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G.R. No.

143483

January 31, 2002

REPUBLIC OF THE PHILIPPINES represented by the REGISTER OF DEEDS OF PASAY CITY, petitioner, vs. COURT OF APPEALS (SPECIAL FORMER 3RD DIVISION) AND AMADA H. SOLANO, assisted by her husband ROMEO SOLANO, respondents. BELLOSILLO ,J.: This petition for certiorari seeks to nullify two (2) Resolutions of the Court of Appeals dated 12 November 1998 and 4 May 2000 giving due course to the petition for annulment of judgment filed by private respondent Amada H. Solano on 3 February 1997 and denying petitioner's motion for reconsideration. For more than three (3) decades (from 1952 to 1985) private respondent Amada Solano served as the all-around personal domestic helper of the late Elizabeth Hankins, a widow and a French national. During Ms. Hankins' lifetime and most especially during the waning years of her life, respondent Solano was her faithful girl Friday and a constant companion since no close relative was available to tend to her needs. In recognition of Solano's faithful and dedicated service, Ms. Hankins executed in her favor two (2) deeds of donation involving two (2) parcels of land covered by TCT Nos. 7807 and 7808 of the Registry of Deeds. Private respondent alleged that she misplaced the deeds of donation and were nowhere to be found. While the deeds of donation were missing, the Republic filed a petition for the escheat of the estate of Elizabeth Hankins before the Regional Trial Court of Pasay City.1 During the proceedings, a motion for intervention was filed by Romeo Solano, spouse of private respondent, and one GaudencioRegosa, but on 24 June 1987 the motion was denied by the trial court for the reason that "they miserably failed to show valid claim or right to the properties in question."2 Since it was established that there were no known heirs and persons entitled to the properties of decedent Hankins, the lower court escheated the estate of the decedent in favor of petitioner Republic of the Philippines. By virtue of the decision of the trial court, the Registry of Deeds of Pasay City cancelled TCT Nos. 7807 and 7808 and issued new ones, TCT Nos. 129551 and 129552, both in the name of Pasay City. In the meantime, private respondent claimed that she accidentally found the deeds of donation she had been looking for a long time. In view of this development, respondent Amada Solano filed on 28 January 1997 a petition before the Court of Appeals for the annulment of the lower court's decision alleging, among other, that3 13.1. The deceased Elizabeth Hankins having donated the subject properties to the petitioner in 1983 (for TCT No. 7807) and 1984 (for TCT No. 7808), these properties did

not and could not form part of her estate when she died on September 20, 1985. Consequently, they could not validly be escheated to the Pasay City Government; 13.2. Even assuming arguendo that the properties could be subject of escheat proceedings, the decision is still legally infirm for escheating the properties to an entity, the Pasay City Government, which is not authorized by law to be the recipient thereof. The property should have been escheated in favor of the Republic of the Philippines under Rule 91, Section 1 of the New Rules of Court x xxx On 17 March 1997 the Office of the Solicitor General representing public respondents RTC and the Register of Deeds (herein petitioner) filed an answer setting forth their affirmative defenses, to wit: (a) lack of jurisdiction over the nature of the action; and, (b) the cause of action was barred by the statute of limitations. Finding no cogent reason to justify the dismissal of the petition for annulment, the Court of Appeals issued on 12 November 1998 the first of its assailed Resolutions giving due course to the petition for annulment of judgment and setting the date for trial on the merits. In upholding the theory of respondent Solano, the Appeals Court ruled that Herein petitioner invokes lack of jurisdiction over the subject matter on the part of respondent RTC to entertain the escheat proceedings x xx because the parcels of land have been earlier donated to herein petitioner in 1983 and 1984 prior to the death of said Hankins; and therefore, respondent court could not have ordered the escheat of said properties in favor of the Republic of the Philippines, assign them to respondent Pasay City government, order the cancellation of the old titles in the name of Hankins and order the properties registered in the name of respondent Pasay City x xxx The 1997 Rules of Civil Procedure specifically laid down the grounds of annulment filed before this Court, to wit: extrinsic fraud and lack of jurisdiction. Jurisdiction over the subject matter is conferred by law and this jurisdiction is determined by the allegations of the complaint. It is axiomatic that the averments of the complaint determine the nature of the action and consequently the jurisdiction of the courts. Thus whether or not the properties in question are no longer part of the estate of the deceased Hankins at the time of her death; and, whether or not the alleged donations are valid are issues in the present petition for annulment which can be resolved only after a full blown trial x xxx It is for the same reason that respondents espousal of the statute of limitations against herein petition for annulment cannot prosper at this stage of the proceedings. Indeed, Section 4, Rule 91 of the Revised Rules of Court expressly provides that a person entitled to the estate must file his claim with the court a quo within five (5) years from the date of said judgment. However, it is clear to this Court that herein petitioner is not claiming anything from the estate of the deceased at the time of her death on September 20, 1985; rather she is claiming that the subject parcels of land should not have been included as part of the estate of the said decedent as she is the owner thereof by virtue of the deeds of donation in her favor.

In effect, herein petitioner, who alleges to be in possession of the premises in question, is claiming ownership of the properties in question and the consequent reconveyance thereof in her favor which cause of action prescribes ten (10) years after the issuance of title in favor of respondent Pasay City on August 7, 1990. Herein petition was seasonably filed on February 3, 1997 under Article 1144, to wit: Art. 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment. And Article 1456, to wit: Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.4 In its Resolution of 4 May 2000 the Court of Appeals denied the motion for reconsideration filed by public respondents Register of Deeds of Pasay City and the Presiding judge of the lower court and set the trial on the merits for June 15 and 16, 2000. In its effort to nullify the Resolutions herein before mentioned, petitioner points out that the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction (a) in denying petitioner's affirmative defenses set forth in its answer and motion for reconsideration, and in setting the case for trial and reception of evidence; and, (b) in giving due course to private respondent's petition for annulment of decision despite the palpable setting-in of the 5-year statute of limitations within which to file claims before the court a quo set forth in Rule 91 of the Revised Rules of Court and Art. 1014 of the Civil Code. Petitioner argues that the lower court had jurisdiction when it escheated the properties in question in favor of the city government and the filing of a petition for annulment of judgment on the ground of subsequent discovery of the deeds of donation did not divest the lower court of its jurisdiction on the matter. It further contends that Rule 47 of the 1997 Rules of Civil Procedure only provides for two (2) grounds for the annulment of judgment, namely: extrinsic fraud and lack of jurisdiction. As such the discovery of the deeds of donation seven (7) years after the finality of the escheat proceedings is an extraneous matter which is clearly not an instance of extrinsic fraud nor a ground to oust the lower court of its jurisdiction. Petitioner also insists that notwithstanding the execution of the deeds of donation in favor of private respondent, the 5-year statute of limitations within which to file claims before the court a quo as set forth in Rule 91 of the Revised Rules of Court has set in. The present controversy revolves around the nature of the parcels of land purportedly donated to private respondent which will ultimately determine whether the lower court had jurisdiction to declare the same escheated in favor of the state.

We rule for the petitioner. Escheat is a proceeding, unlike that of succession or assignment, whereby the state, by virtue of its sovereignty, steps in and claims the real or personal property of a person who dies intestate leaving no heir. In the absence of a lawful owner, a property is claimed by the state to forestall an open "invitation to self-service by the first comers."5 Since escheat is one of the incidents of sovereignty, the state may, and usually does, prescribe the conditions and limits the time within which a claim to such property may be made. The procedure by which the escheated property may be recovered is generally prescribed by statue, and a time limit is imposed within which such action must be brought. In this jurisdiction, a claimant to an escheated property must file his claim "within five (5) years from the date of such judgment, such person shall have possession of and title to the same, or if sold, the municipality or city shall be accountable to him for the proceeds, after deducting the estate; but a claim not made shall be barred forever."6 The 5-year period is not a device capriciously conjured by the state to defraud any claimant; on the contrary, it is decidedly prescribed to encourage would-be claimants to be punctilious in asserting their claims, otherwise they may lose them forever in a final judgment. Incidentally, the question may be asked: Does herein private respondent, not being an heir but allegedly a donee, have the personality to be a claimant within the purview of Sec. 4, Rule 91, of the Revised Rules of Court? In this regard, we agree with the Solicitor General that the case of Municipal Council of San Pedro,Laguna v. Colegio de San Jose, Inc.,7 is applicable at least insofar as it concerns the Court's discussion on who is an "interested party" in an escheat proceeding In a special proceeding for escheat under sections 750 and 751 the petitioner is not the sole and exclusive interested party. Any person alleging to have a direct right or interest in the property sought to be escheated is likewise an interested party and may appear and oppose the petition for escheat. In the present case, the Colegio de San Jose, Inc. and Carlos Young appeared alleging to have a material interest in the Hacienda de San Pedro Tunasan; the former because it claims to be the exclusive owner of the hacienda, and the latter because he claims to be the lessee thereof under a contract legally entered with the former (underscoring supplied). In the instant petition, the escheat judgment was handed down by the lower court as early as 27 June 1989 but it was only on 28 January 1997, more or less seven (7) years after, when private respondent decided to contest the escheat judgment in the guise of a petition for annulment of judgment before the Court of Appeals. Obviously, private respondent's belated assertion of her right over the escheated properties militates against recovery. A judgment in escheat proceedings when rendered by a court of competent jurisdiction is conclusive against all persons with actual or constructive notice, but not against those who are not parties or privies thereto. As held in Hamilton v. Brown,8 "a judgment of escheat was held conclusive upon persons notified by advertisement to all persons interested. Absolute lack on the part of petitioners of any dishonest intent to deprive the appellee of any right, or in any way injure him, constitutes due process of law, proper notice having been observed." With the lapse of the 5-year period therefore, private respondent has irretrievably lost her right to claim and the

supposed "discovery of the deeds of donation" is not enough justification to nullify the escheat judgment which has long attained finality. In the mind of this Court the subject properties were owned by the decedent during the time that the escheat proceedings were being conducted and the lower court was not divested of its jurisdiction to escheat them in favor of Pasay City notwithstanding an allegation that they had been previously donated. We recall that a motion for intervention was earlier denied by the escheat court for failure to show "valid claim or right to the properties in question."9 Where a person comes into an escheat proceeding as a claimant, the burden is on such intervenor to establish his title to the property and his right to intervene. A fortiori, the certificates of title covering the subject properties were in the name of the decedent indicating that no transfer of ownership involving the disputed properties was ever made by the deceased during her lifetime. In the absence therefore of any clear and convincing proof showing that the subject lands had been conveyed by Hankins to private respondent Solano, the same still remained, at least before the escheat, part of the estate of the decedent and the lower court was right not to assume otherwise. The Court of Appeals therefore cannot perfunctorily presuppose that the subject properties were no longer part of the decedent's estate at the time the lower court handed down its decision on the strength of a belated allegation that the same had previously been disposed of by the owner. It is settled that courts decide only after a close scrutiny of every piece of evidence and analyze each case with deliberate precision and unadulterated thoroughness, the judgment not being diluted by speculations, conjectures and unsubstantiated assertions. WHEREFORE, the petition is GRANTED. The assailed Resolution of the Court of Appeals dated 12 November 1998 giving due course to the petition for annulment of judgment, and its Resolution dated 4 May 2000 denying petitioner's motion for reconsideration, are SET ASIDE. The decision of the RTC-Br. 114, Pasay City, dated 27 June 1989, is REINSTATED. SO ORDERED. Mendoza, Quisumbing, and De Leon, Jr., JJ.,concur. Buena J., no part for being a co-signee of res. in question. 2.G.R. No. L-23096 April 27, 1972 MARTIN NERY and LEONCIA L. DE LEON, petitioners, vs. ROSARIO, ALFREDO, MARIANO, PACIFICO, ONOFRE, TEOFILO, LOLOY and TRINIDAD, all surnamed LORENZO, respondents. G.R. No. L-23376 April 27, 1972 DIONISIO, PERFECTO, MARIA REBECCA, ASUNCION, MAURO, and, LOURDES, all surnamed LORENZO, petitioners, vs. MARTIN NERY and LEONCIA L. DE LEON, respondents.

Salonga, Ordonez, Yap, Sicat& Associates for petitioners. Estanistao A. Fernandez for respondents.

