XERXES A.

ABADIANO,

G.R. No. 156310

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus -

AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

SPOUSES JESUS and LOLITA MARTIR,

Promulgated:

Respondents.
July 31, 2008

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DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Civil Procedure
assailing the Decision1[1] of the Court of Appeals (CA) dated March 14, 2002 and its Resolution 2[2] dated November 21,
2002 in CA-G.R. CV No. 51679. The CA affirmed the Decision of the Regional Trial Court (RTC) of Kabankalan, Negros
Occidental3[3] declaring respondents as the owners of the property in question.

The case stemmed from an action for quieting of title and/or recovery of possession 4[4] of a parcel of land filed by
herein respondents against Roberto Abadiano, Faustino Montao, and Quirico Mandaguit. Petitioner Xerxes A. Abadiano
intervened in that case.

Lot No. 1318 of the Kabankalan Cadastre consists of 34,281 square meters covered by Original Certificate of
Title (OCT) No. 20461 issued on November 19, 1923 in the name of the spouses Inocentes Baares and Feliciana
Villanueva. Before the issuance of OCT No. 20461, however, Inocentes and the heirs of Feliciana Villanueva (who had
predeceased her husband) executed an Agreement of Partition dated June 1, 1922 over Lot No. 1318. The lot was
partitioned and distributed as follows: (1) 14,976 sq m denominated as Lot No. 1318-A, in favor of Demetrio Baares; (2)
10,125 sq m denominated as Lot No. 1318-B, in favor of Ramon and David Abadiano (grandchildren of Inocentes and
Feliciana); and (3) 10,180 sq m denominated as Lot No. 1318-C, in favor of Amando Baares. The partition is embodied in
a Deed of Partition executed on June 1, 1922 and notarized the following day by Notary Public Jose Peralta with notarial
inscriptions Reg. No. 64, Pag. 69, Libro III.5[5]

On September 30, 1939, David Abadiano, who was absent during the execution of the Agreement of Partition,
executed a Deed of Confirmation acknowledging and ratifying the document of partition. 6[6]
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OCT No. 20461 was administratively reconstituted on February 15, 1962 and in lieu thereof OCT No. RO-8211
(20461) was issued over Lot No. 1318, still in the name of Inocentes Baares and Felicidad Villanueva. Annotated at the
back of the reconstituted title were the Agreement of Partition and the Deed of Confirmation.7[7]

On June 14, 1957 Demetrio Baares sold his share of the lot to his son, Leopoldo. The same was annotated at the
back of OCT No. RO-8211 (20461).8[8]

Subsequently, on February 21, 1962, Leopoldo Baares filed before the Court of First Instance (CFI) of Negros
Occidental an ex-parte petition praying for: first, the confirmation of the Agreement of Partition, the Conformity executed
by David Abadiano, and the Deed of Sale between him and his father; and second, the cancellation of OCT No. RO-8211
(20461) and, in lieu thereof, the issuance of a new certificate of title over the property. In an Order dated February 22,
1962, the court ordered the cancellation of OCT No. RO-8211 (20461) and the issuance of a new certificate of title in the
names of Dr. Leopoldo Baares, Amando Baares, and Ramon and David Abadiano. Pursuant thereto, Transfer Certificate of
Title (TCT) No. T-31862 was issued by the Register of Deeds for Negros Occidental. 9[9]

Petitioner insists that this is still the valid and subsisting title over Lot No. 1318 and that no sale of the portion
pertaining to Ramon and David Abadiano ever took place. 10[10]

On the other hand, respondent spouses alleged that, prior to the issuance of TCT No. T-31862, Ramon Abadiano,
for himself and on behalf of David Abadiano, had already sold their rights and interests over Lot No. 1318-C11[11] to
Victor Garde. The sale was allegedly evidenced by a document of sale (Compra Y Venta) dated June 3, 1922 and
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acknowledged before Notary Public Jose Peralta and bearing notarial inscription Doc. No. 64, Pag. No. 60, Book No. III,
series of 1922. The sale was allegedly affirmed by David Abadiano in a document dated September 30, 1939.12[12]

They further alleged that from the time of the sale, Victor Garde and his heirs were in continuous, public,
peaceful, and uninterrupted possession and occupation in the concept of an owner of Lot No. 1318-C.13[13] On December
29, 1961, the heirs of Victor Garde sold their rights and interests over Lot No. 1318-C 14[14] to Jose Garde, who
immediately took possession thereof. Jose Garde continuously planted sugarcane on the land until he sold the property to
Lolita Martir in 1979.15[15]

After acquiring the property, respondent spouses continued to plant sugarcane on the land. Sometime in March
1982, after respondent Jesus Martir harvested the sugarcane he had planted on Lot No. 1318-C, defendant below Roberto
Abadiano (son of Ramon) allegedly entered the property and cultivated the remaining stalks of sugarcane and refused to
vacate despite demands to do so. The following year, defendants Roberto Abadiano, Faustino Montao, and Quirico
Mandaguit again harvested the sugarcane on Lot No. 1318-C. 16[16] Further, the defendants also entered the property and
harvested the sugarcane on Lot No. 1318-B, 17[17] which by then had been acquired by Lolita B. Martir from her adoptive
father, Amando Baares.18[18]

Thus, in April 1982, herein respondent-spouses filed the Action to Quiet Title and/or Recovery of Possession with
Damages before the then CFI of Negros Occidental.

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In their Answer with Counterclaim,19[19] defendants denied that the subject property was ever sold by Ramon and
David Abadiano, and that, consequently, defendant Roberto Abadiano had inherited the same from Ramon. They also
alleged, by way of Special and Affirmative Defenses, that the subject land still belonged to the estate of Ramon and David
Abadiano and was never alienated. They alleged further that the act of spouses Martir in planting sugarcane on the land
was without Robertos consent; that Roberto had demanded that the spouses Martir pay him reasonable rental for the land
but that they had persistently refused to do so; and that sometime in March 1981, Roberto and the spouses Martir came to
an agreement whereby the defendant continued to cultivate the remaining stalks of sugarcane left by plaintiffs and that
until the harvest of said sugarcane, plaintiffs never posed any objection thereto.

Xerxes Abadiano intervened in the proceedings before the trial court alleging likewise that his predecessor Ramon
Abadiano never sold their share of the property to Victor Garde. 20[20]

After trial, the court issued a Decision21[21] dated June 23, 1995, ruling in favor of the spouses Martir, thus:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants
declaring plaintiffs spouses Jesus and Lolita Martir as the true and legitimate owners of portions of Lot
No. 1318 Kabankalan Cadastre denominated as Lots 1318-B and 1318-C and ordering:
(1)

That the defendants Roberto Abadiano and the intervenor Xerxes Abadiano shall

surrender Transfer Certificate of Title No. T-31862 to the Registrar of Deeds of Negros Occidental who is
directed to partially cancel said title and issue new Certificate of Title corresponding to Lots 1318-B and
1318-C in the names of the spouses Jesus and Lolita Martir;

(2)

That the defendants shall jointly and severally pay to the plaintiffs the amount of

Twenty Thousand (P20,000.00) Pesos representing the value of the sugarcanes of plaintiffs which
defendants harvested and milled with SONEDCO and;

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(3)

To pay the costs of this suit.

SO ORDERED.22[22]

The trial court rejected therein defendants contention that the Compra Y Venta was null and void because the coowner, David Abadiano, did not sign the same. It held that the Supreme Court has ruled to the effect that the sale by a coowner of the entire property without the consent of the other co-owners was not null and void but that only the rights of
the co-owner-seller are transferred, making the buyer a co-owner. The trial court also held that although the Compra Y
Venta was not annotated either on the OCT or on the reconstituted OCT, the validity of the sale was not vitiated. The
registration or annotation is required only to make the sale valid as to third persons . Thus, the trial court concluded that
the Compra Y Venta was valid between the parties, Ramon Abadiano and Victor Garde.

The trial court also brushed aside the defendants contention that the Compra Y Venta contained the same notarial
inscription as the Deed of Partition. It said that assuming this to be true, this may be considered an error which did not
nullify the Compra Y Venta; at most, the document would be non-registrable but still valid.

On the contention that the alleged confirmation executed by David Abadiano was for the Deed of Partition and
not for the Compra Y Venta, the trial court agreed. It, however, interpreted the same to mean that David Abadiano must
not have authorized his brother to sell his share in Lot No. 1318-C. The effect was that David Abadiano continued to be
one of the registered owners of the property and his heirs stepped into his shoes upon his death.

However, the trial court found that the plaintiffs (respondents) claim that they and their predecessors-in-interest
have been in possession of the property for more than sixty (60) years was duly established. In contrast, the court found
that defendants and intervenor, and their deceased parents, had not been in possession of their share in the property. It held
that the defendants and intervenor were guilty of laches for failing to avail of the many opportunities for them to bring an
action to establish their right over Lot No. 1318-C.

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Defendants appealed to the CA. However, the same was summarily dismissed in a Resolution dated February 11,
1997 due to defendants failure to pay the required docket fee within the period set. Nonetheless, the records were retained
for the appeal of Xerxes Abadiano, intervenor in the trial court.

On March 14, 2002, the CA rendered a Decision affirming the Decision of the RTC in toto.23[23]

Xerxes Abadiano now comes before this Court raising the following arguments:

A
THE HONORABLE COURT OF APPEALS ERRED, BASED ON ITS MISAPPREHENSION AND/OR
OMISSION OF THE FACTS, IN DISREGARDING THE PRIMORDIAL ISSUE OF WHETHER OR
NOT THE DEED OF SALE (COMPRA Y VENTA) IS A SPURIOUS DOCUMENT
B
THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONER GUILTY OF
LACHES OVER REGISTERED LAND24[24]

The Petition is impressed with merit. We believe the trial court and the CA erred in ruling for the respondents.
Accordingly, we reverse the assailed Decision and Resolution.

It is well settled that the findings of fact of the trial court, especially when affirmed by the CA, are accorded the
highest degree of respect, and generally will not be disturbed on appeal. Such findings are binding and conclusive on the
Court. Further, it is not the Courts function under Rule 45 of the 1997 Revised Rules of Civil Procedure to review,
examine and evaluate or weigh the probative value of the evidence presented. The jurisdiction of the Court in a petition

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for review under Rule 45 is limited to reviewing only errors of law. Unless the case falls under the recognized exceptions,
the rule shall not be disturbed.25[25]

However, this Court has consistently recognized the following exceptions: (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 CA went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to those
of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9)
when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record.26[26]

In the present case, we find that the trial court based its judgment on a misapprehension of facts, as well as on the
supposed absence of evidence which is contradicted by the records.

In appreciating the alleged Compra Y Venta presented by respondents, the trial court concluded that [t]he parties
have no quarrel on the existence of a Deed of Sale of a portion of Lot No. 1318 executed by Ramon Abadiano for himself
and as representative of David Abadiano, dated June 3, [1922] in favor of Victor Garde. 27[27]

The trial court erred in its conclusion.

Borne very clearly by the records is the defendants repudiation of the existence of the sale in their Answer with
Counterclaim. They stated:

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2. That defendants admit plaintiffs allegation in paragraph 4 that there has been no particular
designation of lot number (sic) for each of the co-owner (sic) of Lot No. 1318 but specifically deny under
oath the other allegations thereof the truth being that the property referred to here as Lot No. 1318
remains undivided to this day that the owners thereof as shown by the TCT No. 31862 co-own the same
pro-indiviso;
3. That defendants have no knowledge sufficient to form a belief as to the truth of the allegations
in paragraph 528[28] and therefore specifically deny the same under oath the truth being that Ramon
Abadiano and David Abadiano had not sold the land at bar to anyone and that consequently, defendant
Roberto Abadiano had inherited the same from the former; x x x.29[29] (emphasis supplied).

Likewise, petitioner specifically denied the allegations in paragraph 5 of the Complaint. He alleged that the lot
had never been sold or alienated and the same still remains intact as the property of the Intervenor and his co-owners by
operation of law.30[30]

This was testified to by Roberto Abadiano during the trial, thus:

Q:During the lifetime of your father, do you know if your father has ever sold to any party his share on
Lot No. 1318?
A:

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He has not sold his share.31[31]

These statements were enough to impugn the due execution of the document. While it is true that this Court had
previously ruled that mere denials would not have sufficed to impeach the document, in this case, there was an effective
specific denial as contemplated by law in accordance with our ruling that -

defendant must declare under oath that he did not sign the document or that it is otherwise false or
fabricated. Neither does the statement of the answer to the effect that the instrument was procured by
fraudulent representation raise any issue as to its genuineness or due execution. On the contrary such a
plea is an admission both of the genuineness and due execution thereof, since it seeks to avoid the
instrument upon a ground not affecting either.32[32]

It was error then for the RTC to have brushed aside this issue and then make so sweeping a conclusion in the face
of such opposition. In light of this challenge to the very existence of the Compra Y Venta, the trial court should have first
resolved the issue of the documents authenticity and due execution before deciding on its validity. Unfortunately, the CA
did not even discuss this issue.

