FIRST DIVISION

[ G.R. No. 157537, September 07, 2011 ]

THE HEIRS OF PROTACIO GO, SR. AND MARTA BAROLA,
NAMELY: LEONOR, SIMPLICIO, PROTACIO, JR., ANTONIO,
BEVERLY ANN LORRAINNE, TITA, CONSOLACION, LEONORA
AND ASUNCION, ALL SURNAMED GO, REPRESENTED BY
LEONORA B. GO, PETITIONERS, VS. ESTER L. SERVACIO AND
RITO B. GO, RESPONDENTS.

DECISION

BERSAMIN, J.: 

The disposition by sale of a portion of the conjugal property by the surviving spouse
without the prior liquidation mandated by Article 130 of the Family Code is not
necessarily void if said portion has not yet been allocated by judicial or extrajudicial
partition to another heir of the deceased spouse. At any rate, the requirement of
prior liquidation does not prejudice vested rights.

Antecedents

On February 22, 1976, Jesus B. Gaviola sold two parcels of land with a total area of
17,140 square meters situated in Southern Leyte to Protacio B. Go, Jr. (Protacio,
Jr.). Twenty three years later, or on March 29, 1999, Protacio, Jr. executed
an Affidavit of Renunciation and Waiver,[1] whereby he affirmed under oath that it
was his father, Protacio Go, Sr. (Protacio, Sr.), not he, who had purchased the two
parcels of land (the property).

On November 25, 1987, Marta Barola Go died. She was the wife of Protacio, Sr. and
mother of the petitioners.[2] On December 28, 1999, Protacio, Sr. and his son Rito
B. Go (joined by Rito's wife Dina B. Go) sold a portion of the property with an area
of 5,560 square meters to Ester L. Servacio (Servacio) for P5,686,768.00.[3] On
March 2, 2001, the petitioners demanded the return of the property,[4] but Servacio
refused to heed their demand. After barangay proceedings failed to resolve the
dispute,[5] they sued Servacio and Rito in the Regional Trial Court in Maasin City,
Southern Leyte (RTC) for the annulment of the sale of the property.

The petitioners averred that following Protacio, Jr.'s renunciation, the property
became conjugal property; and that the sale of the property to Servacio without the
prior liquidation of the community property between Protacio, Sr. and Marta was
null and void.[6]
Servacio and Rito countered that Protacio, Sr. had exclusively owned the property
because he had purchased it with his own money.[7]

On October 3, 2002,[8] the RTC declared that the property was the conjugal
property of Protacio, Sr. and Marta, not the exclusive property of Protacio, Sr.,
because there were three vendors in the sale to Servacio (namely: Protacio, Sr.,
Rito, and Dina); that the participation of Rito and Dina as vendors had been by
virtue of their being heirs of the late Marta; that under Article 160 of the Civil Code,
the law in effect when the property was acquired, all property acquired by either
spouse during the marriage was conjugal unless there was proof that the property
thus acquired pertained exclusively to the husband or to the wife; and that
Protacio, Jr.'s renunciation was grossly insufficient to rebut the legal presumption.[9]

Nonetheless, the RTC affirmed the validity of the sale of the property, holding that:
"xxx As long as the portion sold, alienated or encumbered will not be allotted to the
other heirs in the final partition of the property, or to state it plainly, as long as the
portion sold does not encroach upon the legitimate (sic) of other heirs, it is
valid."[10] Quoting Tolentino's commentary on the matter as authority,[11] the RTC
opined:

In his comment on Article 175 of the New Civil Code regarding the dissolution of the
conjugal partnership, Senator Arturo Tolentino, says" [sic]

"Alienation by the survivor. -- After the death of one of the spouses, in case it is
necessary to sell any portion of the community property in order to pay outstanding
obligation of the partnership, such sale must be made in the manner and with the
formalities established by the Rules of Court for the sale of the property of the
deceased persons. Any sale, transfer, alienation or disposition of said property
affected without said formalities shall be null and void, except as regards the
portion that belongs to the vendor as determined in the liquidation and partition.
Pending the liquidation, the disposition must be considered as limited only to the
contingent share or interest of the vendor in the particular property involved, but
not to the corpus of the property.

