FIRST DIVISION

G. R. No. 120864 - October 8, 2003

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

DECISION

CARPIO, J.:

The Case

This is a Petition for Review on Certiorari1 assailing the 22 August 1994 Decision2 as well as the 27
June 1995 Resolution of the Court of Appeals in CA-G.R. CV No. 39875. The Court of Appeals affirmed
the Decision3 of the Regional Trial Court ("trial court") of Malolos, Bulacan, Branch 16, in Civil Case
No. 8796-M. The trial courts Decision ordered petitioner Manuel T. De Guia ("DE GUIA") to turn over
to private respondent Jose B. Abejo ("ABEJO") possession of the one half () undivided portion of a
fishpond and to pay actual damages and attorneys fees.

The Antecedents

On 12 May 1986, ABEJO4 instituted an action for recovery of possession with damages against DE
GUIA. In his complaint, ABEJO alleged that he is the owner of the undivided portion of a property used
as a fishpond ("FISHPOND") situated in Meycauayan, Bulacan and covered by TCT No. T-6358 of the
Bulacan Register of Deeds. He alleged ownership over approximately 39,611 square meters out of the
FISHPONDs total area of 79,220 square meters. ABEJO further averred that DE GUIA continues to
possess and use the FISHPOND without any contract and without paying rent to ABEJOs damage and
prejudice. ABEJO also complained that DE GUIA refuses to surrender ownership and possession of the
FISHPOND despite repeated demands to do so after DE GUIAs sublease contract over the FISHPOND
had expired. ABEJO asked the trial court to order DE GUIA to vacate an approximate area of 39,611
square meters as well as pay damages.

DE GUIA, a lawyer by profession, appeared on his own behalf. He filed his Answer on 12 January 1990
after the Court of Appeals resolved several issues concerning the validity of the service of summons
on him. In his Answer, DE GUIA alleged that the complaint does not state a cause of action and has
prescribed. He claimed that the FISHPOND was originally owned by Maxima Termulo who died
intestate with Primitiva Lejano as her only heir. According to him, ABEJO is not the owner of the entire
FISHPOND but the heirs of Primitiva Lejano who authorized him to possess the entire FISHPOND. He
assailed ABEJOs ownership of the undivided portion of the FISHPOND as void and claimed ownership
over an undivided half portion of the FISHPOND for himself. DE GUIA sought payment of damages and
reimbursement for the improvements he introduced as a builder in good faith.

The trial court set the pre-trial and required the parties to file their pre-trial briefs. ABEJO filed his pre-
trial brief5 on 05 April 1990. DE GUIA filed his pre-trial brief6 on 31 July 1990. DE GUIAs pre-trial brief
raised as the only issue in the case the amount of damages in the form of rent that DE GUIA should
pay ABEJO. DE GUIA also submitted an Offer to Compromise,7 offering to settle ABEJOs claim
for P300,000 and to lease the entire FISHPOND to any party of ABEJOs choice.

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

Evidence adduced from plaintiff shows that there are two parcels of land covering a fishpond with a
total area of 79,220 sq. m. more or less, situated at Ubihan, Meycauayan, Bulacan and covered by
TCT No. 6358 equally owned by Primitiva Lejano and Lorenza Araniego married to Juan Abejo (Exh.
A). The one half undivided portion owned by Lorenza Araniego corresponding to 39,611 sq. m. was
later purchased by plaintiff from his father Teofilo Abejo (Exh. B), the only heir of the original owner
on November 22, 1983. Prior to this sale on July 30, 1974 the whole fishpond (79,220) was the
subject of a "Salin ng Pamumusisyong ng Palaisdaan" executed by the heirs of Primitiva Lejano with
the knowledge and consent of Teofilo A. Abejo in favor of one Aniano Victa and defendant. The
contract provided that the period of lease shall be until November 30, 1979. When the contract

1
expired and defendant failed to surrender the fishpond, written demands the last of which was on
November 27, 1983 were made for defendants to pay back rental and to vacate the premises in
question (Exh. D & E). Defendant refused to deliver possession and also to pay the rentals due. In
anticipation, however, that defendant will vacate the fishpond, plaintiff, on December 21, 1983
entered into a two year "Kasunduan ng Buwisan ng Palaisdaan" with Ruperto C. Villarico for a
consideration of P50,000.00 (Exh. G). This contract, despite its execution and even already notarized,
had to be cancelled and the amount of P50,000.00 returned by plaintiff to Villarico when the
defendant did not heed the demand to vacate the fishpond. For unpaid rental, actual as well as moral
and exemplary damages, plaintiff asks payment of P450,000.00 and P20,000.00 attorneys fees.

On the other hand, defendants evidence tends to show that the entire fishpond with an area of 79,200
sq. m. was leased to him by the heirs of Primitiva Lejano. Subsequently, defendant became the
absolute owner of one half of the undivided area of the fishpond and he questioned plaintiffs
ownership of the other half as void and fraudulent. As to the area pertaining to plaintiff, defendant
claimed that he introduced improvements worth P500,000 and being in good faith, he asked that he
should be reimbursed by plaintiff. In his pre-trial brief, however, defendant raised the only issue which
is the amount of damages plaintiff is entitled to in the form of rental. Hence, the thrust of the
testimonies of defendants witnesses particularly Ben Ruben Camargo and Marta Fernando Peña was
the amount of rental of fishponds in the same locality as the fishpond in question at a given time.
However, the documentary evidence (Exhs. 1 and 2) in support of their testimony were not offered as
evidence.8cräläwvirt ualib rä ry

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

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

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

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

3 Defendant shall pay plaintiff P20,000.00 as and for attorneys fees; and

4. To pay the costs.

SO ORDERED.9 crä läwvirtuali brä ry

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

Hence, the instant petition.

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

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

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

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

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

4. DE GUIA (along with a certain Aniano Victa) acquired possession of the entire FISHPOND by virtue
of a document captioned Salin ng Pamumusisyong ng Palaisdaan ("Lease Contract") executed between

2
him and the heirs of Primitiva Lejano. The Lease Contract was effective from 30 July 1974 up to 30
November 1979 for a consideration of P100,000.

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

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

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

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

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

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

The trial court rendered judgment11 on 28 February 1992 against DE GUIA and the Lejano Heirs as
follows:

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

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

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

3. Ordering plaintiffs to pay defendants attorneys fees in the amount of P20,000.00.

SO ORDERED.12 crä läwvirt ualib rä ry

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

The Trial Courts Ruling

The trial court ruled that ABEJO has the right to demand that DE GUIA vacate and surrender an area
equivalent to ABEJOs undivided share in the FISHPOND. The trial court explained that DE GUIAs
sublease contract expired in 1979 and ABEJO acquired his fathers share in 1983. However, the trial

3
court pointed out that ABEJO failed to present evidence of the judicial or extra-judicial partition of the
FISHPOND. The identification of the specific area pertaining to ABEJO and his co-owner is vital in an
action to recover possession of real property. Nevertheless, the trial court declared that pending
partition, it is only just that DE GUIA pay ABEJO a reasonable amount as rental for the use of ABEJOs
share in the FISHPOND. DE GUIA admitted this obligation when he raised as sole issue in his pre-trial
brief how much rent he should pay ABEJO. DE GUIA even proposed P300,000 as the reasonable
amount but under certain conditions which ABEJO found unacceptable.

In determining the reasonable rent due to ABEJO, the trial court considered the Lease Contract
between ABEJO and a certain Ruperto C. Villarico which provided for a yearly rent of P25,000 for
undivided portion of the FISHPOND. The trial court declared that the total amount of rent due
is P212,500, computed from November 1983 when ABEJO became a co-owner of the FISHPOND up to
199113 or a period of eight and one half years. The trial court further ordered DE GUIA to pay an
additional P50,000 which represents the amount ABEJO returned to Ruperto C. Villarico when they
cancelled the Lease Contract between them due to DE GUIAs refusal to vacate the FISHPOND.

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

The Court of Appeals Ruling

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

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

On motion for reconsideration, the Court of Appeals reduced the compensatory damages
from P262,500 to P212,500. The Court of Appeals explained that the trial court correctly computed the
total amount of rent due at P212,500. The trial court erred, however, in adding the sum of P50,000
representing the rent for 1983 and 1984 which ABEJO returned to Ruperto C. Villarico. The appellate
court clarified that the sum of P212,500 was arrived at by multiplying the rent of P25,000 by 8 years.
The 8 year period already included the two months rent received from and then subsequently
reimbursed to Ruperto C. Villarico.

The Issues

DE GUIA raises the following issues in his Memorandum:

I.

THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURTS DECISION DENYING PETITIONERS
PLEA FOR DISMISSAL OF THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION;

II.

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

III.

THE COURT OF APPEALS ERRED IN AFFIRMING, IN PART, THE AWARD OF ACTUAL OR

COMPENSATORY DAMAGES DESPITE LACK OF CREDIBLE EVIDENCE TO SUPPORT THE SAME;

4
 IV.

THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF ATTORNEYS FEES IN PRIVATE
RESPONDENTS FAVOR.14

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

The Courts Ruling

The petition is partly meritorious.

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

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

Under Article 484 of the Civil Code, "there is co-ownership whenever the ownership of an undivided
thing or right belongs to different persons." A co-owner of an undivided parcel of land is an "owner of
the whole, and over the whole he exercises the right of dominion, but he is at the same time the
owner of a portion which is truly abstract."15 On the other hand, there is no co-ownership when the
different portions owned by different people are already concretely determined and separately
identifiable, even if not yet technically described.16
cräläwvirt uali brä ry

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

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

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

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

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

Indisputably, DE GUIA has been in exclusive possession of the entire FISHPOND since July 1974.
Initially, DE GUIA disputed ABEJOs claim of ownership over the undivided portion of the FISHPOND.
Subsequently, he implicitly recognized ABEJOs undivided share by offering to settle the case
for P300,000 and to vacate the property. During the trial proper, neither DE GUIA nor ABEJO asserted
or manifested a claim of absolute and exclusive ownership over the entire FISHPOND. Before this

5
Court, DE GUIA limits the issues to the propriety of bringing an action for recovery of possession and
the recovery of compensatory damages.

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

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

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

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

We disagree.

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

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

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

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

ABEJO made an extrajudicial demand on DE GUIA by sending the 27 November 1983 demand letter.
Thus, the rent in arrears should earn interest at 6% per annum from 27 November 1983 until finality
of this decision pursuant to Article 220930 of the Civil Code. Thereafter, the interest rate is 12% per
annum from finality of this decision until full payment.31cräläwvi rtua lib räry

6
Third Issue: Lack of Credible Evidence to Support Award of Compensatory Damages

DE GUIA contends the P212,500 in rent awarded to ABEJO is exorbitant. He assails as doubtful and
self-serving evidence the Lease Contract between ABEJO and Ruperto C. Villarico that served as basis
for the yearly rent of P25,000 for ABEJOs share in the FISHPOND.

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

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

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

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

Fourth Issue: Attorneys Fees

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

xxx

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

xxx

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

WHEREFORE, the Decision dated 22 August 1994 and Resolution dated 27 June 1995 of the Court of
Appeals in CA-G.R. CV No. 39875 is AFFIRMED with respect to that portion ordering Manuel T. De Guia
to pay Jose B. Abejo compensatory damages of P212,500 and attorneys fees of P20,000, and
MODIFIED as follows:

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

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

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

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

7
5. After finality of this decision and for as long as Manuel T. de Guia exclusively possesses the entire
FISHPOND, he shall pay Jose B. Abejo a yearly rental of P25,000 for the latters undivided share in the
FISHPOND, unless Jose B. Abejo secures from the proper court an order fixing a different rental rate in
view of possible changed circumstances.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago and Azcuna, JJ., concur.

Endnotes:

1 Under Rule 45 of the Rules of Court.

2Penned by Associate Justice Serafin V.C. Guingona, with Associate Justices Gloria C. Paras and Eubolo G. Verzola
concurring.

3 Penned by Judge Elpidio M. Catungal, Sr.

4 Represented by his Attorney-in-Fact Hermenegilda Abejo-Rivera.

5 Records, Vol. I, pp. 182-183.

6 Ibid., Vol. II, pp. 212-213.

7
Ibid., p. 214.

8 CA Rollo, pp. 11-12.

9 Ibid., pp. 14-15.

10 Fe Davis Maramba, Renato Davis, Flordeliza D. Yeh, Jocelyn D. Queblatin and Betty Davis.

11
Penned by Judge Crisanto C. Concepcion.

12 CA Rollo, pp. 72-73.

13
Should be 1992. The 8 period is counted from November 1983 up to May 1992.

14 Rollo, pp. 172-173.

15 Si v. Court of Appeals, G.R. No. 122047, 12 October 2000, 342 SCRA 653.

16 Ibid.

17 Javier v. Veridiano II, G.R. No. 48050, 10 October 1994, 237 SCRA 565.

18 ARTURO M. TOLENTINO, Civil Code of the Philippines, Vol. II, 1992, Ed.

19 Ibid.

20 G.R. No.148727, 9 April 2003.

21 Villanueva v. Florendo, No. L-33158, 17 October 1985, 139 SCRA 329.

22 Article 494 of the Civil Code states, "[p]rescription does not run in favor of a co-owner or co-heir against his co-owners
or his co-heirs so long as he expressly or impliedly recognizes the co-ownership."

23Prescription as a mode of terminating a relation of co-ownership must have been preceded by repudiation in this manner
(1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners;
(3) the evidence of repudiation is clear and conclusive; (4) he has been in open, continuous, exclusive and notorious
possession of the property for the period required by law. Santos v. Santos, G.R. No. 139524, 12 October 2000, 342 SCRA
753.

24 TOLENTINO, supra, note 18.

25 Ibid.

8
26
Ibid.

27 Ibid.

28 Pardell v. Bartolome, 23 Phil 450 (1912).

29 Araos v. Court of Appeals, G.R. No. 107057, 2 June 1994, 232 SCRA 770.

30 Article 2209 of the Civil Code provides, "[i]f the obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest
agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum."

31 Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78.

32 Roble v. Arbasa, 414 Phil. 343 (2001).

33 Reyes v. Court of Appeals, 415 Phil. 258 (2001).

34
Baritua v. Mercader, G.R. No. 136048, 23 January 2001, 350 SCRA 86.

9
 FIRST DIVISION

[G.R. NO. 161916 - January 20, 2006]

ARNELITO ADLAWAN, Petitioner, v. EMETERIO M. ADLAWAN and NARCISA M.

ADLAWAN, Respondents.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this Petition for Review is the September 23, 2003 Decision1 of the Court of Appeals in CA-G.R.
SP No. 74921 which set aside the September 13, 2002 Decision2 of the Regional Trial Court (RTC) of Cebu
City, Branch 7, in Civil Case No. CEB-27806, and reinstated the February 12, 2002 Judgment3 of the
Municipal Trial Court (MTC) of Minglanilla, Metro Cebu, in Civil Case No. 392, dismissing petitioner Arnelito
Adlawan's unlawful detainer suit against respondents Emeterio and Narcisa Adlawan. Likewise questioned is
the January 8, 2004 Resolution4 of the Court of Appeals which denied petitioner's motion for reconsideration.

The instant ejectment suit stemmed from the parties' dispute over Lot 7226 and the house built thereon,
covered by Transfer Certificate of Title No. 8842,5 registered in the name of the late Dominador Adlawan and
located at Barrio Lipata, Municipality of Minglanilla, Cebu. In his complaint, petitioner claimed that he is an
acknowledged illegitimate child6 of Dominador who died on May 28, 1987 without any other issue. Claiming
to be the sole heir of Dominador, he executed an affidavit adjudicating to himself Lot 7226 and the house
built thereon.7 Out of respect and generosity to respondents who are the siblings of his father, he granted
their plea to occupy the subject property provided they would vacate the same should his need for the
property arise. Sometime in January 1999, he verbally requested respondents to vacate the house and lot,
but they refused and filed instead an action for quieting of title8 with the RTC. Finally, upon respondents'
refusal to heed the last demand letter to vacate dated August 2, 2000, petitioner filed the instant case on
August 9, 2000.9

On the other hand, respondents Narcisa and Emeterio, 70 and 59 years of age, respectively,10 denied that
they begged petitioner to allow them to stay on the questioned property and stressed that they have been
occupying Lot 7226 and the house standing thereon since birth. They alleged that Lot 7226 was originally
registered in the name of their deceased father, Ramon Adlawan11 and the ancestral house standing thereon
was owned by Ramon and their mother, Oligia Mañacap Adlawan. The spouses had nine12children including
the late Dominador and herein surviving respondents Emeterio and Narcisa. During the lifetime of their
parents and deceased siblings, all of them lived on the said property. Dominador and his wife, Graciana
Ramas Adlawan, who died without issue, also occupied the same.13 Petitioner, on the other hand, is a
stranger who never had possession of Lot 7226.