We are cognizant, however, that it is now too late in the day to remand the case to the trial court for the
determination of the purported Compra Y Ventas authenticity and due execution. Thus, we will resolve this very issue here
and now in order to put an end to this protracted litigation.

There is no denying that TCT No. 31862 is still the subsisting title over the parcel of land in dispute . It is also a
fact that the purported Compra Y Venta was not annotated on TCT No. 31862 until April 1982, shortly before the
complaint was commenced, even though the deed was allegedly executed in 1922.

Considering that the action is one for quieting of title and respondents anchored their claim to the property on the
disputed Compra Y Venta, we find it necessary to repeat that it was incumbent upon the trial court to have resolved first
the issue of the documents due execution and authenticity, before determining its validity.

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Rule 130, Section 3 of the Revised Rules of Court reads:

Original document must be produced; exceptions. When the subject of inquiry is the contents of a
document, no evidence shall be admissible other than the original document itself, except in the following
cases:
(a) When the original has been lost or destroyed, or cannot be produced in court without bad faith
on the part of the offeror;
(b) When the original is in the custody or under the control of the party against whom the
evidence is offered, and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other documents which cannot be
examined in court without great loss of time and the fact sought to be established from them is only the
general result of the whole;
(d) When the original is a public record in the custody of a public officer or is recorded in a
public office.

Respondents attached only a photocopy of the Compra Y Venta to their complaint. According to respondent Lolita
Martir, the original of said document was in the office of the Register of Deeds. They allegedly tried to obtain a copy from
that office but their request was refused. No other evidence but these bare assertions, however, was presented to prove that
the original is indeed in the custody of the Register of Deeds or that respondents due and diligent search for the same was
unsuccessful.

The Rule states that when the original document is unavailable, has been lost or destroyed, or cannot be produced
in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his
part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of
witnesses in the order stated.33[33]

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In the case at bar, respondents failed to establish that the offer in evidence of the document was made in
accordance with any of the exceptions allowed under the abovequoted rule, and yet, the trial court accepted the document
as genuine and proceeded to determine its validity based on such assumption.

The trial court likewise brushed aside the apparent defect that the document presented contained the same notarial
inscription as the Agreement on Partition. Indeed, the Deed of Partition and the Compra Y Venta, though executed on
different days, were notarized on the same day, and both documents contained the signatures of the same witnesses and
the same notarial inscription.

This notwithstanding, the court concluded, Assuming this to be true, same could be considered an error which did
not nullify, (sic) the Deed of Sale or Compra Y Venta. At most, the document would be a non-registrable, but valid
document.34[34]

We stress that a notarial document is evidence of the facts in the clear unequivocal manner therein expressed and
has in its favor the presumption of regularity.35[35]

In this case, while it is true that the error in the notarial inscription would not have invalidated the sale if indeed it
took place the same error would have meant that the document cannot be treated as a notarial document and thus, not
entitled to the presumption of regularity. The document would be taken out of the realm of public documents whose
genuineness and due execution need not be proved. 36[36]

Accordingly, respondents not having proven the due execution and genuineness of the purported Compra Y Venta,
the weight of evidence preponderates in favor of petitioner.

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Next, we determine if petitioner is guilty of laches. On this issue, we rule in the negative.

Under the Property Registration Decree,37[37] no title to registered land in derogation of the title of the registered
owner shall be acquired by prescription or adverse possession.38[38] Indefeasibility and imprescriptibility are the
cornerstones of land registration proceedings. Barring any mistake or use of fraud in the procurement of the title, owners
may rest secure on their ownership and possession once their title is registered under the protective mantle of the Torrens
system.39[39]

Nonetheless, even if a Torrens title is indefeasible and imprescriptible, 40[40] the registered landowner may lose his
right to recover the possession of his registered property by reason of laches.41[41]

Laches has been defined as neglect or omission to assert a right, taken in conjunction with lapse of time and other
circumstances causing prejudice to an adverse party, as will operate as a bar in equity. It is a delay in the assertion of a
right which works disadvantage to another because of the inequity founded on some change in the condition or relations
of the property or parties. It is based on public policy which, for the peace of society, ordains that relief will be denied to
a stale demand which otherwise could be a valid claim. 42[42]
The four basic elements of laches are: (1) conduct on the part of the defendant, or of one under whom he claims,
giving rise to the situation of which complaint is made and for which the complaint seeks a remed y; (2) delay in asserting
the complainant's rights, the complainant having had knowledge or notice of the defendants conduct and having been
afforded an opportunity to institute suit; (3) lack of knowledge or notice on the part of the defendant that the complainant

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would assert the right on 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 to be barred.43[43]

The reason for the rule is not simply the lapse of time during which the neglect to enforce the right has existed,
but the changes of condition which may have arisen during the period in which there has been neglect . In other words,
where a court finds that the position of the parties will change, that equitable relief cannot be afforded without doing
injustice, or that the intervening rights of third persons may be destroyed or seriously impaired, it will not exert its
equitable powers in order to save one from the consequences of his own neglect. 44[44]

Though laches applies even to imprescriptible actions, its elements must be proved positively. Laches is
evidentiary in nature and cannot be established by mere allegations in the pleadings. 45[45]

Based on the foregoing, we hold that petitioner is not guilty of laches. The evidence on record does not support
such finding.

Petitioner had reasonable ground to believe that the property, being still in the name of his predecessor in interest,
continued to be theirs, especially considering that the annotation of the purported sale was done only in 1982 . According
to petitioner, his father had told him that his (the fathers) inheritance was in the possession of their uncle, Amando Baares
who knew likewise that the property was theirs.

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Thus, Roberto Abadiano testified:

Q:Before Amando Baares died, did you know that your father is a part owner of Lot No. 1318?
A:

Yes, Sir.

Q:

And did you not complain to Amando Baares that your father is a pert owner of that lot?

A:

No, Sir. We did not complain because he was our grandfather and when he dies, the property will
go back to us.46[46]

And herein petitioner testified:

Atty. Garaygay
Q:Before the war who was occupying this lot which you claimed belonging (sic) to your father?
A:

The uncle of my father, Amando Baares, Sir.

Q:

As a matter of fact, before and after the war and during the lifetime of Amando Baares, he was
the one in possession of Lot No. 1318?

A:

Yes, sir.

Q:

What was the condition of the lot under the possession of the lot under the possession of Amando
Baares was it under lease?

A:

As far as I can remember, my father told me that his inheritance was with Amando Baares, his
uncle.47[47]

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From the testimonies of petitioner and the defendants during trial, it would appear that they were unaware of any
of respondents actions in relation to the property until the death of their grandfather, Amando Baares. When they did find
out that respondents were occupying the land, they immediately took action to occupy what they believed was still
rightfully theirs.

On this point, petitioner testified, thus:

Q:When did you initiate the move to claim Lot No. 1318-B as your inheritance from your late father?
A:

It was shortly after the death of Amando Baares.

Q:

Who were these, who initiated the move to claim Lot No. 1318-B?

A:

I advised my brothers here in Kabankalan to take action to possess the land which was then
occupied before by our (sic) great uncle, Amando Baares.

Q:

When was that, in what year, because we do not know when did your uncle (sic) die?

A:

It was after the death of Amando Baares sometime in 1973 or 1974.

Q:

Why did it take you that long before you initiated the move to claim the inheritance?

A:

Considering that relatives were involved and the fact we understand that our late parents revered
our uncle so, we cautiously tried to take action shortly after his death, so as not to antagonize our
relatives.

Q:

What did you do in order to claim your inheritance?

A:

Now, after learning that it was being farmed by Lolita Martir, I advised my brothers here in
Kabankalan to go to Bacolod City to seek the intercession of the Philippine Constabulary
Commander in order to thresh out the matter in a way that there will be no hostility or adverse
reaction.

Q:

What other reactions did you take, if any?

A:

Well, I told my brother that they have a confrontation in the Office of the PACLAP known as the
Presidential Action Commission on Land Problems.

Q:

Besides that confrontation at the PACLAP, what other action did you personally take as an heir of
Lot No. 1318-B?

A:

After that confrontation, I advised my brothers to occupy the land in question to farm it because it
belongs to us.

Q:

With respect to the Transfer Certificate of Title, what action, if any, did you undertake?

A:

Well, we drew out a Declaration of Heirship and Adjudication and after it was approved by the
Court, it was annotated at the back of the Transfer Certificate of Title No. T-31862 and we were
given a co-owners copy of the said title by the Register of Deeds.

xxxx
Q:

Mr. Witness, when did you and your co-owners executed (sic) this Declaration of Heirship and
Adjudication over Lot 1318-B?

A:

That was on July 17, 1976.

Q:

Was that before or after the plaintiffs have filed this present case?

A:

That was almost 6 or 7 years before this present case was filed. 48[48]

On the other hand, Roberto Abadiano testified:

Atty. Garaygay
Q:Now, according to you, your father is the co-owner of Lot No. 1318. Prior to the death of your father,
who was in possession of Lot No. 1318?
Witness
A:
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What I know is it was Amando Baares.

Q:

You mean to say that when your father was still alive, it was Amando Baares who was in
possession of Lot No. 1318?

A:

Yes, sir.

Q:

And until when did you know that Amando Baares has been in possession of Lot No. 1318?

A:

Up to 1976 when he died.

Q:

After his death in 1976, who was in possession of the said lot?

A:

I made a verification in the Office of the Register of Deeds, and when I went to the said lot, it was
vacant.

Q:

When was that?

A:

In 1976-1977, and I have it planted in 1978.49[49]

That petitioner and his co-heirs waited until the death of Amando Baares to try and occupy the land is
understandable. They had to be careful about the actions they took, lest they sow dissent within the family. Furthermore,
they knew that their parents revered Amando.50[50]

The Court has recognized that this reaction cannot be characterized as such delay as would amount to laches, thus:

in determining whether a delay in seeking to enforce a right constitutes laches, the existence of a
confidential relationship between the parties is an important circumstance for consideration, a delay under
such circumstances not being so strictly regarded as where the parties are strangers to each other. The

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doctrine of laches is not strictly applied between near relatives, and the fact that parties are connected by
ties of blood or marriage tends to excuse an otherwise unreasonable delay.51[51]

In addition, several other factors militate against the finding of laches on the part of the petitioner.

When the Original Certificate of Title was reconstituted on February 15, 1962, no annotation therein was made of
the Compra Y Venta or of the Deed of Sale between Ramon Abadiano and Victor Garde. Only the Agreement of Partition,
the Confirmation by David Abadiano, and the sale from Demetrio to Leopoldo Baares were annotated therein. 52[52]
Neither does the Deed of Sale of Demetrios share in favor of Leopoldo, executed in 1957, mention that the property
belonged to anyone other than the parties to the Deed of Partition. 53[53]

Likewise, Transfer Certificate of Title No. T-31862, which was issued in 1962 pursuant to an Order of the
Kabankalan CFI, was issued in the names of Leopoldo Baares, Amando Baares, and Ramon and David Abadiano. Even at
the time of the issuance of said TCT, there was no annotation of the alleged sale to Victor Garde, which according to
respondents took place in 1922.

If respondents contention were true, the TCT should not have been issued in April 1962 in the name of Ramon
and David Abadiano, but in the name of Victor Garde or Jose Garde who by then had supposedly acquired the property by
virtue of the Declaration of Heirship and Deed of Sale executed on December 29, 1961. 54[54] As it is, neither respondents
nor any of their predecessors in interest participated in any of the proceedings for the issuance of the OCT, the
reconstituted OCT, or the TCT. The petitioners testimony on the matter is revealing:

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Q: Based on your investigation, did you find records of the proceedings of the reconstitution of title of
Lot 1318 or any evidence as to the participation of the plaintiffs in this Reconstitution Petition?
A:

Based on the existing records, they did not participate.

Q:

How about in the Reconstitution of Original Certificate of Title No. (sic) did the plaintiffs
participate therein?

A:

They did not also.

Q:

How about in the issuance of the new Transfer Certificate of Title, did the plaintiffs participate
therein?

A:

No, sir.55[55]

Again, the TCT bears out the fact that the purported Compra Y Venta to Victor Garde was annotated thereon only
on April 23, 1982. On the other hand, several entries made in 1981 evince that petitioner and his co-heirs took steps after
Amandos death to assert their rights over the property.56[56]

In 1976, the heirs of David Abadiano executed a Special Power of Attorney in favor of Roberto Abadiano giving
the latter authority to act, sue, and/or represent them in any suit or action for recovery of possession or of whatever kind or
nature.57[57] For their part, the heirs of Ramon Abadiano executed a Declaration of Heirship and Adjudication over the
part of Lot No. 1318 pertaining to their predecessor.58[58]

Ranged against these positive steps, respondents only have their bare assertions to support their claim that they
indeed had possession of the land through their predecessors in interest, which are insufficient to overcome the testimony

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that it was Amando Baares and not Victor Garde who had possession of the property during the formers lifetime, or that
after Amandos death, the lot remained unoccupied.