FERNANDO, J.:p The point to be resolved in these two petitions for the review of a decision of the respondent Court of Appeals dated April 30, 1964 is the extent of the rights acquired by the vendees, the spouses Martin Nery and Leoncia L. de Leon 1 arising from a sale of a parcel of land, four (4) hectares more or less, situated in Malaking Kahoy, Paraaque, Rizal. The vendor, Bienvenida de la Isla, was the widow of the deceased Leoncio Lorenzo and guardian of their children, Dionisio, Perfecto, Maria Rebeeca, Asuncion, Mauro and Lourdes, 2 who thereafter challenged the validity of such a transaction. It was their contention that notwithstanding an order authorizing the sale from the probate court on June 2, 1953, it could be, impugned as they were not informed of such a move. Moreover, the guardianship proceeding, instituted on December 7, 1950, was heard without the two elder children, Dionisio and Perfecto Lorenzo being notified although they were then more than 14 years of age. The heirs of Silvestra Ferrer, who originally owned one-fourth of the property in question, 3 intervened in such action. In the lower court decision, they were adjudged co-owners of the aforesaid one-fourth portion of the property, the sale by the widow being considered null and void insofar as they were concerned. The rights of the Children of Leoncio Lorenzo and Bienvenida de la Isla to one-half of the three-fourths appertaining to such spouses were likewise accorded recognition. The matter was then elevated to the respondent Court of Appeals by the spouses Martin Nery and Leoncia L. de Leon. Respondent Court in its decision, now subject of this review, declared valid the deed of sale executed by the mother Bienvenida de la Isla in favor of the spouses Nery and de Leon as to the whole three-fourths, without prejudice however to the children demanding from their mother their participation in the amount paid for the sale of such property. It thus ignored the grave jurisdictional defects that attended the challenged orders, starting with the two elder children not being notified of the petition for guardianship, even if they were already above 14, as pointed out and stressed in their petition for review. There is need then for the exercise of the corrective power of this Court. The original decision of the lower court has much more to recommend it. Thereby, the rights of the children are fully respected. With a restoration in full of what was decided by the lower court, there is a corresponding modification of the judgment of the Court of Appeals. So we decide. The antecedents of the case were set forth in the appealed decision thus: "After hearing the evidence, the lower court handed down decision on June 24, 1961, finding that in the guardianship proceedings, the court acquired no jurisdiction over the persons of the minors who were not notified of the petition, at least 2 of them being over 14 years of age; that as the inventory submitted by the guardian stated that the minors had no real

estate, the court did not acquire jurisdiction over the real property of the minors and could not have validly authorized its sale, and the total absence of the requisite notice necessarily rendered the order of sale, ... null and void, and the defendant, Martin S. Nery, a lawyer, could not be considered a purchaser in good faith of the one-half portion of the land belonging to the minors; ... that as Silvestra Ferrer, one of the sisters of Florentino Ferrer, did not sign the deed of sale ... upon her death in 1952, her 1/4 portion of the land passed to her nearest relatives, the third-party plaintiffs who are children of her sister, Tomasa Ferrer, whose action had not prescribed 'because from the death of SilvestraFerrer in 1952 up to the filing of the third-party complaint on September 3, 1958, barely six yeaxs had elapsed'; and that the remaining 3/4 of the land in question was the conjugal property of Leoncio Lorenzo and his wife, Bienvenida de la Isla, 1/2 of which, upon the demise of Leoncio, corresponding to Bienvenida and the other half to their children, the herein plaintiffs, in equal shares." 4 Why respondent Court reached the decision it did on appeal was explained this way: "It is unquestioned that the property in question formerly belonged to Florentino Ferrer and his three sisters, Agueda, Tomasa and Silvestra, and brother, Meliton. When, after the death of Florentino, that is, on December 6, 1943, the document denominated 'BilihanGanap Nang Lupang-Bukid', ... was executed in favor of Leoncio F. Lorenzo, one of the children of Agueda and married to Bienvenida de la Isla, by said Agueda, Tomasa and the children of Meliton, already deceased, said Leoncio merely acquired the participation of said sellers, equivalent to 3/4 undivided part of said land, and became a co-owner to that extent with Silvestra who did not execute said document and, therefore,did not sell her 1/4 undivided portion of the said land, which 1/4 undivided portion passed, upon her demise in 1952, to her nearest relatives who are the thirdparty plaintiffs Rosario, Alfredo, Mariano, Pacifica, Onofre, Teofilo, Loloy and Trinidad all surnamed Lorenzo, the children of her deceased sister, Tomasa. Bienvenida de la Isla, then the wife of said Leoncio F. Lorenzo, knew of this purchase made by her deceased husband, and she had no right to mortgage the whole land which, for taxation purposes was declared in her husband's name, without the consent of afore named successors-in-interest of Silvestra Ferrer, much less sell the same afterwards to the defendant spouses, Martin S. Nery and Leoncia L. de Leon, even if authorized by the guardianship court, said authority having been granted upon her misrepresentation, contained in her petition of May 26, 1953, that her minor children, the plaintiff's herein, were the owners in common of 1/2 portion of the land in question, the other 1/2 pertaining to her. However, inasmuch as the said minor plaintiffs were really the owners in common of 1/2 of 3/4 undivided part of the said land, and the other 1/2, to their mother and guardian, the orders of the guardianship court authorizing the guardian to sell the real property of the minors, and approving the deed of sale executed in accordance with said authority must be construed as referring to the correct real property of the said minors." 5 Hence its dispositive portion provided as follows: "[Wherefore], the appealed judgment is hereby modified by declaring that the deed of sale ..., executed by Bienvenida de la Isla in favor of the defendants valid only insofar as the undivided 3/4 portion of the land in question is concerned, as to which portion, the defendants are declared owners, and

that the third-party plaintiffs, Rosario, Alfredo, Mariano, Pacifica, Onofre, Teofilo, Loloy and Trinidad, all surnamed Lorenzo, are declared owners in common of the remaining undivided 1/4 portion of the said land. In all other respects, the appealed judgment is hereby affirmed. No Costs." 6 The spouses Martin Nery and Leoncia L. de Leon and the children of the deceased Leoncio Lorenzo and the vendor, Bienvenida de la Isla, not being satisfied with the above decision instituted the petitions for review. As noted at the outset, the failure of respondent Court of Appeals to give due weight to the grave jurisdictional defect that tainted the guardianship proceeding resulted in its judgment suffering the corrosion of substantial legal error. The rights of the children of Leoncio Lorenzo as upheld by the lower court must, to repeat, be maintained. In that sense, the decision of the respondent Court of Appeals is subject to modification. Insofar however as it affirmed the lower court decision sustaining the claim of the heirs of SilvestraFerrer, 7 it is free from any infirmity. 1. What is indisputable in the light of the controlling legal doctrines is that it was the lower court and not the respondent Court of Appeals that yielded obeisance to the applicable procedural rule. It is worded thus: "When a petition for the appointment of a general guardian is filed, the court shall fix a time and place for hearing the same, and shall cause reasonable notice thereof to be given to the persons mentioned in the petition residing in the province, including the minor if above 14 years of age or the incompetent himself, and may direct other general or special notice thereof to be given." 8 The late Chief Justice Moran was quite explicit as to its jurisdictional character. These are his words: "Service of the notice upon the minor if above 14 years of age or upon the incompetent, is jurisdictional. Without such notice, the court acquires no jurisdiction to appoint a guardian." 9 The case cited by him in support of such view is Yangco v. Court of First Instance, 10 a 1915 decision. As was therein made clear: "There is no need for interpretation or construction of the word in the case before us. Its meaning is so clear that interpretation and construction are unnecessary. Our simple duty is to leave untouched the meaning with which the English language has endowed the word; and that is the meaning which the ordinary reader would accord to it on reading a sentence in which it was found. Where language is plain, subtle refinements which tinge words so as to give them the color of a particular judicial theory are not only unnecessary but decidedly harmful. That which has caused so much confusion in the law, which has made it so difficult for the public to understand and know what the law is with respect to a given matter, is in considerable measure the unwarranted interference by judicial tribunals with the English language as found in statutes and contracts, cutting out words here and inserting them there, making them fit personal ideas of what the legislature ought to have done or what parties should have agreed upon, giving them meanings which they do not ordinarily have, cutting, trimming, fitting, changing and coloring until lawyers themselves are unable to advise their clients as to the meaning of a given statute or contract until it has been submitted to some court for its 'interpretation and construction.' " 11

Respondent Court of Appeals cannot therefore be sustained in its assumption that the probate court could have authorized the sale in question. The jurisdictional infirmity was too patent to be overcome. It was the lower court that acted correctly. There is the more reason for deciding as we do considering that the rights of minors are involved. It is a distinctive feature of our law, one that is quite commendable, that whenever their welfare may be affected, its solicitude is made manifest. The rights of young are not to be ignored. Precisely their stage of immaturity calls for every procedural principle being observed before their interest in property to which they have a claim could be adversely affected. It does not matter that their guardian is their mother. As far back as 1811, in Salunga v. Evangelista, 12 Chief Justice Arellano took note that even a mother could have an "interest opposed to that of her children." 13 That may not have been the precise situation in this case, but certainly from the facts as found by the Court of Appeals, the Lorenzo children would have been better protected if they were notified as is required by law. If there is any occasion then why there should be a strict insistence on rule having the impress of a jurisdictional requirement, this is it. Moreover, where minors are involved, the State acts as parenspatriae. To it is cast the duty of protecting the rights of persons or individual who because of age or incapacity are in an unfavorable position, vis-a-vis other parties. Unable as they are to take due care of what concerns them, they have the political community to look after their welfare. This obligation the state must live up to. It cannot be recreant to such a trust. As was set forth in an opinion of the United States Supreme Court: "This prerogative of parenspatriae is inherent in the supreme power of every State, whether that power is lodged in a royal person or in the legislature, and has no affinity to those arbitrary powers which are sometimes exerted by irresponsible monarchs to the great detriment of the people and the destruction of their liberties. On the contrary, it is a most beneficent function, and often necessary to be exercised in the interest of humanity, and for the prevention of injury to those who cannot protect themselves." 14 2. Much less could the decision arrived at both by the lower court and respondent Court of Appeals as to the heirs of SilvestraFerrer15 being entitled to one-fourth of the property in question be set aside. At no time had the deceased Leoncio Lorenzo ever denied that he was holding such property in the capacity of trustee for them. At the time then that the settlement of his estate was pending in the probate court, his widow, Bienvenida de la Isla, the vendor, could not assert any other right, except that traceable to her late husband. Respondent Court of Appeals did note that petitioner Martin S. Nery is a lawyer. As a member of the bar, he could not have been unaware that his vendor could not sell to him more than she rightfully could dispose of. It is much too late in the day to depart from the well-settled principle as to a trustee being incapable of acquiring interest opposed to that of his principal. So it was announced in Severino v. Severino. 16 That is in conformity with an overmastering requirement of equity and conscience. He should thus be held to the strictest degree of acccountability. The law would lay itself open to well-deserved criticism if a principle other than the above were followed. The Nery spouses ought to be aware that it would be unthinkable to deny its authoritative force whenever called for.

The spouses Martin Nery and Leoncia L. de Leon would demonstrate its inapplicability by the two principal errors assigned, namely, that SilvestraFerrer did sell her share of the property as far back as 1943 and that even if it were not so, the deceased Leoncio Lorenzo and thereafter his widow, Bienvenida de la Isla did assert rights of ownership therein. It is obvious that on the face of such alleged errors that they are essentially factual. We are thus precluded from inquiring into their veracity as on such a matter what was decided by respondent Court of Appeals is binding on us. Moreover, as to the alleged prescription, the issue was resolved satisfactorily by the lower court in this fashion: "The action of said children of TomasaFerrer has not as yet prescribed because from the death of SilvestraFerrer in 1952 up to the filing of the third-party complaint on September 3, 1958, barely six years had elapsed. Moreover, there is no clear and satisfactory evidence that Leoncio Lorenzo and his successors-in-interest had been in continuous, adverse, and open possession, and under claim of ownership, of the one-fourth portion corresponding to SilvestraFerrer as to acquire same by acquisitive prescription." 17 Consequently, it was appropriate for the Court of Appeals to affirm the judgment of the lower court insofar as it recognized the rights of the heir of SilvestraFerrer to one-fourth of the land sold. WHEREFORE, premises considered with the modification as above set forth that Dionisio, Perfecto, Maria Rebecca, Asuncion, Mauro and Lourdes, all surnamed Lorenzo, children of the deceased Leoncio Lorenzo and Bienvenida de la Isla are adjudged co-owners to the extent of one-half of the three-fourths of the property in question, as was decreed by the lower court, the appealed decision of the Court of Appeals is affirmed. With costs against Martin Nery and Leoncia L. de Leon.