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

Respondents also contended that Dominador's signature at the back of petitioner's birth certificate was
forged, hence, the latter is not an heir of Dominador and has no right to claim ownership of Lot 7226.15They
argued that even if petitioner is indeed Dominador's acknowledged illegitimate son, his right to succeed is
doubtful because Dominador was survived by his wife, Graciana.16

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

In View of the foregoing, for failure to prove by preponderance of evidence, the plaintiff's cause of action,
the above-entitled case is hereby Ordered DISMISSED.

SO ORDERED.17

10
On appeal by petitioner, the RTC reversed the decision of the MTC holding that the title of Dominador over
Lot 7226 cannot be collaterally attacked. It thus ordered respondents to turn over possession of the
controverted lot to petitioner and to pay compensation for the use and occupation of the premises. The
decretal portion thereof, provides:

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

So ordered.18

Meanwhile, the RTC granted petitioner's motion for execution pending appeal19 which was opposed by the
alleged nephew and nieces of Graciana in their motion for leave to intervene and to file an answer in
intervention.20 They contended that as heirs of Graciana, they have a share in Lot 7226 and that
intervention is necessary to protect their right over the property. In addition, they declared that as co-
owners of the property, they are allowing respondents to stay in Lot 7226 until a formal partition of the
property is made.

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

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

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

SO ORDERED.23

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

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

Petitioner averred that he is an acknowledged illegitimate son and the sole heir of Dominador. He in fact
executed an affidavit adjudicating to himself the controverted property. In ruling for the petitioner, the RTC
held that the questioned January 31, 1962 deed of sale validly transferred title to Dominador and that
petitioner is his acknowledged illegitimate son who inherited ownership of the questioned lot. The Court
notes, however, that the RTC lost sight of the fact that the theory of succession invoked by petitioner would
end up proving that he is not the sole owner of Lot 7226. This is so because Dominador was survived not
only by petitioner but also by his legal wife, Graciana, who died 10 years after the demise of Dominador on
May 28, 1987.24 By intestate succession, Graciana and petitioner became co-owners of Lot 7226.25 The
death of Graciana on May 6, 1997, did not make petitioner the absolute owner of Lot 7226 because the
share of Graciana passed to her relatives by consanguinity and not to petitioner with whom she had no
blood relations. The Court of Appeals thus correctly held that petitioner has no authority to institute the
instant action as the sole owner of Lot 7226.

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

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

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

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

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

11
In Baloloy v. Hular,29 respondent filed a complaint for quieting of title claiming exclusive ownership of the
property, but the evidence showed that respondent has co-owners over the property. In dismissing the
complaint for want of respondent's authority to file the case, the Court held that -

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

In this case, the respondent alone filed the complaint, claiming sole ownership over the subject property and
praying that he be declared the sole owner thereof. There is no proof that the other co-owners had waived
their rights over the subject property or conveyed the same to the respondent or such co-owners were
aware of the case in the trial court. The trial court rendered judgment declaring the respondent as the sole
owner of the property and entitled to its possession, to the prejudice of the latter's siblings. Patently then,
the decision of the trial court is erroneous.

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

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

In the same vein, there is no merit in petitioner's claim that he has the legal personality to file the present
unlawful detainer suit because the ejectment of respondents would benefit not only him but also his alleged
co-owners. However, petitioner forgets that he filed the instant case to acquire possession of the property
and to recover damages. If granted, he alone will gain possession of the lot and benefit from the proceeds of
the award of damages to the exclusion of the heirs of Graciana. Hence, petitioner cannot successfully
capitalize on the alleged benefit to his co-owners. Incidentally, it should be pointed out that in default of the
said heirs of Graciana, whom petitioner labeled as "fictitious heirs," the State will inherit her share31 and will
thus be petitioner's co-owner entitled to possession and enjoyment of the property.

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

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

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

xxxx

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

Clearly, the said cases find no application here because petitioner's action operates as a complete
repudiation of the existence of co-ownership and not in representation or recognition thereof. Dismissal of
the complaint is therefore proper. As noted by Former Supreme Court Associate Justice Edgrado L. Paras
"[i]t is understood, of course, that the action [under Article 487 of the Civil Code] is being instituted for all.

12
Hence, if the co-owner expressly states that he is bringing the case only for himself, the action should not
be allowed to prosper."38

Indeed, respondents' not less than four decade actual physical possession of the questioned ancestral house
and lot deserves to be respected especially so that petitioner failed to show that he has the requisite
personality and authority as co-owner to file the instant case. Justice dictates that respondents who are now
in the twilight years of their life be granted possession of their ancestral property where their parents and
siblings lived during their lifetime, and where they, will probably spend the remaining days of their life.

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

SO ORDERED.

Endnotes:

1
Rollo, pp. 31 - 43. Penned by Associate Justice Salvador J. Valdez, Jr., and concurred in by Associate
Justices Josefina Guevara-Salonga and Arturo D. Brion.

2
Id. at 61-65. Penned by Judge Simeon P. Dumdum, Jr.

3
Id. at 59-60. Penned by Judge Gerardo E. Gestopa, Jr.

4
Id. at 57-58.

5
Id. at 71.

6
Born on April 10, 1967; Rollo, p. 72.

7
RTC records, p. 103.

8
Docketed as Civil Case No. CEB-23205 before the RTC of Cebu City, Branch 5; Rollo, pp. 73-81.

9
RTC records, p. 1.

10
CA rollo, p. 14.

11
Originally covered by OCT No. 3496 (See Deed of Sale of One Parcel of Land, Rollo, p. 70 and TCT No.
8842, at Rollo, p. 71, which cancelled OCT No. 3496).

12
Except for respondents, the other siblings are already deceased.

13
RTC records, pp. 20 & 80-81.

14
Rollo, p. 70.

15
RTC records, p. 81.

16
Id.

17
Rollo, p. 60.

18
Id. at 65.

19
Id. at 92.

20
Id. at 84-89.

21
Id. at 92.

22
RTC records, p. 314.

13
23
Rollo, p. 43.

24
Article 998 of the Civil Code, provides:

ART. 998. If a widow or widower survives with illegitimate children, such widow or widower shall be entitled
to one-half of the inheritance, and the illegitimate children or their descendants, whether legitimate or
illegitimate, to the other half.

25
Article 1078 of the Civil Code, states:

ART. 1078. Where there are two or more heirs, the whole estate of the decedent is, before its partition,
owned in common by such heirs, subject to the payment of debts of the deceased.

26
De Guia v. Court of Appeals, G.R. No. 120864, October 8, 2003, 413 SCRA 114, 125.

27
Baloloy v. Hular, G.R. No 157767, September 9, 2004, 438 SCRA 80, 90-91.

28
Tolentino, Civil Code of the Philippines, Vol. II, 1983 Edition, p. 157.

29
Supra.

30
Id. at 90-92.

31
Article 1011 of the Civil Code reads:

Art. 1011. In default of persons entitled to succeed in accordance with the provisions of the preceding
Sections, the State shall inherit the whole estate.

32
G.R. No. 128338, March 28, 2005, 454 SCRA 42.

33
G.R. No. L-49731, September 29, 1988, 166 SCRA 84.

34
G.R. No. 161817, July 30, 2004, 435 SCRA 690.

35
Id. at 694.

36
140 Phil. 99, 101-102.

37
RTC records, pp. 1 & 2.

38
Paras, Civil Code of the Philippines Annotated, Vol. II, 1999 Edition, p. 294.

14
 FIRST DIVISION

G.R. No. 150611. June 10, 2003

Jacinto Saguid, Petitioner, v. HON. Court of Appeals, THE regional trial court, BRANCH 94,
BOAC, MARINDUQUE AND GINA S. REY, RESPONDENTS.

DECISION

YNARES-SANTIAGO, J.:

The regime of limited co-ownership of property governing the union of parties who are not legally
capacitated to marry each other, but who nonetheless live together as husband and wife, applies to
properties acquired during said cohabitation in proportion to their respective contributions. Co-
ownership will only be up to the extent of the proven actual contribution of money, property or
industry. Absent proof of the extent thereof, their contributions and corresponding shares shall be
presumed to be equal.1 cräläwvirtuali brä ry

Seventeen-year old Gina S. Rey was married,2 but separated de facto from her husband, when she
met petitioner Jacinto Saguid in Marinduque, sometime in July 1987.3 After a brief courtship, the two
decided to cohabit as husband and wife in a house built on a lot owned by Jacintos father. 4Their
cohabitation was not blessed with any children. Jacinto made a living as the patron of their fishing
vessel Saguid Brothers.5 Gina, on the other hand, worked as a fish dealer, but decided to work as an
entertainer in Japan from 1992 to 1994 when her relationship with Jacintos relatives turned sour. Her
periodic absence, however, did not ebb away the conflict with petitioners relatives. In 1996, the
couple decided to separate and end up their 9-year cohabitation.6 cräläwvirt ualib räry

On January 9, 1997, private respondent filed a complaint for Partition and Recovery of Personal
Property with Receivership against the petitioner with the Regional Trial Court of Boac, Marinduque.
She alleged that from her salary of $1,500.00 a month as entertainer in Japan, she was able to
contribute P70,000.00 in the completion of their unfinished house. Also, from her own earnings as an
entertainer and fish dealer, she was able to acquire and accumulate appliances, pieces of furniture and
household effects, with a total value of P111,375.00. She prayed that she be declared the sole owner
of these personal properties and that the amount of P70,000.00, representing her contribution to the
construction of their house, be reimbursed to her.

Private respondent testified that she deposited part of her earnings in her savings account with First
Allied Development Bank.7 Her Pass Book shows that as of May 23, 1995, she had a balance of
P21,046.08.8 She further stated that she had a total of P35,465.009 share in the joint account deposit
which she and the petitioner maintained with the same bank.10 Gina declared that said deposits were
spent for the purchase of construction materials, appliances and other personal properties. 11 cräläwvirtuali brä ry

In his answer12 to the complaint, petitioner claimed that the expenses for the construction of their
house were defrayed solely from his income as a captain of their fishing vessel. He averred that
private respondents meager income as fish dealer rendered her unable to contribute in the
construction of said house. Besides, selling fish was a mere pastime to her; as such, she was
contented with the small quantity of fish allotted to her from his fishing trips. Petitioner further
contended that Gina did not work continuously in Japan from 1992 to 1994, but only for a 6-month
duration each year. When their house was repaired and improved sometime in 1995-1996, private
respondent did not share in the expenses because her earnings as entertainer were spent on the daily
needs and business of her parents. From his income in the fishing business, he claimed to have saved
a total of P130,000.00, P75,000.00 of which was placed in a joint account deposit with private
respondent. This savings, according to petitioner was spent in purchasing the disputed personal
properties.

On May 21, 1997, the trial court declared the petitioner as in default for failure to file a pre-trial brief
as required by Supreme Court Circular No. 1-89.13 cräläwvirtual ibrä ry

15
On May 26, 1997, petitioner filed a motion for reconsideration14 of the May 21, 1997 order, which was
denied on June 2, 1997, and private respondent was allowed to present evidence ex parte.15Petitioner
filed another motion for reconsideration but the same was also denied on October 8, 1997.

On July 15, 1998, a decision16 was rendered in favor of private respondent, the dispositive portion of
which reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the plaintiff Gina S.
Rey against defendant Jacinto Saguid:

a) Ordering the partition of the house identified as plaintiffs Exhibit C and D and directing the
defendant to return and/or reimburse to the plaintiff the amount of seventy thousand pesos
(P70,000,00) which the latter actually contributed to its construction and completion;

b) Declaring the plaintiff as the exclusive owner of the personal properties listed on Exhibit M;

c) Ordering the defendant, and/or anyone in possession of the aforesaid personal properties, to return
and/or deliver the same to the plaintiff; and

d) Ordering the defendant to pay the plaintiff moral damages in the sum of fifty thousand pesos
(P50,000.00) plus the costs of suit.

SO ORDERED.17 crä läwvirt ualib rä ry

On appeal, said decision was affirmed by the Court of Appeals; however, the award of P50,000.00 as
moral damages was deleted for lack of basis.18 The appellate court ruled that the propriety of the
order which declared the petitioner as in default became moot and academic in view of the effectivity
of the 1997 Rules of Civil Procedure. It explained that the new rules now require the filing of a pre-
trial brief and the defendants non-compliance therewith entitles the plaintiff to present evidence ex
parte.

Both parties filed motions for reconsideration which were denied; hence, petitioner filed the instant
petition based on the following assigned errors:

A.

THE HONORABLE COURT OF APPEALS COMMIT[TED] A REVERSIBLE ERROR IN APPLYING

RETROACTIVELY THE 1997 RULES OF CIVIL PROCEDURE IN THE PRESENT CASE AND HOLDING THE
FIRST ASSIGNED ERROR THEREIN MOOT AND ACADEMIC THUS, FAILED TO RULE ON THE PROPRIETY
OF THE TRIAL COURTS REFUSAL TO SET ASIDE THE ORDER OF DEFAULT DUE TO MISTAKE AND/OR
EXCUSABLE NEGLIGENCE COMMITTED BY PETITIONER.

B.

THE HONORABLE COURT OF APPEALS COMMIT[TED] A REVERSIBLE ERROR IN RELYING ON THE

FACTUAL FINDINGS OF THE TRIAL COURT WHICH RECEIVED THE EVIDENCE OF HEREIN RESPONDENT
ONLY EX PARTE.19 c räläwvi rtual ibrä ry

The issues for resolution are: (1) whether or not the trial court erred in allowing private respondent to
present evidence ex parte; and (2) whether or not the trial courts decision is supported by evidence.

Under Section 6, Rule 18 of the 1997 Rules of Civil Procedure, the failure of the defendant to file a
pre-trial brief shall have the same effect as failure to appear at the pre-trial, i.e., the plaintiff may
present his evidence ex parte and the court shall render judgment on the basis thereof.20 The remedy
of the defendant is to file a motion for reconsideration21 showing that his failure to file a pre-trial brief
was due to fraud, accident, mistake or excusable neglect.22 The motion need not really stress the fact
that the defendant has a valid and meritorious defense because his answer which contains his
defenses is already on record.23 cräläwvirtua lib räry

In the case at bar, petitioner insists that his failure to file a pre-trial brief is justified because he was
not represented by counsel. This justification is not, however, sufficient to set aside the order directing
private respondent to present evidence ex parte, inasmuch as the petitioner chose at his own risk not
to be represented by counsel. Even without the assistance of a lawyer, petitioner was able to file a
motion for extension to file answer,24 the required answer stating therein the special and affirmative
defenses,25 and several other motions.26 If it were true that petitioner did not understand the import
of the April 23, 1997 order directing him to file a pre-trial brief, he could have inquired from the court
or filed a motion for extension of time to file the brief. Instead, he waited until May 26, 1997, or 14

16
days from his alleged receipt of the April 23, 1997 order before he filed a motion asking the court to
excuse his failure to file a brief. Pre-trial rules are not to be belittled or dismissed because their non-
observance may result in prejudice to a partys substantive rights. Like all rules, they should be
followed except only for the most persuasive of reasons when they may be relaxed to relieve a litigant
of an injustice not commensurate with the degree of his thoughtlessness in not complying with the
procedure prescribed.27 cräläwvirtuali brä ry

In the instant case, the fact that petitioner was not assisted by a lawyer is not a persuasive reason to
relax the application of the rules. There is nothing in the Constitution which mandates that a party in a
non-criminal proceeding be represented by counsel and that the absence of such representation
amounts to a denial of due process. The assistance of lawyers, while desirable, is not indispensable.
The legal profession is not engrafted in the due process clause such that without the participation of
its members the safeguard is deemed ignored or violated.28 cräläwvirtua lib räry

However, the Court of Appeals erred in ruling that the effectivity of the 1997 Rules of Civil Procedure,
specifically, Section 6, Rule 18 thereof, rendered moot and academic the issue of whether or not the
plaintiff may be allowed to present evidence ex parte for failure of the defendant to file a pre-trial
brief. While the rules may indeed be applied retroactively, the same is not called for in the case at bar.
Even before the 1997 Rules of Civil Procedure took effect on July 1, 1997, the filing of a pre-trial brief
was required under Circular No. 1-89 which became effective on February 1, 1989. Pursuant to the
said circular, [f]ailure to file pre-trial briefs may be given the same effect as the failure to appear at
the pre-trial, that is, the party may be declared non-suited or considered as in default.29 cräläwvirt ualib rä ry

Coming now to the substantive issue, it is not disputed that Gina and Jacinto were not capacitated to
marry each other because the former was validly married to another man at the time of her
cohabitation with the latter. Their property regime therefore is governed by Article 14830 of the Family
Code, which applies to bigamous marriages, adulterous relationships, relationships in a state of
concubinage, relationships where both man and woman are married to other persons, and multiple
alliances of the same married man. Under this regime, only the properties acquired by both of the
parties through their actual joint contribution of money, property, or industry shall be owned by them
in common in proportion to their respective contributions ...31 Proof of actual contribution is
required.32cräläwvirtual ibrä ry

In the case at bar, although the adulterous cohabitation of the parties commenced in 1987, which is
before the date of the effectivity of the Family Code on August 3, 1998, Article 148 thereof applies
because this provision was intended precisely to fill up the hiatus in Article 144 of the Civil
Code.33 Before Article 148 of the Family Code was enacted, there was no provision governing property
relations of couples living in a state of adultery or concubinage. Hence, even if the cohabitation or the
acquisition of the property occurred before the Family Code took effect, Article 148 governs.34 cräläwvirtuali brä ry

In the cases of Agapay v. Palang,35 and Tumlos v. Fernandez,36 which involved the issue of co-
ownership of properties acquired by the parties to a bigamous marriage and an adulterous
relationship, respectively, we ruled that proof of actual contribution in the acquisition of the property
is essential. The claim of co-ownership of the petitioners therein who were parties to the bigamous
and adulterous union is without basis because they failed to substantiate their allegation that they
contributed money in the purchase of the disputed properties. Also in Adriano v. Court of
Appeals,37 we ruled that the fact that the controverted property was titled in the name of the parties
to an adulterous relationship is not sufficient proof of co-ownership absent evidence of actual
contribution in the acquisition of the property.