In sum, we find that petitioner is not guilty of such neglect or inaction as would bar his claim to the property in
question. In contrast, it is most telling that respondents, who are claiming to have been in possession of the property by
virtue of an alleged duly constituted sale for almost 60 years, have themselves failed within that long period to have the
same property transferred in their name or even only to have the sale annotated on the title of the property.

Finally, we come to the issue of damages. Petitioner prays that respondents be made to pay actual damages of not
less that P30,000.00 plus rentals on the property from the time of the latters occupation, moral damages amounting to
P100,000.00, and exemplary damages, as well as attorneys fees.

The record shows that petitioner testified on the prevailing rate of rentals on the subject property from the time of
Amando Baares death in 1976 until the time of the trial. According to petitioner, the rental rate from 1976 until 1985 was
P3,000.00 per hectare, while from 1985 until the time of his testimony in 1994, the rental rate was P5,000.00 per hectare.
We thus rule that the actual damages that may be awarded shall be based only on these rates. 59[59]

Considering, however, that petitioners co-heirs (defendants Roberto Abandiano, et al.) were able to enter the
property and harvest the sugarcane therein in 1981 and, thereafter, the land remained unoccupied, the rent must be
reckoned only from the time respondents actually occupied the land until March 1981.

The claims for moral damages must be anchored on a definite showing that the claiming party actually
experienced emotional and mental sufferings. 60[60] In this case, we find that petitioners testimony that he suffered from
sleepless nights from worrying about this case and considering the great distance he had to travel from his home in
Tacloban to see the case through are enough bases to award him moral damages. With the award of moral damages,
exemplary damages are likewise in order.61[61]

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Attorneys fees are recoverable when exemplary damages are awarded, or when the court deems it just and
equitable. The grant of attorneys fees depends on the circumstances of each case and lies within the discretion of the
court.62[62] Given the circumstances of this case, we grant the prayer for attorneys fees.

WHEREFORE, the foregoing premises considered, the Petition is GRANTED. The Decision and Resolution of
the Court of Appeals in CA-G.R. CV No. 51679 are REVERSED AND SET ASIDE. A new one is entered:

(1)

reversing the Decision of the Regional Trial Court of Kabankalan, Negros Occidental in Civil
Case No. 1331;

(2)

declaring the heirs of Ramon and David Abadiano as the lawful owners of Lot No. 1318-B, a
portion of Lot No. 1318 covered by Transfer Certificate of Title No. T-31862, Kabankalan
Cadastre, Negros Occidental; and

(3)

ordering respondents to pay petitioner and his co-heirs rentals at the rate of P3,000.00 per
hectare per year, from the time of actual occupation of the land in 1976 until March 1981, moral
damages in the amount of P100,00.00, exemplary damages in the amount of P30,000.00, and
attorneys fees in the amount of P10,000.00.

SO ORDERED.

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DOLORES L. DELA CRUZ,A.C. No. 7781

MILAGROS L. PRINCIPE,
NARCISA L. FAUSTINO,

Present:

JORGE V. LEGASPI, and

JUANITO V. LEGASPI,
Complainants,

QUISUMBING, J., Chairperson,

CARPIO MORALES,
TINGA,
VELASCO, JR., and

- versus -

BRION, JJ.

Promulgated:
ATTY. JOSE R. DIMAANO, JR.,
Respondent.

September 12, 2008

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

DECISION

VELASCO, JR., J.:

In their complaint for disbarment against respondent Atty. Jose R. Dimaano, Jr., Dolores L. Dela Cruz, Milagros
L. Principe, Narcisa L. Faustino, Jorge V. Legaspi, and Juanito V. Legaspi alleged that on July 16, 2004, respondent
notarized a document denominated as Extrajudicial Settlement of the Estate with Waiver of Rights purportedly executed
by them and their sister, Zenaida V.L. Navarro. Complainants further alleged that: (1) their signatures in this document
were forged; (2) they did not appear and acknowledge the document on July 16, 2004 before respondent, as notarizing
officer; and (3) their purported community tax certificates indicated in the document were not theirs.

According to complainants, respondent had made untruthful statements in the acknowledgment portion of the
notarized document when he made it appear, among other things, that complainants personally came and appeared before
him and that they affixed their signatures on the document in his presence. In the process, complainants added, respondent
effectively enabled their sister, Navarro, to assume full ownership of their deceased parents property in Tibagan, San
Miguel, Bulacan, covered by Transfer Certificate of Title No. T-303936 and sell the same to the Department of Public
Works and Highways.

In his answer, respondent admitted having a hand in the preparation of the document in question, but admitted
having indeed notarized it. He explained that he notarized [the] document in good faith relying on the representation and
assurance of Zenaida Navarro that the signatures and the community tax certificates appearing in the document were true
and correct. Navarro would not, according to respondent, lie to him having known, and being neighbors of, each other for
30 years. Finally, respondent disclaimed liability for any damage or injury considering that the falsified document had
been revoked and canceled.

In his Report and Recommendation, the Investigating Commissioner of the Office of the Commission on Bar
Discipline, Integrated Bar of the Philippines (IBP), found the following as established: (1) the questioned document bore
the signatures and community tax certificates of, and purports to have been executed by, complainants and Navarr o; (2)
respondent indeed notarized the questioned document on July 16, 2004; (3) complainants did not appear and acknowledge
the document before respondent on July 16, 2004; (4) respondent notarized the questioned document only on Navarros
representation that the signatures appearing and community tax certificates were true and correct; and (5) respondent did
not ascertain if the purported signatures of each of the complainants appearing in the document belonged to them.

The Commission concluded that with respondents admission of having notarized the document in question against
the factual backdrop as thus established, a clear case of falsification and violation of the Notarial Law had been committed
when he stated in the Acknowledgment that:

Before me, on this 16th day of July 16, 2004 at Manila, personally came and appeared the abovenamed persons with their respective Community Tax Certificates as follows:
xxxx
who are known to me to be the same persons who executed the foregoing instrument and they
acknowledge to me that the same is their own free act and deed. x x x

For the stated infraction, the Commission recommended, conformably with the Courts ruling in Gonzales v.
Ramos,63[1] that respondent be suspended from the practice of law for one (1) year; that his notarial commission, if still
existing, be revoked; and that he be disqualified for reappointment as notary public for two (2) years. On September 28,
2007, the IBP Board of Governors passed Resolution No. XVIII-2007-147, adopting and approving the report and
recommendation of the Commission.

We agree with the recommendation of the Commission and the premises holding it together. It bears reiterating
that notaries public should refrain from affixing their signature and notarial seal on a document unless the persons who
signed it are the same individuals who executed and personally appeared before the notaries public to attest to the truth of
what are stated therein, for under Section 1 of Public Act No. 2103 or the Notarial Law, an instrument or document shall
be considered authentic if the acknowledgment is made in accordance with the following requirements:

(a) The acknowledgment shall be made before a notary public or an officer duly authorized by
law of the country to take acknowledgments of instruments or documents in the place where the act is
done. The notary public or the officer taking the acknowledgment shall certify that the person
acknowledging the instrument or document is known to him and that he is the same person who executed
it, and acknowledged that the same is his free act and deed. The certificate shall be made under his official
seal, if he is by law required to keep a seal, and if not, his certificate shall so state. 64[2]

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Without the appearance of the person who actually executed the document in question, notaries public would be
unable to verify the genuineness of the signature of the acknowledging party and to ascertain that the document is the
partys free act or deed.65[3] Furthermore, notaries public are required by the Notarial Law to certify that the party to the
instrument has acknowledged and presented before the notaries public the proper residence certificate (or exemption from
the residence certificate) and to enter its number, place, and date of issue as part of certification. 66[4] Rule II, Sec. 12 of
the 2004 Rules on Notarial Practice67[5] now requires a party to the instrument to present competent evidence of identity.
Sec. 12 provides:

Sec. 12. Competent Evidence of Identity.The phrase competent evidence of identity refers to the
identification of an individual based on:
(a) at least one current identification document issued by an official agency bearing the
photograph and signature of the individual, such as but not limited to, passport, drivers license,
Professional Regulations Commission ID, National Bureau of Investigation clearance, police clearance,
postal ID, voters ID, Barangay certification, Government Service Insurance System (GSIS) e-card, Social
Security System (SSS) card, Philhealth card, senior citizen card, Overseas Workers Welfare
Administration (OWWA) ID, OFW ID, seamans book, alien certificate of registration/immigrant
certificate of registration, government office ID, certificate from the National Council for the Welfare of
Disabled Persons (NCWDP), Department of Social Welfare and Development certification [as amended
by A.M. No. 02-8-13-SC dated February 19, 2008]; or
(b) the oath or affirmation of one credible witness not privy to the instrument, document or
transaction who is personally known to the notary public and who personally knows the individual, or of
two credible witnesses neither of whom is privy to the instrument, document or transaction who each
personally knows the individual and shows to the notary public documentary identification.

One last note. Lawyers commissioned as notaries public are mandated to discharge with fidelity the duties of their
offices, such duties being dictated by public policy and impressed with public interest. It must be remembered that
notarization is not a routinary, meaningless act, for notarization converts a private document to a public instrument,

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making it admissible in evidence without the necessity of preliminary proof of its authenticity and due execution. 68[6] A
notarized document is by law entitled to full credit upon its face and it is for this reason that notaries public must observe
the basic requirements in notarizing documents. Otherwise, the confidence of the public on notorized documents will be
eroded.

WHEREFORE, for breach of the Notarial Law, the notarial commission of respondent Atty. Jose R. Dimaano,
Jr., if still existing, is REVOKED. He is DISQUALIFIED from being commissioned as notary public for a period of two
(2) years and SUSPENDED from the practice of law for a period of one (1) year, effective upon receipt of a copy of this
Decision, with WARNING that a repetition of the same negligent act shall be dealt with more severely.

Let all the courts, through the Office of the Court Administrator, as well as the IBP and the Office of the Bar
Confidant, be notified of this Decision and be it entered into respondents personal record.

SO ORDERED.

LEONOR CAMCAM, JOSE, FORTUNATO,

G.R. No. 142977

VIRGINIA, GLORIA, FLORENDO, DELFIN,

RODRIGO,

LEUTERIO,

NARCISO,

ONOFRE, ZENAIDA, AURELIA, TEOFILA,

FELICIDAD,

MERCEDES,

LYDIA,

Present:

ALFREDO, BIENVENIDO, EFREN, LILIA,

ERLINDA,

MELINDA,

MARYLOU,

MERIAM, all surnamed SALVADOR,

QUISUMBING, J., Chairperson,

CARPIO MORALES,

68

Petitioners,

TINGA,
VELASCO, JR., and
BRION, JJ.

- versus -

HONORABLE COURT OF APPEALS AND

ARCADIO FRIAS,
Respondents.
Promulgated:

September 30, 2008

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

DECISION

CARPIO MORALES, J.:

Petitioner Leonor Camcam (Leonor) and her husband Laureano Salvador (Laureano) were the registered owners
of two parcels of land, Lot Nos. 19554 and 18738 of the Cadastral Survey of San Carlos, Pangasinan, located in the Barrio
of Basista, San Carlos, Pangasinan.

Laureano died intestate on December 9, 1941. He was survived by his wife-petitioner Leonor; his brothers
Agapito and petitioners Jose and Fortunato, all surnamed Salvador; and the heirs of his deceased brother Luis Salvador

(Luis), namely, petitioners Virginia, Gloria, Florendo, Delfin, Rodrigo, Eleuterio, Narciso, Onofre, Zenaida, and Aurelia,
all surnamed Salvador.

On February 9, 1983, Leonor, together with her brothers-in-law Agapito, Jose, Fortunato, and Luis heirs, filed
before the Regional Trial Court of San Carlos City, Pangasinan a Complaint, 69[1] docketed as Civil Case No. SCC-833,
against respondent Arcadio Frias (Frias), for annulment of the following documents executed by Leonor in Frias favor
covering Lot Nos. 19554 and 18738:

1.

November 4, 1982 Deed of Adjudication with Sale of the entire Lot No. 19554 and of Lot No. 18738, for a
P11,000 consideration signed by Leonor (Exhibit B/1);70[2]

2.

November 4, 1982 Deed of Extra-Judicial Partition and Sale of ONE-HALF () portion EACH [of the two
lots] together with [Leonors] conjugal share of ONE-HALF () EACH of the [two lots] with all the
improvements thereon for a P45,000 consideration, signed by Leonor (Exhibit A/3);71[3] and

3.

November 23, 1982 Deed of Absolute Sale of the other half of Lot No. 18738, for a consideration of P3,000,
signed by Leonor (Exhibit C/2).72[4]

Before the trial court, petitioners advanced the following version of the case:

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In November 1982, Frias offered to purchase the two lots from Leonor. Leonor, however, was only willing to
enter into a sale with right of repurchase within five years. Frias agreed to Leonors condition but he deceived her into
signing the Deed of Adjudication-Exhibit B/1, after which he paid her P9,000 out of the P11,000 consideration, he
promising that he would settle the balance of P2,000 before the end of the month.