3. G.R. No. 151243

April 30, 2008

LOLITA R. ALAMAYRI, petitioner, vs. ROMMEL, ELMER, ERWIN, ROILER and AMANDA, all surnamed PABALE, respondents. DECISION CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court filed by petitioner Lolita R. Alamayri (Alamayri) seeking the reversal and setting aside of the Decision,2 dated 10 April 2001, of the Court of Appeals in CA-G.R. CV No. 58133; as well as the Resolution,3 dated 19 December 2001 of the same court denying reconsideration of its aforementioned Decision. The Court of Appeals, in its assailed Decision, upheld the validity of

the Deed of Absolute Sale, dated 20 February 1984, executed by Nelly S. Nave (Nave) in favor of siblings Rommel, Elmer, Erwin, Roiler and Amanda, all surnamed Pabale (the Pabale siblings) over a piece of land (subject property) in Calamba, Laguna, covered by Transfer Certificate of Title (TCT) No. T-3317 (27604); and, thus, reversed and set aside the Decision,4 dated 2 December 1997, of the Regional Trial Court (RTC) of Pasay City, Branch 119 in Civil Case No. 675-84-C.5 The 2 December 1997 Decision of the RTC declared null and void the two sales agreements involving the subject property entered into by Nave with different parties, namely, Sesinando M. Fernando (Fernando) and the Pabale siblings; and ordered the reconveyance of the subject property to Alamayri, as Naves successor-in-interest. There is no controversy as to the facts that gave rise to the present Petition, determined by the Court of Appeals to be as follows: This is a Complaint for Specific Performance with Damages filed by Sesinando M. Fernando, representing S.M. Fernando Realty Corporation [Fernando] on February 6, 1984 before the Regional Trial Court of Calamba, Laguna presided over by Judge Salvador P. de Guzman, Jr., docketed as Civil Case No. 675-84-C against Nelly S. Nave [Nave], owner of a parcel of land located in Calamba, Laguna covered by TCT No. T3317 (27604). [Fernando] alleged that on January 3, 1984, a handwritten "KasunduanSaPagbibilihan" (Contract to Sell) was entered into by and between him and [Nave] involving said parcel of land. However, [Nave] reneged on their agreement when the latter refused to accept the partial down payment he tendered to her as previously agreed because she did not want to sell her property to him anymore. [Fernando] prayed that after trial on the merits, [Nave] be ordered to execute the corresponding Deed of Sale in his favor, and to pay attorneys fees, litigation expenses and damages. [Nave] filed a Motion to Dismiss averring that she could not be ordered to execute the corresponding Deed of Sale in favor of [Fernando] based on the following grounds: (1) she was not fully apprised of the nature of the piece of paper [Fernando] handed to her for her signature on January 3, 1984. When she was informed that it was for the sale of her property in Calamba, Laguna covered by TCT No. T-3317 (27604), she immediately returned to [Fernando] the said piece of paper and at the same time repudiating the same. Her repudiation was further bolstered by the fact that when [Fernando] tendered the partial down payment to her, she refused to receive the same; and (2) she already sold the property in good faith to Rommel, Elmer, Erwin, Roller and Amanda, all surnamed Pabale [the Pabale siblings] on February 20, 1984 after the complaint was filed against her but before she received a copy thereof. Moreover, she alleged that [Fernando] has no cause of action against her as he is suing for and in behalf of S.M. Fernando Realty Corporation who is not a party to the alleged Contract to Sell. Even assuming that said entity is the real party in interest, still, [Fernando] cannot sue in representation of the corporation there being no evidence to show that he was duly authorized to do so. Subsequently, [the Pabale siblings] filed a Motion to Intervene alleging that they are now the land owners of the subject property. Thus, the complaint was amended to include [the

Pabale siblings] as party defendants. In an Order dated April 24, 1984, the trial court denied [Naves] Motion to Dismiss prompting her to file a Manifestation and Motion stating that she was adopting the allegations in her Motion to Dismiss in answer to [Fernandos] amended complaint. Thereafter, [Nave] filed a Motion to Admit her Amended Answer with Counterclaim and Cross-claim praying that her husband, Atty. Vedasto Gesmundo be impleaded as her codefendant, and including as her defense undue influence and fraud by reason of the fact that she was made to appear as widow when in fact she was very much married at the time of the transaction in issue. Despite the opposition of [Fernando] and [the Pabale siblings], the trial court admitted the aforesaid Amended Answer with Counterclaim and Cross-claim. Still unsatisfied with her defense, [Nave] and Atty. Vedasto Gesmundo filed a Motion to Admit Second Amended Answer and Amended Reply and Cross-claim against [the Pabale siblings], this time including the fact of her incapacity to contract for being mentally deficient based on the psychological evaluation report conducted on December 2, 1985 by Dra. Virginia P. Panlasigui, M. A., a clinical psychologist. Finding the motion unmeritorious, the same was denied by the court a quo. [Nave] filed a motion for reconsideration thereof asseverating that in Criminal Case No. 1308-85-C entitled "People vs. Nelly S. Nave" she raised therein as a defense her mental deficiency. This being a decisive factor to determine once and for all whether the contract entered into by [Nave] with respect to the subject property is null and void, the Second Amended Answer and Amended Reply and Cross-claim against [the Pabale siblings] should be admitted. Before the motion for reconsideration could be acted upon, the proceedings in this case was suspended sometime in 1987 in view of the filing of a Petition for Guardianship of [Nave] with the Regional Trial Court, Branch 36 of Calamba, Laguna, docketed as SP No. 146-86-C with Atty. VedastoGesmundo as the petitioner. On June 22, 1988, a Decision was rendered in the said guardianship proceedings, the dispositive portion of which reads: "Under the circumstances, specially since Nelly S. Nave who now resides with the Brosas spouses has categorically refused to be examined again at the National Mental Hospital, the Court is constrained to accept the Neuro-Psychiatric Evaluation report dated April 14, 1986 submitted by Dra. Nona Jean AlvisoRamos and the supporting report dated April 20, 1987 submitted by Dr. Eduardo T. Maaba, both of the National Mental Hospital and hereby finds Nelly S. Nave an incompetent within the purview of Rule 92 of the Revised Rules of Court, a person who, by reason of age, disease, weak mind and deteriorating mental processes cannot without outside aid take care of herself and manage her properties, becoming thereby an easy prey for deceit and exploitation, said condition having become severe since the year 1980. She and her estate are hereby placed under guardianship. Atty. Leonardo C. Paner is hereby appointed as

her regular guardian without need of bond, until further orders from this Court. Upon his taking his oath of office as regular guardian, Atty. Paner is ordered to participate actively in the pending cases of Nelly S. Nave with the end in view of protecting her interests from the prejudicial sales of her real properties, from the overpayment in the foreclosure made by Ms. Gilda Mendoza-Ong, and in recovering her lost jewelries and monies and other personal effects. SO ORDERED." Both [Fernando] and [the Pabale siblings] did not appeal therefrom, while the appeal interposed by spouses Juliano and Evangelina Brosas was dismissed by this Court for failure to pay the required docketing fees within the reglementary period. In the meantime, [Nave] died on December 9, 1992. On September 20, 1993, Atty. Vedasto Gesmundo, [Naves] sole heir, she being an orphan and childless, executed an Affidavit of Self-Adjudication pertaining to his inherited properties from [Nave]. On account of such development, a motion for the dismissal of the instant case and for the issuance of a writ of execution of the Decision dated June 22, 1988 in SP No. 146-86C (petition for guardianship) was filed by Atty. Vedasto Gesmundo on February 14, 1996 with the court a quo. [The Pabale siblings] filed their Opposition to the motion on grounds that (1) they were not made a party to the guardianship proceedings and thus cannot be bound by the Decision therein; and (2) that the validity of the Deed of Absolute Sale executed by the late [Nave] in their favor was never raised in the guardianship case. The case was then set for an annual conference. On January 9, 1997, Atty. VedastoGesmundo filed a motion seeking the courts permission for his substitution for the late defendant Nelly in the instant case. Not long after the parties submitted their respective pre-trial briefs, a motion for substitution was filed by Lolita R. Alamayre (sic) [Alamayri] alleging that since the subject property was sold to her by Atty. VedastoGesmundo as evidenced by a Deed of Absolute Sale, she should be substituted in his stead. In refutation, Atty. Vedasto Gesmundo filed a Manifestation stating that what he executed is a Deed of Donation and not a Deed of Absolute Sale in favor of [Alamayri] and that the same was already revoked by him on March 5, 1997. Thus, the motion for substitution should be denied. On July 29, 1997, the court a quo issued an Order declaring that it cannot make a ruling as to the conflicting claims of [Alamayri] and Atty. VedastoGesmundo. After the case was heard on the merits, the trial court rendered its Decision on December 2, 1997, the dispositive portion of which reads: "WHEREFORE, judgment is hereby rendered as follows: 1. Declaring the handwritten Contract to Sell dated January 3, 1984 executed by Nelly S. Nave and Sesinando Fernando null and void and of no force and effect;

2. Declaring the Deed of Absolute Sale dated February 20, 1984 executed by Nelly S. Nave in favor of the [Pabale siblings] similarly null and void and of no force and effect; 3. Recognizing Ms. Lolita P. [Alamayri] as the owner of the property covered by TCT No. 111249 of the land records of Calamba, Laguna; 4. Ordering the [Pabale siblings] to execute a transfer of title over the property in favor of Ms. Lolita P. [Alamayri] in the concept of reconveyance because the sale in their favor has been declared null and void; 5. Ordering the [Pabale siblings] to surrender possession over the property to Ms. [Alamayri] and to account for its income from the time they took over possession to the time the same is turned over to Ms. Lolita [Alamayri], and thereafter pay the said income to the latter; 6. Ordering [Fernando] and the [Pabale siblings], jointly and severally, to pay Ms. [Alamayri]: a. attorneys fees in the sum of P30,000.00; and b. the costs.6 S.M. Fernando Realty Corporation, still represented by Fernando, filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 58133, solely to question the portion of the 2 December 1997 Decision of the RTC ordering him and the Pabale siblings to jointly and severally pay Alamayri the amount of P30,000.00 as attorneys fees. The Pabale siblings intervened as appellants in CA-G.R. CV No. 58133 averring that the RTC erred in declaring in its 2 December 1997 Decision that the Deed of Absolute Sale dated 20 February 1984 executed by Nave in their favor was null and void on the ground that Nave was found incompetent since the year 1980. The Court of Appeals, in its Decision, dated 10 April 2001, granted the appeals of S.M. Fernando Realty Corporation and the Pabale siblings. It ruled thus: WHEREFORE, premises considered, the appeal filed by S. M. Fernando Realty Corporation, represented by its President, Sesinando M. Fernando as well as the appeal interposed by Rommel, Elmer, Erwin, Roller and Amanda, all surnamed Pabale, are hereby GRANTED. The Decision of the Regional Trial Court of Pasay City, Branch 119 in Civil Case No. 675-84-C is hereby REVERSED and SET ASIDE and a new one rendered upholding the VALIDITY of the Deed of Absolute Sale dated February 20, 1984. No pronouncements as to costs.7

Alamayri sought reconsideration of the afore-quoted Decision of the appellate court, invoking the Decision,8 dated 22 June 1988, of the RTC in the guardianship proceedings, docketed as SP. PROC. No. 146-86-C, which found Nave incompetent, her condition becoming severe since 1980; and thus appointed Atty. Leonardo C. Paner as her guardian. Said Decision already became final and executory when no one appealed therefrom. Alamayri argued that since Nave was already judicially determined to be an incompetent since 1980, then all contracts she subsequently entered into should be declared null and void, including the Deed of Sale, dated 20 February 1984, which she executed over the subject property in favor of the Pabale siblings. According to Alamayri, the Pabale siblings should be bound by the findings of the RTC in its 22 June 1988 Decision in SP. PROC. No. 146-86-C, having participated in the said guardianship proceedings through their father Jose Pabale. She pointed out that the RTC explicitly named in its orders Jose Pabale as among those present during the hearings held on 30 October 1987 and 19 November 1987 in SP. PROC. No. 146-86-C. Alamayri thus filed on 21 November 2001 a Motion to Schedule Hearing to Mark Exhibits in Evidence so she could mark and submit as evidence certain documents to establish that the Pabale siblings are indeed the children of Jose Pabale. Atty. Gesmundo, Naves surviving spouse, likewise filed his own Motion for Reconsideration of the 10 April 2001 Decision of the Court of Appeals in CA-G.R. CV No. 58133, asserting Naves incompetence since 1980 as found by the RTC in SP. PROC. No. 146-86-C, and his right to the subject property as owner upon Naves death in accordance with the laws of succession. It must be remembered that Atty. Gesmundo disputed before the RTC the supposed transfer of his rights to the subject property to Alamayri, but the court a quo refrained from ruling thereon. In a Resolution, dated 19 December 2001, the Court of Appeals denied for lack of merit the Motions for Reconsideration of Alamayri and Atty. Gesmundo. Hence, Alamayri comes before this Court via the present Petition for Review on Certiorari under Rule 45 of the Rules of Court, with the following assignment of errors: I THE COURT OF APPEALS ERRED IN HOLDING THAT THE FINDING THAT NELLY S. NAVE WAS INCOMPETENT IN SPECIAL PROCEEDING NO. 146-86-C ON JUNE 22, 1988 CANNOT RETROACT TO AFFECT THE VALIDITY OF THE DEED OF SALE SHE EXECUTED ON FEBRUARY 20, 1984 IN FAVOR OF RESPONDENTS PABALES. II THE COURT OF APPEALS ERRED IN HOLDING THAT THE DECISION IN SPECIAL PROCEEDING NO. 146-86-C DATED JUNE 22, 1988 IS NOT BINDING ON RESPONDENTS PABALES. III