As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings
or the nature of the case, asserts an affirmative issue. Contentions must be proved by competent
evidence and reliance must be had on the strength of the partys own evidence and not upon the
weakness of the opponents defense.38 This applies with more vigor where, as in the instant case, the
plaintiff was allowed to present evidence ex parte. The plaintiff is not automatically entitled to the
relief prayed for. The law gives the defendant some measure of protection as the plaintiff must still
prove the allegations in the complaint. Favorable relief can be granted only after the court is
convinced that the facts proven by the plaintiff warrant such relief.39 Indeed, the party alleging a fact
has the burden of proving it and a mere allegation is not evidence.40 cräläwvirtua lib räry

In the case at bar, the controversy centers on the house and personal properties of the parties.
Private respondent alleged in her complaint that she contributed P70,000.00 for the completion of
their house. However, nowhere in her testimony did she specify the extent of her contribution. What
appears in the record are receipts41 in her name for the purchase of construction materials on
November 17, 1995 and December 23, 1995, in the total amount of P11,413.00.

On the other hand, both parties claim that the money used to purchase the disputed personal
properties came partly from their joint account with First Allied Development Bank. While there is no
question that both parties contributed in their joint account deposit, there is, however, no sufficient
proof of the exact amount of their respective shares therein. Pursuant to Article 148 of the Family

17
Code, in the absence of proof of extent of the parties respective contribution, their share shall be
presumed to be equal. Here, the disputed personal properties were valued at P111,375.00, the
existence and value of which were not questioned by the petitioner. Hence, their share therein is
equivalent to one-half, i.e., P55,687.50 each.

The Court of Appeals thus erred in affirming the decision of the trial court which granted the reliefs
prayed for by private respondent. On the basis of the evidence established, the extent of private
respondents co-ownership over the disputed house is only up to the amount of P11,413.00, her
proven contribution in the construction thereof. Anent the personal properties, her participation
therein should be limited only to the amount of P55,687.50.

As regards the trial courts award of P50,000.00 as moral damages, the Court of Appeals correctly
deleted the same for lack of basis.

WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals in CA-G.R. CV No.
64166 is AFFIRMED with MODIFICATION. Private respondent Gina S. Rey is declared co-owner of
petitioner Jacinto Saguid in the controverted house to the extent of P11,413.00 and personal
properties to the extent of P55,687.50. Petitioner is ordered to reimburse the amount of P67,100.50
to private respondent, failing which the house shall be sold at public auction to satisfy private
respondents claim.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.

Endnotes:

1Family Code, Article 148; Agapay v. Palang, 342 Phil. 302, 311-312 (1997), citing Tolentino, I Civil Code Of The
Philippines Commentaries and Jurisprudence, 500 (1999 edition); Tumlos v. Fernandez, G.R. No. 137650, 12 April 2000,
330 SCRA 718, 733-734, citing Agapay v. Palang, supra; Adriano v. Court of Appeals, 385 Phil. 474, 484-485 (2000).

2Exhibit A, Marriage Contract showing that Gina S. Rey was married at the age of 15 to Eduardo V. Salazar on June 19,
1985.

3 Complaint, Records, p. 7.

4 Id., p. 8.

5 Answer, Records, p. 21.

6 Complaint, p. 8.

7 TSN, 20 January 1998, pp. 5-7.

8 Exhibit K.

9 TSN, 20 January 1998, pp. 16-18.

10
Exhibit L, First Allied Development Bank Golden Account Pass Book.

11 TSN, 20 January 1998, pp. 5-6 and 9-10.

12 Records, p. 19.

13 Records, p. 41.

14
Records, p. 46.

15
Records, p. 53.

16 Penned by Judge Rodolfo B. Dimaano.

17 Records, p. 92.

18CA-G.R. CV No. 64166, penned by Associate Justice Perlita J. Tria Tirona and concurred in by Associate Justices Eugenio
S. Labitoria and Eloy R. Bello, Jr.

18
19
Rollo, p. 20.

20Rule 18, SEC. 5. Effect of failure to appear.The failure of the plaintiff to appear when so required pursuant to the next
preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered
by the court. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present his evidence ex
parte and the court to render judgment on the basis thereof.

21Jungco v. Court of Appeals, G.R. No. 78051, 8 November 1989, 179 SCRA 213, 217-218, citing Lucero v. Dacayo, 131
Phil. 99 (1968).

22 Circle Financial Corporation v. Court of Appeals, G.R. No. 77315, 22 April 1991, 196 SCRA 166, 170.

23
Junco v. Court of Appeals, supra, note 24 at 218.

24 Records, p. 16.

25 Id., p. 19.

26 Records, pp. 44, 46 and 54.

27Victory Liner, Inc. v. Court of Appeals, G.R. No. 125034, 30 July 1998, 293 SCRA 378, 384, citing Pedrosa v. Hill, 327
Phil. 153 (1996).

28
Nera v. Auditor General, G.R. No. L-24957, 3 August 1988, 164 SCRA 1, 6.

29 Section 2, Rule 20 of the old rules.

30Art. 148. In cases of cohabitation not falling under [Article 147], only the properties acquired by both of the parties
through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to
their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are
presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidences of credit.

If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute
community or conjugal partnership existing in such valid marriage. If the party who acted in bad faith is not validly
married to another, his or her share shall be forfeited in the manner provided in the last paragraph of the preceding
Article.

Art. 147. When a man and a woman who are capacitated to marry each other live exclusively with each other as husband
and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in
equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on
co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been
obtained by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a
party who did not participate in the acquisition of the other party of any property shall be deemed to have contributed
jointly in the acquisition thereof if the formers efforts consisted in the care and maintenance of the family and of the
household.

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation
and owned in common, without the consent of the other, until after the termination of the cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership
shall be forfeited in favor of their common children. In case of default or of waiver by any or all of the common children or
their descendants, each vacant share shall belong to the respective surviving descendants. In the absence of descendants,
such share shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination of the
cohabitation.

The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.

31 Cario v. Cario, G.R. No. 132529, 2 February 2001, 351 SCRA 127, 135.

32 Agapay v. Palang, supra, note 1.

33Tumlos v. Fernandez, supra, note 1, at 733, citing Sempio-Dy, Handbook on the Family Code of the Philippines, 1997
ed., p. 228; Vitug, Compendium on Civil Law and Jurisprudence, 1993 ed., pp. 210-211.

34
Tumlos v. Fernandez, supra, citing the Family Code, Article 256.

35 Supra, note 1.

36 Supra, note 1.

37
Supra, note 1.

19
38
Heirs of Anastacio Fabela v. Court of Appeals, G.R. No.142546, 9 August 2001, 362 SCRA 531, citing Javier v. Court of
Appeals, G.R. No. 101177, 28 March 1994, 231 SCRA 498; Pornellosa v. Land Tenure Administration, 110 Phil. 986
(1961).

39Luxuria Homes, Inc. v. Court of Appeals, 361 Phil. 989, 1001 (1999), citing Pascua v. Florendo, 220 Phil. 588 (1985);
Lim Tanhu v. Ramolete, G.R. No. L-40098, 29 August 1975, 66 SCRA 425;

40 Id., citing P.T. Cerna Corporation v. Court of Appeals, G.R. No. 91622, 6 April 1993, 221 SCRA 19.

41 Exhibits O, O-1 and O-2.

20
 FIRST DIVISION

G.R. No. 76351 October 29, 1993

VIRGILIO B. AGUILAR, Petitioner, vs. COURT OF APPEALS and

SENEN B. AGUILAR, Respondents.

Jose F. Manacop for petitioner. chanrobles vi rtua l law lib ra ry

Siruello, Muyco & Associates Law Office for private respondent.

BELLOSILLO, J.:

This is a petition for review on certiorari seeking to reverse and set

aside the Decision of the Court of Appeals in CA-GR CV No. 03933
declaring null and void the orders of 23 and 26 April, 1979, the
judgment by default of 26 July 1979, and the order of 22 October
1979 of the then Court of First Instance of Rizal, Pasay City, Branch
30, and directing the trial court to set the case for pre-trial
conference. chanroble svi rtualaw lib raryc hanrobles vi rt ual law li bra ry

Petitioner Virgilio and respondent Senen are brothers; Virgilio is the

youngest of seven (7) children of the late Maximiano Aguilar, while
Senen is the fifth. On 28 October 1969, the two brothers purchased
a house and lot in Parañaque where their father could spend and
enjoy his remaining years in a peaceful neighborhood. Initially, the
brothers agreed that Virgilio's share in the co-ownership was two-
thirds while that of Senen was one-third. By virtue of a written
memorandum dated 23 February 1970, Virgilio and Senen agreed
that henceforth their interests in the house and lot should be equal,
with Senen assuming the remaining mortgage obligation of the
original owners with the Social Security System (SSS) in exchange
for his possession and enjoyment of the house together with their
father.
chanroblesvi rtua lawlib rary chan robles v irt ual law l ibra ry

Since Virgilio was then disqualified from obtaining a loan from SSS,
the brothers agreed that the deed of sale would be executed and
the title registered in the meantime in the name of Senen. It was
further agreed that Senen would take care of their father and his
needs since Virgilio and his family were staying in Cebu. chanroble svirtualawl ibra rycha nro bles vi rtua l law lib ra ry

After Maximiano Aguilar died in 1974, petitioner demanded from

private respondent that the latter vacate the house and that the
property be sold and proceeds thereof divided among them. chanroblesvi rtua lawlib rary chan roble s virtual law l ibra ry

21
Because of the refusal of respondent to give in to petitioner's
demands, the latter filed on 12 January 1979 an action to compel
the sale of the house and lot so that the they could divide the
proceeds between them. chanroblesvi rtua lawlib rary chan roble s virtual law l ibra ry

In his complaint, petitioner prayed that the proceeds of the sale, be

divided on the basis of two-thirds (2/3) in his favor and one-third
(1/3) to respondent. Petitioner also prayed for monthly rentals for
the use of the house by respondent after their father died. chan rob lesvi rtua lawlib raryc han robles v irt ual law l ibra ry

In his answer with counterclaim, respondent alleged that he had no

objection to the sale as long as the best selling price could be
obtained; that if the sale would be effected, the proceeds thereof
should be divided equally; and, that being a co-owner, he was
entitled to the use and enjoyment of the property. chanroblesvi rt ualawlib ra rychan robles v irt ual law l ibra ry

Upon issues being joined, the case was set for pre-trial on 26 April
1979 with the lawyers of both parties notified of the pre-trial, and
served with the pre-trial order, with private respondent executing a
special power of attorney to his lawyer to appear at the pre-trial and
enter into any amicable settlement in his behalf. 1 chanrobles v irt ual law li bra ry

On 20 April 1979, Atty. Manuel S. Tonogbanua, counsel for

respondent, filed a motion to cancel pre-trial on the ground that he
would be accompanying his wife to Dumaguete City where she
would be a principal sponsor in a wedding. chan roble svirtualawl ibra ryc hanro bles vi rt ual law li bra ry

On 23 April 1979, finding the reasons of counsel to be without

merit, the trial court denied the motion and directed that the pre-
trial should continue as scheduled. chan roblesv irtual awlibra rycha nrob les vi rtual law lib rary

When the case was called for pre-trial as scheduled on 26 April

1979, plaintiff and his counsel appeared. Defendant did not appear;
neither his counsel in whose favor he executed a special power of
attorney to represent him at the pre-trial. Consequently, the trial
court, on motion of plaintiff, declared defendant as in default and
ordered reception of plaintiff's evidence ex parte. chanroblesvi rtualaw lib raryc han robles v irt ual law l ibra ry

On 7 May 1979, defendant through counsel filed an omnibus motion

to reconsider the order of default and to defer reception of
evidence. The trial court denied the motion and plaintiff presented
his evidence.chanroblesvi rtua lawlib rary chan robles v irt ual law l ibra ry

On 26 July 1979, rendering judgment by default against defendant,

the trial court found him and plaintiff to be co-owners of the house
and lot, in equal shares on the basis of their written agreement.
However, it ruled that plaintiff has been deprived of his participation
in the property by defendant's continued enjoyment of the house
and lot, free of rent, despite demands for rentals and continued

22
maneuvers of defendants, to delay partition. The trial court also
upheld the right of plaintiff as co-owner to demand partition. Since
plaintiff could not agree to the amount offered by defendant for the
former's share, the trial court held that this property should be sold
to a third person and the proceeds divided equally between the
parties.
chanroble svi rtualawl ib raryc hanrobles vi rt ual law li bra ry

The trial court likewise ordered defendant to vacate the property

and pay plaintiff P1,200.00 as rentals 2 from January 1975 up to the
date of decision plus interest from the time the action was filed. c hanro blesvi rt ualawlib ra rychan roble s virtual law lib rary

On 17 September 1979, defendant filed an omnibus motion for new

trial but on 22 October 1979 the trial court denied the motion. chanroblesvi rt ualawlib ra rychan roble s virtual law lib rary

Defendant sought relief from the Court of Appeals praying that the
following orders and decision of the trial court be set aside: (a) the
order of 23 April 1970 denying defendants motion for postponement
of the pre-trial set on 26 April 1979; (b) the order of 26 April 1979
declaring him in default and authorizing plaintiff to present his
evidence ex-parte; (e) the default judgment of 26 July 1979; and,
(d) the order dated 22 October 1979 denying his omnibus motion
for new trial. chanro blesvi rtua lawlib rary chan roble s virtual law lib rary

On 16 October 1986, the Court of Appeals set aside the order of the
trial court of 26 April 1979 as well as the assailed judgment
rendered by default., The appellate court found the explanation of
counsel for defendant in his motion to cancel pre-trial as
satisfactory and devoid of a manifest intention to delay the
disposition of the case. It also ruled that the trial court should have
granted the motion for postponement filed by counsel for defendant
who should not have been declared as in default for the absence of
his counsel. chanro blesvi rt ualawlib ra rychan rob les vi rtual law lib rary

Petitioner now comes to us alleging that the Court of Appeals erred

(1) in not holding that the motion of defendant through counsel to
cancel the pre-trial was dilatory in character and (2) in remanding
the case to the trial court for pre-trial and trial. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

The issues to be resolved are whether the trial court correctly

declared respondent as in default for his failure to appear at the
pre-trial and in allowing petitioner to present his evidence ex-parte,
and whether the trial court correctly rendered the default judgment
against respondent. chanroble svi rtualawl ib raryc hanrobles vi rt ual law li bra ry

We find merit in the petition. chanroblesvi rtua lawlib rary chan roble s virtual law l ibra ry

As regards the first issue, the law is clear that the appearance of
parties at the pre-trial is mandatory. 3 A party who fails to appear at
a pre-trial conference may be non-suited or considered as in

23
default. 4 In the case at bar, where private respondent and counsel
failed to appear at the scheduled pre-trial, the trial, court has
authority to declare respondent in default. 5 chanrob les vi rtual law lib rary

Although respondent's counsel filed a motion to postpone pre-trial

hearing, the grant or denial thereof is within the sound discretion of
the trial court, which should take into account two factors in the
grant or denial of motions for postponement, namely: (a) the
reason for the postponement and (b) the merits of the case of
movant. 6 chanroble s virtual law l ibra ry