In the latter part of November 1982, Frias, instead of delivering the balance of P2,000, again deceived Leonor into
signing another document, the Deed of Absolute Sale-Exhibit C/2, he telling her that since two lots were involved, she had
to sign another instrument pertaining to the other lot.

Upon verification with Rodolfo Acosta (Acosta), the notary public who notarized Exhibits B/1 and C/2,
petitioners discovered that the deeds Leonor signed transferred ownership of the entire area covering the two lots. They
also, upon inquiry with the Register of Deeds at Lingayen, discovered that Original Certificate of Title Nos. 1163473[5]
and 1202774[6] in the name of Leonor and her husband covering the two lots were cancelled and Transfer Certificate of
Title Nos. 14375275[7] and 14375376[8] were in their stead issued in Frias name. Further, they discovered that Frias
registered the document-Exhibit A/3, which had the same date and notarial details as those of Exhibit B/1.

Petitioners alleged that assuming that the documents are valid, it is void with respect to the shares of Leonors coheirs-co-petitioners as they were conveyed without their knowledge and participation.

They thus prayed for judgment

(1)

Declaring null and void, the Deed of Adjudication with Sale dated November 4, 1982 [Exhibit
B/1], and the Deed of Absolute Sale dated November 23, 1982 [Exhibit C/2] on the ground that

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the said documents did not reflect the true intention of the parties x x x, moreover, the shares of the
plaintiffs, other than plaintiff Camcam, were included without their knowledge, participation and
consent x x x;
(2)

Declaring null and void, the Deed of Extrajudicial Partition and Sale dated November 4,
1982 [Exhibit A/3] based on the fact that it is absolutely fictitious and simulated x x x;

(3)

That as a consequence of the nullity of [Exhibit A/3], TCT Nos. 143752 and 143753 be declared
null and void and ordering the Register of Deeds of Lingayen, Pangasinan to cancel said transfer
certificates of titles issued in the name of defendant Frias and the annotations on OCT Nos. 11634
and 12027 relative to the cancellation be cancelled; or, in the alternative, the defendant Frias xxx be
ordered to execute a deed of reconveyance over the parcels subject of this suit in favor of the
plaintiffs, in the following proportion, to wit: one half (1/2) to plaintiff Camcam, and the other half
shall pertain to the other plaintiffs, namely, Agapito, Jose, Fortunato and the heirs of the late Luis,
all surnamed Salvador, in equal proportion;

(4)

Declaring plaintiffs Agapito, Jose, Fortunato, and the late Luis, all surnamed Salvador, the latter
being represented in this suit by his heirs, as the only legitimate heirs to inherit the estate of their
deceased brother, Laureano Salvador who died on December 9, 1941, thereby excluding the widow
from participating xxx;

(5)

Declaring the defendant liable for actual, compensatory and moral damages to plaintiffs and
litigation expenses, assessable in terms of money in such amount as will be proved in court, and to
pay exemplary damages as may be assessed by the court;

(6)

Declaring the defendant liable for the attorneys fees in the amount of P10,000.00 and to pay the
costs.77[9] (Emphasis and underscoring supplied)

They likewise prayed for other just and equitable reliefs. 78[10]

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Upon the other hand, Frias advanced the following version:

Leonor inherited the two lots, to the exclusion of her co-petitioners, under the old Civil Code 79[11] and it was she
who convinced him to buy them.
Leonor later changed her mind and was willing to sell only the whole of the residential land, Lot No. 19554, and
of the mango and coconut land, Lot No. 18739,80[12] as she was giving her brothers-in-law two weeks to buy the
remaining portion thereof,81[13] hence, he and Leonor forged Exhibit B/1. Leonor later informed him that her brothers-inlaw could not buy the remaining portion of Lot No. 18739, hence, he and Leonor forged Exhibit C/2.82[14]

After the execution of the two documents dated November 4, 1982, Frias brought them to the Municipal Building
to pay taxes. When asked by an employee of the then-Ministry of Agrarian Reform how much he paid for the lots, Frias
confessed to not having indicated the correct consideration on the documents because he wanted to escape paying taxes
such as capital gains taxes. On being informed of the consequences of not reflecting the true consideration of the two lots
in the documents, he had the third document, Exhibit A/3, prepared which, after explaining to Leonor the reason beyond
the necessity therefor, she signed in notary public Acostas office.83[15]

During the pendency of the proceedings before the trial court, Leonors brother-in-law Agapito died and was
substituted by his heirs, namely petitioners Teofila, Felicidad, Mercedes, Lydia, Alfredo, Bienvenido, Efren, Lilia, Erlinda,
Melinda, Marylou, and Meriam, all surnamed Salvador.84[16]

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By Decision85[17] of December 12, 1990, Branch 57 of the Pangasinan RTC, holding that:

xxxx
We cannot agree that Leonor Camcam signed [these] document[s] without reading them.
She signed [them] and read [them] because she was one who had enough learning. x x x Besides that,
Evangeline Pira, and Gertrudes Calpo signed it themselves as [witnesses according to] the testimony of
Atty. Rodolfo Acosta.
xxxx
But this is true only with regards to of the properties as [they are] conjugal in nature . As
regards x x x the other half of the property the rights of inheritance by x x x brothers and sisters
under the old law is provided thus:
Article 948. If there are brothers and sisters and nephews, who are children of
brothers and sisters of the whole blood, the former shall inherit per capita, and the latter
per stirpes.
Article 953. In case there are brothers or sisters or children of brothers or sisters,
the widow or widower shall have a right to receive, in concurrence with the former, the
portion of the inheritance in usufruct granted him or her in Article 837.
Article 837. When the testator leaves no legitimate descendants or ascendants,
the surviving spouse shall be entitled to one-half of the inheritance also in usufruct 86[18]
(The old civil code) (Emphasis and underscoring supplied),

disposed as follows:

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WHEREFORE the other half [of the two lots] should be divided among the brothers and sisters
and nephews and nieces by the right of intestate succession; to brothers and sisters, per capita; and the
nephews and nieces per stirpes; of one-half of the property. The remaining one-half belong[s] to
defendant [herein-respondent Frias].
Ordering the Register of Deeds of Lingayen, Pangasinan to cancel TCT No. 143752 and 143753
and instead issue another title, one half of the property to the brothers and sisters, per capita; and to the
nieces and nephews per stirpes; the other half to the defendants. 87[19] (Emphasis and underscoring
supplied)

On appeal,88[20] the Court of Appeals, by Decision89[21] of April 30, 1992, affirmed with modification the trial
courts decision. Thus it disposed:

WHEREFORE, in view of the foregoing, the decision of the lower court dated December 12,
1990 is hereby AFFIRMED with MODIFICATION. One-half of the properties in question belong to
defendant-appellee Arcadio Frias, by virtue of the valid sale by Leonor Camcam. The other half should be
divided among the brothers, nephews and nieces of the late Laureano Salvador by right of intestate
succession: to brothers per capita and to the nephews and nieces per stirpes.
THE Register of Deeds of Lingayen, Pangasinan is directed to cancel TCT Nos. 143752 and
143753 and issue the corresponding titles in accordance with the above pronouncement. The expenses of
the survey should be borne equally by plaintiffs-appellants and defendant-appellee. Costs against
plaintiffs-appellants.90[22] (Underscoring supplied)

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89
90

Their Motion for Reconsideration91[23] having been denied,92[24] petitioners filed the present Petition for Review
on Certiorari,93[25] faulting the appellate court

1.

. . . IN NOT DECLARING NULL AND VOID THE THREE (3) DEEDS X X X CONSIDERING
THEIR PHYSICAL APPEARANCE AND CONDITIONS INDICATING STRONGLY THE
IRREGULARITIES OF THEIR EXECUTION.

2.

[IN NOT DECLARING THAT] THE SALES WERE ILLEGAL, CONSIDERING THE OTHER
PETITIONERS [,] BEING OWNERS OF THE OTHER HALF, HAVE THE PREFERENTIAL
RIGHT TO PURCHASE THAT HALF PORTION INSTEAD OF PRIVATE RESPONDENT.94[26]

Petitioners contend as follows:

xxxx
From the appearance of these documents, particularly the Deed of Extrajudicial Partition and Sale
(Annex A or Exh. A/3) and the Deed of Adjudication with Sale (Annex B or Exh. B/1), while both were
notarized by the same notary public, yet they have identical notarial documentary identification, i.e., the
same documentary number to be 464, same page number 44, the same book number X and the same
series of 1982, and appeared to have been sworn before the notary public on the same date November 4,
1982.
xxxx
91
92
93
94

Aside from the anomalous situation created by the irregularly executed deeds and advantageously
employed by the private respondent, in order to conceal the apparent irregularities, the private respondent
claimed that the Deed of Partition and Sale (Annex A or Exh A/3) dated November 4, 1982, was a
consolidation deed of the Deed of Adjudication with Sale dated November 4, 1982 (Annex B or Exh. B/1)
and the Deed of Absolute Sale dated November 23, 1982 (Annex C or Exh C/2). However, summing up
the consideration stated in Annex B of P11,000.00 and the consideration stated in Annex C of P3,000.00,
the total will naturally be P14,000.00, but the alleged [consolidation] deed (Annex A or Exh A/3) shows
the consideration is not P14,000.00 but P45,000.00.95[27]
xxxx
Assuming, without admitting, that petitioner Leonor Camcam regularly sold her one-half portion
in the two parcels of land in favor of private respondent Arcadio Frias, however, considering the
preferential right of the other petitioners, who are admittedly the owners of the other half portion in said
parcels of land, and considering further the attendant circumstances of this case, as discussed above, the
petitioners, with the exception of petitioner Leonor Camcam, should be allowed to jointly exercise their
right of redemption, the consideration of which shall proportionately be based on that Deed (Annex B or
Exh. B/1) which was published in the newspaper.96[28] (Underscoring supplied)

The petition is bereft of merit.

Without passing on the merits of Frias claim that Leonor originally sold to him of Lot No. 18739 as reflected in
the first November 4, 1982 document but later conveyed the remaining thereof, hence, the execution of the second
document bearing the same date, an irregular notarization merely reduces the evidentiary value of a document to that of a
private document, which requires proof of its due execution and authenticity to be admissible as evidence.97[29] The
irregular notarization or, for that matter, the lack of notarization does not thus necessarily affect the validity of the contract
reflected in the document. Tigno v. Aquino98[30] enlightens:

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x x x [F]rom a civil law perspective, the absence of notarization of the Deed of Sale would not
necessarily invalidate the transaction evidenced therein. Article 1358 of the Civil Code requires that the
form of a contract that transmits or extinguishes real rights over immovable property should be in a public
document, yet it is also an accepted rule that the failure to observe the proper form does not render the
transaction invalid. Thus, it has been uniformly held that the form required in Article 1358 is not essential
to the validity or enforceability of the transaction, but required merely for convenience. We have even
affirmed that a sale of real property though not consigned in a public instrument or formal writing, is
nevertheless valid and binding among the parties, for the time-honored rule is that even a verbal contract
of sale or real estate produces effects between the parties.99[31] (Underscoring supplied)

Petitioners alleged fraud on Frias part, hence, they had the burden of establishing the same by clear and
convincing evidence.100[32] This they failed to discharge.

By Leonors account, she signed the three documents relying on Frias word that they were deeds of mortgage, and
she did not read them because she [did] not know how to read,101[33] When asked, however, on cross-examination about
her educational attainment, Leonor answered that she finished the third year of a nursing course at San Juan de Dios
Hospital.102[34]

Clarifying her statement that she did not know how to read, Leonor explained that she knew how to read but her
eyesight was blurred.103[35] Leonors granddaughter-witness Gertrudes Calpo (Gertrudes) who signed as witness in Exhibit
98
99
100
101
102
103

B/1 declared, however, that she read the contents of Exhibit B/1 to Leonor, 104[36] thus belying petitioners claim that
Leonor signed the same without knowing its true contents.

As for Exhibit A/3 which petitioners maintain is spurious, Leonors signature therein being allegedly forged,105[37]
Leonor herself admitted having signed the same,106[38] and this was corroborated by Gertrudes.107[39]

As for Leonors co-petitioners invocation of their right of redemption of the share of Leonor in the lots sold to
Frias, points of law, theories, issues of fact, and arguments not brought to the attention of the trial court ordinarily are not
considered by a reviewing court as they cannot be raised for the first time on appeal. 108[40] Besides, given that petitioners
already knew of the sale as early as 1983, they are guilty of laches, having raised their right of redemption for the first
time in 2000 when they filed the present petition.109[41]

AT ALL EVENTS, even assuming that the invocation by Leonors co-petitioners of their right of redemption was
timely made, it cannot be considered a valid exercise thereof as it was not accompanied by a reasonable and valid tender
of the entire repurchase price.110[42]

WHEREFORE, the petition is, in light of the foregoing disquisition, DENIED.

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110

SO ORDERED.