THE COURT OF APPEALS ERRED IN DENYING PETITIONERS MOTION TO SCHEDULE HEARING TO MARK DOCUMENTARY EXHIBITS IN EVIDENCE TO ESTABLISH THE IDENTITY OF JOSE PABALE AS THE FATHER OF RESPONDENTS PABALES.9 It is Alamayris position that given the final and executory Decision, dated 22 June 1988, of the RTC in SP. PROC. No. 146-86-C finding Nave incompetent since 1980, then the same fact may no longer be re-litigated in Civil Case No. 675-84-C, based on the doctrine of res judicata, more particularly, the rule on conclusiveness of judgment. This Court is not persuaded. Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment." Res judicata lays the rule that an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.10 It is espoused in the Rules of Court, under paragraphs (b) and (c) of Section 47, Rule 39, which read: SEC. 47.Effect of judgments or final orders. The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows: x xxx (b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating the same thing and under the same title and in the same capacity; and (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. The doctrine of res judicata thus lays down two main rules which may be stated as follows: (1) The judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action either before the same or any other tribunal; and (2) Any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which a judgment or decree is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies

whether or not the claims or demands, purposes, or subject matters of the two suits are the same. These two main rules mark the distinction between the principles governing the two typical cases in which a judgment may operate as evidence.11 In speaking of these cases, the first general rule above stated, and which corresponds to the afore-quoted paragraph (b) of Section 47, Rule 39 of the Rules of Court, is referred to as "bar by former judgment"; while the second general rule, which is embodied in paragraph (c) of the same section and rule, is known as "conclusiveness of judgment." The Resolution of this Court in Calalang v. Register of Deeds provides the following enlightening discourse on conclusiveness of judgment: The doctrine res judicata actually embraces two different concepts: (1) bar by former judgment and (b) conclusiveness of judgment. The second concept conclusiveness of judgment states that a fact or question which was in issue in a former suit and was there judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action is not required but merely identity of issues. Justice Feliciano, in Smith Bell & Company (Phils.), Inc. vs. Court of Appeals (197 SCRA 201, 210 [1991]), reiterated Lopez vs. Reyes (76 SCRA 179 [1977]) in regard to the distinction between bar by former judgment which bars the prosecution of a second action upon the same claim, demand, or cause of action, and conclusiveness of judgment which bars the relitigation of particular facts or issues in another litigation between the same parties on a different claim or cause of action. The general rule precluding the relitigation of material facts or questions which were in issue and adjudicated in former action are commonly applied to all matters essentially connected with the subject matter of the litigation. Thus, it extends to questions necessarily implied in the final judgment, although no specific finding may have been made in reference thereto and although such matters were directly referred to in the pleadings and were not actually or formally presented. Under this rule, if the record of the former trial shows that the judgment could not have been rendered without deciding the particular matter, it will be considered as having settled that matter as to all future actions between the

parties and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself.12 Another case, Oropeza Marketing Corporation v. Allied Banking Corporation, further differentiated between the two rules of res judicata,as follows: There is "bar by prior judgment" when, as between the first case where the judgment was rendered and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In this instance, the judgment in the first case constitutes an absolute bar to the second action. Otherwise put, the judgment or decree of the court of competent jurisdiction on the merits concludes the litigation between the parties, as well as their privies, and constitutes a bar to a new action or suit involving the same cause of action before the same or other tribunal. But where there is identity of parties in the first and second cases, but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. This is the concept of res judicata known as "conclusiveness of judgment." Stated differently, any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies whether or not the claim, demand, purpose, or subject matter of the two actions is the same.13 In sum, conclusiveness of judgment bars the re-litigation in a second case of a fact or question already settled in a previous case. The second case, however, may still proceed provided that it will no longer touch on the same fact or question adjudged in the first case. Conclusiveness of judgment requires only the identity of issues and parties, but not of causes of action. Contrary to Alamayris assertion, conclusiveness of judgment has no application to the instant Petition since there is no identity of parties and issues between SP. PROC. No. 146-86-C and Civil Case No. 675-84-C. No identity of parties SP. PROC. No. 146-86-C was a petition filed with the RTC by Atty. Gesmundo for the appointment of a guardian over the person and estate of his late wife Nave alleging her incompetence. A guardian may be appointed by the RTC over the person and estate of a minor or an incompetent, the latter being described as a person "suffering the penalty of civil interdiction or who are hospitalized lepers, prodigals, deaf and dumb who are unable to read and write, those who are of unsound mind, even though they have lucid intervals, and persons not being of unsound mind, but by reason of age, disease, weak mind, and other similar causes, cannot, without outside aid, take care of themselves and manage their property, becoming thereby an easy prey for deceit and exploitation."14

Rule 93 of the Rules of Court governs the proceedings for the appointment of a guardian, to wit: Rule 93 APPOINTMENT OF GUARDIANS SECTION 1.Who may petition for appointment of guardian for resident. Any relative, friend, or other person on behalf of a resident minor or incompetent who has no parent or lawful guardian, or the minor himself if fourteen years of age or over, may petition the court having jurisdiction for the appointment of a general guardian for the person or estate, or both, of such minor or incompetent. An officer of the Federal Administration of the United States in the Philippines may also file a petition in favor of a ward thereof, and the Director of Health, in favor of an insane person who should be hospitalized, or in favor of an isolated leper. SEC. 2.Contents of petition. A petition for the appointment of a general guardian must show, so far as known to the petitioner: (a) The jurisdictional facts; (b) The minority or incompetency rendering the appointment necessary or convenient; (c) The names, ages, and residences of the relatives of the minor or incompetent, and of the persons having him in their care; (d) The probable value and character of his estate; (e) The name of the person for whom letters of guardianship are prayed. The petition shall be verified; but no defect in the petition or verification shall render void the issuance of letters of guardianship. SEC. 3.Court to set time for hearing. Notice thereof. When a petition for the appointment of a general guardian is filed, the court shall fix a time and place for hearing the same, and shall cause reasonable notice thereof to be given to the persons mentioned in the petition residing in the province, including the minor if above 14 years of age or the incompetent himself, and may direct other general or special notice thereof to be given. SEC. 4.Opposition to petition. Any interested person may, by filing a written opposition, contest the petition on the ground of majority of the alleged minor, competency of the alleged incompetent, or the unsuitability of the person for whom letters are prayed, and may pray that the petition be dismissed, or that letters of guardianship issue to himself, or to any suitable person named in the opposition.

SEC. 5.Hearing and order for letters to issue. At the hearing of the petition the alleged incompetent must be present if able to attend, and it must be shown that the required notice has been given. Thereupon the court shall hear the evidence of the parties in support of their respective allegations, and, if the person in question is a minor or incompetent it shall appoint a suitable guardian of his person or estate, or both, with the powers and duties hereinafter specified. x xxx SEC. 8.Service of judgment. Final orders or judgments under this rule shall be served upon the civil registrar of the municipality or city where the minor or incompetent person resides or where his property or part thereof is situated. A petition for appointment of a guardian is a special proceeding, without the usual parties, i.e., petitioner versus respondent, in an ordinary civil case. Accordingly, SP. PROC. No. 146-86-C bears the title: In re: Guardianship of Nelly S. Nave for Incompetency, VerdastoGesmundo y Banayo, petitioner, with no named respondent/s. Sections 2 and 3 of Rule 93 of the Rules of Court, though, require that the petition contain the names, ages, and residences of relatives of the supposed minor or incompetent and those having him in their care, so that those residing within the same province as the minor or incompetent can be notified of the time and place of the hearing on the petition. The objectives of an RTC hearing a petition for appointment of a guardian under Rule 93 of the Rules of Court is to determine, first, whether a person is indeed a minor or an incompetent who has no capacity to care for himself and/or his properties; and, second, who is most qualified to be appointed as his guardian. The rules reasonably assume that the people who best could help the trial court settle such issues would be those who are closest to and most familiar with the supposed minor or incompetent, namely, his relatives living within the same province and/or the persons caring for him. It is significant to note that the rules do not necessitate that creditors of the minor or incompetent be likewise identified and notified. The reason is simple: because their presence is not essential to the proceedings for appointment of a guardian. It is almost a given, and understandably so, that they will only insist that the supposed minor or incompetent is actually capacitated to enter into contracts, so as to preserve the validity of said contracts and keep the supposed minor or incompetent obligated to comply therewith. Hence, it cannot be presumed that the Pabale siblings were given notice and actually took part in SP. PROC. No. 146-86-C. They are not Naves relatives, nor are they the ones caring for her. Although the rules allow the RTC to direct the giving of other general or special notices of the hearings on the petition for appointment of a guardian, it was not established that the RTC actually did so in SP. PROC. No. 146-86-C. Alamayris allegation that the Pabale siblings participated in SP. PROC. No. 146-86-C rests on two Orders, dated 30 October 198715 and 19 November 1987,16 issued by the RTC in SP. PROC.

No. 146-86-C, expressly mentioning the presence of a Jose Pabale, who was supposedly the father of the Pabale siblings, during the hearings held on the same dates. However, the said Orders by themselves cannot confirm that Jose Pabale was indeed the father of the Pabale siblings and that he was authorized by his children to appear in the said hearings on their behalf. Alamayri decries that she was not allowed by the Court of Appeals to submit and mark additional evidence to prove that Jose Pabale was the father of the Pabale siblings. It is true that the Court of Appeals has the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. In general, however, the Court of Appeals conducts hearings and receives evidence prior to the submission of the case for judgment.17 It must be pointed out that, in this case, Alamayri filed her Motion to Schedule Hearing to Mark Exhibits in Evidence on 21 November 2001. She thus sought to submit additional evidence as to the identity of Jose Pabale, not only after CA-G.R. CV No. 58133 had been submitted for judgment, but after the Court of Appeals had already promulgated its Decision in said case on 10 April 2001. The parties must diligently and conscientiously present all arguments and available evidences in support of their respective positions to the court before the case is deemed submitted for judgment. Only under exceptional circumstances may the court receive new evidence after having rendered judgment;18 otherwise, its judgment may never attain finality since the parties may continually refute the findings therein with further evidence. Alamayri failed to provide any explanation why she did not present her evidence earlier. Merely invoking that the ends of justice would have been best served if she was allowed to present additional evidence is not sufficient to justify deviation from the general rules of procedure. Obedience to the requirements of procedural rules is needed if the parties are to expect fair results therefrom, and utter disregard of the rules cannot justly be rationalized by harking on the policy of liberal construction.19 Procedural rules are tools designed to facilitate the adjudication of cases. Courts and litigants alike are thus enjoined to abide strictly by the rules. And while the Court, in some instances, allows a relaxation in the application of the rules, this, we stress, was never intended to forge a bastion for erring litigants to violate the rules with impunity. The liberality in the interpretation and application of the rules applies only to proper cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.20 Moreover, contrary to Alamayris assertion, the Court of Appeals did not deny her Motion to Schedule Hearing to Mark Exhibits in Evidence merely for being late. In its Resolution, dated 19 December 2001, the Court of Appeals also denied the said motion on the following grounds: While it is now alleged, for the first time, that the [herein respondents Pabale siblings] participated in the guardianship proceedings considering that the Jose Pabale mentioned therein is their late father, [herein petitioner Alamayri] submitting herein documentary evidence to prove their filiation, even though admitted in evidence at this late stage, cannot bind [the Pabale siblings] as verily, notice to their father is not notice to them

there being no allegation to the effect that he represented them before the Calamba Court.21 As the appellate court reasoned, even if the evidence Alamayri wanted to submit do prove that the Jose Pabale who attended the RTC hearings on 30 October 1987 and 19 November 1987 in SP. PROC. No. 146-86-C was the father of the Pabale siblings, they would still not confirm his authority to represent his children in the said proceedings. Worth stressing is the fact that Jose Pabale was not at all a party to the Deed of Sale dated 20 February 1984 over the subject property, which was executed by Nave in favor of the Pabale siblings. Without proper authority, Jose Pabales presence at the hearings in SP. PROC. No. 146-86-C should not bind his children to the outcome of said proceedings or affect their right to the subject property. Since it was not established that the Pabale siblings participated in SP. PROC. No. 146-86-C, then any finding therein should not bind them in Civil Case No. 675-84-C. No identity of issues Neither is there identity of issues between SP. PROC. No. 146-86-C and Civil Case No. 675-84C that may bar the latter, by conclusiveness of judgment, from ruling on Naves competency in 1984, when she executed the Deed of Sale over the subject property in favor the Pabale siblings. In SP. PROC. No. 146-86-C, the main issue was whether Nave was incompetent at the time of filing of the petition with the RTC in 1986, thus, requiring the appointment of a guardian over her person and estate. In the cross-claim of Nave and Atty. Gesmundo against the Pabale siblings in Civil Case No. 675-84-C, the issue was whether Nave was an incompetent when she executed a Deed of Sale of the subject property in favor of the Pabale siblings on 20 February 1984, hence, rendering the said sale void. While both cases involve a determination of Naves incompetency, it must be established at two separate times, one in 1984 and the other in 1986. A finding that she was incompetent in 1986 does not automatically mean that she was so in 1984. In Carillo v. Jaojoco,22 the Court ruled that despite the fact that the seller was declared mentally incapacitated by the trial court only nine days after the execution of the contract of sale, it does not prove that she was so when she executed the contract. Hence, the significance of the two-year gap herein cannot be gainsaid since Naves mental condition in 1986 may vastly differ from that of 1984 given the intervening period. Capacity to act is supposed to attach to a person who has not previously been declared incapable, and such capacity is presumed to continue so long as the contrary be not proved; that is, that at the moment of his acting he was incapable, crazy, insane, or out of his mind.23 The burden of proving incapacity to enter into contractual relations rests upon the person who alleges it; if no sufficient proof to this effect is presented, capacity will be presumed.24

Nave was examined and diagnosed by doctors to be mentally incapacitated only in 1986, when the RTC started hearing SP. PROC. No. 146-86-C; and she was not judicially declared an incompetent until 22 June 1988 when a Decision in said case was rendered by the RTC, resulting in the appointment of Atty. Leonardo C. Paner as her guardian. Thus, prior to 1986, Nave is still presumed to be capacitated and competent to enter into contracts such as the Deed of Sale over the subject property, which she executed in favor of the Pabale siblings on 20 February 1984. The burden of proving otherwise falls upon Alamayri, which she dismally failed to do, having relied entirely on the 22 June 1988 Decision of the RTC in SP. PROC. No. 146-86-C. Alamayri capitalizes on the declaration of the RTC in its Decision dated 22 June 1988 in SP. PROC. No. 146-86-C on Naves condition "having become severe since the year 1980."25But there is no basis for such a declaration. The medical reports extensively quoted in said Decision, prepared by: (1) Dr. Nona Jean Alviso-Ramos, dated 14 April 1986,26 and (2) by Dr. Eduardo T. Maaba, dated 20 April 1987,27 both stated that upon their examination, Nave was suffering from "organic brain syndrome secondary to cerebral arteriosclerosis with psychotic episodes," which impaired her judgment. There was nothing in the said medical reports, however, which may shed light on when Nave began to suffer from said mental condition. All they said was that it existed at the time Nave was examined in 1986, and again in 1987. Even the RTC judge was only able to observe Nave, which made him realize that her mind was very impressionable and capable of being manipulated, on the occasions when Nave visited the court from 1987 to 1988. Hence, for this Court, the RTC Decision dated 22 June 1988 in SP. PROC. No. 146-86-C may be conclusive as to Naves incompetency from 1986 onwards, but not as to her incompetency in 1984. And other than invoking the 22 June 1988 Decision of the RTC in SP. PROC. No. 146-86-C, Alamayri did not bother to establish with her own evidence that Nave was mentally incapacitated when she executed the 20 February 1984 Deed of Sale over the subject property in favor of the Pabale siblings, so as to render the said deed void. All told, there being no identity of parties and issues between SP. PROC. No. 146-86-C and Civil Case No. 675-84-C, the 22 June 1988 Decision in the former on Naves incompetency by the year 1986 should not bar, by conclusiveness of judgment, a finding in the latter case that Nave still had capacity and was competent when she executed on 20 February 1984 the Deed of Sale over the subject property in favor of the Pabale siblings. Therefore, the Court of Appeals did not commit any error when it upheld the validity of the 20 February 1984 Deed of Sale. WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. The Decision, dated 10 April 2001, of the Court of Appeals in CA-G.R. CV No. 58133, is hereby AFFIRMED in toto. Costs against the petitioner Lolita R. Alamayri.