In the instant case, the trial court found the reason stated in the
motion of counsel for respondent to cancel the pre-trial to be
without merit. Counsel's explanation that he had to go to by boat as
early as 25 March 1979 to fetch his wife and accompany her to a
wedding in Dumaguete City on 27 April 1979 where she was one of
the principal sponsors, cannot be accepted. We find it insufficient to
justify postponement of the pre-trial, and the Court of Appeals did
not act wisely in overruling the denial. We sustain the trial court and
rule that it did not abuse its discretion in denying the postponement
for lack of merit. Certainly, to warrant a postponement of a
mandatory process as pre-trial would require much more than mere
attendance in a social function. It is time indeed we emphasize that
there should be much more than mere perfunctory treatment of the
pre-trial procedure. Its observance must be taken seriously if it is to
attain its objective, i.e., the speedy and inexpensive disposition of
cases.chanroble svirtualawl ibra ryc hanro bles vi rtua l law li bra ry

Moreover, the trial court denied the motion for postponement three
(3) days before the scheduled pre-trial. If indeed, counsel for
respondent could not attend the pre-trial on the scheduled date,
respondent at least should have personally appeared in order not to
be declared as in default. But, since nobody appeared for him, the
order of the trial court declaring him as in default and directing the
presentation of petitioner's evidence ex parte was proper. 7 chanroble s virtual law l ibra ry

With regard to the merits of the judgment of the trial court by

default, which respondent appellate court did not touch upon in
resolving the appeal, the Court holds that on the basis of the
pleadings of the parties and the evidence presented ex parte,
petitioner and respondents are co-owners of subject house and lot
in equal shares; either one of them may demand the sale of the
house and lot at any time and the other cannot object to such
demand; thereafter the proceeds of the sale shall be divided equally
according to their respective interests. chanroble svi rtualaw lib raryc han robles v irt ual law li bra ry

Private respondent and his family refuse to pay monthly rentals to

petitioner from the time their father died in 1975 and to vacate the
house so that it can be sold to third persons. Petitioner alleges that
24
respondent's continued stay in the property hinders its disposal to
the prejudice of petitioner. On the part of petitioner, he claims that
he should be paid two-thirds (2/3) of a monthly rental of P2,400.00
or the sum of P1,600.00. chanroble svi rtualaw lib raryc han robles vi rt ual law li bra ry

In resolving the dispute, the trial court ordered respondent to

vacate the property so that it could be sold to third persons and the
proceeds divided between them equally, and for respondent to pay
petitioner one-half (1/2) of P2,400.00 or the sum of P1,200.00 as
monthly rental, conformably with their stipulated sharing reflected
in their written agreement. chanroblesvi rt ualawlib ra rychan rob les vi rtual law lib rary

We uphold the trial court in ruling in favor of petitioner, except as to

the effectivity of the payment of monthly rentals by respondent as
co-owner which we here declare to commence only after the trial
court ordered respondent to vacate in accordance with its order of
26 July 1979. chanroblesv irt ualawli bra rychan rob les vi rtual law lib rary

Article 494 of the Civil Code provides that no co-owner shall be

obliged to remain in the co-ownership, and that each co-owner may
demand at any time partition of the thing owned in common insofar
as his share is concerned. Corollary to this rule, Art. 498 of the
Code states that whenever the thing is essentially, indivisible and
the co-owners cannot agree that it be, allotted to one of them who
shall indemnify the others, it shall be sold and its proceeds
accordingly distributed. This is resorted to (1) when the right to
partition the property is invoked by any of the co-owners but
because of the nature of the property it cannot be subdivided or its
subdivision would prejudice the interests of the co-owners, and (b)
the co-owners are not in agreement as to who among them shall be
allotted or assigned the entire property upon proper reimbursement
of the co-owners. In one case, 8 this Court upheld the order of the
trial court directing the holding of a public sale of the properties
owned in common pursuant to Art. 498 of the Civil Code. chanroble svirtualawl ibra ryc hanro bles vi rtua l law lib ra ry

However, being a co-owner respondent has the right to use the

house and lot without paying any compensation to petitioner, as he
may use the property owned in common long as it is in accordance
with the purpose for which it is intended and in a manner not
injurious to the interest of the other co-owners. 9 Each co-owner of
property held pro indivisoexercises his rights over the whole
property and may use and enjoy the same with no other limitation
than that he shall not injure the interests of his co-owners, the
reason being that until a division is made, the respective share of
each cannot be determined and every co-owner exercises, together
with his co-participants joint ownership over the pro
indiviso property, in addition to his use and enjoyment of the
same. 10 chanrob les vi rtua l law lib rary

25
Since petitioner has decided to enforce his right in court to end the
co-ownership of the house and lot and respondent has not refuted
the allegation that he has been preventing the sale of the property
by his continued occupancy of the premises, justice and equity
demand that respondent and his family vacate the property so that
the sale can be effected immediately. In fairness to petitioner,
respondent should pay a rental of P1,200.00 per month, with legal
interest; from the time the trial court ordered him to vacate, for the
use and enjoyment of the other half of the property appertaining to
petitioner. chanroblesvi rt ualawlib ra rychan rob les vi rtual law lib rary

When petitioner filed an action to compel the sale of the property

and the trial court granted the petition and ordered the ejectment of
respondent, the co-ownership was deemed terminated and the right
to enjoy the possession jointly also ceased. Thereafter, the
continued stay of respondent and his family in the house prejudiced
the interest of petitioner as the property should have been sold and
the proceeds divided equally between them. To this extent and from
then on, respondent should be held liable for monthly rentals until
he and his family vacate. chanroblesvi rtua lawlib rary chan robles v irt ual law l ibra ry

WHEREFORE, the petition is GRANTED. The assailed Decision of the

Court of Appeals dated 16 October 1986 is REVERSED and
SET ASIDE. The decision of the trial court in Civil Case No. 69.12-P
dated 16 July 1979 is REINSTATED, with the modification that
respondent Senen B. Aguilar is ordered to vacate the premises in
question within ninety (90) days from receipt of this and to pay
petitioner Virgilio B. Aguilar a monthly rental of P1,200.00 with
interest at the legal rate from the time he received the decision of
the trial court directing him to vacate until he effectively leaves the
premises. chanrob lesvi rtua lawlib rary chan robles v irt ual law l ibra ry

The trial court is further directed to take immediate steps to

implement this decision conformably with Art. 498 of the Civil Code
and the Rules of Court. This decision is final and executory. chanroblesvi rt ualawlib ra rychan rob les vi rtual law lib rary

SO ORDERED.

Cruz, Davide, Jr., Quiason, JJ., concur.

Endnotes:

1 Page 97, Rollo. chanrobles vi rtua l law lib rary

2 Presumable per month although the decision does not so specify. chanroble s virtual law lib rary

3 Jungco v. Court of Appeals, G.R. No. 78051, 8 November 1989, 179 SCRA 213. chanrobles v irt ual law l ibra ry

4 Sec. 2, Rule 20, Rules of Court; Insular Veneer v. Plan, G.R. L-40155, 10 September 1976, 73 SCRA 1. chanrobles vi rt ual law li bra ry

26
5 Pacweld Steel Corp. v. Asia Steel Corp. No. L-26325, 15 November 1982, 118 SCRA 229. chanrobles vi rt ual law li bra ry

6 Guzman v. Elbinias; G.R. No. 57395, 17 April 1989, 172 SCRA 240. chanrobles vi rtua l law lib rary

7 Ravelo v. Court of Appeals, No. L-40111, 27 October 1983, 125 SCRA 366. chanrobles vi rtua l law li bra ry

8 Reyes v. Concepcion, G.R. No. 56550, 1 October 1990, 190 SCRA 171. chanrobles vi rtua l law lib rary

9 Article 486, Civil Code. chanroble s virtual law l ibra ry

10 Pardell v. Bartolome, 23 Phil. 450 (1912).

27
 SECOND DIVISION

[G.R. No. 108228. February 1, 2001.]

SPOUSES MANUEL and SALVACION DEL CAMPO, Petitioners, v. HON. COURT OF APPEALS and
HEIRS OF JOSE REGALADO, SR., Respondents.

DECISION

QUISUMBING, J.:

This is a petition for review on certiorari of a decision of the Court of Appeals which affirmed the judgment of
the Regional Trial Court of Roxas City, Branch 15 in Civil Case No. V-5369, ordering the dismissal of the
action for repartition, resurvey and reconveyance filed by petitioners.

Pure questions of law are raised in this appeal as the following factual antecedents are undisputed: cha nro b1es vi rtua l 1aw lib ra ry

Salome, Consorcia, Alfredo, Maria, Rosalia, Jose, Quirico and Julita, all surnamed Bornales, were the original
co-owners of Lot 162 of the Cadastral Survey of Pontevedra, Capiz under Original Certificate of Title No.
18047. As appearing therein, the lot, which consisted of a total area of 27,179 square meters was divided in
aliquot shares among the eight (8) co-owners as follows: chan rob1es v irt ual 1aw l ibra ry

Salome Bornales 4/16

Consorcia Bornales 4/16

Alfredo Bornales 2/16

Maria Bornales 2/16

Jose Bornales 1/16

Quirico Bornales 1/16

Rosalia Bornales 1/16

Julita Bornales 1/16

On July 14, 1940, Salome sold part of her 4/16 share in Lot 162 for P200.00 to Soledad Daynolo. In the
Deed of Absolute Sale signed by Salome and two other co-owners, Consorcia and Alfredo, the portion of Lot
162 sold to Soledad was described as having more or less the following measurements: chanro b1es vi rt ual 1aw li bra ry

63-1/2 meters from point "9" to "10", 35 meters from point "10" to point "11", 30 meters from point "11" to
a certain point parallel to a line drawn from points "9" to "10" ; and then from this "Certain Point" to point
"9" and as shown in the accompanying sketch, and made an integral part of this deed, to SOLEDAD
DAYNOLO, her heirs and assigns. 1

Thereafter, Soledad Daynolo immediately took possession of the land described above and built a house
thereon. A few years later, Soledad and her husband, Simplicio Distajo, mortgaged the subject portion of Lot
162 as security for a P400.00 debt to Jose Regalado, Sr. This transaction was evidenced by a Deed of
Mortgage 2 dated May 1, 1947.

On April 14, 1948, three of the eight co-owners of Lot 162, specifically, Salome, Consorcia and Alfredo, sold
24,993 square meters of said lot to Jose Regalado, Sr.

On May 4, 1951, Simplicio Distajo, heir of Soledad Daynolo who had since died, paid the mortgage debt and
redeemed the mortgaged portion of Lot 162 from Jose Regalado, Sr. The latter, in turn, executed a Deed of
Discharge of Mortgage 3 in favor of Soledad’s heirs, namely: Simplicio Distajo, Rafael Distajo and Teresita
Distajo-Regalado. On same date, the said heirs sold the redeemed portion of Lot 162 for P1,500.00 to
herein petitioners, the spouses Manuel Del Campo and Salvacion Quiachon.

Meanwhile, Jose Regalado, Sr. caused the reconstitution of Original Certificate of Title No. 18047. The
reconstituted OCT No. RO-4541 initially reflected the shares of the original co-owners in Lot 162. However,
title was transferred later to Jose Regalado, Sr. who subdivided the entire property into smaller lots, each
covered by a respective title in his name. One of these small lots is Lot No. 162-C-6 with an area of 11,732
square meters which was registered on February 24, 1977 under TCT No. 14566.

28
In 1987, petitioners Manuel and Salvacion del Campo brought this complaint for "repartition, resurvey and
reconveyance" against the heirs of the now deceased Jose Regalado, Sr. Petitioners claimed that they owned
an area of 1,544 square meters located within Lot 162-C-6 which was erroneously included in TCT No.
14566 in the name of Regalado. Petitioners alleged that they occupied the disputed area as residential
dwelling ever since they purchased the property from the Distajos way back in 1951. They also declared the
land for taxation purposes and paid the corresponding taxes.

On April 1, 1987, summons were served on Regalado’s widow, Josefina Buenvenida, and two of her children,
Rosemarie and Antonio. Josefina and Rosemarie were declared in default on May 10, 1989 because only
Antonio filed an answer to the complaint.

During trial, petitioners presented the Deed of Absolute Sale 4 executed between Soledad Daynolo and
Salome Bornales as well as the Deed of Mortgage 5 and Deed of Discharge 6 signed by Jose Regalado, Sr.
The Deed of Absolute Sale 7 showing the purchase by the Del Campos of the property from the Distajos was
likewise given in evidence.

Despite the filing of an answer, Antonio failed to present any evidence to refute the claim of petitioners.
Thus, after considering Antonio to have waived his opportunity to present evidence, the trial court deemed
the case submitted for decision.

On November 20, 1990, the trial court rendered judgment dismissing the complaint. It held that while
Salome could alienate her pro-indiviso share in Lot 162, she could not validly sell an undivided part thereof
by metes and bounds to Soledad, from whom petitioners derived their title. The trial court also reasoned
that petitioners could not have a better right to the property even if they were in physical possession of the
same and declared the property for taxation purposes, because mere possession cannot defeat the right of
the Regalados who had a Torrens title over the land.

On appeal, the Court of Appeals affirmed the trial court’s judgment, with no pronouncement as to costs. 8

Petitioners now seek relief from this Court and maintain that: chanrob1e s virtual 1aw lib rary

I.

THE FACT THAT THE SALE OF THE SUBJECT PORTION CONSTITUTES A SALE OF A CONCRETE OR DEFINITE
PORTION OF LAND OWNED IN COMMON DOES NOT ABSOLUTELY DEPRIVE HEREIN PETITIONERS OF ANY
RIGHT OR TITLE THERETO;

II.

IN ANY EVENT, HEREIN PRIVATE RESPONDENTS ARE ALL ESTOPPED FROM DENYING THE RIGHT AND TITLE
OF HEREIN PETITIONERS. 9

In resolving petitioners’ appeal, we must answer the following questions: Would the sale by a co-owner of a
physical portion of an undivided property held in common be valid? Is respondent estopped from denying
petitioners’ right and title over the disputed area? Under the facts and circumstances duly established by the
evidence, are petitioners entitled to ‘repartition, resurvey and reconveyance’ of the property in question?

On the first issue, it seems plain to us that the trial court concluded that petitioners could not have acquired
ownership of the subject land which originally formed part of Lot 162, on the ground that their alleged right
springs from a void sale transaction between Salome and Soledad. The mere fact that Salome purportedly
transferred a definite portion of the co-owned lot by metes and bounds to Soledad, however, does not per
se render the sale a nullity. This much is evident under Article 493 10 of the Civil Code and pertinent
jurisprudence on the matter. More particularly in Lopez v. Vda. De Cuaycong, et.al. 11 which we find
relevant, the Court, speaking through Mr. Justice Bocobo, held that: chanrob 1es vi rtual 1aw lib rary

. . . The fact that the agreement in question purported to sell a concrete portion of the hacienda does not
render the sale void, for it is a well-established principle that the binding force of a contract must be
recognized as far as it is legally possible to do so. "Quando res non valet ut ago, valeat quantum valere
potest." (When a thing is of no force as I do it, it shall have as much force as it can have.) 12

Applying this principle to the instant case, there can be no doubt that the transaction entered into by
Salome and Soledad could be legally recognized in its entirety since the object of the sale did not even
exceed the ideal shares held by the former in the co-ownership. As a matter of fact, the deed of sale
executed between the parties expressly stipulated that the portion of Lot 162 sold to Soledad would be
taken from Salome’s 4/16 undivided interest in said lot, which the latter could validly transfer in whole or in
part even without the consent of the other co-owners. Salome’s right to sell part of her undivided interest in
the co-owned property is absolute in accordance with the well-settled doctrine that a co-owner has full
ownership of his pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute
another person in its enjoyment 13 Since Salome’s clear intention was to sell merely part of her aliquot
share in Lot 162, in our view no valid objection can be made against it and the sale can be given effect to
the full extent.

We are not unaware of the principle that a co-owner cannot rightfully dispose of a particular portion of a co-
owned property prior to partition among all the co-owners. However, this should not signify that the vendee

29
does not acquire anything at all in case a physically segregated area of the co-owned lot is in fact sold to
him. Since the co-owner/vendor’s undivided interest could properly be the object of the contract of sale
between the parties, what the vendee obtains by virtue of such a sale are the same rights as the vendor had
as co-owner, in an ideal share equivalent to the consideration given under their transaction. In other words,
the vendee steps into the shoes of the vendor as co-owner and acquires a proportionate abstract share in
the property held in common.

