio[,] who died intestate and leaving without a will, on January 10, 2002, but leaving several real and personal properties (bank deposits), and some of which were the subject of the extrajudicial settlement among them, compulsory heirs of the deceased, Pacifico Brobio. x x x. 3. That in consideration of the said waiver of the plaintiff over the listed properties in the extra-judicial settlement, plaintiff received the sum of P150,000.00, and the defendant executed a "Promissory Note" on June 15, 2003, further committing herself to give plaintiff a financial assistance in the amount ofP600,000.00. x x x. 4. That on its due date, June 15, 2003, defendant failed to make good of her promise of delivering to the plaintiff the sum of P600,000.00 pursuant to her "Promissory Note" dated May 31, 2003, and despite repeated demands, defendant had maliciously and capriciously refused to deliver to the plaintiff the amount [of] P600,000.00, and the last of which demands was on October 29, 2003. x x x.6 In her Answer with Compulsory Counterclaim,7 respondent admitted that she signed the promissory note but claimed that she was forced to do so. She also claimed that the undertaking was not supported by any consideration. More specifically, she contended that 10. Defendant was practically held "hostage" by the demand of the plaintiff. At that time, defendant was so much pressured and was in [a] hurry to submit the documents to the Bureau of Internal Revenue because of the deadline set and for fear of possible penalty if not complied with. Defendant pleaded understanding but plaintiff was adamant. Her hand could only move in exchange for 1 million pesos.
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11. Defendant, out of pressure and confused disposition, was constrained to make a promissory note in a reduced amount in favor of the plaintiff. The circumstances in the execution of the promissory note were obviously attended by involuntariness and the same was issued without consideration at all or for illegal consideration.8 On May 15, 2006, the Regional Trial Court (RTC) rendered a decision in favor of petitioner. The RTC found that the alleged "pressure and confused disposition" experienced by respondent and the circumstances that led to the execution of the promissory note do not constitute undue influence as would vitiate respondents consent thereto. On the contrary, the RTC observed that It is clear from all the foregoing that it is the defendant who took improper advantage of the plaintiffs trust and confidence in her by resorting to a worthless written promise, which she was intent on reneging. On the other hand, plaintiff did not perform an unlawful conduct when she insisted on a written commitment from the defendant, as embodied in the promissory note in question, before affixing her signature that was asked of her by the defendant because, as already mentioned, that was the only opportunity available to her or which suddenly and unexpectedly presented itself to her in order to press her demand upon the defendant to satisfy the correct amount of consideration due to her. In other words, as the defendant had repeatedly rebuffed her plea for additional consideration by claiming lack of money, it is only natural for the plaintiff to seize the unexpected opportunity that suddenly presented itself in order to compel the defendant to give to her [what is] due [her]. And by executing the promissory note which the defendant had no intention of honoring, as testified to by her, the defendant clearly acted in bad faith and took advantage of the trust and confidence that plaintiff had reposed in her.9 The RTC also brushed aside respondents claim that the promissory note was not supported by valuable consideration. The court maintained that the promissory note was an additional consideration for the waiver of petitioners share in the three properties in favor of respondent. Its conclusion was bolstered by the fact that the promissory note was executed after negotiation and haggling between the parties. The dispositive portion of the RTC decision reads: WHEREFORE, judgment is hereby rendered as follows:
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1. Ordering the defendant to pay to plaintiff the sum of Six Hundred Thousand Pesos (P600,000.00) which she committed to pay to plaintiff under the promissory note in question, plus interest thereon at the rate of 12% per annum computed from the date of the filing of the complaint; 2. Ordering the defendant to pay to plaintiff the sum of P50,000.00 as attorneys fees; and 3. Ordering the defendant to pay to plaintiff the costs of this suit. SO ORDERED.10 On February 21, 2008, the CA reversed the RTC decision and dismissed the complaint.11 The CA found that there was a complete absence of consideration in the execution of the promissory note, which made it inexistent and without any legal force and effect. The court noted that "financial assistance" was not the real reason why respondent executed the promissory note, but only to secure petitioners signature. The CA held that the waiver of petitioners share in the three properties, as expressed in the deed of extrajudicial settlement, may not be considered as the consideration of the promissory note, considering that petitioner signed the Deed way back in 2002 and she had already received the consideration of P150,000.00 for signing the same. The CA went on to hold that if petitioner disagreed with the amount she received, then she should have filed an action for partition. Further, the CA found that intimidation attended the signing of the promissory note. Respondent needed the Deed countersigned by petitioner in order to comply with a BIR requirement; and, with petitioners refusal to sign the said document, respondent was forced to sign the promissory note to assure petitioner that the money promised to her would be paid. Petitioner moved for the reconsideration of the CA Decision. In a Resolution dated July 9, 2008, the CA denied petitioners motion.12 In this petition for review, petitioner raises the following issues: 1. The Honorable Court of Appeals erred in the appreciation of the facts of this case when it found that intimidation attended the execution of the promissory note subject of this case.
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2. The Honorable Court of Appeals erred when it found that the promissory note was without consideration. 3. The Honorable Court of Appeals erred when it stated that petitioner should have filed [an action] for partition instead of a case for specific performance.13 The petition is meritorious. Contracts are voidable where consent thereto is given through mistake, violence, intimidation, undue influence, or fraud. In determining whether consent is vitiated by any of these circumstances, courts are given a wide latitude in weighing the facts or circumstances in a given case and in deciding in favor of what they believe actually occurred, considering the age, physical infirmity, intelligence, relationship, and conduct of the parties at the time of the execution of the contract and subsequent thereto, irrespective of whether the contract is in a public or private writing.14 Nowhere is it alleged that mistake, violence, fraud, or intimidation attended the execution of the promissory note. Still, respondent insists that she was "forced" into signing the promissory note because petitioner would not sign the document required by the BIR. In one case, the Court in characterizing a similar argument by respondents therein held that such allegation is tantamount to saying that the other party exerted undue influence upon them. However, the Court said that the fact that respondents were "forced" to sign the documents does not amount to vitiated consent.15 There is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice.16 For undue influence to be present, the influence exerted must have so overpowered or subjugated the mind of a contracting party as to destroy his free agency, making him express the will of another rather than his own.17 Respondent may have desperately needed petitioners signature on the Deed, but there is no showing that she was deprived of free agency when she signed the promissory note. Being forced into a situation does not amount to vitiated consent where it is not shown that the party is deprived of free will and choice. Respondent still had a choice: she could have refused to execute the promissory note and resorted to judicial means to
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obtain petitioners signature. Instead, respondent chose to execute the promissory note to obtain petitioners signature, thereby agreeing to pay the amount demanded by petitioner. The fact that respondent may have felt compelled, under the circumstances, to execute the promissory note will not negate the voluntariness of the act. As rightly observed by the trial court, the execution of the promissory note in the amount of P600,000.00 was, in fact, the product of a negotiation between the parties. Respondent herself testified that she bargained with petitioner to lower the amount: ATTY. VILLEGAS: Q And is it not that there was even a bargaining from P1-M to P600,000.00 before you prepare[d] and [sign[ed] that promissory note marked as Exhibit "C"? A Yes, sir. Q And in fact, you were the one [who] personally wrote the amount of P600,000.00 only as indicated in the said promissory note? A Yes, sir. COURT: Q So, just to clarify. Carmela was asking an additional amount of P1M for her to sign this document but you negotiated with her and asked that it be lowered to P600,000.00 to which she agreed, is that correct? A Yes, Your Honor. Napilitan na po ako. Q But you negotiated and asked for its reduction from P1-M to P600,000.00? A Yes, Your Honor.18 Contrary to the CAs findings, the situation did not amount to intimidation that vitiated consent. There is intimidation when one of the contracting parties is compelled to give his consent by a reasonable and well-grounded
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fear of an imminent and grave evil upon his person or property, or upon the person or property of his spouse, descendants, or ascendants.19 Certainly, the payment of penalties for delayed payment of taxes would not qualify as a "reasonable and well-grounded fear of an imminent and grave evil." We join the RTC in holding that courts will not set aside contracts merely because solicitation, importunity, argument, persuasion, or appeal to affection was used to obtain the consent of the other party. Influence obtained by persuasion or argument or by appeal to affection is not prohibited either in law or morals and is not obnoxious even in courts of equity.20 On the issue that the promissory note is void for not being supported by a consideration, we likewise disagree with the CA. A contract is presumed to be supported by cause or consideration.21 The presumption that a contract has sufficient consideration cannot be overthrown by a mere assertion that it has no consideration. To overcome the presumption, the alleged lack of consideration must be shown by preponderance of evidence.22 The burden to prove lack of consideration rests upon whoever alleges it, which, in the present case, is respondent. Respondent failed to prove that the promissory note was not supported by any consideration. From her testimony and her assertions in the pleadings, it is clear that the promissory note was issued for a cause or consideration, which, at the very least, was petitioners signature on the document.
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It may very well be argued that if such was the consideration, it was inadequate. Nonetheless, even if the consideration is inadequate, the contract would not be invalidated, unless there has been fraud, mistake, or undue influence.23 As previously stated, none of these grounds had been proven present in this case. The foregoing discussion renders the final issue insignificant. Be that as it may, we would like to state that the remedy suggested by the CA is not the proper one under the circumstances. An action for partition implies that the property is still owned in common.24 Considering that the heirs had already executed a deed of extrajudicial settlement and waived their shares in favor of respondent, the properties are no longer under a state of co-ownership; there is nothing more to be partitioned, as ownership had already been merged in one person.
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WHEREFORE, premises considered, the CA Decision dated February 21, 2008 and its Resolution dated July 9, 2008 are REVERSED and SET ASIDE. The RTC decision dated May 15, 2006 is REINSTATED. SO ORDERED. ANTONIO EDUARDO B. NACHURA G.R. No. 157493 February 5, 2007

RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO, ERNESTO, LEONORA, BIBIANO, JR., LIBRADO and ENRIQUETA, all surnamed OESMER, Petitioners, vs. PARAISO DEVELOPMENT CORPORATION, Respondent. DECISION CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to reverse and set aside the Court of Appeals Decision1 dated 26 April 2002 in CA-G.R. CV No. 53130 entitled, Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, Enriqueta, Adolfo, and Jesus, all surnamed Oesmer vs. Paraiso Development Corporation, as modified by its Resolution2 dated 4 March 2003, declaring the Contract to Sell valid and binding with respect to the undivided proportionate shares of the six signatories of the said document, herein petitioners, namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer); and ordering them to execute the Deed of Absolute Sale concerning their 6/8 share over the subject parcels of land in favor of herein respondent Paraiso Development Corporation, and to pay the latter the attorneys fees plus costs of the suit. The assailed Decision, as modified, likewise ordered the respondent to tender payment to the petitioners in the amount of P3,216,560.00 representing the balance of the purchase price of the subject parcels of land. The facts of the case are as follows: Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all surnamed Oesmer, together with Adolfo Oesmer (Adolfo) and Jesus
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Oesmer (Jesus), are brothers and sisters, and the co-owners of undivided shares of two parcels of agricultural and tenanted land situated in Barangay Ulong Tubig, Carmona, Cavite, identified as Lot 720 with an area of 40,507 square meters (sq. m.) and Lot 834 containing an area of 14,769 sq. m., or a total land area of 55,276 sq. m. Both lots are unregistered and originally owned by their parents, Bibiano Oesmer and Encarnacion Durumpili, who declared the lots for taxation purposes under Tax Declaration No. 34383(cancelled by I.D. No. 6064-A) for Lot 720 and Tax Declaration No. 34374 (cancelled by I.D. No. 5629) for Lot 834. When the spouses Oesmer died, petitioners, together with Adolfo and Jesus, acquired the lots as heirs of the former by right of succession. Respondent Paraiso Development Corporation is known to be engaged in the real estate business. Sometime in March 1989, Rogelio Paular, a resident and former Municipal Secretary of Carmona, Cavite, brought along petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso Development Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of brokering the sale of petitioners properties to respondent corporation. Pursuant to the said meeting, a Contract to Sell5 was drafted by the Executive Assistant of Sotero Lee, Inocencia Almo. On 1 April 1989, petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell. A check in the amount of P100,000.00, payable to Ernesto, was given as option money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said Contract to Sell. However, two of the brothers, Adolfo and Jesus, did not sign the document. On 5 April 1989, a duplicate copy of the instrument was returned to respondent corporation. On 21 April 1989, respondent brought the same to a notary public for notarization. In a letter6 dated 1 November 1989, addressed to respondent corporation, petitioners informed the former of their intention to rescind the Contract to Sell and to return the amount of P100,000.00 given by respondent as option money. Respondent did not respond to the aforesaid letter. On 30 May 1991, herein petitioners, together with Adolfo and Jesus, filed a Complaint7 for
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Declaration of Nullity or for Annulment of Option Agreement or Contract to Sell with Damages before the Regional Trial Court (RTC) of Bacoor, Cavite. The said case was docketed as Civil Case No. BCV-91-49. During trial, petitioner Rizalino died. Upon motion of petitioners, the trial court issued an Order,8 dated 16 September 1992, to the effect that the deceased petitioner be substituted by his surviving spouse, Josefina O. Oesmer, and his children, Rolando O. Oesmer and Fernando O. Oesmer. However, the name of Rizalino was retained in the title of the case both in the RTC and the Court of Appeals. After trial on the merits, the lower court rendered a Decision9 dated 27 March 1996 in favor of the respondent, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and binding only to the undivided proportionate share of the signatory of this document and recipient of the check, [herein petitioner] co-owner Ernesto Durumpili Oesmer. The latter is hereby ordered to execute the Contract of Absolute Sale concerning his 1/8 share over the subject two parcels of land in favor of herein [respondent] corporation, and to pay the latter the attorneys fees in the sum of Ten Thousand (P10,000.00) Pesos plus costs of suit. The counterclaim of [respondent] corporation is hereby Dismissed for lack of merit.10 Unsatisfied, respondent appealed the said Decision before the Court of Appeals. On 26 April 2002, the appellate court rendered a Decision modifying the Decision of the court a quo by declaring that the Contract to Sell is valid and binding with respect to the undivided proportionate shares of the six signatories of the said document, herein petitioners, namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The decretal portion of the said Decision states that: WHEREFORE, premises considered, the Decision of the court a quo is hereby MODIFIED. Judgment is hereby rendered in favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and binding with respect to the undivided proportionate share of the six (6) signatories of this document, [herein petitioners], namely,
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Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The said [petitioners] are hereby ordered to execute the Deed of Absolute Sale concerning their 6/8 share over the subject two parcels of land and in favor of herein [respondent] corporation, and to pay the latter the attorneys fees in the sum of Ten Thousand Pesos (P10,000.00) plus costs of suit.11 Aggrieved by the above-mentioned Decision, petitioners filed a Motion for Reconsideration of the same on 2 July 2002. Acting on petitioners Motion for Reconsideration, the Court of Appeals issued a Resolution dated 4 March 2003, maintaining its Decision dated 26 April 2002, with the modification that respondent tender payment to petitioners in the amount of P3,216,560.00, representing the balance of the purchase price of the subject parcels of land. The dispositive portion of the said Resolution reads: WHEREFORE, premises considered, the assailed Decision is hereby modified. Judgment is hereby rendered in favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and binding with respect to the undivided proportionate shares of the six (6) signatories of this document, [herein petitioners], namely, Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The said [petitioners] are hereby ordered to execute the Deed of Absolute Sale concerning their 6/8 share over the subject two parcels of land in favor of herein [respondent] corporation, and to pay the latter attorneys fees in the sum of Ten Thousand Pesos (P10,000.00) plus costs of suit. Respondent is likewise ordered to tender payment to the abovenamed [petitioners] in the amount of Three Million Two Hundred Sixteen Thousand Five Hundred Sixty Pesos (P3,216,560.00) representing the balance of the purchase price of the subject two parcels of land. 12
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Hence, this Petition for Review on Certiorari. Petitioners come before this Court arguing that the Court of Appeals erred: I. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is not binding upon petitioner Ernesto Oesmers coowners (herein petitioners Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora).