G.R. No. 174240

March 20, 2013

SPOUSES LEHNER and LUDY MARTIRES, Petitioners,

vs.
MENELIA CHUA, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside
the Amended Decision,1 as well as the Resolutions2 of the Court of Appeals (CA), dated September 30, 2005, July 5, 2006
and August 28, 2006, respectively, in CA-G.R. CV No. 76388. The assailed Decision of the CA reversed and set aside its
earlier Decision, dated April 30, 2004, in favor of petitioners. The July 5, 2006 Resolution denied petitioners' Motion for
Reconsideration, while the August 28, 2006 Resolution denied petitioners' Second Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
Subject of the instant controversy are twenty-four memorial lots located at the Holy Cross Memorial Park in Barangay
Bagbag, Novaliches, Quezon City. The property, more particularly described as "Lot: 24 lots, Block 213, Section: Plaza of
Heritage-Reg.," is covered by Transfer Certificate of Title (TCT) No. 342914. Respondent, together with her mother,
Florencia R. Calagos, own the disputed property. Their co-ownership is evidenced by a Deed of Sale and Certificate of
Perpetual Care, denominated as Contract No. 31760, which was executed on June 4, 1992. 3
On December 18, 1995, respondent borrowed from petitioner spouses the amount of P150,000.00. The loan was secured
by a real estate mortgage over the abovementioned property. Respondent committed to pay a monthly interest of 8% and
an additional 10% monthly interest in case of default.4
Respondent failed to fully settle her obligation.

Subsequently, without foreclosure of the mortgage, ownership of the subject lots were transferred in the name of
petitioners via a Deed of Transfer.5
On June 23, 1997, respondent filed with the Regional Trial Court (RTC) of Quezon City a Complaint against petitioners,
Manila Memorial Park Inc., the company which owns the Holy Cross Memorial Park, and the Register of Deeds of
Quezon City, praying for the annulment of the contract of mortgage between her and petitioners on the ground that the
interest rates imposed are unjust and exorbitant. Respondent also sought accounting to determine her liability under the
law. She likewise prayed that the Register of Deeds of Quezon City and Manila Memorial Park, Inc. be directed to
reconvey the disputed property to her.6
On November 20, 1998, respondent moved for the amendment of her complaint to include the allegation that she later
discovered that ownership of the subject lots was transferred in the name of petitioners by virtue of a forged Deed of
Transfer and Affidavit of Warranty. Respondent prayed that the Deed of Transfer and Affidavit of Warranty be annulled. 7
In their Manifestation dated January 25, 1999, petitioners did not oppose respondent's motion. 8 Trial ensued.
After trial, the RTC of Quezon City rendered a Decision in favor of petitioners, the dispositive portion of which reads,
thus:
Wherefore, premises considered, judgment is hereby rendered against Menelia R. Chua and in favor of the Sps. Lehner
Martires and Ludy Martires; and Manila Memorial Park Cemetery, Inc. as follows:
1. The Complaint is denied and dismissed for lack of merit;
2. The counterclaims are granted as follows:
a. Menelia R. Chua is ordered to pay the Sps. Martires the amount of P100,000.00 as moral damages; the
amount of P50,000.00 as exemplary damages; and the amount of P30,000.00 as reasonable attorneys fees
plus costs of suit.
b. Menelia R. Chua is ordered to pay Manila Memorial Park Cemetery, Inc. the amount of P30,000.00 as
reasonable attorney's fees plus costs of suit.
SO ORDERED.9
On appeal, the CA affirmed, with modification, the judgment of the RTC, disposing as follows:
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit, and the decision of the trial
court dated 03 August 2002 is hereby AFFIRMED with MODIFICATION as to the amount of moral and exemplary
damages, and attorney's fees. Plaintiff-appellant Menelia R. Chua is hereby ordered to pay the defendant-appellees
Spouses Martires the amount of P30,000.00 as moral damages; P20,000.00 as exemplary damages; and attorney's fees of
P10,000.00 plus costs of suit.

Insofar as defendant-appellee Manila Memorial Park Cemetery, Inc. is concerned, the attorney's fees awarded is reduced
to P10,000.00 plus costs of suit.
SO ORDERED.10
The CA ruled that respondent voluntarily entered into a contract of loan and that the execution of the Deed of Transfer is
sufficient evidence of petitioners' acquisition of ownership of the subject property.
Respondent filed a Motion for Reconsideration.11 Petitioners opposed it.12
On September 30, 2005, the CA promulgated its assailed Amended Decision with the following dispositive portion:
WHEREFORE, the Court grants the movant's Motion for Reconsideration.
Accordingly, the decision of this Court dated April 30, 2004 in CA-G.R. CV No. 76388, which had affirmed the judgment
of the Regional Trial Court of Quezon City, Branch 221, in Civil Case No. Q-97-31408, is REVERSED and SET ASIDE,
and it is hereby declared that:
(1) The assailed decision dated August 3, 2002 of the Regional Trial Court of Quezon City Branch 221 in Civil Case No.
Q-97-31408 is hereby Reversed with the following MODIFICATIONS, to wit:
(1) The Deed of Transfer dated July 3, 1996, as well as the Affidavit of Warranty, are hereby declared void ab
initio;
(2) The loan of P150,000.00 is hereby subject to an interest of 12% per annum.
(3) The Manila Memorial Park Cemetery, Inc. and the Register of Deeds of Quezon City [are] hereby directed to
cancel the registration or annotation of ownership of the spouses Martires on Lot: 24 lots, Block 213, Section:
Plaza Heritage Regular, Holy Cross Memorial Park, being a portion of Transfer Certificate of Title No. 342914
issued by the Register of Deeds of Quezon City, and revert registration of ownership over the same in the name of
appellant Menelia R. Chua, and Florencia R. Calagos.
(4) The movant, Menelia R. Chua, is hereby ordered to pay the spouses Martires the amount of P150,000.00 plus
interest of 12% per annum computed from December 18, 1995 up to the time of full payment thereof and, after
deducting payments made in the total amount of P80,000.00, the same shall be paid within ninety (90) days from
the finality of this decision. In case of failure to pay the aforesaid amount and the accrued interests from the
period hereinstated, the property shall be sold at public auction to satisfy the mortgage debt and costs, and if there
is an excess, the same is to be given to the owner.
No costs.

SO ORDERED.13
The CA reconsidered its findings and concluded that the Deed of Transfer which, on its face, transfers ownership of the
subject property to petitioners, is, in fact, an equitable mortgage. The CA held that the true intention of respondent was
merely to provide security for her loan and not to transfer ownership of the property to petitioners. The CA so ruled on the
basis of its findings that: (1) the consideration, amounting to P150,000.00, for the alleged Deed of Transfer is unusually
inadequate, considering that the subject property consists of 24 memorial lots; (2) the Deed of Transfer was executed by
reason of the same loan extended by petitioners to respondent; (3) the Deed of Transfer is incomplete and defective; and
(4) the lots subject of the Deed of Transfer are one and the same property used to secure respondent's P150,000.00 loan
from petitioners.
Petitioners filed a Motion for Reconsideration, 14 but the CA denied it in its Resolution dated July 5, 2006.
On July 26, 2006, petitioners filed a Second Motion for Reconsideration, 15 but again, the CA denied it via its Resolution
dated August 28, 2006.
Hence, the present petition based on the following grounds:
A. THE COURT OF APPEALS PATENTLY ERRED IN NOT UPHOLDING THE DEED OF TRANSFER EXECUTED
BY THE RESPONDENT IN FAVOR OF THE PETITIONERS BY RULING THAT:
1. The Deed of Transfer executed by respondent in favor of petitioners over the subject property was not entered
in the Notarial Book of Atty. Francisco Talampas and reported in the Notarial Section of the Regional Trial Court
of Makati City.
2. The Deed of Transfer was not duly notarized by Atty. Francisco Talampas inasmuch as there was no convincing
proof that respondent appeared before Notary Public Atty. Talampas.
B. THE COURT OF APPEALS PATENTLY ERRED IN RULING THAT THE DEED OF TRANSFER EXECUTED
BETWEEN THE RESPONDENT AND THE PETITIONERS CONSTITUTED AN EQUITABLE MORTGAGE
CONSIDERING THAT:
1. Said issue was not raised in any pleading in the appellate and trial courts.1wphi1
2. Respondent herself admitted that a separate mortgage was executed to secure the loan. 16
The petition lacks merit.
At the outset, the instant petition should be denied for being filed out of time. Petitioners admit in the instant petition that:
(1) on July 18, 2006, they received a copy of the July 5, 2006 Resolution of the CA which denied their Motion for
Reconsideration of the assailed Amended Decision; (2) on July 26, 2006, they filed a Motion to Admit Second Motion for

Reconsideration attaching thereto the said Second Motion for Reconsideration; (3) on September 5, 2006, they received a
copy of the August 28, 2006 Resolution of the CA which denied their Motion to Admit as well as their Second Motion for
Reconsideration; and (4) they filed the instant petition on October 20, 2006.
Section 2, Rule 45 of the Rules of Court provides that a petition for review on certiorari under the said Rule "shall be filed
within fifteen (15) days from notice of the judgment or final order or resolution appealed from or of the denial of the
petitioner's motion for new trial or reconsideration filed in due time after notice of the judgment." Relative thereto,
Section 2, Rule 52 of the same Rules provides that "no second motion for reconsideration of a judgment or final resolution
by the same party shall be entertained." Based on the abovementioned dates, the start f the 15-day period for the filing of
this petition should have been reckoned from July 18, 2006, the time of petitioners' receipt of the CA Resolution denying
their Motion for Reconsideration, and not on September 5, 2006, the date when they received the CA Resolution denying
their Second Motion for Reconsideration. Thus, petitioners should have filed the instant petition not later than August 2,
2006. It is wrong for petitioners to reckon the 15-day period for the filing of the instant petition from the date when they
received the copy of the CA Resolution denying their Second Motion for Reconsideration. Since a second motion for
reconsideration is not allowed, then unavoidably, its filing did not toll the running of the period to file an appeal by
certiorari.17 Petitioners made a critical mistake in waiting for the CA to resolve their second motion for reconsideration
before pursuing an appeal.
Perfection of an appeal within the reglementary period is not only mandatory but also jurisdictional. 18 For this reason,
petitioners' failure to file this petition within the 15-day period rendered the assailed Amended CA Decision and
Resolutions final and executory, thus, depriving this Court of jurisdiction to entertain an appeal therefrom. 19On this
ground alone, the instant petition should be dismissed.
In any case, even granting, arguendo, that the present petition is timely filed, the Court finds no cogent reason to depart
from the findings and conclusions of the CA in its disputed Amended Decision.
Anent the first assigned error, petitioners are correct in pointing out that notarized documents carry evidentiary weight
conferred upon them with respect to their due execution and enjoy the presumption of regularity which may only be
rebutted by evidence so clear, strong and convincing as to exclude all controversy as to falsity.20 However, the
presumptions that attach to notarized documents can be affirmed only so long as it is beyond dispute that the notarization
was regular.21 A defective notarization will strip the document of its public character and reduce it to a private
instrument.22 Consequently, when there is a defect in the notarization of a document, the clear and convincing evidentiary
standard normally attached to a duly-notarized document is dispensed with, and the measure to test the validity of such
document is preponderance of evidence.23
In the present case, the CA has clearly pointed out the dubious circumstances and irregularities attendant in the alleged
notarization of the subject Deed of Transfer, to wit: (1) the Certification 24 issued by the Clerk of Court of the Notarial
Section of the RTC of Makati City which supposedly attested that a copy of the subject Deed of Transfer is on file with
the said court, was contradicted by the Certification25 issued by the Administrative Officer of the Notarial Section of the

same office as well as by the testimony of the court employee who prepared the Certification issued by the Clerk of Court,
to the effect that the subject Deed of Transfer cannot, in fact, be found in their files; (2) respondent's categorical denial
that she executed the subject Deed of Transfer; and (3) the subject document did not state the date of execution and lacks
the marital consent of respondent's husband.
Indeed, petitioners' heavy reliance on the Certification issued by the notary public who supposedly notarized the said
deed, as well as the Certification issued by the Clerk of Court of the Notarial Section of the RTC of Makati City, is
misplaced for the following reasons: first, the persons who issued these Certifications were not presented as witnesses
and, as such, they could not be cross-examined with respect to the truthfulness of the contents of their Certifications;
second, as mentioned above, these Certifications were contradicted by the Certification issued by the Administrative
Officer of the Notarial Section of the RTC of Makati City as well as by the admission, on cross-examination, of the clerk
who prepared the Certification of the Clerk of Court, that their office cannot, in fact, find a copy of the subject Deed of
Transfer in their files;26 and third, the further admission of the said clerk that the Certification, which was issued by the
clerk of court and relied upon by petitioners, was not based on documents existing in their files, but was simply based on
the Certification issued by the notary public who allegedly notarized the said Deed of Transfer.27
Assuming further that the notarization of the disputed Deed of Transfer was regular, the Court, nonetheless, is not
persuaded by petitioners' argument that such Deed is a sufficient evidence of the validity of the agreement between
petitioners and respondent.
While indeed a notarized document enjoys the presumption of regularity, the fact that a deed is notarized is not a
guarantee of the validity of its contents.28 The presumption is not absolute and may be rebutted by clear and convincing
evidence to the contrary.29 In the present case, the presumption cannot be made to apply, because aside from the regularity
of its notarization, the validity of the contents and execution of the subject Deed of Transfer was challenged in the
proceedings below where its prima facie validity was subsequently overthrown by the questionable circumstances
attendant in its supposed execution. These circumstances include: (1) the alleged agreement between the parties that the
ownership of the subject property be simply assigned to petitioners instead of foreclosure of the contract of mortgage
which was earlier entered into by them; (2) the Deed of Transfer was executed by reason of the loan extended by
petitioners to respondent, the amount of the latter's outstanding obligation being the same as the amount of the
consideration for the assignment of ownership over the subject property; (3) the inadequacy of the consideration; and (4)
the claim of respondent that she had no intention of transferring ownership of the subject property to petitioners.
Based on the foregoing, the Court finds no cogent reason to depart from the findings of the CA that the agreement
between petitioners and respondent is, in fact, an equitable mortgage.
An equitable mortgage has been defined as one which, although lacking in some formality, or form or words, or other
requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a
debt, there being no impossibility nor anything contrary to law in this intent. 30