4. G.R. No. L-3071

May 29, 1950

SALVACION LOPEZ, petitioner, vs. JOSE TEODORO, Sr., Judge of the Court of First Instance of Occidental Negros, EULALIO LOPEZ, Jr., and JESUS JALBUENA, respondents. Januario L. Jison, Jose O. Hizon and Jose T. Jamandre for petitioner. Lakandola G. Lopez for respondents Teodoro, Sr. and Lopez, Jr. Antonio T. Lozada for respondent Jalbuena. TUASON, J.: Eulalio Lopez, Sr., an incapacitated under the judicial guardianship of Eulalio Lopez, Jr., was the exclusive and absolute owner of anhacienda in Silay, Negros Occidental, having a total area of over 100 hectares. On September 3, 1948, the Court of First Instance, acting upon a motion of Senen L. Gamboa and AdelaidaGamboa filed in the proceedings for guardianship, ordered the guardian to pay the movants P7,312 plus 12 per cent interest from August, 1944, amount which represented loans properly authorized by court. The order provided that if the guardian did not have funds to pay those debts, he should take the necessary steps for the sale of some of the property of the guardianship. In pursuance of this authority, the guardian sold the above tract of land, the only property of which the incapacitated was possessed, on January 11, 1949, to Jesus bound himself to pay the mortgage debt and other obligations aggregating P22,346.30, and to satisfy the balance in two installments. It is admitted that in authorizing the sale of some of the property of the incapacitated, the court did not follow the requirement of section 2 of Rule 96 to the effect that the court shall direct the next of kin of the ward, and all persons interested in the estate, to appear at a reasonable time and place to be specified in the order, to show cause why the prayer for the sale should not be granted. Nor did the court specify, as provided by section 4 of the same Rule, whether the sale should be effected publicly or privately. Although Eulalio Lopez, Jr. was the judicial guardian, the incapacitated was and is under the actual care and custody of his sister, Salvacion Lopez. Believing that the sale was prejudicial to her brother's interest, Salvacion Lopez filed a motion for reconsideration of the court's order authorizing said sale, and upon the motion being denied, she brought this petition for certiorari and mandamus, contending that the sale was null and void by reason of the court's failure to adhere to Rule 96, and praying that the orders of the respondent court be corrected and the said court directed to revoke the sale. The judicial guardian, Eulalio Lopez, Jr., and the vendee, Jesus Jalbuena, have filed separate answer and raised several defenses. These are, first, that the petitioner's remedy, if she has any, is by appeal and not certiorari and/or mandamus; second, that the petitioner has no interest whatsoever in the subject matter of her petition; third, that whether the sale is prejudicial or not is a proper ground for a separate action and not certiorari or mandamus; fourth, that the sale was not made in contravention of existing laws; and fifth, that the court, as probate court, has lost

jurisdiction over the property sold because the land is now registered in the name of the purchaser to whom a new transfer certificate of title has been duly issued. Without deciding the legality or illegality of the sale, or whether this matter should be ventillated in an ordinary action instead of in a proceeding for certiorari, it is evident that appeal and not certiorari or mandamus is the proper remedy. Unquestionably, the court of first instance in which the guardianship proceedings were pending had jurisdiction to order the questioned sale. The court's jurisdiction is not disputed. Nor was there an abuse of discretion, judging from the averments in the answers. It appears that the outstanding indebtedness of the guardianship properly and legally incurred amounted to P36,833.66, part of which was due the petitioner for the support and maintenance of the incapacitated. The other defense that does not leave much room for discussion is that the petitioner has no legal interest in her complaint. The incapacitated has children, all of age, one of whom is the judicial guardian, while the petitioner is only the ward's sister. Not being Eulalio Lopez's forced heir, she was not prejudiced by the sale she seeks to impugn. It is true that she was a creditor but she does not claim any right to be notified of the sale as such creditor, and her credit was not impaired. On the contrary, she was benefited by the sale in that she was paid what was due her from its proceeds. As to the other creditors, they did not appear to have any objection to the action taken by the judicial guardian and authorized by the court. The petitioner insist that she is next of kin. She is in error. "Next of kin" within the meaning of Rule 96 are relatives whose relationship is such that they are entitled to share in the estate as distributees. (33 C.J., 930-931.) "Next of kin" is also defined in Black's Law Dictionary, 3rd ed., as to mean not the next of kindred but those relatives who share in the estate according to the statute of distribution including those claiming per stripes or by representation. None of the children of the incapacitated is or was opposed to the sale sought to be set aside. Only these had an interest in the land of their father, besides the creditors, and only they or the creditors who may have been prejudiced by the sale have a right to object thereto. Having reached these conclusions, it is unnecessary for us to discuss the other questions raised. The petition is denied, without costs. Ozaeta, Pablo, Bengzon, Montemayor, and Reyes, JJ., concur.

5. singco 51 Phil 587

6. [G.R. No. 154994. June 28, 2005]

JOYCELYN PABLO-GUALBERTO, petitioner, vs. CRISANTO RAFAELITO GUALBERTO V, respondent. [G.R. No. 156254. June 28, 2005] CRISANTO RAFAELITO G. GUALBERTO V, petitioner, vs. COURT OF APPEALS; Hon. HELEN B. RICAFORT, Presiding Judge, Regional Trial Court Paraaque City, Branch 260; and JOYCELYN D. PABLO-GUALBERTO, respondents. DECISION PANGANIBAN, J.: When love is lost between spouses and the marriage inevitably results in separation, the bitterest tussle is often over the custody of their children. The Court is now tasked to settle the opposing claims of the parents for custody pendente lite of their child who is less than seven years of age. There being no sufficient proof of any compelling reason to separate the minor from his mother, custody should remain with her. The Case Before us are two consolidated petitions. The first is a Petition for Review[1] filed by Joycelyn Pablo-Gualberto under Rule 45 of the Rules of Court, assailing the August 30, 2002 Decision[2] of the Court of Appeals (CA) in CA-GR SP No. 70878. The assailed Decision disposed as follows: WHEREFORE, premises considered, the Petition for Certiorari is hereby GRANTED. The assailed Order of May 17, 2002 is hereby SET ASIDE and ANNULLED. The custody of the child is hereby ordered returned to [CrisantoRafaelito G. Gualberto V]. The [respondent] court/Judge is hereby directed to consider, hear and resolve [petitioners] motion to lift the award of custody pendente liteof the child to [respondent].[3] The second is a Petition for Certiorari[4] filed by CrisantoRafaelitoGualberto V under Rule 65 of the Rules of Court, charging the appellate court with grave abuse of discretion for denying his Motion for Partial Reconsideration of the August 30, 2002 Decision. The denial was contained in the CAs November 27, 2002 Resolution, which we quote: We could not find any cogent reason why the [last part of the dispositive portion of our Decision of August 30, 2002] should be deleted, hence, subject motion is hereby DENIED.[5] The Facts The CA narrated the antecedents as follows:

x xx [O]n March 12, 2002, [CrisantoRafaelito G. Gualberto V] filed before [the Regional Trial Court of Paraaque City] a petition for declaration of nullity of his marriage to x xxJoycelyn D. Pablo Gualberto, with an ancillary prayer for custody pendente lite of their almost 4-year-old son, minor Rafaello (the child, for brevity), whom [Joycelyn] allegedly took away with her from the conjugal home and his school (Infant Toddlers Discovery Center in Paraaque City) when [she] decided to abandon [Crisanto] sometime in early February 2002[.] x xx [O]n April 2, 2002, [RTC Judge Helen B. Ricafort] heard the ancillary prayer of [Crisanto] for custody pendente lite. x xx [B]ecause [Joycelyn] allegedly failed to appear despite notice, [Crisanto], a certain Col. Renato Santos, and Ms. Cherry Batistel, testified before the x xx Judge; x xx documentary evidence [was] also presented[.] x xx [O]n April 3, 2002, x xx [the] Judge awarded custody pendente lite of the child to [Crisanto.] [T]he Order partly read x x x: x xxCrisantoRafaelitoGualberto V testified. He stated that [Joycelyn] took their minor child with her to Caminawit, San Jose, Occidental Mindoro. At that time, the minor was enrolled at B.F. Homes, Paraaque City. Despite effort[s] exerted by him, he has failed to see his child. [Joycelyn] and the child are at present staying with the formers step-father at the latters [residence] at Caminawit, San Jose, Occidental Mindoro. Renato Santos, President of United Security Logistic testified that he was commissioned by [Crisanto] to conduct surveillance on [Joycelyn] and came up with the conclusion that [she] is having lesbian relations with one Noreen Gay Cuidadano in Cebu City. The findings of Renato Santos [were] corroborated by Cherry Batistel, a house helper of the spouses who stated that [the mother] does not care for the child as she very often goes out of the house and on one occasion, she saw [Joycelyn] slapping the child. Art. 211 of the Family Code provides as follows: The father and the mother shall jointly exercise parental authority over the persons of their children. In the case of disagreement, the fathers decision shall prevail, unless there is a judicial order to the contrary. The authority of the father and mother over their children is exercised jointly. This recognition, however, does not place her in exactly the same place as the father; her authority is subordinated to that of the father. In all controversies regarding the custody of minors, the sole and foremost consideration is the physical, educational, social and moral welfare of the child, taking into account the respective resources and social and moral situations of the contending parties. The Court believes that [Joycelyn] had no reason to take the child with her. Moreover, per Sheriff returns, she is not with him at Caminawit, San Jose, Occidental Mindoro. WHEREFORE, pendente lite, the Court hereby awards custody of the minor, CrisantoRafaello P. Gualberto X to his father, CrisantoRafaelito G. Gualberto V.

x xx [O]n April 16, 2002, the hearing of [Joycelyns] motion to lift the award of custody pendente lite of the child to [Crisanto] was set but the former did not allegedly present any evidence to support her motion. However, on May 17, 2002, [the] Judge allegedly issued the assailed Order reversing her Order of April 3, 2002 and this time awarding custody of the child to [Joycelyn]. [T]he entire text of the Order [is] herein reproduced, to wit: Submitted is [Crisantos] Motion to Resolve Prayer for Custody Pendente Lite and [Joycelyns] Motion to Dismiss and the respective Oppositions thereto. [Joycelyn], in her Motion to Dismiss, makes issue of the fact that the person referred to in the caption of the Petition is one JOCELYN Pablo Gualberto and not Joycelyn Pablo Gualberto. [Joycelyn] knows she is the person referred to in the Complaint. As a matter of fact, the body of the Complaint states her name correct[ly]. The law is intended to facilitate and promote the administration of justice, not to hinder or delay it. Litigation should be practicable and convenient. The error in the name of Joycelyn does not involve public policy and has not prejudiced [her]. This case was filed on March 12, 2002. Several attempts were made to serve summons on [Joycelyn] as shown by the Sheriffs returns. It appears that on the 4th attempt on March 21, 2002, both Ma. Daisy and x xx Ronnie Nolasco, [Joycelyns mother and stepfather, respectively,] read the contents of the documents presented after which they returned the same. The Court believes that on that day, summons was duly served and this Court acquired jurisdiction over [Joycelyn]. The filing of [Joycelyns annulment] case on March 26, 2002 was an after thought, perforce the Motion to [D]ismiss should be denied. The child subject of this Petition, CrisantoRafaello P. Gualberto is barely four years old. Under Article 213 of the Family Code, he shall not be separated from his mother unless the Court finds compelling reasons to order otherwise. The Court finds the reason stated by [Crisanto] not [to] be compelling reasons. The father should however be entitled to spend time with the minor. These do not appear compelling reasons to deprive him of the company of his child. When [Joycelyn] appeared before this Court, she stated that she has no objection to the father visiting the child even everyday provided it is in Mindoro. The Court hereby grants the mother, [Joycelyn], the custody of CrisantoRafaello P. Gualberto, with [the] right of [Crisanto] to have the child with him every other weekend. WHEREFORE: 1. The [M]otion to Dismiss is hereby DENIED;

2.