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II. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is void altogether considering that respondent itself did not sign it as to indicate its consent to be bound by its terms. Moreover, Exhibit D is really a unilateral promise to sell without consideration distinct from the price, and hence, void. Petitioners assert that the signatures of five of them namely: Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora, on the margins of the supposed Contract to Sell did not confer authority on petitioner Ernesto as agent to sell their respective shares in the questioned properties, and hence, for lack of written authority from the above-named petitioners to sell their respective shares in the subject parcels of land, the supposed Contract to Sell is void as to them. Neither do their signatures signify their consent to directly sell their shares in the questioned properties. Assuming that the signatures indicate consent, such consent was merely conditional. The effectivity of the alleged Contract to Sell was subject to a suspensive condition, which is the approval of the sale by all the co-owners. Petitioners also assert that the supposed Contract to Sell (Exhibit D), contrary to the findings of the Court of Appeals, is not couched in simple language. They further claim that the supposed Contract to Sell does not bind the respondent because the latter did not sign the said contract as to indicate its consent to be bound by its terms. Furthermore, they maintain that the supposed Contract to Sell is really a unilateral promise to sell and the option money does not bind petitioners for lack of cause or consideration distinct from the purchase price. The Petition is bereft of merit. It is true that the signatures of the five petitioners, namely: Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora, on the Contract to Sell did not confer authority on petitioner Ernesto as agent authorized to sell their respective shares in the questioned properties because of Article 1874 of the Civil Code, which expressly provides that: Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.
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The law itself explicitly requires a written authority before an agent can sell an immovable. The conferment of such an authority should be in writing, in as clear and precise terms as possible. It is worth noting that petitioners signatures are found in the Contract to Sell. The Contract is absolutely silent on the establishment of any principal-agent relationship between the five petitioners and their brother and co-petitioner Ernesto as to the sale of the subject parcels of land. Thus, the Contract to Sell, although signed on the margin by the five petitioners, is not sufficient to confer authority on petitioner Ernesto to act as their agent in selling their shares in the properties in question. However, despite petitioner Ernestos lack of written authority from the five petitioners to sell their shares in the subject parcels of land, the supposed Contract to Sell remains valid and binding upon the latter. As can be clearly gleaned from the contract itself, it is not only petitioner Ernesto who signed the said Contract to Sell; the other five petitioners also personally affixed their signatures thereon. Therefore, a written authority is no longer necessary in order to sell their shares in the subject parcels of land because, by affixing their signatures on the Contract to Sell, they were not selling their shares through an agent but, rather, they were selling the same directly and in their own right. The Court also finds untenable the following arguments raised by petitioners to the effect that the Contract to Sell is not binding upon them, except to Ernesto, because: (1) the signatures of five of the petitioners do not signify their consent to sell their shares in the questioned properties since petitioner Enriqueta merely signed as a witness to the said Contract to Sell, and that the other petitioners, namely: Librado, Rizalino, Leonora, and Bibiano, Jr., did not understand the importance and consequences of their action because of their low degree of education and the contents of the aforesaid contract were not read nor explained to them; and (2) assuming that the signatures indicate consent, such consent was merely conditional, thus, the effectivity of the alleged Contract to Sell was subject to a suspensive condition, which is the approval by all the co-owners of the sale. It is well-settled that contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the offeror. From that moment, the parties are bound not only to the fulfillment of what has been
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expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. To produce a contract, the acceptance must not qualify the terms of the offer. However, the acceptance may be express or implied. For a contract to arise, the acceptance must be made known to the offeror. Accordingly, the acceptance can be withdrawn or revoked before it is made known to the offeror.13 In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to the respondent of their shares in the subject parcels of land by affixing their signatures on the said contract. Such signatures show their acceptance of what has been stipulated in the Contract to Sell and such acceptance was made known to respondent corporation when the duplicate copy of the Contract to Sell was returned to the latter bearing petitioners signatures. As to petitioner Enriquetas claim that she merely signed as a witness to the said contract, the contract itself does not say so. There was no single indication in the said contract that she signed the same merely as a witness. The fact that her signature appears on the right-hand margin of the Contract to Sell is insignificant. The contract indisputably referred to the "Heirs of Bibiano and Encarnacion Oesmer," and since there is no showing that Enriqueta signed the document in some other capacity, it can be safely assumed that she did so as one of the parties to the sale. Emphasis should also be given to the fact that petitioners Ernesto and Enriqueta concurrently signed the Contract to Sell. As the Court of Appeals mentioned in its Decision,14 the records of the case speak of the fact that petitioner Ernesto, together with petitioner Enriqueta, met with the representatives of the respondent in order to finalize the terms and conditions of the Contract to Sell. Enriqueta affixed her signature on the said contract when the same was drafted. She even admitted that she understood the undertaking that she and petitioner Ernesto made in connection with the contract. She likewise disclosed that pursuant to the terms embodied in the Contract to Sell, she updated the payment of the real property taxes and transferred the Tax Declarations of the questioned properties in her name.15 Hence, it cannot be gainsaid that she merely signed the Contract to Sell as a witness because she did not only actively participate in the negotiation and execution of the same, but her

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subsequent actions also reveal an attempt to comply with the conditions in the said contract. With respect to the other petitioners assertion that they did not understand the importance and consequences of their action because of their low degree of education and because the contents of the aforesaid contract were not read nor explained to them, the same cannot be sustained. We only have to quote the pertinent portions of the Court of Appeals Decision, clear and concise, to dispose of this issue. Thus, First, the Contract to Sell is couched in such a simple language which is undoubtedly easy to read and understand. The terms of the Contract, specifically the amount of P100,000.00 representing the option money paid by [respondent] corporation, the purchase price of P60.00 per square meter or the total amount ofP3,316,560.00 and a brief description of the subject properties are well-indicated thereon that any prudent and mature man would have known the nature and extent of the transaction encapsulated in the document that he was signing. Second, the following circumstances, as testified by the witnesses and as can be gleaned from the records of the case clearly indicate the [petitioners] intention to be bound by the stipulations chronicled in the said Contract to Sell. As to [petitioner] Ernesto, there is no dispute as to his intention to effect the alienation of the subject property as he in fact was the one who initiated the negotiation process and culminated the same by affixing his signature on the Contract to Sell and by taking receipt of the amount of P100,000.00 which formed part of the purchase price. xxxx As to [petitioner] Librado, the [appellate court] finds it preposterous that he willingly affixed his signature on a document written in a language (English) that he purportedly does not understand. He testified that the document was just brought to him by an 18 year old niece named Baby and he was told that the document was for a check to be paid to him. He readily signed the Contract to Sell without consulting his other siblings. Thereafter, he exerted no effort in communicating with his brothers and sisters regarding the document which he had signed, did not inquire what the check was for
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and did not thereafter ask for the check which is purportedly due to him as a result of his signing the said Contract to Sell. (TSN, 28 September 1993, pp. 22-23) The [appellate court] notes that Librado is a 43 year old family man (TSN, 28 September 1993, p. 19). As such, he is expected to act with that ordinary degree of care and prudence expected of a good father of a family. His unwitting testimony is just divinely disbelieving. The other [petitioners] (Rizalino, Leonora and Bibiano Jr.) are likewise bound by the said Contract to Sell. The theory adopted by the [petitioners] that because of their low degree of education, they did not understand the contents of the said Contract to Sell is devoid of merit. The [appellate court] also notes that Adolfo (one of the co-heirs who did not sign) also possess the same degree of education as that of the signing co-heirs (TSN, 15 October 1991, p. 19). He, however, is employed at the Provincial Treasury Office at Trece Martirez, Cavite and has even accompanied Rogelio Paular to the Assessors Office to locate certain missing documents which were needed to transfer the titles of the subject properties. (TSN, 28 January 1994, pp. 26 & 35) Similarly, the other co-heirs [petitioners], like Adolfo, are far from ignorant, more so, illiterate that they can be extricated from their obligations under the Contract to Sell which they voluntarily and knowingly entered into with the [respondent] corporation. The Supreme Court in the case of Cecilia Mata v. Court of Appeals (207 SCRA 753 [1992]), citing the case of Tan Sua Sia v. Yu Baio Sontua (56 Phil. 711), instructively ruled as follows: "The Court does not accept the petitioners claim that she did not understand the terms and conditions of the transactions because she only reached Grade Three and was already 63 years of age when she signed the documents. She was literate, to begin with, and her age did not make her senile or incompetent. x x x. At any rate, Metrobank had no obligation to explain the documents to the petitioner as nowhere has it been proven that she is unable to read or that the contracts were written in a language not known to her. It was her responsibility to inform herself of the meaning and consequence of the contracts she was signing and, if she found them difficult to comprehend, to consult other persons, preferably lawyers, to explain them to her. After all,
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the transactions involved not only a few hundred or thousand pesos but, indeed, hundreds of thousands of pesos. As the Court has held: x x x The rule that one who signs a contract is presumed to know its contents has been applied even to contracts of illiterate persons on the ground that if such persons are unable to read, they are negligent if they fail to have the contract read to them. If a person cannot read the instrument, it is as much his duty to procure some reliable persons to read and explain it to him, before he signs it, as it would be to read it before he signed it if he were able to do and his failure to obtain a reading and explanation of it is such gross negligence as will estop from avoiding it on the ground that he was ignorant of its contents."16 That the petitioners really had the intention to dispose of their shares in the subject parcels of land, irrespective of whether or not all of the heirs consented to the said Contract to Sell, was unveiled by Adolfos testimony as follows: ATTY. GAMO: This alleged agreement between you and your other brothers and sisters that unless everybody will agree, the properties would not be sold, was that agreement in writing? WITNESS: No sir. ATTY. GAMO: What you are saying is that when your brothers and sisters except Jesus and you did not sign that agreement which had been marked as [Exhibit] "D", your brothers and sisters were grossly violating your agreement. WITNESS: Yes, sir, they violated what we have agreed upon.17 We also cannot sustain the allegation of the petitioners that assuming the signatures indicate consent, such consent was merely conditional, and that, the effectivity of the alleged Contract to Sell was subject to the suspensive condition that the sale be approved by all the co-owners. The Contract to Sell is clear enough. It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control.18 The terms of the Contract to Sell made no mention of the
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condition that before it can become valid and binding, a unanimous consent of all the heirs is necessary. Thus, when the language of the contract is explicit, as in the present case, leaving no doubt as to the intention of the parties thereto, the literal meaning of its stipulation is controlling. In addition, the petitioners, being owners of their respective undivided shares in the subject properties, can dispose of their shares even without the consent of all the co-heirs. Article 493 of the Civil Code expressly provides: Article 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. [Emphases supplied.] Consequently, even without the consent of the two co-heirs, Adolfo and Jesus, the Contract to Sell is still valid and binding with respect to the 6/8 proportionate shares of the petitioners, as properly held by the appellate court. Therefore, this Court finds no error in the findings of the Court of Appeals that all the petitioners who were signatories in the Contract to Sell are bound thereby. The final arguments of petitioners state that the Contract to Sell is void altogether considering that respondent itself did not sign it as to indicate its consent to be bound by its terms; and moreover, the Contract to Sell is really a unilateral promise to sell without consideration distinct from the price, and hence, again, void. Said arguments must necessarily fail. The Contract to Sell is not void merely because it does not bear the signature of the respondent corporation. Respondent corporations consent to be bound by the terms of the contract is shown in the uncontroverted facts which established that there was partial performance by respondent of its obligation in the said Contract to Sell when it tendered the amount of P100,000.00 to form part of the purchase price, which was accepted and acknowledged expressly by petitioners. Therefore, by force of law, respondent is required to complete the payment to enforce the terms of the
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contract. Accordingly, despite the absence of respondents signature in the Contract to Sell, the former cannot evade its obligation to pay the balance of the purchase price. As a final point, the Contract to Sell entered into by the parties is not a unilateral promise to sell merely because it used the word option money when it referred to the amount of P100,000.00, which also form part of the purchase price. Settled is the rule that in the interpretation of contracts, the ascertainment of the intention of the contracting parties is to be discharged by looking to the words they used to project that intention in their contract, all the words, not just a particular word or two, and words in context, not words standing alone.19 In the instant case, the consideration of P100,000.00 paid by respondent to petitioners was referred to as "option money." However, a careful examination of the words used in the contract indicates that the money is not option money but earnest money. "Earnest money" and "option money" are not the same but distinguished thus: (a) earnest money is part of the purchase price, while option money is the money given as a distinct consideration for an option contract; (b) earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; and, (c) when earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy, but may even forfeit it depending on the terms of the option.20 The sum of P100,000.00 was part of the purchase price. Although the same was denominated as "option money," it is actually in the nature of earnest money or down payment when considered with the other terms of the contract. Doubtless, the agreement is not a mere unilateral promise to sell, but, indeed, it is a Contract to Sell as both the trial court and the appellate court declared in their Decisions. WHEREFORE, premises considered, the Petition is DENIED, and the Decision and Resolution of the Court of Appeals dated 26 April 2002 and 4 March 2003, respectively, are AFFIRMED, thus, (a) the Contract to Sell isDECLARED valid and binding with respect to the undivided proportionate shares in the subject parcels of land of the six signatories of the said
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document, herein petitioners Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer); (b) respondent is ORDERED to tender payment to petitioners in the amount ofP3,216,560.00 representing the balance of the purchase price for the latters shares in the subject parcels of land; and (c) petitioners are further ORDERED to execute in favor of respondent the Deed of Absolute Sale covering their shares in the subject parcels of land after receipt of the balance of the purchase price, and to pay respondent attorneys fees plus costs of the suit. Costs against petitioners. SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice G.R. No. 177703 January 28, 2008