One of the circumstances provided for under Article 1602 of the Civil Code, where a contract shall be presumed to be an
equitable mortgage, is "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 the instant case, it has been established that
the intent of both petitioners and respondent is that the subject property shall serve as security for the latter's obligation to
the former. As correctly pointed out by the CA, the circumstances surrounding the execution of the disputed Deed of
Transfer would show that the said document was executed to circumvent the terms of the original agreement and deprive
respondent of her mortgaged property without the requisite foreclosure.
With respect to the foregoing discussions, it bears to point out that in Misena v. Rongavilla, 31 a case which involves a
factual background similar to the present case, this Court arrived at the same ruling. In the said case, the respondent
mortgaged a parcel of land to the petitioner as security for the loan which the former obtained from the latter.
Subsequently, ownership of the property was conveyed to the petitioner via a Deed of Absolute Sale. Applying Article
1602 of the Civil Code, this Court ruled in favor of the respondent holding that the supposed sale of the property was, in
fact, an equitable mortgage as the real intention of the respondent was to provide security for the loan and not to transfer
ownership over the property.
Since the original transaction between the parties was a mortgage, the subsequent assignment of ownership of the subject
lots to petitioners without the benefit of foreclosure proceedings, partakes of the nature of a pactum commissorium, as
provided for under Article 2088 of the Civil Code.
Pactum commissorium is a stipulation empowering the creditor to appropriate the thing given as guaranty for the
fulfillment of the obligation in the event the obligor fails to live up to his undertakings, without further formality, such as
foreclosure proceedings, and a public sale. 32
In the instant case, evidence points to the fact that the sale of the subject property, as proven by the disputed Deed of
Transfer, was simulated to cover up the automatic transfer of ownership in petitioners' favor. While there was no
stipulation in the mortgage contract which provides for petitioners' automatic appropriation of the subject mortgaged
property in the event that respondent fails to pay her obligation, the subsequent acts of the parties and the circumstances
surrounding such acts point to no other conclusion than that petitioners were empowered to acquire ownership of the
disputed property without need of any foreclosure.
Indeed, the Court agrees with the CA in not giving credence to petitioners' contention in their Answer filed with the RTC
that respondent offered to transfer ownership of the subject property in their name as payment for her outstanding
obligation. As this Court has held, all persons in need of money are liable to enter into contractual relationships whatever
the condition if only to alleviate their financial burden albeit temporarily.33
Hence, courts are duty-bound to exercise caution in the interpretation and resolution of contracts lest the lenders devour
the borrowers like vultures do with their prey.34 Aside from this aforementioned reason, the Court cannot fathom why
respondent would agree to transfer ownership of the subject property, whose value is much higher than her outstanding

obligation to petitioners. Considering that the disputed property was mortgaged to secure the payment of her obligation,
the most logical and practical thing that she could have done, if she is unable to pay her debt, is to wait for it to be
foreclosed. She stands to lose less of the value of the subject property if the same is foreclosed, rather than if the title
thereto is directly transferred to petitioners. This is so because in foreclosure, unlike in the present case where ownership
of the property was assigned to petitioners, respondent can still claim the balance from the proceeds of the foreclosure
sale, if there be any. In such a case, she could still recover a portion of the value of the subject property rather than losing
it completely by assigning its ownership to petitioners.
As to the second assigned error, the Court is not persuaded by petitioners' contention that the issue of whether or not the
subject Deed of Transfer is, in fact, an equitable mortgage was not raised by the latter either in the RTC or the CA.
It is true that, as a rule, no issue may be raised on appeal unless it has been brought before the lower tribunal for its
consideration.35 Higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised during
the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal. 36 However, as
with most procedural rules, this maxim is subject to exceptions. 37 In this regard, the Court's ruling in Mendoza v.
Bautista38 is instructive, to wit:
x x x Indeed, our rules recognize the broad discretionary power of an appellate court to waive the lack of proper
assignment of errors and to consider errors not assigned. Section 8 of Rule 51 of the Rules of Court provides:
SEC. 8 Questions that may be decided. - No error which does not affect the jurisdiction over the subject matter or the
validity of the judgment appealed from or the proceedings therein will be considered, unless stated in the assignment of
errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court may pass
upon plain errors and clerical errors.
Thus, an appellate court is clothed with ample authority to review rulings even if they are not assigned as errors in the
appeal in these instances: (a) grounds not assigned as errors but affecting jurisdiction over the subject matter; (b) matters
not assigned as errors on appeal but are evidently plain or clerical errors within contemplation of law; (c) matters not
assigned as errors on appeal but consideration of which is necessary in arriving at a just decision and complete resolution
of the case or to serve the interests of justice or to avoid dispensing piecemeal justice; (d) matters not specifically assigned
as errors on appeal but raised in the trial court and are matters of record having some bearing on the issue submitted which
the parties failed to raise or which the lower court ignored; (e) matters not assigned as errors on appeal but closely related
to an error assigned; and (f) matters not assigned as errors on appeal but upon which the determination of a question
properly assigned, is dependent.39
In the present case, petitioners must be reminded that one of the main issues raised by respondent in her appeal with the
CA is the validity and due execution of the Deed of Transfer which she supposedly executed in petitioners' favor. The
Court agrees with respondent that, under the factual circumstances obtaining in the instant case, the determination of the
validity of the subject Deed of Transfer would necessarily entail or involve an examination of the true nature of the said

agreement. In other words, the matter of validity of the disputed Deed of Transfer and the question of whether the
agreement evidenced by such Deed was, in fact, an equitable mortgage are issues which are closely related, which can,
thus, be resolved jointly by the CA.
WHEREFORE, the instant petition is DENIED. The assailed Amended Decision and Resolutions of the Court of Appeals,
dated September 30, 2005, July 5, 2006 and August 28, 2006, respectively, in CA-G.R. CV No. 76388, are AFFIRMED.
SO ORDERED.

G.R. No. 156407, January 15, 2014

THELMA M. ARANAS, Petitioner, v. TERESITA V. MERCADO, FELIMON V. MERCADO, CARMENCITA M.
SUTHERLAND, RICHARD V. MERCADO, MA. TERESITA M. ANDERSON, AND FRANKLIN L. MERCADO,
Respondents.
DECISION
BERSAMIN, J.:
The probate court is authorized to determine the issue of ownership of properties for purposes of their inclusion or
exclusion from the inventory to be submitted by the administrator, but its determination shall only be provisional unless
the interested parties are all heirs of the decedent, or the question is one of collation or advancement, or the parties consent
to the assumption of jurisdiction by the probate court and the rights of third parties are not impaired. Its jurisdiction
extends to matters incidental or collateral to the settlement and distribution of the estate, such as the determination of the
status of each heir and whether property included in the inventory is the conjugal or exclusive property of the deceased
spouse.
Antecedents
Emigdio S. Mercado (Emigdio) died intestate on January 12, 1991, survived by his second wife, Teresita V. Mercado
(Teresita), and their five children, namely: Allan V. Mercado, Felimon V. Mercado, Carmencita M. Sutherland, Richard V.
Mercado, and Maria Teresita M. Anderson; and his two children by his first marriage, namely: respondent Franklin L.

Mercado and petitioner Thelma M. Aranas (Thelma).

Emigdio inherited and acquired real properties during his lifetime. He owned corporate shares in Mervir Realty
Corporation (Mervir Realty) and Cebu Emerson Transportation Corporation (Cebu Emerson). He assigned his real
properties in exchange for corporate stocks of Mervir Realty, and sold his real property in Badian, Cebu (Lot 3353
covered by Transfer Certificate of Title No. 3252) to Mervir Realty.
On June 3, 1991, Thelma filed in the Regional Trial Court (RTC) in Cebu City a petition for the appointment of Teresita as
the administrator of Emigdios estate (Special Proceedings No. 3094CEB).1 The RTC granted the petition considering
that there was no opposition. The letters of administration in favor of Teresita were issued on September 7, 1992.
As the administrator, Teresita submitted an inventory of the estate of Emigdio on December 14, 1992 for the consideration
and approval by the RTC. She indicated in the inventory that at the time of his death, Emigdio had left no real properties
but only personal properties worth P6,675,435.25 in all, consisting of cash of P32,141.20; furniture and fixtures worth
P20,000.00; pieces of jewelry valued at P15,000.00; 44,806 shares of stock of Mervir Realty worth P6,585,585.80; and 30
shares of stock of Cebu Emerson worth P22,708.25.2
Claiming that Emigdio had owned other properties that were excluded from the inventory, Thelma moved that the RTC
direct Teresita to amend the inventory, and to be examined regarding it. The RTC granted Thelmas motion through the
order of January 8, 1993.
On January 21, 1993, Teresita filed a compliance with the order of January 8, 1993,3 supporting her inventory with copies
of three certificates of stocks covering the 44,806 Mervir Realty shares of stock;4 the deed of assignment executed by
Emigdio on January 10, 1991 involving real properties with the market value of P4,440,651.10 in exchange for 44,407
Mervir Realty shares of stock with total par value of P4,440,700.00; 5 and the certificate of stock issued on January 30,
1979 for 300 shares of stock of Cebu Emerson worth P30,000.00. 6
On January 26, 1993, Thelma again moved to require Teresita to be examined under oath on the inventory, and that she
(Thelma) be allowed 30 days within which to file a formal opposition to or comment on the inventory and the supporting
documents Teresita had submitted.
On February 4, 1993, the RTC issued an order expressing the need for the parties to present evidence and for Teresita to
be examined to enable the court to resolve the motion for approval of the inventory.7cralawred
On April 19, 1993, Thelma opposed the approval of the inventory, and asked leave of court to examine Teresita on the
inventory.

With the parties agreeing to submit themselves to the jurisdiction of the court on the issue of what properties should be
included in or excluded from the inventory, the RTC set dates for the hearing on that issue. 8cralawlawlibrary
Ruling of the RTC
After a series of hearings that ran for almost eight years, the RTC issued on March 14, 2001 an order finding and holding
that the inventory submitted by Teresita had excluded properties that should be included, and accordingly ruled:
WHEREFORE, in view of all the foregoing premises and considerations, the Court hereby denies the administratrixs
motion for approval of inventory. The Court hereby orders the said administratrix to redo the inventory of properties
which are supposed to constitute as the estate of the late Emigdio S. Mercado by including therein the properties
mentioned in the last five immediately preceding paragraphs hereof and then submit the revised inventory within sixty
(60) days from notice of this order.
The Court also directs the said administratrix to render an account of her administration of the estate of the late Emigdio
S. Mercado which had come to her possession. She must render such accounting within sixty (60) days from notice
hereof.
SO ORDERED.9ChanRoblesVirtualawlibrary
On March 29, 2001, Teresita, joined by other heirs of Emigdio, timely sought the reconsideration of the order of March
14, 2001 on the ground that one of the real properties affected, Lot No. 3353 located in Badian, Cebu, had already been
sold to Mervir Realty, and that the parcels of land covered by the deed of assignment had already come into the possession
of and registered in the name of Mervir Realty.10 Thelma opposed the motion.
On May 18, 2001, the RTC denied the motion for reconsideration, 11 stating that there was no cogent reason for the
reconsideration, and that the movants agreement as heirs to submit to the RTC the issue of what properties should be
included or excluded from the inventory already estopped them from questioning its jurisdiction to pass upon the issue.
Decision of the CA
Alleging that the RTC thereby acted with grave abuse of discretion in refusing to approve the inventory, and in ordering
her as administrator to include real properties that had been transferred to Mervir Realty, Teresita, joined by her four
children and her stepson Franklin, assailed the adverse orders of the RTC promulgated on March 14, 2001 and May 18,
2001 by petition for certiorari, stating:
I
THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF JURISDICTION (sic)

AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT THE REAL PROPERTY WHICH
WAS SOLD BY THE LATE EMIGDIO S. MERCADO DURING HIS LIFETIME TO A PRIVATE CORPORATION
(MERVIR REALTY CORPORATION) BE INCLUDED IN THE INVENTORY OF THE ESTATE OF THE LATE
EMIGDIO S. MERCADO.
II
THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF JURISDICTION (sic)
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT REAL PROPERTIES WHICH ARE
IN THE POSSESSION OF AND ALREADY REGISTERED IN THE NAME (OF) PRIVATE CORPORATION
(MERVIR REALTY CORPORATION) BE INCLUDED IN THE INVENTORY OF THE ESTATE OF THE LATE
EMIGDIO S. MERCADO.
III
THE HONORABLE RESPONDENT JUDGE HAS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT PETITIONERS ARE NOW ESTOPPED FROM
QUESTIONING ITS JURISDICTION IN PASSING UPON THE ISSUE OF WHAT PROPERTIES SHOULD BE
INCLUDED IN THE INVENTORY OF THE ESTATE OF THE LATE EMIGDIO MERCADO.12
On May 15, 2002, the CA partly granted the petition for certiorari, disposing as follows: 13
WHEREFORE, FOREGOING PREMISES CONSIDERED, this petition is GRANTED partially. The assailed Orders
dated March 14, 2001 and May 18, 2001 are hereby reversed and set aside insofar as the inclusion of parcels of land
known as Lot No. 3353 located at Badian, Cebu with an area of 53,301 square meters subject matter of the Deed of
Absolute Sale dated November 9, 1989 and the various parcels of land subject matter of the Deeds of Assignment dated
February 17, 1989 and January 10, 1991 in the revised inventory to be submitted by the administratrix is concerned and
affirmed in all other respects.
SO ORDERED.
The CA opined that Teresita, et al. had properly filed the petition for certiorari because the order of the RTC directing a
new inventory of properties was interlocutory; that pursuant to Article 1477 of the Civil Code, to the effect that the
ownership of the thing sold shall be transferred to the vendee upon its actual and constructive delivery, and to Article
1498 of the Civil Code, to the effect that the sale made through a public instrument was equivalent to the delivery of the
object of the sale, the sale by Emigdio and Teresita had transferred the ownership of Lot No. 3353 to Mervir Realty
because the deed of absolute sale executed on November 9, 1989 had been notarized; that Emigdio had thereby ceased to
have any more interest in Lot 3353; that Emigdio had assigned the parcels of land to Mervir Realty as early as February
17, 1989 for the purpose of saving, as in avoiding taxes with the difference that in the Deed of Assignment dated January

10, 1991, additional seven (7) parcels of land were included; that as to the January 10, 1991 deed of assignment, Mervir
Realty had been even at the losing end considering that such parcels of land, subject matter(s) of the Deed of Assignment
dated February 12, 1989, were again given monetary consideration through shares of stock; that even if the assignment
had been based on the deed of assignment dated January 10, 1991, the parcels of land could not be included in the
inventory considering that there is nothing wrong or objectionable about the estate planning scheme; that the RTC, as an
intestate court, also had no power to take cognizance of and determine the issue of title to property registered in the name
of third persons or corporation; that a property covered by the Torrens system should be afforded the presumptive
conclusiveness of title; that the RTC, by disregarding the presumption, had transgressed the clear provisions of law and
infringed settled jurisprudence on the matter; and that the RTC also gravely abused its discretion in holding that Teresita,
et al. were estopped from questioning its jurisdiction because of their agreement to submit to the RTC the issue of which
properties should be included in the inventory.
The CA further opined as follows:
In the instant case, public respondent court erred when it ruled that petitioners are estopped from questioning its
jurisdiction considering that they have already agreed to submit themselves to its jurisdiction of determining what
properties are to be included in or excluded from the inventory to be submitted by the administratrix, because actually, a
reading of petitioners Motion for Reconsideration dated March 26, 2001 filed before public respondent court clearly
shows that petitioners are not questioning its jurisdiction but the manner in which it was exercised for which they are not
estopped, since that is their right, considering that there is grave abuse of discretion amounting to lack or in excess of
limited jurisdiction when it issued the assailed Order dated March 14, 2001 denying the administratrixs motion for
approval of the inventory of properties which were already titled and in possession of a third person that is, Mervir Realty
Corporation, a private corporation, which under the law possessed a personality distinct and separate from its
stockholders, and in the absence of any cogency to shred the veil of corporate fiction, the presumption of conclusiveness
of said titles in favor of Mervir Realty Corporation should stand undisturbed.
Besides, public respondent court acting as a probate court had no authority to determine the applicability of the doctrine of
piercing the veil of corporate fiction and even if public respondent court was not merely acting in a limited capacity as a
probate court, private respondent nonetheless failed to adjudge competent evidence that would have justified the court to
impale the veil of corporate fiction because to disregard the separate jurisdictional personality of a corporation, the
wrongdoing must be clearly and convincingly established since it cannot be presumed. 14
On November 15, 2002, the CA denied the motion for reconsideration of Teresita, et al. 15
Issue
Did the CA properly determine that the RTC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in directing the inclusion of certain properties in the inventory notwithstanding that such properties had been
either transferred by sale or exchanged for corporate shares in Mervir Realty by the decedent during his lifetime?

Ruling of the Court

The appeal is meritorious.

I
Was certiorari the proper recourse
to assail the questioned orders of the RTC?
The first issue to be resolved is procedural. Thelma contends that the resort to the special civil action for certiorari to
assail the orders of the RTC by Teresita and her corespondents was not proper.
Thelmas contention cannot be sustained.
The propriety of the special civil action for certiorari as a remedy depended on whether the assailed orders of the RTC
were final or interlocutory in nature. In PahilaGarrido v. Tortogo,16 the Court distinguished between final and
interlocutory orders as follows:
The distinction between a final order and an interlocutory order is well known. The first disposes of the subject matter in
its entirety or terminates a particular proceeding or action, leaving nothing more to be done except to enforce by execution
what the court has determined, but the latter does not completely dispose of the case but leaves something else to be
decided upon. An interlocutory order deals with preliminary matters and the trial on the merits is yet to be held and the
judgment rendered. The test to ascertain whether or not an order or a judgment is interlocutory or final is: does the order
or judgment leave something to be done in the trial court with respect to the merits of the case? If it does, the order or
judgment is interlocutory; otherwise, it is final.
The order dated November 12, 2002, which granted the application for the writ of preliminary injunction, was an
interlocutory, not a final, order, and should not be the subject of an appeal. The reason for disallowing an appeal from an
interlocutory order is to avoid multiplicity of appeals in a single action, which necessarily suspends the hearing and
decision on the merits of the action during the pendency of the appeals. Permitting multiple appeals will necessarily delay
the trial on the merits of the case for a considerable length of time, and will compel the adverse party to incur unnecessary
expenses, for one of the parties may interpose as many appeals as there are incidental questions raised by him and as there
are interlocutory orders rendered or issued by the lower court. An interlocutory order may be the subject of an appeal, but
only after a judgment has been rendered, with the ground for appealing the order being included in the appeal of the
judgment itself.
The remedy against an interlocutory order not subject of an appeal is an appropriate special civil action under Rule 65,

provided that the interlocutory order is rendered without or in excess of jurisdiction or with grave abuse of discretion.
Then is certiorari under Rule 65 allowed to be resorted to.
The assailed order of March 14, 2001 denying Teresitas motion for the approval of the inventory and the order dated May
18, 2001 denying her motion for reconsideration were interlocutory. This is because the inclusion of the properties in the
inventory was not yet a final determination of their ownership. Hence, the approval of the inventory and the concomitant
determination of the ownership as basis for inclusion or exclusion from the inventory were provisional and subject to
revision at anytime during the course of the administration proceedings.
In Valero Vda. De Rodriguez v. Court of Appeals,17 the Court, in affirming the decision of the CA to the effect that the
order of the intestate court excluding certain real properties from the inventory was interlocutory and could be changed or
modified at anytime during the course of the administration proceedings, held that the order of exclusion was not a final
but an interlocutory order in the sense that it did not settle once and for all the title to the San Lorenzo Village lots. The
Court observed there that:
The prevailing rule is that for the purpose of determining whether a certain property should or should not be included in
the inventory, the probate court may pass upon the title thereto but such determination is not conclusive and is
subject to the final decision in a separate action regarding ownership which may be instituted by the parties (3
Morans Comments on the Rules of Court, 1970 Edition, pages 4489 and 473; Lachenal vs. Salas, L42257, June 14,
1976, 71 SCRA 262, 266).18 (Bold emphasis supplied)
To the same effect was De Leon v. Court of Appeals,19 where the Court declared that a probate court, whether in a testate
or intestate proceeding, can only pass upon questions of title provisionally, and reminded, citing Jimenez v. Court of
Appeals, that the patent reason is the probate courts limited jurisdiction and the principle that questions of title or
ownership, which result in inclusion or exclusion from the inventory of the property, can only be settled in a separate
action. Indeed, in the cited case of Jimenez v. Court of Appeals,20 the Court pointed out:
All that the said court could do as regards the said properties is determine whether they should or should not be included
in the inventory or list of properties to be administered by the administrator. If there is a dispute as to the ownership,
then the opposing parties and the administrator have to resort to an ordinary action for a final determination of
the conflicting claims of title because the probate court cannot do so. (Bold emphasis supplied)
On the other hand, an appeal would not be the correct recourse for Teresita, et al. to take against the assailed orders. The
final judgment rule embodied in the first paragraph of Section 1, Rule 41, Rules of Court,21 which also governs appeals in
special proceedings, stipulates that only the judgments, final orders (and resolutions) of a court of law that completely
disposes of the case, or of a particular matter therein when declared by these Rules to be appealable may be the subject of
an appeal in due course. The same rule states that an interlocutory order or resolution (interlocutory because it deals with
preliminary matters, or that the trial on the merits is yet to be held and the judgment rendered) is expressly made non
appealable.

Multiple appeals are permitted in special proceedings as a practical recognition of the possibility that material issues may
be finally determined at various stages of the special proceedings. Section 1, Rule 109 of the Rules of Court enumerates
the specific instances in which multiple appeals may be resorted to in special proceedings, viz:
Section 1. Orders or judgments from which appeals may be taken. An interested person may appeal in special
proceedings from an order or judgment rendered by a Court of First Instance or a Juvenile and Domestic Relations Court,
where such order or judgment:
(a) Allows or disallows a will;
(b) Determines who are the lawful heirs of a deceased person, or the distributive share of the estate to which such person
is entitled;
(c) Allows or disallows, in whole or in part, any claim against the estate of a deceased person, or any claim presented on
behalf of the estate in offset to a claim against it;
(d) Settles the account of an executor, administrator, trustee or guardian;
(e) Constitutes, in proceedings relating to the settlement of the estate of a deceased person, or the administration of a
trustee or guardian, a final determination in the lower court of the rights of the party appealing, except that no appeal shall
be allowed from the appointment of a special administrator; and
(f) Is the final order or judgment rendered in the case, and affects the substantial rights of the person appealing, unless it
be an order granting or denying a motion for a new trial or for reconsideration.
Clearly, the assailed orders of the RTC, being interlocutory, did not come under any of the instances in which multiple
appeals are permitted.

II
Did the RTC commit grave abuse of discretion
in directing the inclusion of the properties
in the estate of the decedent?

In its assailed decision, the CA concluded that the RTC committed grave abuse of discretion for including properties in the
inventory notwithstanding their having been transferred to Mervir Realty by Emigdio during his lifetime, and for
disregarding the registration of the properties in the name of Mervir Realty, a third party, by applying the doctrine of

piercing the veil of corporate fiction.