Custody pendente lite is hereby given to the mother Joycelyn Pablo Gualberto with the right of the father, x xx [Crisanto], to have him every other week-end. Parties are admonished not to use any other agencies of the government like the CIDG to interfere in this case and to harass the parties.[6]

3.

In a Petition for Certiorari[7] before the CA, Crisanto charged the Regional Trial Court (Branch 260) of Paraaque City with grave abuse of discretion for issuing its aforequoted May 17, 2002 Order. He alleged that this Order superseded, without any factual or legal basis, the still valid and subsisting April 3, 2002 Order awarding him custody pendente lite of his minor son; and that it violated Section 14 of Article VII of the 1987 Constitution. Ruling of the Court of Appeals Partly in Crisantos favor, the CA ruled that grave abuse of discretion had been committed by the trial court in reversing the latter courts previous Order dated April 3, 2002, by issuing the assailed May 17, 2002 Order. The appellate court explained that the only incident to resolve was Joycelyns Motion to Dismiss, not the issuance of the earlier Order. According to the CA, the prior Order awarding provisional custody to the father should prevail, not only because it was issued after a hearing, but also because the trial court did not resolve the correct incident in the later Order. Nonetheless, the CA stressed that the trial court judge was not precluded from considering and resolving Joycelyns Motion to lift the award of custody pendente lite to Crisanto, as that Motion had yet to be properly considered and ruled upon. However, it directed that the child be turned over to him until the issue was resolved. Hence, these Petitions.[8] Issues In GR No. 154994, Petitioner Joycelyn submits these issues for our consideration: 1. Whether or not the Respondent Court of Appeals, when it awarded the custody of the child to the father, violated Art.213 of the Family Code, which mandates that no child under seven years of age shall be separated from the mother, unless the court finds compelling reasons to order otherwise. 2. Is it Article 213 or Article 211 which applies in this case involving four-year old Rafaello?[9] On the other hand, Crisanto raises the following issues: A. Did Respondent Court commit grave abuse of discretion amounting to or in excess of jurisdiction when, in its August 30, 2002 Decision, it ordered respondent court/Judge to

consider, hear and resolve the motion to lift award of custody pendente lite of the child to petitioner and x xx denied the motion for reconsideration thereof in its November 27, 2002 Resolution, considering that: (1) there is no such motion ever, then or now pending, with the court a quo; (2) the November 27, 2002 Resolution is unconstitutional; and (3) the April 3, 2002 Order of respondent Judge, the validity of which has been upheld in the August 30, 2002 Decision of the respondent Court, has become final and executory; and B. Ought not the ancillary remedies [o]f habeas corpus, because the whereabouts, physical and mental condition of the illegally detained Minor Rafaello is now unknown to petitioner and preliminary mandatory injunction with urgent prayer for immediate issuance of preliminary [injunction], petitioner having a clear and settled right to custody of Minor Rafaello which has been violated and still is being continuously violated by [petitioner Joycelyn], be granted by this Honorable Court?[10] Being interrelated, the procedural challenges and the substantive issues in the two Petitions will be addressed jointly. The Courts Ruling There is merit in the Petition in GR No. 154994, but not in GR No. 156254. Preliminary Issue: The Alleged Prematurity of the Petition in GR No. 154994 Before going into the merits of the present controversy, the Court shall first dispose of a threshold issue. In GR No. 154994, therein Respondent Crisanto contends that the Petition for Review was filed beyond the deadline (October 24, 2002) allowed by the Rules of Court and by this Court. He claims that Registry Bill No. 88 shows that the Petition was sent by speed mail, only on November 4, 2002. Furthermore, he assails the Petition for its prematurity, since his Motion for Partial Reconsideration of the August 30, 2002 CA Decision was still pending before the appellate court. Thus, he argues that the Supreme Court has no jurisdiction over Joycelyns Petition. Timeliness of the Petition The manner of filing and service Joycelyns Petition by mail is governed by Sections 3 and 7 of Rule 13 of the Rules of Court, which we quote: SEC. 3. Manner of filing. The filing of pleadings, appearances, motions, notices, orders, judgments and all other papers shall be made by presenting the original copies thereof, plainly indicated as such personally to the clerk of court or by sending them by registered mail. xxx In the second case, the date of mailing of motions, pleadings and other papers or payments or deposits, as shown by the post office stamp on the envelope or the registry receipt, shall be considered as the date of their filing, payment, or deposit in court. The envelope shall be attached to the records of the case.

x xx

xxx

xxx

SEC. 7. Service by mail. Service by registered mail shall be made by depositing the copy in the office, in a sealed envelope, plainly addressed to the party or his counsel at his office, if known, otherwise at his residence, if known, with postage fully pre-paid, and with instructions to the postmaster to return the mail to the sender after ten (10) days if undelivered. If no registry service is available in the locality of either the sender of the addressee, service may be done by ordinary mail. (Italics supplied) The records disclose that Joycelyn received the CAs August 30, 2002 Decision on September 9, 2002. On September 17, she filed before this Court a Motion for a 30-day extension of time to file a petition for review on certiorari. This Motion was granted,[11] and the deadline was thus extended until October 24, 2002. A further perusal of the records reveals that copies of the Petition were sent to this Court and to the parties by registered mail[12] at the Bian, Laguna Post Office on October 24, 2002. This is the date clearly stamped on the face of the envelope[13] and attested to in the Affidavit of Service[14] accompanying the Petition. Petitioner Joycelyn explained that the filing and the service had been made by registered mail due to the volume of delivery assignments and the lack of a regular messenger.[15] The Petition is, therefore, considered to have been filed on October 24, 2002, its mailing date as shown by the post office stamp on the envelope. The last sentence of Section 3 of Rule 13 of the Rules provides that the date of filing may be shown either by the post office stamp on the envelope or by the registry receipt. Proof of its filing, on the other hand, is shown by the existence of the petition in the record, pursuant to Section 12 of Rule 13.[16] The postmaster satisfactorily clarifies that Registry Bill No. 88, which shows the date November 2, 2002, merely discloses when the mail matters received by the Bian Post Office on October 24, 2002, were dispatched or sent to the Central Mail Exchange for distribution to their final destinations.[17] The Registry Bill does not reflect the actual mailing date. Instead, it is the postal Registration Book[18] that shows the list of mail matters that have been registered for mailing on a particular day, along with the names of the senders and the addressees. That book shows that Registry Receipt Nos. 2832-A and 2832-B, pertaining to the mailed matters for the Supreme Court, were issued on October 24, 2002. Prematurity of the Petition As to the alleged prematurity of the Petition of Joycelyn, Crisanto points out that his Urgent Motion for Partial Reconsideration[19] was still awaiting resolution by the CA when she filed her Petition before this Court on October 24, 2002. The CA ruled on the Motion only on November 27, 2002. The records show, however, that the Motion of Crisanto was mailed only on September 12, 2002. Thus, on September 17, 2002, when Joycelyn filed her Motion for Extension of Time to file her Petition for Review, she might have still been unaware that he had moved for a partial

reconsideration of the August 20, 2002 CA Decision. Nevertheless, upon being notified of the filing of his Motion, she should have manifested that fact to this Court. With the CAs final denial of Crisantos Motion for Reconsideration, Joycelyns lapse may be excused in the interest of resolving the substantive issues raised by the parties. First Issue: Grave Abuse of Discretion In GR No. 156254, Crisanto submits that the CA gravely abused its discretion when it ordered the trial court judge to consider, hear and resolve the motion to lift the award of custody pendente lite without any proper motion by Joycelyn and after the April 3, 2002 Order of the trial court had become final and executory. The CA is also charged with grave abuse of discretion for denying his Motion for Partial Reconsideration without stating the reasons for the denial, allegedly in contravention of Section 1 of Rule 36 of the Rules of Court. The Order to Hear the Motion to Lift the Award of Custody Pendente Lite Proper To begin with, grave abuse of discretion is committed when an act is 1) done contrary to the Constitution, the law or jurisprudence;[20] or 2) executed whimsically or arbitrarily in a manner so patent and so gross as to amount to an evasion of a positive duty, or to a virtual refusal to perform the duty enjoined.[21] What constitutes grave abuse of discretion is such capricious and arbitrary exercise of judgment as that which is equivalent, in the eyes of the law, to lack of jurisdiction.[22] On the basis of these criteria, we hold that the CA did not commit grave abuse of discretion. First, there can be no question that a court of competent jurisdiction is vested with the authority to resolve even unassigned issues. It can do so when such a step is indispensable or necessary to a just resolution of issues raised in a particular pleading or when the unassigned issues are inextricably linked or germane to those that have been pleaded.[23] This truism applies with more force when the relief granted has been specifically prayed for, as in this case. Explicit in the Motion to Dismiss[24] filed by Joycelyn before the RTC is her ancillary prayer for the court to lift and set aside its April 3, 2002 Order awarding to Crisanto custody pendente lite of their minor son. Indeed, the necessary consequence of granting her Motion to Dismiss would have been the setting aside of the Order awarding Crisanto provisional custody of the child. Besides, even if the Motion to Dismiss was denied -- as indeed it was -- the trial court, in its discretion and if warranted, could still have granted the ancillary prayer as an alternative relief. Parenthetically, Joycelyns Motion need not have been verified because of the provisional nature of the April 3, 2002 Order. Under Rule 38[25] of the Rules of Court, verification is required only when relief is sought from a final and executory Order. Accordingly, the court may set aside its

own orders even without a proper motion, whenever such action is warranted by the Rules and to prevent a miscarriage of justice.[26] Denial of the Motion for Reconsideration Proper Second, the requirement in Section 1 of Rule 36 (for judges to state clearly and distinctly the reasons for their dispositions) refers only to decisions and final orders on the merits, not to those resolving incidental matters.[27] The provision reads: SECTION 1. Rendition of judgments and final orders. A judgment or final order determining the merits of the case shall be in writing personally and directly prepared by the judge, stating clearly and distinctly the facts and the law on which it is based, signed by him, and filed with the clerk of court. (Italics supplied) Here, the declaration of the nullity of marriage is the subject of the main case, in which the issue of custody pendente lite is an incident. That custody and support of common children may be ruled upon by the court while the action is pending is provided in Article 49 of the Family Code, which we quote : Art. 49. During the pendency of the action[28] and in the absence of adequate provisions in a written agreement between the spouses, the Court shall provide for the support of the spouses and the custody and support of their common children. x xx. Clearly then, the requirement cited by Crisanto is inapplicable. In any event, in its questioned Resolution, the CA clearly stated that it could not find any cogent reason to reconsider and set aside the assailed portion of its August 30, 2002 Decision. The April 3, 2002 Order Not Final and Executory Third, the award of temporary custody, as the term implies, is provisional and subject to change as circumstances may warrant. In this connection, there is no need for a lengthy discussion of the alleged finality of the April 3, 2002 RTC Order granting Crisanto temporary custody of his son. For that matter, even the award of child custody after a judgment on a marriage annulment is not permanent; it may be reexamined and adjusted if and when the parent who was given custody becomes unfit.[29] Second Issue: Custody of a Minor Child When love is lost between spouses and the marriage inevitably results in separation, the bitterest tussle is often over the custody of their children. The Court is now tasked to settle the opposing claims of the parents for custody pendente lite of their child who is less than seven years old.[30] On the one hand, the mother insists that, based on Article 213 of the Family Code, her minor

child cannot be separated from her. On the other hand, the father argues that she is unfit to take care of their son; hence, for compelling reasons, he must be awarded custody of the child. Article 213 of the Family Code[31] provides: ART. 213. In case of separation of the parents, parental authority shall be exercised by the parent designated by the court. The court shall take into account all relevant considerations, especially the choice of the child over seven years of age, unless the parent chosen is unfit. No child under seven years of age shall be separated from the mother, unless the court finds compelling reasons to order otherwise. This Court has held that when the parents are separated, legally or otherwise, the foregoing provision governs the custody of their child.[32] Article 213 takes its bearing from Article 363 of the Civil Code, which reads: Art. 363. In all questions on the care, custody, education and property of children, the latters welfare shall be paramount. No mother shall be separated from her child under seven years of age, unless the court finds compelling reasons for such measure.(Italics supplied) The general rule that children under seven years of age shall not be separated from their mother finds its raison detre in the basic need of minor children for their mothers loving care.[33] In explaining the rationale for Article 363 of the Civil Code, the Code Commission stressed thus: The general rule is recommended in order to avoid a tragedy where a mother has seen her baby torn away from her. No man can sound the deep sorrows of a mother who is deprived of her child of tender age. The exception allowed by the rule has to be for compelling reasons for the good of the child: those cases must indeed be rare, if the mothers heart is not to be unduly hurt. If she has erred, as in cases of adultery, the penalty of imprisonment and the (relative) divorce decree will ordinarily be sufficient punishment for her. Moreover, her moral dereliction will not have any effect upon the baby who is as yet unable to understand the situation. (Report of the Code Commission, p. 12) A similar provision is embodied in Article 8 of the Child and Youth Welfare Code (Presidential Decree No. 603).[34] Article 17 of the same Code is even more explicit in providing for the childs custody under various circumstances, specifically in case the parents are separated. It clearly mandates that no child under five years of age shall be separated from his mother, unless the court finds compelling reasons to do so. The provision is reproduced in its entirety as follows: Art. 17. Joint Parental Authority. The father and the mother shall exercise jointly just and reasonable parental authority and responsibility over their legitimate or adopted children. In case of disagreement, the fathers decision shall prevail unless there is a judicial order to the contrary.