VILMA G. ARRIOLA and ANTHONY RONALD G. ARRIOLA, petitioners, vs. JOHN NABOR C. ARRIOLA, respondent. DECISION AUSTRIA-MARTINEZ, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the November 30, 2006 Decision1 and April 30, 2007 Resolution2 of the Court of Appeals in CA-G.R. SP No. 93570. The relevant facts are culled from the records. John Nabor C. Arriola (respondent) filed Special Civil Action No. 03-0010 with the Regional Trial Court, Branch 254, Las Pias City (RTC) against Vilma G. Arriola and Anthony Ronald G. Arriola (petitioners) for judicial partition of the properties of decedent Fidel Arriola (the decedent Fidel). Respondent is the son of decedent Fidel with his first wife Victoria C. Calabia, while petitioner Anthony is the son of decedent Fidel with his second wife, petitioner Vilma. On February 16, 2004, the RTC rendered a Decision, the dispositive portion of which reads:
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WHEREFORE, premises considered, judgment is hereby rendered: 1. Ordering the partition of the parcel of land covered by Transfer Certificate of Title No. 383714 (84191) left by the decedent Fidel S. Arriola by and among his heirs John Nabor C. Arriola, Vilma G. Arriola and Anthony Ronald G. Arriola in equal shares of one-third (1/3) each without prejudice to the rights of creditors or mortgagees thereon, if any; 2. Attorney's fees in the amount of TEN THOUSAND (P10,000.00) PESOS is hereby awarded to be reimbursed by the defendants to the plaintiff; 3. Costs against the defendants. SO ORDERED.3 The decision became final on March 15, 2004.4 As the parties failed to agree on how to partition among them the land covered by TCT No. 383714 (subject land), respondent sought its sale through public auction, and petitioners acceded to it.5 Accordingly, the RTC ordered the public auction of the subject land.6 The public auction sale was scheduled on May 31, 2003 but it had to be reset when petitioners refused to include in the auction the house (subject house) standing on the subject land.7This prompted respondent to file with the RTC an Urgent Manifestation and Motion for Contempt of Court,8praying that petitioners be declared in contempt. The RTC denied the motion in an Order9 dated August 30, 2005, for the reason that petitioners were justified in refusing to have the subject house included in the auction, thus: The defendants [petitioners] are correct in holding that the house or improvement erected on the property should not be included in the auction sale. A cursory reading of the aforementioned Decision and of the evidence adduced during the ex-parte hearing clearly show that nothing was mentioned about the house existing on the land subject matter of the case. In fact, even plaintiff's [respondent's] initiatory
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Complaint likewise did not mention anything about the house. Undoubtedly therefore, the Court did not include the house in its adjudication of the subject land because it was plaintiff himself who failed to allege the same. It is a well-settled rule that the court can not give a relief to that which is not alleged and prayed for in the complaint. To hold, as plaintiff argued, that the house is considered accessory to the land on which it is built is in effect to add to plaintiff's [a] right which has never been considered or passed upon during the trial on the merits. In the absence of any other declaration, obvious or otherwise, only the land should be partitioned in accordance to[sic] the aforementioned Decision as the house can not be said to have been necessarily adjudicated therein. Thus, plaintiff can not be declared as a co-owner of the same house without evidence thereof and due hearing thereon. The Decision of the Court having attained its finality, as correctly pointed out, judgment must stand even at the risk that it might be erroneous. WHEREFORE, the Urgent Manifestation and Motion for Contempt of Court filed by plaintiff is hereby DENIED for lack of merit. SO ORDERED.10 The RTC, in its Order dated January 3, 2006, denied respondent's Motion for Reconsideration.11 Respondent filed with the CA a Petition for Certiorari12 where he sought to have the RTC Orders set aside, and prayed that he be allowed to proceed with the auction of the subject land including the subject house. In its November 30, 2006 Decision, the CA granted the Petition for Certiorari, to wit: WHEREFORE, the petition is GRANTED. The assailed orders dated August 30, 2005 and January 3, 2006 issued by the RTC, in Civil Case No. SCA 03-0010, are REVERSED and SET ASIDE, and the
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sheriff is ordered to proceed with the public auction sale of the subject lot covered by TCT No. 383714, including the house constructed thereon. SO ORDERED.13 (Emphasis supplied.) Petitioners filed a motion for reconsideration but the CA denied the same in its Resolution14 of April 30, 2007. Hence, the present petition on the sole ground that the CA erred in holding that the RTC committed grave abuse of discretion in denying the motion for contempt of court. The assailed CA Decision and Resolution must be modified for reasons other than those advanced by petitioners. The contempt proceeding initiated by respondent was one for indirect contempt. Section 4, Rule 71 of the Rules of Court prescribes the procedure for the institution of proceedings for indirect contempt, viz: Sec. 4. How proceedings commenced. Proceedings for indirect contempt may be initiated motu proprio by the court against which the contempt was committed by an order or any other formal charge requiring the respondent to show cause why he should not be punished for contempt. In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting particulars and certified true copies of documents or papers involved therein, and upon full compliance with the requirements for filing initiatory pleadings for civil actions in the court concerned. If the contempt charges arose out of or are related to a principal action pending in the court, the petition for contempt shall allege that fact but said petition shall be docketed, heard and decided separately, unless the court in its discretion orders the consolidation of the contempt charge and the principal action for joint hearing and decision. (Emphases supplied.) Under the aforecited second paragraph of the Rules, the requirements for initiating an indirect contempt proceeding are a) that it be initiated by way of
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a verified petition and b) that it should fully comply with the requirements for filing initiatory pleadings for civil actions. In Regalado v. Go,15 we held: As explained by Justice Florenz Regalado, the filing of a verified petition that has complied with the requirements for the filing of initiatory pleading, is mandatory x x x: This new provision clarifies with a regularity norm the proper procedure for commencing contempt proceedings. While such proceeding has been classified as special civil action under the former Rules, the heterogenous practice tolerated by the courts, has been for any party to file a motion without paying any docket or lawful fees therefore and without complying with the requirements for initiatory pleadings, which is now required in the second paragraph of this amended section. xxxx Henceforth, except for indirect contempt proceedings initiated motu propio by order of or a formal charge by the offended court, all charges shall be commenced by a verified petition with full compliance with the requirements therefore and shall be disposed in accordance with the second paragraph of this section. xxxx Even if the contempt proceedings stemmed from the main case over which the court already acquired jurisdiction, the rules direct that the petition for contempt be treated independently of the principal action. Consequently, the necessary prerequisites for the filing of initiatory pleadings, such as the filing of a verified petition, attachment of a certification on non-forum shopping, and the payment of the necessary docket fees, must be faithfully observed. xxxx The provisions of the Rules are worded in very clear and categorical language. In case where the indirect contempt charge is not initiated
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by the courts, the filing of a verified petition which fulfills the requirements on initiatory pleadings is a prerequisite. Beyond question now is the mandatory requirement of a verified petition in initiating an indirect contempt proceeding. Truly, prior to the amendment of the 1997 Rules of Civil Procedure, mere motion without complying with the requirements for initiatory pleadings was tolerated by the courts. At the onset of the 1997 Revised Rules of Civil Procedure, however, such practice can no longer be countenanced.16 (Emphasis ours.) The RTC erred in taking jurisdiction over the indirect contempt proceeding initiated by respondent. The latter did not comply with any of the mandatory requirements of Section 4, Rule 71. He filed a mere Urgent Manifestation and Motion for Contempt of Court, and not a verified petition. He likewise did not conform with the requirements for the filing of initiatory pleadings such as the submission of a certification against forum shopping and the payment of docket fees. Thus, his unverified motion should have been dismissed outright by the RTC. It is noted though that, while at first the RTC overlooked the infirmities in respondent's unverified motion for contempt, in the end, it dismissed the motion, albeit on substantive grounds. The trouble is that, in the CA decision assailed herein, the appellate court committed the same oversight by delving into the merits of respondent's unverified motion and granting the relief sought therein. Thus, strictly speaking, the proper disposition of the present petition ought to be the reversal of the CA decision and the dismissal of respondent's unverified motion for contempt filed in the RTC for being in contravention of Section 4, Rule 71. However, such simplistic disposition will not put an end to the dispute between the parties. A seed of litigation has already been sown that will likely sprout into another case between them at a later time. We refer to the question of whether the subject house should be included in the public auction of the subject land. Until this question is finally resolved, there will be no end to litigation between the parties. We must therefore deal with it squarely, here and now. The RTC and the CA differed in their views on whether the public auction should include the subject house. The RTC excluded the subject house because respondent never alleged its existence in his complaint for
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partition or established his co-ownership thereof.17 On the other hand, citing Articles 440,18 44519 and 44620 of the Civil Code, the CA held that as the deceased owned the subject land, he also owned the subject house which is a mere accessory to the land. Both properties form part of the estate of the deceased and are held in co-ownership by his heirs, the parties herein. Hence, the CA concludes that any decision in the action for partition of said estate should cover not just the subject land but also the subject house.21 The CA further pointed out that petitioners themselves implicitly recognized the inclusion of the subject house in the partition of the subject land when they proposed in their letter of August 5, 2004, the following swapping-arrangement: Sir: Thank you very much for accommodating us even if we are only poor and simple people. We are very much pleased with the decision of Presiding Judge Manuel B. Fernandez, Jr., RTC Br. 254, Las Pias, on the sharing of one-third (1/3) each of a land covered by Transfer Certificate of Title No. 383714 (84191) in Las Pias City. However, to preserve the sanctity of our house which is our residence for more than twenty (20) years, we wish to request that the 1/3 share of John Nabor C. Arriola be paid by the defendants depending on the choice of the plaintiff between item (1) or item (2), detailed as follows: (1) Swap with a 500-square meters [sic] lot located at Baras Rizal x x x. (2) Cash of P205,700.00 x x x. x x x x.22 We agree that the subject house is covered by the judgment of partition for reasons postulated by the CA. We qualify, however, that this ruling does not necessarily countenance the immediate and actual partition of the subject house by way of public auction in view of the suspensive proscription imposed under Article 159 of The Family Code which will be discussed forthwith. It is true that the existence of the subject house was not specifically alleged in the complaint for partition. Such omission notwithstanding, the subject
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house is deemed part of the judgment of partition for two compelling reasons. First, as correctly held by the CA, under the provisions of the Civil Code, the subject house is deemed part of the subject land. The Court quotes with approval the ruling of the CA, to wit: The RTC, in the assailed Order dated August 30, 2005 ratiocinated that since the house constructed on the subject lot was not alleged in the complaint and its ownership was not passed upon during the trial on the merits, the court cannot include the house in its adjudication of the subject lot. The court further stated that it cannot give a relief to[sic] which is not alleged and prayed for in the complaint. We are not persuaded. To follow the foregoing reasoning of the RTC will in effect render meaningless the pertinent rule on accession. In general, the right to accession is automatic (ipso jure), requiring no prior act on the part of the owner or the principal. So that even if the improvements including the house were not alleged in the complaint for partition, they are deemed included in the lot on which they stand, following the principle of accession. Consequently, the lot subject of judicial partition in this case includes the house which is permanently attached thereto, otherwise, it would be absurd to divide the principal, i.e., the lot, without dividing the house which is permanently attached thereto.23 (Emphasis supplied) Second, respondent has repeatedly claimed that the subject house was built by the deceased.24 Petitioners never controverted such claim. There is then no dispute that the subject house is part of the estate of the deceased; as such, it is owned in common by the latter's heirs, the parties herein,25 any one of whom, under Article 49426 of the Civil Code, may, at any time, demand the partition of the subject house.27 Therefore, respondent's recourse to the partition of the subject house cannot be hindered, least of all by the mere technical omission of said common property from the complaint for partition. That said notwithstanding, we must emphasize that, while we treat the subject house as part of the co-ownership of the parties, we stop
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short of authorizing its actual partition by public auction at this time. It bears emphasis that an action for partition involves two phases: first, the declaration of the existence of a state of co-ownership; and second, the actual termination of that state of co-ownership through the segregation of the common property.28 What is settled thus far is only the fact that the subject house is under the co-ownership of the parties, and therefore susceptible of partition among them. Whether the subject house should be sold at public auction as ordered by the RTC is an entirely different matter, depending on the exact nature of the subject house. Respondent claims that the subject house was built by decedent Fidel on his exclusive property.29 Petitioners add that said house has been their residence for 20 years.30 Taken together, these averments on record establish that the subject house is a family home within the contemplation of the provisions of The Family Code, particularly: Article 152. The family home, constituted jointly by the husband and the wife or by an unmarried head of a family, is the dwelling house where they and their family reside, and the land on which it is situated. Article 153. The family home is deemed constituted on a house and lot from the time it is occupied as a family residence. From the time of its constitution and so long as any of its beneficiaries actually resides therein, the family home continues to be such and is exempt from execution, forced sale or attachment except as hereinafter provided and to the extent of the value allowed by law. (Emphasis supplied.) One significant innovation introduced by The Family Code is the automatic constitution of the family home from the time of its occupation as a family residence, without need anymore for the judicial or extrajudicial processes provided under the defunct Articles 224 to 251 of the Civil Code and Rule 106 of the Rules of Court. Furthermore, Articles 152 and 153 specifically extend the scope of the family home not just to the dwelling structure in which the family resides but also to the lot on which it stands. Thus, applying these concepts, the subject house as well as the specific portion of the subject land on which it stands are deemed constituted as a family
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home by the deceased and petitioner Vilma from the moment they began occupying the same as a family residence 20 years back.31 It being settled that the subject house (and the subject lot on which it stands) is the family home of the deceased and his heirs, the same is shielded from immediate partition under Article 159 of The Family Code, viz: Article 159. The family home shall continue despite the death of one or both spouses or of the unmarried head of the family for a period of ten years or for as long as there is a minor beneficiary, and the heirs cannot partition the same unless the court finds compelling reasons therefor. This rule shall apply regardless of whoever owns the property or constituted the family home. (Emphasis supplied.) The purpose of Article 159 is to avert the disintegration of the family unit following the death of its head. To this end, it preserves the family home as the physical symbol of family love, security and unity by imposing the following restrictions on its partition: first, that the heirs cannot extrajudicially partition it for a period of 10 years from the death of one or both spouses or of the unmarried head of the family, or for a longer period, if there is still a minor beneficiary residing therein; and second, that the heirs cannot judicially partition it during the aforesaid periods unless the court finds compelling reasons therefor. No compelling reason has been alleged by the parties; nor has the RTC found any compelling reason to order the partition of the family home, either by physical segregation or assignment to any of the heirs or through auction sale as suggested by the parties. More importantly, Article 159 imposes the proscription against the immediate partition of the family home regardless of its ownership. This signifies that even if the family home has passed by succession to the coownership of the heirs, or has been willed to any one of them, this fact alone cannot transform the family home into an ordinary property, much less dispel the protection cast upon it by the law. The rights of the individual co-owner or owner of the family home cannot subjugate the rights granted under Article 159 to the beneficiaries of the family home. Set against the foregoing rules, the family home -- consisting of the subject house and lot on which it stands -- cannot be partitioned at this time, even if
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it has passed to the co-ownership of his heirs, the parties herein. Decedent Fidel died on March 10, 2003.32 Thus, for 10 years from said date or until March 10, 2013, or for a longer period, if there is still a minor beneficiary residing therein, the family home he constituted cannot be partitioned, much less when no compelling reason exists for the court to otherwise set aside the restriction and order the partition of the property. The Court ruled in Honrado v. Court of Appeals33 that a claim for exception from execution or forced sale under Article 153 should be set up and proved to the Sheriff before the sale of the property at public auction. Herein petitioners timely objected to the inclusion of the subject house although for a different reason. To recapitulate, the evidence of record sustain the CA ruling that the subject house is part of the judgment of co-ownership and partition. The same evidence also establishes that the subject house and the portion of the subject land on which it is standing have been constituted as the family home of decedent Fidel and his heirs. Consequently, its actual and immediate partition cannot be sanctioned until the lapse of a period of 10 years from the death of Fidel Arriola, or until March 10, 2013. It bears emphasis, however, that in the meantime, there is no obstacle to the immediate public auction of the portion of the subject land covered by TCT No. 383714, which falls outside the specific area of the family home. WHEREFORE, the petition is PARTLY GRANTED and the November 30, 2006 Decision and April 30, 2007 Resolution of the Court of Appeals are MODIFIED in that the house standing on the land covered by Transfer Certificate of Title No. 383714 is DECLARED part of the co-ownership of the parties John Nabor C. Arriola, Vilma G. Arriola and Anthony Ronald G. Arriola but EXEMPTED from partition by public auction within the period provided for in Article 159 of the Family Code. No costs. SO ORDERED.
THIRD DIVISION [G.R. No. 159665 : August 03, 2010] ANSELMO TAGHOY AND THE LATE VICENTA T. APA, SUBSTITUTED BY HER 290