Was the CA correct in its conclusion?
The answer is in the negative. It is unavoidable to find that the CA, in reaching its conclusion, ignored the law and the
facts that had fully warranted the assailed orders of the RTC.
Under Section 6(a), Rule 78 of the Rules of Court, the letters of administration may be granted at the discretion of the
court to the surviving spouse, who is competent and willing to serve when the person dies intestate. Upon issuing the
letters of administration to the surviving spouse, the RTC becomes dutybound to direct the preparation and submission of
the inventory of the properties of the estate, and the surviving spouse, as the administrator, has the duty and responsibility
to submit the inventory within three months from the issuance of letters of administration pursuant to Rule 83 of the Rules
of Court, viz:
Section 1. Inventory and appraisal to be returned within three months. Within three (3) months after his appointment
every executor or administrator shall return to the court a true inventory and appraisal of all the real and personal
estate of the deceased which has come into his possession or knowledge. In the appraisement of such estate, the court
may order one or more of the inheritance tax appraisers to give his or their assistance.
The usage of the word all in Section 1, supra, demands the inclusion of all the real and personal properties of the decedent
in the inventory.22 However, the word all is qualified by the phrase which has come into his possession or knowledge,
which signifies that the properties must be known to the administrator to belong to the decedent or are in her possession as
the administrator. Section 1 allows no exception, for the phrase true inventory implies that no properties appearing to
belong to the decedent can be excluded from the inventory, regardless of their being in the possession of another person or
entity.
The objective of the Rules of Court in requiring the inventory and appraisal of the estate of the decedent is to aid the
court in revising the accounts and determining the liabilities of the executor or the administrator, and in making a final and
equitable distribution (partition) of the estate and otherwise to facilitate the administration of the estate. 23 Hence, the RTC
that presides over the administration of an estate is vested with wide discretion on the question of what properties should
be included in the inventory. According to Peralta v. Peralta,24 the CA cannot impose its judgment in order to supplant
that of the RTC on the issue of which properties are to be included or excluded from the inventory in the absence of
positive abuse of discretion, for in the administration of the estates of deceased persons, the judges enjoy ample
discretionary powers and the appellate courts should not interfere with or attempt to replace the action taken by them,
unless it be shown that there has been a positive abuse of discretion. 25 As long as the RTC commits no patently grave
abuse of discretion, its orders must be respected as part of the regular performance of its judicial duty.
There is no dispute that the jurisdiction of the trial court as an intestate court is special and limited. The trial court cannot

adjudicate title to properties claimed to be a part of the estate but are claimed to belong to third parties by title adverse to
that of the decedent and the estate, not by virtue of any right of inheritance from the decedent. All that the trial court can
do regarding said properties is to determine whether or not they should be included in the inventory of properties to be
administered by the administrator. Such determination is provisional and may be still revised. As the Court said in
Agtarap v. Agtarap:26
The general rule is that the jurisdiction of the trial court, either as a probate court or an intestate court, relates only to
matters having to do with the probate of the will and/or settlement of the estate of deceased persons, but does not extend
to the determination of questions of ownership that arise during the proceedings. The patent rationale for this rule is that
such court merely exercises special and limited jurisdiction. As held in several cases, a probate court or one in charge of
estate proceedings, whether testate or intestate, cannot adjudicate or determine title to properties claimed to be a part of
the estate and which are claimed to belong to outside parties, not by virtue of any right of inheritance from the deceased
but by title adverse to that of the deceased and his estate. All that the said court could do as regards said properties is to
determine whether or not they should be included in the inventory of properties to be administered by the administrator. If
there is no dispute, there poses no problem, but if there is, then the parties, the administrator, and the opposing parties
have to resort to an ordinary action before a court exercising general jurisdiction for a final determination of the
conflicting claims of title.
However, this general rule is subject to exceptions as justified by expediency and convenience.
First, the probate court may provisionally pass upon in an intestate or a testate proceeding the question of inclusion
in, or exclusion from, the inventory of a piece of property without prejudice to final determination of ownership in
a separate action. Second, if the interested parties are all heirs to the estate, or the question is one of collation or
advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third
parties are not impaired, then the probate court is competent to resolve issues on ownership. Verily, its jurisdiction
extends to matters incidental or collateral to the settlement and distribution of the estate, such as the determination of the
status of each heir and whether the property in the inventory is conjugal or exclusive property of the deceased
spouse.27 (Italics in the original; bold emphasis supplied)
It is clear to us that the RTC took pains to explain the factual bases for its directive for the inclusion of the properties in
question in its assailed order of March 14, 2001, viz:
In the first place, the administratrix of the estate admitted that Emigdio Mercado was one of the heirs of Severina Mercado
who, upon her death, left several properties as listed in the inventory of properties submitted in Court in Special
Proceedings No. 306R which are supposed to be divided among her heirs. The administratrix admitted, while being
examined in Court by the counsel for the petitioner, that she did not include in the inventory submitted by her in this case
the shares of Emigdio Mercado in the said estate of Severina Mercado. Certainly, said properties constituting Emigdio

Mercados share in the estate of Severina Mercado should be included in the inventory of properties required to be
submitted to the Court in this particular case.
In the second place, the administratrix of the estate of Emigdio Mercado also admitted in Court that she did not include in
the inventory shares of stock of Mervir Realty Corporation which are in her name and which were paid by her from
money derived from the taxicab business which she and her husband had since 1955 as a conjugal undertaking. As these
shares of stock partake of being conjugal in character, onehalf thereof or of the value thereof should be included in the
inventory of the estate of her husband.
In the third place, the administratrix of the estate of Emigdio Mercado admitted, too, in Court that she had a bank account
in her name at Union Bank which she opened when her husband was still alive. Again, the money in said bank account
partakes of being conjugal in character, and so, onehalf thereof should be included in the inventory of the properties
constituting as estate of her husband.
In the fourth place, it has been established during the hearing in this case that Lot No. 3353 of Pls657D located in
Badian, Cebu containing an area of 53,301 square meters as described in and covered by Transfer Certificate of Title No.
3252 of the Registry of Deeds for the Province of Cebu is still registered in the name of Emigdio S. Mercado until now.
When it was the subject of Civil Case No. CEB12690 which was decided on October 19, 1995, it was the estate of the
late Emigdio Mercado which claimed to be the owner thereof. Mervir Realty Corporation never intervened in the said case
in order to be the owner thereof. This fact was admitted by Richard Mercado himself when he testified in Court. x x x So
the said property located in Badian, Cebu should be included in the inventory in this case.
Fifthly and lastly, it appears that the assignment of several parcels of land by the late Emigdio S. Mercado to Mervir
Realty Corporation on January 10, 1991 by virtue of the Deed of Assignment signed by him on the said day (Exhibit N for
the petitioner and Exhibit 5 for the administratrix) was a transfer in contemplation of death. It was made two days before
he died on January 12, 1991. A transfer made in contemplation of death is one prompted by the thought that the transferor
has not long to live and made in place of a testamentary disposition (1959 Prentice Hall, p. 3909). Section 78 of the
National Internal Revenue Code of 1977 provides that the gross estate of the decedent shall be determined by including
the value at the time of his death of all property to the extent of any interest therein of which the decedent has at any time
made a transfer in contemplation of death. So, the inventory to be approved in this case should still include the said
properties of Emigdio Mercado which were transferred by him in contemplation of death. Besides, the said properties
actually appeared to be still registered in the name of Emigdio S. Mercado at least ten (10) months after his death, as
shown by the certification issued by the Cebu City Assessors Office on October 31, 1991 (Exhibit O).28
Thereby, the RTC strictly followed the directives of the Rules of Court and the jurisprudence relevant to the procedure for
preparing the inventory by the administrator. The aforequoted explanations indicated that the directive to include the
properties in question in the inventory rested on good and valid reasons, and thus was far from whimsical, or arbitrary, or
capricious.

Firstly, the shares in the properties inherited by Emigdio from Severina Mercado should be included in the inventory
because Teresita, et al. did not dispute the fact about the shares being inherited by Emigdio.
Secondly, with Emigdio and Teresita having been married prior to the effectivity of the Family Code in August 3, 1988,
their property regime was the conjugal partnership of gains. 29 For purposes of the settlement of Emigdios estate, it was
unavoidable for Teresita to include his shares in the conjugal partnership of gains. The party asserting that specific
property acquired during that property regime did not pertain to the conjugal partnership of gains carried the burden of
proof, and that party must prove the exclusive ownership by one of them by clear, categorical, and convincing evidence. 30
In the absence of or pending the presentation of such proof, the conjugal partnership of Emigdio and Teresita must be
provisionally liquidated to establish who the real owners of the affected properties were, 31 and which of the properties
should form part of the estate of Emigdio. The portions that pertained to the estate of Emigdio must be included in the
inventory.
Moreover, although the title over Lot 3353 was already registered in the name of Mervir Realty, the RTC made findings
that put that title in dispute. Civil Case No. CEB12692, a dispute that had involved the ownership of Lot 3353, was
resolved in favor of the estate of Emigdio, and Transfer Certificate of Title No. 3252 covering Lot 3353 was still in
Emigdios name. Indeed, the RTC noted in the order of March 14, 2001, or ten years after his death, that Lot 3353 had
remained registered in the name of Emigdio.
Interestingly, Mervir Realty did not intervene at all in Civil Case No. CEB12692. Such lack of interest in Civil Case No.
CEB12692 was susceptible of various interpretations, including one to the effect that the heirs of Emigdio could have
already threshed out their differences with the assistance of the trial court. This interpretation was probable considering
that Mervir Realty, whose business was managed by respondent Richard, was headed by Teresita herself as its President.
In other words, Mervir Realty appeared to be a family corporation.
Also, the fact that the deed of absolute sale executed by Emigdio in favor of Mervir Realty was a notarized instrument did
not sufficiently justify the exclusion from the inventory of the properties involved. A notarized deed of sale only enjoyed
the presumption of regularity in favor of its execution, but its notarization did not per se guarantee the legal efficacy of the
transaction under the deed, and what the contents purported to be. The presumption of regularity could be rebutted by
clear and convincing evidence to the contrary.32 As the Court has observed in Suntay v. Court of Appeals:33
x x x. Though the notarization of the deed of sale in question vests in its favor the presumption of regularity, it is not the
intention nor the function of the notary public to validate and make binding an instrument never, in the first place,
intended to have any binding legal effect upon the parties thereto. The intention of the parties still and always is the
primary consideration in determining the true nature of a contract. (Bold emphasis supplied)
It should likewise be pointed out that the exchange of shares of stock of Mervir Realty with the real properties owned by

Emigdio would still have to be inquired into. That Emigdio executed the deed of assignment two days prior to his death
was a circumstance that should put any interested party on his guard regarding the exchange, considering that there was a
finding about Emigdio having been sick of cancer of the pancreas at the time.34 In this regard, whether the CA correctly
characterized the exchange as a form of an estate planning scheme remained to be validated by the facts to be established
in court.
The fact that the properties were already covered by Torrens titles in the name of Mervir Realty could not be a valid basis
for immediately excluding them from the inventory in view of the circumstances admittedly surrounding the execution of
the deed of assignment. This is because:
The Torrens system is not a mode of acquiring titles to lands; it is merely a system of registration of titles to lands.
However, justice and equity demand that the titleholder should not be made to bear the unfavorable effect of the mistake
or negligence of the States agents, in the absence of proof of his complicity in a fraud or of manifest damage to third
persons. The real purpose of the Torrens system is to quiet title to land and put a stop forever to any question as to the
legality of the title, except claims that were noted in the certificate at the time of registration or that may arise subsequent
thereto. Otherwise, the integrity of the Torrens system shall forever be sullied by the ineptitude and inefficiency of land
registration officials, who are ordinarily presumed to have regularly performed their duties. 35
Assuming that only seven titled lots were the subject of the deed of assignment of January 10, 1991, such lots should still
be included in the inventory to enable the parties, by themselves, and with the assistance of the RTC itself, to test and
resolve the issue on the validity of the assignment. The limited jurisdiction of the RTC as an intestate court might have
constricted the determination of the rights to the properties arising from that deed, 36 but it does not prevent the RTC as
intestate court from ordering the inclusion in the inventory of the properties subject of that deed. This is because the RTC
as intestate court, albeit vested only with special and limited jurisdiction, was still deemed to have all the necessary
powers to exercise such jurisdiction to make it effective. 37
Lastly, the inventory of the estate of Emigdio must be prepared and submitted for the important purpose of resolving the
difficult issues of collation and advancement to the heirs. Article 1061 of the Civil Code required every compulsory heir
and the surviving spouse, herein Teresita herself, to bring into the mass of the estate any property or right which he (or
she) may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous
title, in order that it may be computed in the determination of the legitime of each heir, and in the account of the
partition. Section 2, Rule 90 of the Rules of Court also provided that any advancement by the decedent on the legitime of
an heir may be heard and determined by the court having jurisdiction of the estate proceedings, and the final order of the
court thereon shall be binding on the person raising the questions and on the heir. Rule 90 thereby expanded the special
and limited jurisdiction of the RTC as an intestate court about the matters relating to the inventory of the estate of the
decedent by authorizing it to direct the inclusion of properties donated or bestowed by gratuitous title to any compulsory
heir by the decedent.38

The determination of which properties should be excluded from or included in the inventory of estate properties was well
within the authority and discretion of the RTC as an intestate court. In making its determination, the RTC acted with
circumspection, and proceeded under the guiding policy that it was best to include all properties in the possession of the
administrator or were known to the administrator to belong to Emigdio rather than to exclude properties that could turn
out in the end to be actually part of the estate. As long as the RTC commits no patent grave abuse of discretion, its orders
must be respected as part of the regular performance of its judicial duty. Grave abuse of discretion means either that the
judicial or quasijudicial power was exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, or that the respondent judge, tribunal or board evaded a positive duty, or virtually refused to perform the duty
enjoined or to act in contemplation of law, such as when such judge, tribunal or board exercising judicial or quasijudicial
powers acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction. 39
In light of the foregoing, the CAs conclusion of grave abuse of discretion on the part of the RTC was unwarranted and
erroneous.
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the decision
promulgated on May 15, 2002; REINSTATES the orders issued on March 14, 2001 and May 18, 2001 by the Regional
Trial Court in Cebu; DIRECTS the Regional Trial Court in Cebu to proceed with dispatch in Special Proceedings No.
3094CEB entitled Intestate Estate of the late Emigdio Mercado, Thelma Aranas, petitioner, and to resolve the case; and
ORDERS the respondents to pay the costs of suit.ChanRoblesVirtualawlibrary
SO ORDERED.