Resultantly, Soledad became a co-owner of Lot-162 as of the year 1940 when the sale was made in her
favor. It follows that Salome, Consorcia and Alfredo could not have sold the entire Lot 162 to Jose Regalado,
Sr. on April 14, 1948 because at that time, the ideal shares held by the three co-owners/vendors were
equivalent to only 10/16 of the undivided property less the aliquot share previously sold by Salome to
Soledad. Based on the principle that "no one can give what he does not have," 14 Salome, Consorcia and
Alfredo could not legally sell the shares pertaining to Soledad since a co-owner cannot alienate more than
his share in the co-ownership. We have ruled many times that even if a co-owner sells the whole property
as his, the sale will affect only his own share but not those of the other co-owners who did not consent to
the sale. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-
owner will only transfer the rights of said co-owner to the buyer, thereby making the buyer a co-owner of
the property. 15

In this case, Regalado merely became a new co-owner of Lot 162 to the extent of the shares which Salome,
Consorcia and Alfredo could validly convey. Soledad retained her rights as co-owner and could validly
transfer her share to petitioners in 1951. The logical effect of the second disposition is to substitute
petitioners in the rights of Soledad as co-owner of the land. Needless to say, these rights are preserved
notwithstanding the issuance of TCT No. 14566 in Regalado’s name in 1977.

Be that as it may, we find that the area subject matter of this petition had already been effectively
segregated from the ‘mother lot’ even before title was issued in favor of Regalado. It must be noted that 26
years had lapsed from the time petitioners bought and took possession of the property in 1951 until
Regalado procured the issuance of TCT No. 14566. Additionally, the intervening years between the date of
petitioners’ purchase of the property and 1987 when petitioners filed the instant complaint, comprise all of
36 years. However, at no instance during this time did respondents or Regalado, for that matter, question
petitioners’ right over the land in dispute. In the case of Vda. de Cabrera v. Court of Appeals, 16 we had
occasion to hold that where the transferees of an undivided portion of the land allowed a co-owner of the
property to occupy a definite portion thereof and had not disturbed the same for a period too long to be
ignored, the possessor is in a better condition or right than said transferees. (Potior est condition
possidentis). Such undisturbed possession had the effect of a partial partition of the co-owned property
which entitles the possessor to the definite portion which he occupies. Conformably, petitioners are entitled
to the disputed land, having enjoyed uninterrupted possession thereof for a total of 49 years up to the
present.

The lower court’s reliance on the doctrine that mere possession cannot defeat the right of a holder of a
registered Torrens title over property is misplaced, considering that petitioners were deprived of their
dominical rights over the said lot through fraud and with evident bad faith on the part of Regalado. Failure
and intentional omission to disclose the fact of actual physical possession by another person during
registration proceedings constitutes actual fraud. Likewise, it is fraud to knowingly omit or conceal a fact,
upon which benefit is obtained to the prejudice of a third person. 17 In this case, we are convinced that
Regalado knew of the fact that he did not have a title to the entire lot and could not, therefore, have validly
registered the same in his name alone because he was aware of petitioners’ possession of the subject
portion as well as the sale between Salome and Soledad. chanrob 1es vi rtua 1 1aw 1ib ra ry

That Regalado had notice of the fact that the disputed portion of Lot 162 was under claim of ownership by
petitioners and the latter’s predecessor is beyond question. Records show that the particular area subject of
this case was mortgaged by Soledad and her husband to Jose Regalado, Sr. as early as May 1, 1947 or one
year prior to the alienation of the whole lot in favor of the latter. Regalado never questioned the ownership
of the lot given by Soledad as security for the P400.00 debt and he must have at least known that Soledad
bought the subject portion from Salome since he could not have reasonably accepted the lot as security for
the mortgage debt if such were not the case. By accepting the said portion of Lot 162 as security for the
mortgage obligation, Regalado had in fact recognized Soledad’s ownership of this definite portion of Lot 162.
Regalado could not have been ignorant of the fact that the disputed portion is being claimed by Soledad and
subsequently, by petitioners, since Regalado even executed a Release of Mortgage on May 4, 1951, three
years after the entire property was supposedly sold to him. It would certainly be illogical for any mortgagee
to accept property as security, purchase the mortgaged property and, thereafter, claim the very same
property as his own while the mortgage was still subsisting.

Consequently, respondents are estopped from asserting that they own the subject land in view of the Deed
of Mortgage and Discharge of Mortgage executed between Regalado and petitioners’ predecessor-in-interest.
As petitioners correctly contend, respondents are barred from making this assertion under the equitable
principle of estoppel by deed, whereby a party to a deed and his privies are precluded from asserting as
against the other and his privies any right or title in derogation of the deed, or from denying the truth of any
material fact asserted in it. 18 A perusal of the documents evidencing the mortgage would readily reveal
that Soledad, as mortgagor, had declared herself absolute owner of the piece of land now being litigated.
This declaration of fact was accepted by Regalado as mortgagee and accordingly, his heirs cannot now be
permitted to deny it.

Although Regalado’s certificate of title became indefeasible after the lapse of one year from the date of the
decree of registration, the attendance of fraud in its issuance created an implied trust in favor of petitioners

30
and gave them the right to seek reconveyance of the parcel wrongfully obtained by the former. An action for
reconveyance based on an implied trust ordinarily prescribes in ten years. But when the right of the true and
real owner is recognized, expressly or implicitly such as when he remains undisturbed in his possession, the
said action is imprescriptible, it being in the nature of a suit for quieting of title. 19 Having established by
clear and convincing evidence that they are the legal owners of the litigated portion included in TCT No.
14566, it is only proper that reconveyance of the property be ordered in favor of petitioners. The alleged
incontrovertibility of Regalado’s title cannot be successfully invoked by respondents because certificates of
title merely confirm or record title already existing and cannot be used to protect a usurper from the true
owner or be used as a shield for the commission of fraud. 20

WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals in CA-G.R. CV No.
30438 is REVERSED and SET ASIDE. The parties are directed to cause a SURVEY for exact determination of
their respective portions in Lot 162-C-6. Transfer Certificate of Title No. 14566 is declared CANCELLED and
the Register of Deeds of Capiz is ordered to ISSUE a new title in accordance with said survey, upon finality
of this decision.

Costs against respondents.

SO ORDERED.

Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

Endnotes:

1. Rollo, pp. 46-47.

2. Id. at 49.

3. Id at 51.

4. Id. at 46-48.

5. Supra, note 2.

6. Supra. note 3.

7. Supra, note 1 at 52.

8. Id. at 17.

9. Id. at 27 & 31.

10. Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon
the termination of the co-ownership.

11. 74 Phils. 601 (1944).

12. Id. at 609 (Emphasis ours).

13. Nufable v. Nufable, 309 SCRA 692, 700 (1999).

14. Ibid.

15. Tomas Claudio Memorial College, Inc. v. Court of Appeals, Et Al., 316 SCRA 502, 509 (1999).

16. 267 SCRA 339, 357 (1997)

17. Heirs of Manuel A. Roxas v. Court of Appeals, 270 SCRA 309, 320 (1997).

18. Civil Code of the Philippines Annotated, 1989 Edition, Edgardo L. Paras, p. 776 citing 31 CJS 195.

19. David, Et. Al. v. Malay, Et Al., G. R No. 132644, November 19, 1999, pp. 8-10 citing: Armamento v.
Guerrero, 96 SCRA 178 (1980); Javier v. CA, 231 SCRA 498 (1994); Alzona, et. al. v. Capunitan & Reyes,
114 Phil. 377 (1962); Gonzales v. Jimenez, Sr., 13 SCRA 80 (1965); Cuaycong, et. al. v. Cuaycong, Et Al.,
21 SCRA 1192 (1967); Faja v. CA, 75 SCRA 441 (1977) & Heirs of Jose Olviga v. CA, 227 SCRA 330 (1993).

20 Esquivias v. Court of Appeals, 272 SCRA 803, 816 (1997).

31
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 166790 November 19, 2014

JUAN P. CABRERA, Petitioner,

vs.
HENRY YSAAC, Respondent.

DECISION

LEONEN, J.:

Unless all the co-owners have agreed to partition their property, none of them may sell a definite
portion of the land. The co-owner may only sell his or her proportionate interest in the co-ownership.
A contract of sale which purports to sell a specific or definite portion of unpartitioned land is null and
void ab initio.

In this petition for review on certiorari,1 Juan P. Cabrera assails the Court of Appeals' decision dated
June 19, 20032and resolution dated January 3, 2005.3 These decisions ruled that a specific
performance to execute a deed of sale over a parcel of land is not available as a relief for Juan
Cabrera.

It appears that the heirs of Luis and Matilde Ysaac co-owned a 5,517-square-meter parcel of land
located in Sabang, Naga City, covered by Original Certificate of Title (OCT) No. 506.4 One of the co-
owners is respondent, Henry Ysaac.

Henry Ysaac leased out portions of the property to several lessees. Juan Cabrera, one of the
lessees, leased a 95-square-meter portion of the land beginning in 1986.5

On May 6, 1990, Henry Ysaac needed money and offered to sell the 95-square-meter piece of land
to Juan Cabrera.6 He told Henry Ysaac that the land was too small for his needs because there was
no parking space for his vehicle.7

In order to address Juan Cabrera’s concerns, Henry Ysaac expanded his offer to include the two
adjoining lands that Henry Ysaac was then leasing to the Borbe family and the Espiritu family. Those
three parcels of land have a combined area of 439-square-meters. However, Henry Ysaac warned
Juan Cabrera that the sale for those two parcels could only proceed if the two families agree to it.

Juan Cabrera accepted the new offer. Henry Ysaac and Juan Cabrera settled on the price of
₱250.00 per square meter, but Juan Cabrera stated that he could only pay in full after his retirement
on June 15, 1992.8 Henry Ysaac agreed but demanded for an initial payment of ₱1,500.00, which
Juan Cabrera paid.9

According to Juan Cabrera, Henry Ysaac informed him that the Borbe family and the Espiritu family
were no longer interested in purchasing the properties they were leasing. Since Mamerta Espiritu of
the Espiritu family initially considered purchasing the property and had made an initial deposit for it,
Juan Cabrera agreed to reimbursethis earlier payment. On June 9, 1990, Juan Cabrera paid the
amount of ₱6,100.00.10 Henry Ysaac issued a receipt for this amount. ₱3,100.00 of the amount paid
was reimbursed to Mamerta Espiritu and, in turn, she gaveJuan Cabrera the receipts issued to her
by Henry Ysaac.11

On June 15, 1992, Juan Cabrera tried to pay the balance of the purchase price to Henry Ysaac.
However,at that time, Henry Ysaac was in the United States. The only person in Henry Ysaac’s
residence was his wife. The wife refused to accept Juan Cabrera’s payment.12

Sometime in September 1993, JuanCabrera alleged that Henry Ysaac approached him, requesting
to reduce the area of the land subject of their transaction. Part of the 439-square-meter land was
going to be made into a barangay walkway, and another part was being occupied by a family that
was difficult to eject.13 Juan Cabrera agreed to the proposal. The land was surveyed again.

32
According to Juan Cabrera, Henry Ysaac agreed to shoulder the costs of the resurvey, which Juan
Cabrera advanced in the amount of ₱3,000.00.

The resurvey shows that the area now covered by the transaction was 321 square meters.14 Juan
Cabrera intended to show the sketch plan and pay the amount due for the payment of the lot.
However, on that day, Henry Ysaac was in Manila. Once more, Henry Ysaac’s wife refused to
receive the payment because of lack of authority from her husband.15

On September 21, 1994, Henry Ysaac’s counsel, Atty. Luis Ruben General, wrote a letter addressed
to Atty. Leoncio Clemente, Juan Cabrera’s counsel.16 Atty. General informed Atty. Clemente that his
client is formally rescinding the contract of sale because Juan Cabrera failed to pay the balance of
the purchase price of the land between May 1990 and May 1992. The letter also stated that Juan
Cabrera’s initial payment of ₱1,500.00 and the subsequent payment of ₱6,100.00 were going to be
applied as payment for overdue rent of the parcel of land Juan Cabrera was leasing from Henry
Ysaac.17 The letter also denied the allegation of Juan Cabrera that Henry Ysaac agreed to shoulder
the costs of the resurveying of the property.18 Juan Cabrera, together with his uncle, Delfin Cabrera,
went to Henry Ysaac’s house on September 16, 1995 to settle the matter.19 Henry Ysaac told Juan
Cabrera that he could no longer sell the property because the new administrator of the property was
his brother, Franklin Ysaac.20

Due to Juan Cabrera’s inability to enforce the contract of sale between him and Henry Ysaac, he
decided to file a civil case for specific performance on September 20, 1995.21 Juan Cabrera prayed
for the execution of a formal deed of sale and for the transfer of the title of the property in his
name.22 He tendered the sum of ₱69,650.00 to the clerk of court as payment of the remaining
balance of the original sale price.23 On September 22, 1995, a notice of lis pendenswas annotated on
OCT No. 560.24

In his answer with counterclaim,25 Henry Ysaac prayed for the dismissal of Juan Cabrera’s
complaint.26 He also prayed for compensation in the form of moral damages, attorney’s fees, and
incidental litigation expenses.27

Before the Regional Trial Court decided the case, the heirs of Luis and Matilde Ysaac, under the
administration of Franklin Ysaac, sold their property to the local government ofNaga City on
February 12, 1997.28 The property was turned into a projectfor the urban poor of the city.29 During the
trial, Corazon Borbe Combe of the Borbe family testified that contrary to what Juan Cabrera claimed,
her family never agreed to sell the land they were formerly leasing from Henry Ysaac in favor of
Juan Cabrera.30 The Borbe family bought the property from NagaCity’s urban poor program after the
salebetween the Ysaacs and the local government of Naga City.31

On September 22, 1999, the Regional Trial Court of Naga City ruled that the contract of sale
between Juan Cabrera and Henry Ysaac was duly rescinded when the former failed to pay the
balance of the purchase price in the period agreed upon.32 The Regional Trial Court found that there
was an agreement between Juan Cabrera and Henry Ysaac as to the sale of land and the
corresponding unit price.33 However, aside from the receipts turned over by Mamerta Espiritu of the
Espiritu family to Juan Cabrera, there was no "evidence that the other adjoining lot occupants
agreed to sell their respective landholdings" to Juan Cabrera.34 The Regional Trial Court also
doubted that Juan Cabrera was willing and able to pay Henry Ysaac on June 15, 1992. According to
the trial court:

[A]fter the said refusal of Henry Ysaac’s wife, plaintiff [Juan Cabrera] did not bother to write tothe
defendant [Henry Ysaac] or to any of the co-owners his intention to pay for the land or he could have
consigned the amount in court at the same time notifying [Henry Ysaac] of the consignation in
accordance with Article 1256 of the Civil Code. Furthermore, in September, 1993 [Juan Cabrera]
was able to meet [Henry Ysaac] whenthe latter allegedly talked to him about the reduction of the
areahe was going to buy. There is no showing that [Juan Cabrera] again tendered his payment to
Henry Ysaac. Instead, he allegedly made his offer after he had the land resurveyed but defendant
was then in Manila. There is no evidence as to what date this offer was made. . . . . .

[T]he court does not see any serious demand made for performance of the contract on the part of
[Juan Cabrera] in 1992 when he allegedly promised to pay the balance of the purchase price.
Neither could he demand for the sale of the adjoining lots because the occupants thereof did not
manifest their consent thereto. At the most, he could have demanded the sale of the lot which he
was occupying. If his payment was refused in 1995, he cannot demand for damages because the
rescission of the contract was relayed to him in writing in Exhibit "4".35

33
The Regional Trial Court dismissed Juan Cabrera’s complaint and Henry Ysaac’s
counterclaim.36 Juan Cabrera appealed the Regional Trial Court’s decision.37

The Court of Appeals agreed with the Regional Trial Court that there was a perfected contract of
sale between Juan Cabrera and Henry Ysaac.38 According to the Court of Appeals, even if the
subject of the sale is part of Henry Ysaac’s undivided property, a co-owner may sell a definite portion
of the property.39

The Court of Appeals also ruled that the contract of sale between Juan Cabrera and Henry Ysaac
was not validly rescinded.40 For the rescission to be valid under Article 1592 of the Civil Code, it
should have been done through a judicial or notarial act and not merely through a letter.41

However, due to the sale of the entire property of the Ysaac family in favor of the local government
of Naga City, the Court of Appeals ruled that the verbal contract between Juan Cabrera and Henry
Ysaac cannot be subject to the remedy of specific performance.42 The local government of Naga City
was an innocent purchaser for value, and following the rules on double sales, it had a preferential
right since the sale it entered into was in a public instrument, while the one with Juan Cabrera was
only made orally.43 The only recourse the Court of Appeals could do is to order Henry Ysaac to return
the initial payment of the purchase price of ₱10,600.00 (₱1,500.00 and ₱6,100.00 as evidenced by
the receipts issued by Henry Ysaac to Juan Cabrera, and ₱3,000.00 for the surveying expenses) as
payment of actual damages. The Court of Appeals likewise awarded attorney’s fees and litigation
costs. To wit:

WHEREFORE, premises considered, the assailed decision of the lower court is hereby SET ASIDE
and a new one is entered as follows:

1. Declaring that there is no valid rescission of the contract of sale of the subject lot between
plaintiff-appellant [Juan P. Cabrera] and defendant-appellee [Henry Ysaac]; however,
specific performance is not an available relief to plaintiff because of the supervening sale of
the property to the City of Naga, an innocent purchaser and for value;

2. Ordering [Henry Ysaac] to pay [Juan P. Cabrera] actual damages in the amount of
₱10,600.00, with legal interest of 12% per annum from September 20, 1995 until paid;

3. Ordering [Henry Ysaac] to pay [Juan P. Cabrera], the amount of thirty thousand pesos
(₱30,000.00) by way of attorney’s fees and litigation expenses.