HEIRS, NAMELY, MANUEL T. APA, NICASIO T. APA, DELFIN T. APA, ALMA A. JACALAN, ARLENE A. SUMALINOG, AIDA A. ARONG, ELENA A. COSEP, ALFREDO T. APA, ISABELO T. APA, JR., ISABELO T. APA III, SHERWIN T. APA, AND FLORITO T. APA, PETITIONERS, VS. SPS. FELIXBERTO TIGOL, JR. AND ROSITA TIGOL, RESPONDENTS. DECISION BRION, J.: We resolve the present petition for review on certiorari[1] filed by petitioners Anselmo Taghoy and the heirs of Vicenta T. Apa (petitioners) to challenge the decision[2] and the resolution[3] of the Court of Appeals (CA) in CA-G.R. CV No. 54385.[4] The CA decision set aside the decision[5] of the Regional Trial Court (RTC), Branch 27, Lapu-lapu City in Civil Case No. 2247. The CA resolution denied the petitioners' subsequent motion for reconsideration. FACTUAL BACKGROUND The facts of the case, gathered from the records, are briefly summarized below. Spouses Filomeno Taghoy and Margarita Amit[6] owned an 11,067 square meter parcel of land, known as Lot 3635-B of subdivision plan (LRC) Psd-212881 (subject property), located in Barrio Agus, Lapu-Lapu City, Cebu under Transfer Certificate of Title (TCT) No. 6466 of the Lapu-Lapu City Registry of Deeds.[7] On August 6, 1975, Filomeno and Margarita[8] executed a special power of attorney, appointing Felixberto Tigol, Jr. as their attorney-in-fact.[9] On August 21, 1975, Felixberto, as attorney-in-fact, executed a real estate mortgage over the subject property to secure a loan of P22,000.00 with the Philippine National Bank (PNB).[10] Filomeno and Margarita obtained the loan to finance the shellcraft business of their children.[11] Filomeno died intestate on February 12, 1976. On July 27, 1979, his widow, Margarita, and their seven children, namely, Vicenta, Felisa, Pantaleon, Gaudencio, Anselmo, Anastacia and Rosita, as heirs of the deceased, executed a Deed of Extrajudicial Settlement and Sale, adjudicating to themselves the subject property and selling the same to Rosita and her husband Felixberto (respondents) for P1,000.00.[12] Subsequently, on September 7, 1981 and August 10, 1982, Filomeno's heirs executed two (2) Deeds of Confirmation of Sale, confirming the supposed sale of the subject property by Filomeno and Margarita in favor of the respondents for P1,000.00.[13] Simultaneous with the execution of the deeds, however, the respondents executed explanatory Joint Affidavits attesting that the sale was without any consideration, and was only executed to secure a loan.[14] On March 9, 1983, TCT No. 13250 was issued in the respondents' names.[15] On 291

July 1, 1983, the respondents obtained a P70,000.00 loan with the Philippine Banking Corporation, secured by a real estate mortgage on the subject property.[16] Seven (7) years later, on April 17, 1990, Anselmo and Vicenta, together with Margarita, Felisa, Gaudencio, and Pantaleon's surviving heir, Annabel, filed a complaint against the respondents and Anastacia for declaration of nullity of the respondents' TCT and for judicial partition.[17] They alleged that the deeds of confirmation of sale became the bases for the transfer of the title in the respondents' names, but the sale was fictitious or simulated, as evidenced by the respondents' own explanatory joint affidavits attesting that the transfer was for the purpose only of convenience in securing a loan, not for absolute conveyance or sale. The respondents admitted that they executed the joint affidavits but countered that they acquired a valid title to the subject property through the Extrajudicial Settlement of Heirs and Sale. They claimed that when Filomeno died without the PNB loan being paid, the heirs agreed that the respondents will advance payment of the loan, subject to reimbursement, to save the foreclosure of the subject property; the heirs then executed the Extrajudicial Settlement and Sale in the respondents' favor as their way of reimbursing the amount the latter paid; the respondents executed the joint affidavits out of generosity, expressing their willingness to be reimbursed, but when the heirs failed to reimburse the amounts advanced by them, then they caused the registration of the title in their names.[18] Margarita, Felisa, Gaudencio and Annabel failed to appear at the initial hearing, prompting the petitioners' counsel to manifest that, except for Anselmo and Vicenta, they were abandoning the complaint.[19] The petitioners subsequently amended the complaint to implead Margarita, Felisa, Gaudencio and Annabel as party defendants or unwilling plaintiffs.[20] THE RTC RULING In its decision, the RTC found that the sale of the subject property was absolutely simulated since the deeds of confirmation of sale were executed only to accommodate the respondents' loan application using the subject property as collateral. The lower court thus ordered the nullification of the respondents' title. It likewise ordered the partition of the subject property after reimbursement of the amount the respondents paid for the loan.[21] Subsequently, the respondents filed a motion for new trial, anchored on newly discovered evidence allegedly proving that the subject property is Margarita's paraphernal property.[22] When the RTC denied[23] the motion for new trial, the respondents filed an appeal with the CA, under Rule 41 of the Rules of Court. THE CA RULING The CA decided the appeal on August 26, 2002, reversing the RTC decision. Relying upon Margarita's testimony that the respondents paid the loan, the CA found that 292

the contract between the parties was relatively simulated; the respondents' payment of the PNB loan was the real consideration for the transfer of title. After the CA denied[24] the motion for reconsideration[25] that followed, the petitioners filed the present petition. THE PETITION The petitioners argue that the heirs, in executing the extrajudicial settlement, did not intend to divest themselves of their respective rightful shares, interests and participation in the subject property because it lacked a consideration, as affirmed by the respondents' own joint affidavits; the payment of the PNB loan could not be a valid consideration for the transfer since the loan was still unpaid and outstanding at the time of the execution of the extrajudicial settlement.[26] THE CASE FOR THE RESPONDENTS The respondents, on the other hand, maintain that the Extrajudicial Settlement and Sale was the basis of their registration of title, and their payment of the PNB loan was the real consideration for the transfer; the joint affidavits were executed only out of generosity and kindness, subject to the heirs' reimbursement of the amounts they paid for the loan, such that when the heirs did not reimburse the amounts paid, they then caused the registration of title in their names.[27] THE ISSUE The core issue boils down to whether the sale of the subject property between the parties was absolutely or relatively simulated. OUR RULING We find the petition meritorious. This Court is not a trier of facts. However, if the inference drawn by the appellate court from the facts is manifestly mistaken, as in the present case, we can review the evidence to allow us to arrive at the correct factual conclusions based on the record.[28] In the interpretation of contracts, the intention of the parties is accorded primordial consideration;[29] such intention is determined from the express terms of their agreement,[30] as well as their contemporaneous and subsequent acts.[31] When the parties do not intend to be bound at all, the contract is absolutely simulated; if the parties conceal their true agreement, then the contract is relatively simulated.[32] An absolutely simulated contract is void, and the parties may recover from each other what they may have given under the simulated contract, while a relatively simulated contract is valid and enforceable as the parties' real agreement binds them.[23] Characteristic of simulation is that the apparent contract is not really desired or intended to produce legal effects, or in 293

any way, alter the juridical situation of the parties.[34] In the present case, the parties never intended to be bound by their agreement as revealed by the two (2) joint affidavits executed by the respondents simultaneous with the execution of the deeds of confirmation of sale. The September 7, 1981 Joint Affidavit stated: 2. That the truth of the matter is that the deed of sale and the confirmation of said sale by the legal heirs are executed for the purpose of securing a loan in our name but which amount of said loan shall be divided equally among the legal heirs, and that every heir shall pay his corresponding share in the amortization payment of said loan; 3. That said sale was without any consideration, and that we executed this affidavit to establish the aforestated facts for purposes of loan only but not for conveyance and transfer in our name absolutely and forever but during the duration of the terms of the loan; 4. That we executed this affidavit voluntarily and freely in order to establish this facts (sic) above-mentioned and to undertake to return the said land to the legal heirs of the late spouse, Filomeno Taghoy, survived by his widow, Rita AmitTaghoy, upon full payment of our intended loan. The August 10, 1982 Joint Affidavit, on the other hand, averred: 3. That the truth of the matter is that said Lot No. 3635-B was sold without any purchase price or consideration paid to said Filomeno Taghoy, but for the purpose of securing a loan in our name but which amount of said loan shall be divided equally among us, the legal heirs of Filomeno Taghoy; 4. That in case the loan will be fully paid, we shall obligate ourselves to resell, reconvey the said Lot No. 3635-B in favor of the Heirs of Filomeno Taghoy and Rita Amit, and in case, the said loan will not be post (sic) through. 5. That we executed this affidavit voluntarily and freely in order to establish the aforestated facts and to attest the fact that said deed of confirmation of sale is only for purposes of convenience in securing the loan and not for absolute conveyance or sale.[36] The joint affidavits are very solid pieces of evidence in the petitioners' favor. They constitute admissions against interest made by the respondents under oath. An admission against interest is the best evidence that affords the greatest certainty of the facts in dispute,[37] based on the presumption that no man would declare anything against himself unless such declaration is true.[38] It is fair to presume that the declaration corresponds with the truth, and it is his fault if it does not.[39] Thus, by the respondents' own admissions, they never intended to be bound by the sale; they merely executed the documents for convenience in securing a bank loan, 294

and they agreed to reconvey the subject property upon payment of the loan. The sale was absolutely simulated and, therefore, void. We find that the CA misappreciated Margarita's testimony that the respondents are entitled to the entire property because they redeemed or paid the bank loan.[40] The failure of the other heirs to reimburse the amounts advanced by the respondents in payment of the loan did not entitle the latter to claim full ownership of the co-owned property.[41] It only gave them the right to claim reimbursement for the amounts they advanced in behalf of the co-ownership. The respondents' advance payments are in the nature of necessary expenses for the preservation of the co-ownership. Article 488 of the Civil Code provides that necessary expenses may be incurred by one co-owner, subject to his right to collect reimbursement from the remaining co-owners.[42] Until reimbursed, the respondents hold a lien upon the subject property for the amount they advanced. Based on the foregoing, we find that the CA erred in setting aside the decision of the RTC and in dismissing the petitioners' complaint against the respondents. WHEREFORE, we hereby REVERSE and SET ASIDE the decision dated August 26, 2002 and the resolution dated July 22, 2003 of the Court of Appeals in CA-G.R. CV No. 54385. The decision dated February 23, 1994 of the Regional Trial Court, Branch 27, Lapu-Lapu City in Civil Case No. 2247 is REINSTATED. No pronouncement as to costs. SO ORDERED. Carpio Morales, (Chairperson), Bersamin, *Abad, and Villarama, Jr., JJ., concur. Endnotes:

G.R. No. 141880

September 27, 2004

ZENAIDA F. DAPAR alias ZENAIDA D. BIASCAN, petitioner, vs. GLORIA LOZANO BIASCAN and MARIO BIASCAN, respondents. DECISION CALLEJO, SR., J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court from the Decision1 of the Court of Appeals (CA) in CA-G.R. CV- No. 57306 reversing the Decision2 of the Regional Trial Court (RTC) of Caloocan City,

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Branch 120, in Civil Case No. C-16184 and its Resolution3 denying the motion for the reconsideration thereof. The Antecedents Sometime in 1966, Spouses Gloria and Mario Biascan were married in civil rights in Quezon City.4 They were, thereafter, blessed with four (4) children, namely, Robert, Edward, Glomary, and Eric.5 Mario Biascan, an electrician by profession, worked in Saudi Arabia as an overseas contract worker from 1977 to 1981. It was in 1979 when he met Zenaida Dapar, who was then working as a domestic helper. That first meeting ripened into an intimate relationship. Both being lonely in a foreign land, Zenaida and Mario became lovers, which resulted in the latters failure to give support to his wife and family. Zenaida returned to the Philippines in 1981. Upon Marios return to the country, he joined Zenaida to live in a rented house in Pag-asa Subdivision, Karuhatan, Valenzuela, Metro Manila. They opened a joint account with the Philippine National Bank (PNB), Valenzuela Branch, under Savings Account No. 498-514587-96 on March 30, 1982. Mario returned to Saudi Arabia in February 1984, while Zenaida stayed behind and worked in a garment factory. He remitted his earnings to Zenaida, and the latter deposited the said amounts in the PNB joint savings account through the Barclay Bank, PLS Athens. These remittances were credited in the said account, as well as others coming from Zenaidas relatives who were also working abroad. As of May 21, 1901, the balance of the bank account was P257,225.7 In the meantime, on July 8, 1985, a contract to sell was executed by and between State Land Investment Corporation, on the one hand, and "Sps. Mario M. Biascan/ & Zenaida D. Biascan," on the other, over a parcel of land consisting of 150 square meters, described as Lot 11, Block 2, Narra St., Hillcrest Village, Camarin Road, Novaliches, Caloocan City for P177,189.00.8 A Deed of Sale9 was, thereafter, executed in favor of the "Sps. Mario M. Biascan and Zenaida D. Biascan," as vendees, as a result of which Transfer Certificate of Title (TCT) No. 207197 was issued by the Register of Deeds of Caloocan City under their names on February 8, 1990.10

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On November 15, 1993, Gloria L. Biascan filed a complaint against Zenaida for annulment of title, reconveyance, and damages in the RTC of Caloocan City, Branch 120, docketed as Civil Case No. C-16184. She made the following allegations: 4. That said Mario M. Biascan, then an overseas worker, and with the use of his earnings, purchased a lot and house situated at Bo. Camarin, Caloocan City, covered by Transfer Certificate of Title No. 207197, a copy of which is hereto attached as Annex "A" and made [an] integral part hereof; said properties have a total value of P104,000.00 per Tax Declaration No. 196644, a copy of which is hereto attached as Annex "B" and made integral part hereof; 5. That said Transfer Certificate of Title No. 207197 (Annex "A") and Tax Declaration No. 196644 (Annex "B"), were issued to "Spouses Mario M. Biascan and Zenaida D. Biascan", thru the fraudulent misrepresentation of defendant that she is the legal wife of Mario M. Biascan; 6. That the inclusion of the name of defendant in the said transfer certificate of title and tax declaration, is without any legal basis whatsoever, because defendant is not the legal wife of Mario M. Biascan, and that the money used in acquiring the lot and house belonged to Mario M. Biascan; 7. That the defendants use of the surname "Biascan" is a usurpation of surname under Article 377 of the New Civil Code of the Philippines, and as such, plaintiff, who is the legal wife of Mario M. Biascan, is entitled to recover damages from defendant; 8. That by reason of defendants illegal acts in causing the inclusion of her name in the aforesaid transfer certificate of title and tax declaration, plaintiff, the legal wife of Mario M. Biascan, is unduly deprived of her right over the property covered by said title and declaration, and to vindicate such right, she is constrained to institute the instant action and retain the services of counsel to which she has agreed to pay the sum ofP20,000.00 for and as attorneys fees and the sum of P1,000.00 as appearance fee.11 Gloria prayed that judgment be rendered in her favor, as follows:
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1) Declaring as null and void the issuance of Transfer Certificate of Title No. 207197 in favor of Spouses Mario M. Biascan and Zenaida D. Biascan, including Tax Declaration No. 196644; 2) Defendant to recover the undivided one-half (1/2) portion of the lot in question to plaintiff, who is the legal wife of Mario M. Biascan; 3) Defendant to pay to plaintiff the amount of Ten Thousand Pesos (P10,000.00) Philippine Currency, as damages for usurping the surname "Biascan" which rightfully belongs to the plaintiff; 4) Defendant to pay to plaintiff the sum of Twenty Thousand Pesos (P20,000.00) Philippine Currency, for and as attorneys fees; and 5) To pay the costs of this suit. Plaintiff further prays for such other relief this Honorable Court may deem just and equitable in the premises.12 Zenaida filed a Motion to Dismiss13 on January 20, 1994, principally on the ground that, under Article 113 of the Civil Code and Section 4, Rule 3 of the Rules of Court, a married woman cannot sue or be sued alone without joining her husband, and that, as registered co-owner of the subject property, the latter was an indispensable party. She also alleged that she had no idea that Mario was a married man; that she tried to leave him when such fact came to her knowledge; and that Mario made repeated promises of marriage. According to Zenaida, she was fraudulently and maliciously forced by Mario and his family to vacate the house and lot in question. Thus, on January 14, 1992, she instituted an action for partition before Branch 129 of the Regional Trial Court of Caloocan City, docketed as Civil Case No. C-259. Zenaida, likewise, alleged that she instituted an action for the enforcement of the Amicable Settlement made before the barangay, before the Metropolitan Trial Court of Caloocan City for the recovery of personal properties. Thereafter, on May 3, 1993, the RTC of Caloocan City rendered its Decision14 in Civil Case No. C-259, declaring that she was a co-owner of the subject lot. She averred that, after receipt of the decision, Mario and Gloria sent her a Letter15 dated May 18, 1993, persuading her to agree to a very unreasonable settlement.
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Zenaida claimed that Mario filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R. SP. No. 32512, which was dismissed16 on December 17, 1993 on the ground that the decision rendered by the RTC of Caloocan City had long since become final and executory; thus, based on the doctrine of res judicata, her ownership of the one-half portion of the lot covered by TCT No. 207197 could no longer be questioned. Zenaida posited that pursuant to paragraph (c), Sec. 3 of Rule 131 of the Rules of Court, the facts and conclusions contained in the said decision are conclusively presumed to be true. The trial court denied the motion to dismiss in an Order17 dated March 23, 1994. In her answer, Zenaida alleged that the trial court had no jurisdiction over the case, as the cause of action therein was barred by prior judgment. She, likewise, alleged that aside from her savings from her work in Saudi Arabia, she had other sources of income: her earnings from working as a dressmaker at the Flores Garment International Corporation; income from buying and selling jewelry; a dollar pension from her brother who was with the U.S. Navy; and financial support from her mother and older brothers. She averred that most of the money used for the amortization and purchase of the subject lot, as well as the construction of the improvements thereon, was sourced from her earnings and income and not solely from Mario Biascan. She further alleged that Mario was, in fact, unemployed from the later part of 1985 to the early part of 1988, and that they had to secure a loan in the total amount of P80,000 from her mother, which was used to pay part of the amortization of the property and, which to date, has remained unpaid. She further alleged the following by way of counterclaim: 18. That the institution of the instant case is tainted with malice, for plaintiff know[s] for a fact that the defendant is a lawful co-owner of the subject lot and the house erected thereon, because said plaintiff was always present during the hearing of the Partition case filed by the defendant before Branch 129 of this Honorable Court, docketed under Civil Case No. C-259, and of the fact that said case had already been decided in favor of the defendant;