In case of the absence or death of either parent, the present or surviving parent shall continue to exercise parental authority over such children, unless in case of the surviving parents remarriage, the court for justifiable reasons, appoints another person as guardian. In case of separation of his parents, no child under five years of age shall be separated from his mother, unless the court finds compelling reasons to do so. (Italics supplied) The above mandates reverberate in Articles 211, 212 and 213 of the Family Code. It is unmistakable from the language of these provisions that Article 211[35] was derived from the first sentence of the aforequoted Article 17; Article 212,[36] from the second sentence; and Article 213,[37] save for a few additions, from the third sentence. It should be noted that the Family Code has reverted to the Civil Code provision mandating that a child below seven years should not be separated from the mother.[38] Mandatory Character of Article 213 of the Family Code In Lacson v. San Jose-Lacson,[39] the Court held that the use of shall in Article 363 of the Civil Code and the observations made by the Code Commission underscore the mandatory character of the word.[40] Holding in that case that it was a mistake to deprive the mother of custody of her two children, both then below the age of seven, the Court stressed: [Article 363] prohibits in no uncertain terms the separation of a mother and her child below seven years, unless such a separation is grounded upon compelling reasons as determined by a court.[41] In like manner, the word shall in Article 213 of the Family Code and Section 6[42] of Rule 99 of the Rules of Court has been held to connote a mandatory character.[43] Article 213 and Rule 99 similarly contemplate a situation in which the parents of the minor are married to each other, but are separated by virtue of either a decree of legal separation or a de facto separation.[44] In the present case, the parents are living separately as a matter of fact. The Best Interest of the Child a Primary Consideration The Convention on the Rights of the Child provides that [i]n all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.[45] The principle of best interest of the child pervades Philippine cases involving adoption, guardianship, support, personal status, minors in conflict with the law, and child custody. In these cases, it has long been recognized that in choosing the parent to whom custody is given, the welfare of the minors should always be the paramount consideration.[46] Courts are mandated to take into account all relevant circumstances that would have a bearing on the childrens wellbeing and development. Aside from the material resources and the moral and social situations of

each parent, other factors may also be considered to ascertain which one has the capability to attend to the physical, educational, social and moral welfare of the children.[47] Among these factors are the previous care and devotion shown by each of the parents; their religious background, moral uprightness, home environment and time availability; as well as the childrens emotional and educational needs Tender-Age Presumption As pointed out earlier, there is express statutory recognition that, as a general rule, a mother is to be preferred in awarding custody of children under the age of seven. The caveat in Article 213 of the Family Code cannot be ignored, except when the court finds cause to order otherwise.[48] The so-called tender-age presumption under Article 213 of the Family Code may be overcome only by compelling evidence of the mothers unfitness. The mother has been declared unsuitable to have custody of her children in one or more of the following instances: neglect, abandonment, unemployment, immorality, habitual drunkenness, drug addiction, maltreatment of the child, insanity or affliction with a communicable disease.[49] Here, Crisanto cites immorality due to alleged lesbian relations as the compelling reason to deprive Joycelyn of custody. It has indeed been held that under certain circumstances, the mothers immoral conduct may constitute a compelling reason to deprive her of custody.[50] But sexual preference or moral laxity alone does not prove parental neglect or incompetence. Not even the fact that a mother is a prostitute or has been unfaithful to her husband would render her unfit to have custody of her minor child.[51] To deprive the wife of custody, the husband must clearly establish that her moral lapses have had an adverse effect on the welfare of the child or have distracted the offending spouse from exercising proper parental care.[52] To this effect did the Court rule in Unson III v. Navarro,[53] wherein the mother was openly living with her brother-in-law, the childs uncle. Under that circumstance, the Court deemed it in the nine-year-old childs best interest to free her from the obviously unwholesome, not to say immoral influence, that the situation in which the mother ha[d] placed herself might create in [the childs] moral and social outlook.[54] In Espiritu v. CA,[55] the Court took into account psychological and case study reports on the child, whose feelings of insecurity and anxiety had been traced to strong conflicts with the mother. To the psychologist the child revealed, among other things, that the latter was disturbed upon seeing her mother hugging and kissing a bad man who lived in their house and worked for her father. The Court held that the illicit or immoral activities of the mother had already caused the child emotional disturbances, personality conflicts, and exposure to conflicting moral values x xx. Based on the above jurisprudence, it is therefore not enough for Crisanto to show merely that Joycelyn was a lesbian. He must also demonstrate that she carried on her purported relationship with a person of the same sex in the presence of their son or under circumstances not conducive

to the childs proper moral development. Such a fact has not been shown here. There is no evidence that the son was exposed to the mothers alleged sexual proclivities or that his proper moral and psychological development suffered as a result. Moreover, it is worthy to note that the trial court judge, Helen Bautista-Ricafort, ruled in her May 17, 2002 Order that she had found the reason stated by [Crisanto] not to be compelling[56] as to suffice as a ground for separating the child from his mother. The judge made this conclusion after personally observing the two of them, both in the courtroom and in her chambers on April 16, 2002, and after a chance to talk to the boy and to observe him firsthand. This assessment, based on her unique opportunity to witness the childs behavior in the presence of each parent, should carry more weight than a mere reliance on the records. All told, no compelling reason has been adduced to wrench the child from the mothers custody. No Grant of Habeas Corpus and Preliminary Injunction As we have ruled that Joycelyn has the right to keep her minor son in her custody, the writ of habeas corpus and the preliminary mandatory injunction prayed for by Crisanto have no leg to stand on. A writ of habeas corpus may be issued only when the rightful custody of any person is withheld from the person entitled thereto,[57] a situation that does not apply here. On the other hand, the ancillary remedy of preliminary mandatory injunction cannot be granted, because Crisantos right to custody has not been proven to be clear and unmistakable.[58] Unlike an ordinary preliminary injunction, the writ of preliminary mandatory injunction is more cautiously regarded, since the latter requires the performance of a particular act that tends to go beyond the maintenance of the status quo.[59] Besides, such an injunction would serve no purpose, now that the case has been decided on its merits.[60] WHEREFORE, the Petition in GR No. 154994 is GRANTED. The assailed Decision of the Court of Appeals is hereby REVERSED and the May 17, 2002 Regional Trial Court Order REINSTATED. The Petition in GR No. 156254 is DISMISSED. Costs against Petitioner CrisantoRafaelitoGualberto V. SO ORDERED. Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.

7. G.R. No. 58010. March 31, 1993. EMILIA O'LACO and HUCO LUNA, petitioners, vs. VALENTIN CO CHO CHIT, O LAY KIA and COURT OF APPEALS, respondents.

Sergio L. Guadiz for petitioners. Norberto J .Quisumbing& Associates for private respondents. SYLLABUS 1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; CONDITION PRECEDENT TO FILING OF SUIT BETWEEN MEMBERS OF THE SAME FAMILY; EFFECT OF FAILURE TO COMPLY WITH CONDITION. Admittedly, the present action is between members of the same family since petitioner Emilia O'Laco and respondent O Lay Kia are half-sisters. Consequently, there should be an averment in the compliant that earnest efforts toward a compromise have been made, pursuant to Art. 222 of the New Civil Code, or a motion to dismiss could have been filed under Sec. 1, par. (j), Rule 16 of the Rules of Court. For, it is well-settled that the attempt to compromise as well as the inability to succeed is a condition precedent to the filing of a suit between members of the same family. Hence, the defect in the complaint is assailable at any stage of the proceedings, even on appeal, for lack of cause of action. 2. ID.; ID.; AMENDMENT TO COMPLAINT; WHEN PROPER; AMENDMENT TO CONFORM TO EVIDENCE. Plaintiff may be allowed to amend his complaint to correct the defect if the amendment does not actually confer jurisdiction on the court in which the action is filed, i.e., if the cause of action was originally within that court's jurisdiction. In such case, the amendment is only to cure the perceived defect in the complaint, thus may be allowed. In the case before Us, while respondent-spouses did not formally amend their complaint, they were nonetheless allowed to introduce evidence purporting to show that earnest efforts toward a compromise had been made, that is, respondent O Lay Kia importuned Emilia O'Laco and pressed her for the transfer of the title of the Oroquieta property in the name of spouses O Lay Kia and Valentin Co Cho Chit, just before Emilia's marriage to Hugo Luna. But, instead of transferring the title as requested, Emilia sold the property to the Roman Catholic Archbishop of Manila. This testimony was not objected to by petitioner-spouses. Hence, the complaint was deemed accordingly amended to conform to the evidence, pursuant to Sec. 5, Rule 10 of the Rules of Court which reads "Sec. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings . . ." Indeed, if the defendant permits evidence to be introduced without objection and which supplies the necessary allegations of a defective complaint, then the evidence is deemed to have the effect of curing the defects of the complaint. The insufficiency of the allegations in the complaint is deemed ipso facto rectified. 3. CIVIL LAW; OBLIGATIONS AND CONTRACTS; TRUSTS; EXPRESS TRUST; DEFINED; IMPLIED TRUST; DEFINED. By definition, trust relations between parties may either be express or implied. Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust. Implied trusts are those which, without being express, are deducible from the nature of the transaction as matters of intent, or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties.

4. ID.; ID.; ID.; IMPLIED TRUSTS; RESULTING TRUST; BASIS THEREOF; CONSTRUCTIVE TRUST; BASIS THEREOF. Implied trust may either be resulting or constructive trusts, both coming into being by operation of law. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. 5. ID.; ID.; ID.; EXPRESS TRUSTS CONCERNING IMMOVABLES NOT PROVED BY PAROL EVIDENCE; IMPLIED TRUST IN REAL PROPERTY ESTABLISHED BY PAROL EVIDENCE; PROOF REQUIRED; CASE AT BAR. Unlike express trusts concerning immovables or any interest therein which cannot be proved by parol evidence, implied trusts may be established by oral evidence. However, in order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to the trust obligation were proven by an authentic document. It cannot be established upon vague and inconclusive proof. After a thorough review of the evidence on record, We hold that a resulting trust was indeed intended by the parties under Art. 1448 of the New Civil Code which states "Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary . . ." As stipulated by the parties, the document of sale, the owner's duplicate copy of the certificate of title, insurance policies, receipt of initial premium of insurance coverage and real estate tax receipts were all in the possession of respondent-spouses which they offered in evidence. As emphatically asserted by respondent O Lay Kia, the reason why these documents of ownership remained with her is that the land in question belonged to her. Indeed, there can be no persuasive rationalization for the possession of these documents of ownership by respondent-spouses for seventeen (17) years after the Oroquieta property was purchased in 1943 than that of precluding its possible sale, alienation or conveyance by Emilia O'Laco, absent any machination or fraud. This continued possession of the documents, together with other corroborating evidence spread on record, strongly suggests that Emilia O'Laco merely held the Oroquieta property in trust for respondent-spouses. 6. ID.; ID.; ID.; CONSTRUCTIVE TRUST SUBJECT TO PRESCRIPTION; RESULTING TRUST IMPRESCRIPTIBLE; RESULTING TRUST CONVERTED TO CONSTRUCTIVE TRUST BY REPUDIATION; REQUISITES; PRESCRIPTIVE PERIOD FOR ACTION FOR RECONVEYANCE BASED ON CONSTRUCTIVE TRUST. As differentiated from constructive trusts, where the settled rule is that prescription may supervene, in resulting trust, the rule of imprescriptibility may apply for as long as the trustee has not repudiated the trust. Once the resulting trust is repudiated, however, it is converted into a constructive trust and is subject to prescription. A resulting trust is repudiated if the following requisites concur: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made known to the cestui qui trust; and, (c)