This rule applies not only to sale but also to mortgages. The alienation, mortgage or
disposal of the conjugal property without the required formality, is not however,
null ab initio, for the law recognizes their validity so long as they do not exceed the
portion which, after liquidation and partition, should pertain to the surviving spouse
who made the contract." [underlining supplied]

It seems clear from these comments of Senator Arturo Tolentino on the provisions
of the New Civil Code and the Family Code on the alienation by the surviving
spouse of the community property that jurisprudence remains the same  -  that the
alienation made by the surviving spouse of a portion of the community property is
not wholly void ab initio despite Article 103 of the Family Code, and shall be valid to
the extent of what will be allotted, in the final partition, to the vendor. And rightly
so, because why invalidate the sale by the surviving spouse of a portion of the
community property that will eventually be his/her share in the final partition?
Practically there is no reason for that view and it would be absurd.

Now here, in the instant case, the 5,560 square meter portion of the 17,140
square-meter conjugal lot is certainly mush (sic) less than what vendors Protacio
Go and his son Rito B. Go will eventually get as their share in the final partition of
the property. So the sale is still valid.

WHEREFORE, premises considered, complaint is hereby DISMISSED without

pronouncement as to cost and damages.

SO ORDERED.[12]

The RTC's denial of their motion for reconsideration[13] prompted the petitioners to

appeal directly to the Court on a pure question of law.

Issue

The petitioners claim that Article 130 of the Family Code is the applicable law; and
that the sale by Protacio, Sr., et al. to Servacio was void for being made without
prior liquidation.

In contrast, although they have filed separate comments, Servacio and Rito both
argue that Article 130 of the Family Code was inapplicable; that the want of the
liquidation prior to the sale did not render the sale invalid, because the sale was
valid to the extent of the portion that was finally allotted to the vendors as his
share; and that the sale did not also prejudice any rights of the petitioners as heirs,
considering that what the sale disposed of was within the aliquot portion of the
property that the vendors were entitled to as heirs.[14]

Ruling

The appeal lacks merit.

Article 130 of the Family Code reads:

Article 130. Upon the termination of the marriage by death, the conjugal
partnership property shall be liquidated in the same proceeding for the settlement
of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate

the conjugal partnership property either judicially or extra-judicially within one year
from the death of the deceased spouse. If upon the lapse of the six month period
no liquidation is made, any disposition or encumbrance involving the conjugal
partnership property of the terminated marriage shall be void.

Should the surviving spouse contract a subsequent marriage without compliance

with the foregoing requirements, a mandatory regime of complete separation of
property shall govern the property relations of the subsequent marriage.
Article 130 is to be read in consonance with Article 105 of the Family Code, viz:

Article 105. In case the future spouses agree in the marriage settlements that the
regime of conjugal partnership of gains shall govern their property relations during
marriage, the provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of

gains already established between spouses before the effectivity of this
Code, without prejudice to vested rights already acquired in accordance
with the Civil Code or other laws, as provided in Article 256. (n) [emphasis
supplied]

It is clear that conjugal partnership of gains established before and after the
effectivity of the Family Code are governed by the rules found in Chapter 4
(Conjugal Partnership of Gains) of Title IV (Property Relations Between Husband
And Wife) of the Family Code. Hence, any disposition of the conjugal property after
the dissolution of the conjugal partnership must be made only after the liquidation;
otherwise, the disposition is void.