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19. That plaintiff and Mario Biascan even tried to convince to settle the case although [the said] decision was already rendered, showing plaintiff knowledge of the fact that the defendant is indeed entitled to one-half of the property; 20. That obviously, the institution of the case was made to delay and frustrate the immediate enforcement of the decision in Civil Case No. C-259 because plaintiff and her children, and Mario Biascan, are enjoying the use of the subject property to the prejudice of the defendant; 21. That because of the baseless and malicious institution of the instant case, the defendant suffered serious anxiety, besmirched reputation, wounded feeling[s] and sleepless nights to which plaintiff should be held answerable in the sum of not less than P50,000.00 plus P25,000.00 as exemplary damages; 22. That for her protection, the defendant is constrained to secure the services of the undersigned counsel at an agreed attorneys fees of P20,000.00 plus P1,000.00 per court appearances (sic) to which plaintiff should, likewise, be held answerable; 23. That plaintiff, in connivance with Mario Biascan, has forcibly ousted the defendant from the premises through strategy and stealth, and because plaintiff, Mario Biascan and their children are presently occupying that portion owned by the defendant, it is but just and fair that they be adjudged to pay reasonable rent of P2,500.00 per month from date of the decision in Civil Case No. C-259 for the use thereof, up to the time said portion is surrendered to the defendant. WHEREFORE, premises considered, it is most respectfully prayed to the Honorable Court that after due hearing judgment be rendered in favor of the defendant and against the plaintiff, DISMISSING the complaint and GRANTING all the counterclaim[s] interposed by the defendant. Defendant further prays for such other reliefs as are just and equitable under the premises.18 After the parties submitted their respective pre-trial briefs, Gloria filed an amended complaint,19 impleading her husband Mario as party-defendant.
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Thereafter, in an Order20 dated July 6, 1994, the RTC, Branch 120, issued a writ of preliminary injunction restraining and enjoining the enforcement of the writ of execution21 issued by the RTC, Branch 129 in Civil Case No. C259. Gloria then filed a bond in the amount of P50,000 which was duly approved by the RTC, Branch 120.22 After trial, the court ruled in favor of defendant Zenaida and dismissed the complaint on October 28, 1997. The dispositive portion of the decision reads: WHEREFORE, premises considered, the complaint is dismissed. On the counterclaim, plaintiff is ordered to pay co-defendant Zenaida Dapar: 1. Attorneys fees in the sum of P20,000.00, plus P1,000.00 per court appearance 2. Exemplary damages in the amount of P25,000.00; and 3. To pay the costs. SO ORDERED.23 The trial court ruled that the law on co-ownership governed the property relations of Mario and Zenaida, who were living in an adulterous relationship or in a state of concubinage at the time the house and lot in question was acquired. The trial court further explained that under Article 148 of the Family Code, properties acquired by both of the parties through their actual joint contribution of money shall be owned in common in proportion to their respective contributions, and in the event that the amount of such contributions could not be determined, as in the present case, they shall be presumed to be equal. The trial court concluded that the shares of Mario and Zenaida as described in TCT No. 207197 was in accordance with the sharing prescribed in Article 148. As such, there was no legal basis to order the reconveyance of the one-half share of the petitioner in favor of Gloria Biascan. Anent Zenaidas use of the surname Biascan, the trial court ruled that Gloria was not entitled to damages since Mario consented thereto.

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On appeal, however, the appellate court reversed the decision of the trial court and ruled in favor of Gloria as follows: WHEREFORE, premises considered, the decision dated October 28, 1997 is hereby REVERSED and SET ASIDE and in lieu thereof, another judgment is hereby rendered in favor of the appellant and against the appellee as follows: 1. declaring the Transfer Certificate of Title No. 207197 of the Register of Deeds for Caloocan City, registered in the name of the spouses Mario M. Biascan and Zenaida D. Biascan, null and void; 2. ordering appellee to reconvey in favor of the appellant onehalf (1/2) undivided portion of the property described in said title, she being the legal wife of Mario M. Biascan; 3. ordering the appellee to pay the appellant attorneys fee in the amount of P20,000.00 4. ordering the appellee to pay the costs. SO ORDERED.24 The appellate court ruled that Zenaidas contention that Mario was unemployed from 1985 to 1988, and that she had savings and substantial earnings from her jewelry business was untenable. The appellate court also ruled that the remittances from relatives as claimed by Zenaida were not meant for her, as they were either unsigned or addressed to someone else. Clearly, the appellate court ruled, such remittances were not intended to increase Zenaidas resources to support her claim that she contributed to the payment of the house and lot in question from her own funds. The appellate court noted that the appellees income was so meager that it was not even enough for her, and that she failed to establish, by clear and convincing evidence, that her savings and/or the remittances of her mother and brothers were deposited to the PNB joint savings account. The appellate court further ratiocinated as follows: For failure of the appellee to prove by satisfactory evidence that she contributed money to the purchase price of the house and lot in question, there is no basis to justify her co-ownership; the same must revert to the
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conjugal partnership [of] Mario Biascan and his lawful wife, the appellant (Agapay v. Palang, 276 SCRA 340). The entry in the Transfer Certificate of Title No. 207197, the word "Spouses Mario M. Biascan and Zenaida D. Biascan", where the latter is not legally married to the former, is no proof that she contributed her money for the purchase of the property in question. In the case at bar, no iota of evidence was adduced to prove contribution. In the determination of the nature of the property acquired during their livein partner status, the controlling factor is the source of the money utilized in the purchase. Evidently, from the Contract to Sell (Exh. "2"), Mario M. Biascan was in Saudi Arabia and the appellee was probably of the impression that is she made it appear that they are spouses, the same belong to both of them. Regrettably, there is no law to support such belief. Indeed, there was fraud, deceit and misrepresentation in the acquisition of the property in question, depriving the lawful wife, the appellant herein, the property acquired during the marriage which forms part of the conjugal partnership between Mario M. Biascan and Gloria Lozano Biascan.25 Zenaidas motion for reconsideration was, likewise, denied in a Resolution dated February 4, 2000. The Present Petition Zenaida, now the petitioner, raises the following issues for the resolution of the Court in the instant petition: I. The subject properties are acquired thru (sic) the common funds of petitioner and respondent Mario Biascan; II. Petitioner has source of income and had contributed in the purchase of the subject properties (sic); III. The subject properties (sic) were acquired in good faith by petitioner and not with fraudulent means; IV. There are (sic) no proper and legal basis in the annulment of title and reconveyance of the subject properties (sic);

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V. No proper basis for the award of attorneys fees against petitioner; and VI. The decision in Civil Case No. C-259 must be respected for being res judicata.26 The petitioner catalogues the deposits made in the PNB account from 1985 to November 1988,27 and avers that such deposits could not possibly be considered as remittances of respondent Mario Biascan because he was jobless in 1983, and, thereafter, from 1985 to 1988, and was then in the Philippines wholly dependent upon her for support. The petitioner also avers that the alleged remittances cannot be considered as respondent Mario Biascans record of employment abroad, and that based on the evidence on record, he could not have paid even one-half () of the purchase price of the subject property. However, since the contribution of the petitioner and respondent could not be determined, considering that no specific amounts were properly identified as actual deposits of the parties in the joint account, such shares are presumed equal. The petitioner also points out that Article 148 of the Family Code does not provide for an annulment of title of any of the properties acquired during an illicit relationship, but merely provides for forfeiture of the properties of the party in bad faith in accordance with the said provision. According to the petitioner, it is, likewise, evident from the evidence presented that respondent Gloria Biascan had knowledge of the petitioners illicit relationship with her husband, did nothing to stop it, and, in fact, benefited from such relationship. The petitioner contends that the award of attorneys fees in favor of such respondent cannot be allowed, as the appellate court made no express findings or reasons in its decision to justify such award. Finally, the petitioner points out that the decision in Civil Case No. C-259, which was affirmed by the Court of Appeals in CA-G.R. SP No. 32512, already became final and executory, and that the court a quo issued a writ of execution on September 24, 1993. The petitioner cites the ruling of the Court in Mendiola v. Court of Appeals28 to bolster her claim. For their part, the respondents allege that the decision rendered in Civil Case No. C-259 is not res judicata in the instant case. While the petitioner filed a motion to dismiss invoking the defense of bar by former judgment,
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such motion was denied by the court a quo. According to the respondents, the petitioner did not file a motion for reconsideration or appeal, much less raise the same as an error before the appellate court. The respondents allege that the silence of the petitioner on the matter of res judicata before the Court of Appeals is an indication of her conformity to the correctness of the ruling of the lower court. The respondents also posit that the petitioner employed fraud, deceit and misrepresentation in her inclusion as a co-owner of the property, as a result of which the lawful wife, respondent Gloria Biascan, was deprived of the property in question; thus, the annulment of the title and reconveyance of the property in question was legal and proper. Furthermore, due to such fraudulent and deceitful acts of the petitioner, respondent Gloria Biascan, the aggrieved party, is legally entitled to the award of attorneys fees. The issue in the present case is whether or not the action of respondent Gloria Biascan is barred by the decision of the RTC in Civil Case No. C259. A secondary issue is whether or not the petitioner is liable to respondent Gloria Biascan for damages for usurpation of the surname of respondent Mario Biascan under Article 377 of the Civil Code. The Courts Ruling We find and so hold that the action of respondent Gloria Biascan was barred by the decision of the RTC in Civil Case No. C-259. For res judicata to bar the institution of subsequent action, the following requisites must concur: (1) the former judgment must be final; (2) it must have been rendered by a court having jurisdiction of the subject matter and the parties; (3) it must be a judgment on the merits; and (4) there must be, between the first and second actions (a) identity of parties, (b) identity of subject matter, and (c) identity of cause of action.29 The foundation principle upon which the doctrine of res judicata rests is that parties ought not to be permitted to litigate the same issue more than once; that when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it remains unreversed, should be conclusive upon the parties and those in privity with them in law or estate.30 As we ruled in Oropeza Marketing Corporation v. Allied Banking Corporation:31 Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment." Res judicata lays
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the rule that an existing final judgment or decree rendered on the merits, and without fraud or collusion, or by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit. The principle of res judicata has two aspects, namely: (a) "bar by prior judgment" as enunciated in Rule 39, Section 49(b) of the 1997 Rules of Civil Procedure; and (b) "conclusiveness of judgment" which is contained in Rule 39, Section 47(c). There is "bar by prior judgment" when, as between the first case where the judgment was rendered and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In this instance, the judgment in the first case constitutes an absolute bar to the second action. Otherwise put, the judgment or decree of the court of competent jurisdiction on the merits concludes the litigation between the parties, as well as their privies, and constitutes a bar to a new action or suit involving the same cause of action before the same or other tribunal. But where there is identity of parties in the first and second cases, but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. This is the concept of res judicata known as "conclusiveness of judgment." Stated differently, any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies whether or not the claim, demand, purpose, or subject matter of the two actions is the same.32 Contrary to the contentions of the respondents, the petitioner consistently invoked the finality of the judgment of the RTC of Caloocan City, Branch 129, in Civil Case No. C-259 for partition of the property covered by TCT No. 207197, as well as a 1976 model Toyota car. Eighty-three (83) days after learning of the said decision,33respondent Mario Biascan filed a petition for relief from judgment, which the trial court dismissed, and which dismissal was affirmed by the Court of Appeals in CA-G.R. SP No. 32512 promulgated on December 17, 1993. The decision in Civil Case No. C-259 became final and executory, thus satisfying the first requisite. Furthermore,
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such judgment was on the merits and was rendered by a court having jurisdiction over the subject matter and the parties. In the meantime, on October 27, 1993, respondent Gloria Biascan filed Civil Case No. C-16184 for annulment of TCT No. 207197, reconveyance and damages. It is clear that there is identity of subject matter between the two cases; that is, the parcel of land in Caloocan City covered by TCT No. 207197. Such property was adjudicated in favor of the petitioner and the respondent, as co-owners in equal shares. It must be stressed that in a complaint for partition, the plaintiff seeks, first, a declaration that he is a co-owner of the subject properties; and second, the conveyance of his lawful shares. An action for partition is at once an action for declaration of co-ownership and for segregation and conveyance of a determinate portion of the properties involved.34 As we ruled in a recent case:35 To split the proceedings into declaration of nullity of the deed of sale and trial for the partition case, or to hold in abeyance the partition case pending resolution of the nullity case would result in the multiplicity of suits, duplicitous procedure and unnecessary delay, as the lower court observed. The conduct of separate trials of the parties respective claims would entail a substantial duplication of effort and time not only of the parties but also of the courts concerned. On the other hand, it would be in the interest of justice of the partition court hears all the actions and incidents concerning the properties subject of the partition in a single and complete proceeding. After all, the issue of nullity can be properly ventilated before the partition court. Thus, even with the dismissal of the action for nullity, petitioner is not without recourse. She can still dispute the execution of the deed of absolute sale and assert her rights to the properties subject of the said instrument in the partition case. There is no need for a separate case to resolve the matter.36 Indeed, the difference in form and nature of the two actions is immaterial and is not a reason for exemption from the effects of res judicata. The philosophy behind this rule prohibits the parties from litigating the same issue more than once. When a right or fact has been judicially tried and
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determined by a court of competent jurisdiction or an opportunity for such trial has been given, the judgment of the court, as long as it remains unreversed, should be conclusive upon the parties and those in privity with them.37 Whatever has once been irrevocably established as the controlling legal principle in an earlier final judgment continues to be the law of the case between the same parties in another suit, as long as the facts on which such decision was predicated continue to be the facts of the dispute before the court.38 It may be argued that there is no identity of parties in the first and second case. In the first case for partition, the plaintiff was the petitioner, while the defendant was respondent Mario Biascan; in the second case for annulment of title and reconveyance of the same property, respondent Gloria Biascan was the plaintiff, while the defendants were the petitioner and respondent Mario Biascan. However, absolute identity of parties is not required for the principle of res judicata to apply. Mere substantial identity of parties, or a community of interests between a party in the first case and a party in the subsequent case, even if the latter was not impleaded in the first case, is sufficient.39 It cannot be ignored that the evidence presented in the two cases were substantially the same: among others, the PNB Bank account, the Contract to Sell, the Deed of Sale, and the certificates of remittances. In fact, both trial courts made similar findings, and adjudicated the property in favor of both respondent Mario Biascan and the petitioner. This cannot be done without violating the rule on finality of judgments. The Court reiterates the following pronouncement in Gallardo-Corro v. Gallardo:40 Nothing is more settled in law than that once a judgment attains finality it thereby becomes immutable and unalterable. It may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest court of the land. Just as the losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his case. The doctrine of finality of judgment is grounded on fundamental considerations of public policy and sound practice, and that, at the risk of occasional errors, the judgments or orders of courts must become final at some definite
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time fixed by law; otherwise, there would be no end to litigation, thus setting to naught the main role of courts of justice which is to assist in the enforcement of the rule of law and the maintenance of peace and order by settling justiciable controversies with finality.41 Indeed, it is readily apparent that the action for annulment of judgment was, in effect, a second cycle of review regarding a subject matter which has already been finally decided.42 It is, likewise, not lost upon this Court that respondent Gloria Biascan resorted to filing the second case for annulment of title as an afterthought, after realizing her husbands failure to appeal Civil Case No. C-259, and the inevitable dismissal of the petition for relief from judgment by the trial court and, thereafter, the petition for certiorari before the appellate court. Anent respondent Gloria Biascans claim for damages for the petitioners alleged usurpation of her husbands name, we rule that she is not entitled to an award therefor. The usurpation of name under Article 377 of the Civil Code43 implies some injury to the interests of the owner of the name. It consists in the possibility of confusion of identity between the owner and the usurper, and exists when a person designates himself by another name. The elements are as follows: (1) there is an actual use of anothers name by the defendant; (2) the use is unauthorized; and (3) the use of anothers name is to designate personality or identify a person.44 None of the foregoing exist in the case at bar. Respondent Gloria Biascan did not claim that the petitioner ever attempted to impersonate her. In fact, the trial court found that respondent Mario Biascan allowed the petitioner to use his surname, viz: On the other cause of action referring to the use by Zenaida of the family name Biascan for which damages is prayed for by the plaintiff, there is evidence to show that defendant Mario Biascan was the one who suggested, and in fact authorized Zenaida Dapar to use said family name. It would appear that the very first time that Zenaida Dapars name had the surname Biascan was when defendant Mario Biascan had executed the affidavit of undertaking in connection with his employment in Saudi Arabia, wherein he designated as his beneficiary Zenaida Dapar Biascan. The undertaking was sworn to by the defendant on April 7, 1982 and which also showed that his effective date of employment in Saudi Arabia was April 1982 and to
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expire on February 1984 (Exhibit "A"). This is an extrajudicial admission that would not allow proof to the contrary. Zenaida appeared to have no participation in the preparation of said document. Moreover, when the contract to sell and the deed of sale of the property in question were executed, Zenaida Dapar used the surname Biascan and defendant Mario Biascan did not object to the use of such surname. Also, in the joint bank account with the PNB Valenzuela, the name Zenaida Dapar Biascan is described as a joint depositor. Defendant Zenaida Dapar testified that she used the surname Biascan because she was instructed by her co-defendant to do so and she thought the latter was not married. She only became aware of his civil status a few years later after their living together in 1981. The use by Zenaida Dapar of the surname of her co-defendant Mario Biascan was allowed by the latter and in no case could it be considered usurpation of surname. Accordingly, co-defendant Zenaida Dapar can no longer be held liable for damages for the use thereof.45 The mere use of a surname cannot be enjoined; it is the use thereof coupled with the representation that one is the lawful wife, or the usurpation of the wifes status, which gives rise to an action for damages.46 WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 57306 is REVERSED AND SET ASIDE. The complaint of respondent Gloria Biascan is DISMISSED on the ground of res judicata. The counterclaims of the petitioner against respondent Gloria Biascan are DISMISSED. No costs. SO ORDERED. Puno, Austria-Martinez, Tinga, and Chico-Nazario*, JJ., concur. Footnotes G.R. No. 158589 June 27, 2006

PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC REUNIES, S.A., (now known as PHILIP
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MORRIS PRODUCTS S.A.), Petitioners, vs. FORTUNE TOBACCO CORPORATION, Respondent. DECISION GARCIA, J.: Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc., Benson & Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the reversal and setting aside of the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 66619, to wit: 1. Decision dated January 21, 20031 affirming an earlier decision of the Regional Trial Court of Pasig City, Branch 166, in its Civil Case No. 47374, which dismissed the complaint for trademark infringement and damages thereat commenced by the petitioners against respondent Fortune Tobacco Corporation; and 2. Resolution dated May 30, 20032 denying petitioners motion for reconsideration. Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United States of America, is, per Certificate of Registration No. 18723 issued on April 26, 1973 by the Philippine Patents Office (PPO), the registered owner of the trademark "MARK VII" for cigarettes. Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the registered owner of the trademark "MARK TEN" for cigarettes as evidenced by PPO Certificate of Registration No. 11147. And as can be seen in Trademark Certificate of Registration No. 19053, another subsidiary of Philip Morris, Inc., the Swiss company Fabriques de Tabac Reunies, S.A., is the assignee of the trademark "LARK," which was originally registered in 1964 by Ligget and Myers Tobacco Company. On the other hand, respondent Fortune Tobacco Corporation, a company organized in the Philippines, manufactures and sells cigarettes using the trademark "MARK." The legal dispute between the parties started when the herein petitioners, on the claim that an infringement of their respective trademarks had been committed, filed, on August 18, 1982, a Complaint for Infringement of
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Trademark and Damages against respondent Fortune Tobacco Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch 166. The decision under review summarized what happened next, as follows: In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners] alleged that they are foreign corporations not doing business in the Philippines and are suing on an isolated transaction. xxx they averred that the countries in which they are domiciled grant xxx to corporate or juristic persons of the Philippines the privilege to bring action for infringement, xxx without need of a license to do business in those countries. [Petitioners] likewise manifested [being registered owners of the trademark "MARK VII" and "MARK TEN" for cigarettes as evidenced by the corresponding certificates of registration and an applicant for the registration of the trademark "LARK MILDS"]. xxx. [Petitioners] claimed that they have registered the aforementioned trademarks in their respective countries of origin and that, by virtue of the long and extensive usage of the same, these trademarks have already gained international fame and acceptance. Imputing bad faith on the part of the [respondent], petitioners claimed that the [respondent], without any previous consent from any of the [petitioners], manufactured and sold cigarettes bearing the identical and/or confusingly similar trademark "MARK" xxx Accordingly, they argued that [respondents] use of the trademark "MARK" in its cigarette products have caused and is likely to cause confusion or mistake, or would deceive purchasers and the public in general into buying these products under the impression and mistaken belief that they are buying [petitioners] products. Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual Property (Paris Convention, for brevity), to which the Philippines is a signatory xxx, [petitioners] pointed out that upon the request of an interested party, a country of the Union may prohibit the use of a trademark which constitutes a reproduction, imitation, or translation of a mark already belonging to a person entitled to the benefits of the said Convention. They likewise argued that, in accordance with Section 21-A in relation to Section 23 of Republic Act 166, as amended, they are entitled to relief in the form of damages xxx [and] the issuance of a writ of preliminary injunction which should be made permanent to enjoin perpetually the [respondent] from violating [petitioners] right to the exclusive use of their aforementioned trademarks.
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[Respondent] filed its Answer xxx denying [petitioners] material allegations and xxx averred [among other things] xxx that "MARK" is a common word, which cannot particularly identify a product to be the product of the [petitioners] xxx xxx
lawphil.net

xxx

xxx.

Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the [petitioners] prayer for the issuance of a writ of preliminary injunction was negatively resolved by the court in an Order xxx dated March 28, 1973. [The incidental issue of the propriety of an injunction would eventually be elevated to the CA and would finally be resolved by the Supreme Court in its Decision dated July 16, 1993 in G.R. No. 91332]. xxx. xxx xxx xxx

After the termination of the trial on the merits xxx trial court rendered its Decision xxx dated November 3, 1999 dismissing the complaint and counterclaim after making a finding that the [respondent] did not commit trademark infringement against the [petitioners]. Resolving first the issue of whether or not [petitioners] have capacity to institute the instant action, the trial court opined that [petitioners] failure to present evidence to support their allegation that their respective countries indeed grant Philippine corporations reciprocal or similar privileges by law xxx justifies the dismissal of the complaint xxx. It added that the testimonies of [petitioners] witnesses xxx essentially declared that [petitioners] are in fact doing business in the Philippines, but [petitioners] failed to establish that they are doing so in accordance with the legal requirement of first securing a license. Hence, the court declared that [petitioners] are barred from maintaining any action in Philippine courts pursuant to Section 133 of the Corporation Code. The issue of whether or not there was infringement of the [petitioners] trademarks by the [respondent] was likewise answered xxx in the negative. It expounded that "in order for a name, symbol or device to constitute a trademark, it must, either by itself or by association, point distinctly to the origin or ownership of the article to which it is applied and be of such nature as to permit an exclusive appropriation by one person". Applying such principle to the instant case, the trial court was of the opinion that the words "MARK", "TEN", "LARK" and the Roman Numerals "VII", either alone or in
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combination of each other do not by themselves or by association point distinctly to the origin or ownership of the cigarettes to which they refer, such that the buying public could not be deceived into believing that [respondents] "MARK" cigarettes originated either from the USA, Canada, or Switzerland. Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the trial court stated that the general rule is that an infringement exists if the resemblance is so close that it deceives or is likely to deceive a customer exercising ordinary caution in his dealings and induces him to purchase the goods of one manufacturer in the belief that they are those of another. xxx. The trial court ruled that the [petitioners] failed to pass these tests as it neither presented witnesses or purchasers attesting that they have bought [respondents] product believing that they bought [petitioners] "MARK VII", "MARK TEN" or "LARK", and have also failed to introduce in evidence a specific magazine or periodical circulated locally, which promotes and popularizes their products in the Philippines. It, moreover, elucidated that the words consisting of the trademarks allegedly infringed by [respondent] failed to show that they have acquired a secondary meaning as to identify them as [petitioners] products. Hence, the court ruled that the [petitioners] cannot avail themselves of the doctrine of secondary meaning. As to the issue of damages, the trial court deemed it just not to award any to either party stating that, since the [petitioners] filed the action in the belief that they were aggrieved by what they perceived to be an infringement of their trademark, no wrongful act or omission can be attributed to them. xxx.3 (Words in brackets supplied) Maintaining to have the standing to sue in the local forum and that respondent has committed trademark infringement, petitioners went on appeal to the CA whereat their appellate recourse was docketed as CAG.R. CV No. 66619. Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the matter of their legal capacity to sue in this country for trademark infringement, nevertheless affirmed the trial courts decision on the underlying issue of respondents liability for infringement as it found that:

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xxx the appellants [petitioners] trademarks, i.e., "MARK VII", "MARK TEN" and "LARK", do not qualify as well-known marks entitled to protection even without the benefit of actual use in the local market and that the similarities in the trademarks in question are insufficient as to cause deception or confusion tantamount to infringement. Consequently, as regards the third issue, there is likewise no basis for the award of damages prayed for by the appellants herein.4 (Word in bracket supplied) With their motion for reconsideration having been denied by the CA in its equally challenged Resolution of May 30, 2003, petitioners are now with this Court via this petition for review essentially raising the following issues: (1) whether or not petitioners, as Philippine registrants of trademarks, are entitled to enforce trademark rights in this country; and (2) whether or not respondent has committed trademark infringement against petitioners by its use of the mark "MARK" for its cigarettes, hence liable for damages. In its Comment,5 respondent, aside from asserting the correctness of the CAs finding on its liability for trademark infringement and damages, also puts in issue the propriety of the petition as it allegedly raises questions of fact. The petition is bereft of merit. Dealing first with the procedural matter interposed by respondent, we find that the petition raises both questions of fact and law contrary to the prescription against raising factual questions in a petition for review on certiorari filed before the Court. A question of law exists when the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or falsity of alleged facts.6 Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts.7 Unless the factual findings of the appellate court are mistaken, absurd, speculative, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the court of origin,8 we will not disturb them. It is petitioners posture, however, that their contentions should be treated as purely legal since they are assailing erroneous conclusions deduced from a set of undisputed facts.
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Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn therefrom by the CA is correct is one of law.9 But, even if we consider and accept as pure questions of law the issues raised in this petition, still, the Court is not inclined to disturb the conclusions reached by the appellate court, the established rule being that all doubts shall be resolved in favor of the correctness of such conclusions.10 Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in accordance with law and established jurisprudence in arriving at its assailed decision. A "trademark" is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof adopted and used by a manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt in by others.11 Inarguably, a trademark deserves protection. For, as Mr. Justice Frankfurter observed in Mishawaka Mfg. Co. v. Kresge Co.:12 The protection of trademarks is the laws recognition of the psychological function of symbols. If it is true that we live by symbols, it is no less true that we purchase goods by them. A trade-mark is a merchandising shortcut which induces a purchaser to select what he wants, or what he has been led to believe what he wants. The owner of a mark exploits this human propensity by making every effort to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means employed, the aim is the same - to convey through the mark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this is attained, the trade-mark owner has something of value. If another poaches upon the commercial magnetism of the symbol he has created, the owner can obtain legal redress. It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce trademark rights in this country, specifically, the right to sue for trademark infringement in Philippine courts and be accorded protection against unauthorized use of their Philippine-registered trademarks. In support of their contention respecting their right of action, petitioners assert that, as corporate nationals of member-countries of the Paris Union, they can sue before Philippine courts for infringement of trademarks, or for
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unfair competition, without need of obtaining registration or a license to do business in the Philippines, and without necessity of actually doing business in the Philippines. To petitioners, these grievance right and mechanism are accorded not only by Section 21-A of Republic Act (R.A.) No. 166, as amended, or the Trademark Law, but also by Article 2 of the Paris Convention for the Protection of Industrial Property, otherwise known as the Paris Convention. In any event, petitioners point out that there is actual use of their trademarks in the Philippines as evidenced by the certificates of registration of their trademarks. The marks "MARK TEN" and "LARK" were registered on the basis of actual use in accordance with Sections 2-A13 and 5(a)14 of R.A. No. 166, as amended, providing for a 2-month pre-registration use in local commerce and trade while the registration of "MARK VII" was on the basis of registration in the foreign country of origin pursuant to Section 37 of the same law wherein it is explicitly provided that prior use in commerce need not be alleged.15 Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does not mean that cigarettes bearing their trademarks are not available and sold locally. Citing Converse Rubber Corporation v. Universal Rubber Products, Inc.,16 petitioners state that such availability and sale may be effected through the acts of importers and distributors. Finally, petitioners would press on their entitlement to protection even in the absence of actual use of trademarks in the country in view of the Philippines adherence to the Trade Related Aspects of Intellectual Property Rights or the TRIPS Agreement and the enactment of R.A. No. 8293, or the Intellectual Property Code (hereinafter the "IP Code"), both of which provide that the fame of a trademark may be acquired through promotion or advertising with no explicit requirement of actual use in local trade or commerce. Before discussing petitioners claimed entitlement to enforce trademark rights in the Philippines, it must be emphasized that their standing to sue in Philippine courts had been recognized, and rightly so, by the CA. It ought to be pointed out, however, that the appellate court qualified its holding with a statement, following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The Court of Appeals and Fortune Tobacco Corporation,17 that such right to