the evidence thereon is clear and convincing. In Tale v. Court of Appeals the Court categorically ruled that an action for reconveyance based on an implied or constructive trust must perforce prescribe in ten (10) years, and not otherwise, thereby modifying previous decisions holding that the prescriptive period was four (4) years. So long as the trustee recognizes the trust, the beneficiary may rely upon the recognition, and ordinarily will not be in fault for omitting to bring an action to enforce his rights. There is no running of the prescriptive period if the trustee expressly recognizes the resulting trust. Since the complaint for breach of trust was filed by respondent-spouses two (2) months after acquiring knowledge of the sale, the action therefore has not yet prescribed. DECISION BELLOSILLO, J p: History is replete with cases of erstwhile close family relations put asunder by property disputes. This is one of them. It involves half-sisters each claiming ownership over a parcel of land. While petitioner Emilia O'Laco asserts that she merely left the certificate of title covering the property with private respondent O Lay Kia for safekeeping, the latter who is the former's older sister insists that the title was in her possession because she and her husband bought the property from their conjugal funds. To be resolved therefore is the issue of whether a resulting trust was intended by them in the acquisition of the property. The trial court declared that there was no trust relation of any sort between the sisters. 1 The Court of Appeals ruled otherwise. 2 Hence, the instant petition for review on certiorari of the decision of the appellate court together with its resolution denying reconsideration. 3 It appears that on 31 May 1943, the Philippine Sugar Estate Development Company, Ltd., sold a parcel of land, Lot No. 5, Block No. 10, Plan Psu-10038, situated at Oroquieta St., Sta. Cruz, Manila, with the Deed of Absolute Sale naming Emilia O'Laco as vendee; thereafter, Transfer Certificate of Title No. 66456 was issued in her name. On 17 May 1960, private respondent-spouses Valentin Co Cho Chit and O Lay Wa learned from the newspapers that Emilia O'Laco sold the same property to the Roman Catholic Archbishop of Manila for P230,000.00, with assumption of the real estate mortgage constituted thereon. 4 On 22 June 1960, respondent-spouses Valentin Co Cho Chit and O Lay Kia sued petitionerspouses Emilia O'Laco and Hugo Luna to recover the purchase price of the land before the then Court of First Instance of Rizal, respondent-spouses asserting that petitioner Emilia O'Laco knew that they were the real vendees of the Oroquieta property sold in 1943 by Philippine Sugar Estate Development Company, Ltd., and that the legal title thereto was merely placed in her name. They contend that Emilia O'Laco breached the trust when she sold the land to the Roman Catholic Archbishop of Manila. Meanwhile, they asked the trial court to garnish all the amounts still due and payable to petitioner-spouses arising from the sale, which was granted on 30 June 1960. 5 Petitioner-spouses deny the existence of any form of trust relation. They aver that Emilia O'Laco actually bought the property with her own money; that she left the Deed of Absolute Sale and the

corresponding title with respondent-spouses merely for safekeeping; that when she asked for the return of the documents evidencing her ownership, respondent-spouses told her that these were misplaced or lost; and, that in view of the loss, she filed a petition for issuance of a new title, and on 18 August 1944 the then Court of First Instance of Manila granted her petition. On 20 September 1976, finding no trust relation between the parties, the trial court dismissed the complaint together with the counterclaim. Petitioners and respondents appealed. On 9 April 1981, the Court of Appeals set aside the decision of the trial court thus ". . . We set aside the decision of the lower court dated September 20, 1976 and the order of January 5, 1977 and another one is hereby entered ordering the defendants-appellees to pay plaintiffs-appellants jointly and severally the sum of P230,000.00 representing the value of the property subject of the sale with assumption of mortgage to the Roman Catholic Archbishop of Manila with legal interest from the filing of the complaint until fully paid, the sum of P10,000.00 as attorney's fees, plus costs." On 7 August 1981, the Court of Appeals denied reconsideration of its decision, prompting petitioners to come to this Court for relief. Petitioners contend that the present action should have been dismissed. They argue that the complaint fails to allege that earnest efforts toward a compromise were exerted considering that the suit is between members of the same family, and no trust relation exists between them. Even assuming ex argumenti that there is such a relation, petitioners further argue, respondents are already barred by laches. We are not persuaded. Admittedly, the present action is between members of the same family since petitioner Emilia O'Laco and respondent O Lay Kia are half-sisters. Consequently, there should be an averment in the complaint that earnest efforts toward a compromise have been made, pursuant to Art. 222 of the New Civil Code, 6 or a motion to dismiss could have been filed under Sec. 1, par. (j), Rule 16, of the Rules of Court. 7 For, it is well-settled that the attempt to compromise as well as the inability to succeed is a condition precedent to the filing of a suit between members of the same family. 8 Hence, the defect in the complaint is assailable at any stage of the proceedings, even on appeal, for lack of cause of action. 9 But, plaintiff may be allowed to amend his complaint to correct the defect if the amendment does not actually confer jurisdiction on the court in which the action is filed, i.e., if the cause of action was originally within that court's jurisdiction. 10 In such case, the amendment is only to cure the perceived defect in the complaint, thus may be allowed. In the case before Us, while respondent-spouses did not formally amend their complaint, they were nonetheless allowed to introduce evidence purporting to show that earnest efforts toward a compromise had been made, that is, respondent O Lay Kia importuned Emilia O'Laco and pressed her for the transfer of the title of the Oroquieta property in the name of spouses O Lay Kia and Valentin Co Cho Chit, just before Emilia's marriage to Hugo Luna. 11 But, instead of transferring the title as requested, Emilia sold the property to the Roman Catholic Archbishop of

Manila. This testimony was not objected to by petitioner-spouses. Hence, the complaint was deemed accordingly amended to conform to the evidence, 12 pursuant to Sec. 5, Rule 10 of the Rules of Court which reads "SECTION 5.Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as, if they had been raised in the pleadings . . ." (emphasis supplied). Indeed, if the defendant permits evidence to be introduced without objection and which supplies the necessary allegations of a defective complaint, then the evidence is deemed to have the effect of curing the defects of the complaint. 13 The insufficiency of the allegations in the complaint is deemed ipso facto rectified. 14 But the more crucial issue before Us is whether there is a trust relation between the parties in contemplation of law. We find that there is. By definition, trust relations between parties may either be express or implied. 15 Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust. 16 Implied trusts are those which, without being express, are deducible from the nature of the transaction as matters of intent, or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties.17 Implied trusts may either be resulting or constructive trusts, both coming into being by operation of law. 18 Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest 19 and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. 20 On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice 21 and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. 22 Specific examples of resulting trusts may be found in the Civil Code, particularly Arts. 1448, 1449, 1451,1452 and 1453, 23 while constructive trusts are illustrated in Arts. 1450, 1454, 1455 and 1456. 24 Unlike express trusts concerning immovables or any interest therein which cannot be proved by parol evidence, 25 implied trusts may be established by oral evidence. 26 However, in order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to the trust obligation were proven by an authentic document. 27 It cannot be established upon vague and inconclusive proof. 28 After a thorough review of the evidence on record, We hold that a resulting trust was indeed intended by the parties under Art. 1448 of the New Civil Code which states

"ARTICLE 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary . . ." (emphasis supplied). First. As stipulated by the parties, the document of sale, the owner's duplicate copy of the certificate of title, insurance policies, receipt of initial premium of insurance coverage and real estate tax receipts ware all in the possession of respondent spouses which they offered in evidence. As emphatically asserted by respondent O Lay Kia, the reason why these documents of ownership remained with her is that the land in question belonged to her. 29 Indeed, there can be no persuasive rationalization for the possession of these documents of ownership by respondent-spouses for seventeen (17) years after the Oroquieta property was purchased in 1943 than that of precluding its possible sale, alienation or conveyance by Emilia O'Laco, absent any machination or fraud. This continued possession of the documents, together with other corroborating evidence spread on record, strongly suggests that Emilia O'Laco merely held the Oroquieta property in trust for respondent-spouses. Second. It may be worth to mention that before buying the Oroquieta property, respondentspouses purchased another property situated in Kusang-Loob, Sta. Cruz, Manila, where the certificate of title was placed in the name of AmbrosioO'Laco, older brother of Emilia, under similar or identical circumstances. The testimony of former counsel for respondent-spouses, then Associate Justice Antonio G. Lucero of the Court of Appeals, is enlightening "Q In the same conversation he told you how he would buy the property (referring to the Oroquieta property), he and his wife? "A Yes, Sir, he did. "Q What did he say? xxxxxxxxx "A He said he and his wife has (sic) already acquired by purchase a certain property located at Kusang-Loob, Sta. Cruz, Manila. He told me he would like to place the Oroquieta Maternity Hospital in case the negotiation materialize(s) in the name of a sister of his wife (O'Laco)" (emphasis supplied). 30 On the part of respondent-spouses, they explained that the reason why they did not place these Oroquieta and Kusang-Loob properties in their name was that being Chinese nationals at the time of the purchase they did not want to execute the required affidavit to the effect that they were allies of the Japanese. 31 Since O Lay Kia took care of Emilia who was still young when her mother died, 32 respondent-spouses did not hesitate to place the title of the Oroquieta property in Emilia's name.

Quite significantly, respondent-spouses also instituted an action for reconveyance against AmbrosioO'Laco when the latter claimed the Kusang-Loob property as his own. A similar stipulation of facts was likewise entered, i.e., respondent-spouses had in their possession documents showing ownership of the Kusang-Loob property which they offered in evidence. In that case, the decision of the trial court, now final and executory, declared respondent-spouses as owners of the Kusang-Loob property and ordered AmbrosioO'Laco to reconvey it to them. 33 Incidentally, AmbrosioO'Laco thus charged respondent spouses Valentin Co Cho Cit and O Lay Kia before the Anti-Dummy Board, docketed as Case No. 2424, for their acquisition of the Kusang-Loob and Oroquieta properties. 34 He claimed that respondent-spouses utilized his name in buying the Kusang-Loob property while that of petitioner O'Laco was used in the purchase of the Oroquieta property. In effect, there was an implied admission by Ambrosio that his sister Emilia, like him, was merely used as a dummy. However, the Anti-Dummy Board exonerated respondent-spouses since the purchases were made in 1943, or during World War II, when the Anti-Dummy Law was not enforceable. Third. The circumstances by which Emilia O'Laco obtained a new title by reason of the alleged loss of the old title then in the possession of respondent-spouses cast serious doubt on the veracity of her ownership. The petitions respectively filed by Emilia O'Laco and AmbrosioO'Laco for the Oroquieta and the Kusang-Loob properties were both granted on the same day, 18 August 1944, by the then Court of First Instance of Manila. These orders were recorded in the Primary Entry Book of the Register of Deeds of Manila at the same time, 2:35 o'clock in the afternoon of 1 September 1944, in consecutive entries, Entries Nos. 246117-18. 35 This coincidence lends credence to the position of respondent-spouses that there was in fact a conspiracy between the siblings Ambrosio and Emilia to defraud and deprive respondents of their title to the Oroquieta and Kusang-Loob properties. Fourth. Until the sale of the Oroquieta property to the Roman Catholic Archbishop of Manila, petitioner Emilia O'Laco actually recognized the trust. Specifically, when respondent spouses learned that Emilia was getting married to Hugo, O Lay Kia asked her to have the title to the property already transferred to her and her husband Valentin, and Emilia assured her that "would be arranged (maaayosna)" after her wedding. 36 Her answer was an express recognition of the trust, otherwise, she would have refused the request outright. Petitioners never objected to this evidence; nor did they attempt to controvert it. Fifth. The trial court itself determined that "Valentin Co Cho Chit and O Lay Kia had some money with which they could buy the property." 37 In fact, Valentin was the Chief Mechanic of the Paniqui Sugar Mills, was engaged in the buy and sell business, operated a gasoline station, and owned an auto supply store as well as a ten-door apartment in Caloocan City. 38 In contrast, Emilia O'Laco failed to convince the Court that she was financially capable of purchasing the Oroquieta property. In fact, she opened a bank account only in 1946 and likewise began filing income tax returns that same year, 39 while the property in question was bought in 1943. Respondent-spouses even helped Emilia and her brothers in their expenses and livelihood. Emilia could only give a vague account on how she raised the money for the purchase of the property. Her narration of the transaction of sale abounds with "I don't know" and "I don't remember." 40

Having established a resulting trust between the parties, the next question is whether prescription has set in. As differentiated from constructive trusts, where the settled rule is that prescription may supervene, in resulting trust, the rule of imprescriptibility may apply for as long as the trustee has not repudiated the trust. 41 Once the resulting trust is repudiated, however, it is converted into a constructive trust and is subject to prescription. A resulting trust is repudiated if the following requisites concur: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made known to the cestui qui trust; and, (c) the evidence thereon is clear and convincing. 42 In Tale v. Court of Appeals 43 the Court categorically ruled that an action for reconveyance based on an implied or constructive trust must perforce prescribe in ten (10) years, and not otherwise, thereby modifying previous decisions holding that the prescriptive period was four (4) years. Neither the registration of the Oroquieta property in the name of petitioner Emilia O'Laco nor the issuance of a new Torrens title in 1944 in her name in lieu of the alleged loss of the original may be made the basis for the commencement of the prescriptive period. For, the issuance of the Torrens title in the name of Emilia O'Laco could not be considered adverse, much less fraudulent. Precisely, although the property was bought by respondent-spouses, the legal title was placed in the name of Emilia O'Laco. The transfer of the Torrens title in her name was only in consonance with the deed of sale in her favor. Consequently, there was no cause for any alarm on the part of respondent-spouses. As late as 1959, or just before she got married, Emilia continued to recognize the ownership of respondent-spouses over the Oroquieta property. Thus, until that point, respondent-spouses were not aware of any act of Emilia which would convey to them the idea that she was repudiating the resulting trust. The second requisite is therefore absent. Hence, prescription did not begin to run until the sale of the Oroquieta property, which was clearly an act of repudiation. But immediately after Emilia sold the Oroquieta property which is obviously a disavowal of the resulting trust, respondent-spouses instituted the present suit for breach of trust. Correspondingly, laches cannot lie against them. After all, so long as the trustee recognizes the trust, the beneficiary may rely upon the recognition, and ordinarily will not be in fault for omitting to bring an action to enforce his rights. 44 There is no running of the prescriptive period if the trustee expressly recognizes the resulting trust. 45 Since the complaint for breach of trust was filed by respondent-spouses two (2) months after acquiring knowledge of the sale, the action therefore has not yet prescribed. WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals of 9 April 1981, which reversed the trial court, is AFFIRMED. Costs against petitioners. SO ORDERED.