Henry Ysaac filed his motion for reconsideration dated July 14, 2003 of the decision of the Court of
Appeals.44 On the other hand, Juan Cabrera immediately filed a petition for reviewon certiorari with
this court.45 In the resolution dated October 15, 2003, this court denied the petition "for being
premature since respondent’s motion for reconsideration of the questioned decision of the Court of
Appeals is still pending resolution."46

In the resolution dated January 3,2005, the Court of Appeals denied Henry Ysaac’s motion for
reconsideration. On February24, 2005, Juan Cabrera filed another petition with this court,
questioning the propriety of the Court of Appeals’ decision and resolution.

This court initially noted that the petition was filed out of time. The stamp on the petition states that it
was received by this court on March 24, 2005,47 while the reglementary period to file the petition
expired on February 28, 2005. Thus, the petition was dismissed in this court’s resolution dated April
27, 2005.48 Petitioner filed a motion for reconsideration.49 However, the same was denied with finality
in this court’s resolution dated August 17, 2005.50

In a letter addressed to the Chief Justice, petitioner argued that it would be unfair to him if a clerical
error would deprive his petition from being judged on the merits. Petitioner emphasized that the
registry receipts show that he filed the petition on February 24, 2005, not March 24, 2005, as noted
by this court in his pleading.51 This court treated the letter as a second motion for reconsideration. In
the resolution dated March 31, 2006, this court found merit in petitioner’s letter.52 The petition was
reinstated, and respondent was ordered to file his comment.53Respondent filed his comment on
September 18, 2006.54 This court required petitioner to file a reply,55 which petitioner complied with on
January 15, 2007.56

The issues raised by petitioner and respondent are summarized as follows:

34
 1. Whether this court could take cognizance of issues not raised by petitioner but by
respondent in his comment to the petition for review;

2. Whether there was a valid contractof sale between petitioner and respondent;

3. Whether the contract ofsale still subsisted;

a. Whether the contract was terminated through rescission;

b. Whether the contract was no longer enforceable due to the supervening sale of
the property to the local government of Naga City;

4. Whether petitioner is entitled to the execution of a deed of sale in his favor; and

5. Whether petitioner is entitled to actual damages, attorney’s fees, and costs of litigation.

The petition should be denied.

This court can resolve issues raised by both parties

Petitioner stated that the errors inthis case are: (1) "the [Court of Appeals] erred in holding that the
relief of specific performance is not available to [petitioner] supposedly because of the supervening
sale of [the] property to the City Government of Naga";57 and (2) "consequently, the [Court of
Appeals] erred in not ordering the execution of the necessary deed of sale in favor of
[petitioner]."58 Petitioner argues that this court should limit its adjudication to these two errors.59

On the other hand, respondent raised issues on the validity of the contract of sale in favor of
petitioner, and the propriety of the award of actual damages with interest, attorney’s fees, and
litigation expenses.60

For petitioner, if respondent wanted to raise issues regarding the Court of Appeals’ decision,
respondent should have interposed a separate appeal.61

Petitioner’s position is erroneous. This court can resolve issues and assignments of error argued by
petitioner and respondent.

This court "is clothed with ample authority to review matters, even if they are not assigned as errors
in their appeal,if it finds that their consideration is necessary to arriveat a just decision of the
case."62 We can consider errors not raised by the parties,more so if these errors were raised by
respondent.

Respondent raised different issues compared with those raised by petitioner. However, the
assignment of error of respondent was still responsive to the main argument of petitioner.
Petitioner’s argument works on the premise that there was a valid contract. By attacking the validity
of the contract, respondent was merely responding to the premise of petitioner’s main argument. The
issue is relevant to the final disposition of this case; hence, it should be considered by this court in
arriving at a decision.

II

There was no valid contract of sale between petitioner and respondent

Petitioner agrees with the decision of the Court of Appeals that there was a perfected contract of
sale between him and respondent.63

Respondent, however, argues that there was no contract between him and petitioner because under
Article 1475 of the Civil Code, there has to be a meeting of the minds as to the price and the object
of the contract.64 Respondent argues that there was no meeting of the minds as to the final
price65 and size66 of the property subject of the sale.

35
In addition, while respondent admits that he was willing to sell the property being leased from him by
the Borbe family and the Espiritu family, petitioner presented no evidence to show that these families
agreed to the sale in favor of petitioner. During trial, Corazon Borbe Combe of the Borbe family
testified that her family never agreed to allow the sale of the property in favor of
petitioner.67 Respondent likewise alleged that Mamerta Espiritu of the Espiritu family eventually
bought the property occupied by her family, which is contrary to the claim that petitioner obtained the
consent of Mamerta Espiritu to have the land sold in his favor.68 Petitioner replied that respondent
sold 113 square meters of the 321-square-meter property to the Espiritu family on January 17,
1996.69 Petitioner argued that Mamerta Espiritu was not a buyer in good faith because in 1990, she
voluntarily agreed to surrender the lot for sale in favor of petitioner because she did not have the
money to pay for the lot. Hence, the sale in favor of Mamerta Espiritu should not supersede the sale
in favor of petitioner.70

The Regional Trial Court ruled that there was a valid contract of sale, although it found that there
was no evidence to support petitioner’s claim that he was able to secure the consent of the Espiritu
family and the Borbe family to the sale of the land.71 There was a valid contract of sale subject to a
suspensive condition, but the suspensive condition was not complied with.

For the Court of Appeals, there was a valid contract of sale.72 The Court of Appeals’ ruling was based
on the idea that a co-owner could sell a definite portion of the land owned in common, and not
because the suspensive conditions of the contract were complied with. In ruling this way, the Court
of Appeals relied on Pamplona v. Morato,73 which stated that:

. . . [A] "co-owner may validly sell his undivided share of the property owned in common. (If the part
sold happens to be his allotted share after partition, the transaction is entirely valid). Now then if
there has been no express partition as yet, but the co-owner who sells points out to his buyers the
boundaries of the parthe was selling, and the other coowners make no objection, there is in effect
already a partial partition, and the sale of the definite portioncan no longer be assailed."74

We find that there was no contract of sale. It was null ab initio.

As defined by the Civil Code, "[a] contract is a meeting of minds between two persons whereby one
binds himself, with respect to the other, to give something or to render some service."75 For there to
be a valid contract, there must be consent of the contracting parties, an object certain which is the
subject matter of the contract, and cause of the obligation which is established.76 Sale is a special
contract. The seller obligates himself to deliver a determinate thing and to transfer its ownership to
the buyer. In turn, the buyer pays for a price certain in money or its equivalent.77 A "contract of sale is
perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price."78 The seller and buyer must agree as to the certain thing that will be
subject of the sale as well as the price in which the thing will be sold. The thing to be sold is the
object of the contract, while the price is the cause or consideration.

The object of a valid sales contract must be owned by the seller. If the seller is not the owner, the
seller must be authorized by the owner to sell the object.79

Specific rules attach when the seller co-ownsthe object of the contract. Sale of a portion of the
property is considered an alteration of the thing owned in common. Under the Civil Code, such
disposition requires the unanimous consent of the other co-owners.80 However, the rules also allow a
co-owner to alienate his or her part in the co-ownership.81

These two rules are reconciled through jurisprudence.

If the alienation precedes the partition, the co-owner cannot sell a definite portion of the land without
consent from his or her co-owners. He or she could only sell the undivided interest of the co-owned
property.82 As summarized in Lopez v. Ilustre,83 "[i]f he is the owner of an undivided half of a tract of
land, he has a right to sell and convey an undivided half, but he has no right to divide the lot into two
parts, and convey the whole of one part by metes and bounds."84

The undivided interestof a co-owner is also referred to as the "ideal or abstract quota" or
"proportionate share." On the other hand, the definite portion of the land refers to specific metes and
bounds of a co-owned property.

36
To illustrate, if a ten-hectare property is owned equally by ten coowners, the undivided interest of a
co-owner is one hectare. The definite portion of that interest is usually determined during judicial or
extrajudicial partition. After partition, a definite portion of the property held in common is allocated to
a specific co-owner. The co-ownership is dissolved and, in effect, each of the former co-owners is
free to exercise autonomously the rights attached to his or her ownership over the definite portion of
the land. It is crucial that the co-owners agree to which portion of the land goes to whom.

Hence, prior to partition, a sale of a definite portion of common property requires the consent of all
co-owners because it operates to partition the land with respect to the co-owner selling his or her
share. The co-owner or seller is already marking which portion should redound to his or her
autonomous ownership upon future partition.

The object of the sales contract between petitioner and respondent was a definite portion of a co-
owned parcel of land. At the time of the alleged sale between petitioner and respondent, the entire
property was still held in common. This is evidenced by the original certificate of title, which was
under the names of Matilde Ysaac, Priscilla Ysaac, Walter Ysaac, respondent Henry Ysaac,
Elizabeth Ysaac, Norma Ysaac, Luis Ysaac, Jr., George Ysaac, Franklin Ysaac, Marison Ysaac,
Helen Ysaac, Erlinda Ysaac, and Maridel Ysaac.85

The rules allow respondent to sell his undivided interestin the coownership. However, this was not
the object of the sale between him and petitioner. The object of the sale was a definite portion. Even
if it was respondent who was benefiting from the fruits of the lease contract to petitioner, respondent
has "no right to sell or alienate a concrete, specific or determinate part of the thing owned in
common, because his right over the thing is represented by quota or ideal portion without any
physical adjudication."86

There was no showing that respondent was authorized by his coowners to sell the portion of land
occupied by Juan Cabrera, the Espiritu family, or the Borbe family. Without the consent of his co-
owners, respondent could not sell a definite portion of the co-owned property.

Respondent had no right to define a 95-square-meter parcel of land, a 439-square-meter parcel of

land, or a 321-square-meter parcel of land for purposes of selling to petitioner. The determination of
those metes and bounds are not binding to the co-ownership and, hence, cannot be subject to sale,
unless consented to by all the co-owners.

In finding that there was a valid contract of sale between petitioner and respondent, the Court of
Appeals erred in the application of Pamplona v. Moreto.87 The ruling in Pamplona should be read and
applied only in situations similar to the context of that case.

Pamplona involved the Spouses Moreto who owned three (3) parcels of land with a total area of
2,346 square meters. The spouses had six (6) children. After the wife had died, the husband sold
one of the parcels to the Pamplona family, even if the conjugal partnership had not yet been
liquidated. The parcel sold measured 781 square meters, which was less than the ideal share of the
husband in the estate. This court allowed the sale to prosper because of the tolerance from the
husband’s co-heirs. This court ruled:

The title may be pro-indiviso or inchoate but the moment the coowner as vendor pointed out its
location and even indicated the boundaries over which the fences were to be erected without
objection, protest or complaint bythe other co-owners, on the contrary they acquiesced and tolerated
such alienation, occupation and possession, We rule that a factual partition or termination of the co-
ownership, although partial, was created, and barred not only the vendor, Flaviano Moreto, butalso
his heirs, the private respondents herein from asserting as against the vendees petitioners any right
or title in derogation of the deed of sale executed by said vendor Flaviano Moreto.88 (Emphasis
supplied)

In Pamplona, the co-heirs of Flaviano Moreto only questioned the sale to the Pamplona family nine
(9) years after the sale. By then, the Pamplona family had exercised several acts of ownership over
the land. That is why this court considered it acquiescence or tolerance on the part of the co-heirs
when they allowed the Pamplonas to take possession and build upon the land sold, and only
questioned these acts several years later.

The ruling in Pamplonadoes not apply to petitioner. There was no evidence adduced during the trial
that respondent’s co-owners acquiesced or tolerated the sale to petitioner. The co-owners tolerated

37
petitioner’s possession of a portion of their land because petitioner was a lessee over a 95-square-
meter portion of the property, not the buyer of the 321-squaremeter portion.

There was also no evidence of consent to sell from the co-owners. When petitioner approached
respondent in 1995 to enforce the contract of sale, respondent referred him to Franklin Ysaac, the
administrator over the entire property. Respondent’s act suggests the absence of consent from the
co-owners. Petitioner did not show that he sought Franklin Ysaac’s consent as administrator and the
consent of the other co-owners. Without the consent of the co-owners, no partial partition operated
in favor of the sale to petitioner.

At best, the agreement between petitioner and respondent is a contract to sell, not a contract of sale.
A contract to sell is a promise to sell an object, subject to suspensive conditions.89 Without the
fulfillment of these suspensive conditions, the sale does not operate to determine the obligation of
the seller to deliver the object.

A co-owner could enter into a contract to sell a definite portion of the property. However, such
contract is still subject to the suspensive condition of the partition of the property, and that the other
co-owners agree that the part subject of the contract to sell vests in favor of the co-owner’s buyer.
Hence, the co-owners’ consent is an important factor for the sale to ripen.

A non-existent contract cannot be a

source of obligations, and it cannot
be enforced by the courts

Since petitioner believes that there was a perfected contract of sale between him and respondent,
he argues that a deed of sale should be formally executed. Petitioner agrees with the Court of
Appeals’ finding that there was no valid rescission of the contract in accordance with Article 1592 of
the Civil Code.90 However, petitioner disagrees with the Court of Appeals when it ruled that the
contract was no longer enforceable due to the supervening sale with the local government of Naga
City. Petitioner argues that the sale in favor of the local government of Naga City was not made in
good faith. Before the sale was finalized between the local government and the heirs of Luis and
Matilde Ysaac, petitioner had a notice of lis pendens annotated to OCT No. 506.91 It was presumed
that the local government had due notice of petitioner’s adverse claim, thus, it cannot be considered
an innocent purchaser.

For respondent, due to the inexistence of a valid contract of sale, petitioner cannot demand specific
performance from respondent.92 Respondent disagrees with the Court of Appeals when it stated that
Article 1592 of the rescission of contract of sale applies. There is no need to apply Article 1592
because there was no contract to begin with.93 The contract between respondent and petitioner was
terminated by virtue of the letter dated September 21, 1994.94

We rule in favor of respondent.

The absence of a contract of sale means that there is no source of obligations for respondent, as
seller, orpetitioner, as buyer. Rescission is impossible because there is no contract to rescind. The
rule in Article 1592 that requires a judicial or notarial act to formalize rescission of a contract of sale
of an immovable property does not apply. This court does not need to rule whether a letter is a valid
method of rescinding a sales contract over an immovable property because the question is moot and
academic.

Even if we assume that respondent had full ownership of the property and that he agreed to sell a
portion of the property to petitioner, the letter was enough to cancel the contract to sell. Generally,
"[t]he power to rescind obligations is implied in reciprocal ones, in case one of the obligors should
not comply with what is incumbent on him."95

For the sale of immovable property, the following provision governs its rescission:

Article 1592. In the sale of immovable property, even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of right take place,
the vendee may pay, even after the expiration of the period, as long as no demand for rescissionof
the contract has been made upon him either judicially or by notarial act. After the demand, the court
may not grant him a new term.

38
This provision contemplates (1) a contract of sale of an immovable property and (2) a stipulation in
the contract that failure to pay the price at the time agreed upon will cause the rescission of the
contract. The vendee or the buyer can still pay even after the time agreed upon, if the agreement
between the parties has these requisites. This right of the vendee to pay ceases when the vendor or
the seller demands the rescission of the contract judicially or extra judicially. In case of an extra
judicial demand to rescind the contract, it should be notarized.