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sue does not necessarily mean protection of their registered marks in the absence of actual use in the Philippines. Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of registration of their trademarks in the Philippines. As we ruled in G.R. No. 91332,18 supra, so it must be here. Admittedly, the registration of a trademark gives the registrant, such as petitioners, advantages denied non-registrants or ordinary users, like respondent. But while petitioners enjoy the statutory presumptions arising from such registration,19 i.e., as to the validity of the registration, ownership and the exclusive right to use the registered marks, they may not successfully sue on the basis alone of their respective certificates of registration of trademarks. For, petitioners are still foreign corporations. As such, they ought, as a condition to availment of the rights and privileges vis--vis their trademarks in this country, to show proof that, on top of Philippine registration, their country grants substantially similar rights and privileges to Filipino citizens pursuant to Section 21-A20 of R.A. No. 166. In Leviton Industries v. Salvador,21 the Court further held that the aforementioned reciprocity requirement is a condition sine qua non to filing a suit by a foreign corporation which, unless alleged in the complaint, would justify dismissal thereof, a mere allegation that the suit is being pursued under Section 21-A of R.A. No. 166 not being sufficient. In a subsequent case,22 however, the Court held that where the complainant is a national of a Paris Convention- adhering country, its allegation that it is suing under said Section 21-A would suffice, because the reciprocal agreement between the two countries is embodied and supplied by the Paris Convention which, being considered part of Philippine municipal laws, can be taken judicial notice of in infringement suits.23 As well, the fact that their respective home countries, namely, the United States, Switzerland and Canada, are, together with the Philippines, members of the Paris Union does not automatically entitle petitioners to the protection of their trademarks in this country absent actual use of the marks in local commerce and trade. True, the Philippines adherence to the Paris Convention24 effectively obligates the country to honor and enforce its provisions25 as regards the
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protection of industrial property of foreign nationals in this country. However, any protection accorded has to be made subject to the limitations of Philippine laws.26 Hence, despite Article 2 of the Paris Convention which substantially provides that (1) nationals of member-countries shall have in this country rights specially provided by the Convention as are consistent with Philippine laws, and enjoy the privileges that Philippine laws now grant or may hereafter grant to its nationals, and (2) while no domicile requirement in the country where protection is claimed shall be required of persons entitled to the benefits of the Union for the enjoyment of any industrial property rights,27 foreign nationals must still observe and comply with the conditions imposed by Philippine law on its nationals. Considering that R.A. No. 166, as amended, specifically Sections 228 and 2-A29 thereof, mandates actual use of the marks and/or emblems in local commerce and trade before they may be registered and ownership thereof acquired, the petitioners cannot, therefore, dispense with the element of actual use. Their being nationals of member-countries of the Paris Union does not alter the legal situation. In Emerald Garment Mfg. Corporation v. Court of Appeals,30 the Court reiterated its rulings in Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft,31 Kabushi Kaisha Isetan v. Intermediate Appellate Court,32 and Philip Morris v. Court of Appeals and Fortune Tobacco Corporation33 on the importance of actual commercial use of a trademark in the Philippines notwithstanding the Paris Convention: The provisions of the 1965 Paris Convention relied upon by private respondent and Sec. 21-A of the Trademark Law were sufficiently expounded upon and qualified in the recent case of Philip Morris, Inc., et. al. vs. Court of Appeals: xxx xxx xxx

Following universal acquiescence and comity, our municipal law on trademarks regarding the requirements of actual use in the Philippines must subordinate an international agreement inasmuch as the apparent clash is being decided by a municipal tribunal. Xxx. Withal, the fact that international law has been made part of the law of the land does not by any means imply the primacy of international law over national law in the municipal sphere. Under the doctrine of incorporation as applied in most
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countries, rules of International Law are given a standing equal, not superior, to national legislative enactments. xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement but the question of whether they have an exclusive right over their symbol as to justify issuance of the controversial writ will depend on actual use of their trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It is thus incongruous for petitioners to claim that when a foreign corporation not licensed to do business in the Philippines files a complaint for infringement, the entity need not be actually using its trademark in commerce in the Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it may not necessarily be entitled to protection due to absence of actual use of the emblem in the local market. Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as to the actual use of such trademark in local commerce. As it were, registration does not confer upon the registrant an absolute right to the registered mark. The certificate of registration merely constitutes prima facie evidence that the registrant is the owner of the registered mark. Evidence of non-usage of the mark rebuts the presumption of trademark ownership,34 as what happened here when petitioners no less admitted not doing business in this country.35 Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto convey an absolute right or exclusive ownership thereof. To borrow from Shangri-La International Hotel Management, Ltd. v. Development Group of Companies, Inc.36 trademark is a creation of use and, therefore, actual use is a pre-requisite to exclusive ownership; registration is only an administrative confirmation of the existence of the right of ownership of the mark, but does not perfect such right; actual use thereof is the perfecting ingredient.37 Petitioners reliance on Converse Rubber Corporation38 is quite misplaced, that case being cast in a different factual milieu. There, we ruled that a foreign owner of a Philippine trademark, albeit not licensed to do, and not so engaged in, business in the Philippines, may actually earn reputation or goodwill for its goods in the country. But unlike in the instant case,
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evidence of actual sales of Converse rubber shoes, such as sales invoices, receipts and the testimony of a legitimate trader, was presented in Converse. This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement complaint herein having been filed in August 1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code, however, took effect only on January 1, 1998 without a provision as to its retroactivity.39 In the same vein, the TRIPS Agreement was inexistent when the suit for infringement was filed, the Philippines having adhered thereto only on December 16, 1994. With the foregoing perspective, it may be stated right off that the registration of a trademark unaccompanied by actual use thereof in the country accords the registrant only the standing to sue for infringement in Philippine courts. Entitlement to protection of such trademark in the country is entirely a different matter. This brings us to the principal issue of infringement. Section 22 of R.A. No. 166, as amended, defines what constitutes trademark infringement, as follows: Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy of color ably imitate any such mark or tradename and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business, or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided. Petitioners would insist on their thesis of infringement since respondents mark "MARK" for cigarettes is confusingly or deceptively similar with their duly registered "MARK VII," "MARK TEN" and "LARK" marks likewise for cigarettes. To them, the word "MARK" would likely cause confusion in the
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trade, or deceive purchasers, particularly as to the source or origin of respondents cigarettes. The "likelihood of confusion" is the gravamen of trademark infringement.40 But likelihood of confusion is a relative concept, the particular, and sometimes peculiar, circumstances of each case being determinative of its existence. Thus, in trademark infringement cases, more than in other kinds of litigation, precedents must be evaluated in the light of each particular case.41 In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the dominancy test and the holistic test.42 The dominancy test43 sets sight on the similarity of the prevalent features of the competing trademarks that might cause confusion and deception, thus constitutes infringement. Under this norm, the question at issue turns on whether the use of the marks involved would be likely to cause confusion or mistake in the mind of the public or deceive purchasers.44 In contrast, the holistic test45 entails a consideration of the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity. Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the likelihood of confusion resulting in infringement arising from the respondents use of the trademark "MARK" for its particular cigarette product. For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as they appear on the products,46 the striking dissimilarities are significant enough to warn any purchaser that one is different from the other. Indeed, although the perceived offending word "MARK" is itself prominent in petitioners trademarks "MARK VII" and "MARK TEN," the entire marking system should be considered as a whole and not dissected, because a discerning eye would focus not only on the predominant word but also on the other features appearing in the labels. Only then would such discerning observer draw his conclusion whether one mark would be confusingly similar to the other and whether or not sufficient differences existed between the marks.47

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This said, the CA then, in finding that respondents goods cannot be mistaken as any of the three cigarette brands of the petitioners, correctly relied on the holistic test. But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind that a trademark serves as a tool to point out distinctly the origin or ownership of the goods to which it is affixed,48 the likelihood of confusion tantamount to infringement appears to be farfetched. The reason for the origin and/or ownership angle is that unless the words or devices do so point out the origin or ownership, the person who first adopted them cannot be injured by any appropriation or imitation of them by others, nor can the public be deceived.49 Since the word "MARK," be it alone or in combination with the word "TEN" and the Roman numeral "VII," does not point to the origin or ownership of the cigarettes to which they apply, the local buying public could not possibly be confused or deceived that respondents "MARK" is the product of petitioners and/or originated from the U.S.A., Canada or Switzerland. And lest it be overlooked, no actual commercial use of petitioners marks in local commerce was proven. There can thus be no occasion for the public in this country, unfamiliar in the first place with petitioners marks, to be confused. For another, a comparison of the trademarks as they appear on the goods is just one of the appreciable circumstances in determining likelihood of confusion. Del Monte Corp. v. CA50 dealt with another, where we instructed to give due regard to the "ordinary purchaser," thus: The question is not whether the two articles are distinguishable by their label when set side by side but whether the general confusion made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result in his confounding it with the original. As observed in several cases, the general impression of the ordinary purchaser, buying under the normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that class of goods is the touchstone. When we spoke of an "ordinary purchaser," the reference was not to the "completely unwary customer" but to the "ordinarily intelligent buyer" considering the type of product involved.51

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It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly by those who are already predisposed to a certain brand. Accordingly, the ordinary buyer thereof would be all too familiar with his brand and discriminating as well. We, thus, concur with the CA when it held, citing a definition found in Dy Buncio v. Tan Tiao Bok,52 that the "ordinary purchaser" in this case means "one accustomed to buy, and therefore to some extent familiar with, the goods in question." Pressing on with their contention respecting the commission of trademark infringement, petitioners finally point to Section 22 of R.A. No. 166, as amended. As argued, actual use of trademarks in local commerce is, under said section, not a requisite before an aggrieved trademark owner can restrain the use of his trademark upon goods manufactured or dealt in by another, it being sufficient that he had registered the trademark or tradename with the IP Office. In fine, petitioners submit that respondent is liable for infringement, having manufactured and sold cigarettes with the trademark "MARK" which, as it were, are identical and/or confusingly similar with their duly registered trademarks "MARK VII," "MARK TEN" and "LARK". This Court is not persuaded. In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following constitute the elements of trademark infringement in accordance not only with Section 22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A54 and 20 thereof: (a) a trademark actually used in commerce in the Philippines and registered in the principal register of the Philippine Patent Office, (b) is used by another person in connection with the sale, offering for sale, or advertising of any goods, business or services or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or such trademark is reproduced, counterfeited, copied or colorably imitated by another person and such reproduction, counterfeit, copy or colorable imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or

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in connection with such goods, business or services as to likely cause confusion or mistake or to deceive purchasers, (c) the trademark is used for identical or similar goods, and (d) such act is done without the consent of the trademark registrant or assignee.
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As already found herein, while petitioners have registered the trademarks "MARK VII," "MARK TEN" and "LARK" for cigarettes in the Philippines, prior actual commercial use thereof had not been proven. In fact, petitioners judicial admission of not doing business in this country effectively belies any pretension to the contrary. Likewise, we note that petitioners even failed to support their claim that their respective marks are well-known and/or have acquired goodwill in the Philippines so as to be entitled to protection even without actual use in this country in accordance with Article 6bis55 of the Paris Convention. As correctly found by the CA, affirming that of the trial court: xxx the records are bereft of evidence to establish that the appellants [petitioners] products are indeed well-known in the Philippines, either through actual sale of the product or through different forms of advertising. This finding is supported by the fact that appellants admit in their Complaint that they are not doing business in the Philippines, hence, admitting that their products are not being sold in the local market. We likewise see no cogent reason to disturb the trial courts finding that the appellants failed to establish that their products are widely known by local purchasers as "(n)o specific magazine or periodical published in the Philippines, or in other countries but circulated locally" have been presented by the appellants during trial. The appellants also were not able to show the length of time or the extent of the promotion or advertisement made to popularize their products in the Philippines.56 Last, but not least, we must reiterate that the issue of trademark infringement is factual, with both the trial and appellate courts having peremptorily found allegations of infringement on the part of respondent to be without basis. As we said time and time again, factual determinations of the trial court, concurred in by the CA, are final and binding on this Court.57

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For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks prior to respondents use of its mark and for petitioners failure to demonstrate confusing similarity between said trademarks, the dismissal of their basic complaint for infringement and the concomitant plea for damages must be affirmed. The law, the surrounding circumstances and the equities of the situation call for this disposition. WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs against the petitioners. SO ORDERED. CANCIO C. GARCIA G.R. No. 166115 February 2, 2007

McDONALDS CORPORATION, Petitioner, vs. MACJOY FASTFOOD CORPORATION, Respondent. DECISION GARCIA, J.: In this petition for review on certiorari under Rule 45 of the Rules of Court, herein petitioner McDonalds Corporation seeks the reversal and setting aside of the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 57247, to wit: 1. Decision dated 29 July 20041 reversing an earlier decision of the Intellectual Property Office (IPO) which rejected herein respondent MacJoy FastFood Corporations application for registration of the trademark "MACJOY & DEVICE"; and 2. Resolution dated 12 November 20042 denying the petitioners motion for reconsideration. As culled from the record, the facts are as follows:

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On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic corporation engaged in the sale of fast food products in Cebu City, filed with the then Bureau of Patents, Trademarks and Technology Transfer (BPTT), now the Intellectual Property Office (IPO), an application, thereat identified as Application Serial No. 75274, for the registration of the trademark "MACJOY & DEVICE" for fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks under classes 29 and 30 of the International Classification of Goods. Petitioner McDonalds Corporation, a corporation duly organized and existing under the laws of the State of Delaware, USA, filed a verified Notice of Opposition3 against the respondents application claiming that the trademark "MACJOY & DEVICE" so resembles its corporate logo, otherwise known as the Golden Arches or "M" design, and its marks "McDonalds," McChicken," "MacFries," "BigMac," "McDo," "McSpaghetti," "McSnack," and "Mc," (hereinafter collectively known as the MCDONALDS marks) such that when used on identical or related goods, the trademark applied for would confuse or deceive purchasers into believing that the goods originate from the same source or origin. Likewise, the petitioner alleged that the respondents use and adoption in bad faith of the "MACJOY & DEVICE" mark would falsely tend to suggest a connection or affiliation with petitioners restaurant services and food products, thus, constituting a fraud upon the general public and further cause the dilution of the distinctiveness of petitioners registered and internationally recognized MCDONALDS marks to its prejudice and irreparable damage. The application and the opposition thereto was docketed as Inter Partes Case No. 3861. Respondent denied the aforementioned allegations of the petitioner and averred that it has used the mark "MACJOY" for the past many years in good faith and has spent considerable sums of money for said marks extensive promotion in tri-media, especially in Cebu City where it has been doing business long before the petitioner opened its outlet thereat sometime in 1992; and that its use of said mark would not confuse affiliation with the petitioners restaurant services and food products because of the differences in the design and detail of the two (2) marks. In a decision4 dated December 28, 1998, the IPO, ratiocinating that the predominance of the letter "M," and the prefixes "Mac/Mc" in both the "MACJOY" and the "MCDONALDS" marks lead to the conclusion that there
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is confusing similarity between them especially since both are used on almost the same products falling under classes 29 and 30 of the International Classification of Goods, i.e., food and ingredients of food, sustained the petitioners opposition and rejected the respondents application, viz: WHEREFORE, the Opposition to the registration of the mark MACJOY & DEVICE for use in fried chicken and chicken barbecue, burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo, and steaks is, as it is hereby, SUSTAINED. Accordingly, Application Serial No. 75274 of the herein Respondent-Applicant is REJECTED. Let the filewrapper of MACJOY subject matter of this case be sent to the Administrative, Financial and Human Resources Development Bureau for appropriate action in accordance with this Decision, with a copy to be furnished the Bureau of Trademarks for information and to update its record. SO ORDERED. In time, the respondent moved for a reconsideration but the IPO denied the motion in its Order5 of January 14, 2000. Therefrom, the respondent went to the CA via a Petition for Review with prayer for Preliminary Injunction6 under Rule 43 of the Rules of Court, whereat its appellate recourse was docketed as CA-G.R. SP No. 57247. Finding no confusing similarity between the marks "MACJOY" and "MCDONALDS," the CA, in its herein assailed Decision7 dated July 29, 2004, reversed and set aside the appealed IPO decision and order, thus: WHEREFORE, in view of the foregoing, judgment is hereby rendered by us REVERSING and SETTING ASIDE the Decision of the IPO dated 28 December 1998 and its Order dated 14 January 2000 and ORDERING the IPO to give due course to petitioners Application Serial No. 75274. SO ORDERED. Explains the CA in its decision:

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xxx, it is clear that the IPO brushed aside and rendered useless the glaring and drastic differences and variations in style of the two trademarks and even decreed that these pronounced differences are "miniscule" and considered them to have been "overshadowed by the appearance of the predominant features" such as "M," "Mc," and "Mac" appearing in both MCDONALDS and MACJOY marks. Instead of taking into account these differences, the IPO unreasonably shrugged off these differences in the device, letters and marks in the trademark sought to be registered. The IPO brushed aside and ignored the following irrefutable facts and circumstances showing differences between the marks of MACJOY and MCDONALDS. They are, as averred by the petitioner [now respondent]: 1. The word "MacJoy" is written in round script while the word "McDonalds" is written in single stroke gothic; 2. The word "MacJoy" comes with the picture of a chicken head with cap and bowtie and wings sprouting on both sides, while the word "McDonalds" comes with an arches "M" in gold colors, and absolutely without any picture of a chicken; 3. The word "MacJoy" is set in deep pink and white color scheme while "McDonalds" is written in red, yellow and black color combination; 4. The faade of the respective stores of the parties are entirely different. Exhibits 1 and 1-A, show that [respondents] restaurant is set also in the same bold, brilliant and noticeable color scheme as that of its wrappers, containers, cups, etc., while [petitioners] restaurant is in yellow and red colors, and with the mascot of "Ronald McDonald" being prominently displayed therein." (Words in brackets supplied.) Petitioner promptly filed a motion for reconsideration. However, in its similarly challenged Resolution8 of November 12, 2004, the CA denied the motion, as it further held: Whether a mark or label of a competitor resembles another is to be determined by an inspection of the points of difference and resemblance as a whole, and not merely the points of resemblance. The articles and trademarks employed and used by the [respondent] Macjoy Fastfood Corporation are so different and distinct as to preclude any probability or
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likelihood of confusion or deception on the part of the public to the injury of the trade or business of the [petitioner] McDonalds Corporation. The "Macjoy & Device" mark is dissimilar in color, design, spelling, size, concept and appearance to the McDonalds marks. (Words in brackets supplied.) Hence, the petitioners present recourse on the following grounds: I. THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS "MACJOY & DEVICE" MARK IS NOT CONFUSINGLY SIMILAR TO PETITIONERS "McDONALDS MARKS." IT FAILED TO CORRECTLY APPLY THE DOMINANCY TEST WHICH HAS BEEN CONSISTENTLY APPLIED BY THIS HONORABLE COURT IN DETERMINING THE EXISTENCE OF CONFUSING SIMILARITY BETWEEN COMPETING MARKS. A. The McDonalds Marks belong to a well-known and established "family of marks" distinguished by the use of the prefix "Mc" and/or "Mac" and the corporate "M" logo design. B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioners McDonalds Marks and the Respondents "Macjoy & Device" mark. As such, the marks are confusingly similar under the Dominancy Test. C. Petitioners McDonalds Marks are well-known and world-famous marks which must be protected under the Paris Convention. II. THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE IPO DATED 28 DECEMBER 1998 AND ITS ORDER DATED 14 JANUARY 2000 WERE NOT BASED ON SUBSTANTIAL EVIDENCE. In its Comment,9 the respondent asserts that the petition should be dismissed outright for being procedurally defective: first, because the person who signed the certification against forum shopping in behalf of the petitioner was not specifically authorized to do so, and second, because the petition does not present a reviewable issue as what it challenges are
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the factual findings of the CA. In any event, the respondent insists that the CA committed no reversible error in finding no confusing similarity between the trademarks in question. The petition is impressed with merit. Contrary to respondents claim, the petitioners Managing Counsel, Sheila Lehr, was specifically authorized to sign on behalf of the petitioner the Verification and Certification10 attached to the petition. As can be gleaned from the petitioners Board of Directors Resolution dated December 5, 2002, as embodied in the Certificate of the Assistant Secretary dated December 21, 2004,11 Sheila Lehr was one of those authorized and empowered "to execute and deliver for and on behalf of [the petitioner] all documents as may be required in connection with x x x the protection and maintenance of any foreign patents, trademarks, trade-names, and copyrights owned now or hereafter by [the petitioner], including, but not limited to, x x x documents required to institute opposition or cancellation proceedings against conflicting trademarks, and to do such other acts and things and to execute such other documents as may be necessary and appropriate to effect and carry out the intent of this resolution." Indeed, the afore-stated authority given to Lehr necessarily includes the authority to execute and sign the mandatorily required certification of non-forum shopping to support the instant petition for review which stemmed from the "opposition proceedings" lodged by the petitioner before the IPO. Considering that the person who executed and signed the certification against forum shopping has the authority to do so, the petition, therefore, is not procedurally defective. As regards the respondents argument that the petition raises only questions of fact which are not proper in a petition for review, suffice it to say that the contradictory findings of the IPO and the CA constrain us to give due course to the petition, this being one of the recognized exceptions to Section 1, Rule 45 of the Rules of Court. True, this Court is not the proper venue to consider factual issues as it is not a trier of facts.12 Nevertheless, when the factual findings of the appellate court are mistaken, absurd, speculative, conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the court of origin,13 as here, this Court will review them.

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The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a "trademark" as any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof adopted and used by a manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt in by others.14 Under the same law, the registration of a trademark is subject to the provisions of Section 4 thereof, paragraph (d) of which is pertinent to this case. The provision reads: Section 4. Registration of trademarks, trade-names and service-marks on the principal register. There is hereby established a register of trademarks, tradenames and service-marks which shall be known as the principal register. The owner of the trade-mark, trade-name or service-mark used to distinguish his goods, business or services of others shall have the right to register the same on the principal register, unless it: xxx xxx xxx (d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in the Philippines or a mark or trade-name previously used in the Philippines by another and not abandoned, as to be likely, when applied to or used in connection with the goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers; xxx xxx xxx Essentially, the issue here is whether there is a confusing similarity between the MCDONALDS marks of the petitioner and the respondents "MACJOY & DEVICE" trademark when applied to Classes 29 and 30 of the International Classification of Goods, i.e., food and ingredients of food. In determining similarity and likelihood of confusion, jurisprudence has developed two tests, the dominancy test and the holistic test.15 The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might cause confusion or deception.16 In contrast, the holistic test requires the court to consider the entirety of the marks as applied to the products, including the labels and packaging, in determining confusing similarity.17 Under the latter test, a comparison of the words is not the only determinant factor.18
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Here, the IPO used the dominancy test in concluding that there was confusing similarity between the two (2) trademarks in question as it took note of the appearance of the predominant features "M", "Mc" and/or "Mac" in both the marks. In reversing the conclusion reached by the IPO, the CA, while seemingly applying the dominancy test, in fact actually applied the holistic test. The appellate court ruled in this wise: Applying the Dominancy test to the present case, the IPO should have taken into consideration the entirety of the two marks instead of simply fixing its gaze on the single letter "M" or on the combinations "Mc" or "Mac". A mere cursory look of the subject marks will reveal that, save for the letters "M" and "c", no other similarity exists in the subject marks. We agree with the [respondent] that it is entirely unwarranted for the IPO to consider the prefix "Mac" as the predominant feature and the rest of the designs in [respondents] mark as details. Taking into account such paramount factors as color, designs, spelling, sound, concept, sizes and audio and visual effects, the prefix "Mc" will appear to be the only similarity in the two completely different marks; and it is the prefix "Mc" that would thus appear as the miniscule detail. When pitted against each other, the two marks reflect a distinct and disparate visual impression that negates any possible confusing similarity in the mind of the buying public. (Words in brackets supplied.) Petitioner now vigorously points out that the dominancy test should be the one applied in this case. We agree. In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no set rules can be deduced because each case must be decided on its merits.19 In such cases, even more than in any other litigation, precedent must be studied in the light of the facts of the particular case.20 That is the reason why in trademark cases, jurisprudential precedents should be applied only to a case if they are specifically in point.21 While we agree with the CAs detailed enumeration of differences between the two (2) competing trademarks herein involved, we believe that the holistic test is not the one applicable in this case, the dominancy test being the one more suitable. In recent cases with a similar factual milieu as here,
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the Court has consistently used and applied the dominancy test in determining confusing similarity or likelihood of confusion between competing trademarks.22 Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case where the trademark "Big Mak" was found to be confusingly similar with the "Big Mac" mark of the herein the petitioner, the Court explicitly held: This Court, xxx, has relied on the dominancy test rather than the holistic test. The dominancy test considers the dominant features in the competing marks in determining whether they are confusingly similar. Under the dominancy test, courts give greater weight to the similarity of the appearance of the product arising from the adoption of the dominant features of the registered mark, disregarding minor differences. Courts will consider more the aural and visual impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets and market segments. Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court, applying the dominancy test, concluded that the use by the respondent therein of the word "MASTER" for its coffee product "FLAVOR MASTER" was likely to cause confusion with therein petitioners coffee products "MASTER ROAST" and "MASTER BLEND" and further ruled: xxx, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair competition that confusing similarity is to be determined on the basis of visual, aural, connotative comparisons and overall impressions engendered by the marks in controversy as they are encountered in the marketplace. The totality or holistic test only relies on visual comparisons between two trademarks whereas the dominancy test relies not only on the visual but also on the aural and connotative comparisons and overall impressions between the two trademarks. Applying the dominancy test to the instant case, the Court finds that herein petitioners "MCDONALDS" and respondents "MACJOY" marks are confusingly similar with each other such that an ordinary purchaser can conclude an association or relation between the marks. To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as dominant features. The first letter "M" in both marks puts emphasis on the prefixes "Mc" and/or "Mac" by the similar way
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in which they are depicted i.e. in an arch-like, capitalized and stylized manner.25 For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and aurally catches the attention of the consuming public. Verily, the word "MACJOY" attracts attention the same way as did "McDonalds," "MacFries," "McSpaghetti," "McDo," "Big Mac" and the rest of the MCDONALDS marks which all use the prefixes Mc and/or Mac. Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the respondents trademark application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the International Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioners trademark registration for the MCDONALDS marks in the Philippines covers goods which are similar if not identical to those covered by the respondents application. Thus, we concur with the IPOs findings that: In the case at bar, the predominant features such as the "M," "Mc," and "Mac" appearing in both McDonalds marks and the MACJOY & DEVICE" easily attract the attention of would-be customers. Even non-regular customers of their fastfood restaurants would readily notice the predominance of the "M" design, "Mc/Mac" prefixes shown in both marks. Such that the common awareness or perception of customers that the trademarks McDonalds mark and MACJOY & DEVICE are one and the same, or an affiliate, or under the sponsorship of the other is not farfetched. The differences and variations in styles as the device depicting a head of chicken with cap and bowtie and wings sprouting on both sides of the chicken head, the heart-shaped "M," and the stylistic letters in "MACJOY & DEVICE;" in contrast to the arch-like "M" and the one-styled gothic letters in McDonalds marks are of no moment. These minuscule variations are overshadowed by the appearance of the predominant features mentioned hereinabove. Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found in both marks, the inevitable conclusion is there is confusing similarity between the trademarks Mc Donalds marks and "MACJOY AND DEVICE"
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especially considering the fact that both marks are being used on almost the same products falling under Classes 29 and 30 of the International Classification of Goods i.e. Food and ingredients of food. With the existence of confusing similarity between the subject trademarks, the resulting issue to be resolved is who, as between the parties, has the rightful claim of ownership over the said marks. We rule for the petitioner. A mark is valid if it is distinctive and hence not barred from registration under the Trademark Law. However, once registered, not only the marks validity but also the registrants ownership thereof is prima facie presumed.26 Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the provision regarding the protection of industrial property of foreign nationals in this country as embodied in the Paris Convention28 under which the Philippines and the petitioners domicile, the United States, are adherentmembers, the petitioner was able to register its MCDONALDS marks successively, i.e., "McDonalds" in 04 October, 197129 ; the corporate logo which is the "M" or the golden arches design and the "McDonalds" with the "M" or golden arches design both in 30 June 197730 ; and so on and so forth.31 On the other hand, it is not disputed that the respondents application for registration of its trademark "MACJOY & DEVICE" was filed only on March 14, 1991 albeit the date of first use in the Philippines was December 7, 1987.32 Hence, from the evidence on record, it is clear that the petitioner has duly established its ownership of the mark/s. Respondents contention that it was the first user of the mark in the Philippines having used "MACJOY & DEVICE" on its restaurant business and food products since December, 1987 at Cebu City while the first McDonalds outlet of the petitioner thereat was opened only in 1992, is downright unmeritorious. For the requirement of "actual use in commerce x x x in the Philippines" before one may register a trademark, trade-name and service mark under the Trademark Law33 pertains to the territorial
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jurisdiction of the Philippines and is not only confined to a certain region, province, city or barangay. Likewise wanting in merit is the respondents claim that the petitioner cannot acquire ownership of the word "Mac" because it is a personal name which may not be monopolized as a trademark as against others of the same name or surname. As stated earlier, once a trademark has been registered, the validity of the mark is prima facie presumed. In this case, the respondent failed to overcome such presumption. We agree with the observations of the petitioner regarding the respondents explanation that the word "MACJOY" is based on the name of its presidents niece, Scarlett Yu Carcell. In the words of the petitioner: First of all, Respondent failed to present evidence to support the foregoing claim which, at best, is a mere self-serving assertion. Secondly, it cannot be denied that there is absolutely no connection between the name "Scarlett Yu Carcel" and "MacJoy" to merit the coinage of the latter word. Even assuming that the word "MacJoy" was chosen as a term of endearment, fondness and affection for a certain Scarlett Yu Carcel, allegedly the niece of Respondents president, as well as to supposedly bring good luck to Respondents business, one cannot help but wonder why out of all the possible letters or combinations of letters available to Respondent, its president had to choose and adopt a mark with the prefix "Mac" as the dominant feature thereof. A more plausible explanation perhaps is that the niece of Respondents president was fond of the food products and services of the Respondent, but that is beside the point." 34 By reason of the respondents implausible and insufficient explanation as to how and why out of the many choices of words it could have used for its trade-name and/or trademark, it chose the word "MACJOY," the only logical conclusion deducible therefrom is that the respondent would want to ride high on the established reputation and goodwill of the MCDONALDs marks, which, as applied to petitioners restaurant business and food products, is undoubtedly beyond question. Thus, the IPO was correct in rejecting and denying the respondents application for registration of the trademark "MACJOY & DEVICE." As this Court ruled in Faberge Inc. v. IAC,35 citing Chuanchow Soy & Canning Co. v. Dir. of Patents and Villapanta:36

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When one applies for the registration of a trademark or label which is almost the same or very closely resembles one already used and registered by another, the application should be rejected and dismissed outright, even without any opposition on the part of the owner and user of a previously registered label or trademark, this not only to avoid confusion on the part of the public, but also to protect an already used and registered trademark and an established goodwill. WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP NO. 57247, are REVERSED and SET ASIDE and the Decision of the Intellectual Property Office in Inter Partes Case No. 3861 is REINSTATED. No pronouncement as to costs. SO ORDERED.

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