Hence, this provision does not apply if it is not a contract of sale of an immovable property and
merely a contract to sellan immovable property. A contract to sell is "where the ownership or title is
retained by the seller and is not to pass until the full payment of the price, such payment being a
positive suspensive condition and failure of which is not a breach, casual or serious, but simply an
event that prevented the obligation of the vendor to convey title from acquiring binding force."96

In a similar case entitled Manuel v. Rodriguez,97 Eusebio Manuel offered to buy the land owned by
Payatas Subdivision, Inc. The Secretary Treasurer of Payatas Subdivision, Eulogio Rodriguez, Sr.,
agreed to sell the land to Eusebio Manuel after negotiations. Similar to this case, the agreement was
only made orally and not in writing. An initial payment was made, and a final payment was to be
madenine (9) to ten (10) months later. Manuel never paid for the latter installment; hence, Eulogio
Rodriguez cancelled their agreement and sold the land to someone else.

In Manuel, this court categorically stated that Article 1592 "does not apply to a contract to sell or
promise to sell, where title remains with the vendor until fulfillment to a positive suspensive condition,
such as full payment of the price."98 This court upheld that the contract to sell was validly cancelled
through the non-payment of Eusebio Manuel. The same conclusion applies in this case.

The law does not prescribe a form to rescind a contract to sell immovable property. In Manuel, the
non-payment operated to cancel the contract. If mere non-payment is enough to cancel a contract to
sell, the letter given to petitioner’s lawyer is also an acceptable form of rescinding the contract. The
law does not require notarization for a letter to rescind a contract to sell immovable property.
Notarization is only required if a contract of sale is being rescinded.

Petitioner argued that he was willing to comply with the suspensive condition on the contract to sell
because he was ready to pay the balance of the purchase price on June 15, 1992.99 However, his
argument is unmeritorious. As ruled by the Regional Trial Court, petitioner should have resorted to
the various modes of consignment when respondent’s wife refused to accept the payment on
respondent’s behalf.100

Therefore, even if we assumed that the contract between petitioner and respondents were perfected,
the strict requisites in Article 1592 did not apply because the only perfected contract was a contract
to sell, not a contract of sale. The courts cannot enforce the right of petitioner to buy respondent’s
property. We cannot order the execution of a deed of sale between petitioner and respondent.

The question of double sale also becomes moot and academic. There was no valid sale between
petitioner and respondent, while there was a valid sale between the local government of Naga City
and respondent and his coowners. Since there is only one valid sale, the ruleon double sales under
Article 1544 of the Civil Code does not apply.101

Compensatory damages, attorney’s

fees, and costs of litigation

Respondent argued that petitioner is not entitled to the compensatory damages that the Court of
Appeals awarded. According to respondent, petitioner continues to occupy the 95-square-meter
property that he has been leasing since 1986 because the parcel was not included in the sale to the
local government of Naga City.102 Since April 30, 1990, petitioner has not been paying rent to
respondent despite his continued occupation of the property.103Therefore, there was no unjust
enrichment on the part of respondent when he applied petitioner’s initial payment over the sale of the
property as payment for rent.

Respondent argued further that the award of attorney’s fees and litigation expenses in favor of
petitioner was also erroneous because prior to this litigation, respondent already informed petitioner
that his claim has no basis in law and fact.104 Yet, petitioner persisted on filing this case.105

39
We rule that petitioner is entitled to the return of the amount of money because he paid it as
consideration for ownership of the land. Since the ownership of the land could not be transferred to
him, the money he paid for that purpose must be returned to him. Otherwise, respondent will be
unjustly enriched.

Respondent’s claim for rent in arrears is a separate cause of action from this case. For petitioner’s
1âwphi1

earnestmoney payment to be considered payment for his rent liabilities, the rules of compensation
under Article 1279 of the Civil Code must be followed.106

It was not proven during trial if petitioner's rental liability to respondent is due, or if it is already
liquidated and demandable. Hence, this court is limited to uphold the ruling of the Court of Appeals,
but such payment could be subject to the rule on compensation.

However, petitioner is not entitled to attorney's fees and the costs of litigation. The Court of Appeals
awarded attorney's fees to petitioner "just to protect his right [because petitioner] reached this court
to seek justice for himself."107

Contrary to the Court of Appeals' ruling, we find that petitioner did not have a clear right over the
property in question. The Court of Appeals awarded attorney's fees and litigation costs on the
premise that the contract between petitioner and respondent was perfected. Without a valid contract
that stipulates his rights, petitioner risked litigation in order to determine if he has rights, and not to
protect rights that he currently has. Hence, the award of attorney's fees and litigation costs was not
properly justified.

WHEREFORE, the petition is DENIED. The Court of Appeals' decision dated June 19, 2003 in CA-
G.R. CV No. 65869 is SET ASIDE. The contract between petitioner and respondent is DECLARED
invalid and, therefore, cannot be subject to specific performance. Respondent is ORDERED to
return ₱10,600.00 to petitioner, with legal interest of 12% per annum from September 20, 1995 until
June 30, 2013 and 6% per annum from July 1, 2013 ·until fully paid. The award of attorney's fees
and litigation expenses is DELETED.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

40
MARIA LOURDES P.A. SERENO
Chief Justice

Footnotes

1
Rollo, pp. 10-22.

2
Cabrera v. Ysaac, docketed as CA-G.R. CV No. 65869 and decided by the Court of
Appeals' Eight Division. The decision was penned by Associate Justice Rosmari D.
Carandang, with Associate Justices Conrado M. Vasquez, Jr. and Mercedes Gozo-Dadole
concurring.

3
Resolved by the Court of Appeals' Special Former Elghth Division. The resolution was
penned by Associate Justice Rosmari D. Carandang, with Associate Justices Conrado M.
Vasquez, Jr. and Rodrigo V. Cosico concurring.

4
Rollo, pp. 80-81.

5
Id. at 58.

6
Id.

7
Id. at 38.

8
Id.

9
Id.

10
Id.

11
Id.

12
Id.

13
Id. at 16.

14
Id.

15
Id. at 39.

16
Id. at 40.

17
Id. at 108.

18
Id. at 40.

19
Id. at 39.

20
Id.

21
Id. at 24-28. The case was docketed as Civil Case No. 95-3443 in the Regional Trial Court,
Fifth Judicial Region, Branch 24 of Naga City.

22
Id. at 28.

23
Id. at 39.

24
Id. at 81.

41
25
Id. at 29-34.

26
Id. at 33.

27
Id. at 29-34.

28
Id. at 40.

29
Id.

30
Id.

31
Id.

Id. at 37-42. The decision dated September 22, 1999 was rendered by Judge Corazon A.
32

Tordilla.

33
Id. at 40.

34
Id. at 41.

35
Id.

36
Id. at 42.

37
Id. at 43.

38
Id. at 60.

39
Id. at 60-61.

40
Id. at 61.

41
Id.

42
Id. at 61-62.

43
Id. at 62.

44
Id. at 65-75.

45
The petition was docketed as G.R. No. 159094.

46
Rollo, p. 76.

47
Id. at 10.

48
Id. at 84.

49
Id. at 85-90.

50
Id. at 92.

51
Id. at 82-83.

52
Id. at 101-103.

53
Id. at 103.

54
Id. at 106-124.

42
55
Id. at 126.

56
Id. at 135-137.

57
Id. at 18.

58
Id.

59
Id. at 136-137.

60
Id. at 111-122.

61
Id. at 136.

62
Globe Telecom, Inc. v. Florendo-Flores, 438 Phil. 756, 764 (2002) [Per J. Bellosillo,
Second Division], citing Barons Marketing Corp v. Court of Appeals,349 Phil. 966 (1998) [Per
J. Puno, Second Division] (Emphasis supplied).

63
Rollo, p. 18.

64
Id. at 112.

65
Id. at 112-113.

66
Id. at 114.

67
Id. at 39-40.

68
Id. at 113-114.

69
Id. at 20-21.

70
Id.

71
Id. at 40-41.

72
Id. at 60.

73
185 Phil. 556 (1980) [Per J. Guerrero, First Division].

74
The Court of Appeals decisiondid not cite directly from the Pamplona case. Instead, it lifted
the digest in E. Paras, CIVIL CODE OF THE PHILIPPINES ANNOTATED, vol. II, 15th Ed.
351 (2002).

75
CIVIL CODE, art. 1305.

76
CIVIL CODE, art. 1318.

77
CIVIL CODE, art. 1458.

78
CIVIL CODE, art. 1475.

Francisco v. Chemical Bulk Carriers, Inc., G.R. No. 193577, September 7, 2011, 657
79

SCRA 355, 365 [Per J. Carpio, Second Division].

80
CIVIL CODE, art. 491.

81
CIVIL CODE, art. 493.

82
Oliveras v. Lopez, 250 Phil. 430, 435-436 (1988) [Per C.J. Fernan, Third Division].

43
83
5 Phil. 567 (1906) [Per J. Willard, En Banc].

84
Id. at 568-569.

85
Rollo, p. 80 (front and back).

Sanchez v. Court of Appeals, 452 Phil. 665, 677 (2003) [Per J. Bellosillo, En Banc], citing
86

A. Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE

PHILIPPINES, vol. II, 201 (1994).

87
185 Phil. 556 (1980) [Per J. Guerrero, First Division].

88
Pamplona v. Moreto, 185 Phil. 556, 564 (1980) [Per J. Guerrero, First Division].

89
Roque v. Lapuz, 185 Phil. 525, 540 (1980) [Per J. Guerrero, First Division].

90
Rollo, p. 18.

91
Id.

92
Id. at 115.

93
Id. at 116.

94
Id. at 116-117.

95
CIVIL CODE, art. 1191.

96
Roque v. Lapuz,185 Phil. 525, 540 (1980) [Per J. Guerrero, First Division].

97
109 Phil. 1 (1960) [Per. J. J.B.L. Reyes, En Banc].

98
Manuel v. Rodriguez, 109 Phil. 1, 9 (1960) [Per. J. J.B.L. Reyes, En Banc].

99
Rollo,p. 18.

100
Id. at 41.

101
Article 1544. If the same thing should have been sold to different vendees. . . .

Should it be immovable property, the ownership shall belong to the person acquiring
it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.

102
Rollo, p. 118.

103
Id.

104
Id. at 120-122.

105
Id. at 122.

106
Article 1279. In order that compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;

44
 (2) That both debts consist in a sum of money, or if the things due are consumable,
hey be of the same kind, and also of the same quality if the latter has been stated;

(3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by
third persons and communicated in due time to the debtor.

107
Rollo, p. 62.

45
 FIRST DIVISION

G.R. No. 187987, November 26, 2014

VICENTE TORRES, JR., CARLOS VELEZ, AND THE HEIRS OF MARIANO VELEZ, NAMELY: ANITA
CHIONG VELEZ, ROBERT OSCAR CHIONG VELEZ, SARAH JEAN CHIONG VELEZ AND TED CHIONG
VELEZ, Petitioners, v. LORENZO LAPINID AND JESUS VELEZ, Respondents.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court filed by the petitioners
assailing the 30 January 2009 Decision2 and 14 May 2009 Resolution3 of the Twentieth Division of the Court
of Appeals in CA-G.R. CV No. 02390, affirming the 15 October 2007 Decision4 of the Regional Trial Court of
Cebu City (RTC Cebu City) which dismissed the complaint for the declaration of nullity of deed of sale
against respondent Lorenzo Lapinid (Lapinid).

The facts as reviewed are the following:

On 4 February 2006, Vicente V. Torres, Jr. (Vicente), Mariano Velez (Mariano)5 and Carlos Velez
(petitioners) filed a Complaint6 before RTC Cebu City praying for the nullification of the sale of real property
by respondent Jesus Velez (Jesus) in favor of Lapinid; the recovery of possession and ownership of the
property; and the payment of damages.

Petitioners alleged in their complaint that they, including Jesus, are co-owners of several parcels of land
including the disputed Lot. No. 43897 located at Cogon, Carcar, Cebu. Sometime in 1993, Jesus filed an
action for partition of the parcels of land against the petitioners and other co-owners before Branch 21 of
RTC Cebu City. On 13 August 2001, a judgment was rendered based on a compromise agreement signed by
the parties wherein they agreed that Jesus, Mariano and Vicente were jointly authorized to sell the said
properties and receive the proceeds thereof and distribute them to all the co-owners. However, the
agreement was later amended to exclude Jesus as an authorized seller. Pursuant to their mandate, the
petitioners inspected the property and discovered that Lapinid was occupying a specific portion of the 3000
square meters of Lot No. 4389 by virtue of a deed of sale executed by Jesus in favor of Lapinid. It was
pointed out by petitioner that as a consequence of what they discovered, a forcible entry case was filed
against Lapinid.

The petitioners prayed that the deed of sale be declared null and void arguing that the sale of a definite
portion of a co-owned property without notice to the other co-owners is without force and effect. Further,
the complainants prayed for payment of rental fees amounting to P1,000.00 per month from January 2004
or from the time of deprivation of property in addition to attorney’s fees and litigation expenses.

Answering the allegations, Jesus admitted that there was a partition case between him and the petitioners
filed in 1993 involving several parcels of land including the contested Lot No. 4389. However, he insisted
that as early as 6 November 1997, a motion8 was signed by the co-owners (including the petitioners)
wherein Lot No. 4389 was agreed to be adjudicated to the co-owners belonging to the group of Jesus and
the other lots be divided to the other co-owners belonging to the group of Torres. Jesus further alleged that
even prior to the partition and motion, several co-owners in his group had already sold their shares to him in
various dates of 1985, 1990 and 2004.9 Thus, when the motion was filed and signed by the parties on 6
November 1997, his rights as a majority co-owner (73%) of Lot No. 4389 became consolidated. Jesus
averred that it was unnecessary to give notice of the sale as the lot was already adjudicated in his favor. He
clarified that he only agreed with the 2001 Compromise Agreement believing that it only pertained to the
remaining parcels of land excluding Lot No. 4389.10

On his part, Lapinid admitted that a deed of sale was entered into between him and Jesus pertaining to a
parcel of land with an area of 3000 square meters. However, he insisted on the validity of sale since Jesus
showed him several deeds of sale making him a majority owner of Lot No. 4389. He further denied that he
acquired a specific and definite portion of the questioned property, citing as evidence the deed of sale which
does not mention any boundaries or specific portion. He explained that Jesus permitted him to occupy a
portion not exceeding 3000 square meters conditioned on the result of the partition of the co-owners.11

Regarding the forcible entry case, Jesus and Lapinid admitted that such case was filed but the same was
already dismissed by the Municipal Trial Court of Carcar, Cebu. In that decision, it was ruled that the buyers,
including Lapinid, were buyers in good faith since a proof of ownership was shown to them by Jesus before
buying the property.12

On 15 October 2007, the trial court dismissed the complaint of petitioners in this wise: chan roble svirtual lawlib rary

46
Therefore, the Court DISMISSES the Complaint. At the same time, the Court NULLIFIES the site assignment
made by Jesus Velez in the Deed of Sale, dated November 9, 1997, of Lorenzo Lapinid’s portion, the exact
location of which still has to be determined either by agreement of the co-owners or by the Court in proper
proceedings.13
Aggrieved, petitioners filed their partial motion for reconsideration which was denied through a 26 November
2007 Order of the court.14 Thereafter, they filed a notice of appeal on 10 December 2007.15

On 30 January 2009, the Court of Appeals affirmed16 the decision of the trial court. It validated the sale and
ruled that the compromise agreement did not affect the validity of the sale previously executed by Jesus and
Lapinid. It likewise dismissed the claim for rental payments, attorney’s fees and litigation expenses of the
petitioners.

Upon appeal before this Court, the petitioners echo the same arguments posited before the lower courts.
They argue that Lapinid, as the successor-in-interest of Jesus, is also bound by the 2001 judgment based on
compromise stating that the parcels of land must be sold jointly by Jesus, Mariano and Vicente and the
proceeds of the sale be divided among the co-owners. To further strengthen their contention, they advance
the argument that since the portion sold was a definite and specific portion of a co-owned property, the
entire deed of sale must be declared null and void.

We deny the petition.

Admittedly, Jesus sold an area of land to Lapinid on 9 November 1997. To simplify, the question now is
whether Jesus, as a co-owner, can validly sell a portion of the property he co-owns in favor of another
person. We answer in the affirmative.

A co-owner has an absolute ownership of his undivided and pro-indiviso share in the co-owned
property.17 He has the right to alienate, assign and mortgage it, even to the extent of substituting a third
person in its enjoyment provided that no personal rights will be affected. This is evident from the provision
of the Civil Code:chan roble svirtuallaw lib rary

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon
the termination of the co-ownership.
A co-owner is an owner of the whole and over the whole he exercises the right of dominion, but he is at the
same time the owner of a portion which is truly abstract.18 Hence, his co-owners have no right to enjoin a
co-owner who intends to alienate or substitute his abstract portion or substitute a third person in its
enjoyment.19

In this case, Jesus can validly alienate his co-owned property in favor of Lapinid, free from any opposition
from the co-owners. Lapinid, as a transferee, validly obtained the same rights of Jesus from the date of the
execution of a valid sale. Absent any proof that the sale was not perfected, the validity of sale subsists. In
essence, Lapinid steps into the shoes of Jesus as co-owner of an ideal and proportionate share in the
property held in common.20 Thus, from the perfection of contract on 9 November 1997, Lapinid eventually
became a co-owner of the property.

Even assuming that the petitioners are correct in their allegation that the disposition in favor of Lapinid
before partition was a concrete or definite portion, the validity of sale still prevails.

In a catena of decisions,21 the Supreme Court had repeatedly held that no individual can claim title to a
definite or concrete portion before partition of co-owned property. Each co-owner only possesses a right to
sell or alienate his ideal share after partition. However, in case he disposes his share before partition, such
disposition does not make the sale or alienation null and void. What will be affected on the sale is only his
proportionate share, subject to the results of the partition. The co-owners who did not give their consent to
the sale stand to be unaffected by the alienation.22

As explained in Spouses Del Campo v. Court of Appeals:23

We are not unaware of the principle that a co-owner cannot rightfully dispose of a particular portion of a co-
owned property prior to partition among all the co-owners. However, this should not signify that the vendee
does not acquire anything at all in case a physically segregated area of the co-owned lot is in fact sold to
him. Since the co-owner/vendor’s undivided interest could properly be the object of the contract of sale
between the parties, what the vendee obtains by virtue of such a sale are the same rights as the vendor had
as co-owner, in an ideal share equivalent to the consideration given under their transaction. In other words,
the vendee steps into the shoes of the vendor as co-owner and acquires a proportionate abstract share in
the property held in common.24
Also worth noting is the pronouncement in Lopez v. Vda. De Cuaycong:25
x x x The fact that the agreement in question purported to sell a concrete portion of the hacienda does not
render the sale void, for it is a well-established principle that the binding force of a contract must be
recognized as far as it is legally possible to do so. “Quando res non valet ut ago, valeat quantum valere
potest.” (When a thing is of no force as I do it, it shall have as much force as it can have).26 (Italics theirs).
Consequently, whether the disposition involves an abstract or concrete portion of the co-owned property,
the sale remains validly executed.

The validity of sale being settled, it follows that the subsequent compromise agreement between the other

47
co-owners did not affect the rights of Lapinid as a co-owner.

Records show that on 13 August 2001, a judgment based on compromise agreement was rendered with
regard to the previous partition case involving the same parties pertaining to several parcels of land,
including the disputed lot. The words of the compromise state that: chanrob lesvi rtua llawlib ra ry

COME NOW[,] the parties and to this Honorable Court, most respectfully state that instead of partitioning
the properties, subject matter of litigation, that they will just sell the properties covered by TCT Nos. 25796,
25797 and 25798 of the Register of Deeds of the Province of Cebu and divide the proceeds among
themselves.

That Jesus Velez, Mariano Velez and Vicente Torres, Jr. are currently authorized to sell said properties,
receive the proceeds thereof and distribute them to the parties.27
Be that as it may, the compromise agreement failed to defeat the already accrued right of ownership of
Lapinid over the share sold by Jesus. As early as 9 November 1997, Lapinid already became a co-owner of
the property and thus, vested with all the rights enjoyed by the other co-owners. The judgment based on
the compromise agreement, which is to have the covered properties sold, is valid and effectual provided as
it does not affect the proportionate share of the non-consenting party. Accordingly, when the compromise
agreement was executed without Lapinid’s consent, said agreement could not have affected his ideal and
undivided share. Petitioners cannot sell Lapinid’s share absent his consent. Nemo dat quod non habet – “no
one can give what he does not have.”28

This Court has ruled in many cases that even if a co-owner sells the whole property as his, the sale will
affect only his own share but not those of the other co-owners who did not consent to the sale. This is
because the sale or other disposition of a co-owner affects only his undivided share and the transferee gets
only what would correspond to his grantor in the partition of the thing owned in common.29

We find unacceptable the argument that Lapinid must pay rental payments to the other co-owners.

As previously discussed, Lapinid, from the execution of sale, became a co-owner vested with rights to enjoy
the property held in common.

Clearly specified in the Civil Code are the following rights: chan roblesv irt uallawl ibra ry

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

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon
the termination of the co-ownership.
Affirming these rights, the Court held in Aguilar v. Court of Appeals that:30
x x x Each co-owner of property held pro indiviso exercises his rights over the whole property and may use
and enjoy the same with no other limitation than that he shall not injure the interests of his co-owners, the
reason being that until a division is made, the respective share of each cannot be determined and every co-
owner exercises, together with his co-participants joint ownership over the pro indiviso property, in addition
to his use and enjoyment of the same.31
From the foregoing, it is absurd to rule that Lapinid, who is already a co-owner, be ordered to pay rental
payments to his other co-owners. Lapinid’s right of enjoyment over the property owned in common must be
respected despite opposition and may not be limited as long he uses the property to the purpose for which it
is intended and he does not injure the interest of the co-ownership.

Finally, we find no error on denial of attorney’s fees and litigation expenses.

Pursuant to Article 2208 of the New Civil Code, attorney’s fees and expenses of litigation, in the absence of
stipulation, are awarded only in the following instances: chan roblesv irt uallawl ibra ry

xxxx

1. When exemplary damages are awarded;

2. When the defendant’s act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interests;

3. In criminal cases of malicious prosecution against the plaintiff;

4. In case of a clearly unfounded civil action or proceeding against the plaintiff;

5. Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff’s plainly valid and demandable claim;

6. In actions for legal support;

48
 7. In actions for the recovery of wages of household helpers, laborers and skilled workers;

8. In actions for indemnity under workmen’s compensation and employer’s liability laws;

9. In a separate civil action to recover civil liability arising from a crime;

10. When at least double judicial costs are awarded;

11. In any other case where the court deems it just and equitable that attorney’s fees and
expenses of litigation should be recovered.

In all cases, the attorney’s fees and expenses of litigation must be reasonable.
Petitioners cite Jesus’ act of selling a definite portion to Lapinid as the reason which forced them to litigate
and file their complaint. However, though the Court may not fault the complainants when they filed a
complaint based on their perceived cause of action, they should have also considered thoroughly that it is
well within the rights of a co-owner to validly sell his ideal share pursuant to law and jurisprudence.

WHEREFORE, the petition is DENIED. Accordingly, the Decision and Resolution of the Court of Appeals
dated 30 January 2009 and 14 May 2009 are hereby AFFIRMED.

SO ORDERED.

Sereno, Chief Justice, (Chairperson), Leonardo-De Castro, Bersamin , and Villarama, Jr.,*JJ., concur.

Endnotes:

*
Per Special Order No. 1885 dated 24 November 2014.

Rollo, pp. 3-20.

1

2
Penned by Associate Justice Francisco P. Acosta with Associate Justices Amy C. Lazaro-Javier and Rodil V.
Zalameda, concurring. Id. at 22-31.

3
Id. at 39-40.

4
Penned by Judge Simeon P. Dumdum, Jr. Records, pp. 149-154.

5
Now deceased and substituted by his legal heirs named as petitioners in this case.

6
Records, pp. 1-4.

7
With an area of 19,018 square meters.

8
Records, p. 178.

9
Annexes “A” “A-I,” id. at 14-25.

10
Joint Answer of Jesus and Lapinid, id. at 10-13; Affidavit of Jesus, id. at 113-116.

11
Id.; Affidavit of Lapinid, id. at 120-121.

12
Id.; Municipal Trial Court Decision, id. at 43-50.

13
Id. at 154.

14
Id. at 165.

15
Id. at 167.

16
Rollo, pp. 22-31.

17
Rabuya, Elmer, Property, 2008 ed., p. 306 citing City of Mandaluyong v. Aguilar, 403 Phil. 404, 424
(2001).

18
De Guia v. Court of Appeals, 459 Phil. 447, 462 (2003).

19
Heirs of Dela Rosa v. Batongbakal, G.R. No. 179205, 30 July 2014.

20
Rabuya, Elmer, Property, 2008 ed., p. 307.

21
Vagilidad v. Vagilidad, Jr., 537 Phil. 310, 326-327 (2006); Sanchez v. Court of Appeals, 452 Phil. 665, 676
(2003) citing Oliveras v. Lopez, 250 Phil. 430, 435-436 (1988).

49
22
Rabuya, Elmer, Property, 2008 ed., p. 308 citing Oliveras v. Lopez, id. at 436; City of Mandaluyong v.
Aguilar, supra note 17 at 424; Spouses Del Campo v. Court of Appeals, 403 Phil. 706, 717 (2001).

23
Id.

24
Id.

25
74 Phil. 601 (1944).

26
Id. at 609.

27
Records, p. 65.

28
Rabuya, Elmer, Property, 2008 ed., p. 318 citing Spouses Del Campo v. Court of Appeals, supra note 22
at 717.

Acabal v. Acabal, 494 Phil. 528, 553 (2005); Spouses Del Campo v. Court of Appeals, id.
29

30
G.R. No. 76351, 29 October 1993, 227 SCRA 472.

31
Id. at 480.

50
 FIRST DIVISION

[G.R. No. 125233. March 9, 2000.]

Spouses ALEXANDER CRUZ and ADELAIDA CRUZ, Petitioners, v. ELEUTERIO LEIS, RAYMUNDO
LEIS, ANASTACIO L. LAGDANO, LORETA L. CAYONDA and the HONORABLE COURT OF
APPEALS, Respondents.

DECISION

KAPUNAN, J.:

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

The facts that gave rise to the complaint: chan rob1e s virt ual 1aw l ibra ry

Adriano and Gertrudes were married on 19 April 1923. On 27 April 1955, Gertrudes acquired from the then
Department of Agriculture and Natural Resources (DANR) a parcel of land with an area of one hundred (100)
square meters, situated at Bo. Sto. Niño, Marikina, Rizal and covered by Transfer Certificate of Title (TCT)
No. 42245. The Deed of Sale described Gertrudes as a widow. On 2 March 1956, TCT No. 43100 was issued
in the name of "Gertrudes Isidro," who was also referred to therein as a "widow." cralaw virt ua1aw lib ra ry

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

On 5 February 1985, Gertrudes obtained a loan from petitioners, the spouses Alexander and Adelaida Cruz,
in the amount of P15,000.00 at 5% interest, payable on or before 5 February 1986. The loan was secured
by a mortgage over the property covered by TCT No. 43100. Gertrudes, however, failed to pay the loan on
the due date.

Unable to pay her outstanding obligation after the debt became due and payable, on 11 March 1986,
Gertrudes executed two contracts in favor of petitioner Alexander Cruz. The first is denominated as
"Kasunduan," which the parties concede is a pacto de retro sale, granting Gertrudes one year within which
to repurchase the property. The second is a "Kasunduan ng Tuwirang Bilihan," a Deed of Absolute Sale
covering the same property for the price of P39,083.00, the same amount stipulated in the "Kasunduan." cralaw virt ua1aw lib rary

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

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

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

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

The dispositive portion of the RTC’s Decision reads: chanrob 1es vi rtua l 1aw lib rary

51
WHEREFORE, in the light of all the foregoing, judgment is hereby rendered: chan rob 1es vi rtual 1aw lib rary

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

2. Declaring the property in litigation as conjugal property;

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

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

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

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

7. Dismissing defendant[s’] counterclaim; and

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

SO ORDERED. 2

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

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

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

Incidentally, there is no merit in petitioners’ contention that Gertrudes’ redemption of the property from the
Daily Savings Bank vested in her ownership over the same to the exclusion of her co-owners. We dismissed
the same argument by one of the petitioners in Paulmitan v. Court of Appeals, 7 where one of the
petitioners therein claimed ownership of the entire property subject of the case by virtue of her redemption
thereof after the same was forfeited in favor of the provincial government for non-payment of taxes. We
held, however, that the redemption of the land "did not terminate the co-ownership nor give her title to the
entire land subject of the co-ownership." We expounded, quoting our pronouncement in, Adille v. Court of
Appeals: 8

The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held
in common? chanroble s.com : vi rtual lawlib rary

Essentially, it is the petitioner’s contention that the property subject of dispute devolved upon him upon the
failure of his co-heirs to join him in its redemption within the period required by law. He relies on the
provisions of Article 1515 of the old Civil Code, Article 1613 of the present Code, giving the vendee a retro
the right to demand redemption of the entire property.

There is no merit in this petition.

The right of repurchase may be exercised by a co-owner with respect to his share alone (CIVIL CODE, art.
1612; CIVIL CODE (1889), art. 1514.). While the records show that petitioner redeemed the property in its
entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it
did not put to end the existing state of co-ownership (Supra, Art. 489). There is no doubt that redemption of
property entails a necessary expense. Under the Civil Code: chan rob 1es vi rtual 1aw lib rary

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

52
The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under
Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by one
co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part
of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title
thereto in his name (Supra, art. 1607). But the provision does not give to the redeeming co-owner the right
to the entire property. It does not provide for a mode of terminating a co-ownership.

It is conceded that, as a rule, a co-owner such as Gertrudes could only dispose of her share in the property
owned in common. Article 493 of the Civil Code provides: chan rob1es v irt ual 1aw li bra ry

ARTICLE 493. Each co-owner shall have the full ownership of his part of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon
the termination of the co-ownership.

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

As gleaned from the foregoing discussion, despite the Court of Appeals’ finding and conclusion that
Gertrudes as well as private respondents failed to repurchase the property within the period stipulated and
has lost all their rights to it, it still ruled against petitioners by affirming the Regional Trial Court’s decision
on the premise that there was no compliance with Article 1607 of the Civil Code requiring a judicial hearing
before registration of the property in the name of petitioners. This provision states: ch anrob1e s virtual 1aw lib rary

ARTICLE 1607. In case of real property, the consolidation of ownership in the vendee by virtue of the failure
of the vendor to comply with the provisions of article 1616 shall not be recorded in the Registry of Property
without a judicial order, after the vendor has been duly heard.

The aforequoted article is intended to minimize the evils which the pacto de retro sale has caused in the
hands of usurers. A judicial order is necessary in order to determine the true nature of the transaction and
to prevent the interposition of buyers in good faith while the determination is being made. 10

It bears stressing that notwithstanding Article 1607, the recording in the Registry of Property of the
consolidation of ownership of the vendee is not a condition sine qua non to the transfer of ownership.
Petitioners are the owners of the subject property since neither Gertrudes nor her co-owners redeemed the
same within the one-year period stipulated in the "Kasunduan." The essence of a pacto de retro sale is that
title and ownership of the property sold are immediately vested in the vendee a retro, subject to the
resolutory condition of repurchase by the vendor a retro within the stipulated period. Failure thus of the
vendor a retro to perform said resolutory condition vests upon the vendee by operation of law absolute title
and ownership over the property sold. As title is already vested in the vendee a retro, his failure to
consolidate his title under Article 1607 of the Civil Code does not impair such title or ownership for the
method prescribed thereunder is merely for the purpose of registering the consolidated title. 11

WHEREFORE, the decision of the Court of Appeals is MODIFIED in that the petitioners are deemed owners of
the property by reason of the failure of the vendor, Gertrudes Isidro, to repurchase the same within the
period stipulated. However, Transfer Certificate of Title No. 130584, in the name of Alexander M. Cruz,
which was issued without judicial order, is hereby ordered CANCELLED, and Transfer Certificate of Title No.
43100 in the name of Gertrudes Isidro is ordered REINSTATED, without prejudice to compliance by
petitioners with the provisions of Article 1607 of the Civil Code. chanro bles. com : red

SO ORDERED.

Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.

Pardo, J., on official business abroad.

Endnotes:

1. Private respondents Eleuterio Leis, Raymundo Leis, Anastacia Leis-Lagnada and Loreta Leis-Cayonda are
the children of spouses Adriano Leis and Gertrudes Isidro, while private respondent Teresita Mandocdoc is
the spouses’ grandchild.

2. Records, p. 276.

3. Civil Code, Article 175 (1).

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4. Civil Code, Article 185.

5. Civil Code, Article 777.

6. Civil Code, Article 996.

7. 215 SCRA 866 (1992).

8. 157 SCRA 455 (1988).

9. Ibarra v. Ibarra, Sr., 156 SCRA 616 (1987), citing Paraiso v. Camon 106 Phil. 187 (1959). Ibarra was
wrongly cited in p. 4 of the Petition (Rollo, p. 6) as "Vda. de Carcallas v. Judge Yancha, G.R. 46401, 18 Dec.
87," at 156 SCRA 608 (1987).

10. Aquino, Civil Code, Vol. 3, 1990 ed., pp. 150-151.

11. De Guzman, Jr. v. Court of Appeals, 156 SCRA 701 (1987). See also De Bayquen v. Balaoro, 143 SCRA
412 (1986).

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