Before applying such rules, however, the conjugal partnership of gains must be
subsisting at the time of the effectivity of the Family Code. There being no dispute
that Protacio, Sr. and Marta were married prior to the effectivity of the Family
Code on August 3, 1988, their property relation was properly characterized as one
of conjugal partnership governed by the Civil Code.  Upon Marta's death in 1987,
the conjugal partnership was dissolved, pursuant to Article 175 (1) of the Civil
Code,[15] and an implied ordinary co-ownership ensued among Protacio, Sr. and the
other heirs of Marta with respect to her share in the assets of the conjugal
partnership pending a liquidation following its liquidation.[16] The ensuing implied
ordinary co-ownership was governed by Article 493 of the Civil Code,[17] to wit:

Article 493. Each co-owner shall have the full ownership of his part and of the fruits
and benefits pertaining thereto, and he may therefore alienate, assign or mortgage
it, and even substitute another person in its enjoyment, except when personal
rights are involved. But the effect of the alienation or the mortgage, with respect to
the co-owners, shall be limited to the portion which may be allotted to him in the
division upon the termination of the co-ownership. (399)

Protacio, Sr., although becoming a co-owner with his children in respect of Marta's
share in the conjugal partnership, could not yet assert or claim title to any specific
portion of Marta's share without an actual partition of the property being first done
either by agreement or by judicial decree. Until then, all that he had was an ideal or
abstract quota in Marta's share.[18] Nonetheless, a co-owner could sell his undivided
share; hence, Protacio, Sr. had the right to freely sell and dispose of his undivided
interest, but not the interest of his co-owners.[19] Consequently, the sale by
Protacio, Sr. and Rito as co-owners without the consent of the other co-owners was
not necessarily void, for the rights of the selling co-owners were thereby effectively
transferred, making the buyer (Servacio) a co-owner of Marta's share.[20] This result
conforms to the well-established principle that the binding force of a contract must
be recognized as far as it is legally possible to do so (quando res non valet ut ago,
valeat quantum valere potest).[21]

Article 105 of the Family Code, supra, expressly provides that the applicability of

the rules on dissolution of the conjugal partnership is "without prejudice to vested
rights already acquired in accordance with the Civil Code or other laws." This
provision gives another reason not to declare the sale as entirely void. Indeed, such
a declaration prejudices the rights of Servacio who had already acquired the shares
of Protacio, Sr. and Rito in the property subject of the sale.

In their separate comments,[22] the respondents aver that each of the heirs had
already received "a certain allotted portion" at the time of the sale, and that
Protacio, Sr. and Rito sold only the portions adjudicated to and owned by them.
However, they did not present any public document on the allocation among her
heirs, including themselves, of specific shares in Marta's estate. Neither did they
aver that the conjugal properties had already been liquidated and partitioned.
Accordingly, pending a partition among the heirs of Marta, the efficacy of the sale,
and whether the extent of the property sold adversely affected the interests of the
petitioners might not yet be properly decided with finality. The appropriate recourse
to bring that about is to commence an action for judicial partition, as instructed
in Bailon-Casilao v. Court of Appeals,[23] to wit:

From the foregoing, it may be deduced that since a co-owner is entitled to sell his
undivided share, a sale of the entire property by one co-owner without the
consent of the other co-owners is not null and void. However, only the rights
of the co-owner-seller are transferred, thereby making the buyer a co-owner of the
property.

The proper action in cases like this is not for the nullification of the sale or for the
recovery of possession of the thing owned in common from the third person who
substituted the co-owner or co-owners who alienated their shares, but the
DIVISION of the common property as if it continued to remain in the possession of
the co-owners who possessed and administered it [Mainit v. Bandoy, supra].

Thus, it is now settled that the appropriate recourse of co-owners in cases

where their consent were not secured in a sale of the entire property as
well as in a sale merely of the undivided shares of some of the co-owners
is an action for PARTITION under Rule 69 of the Revised Rules of
Court. xxx[24]

In the meanwhile, Servacio would be a trustee for the benefit of the co-heirs of her
vendors in respect of any portion that might not be validly sold to her. The
following observations of Justice Paras are explanatory of this result, viz:

xxx [I]f it turns out that the property alienated or mortgaged really would pertain
to the share of the surviving spouse, then said transaction is valid. If it turns out
that there really would be, after liquidation, no more conjugal assets then the whole
transaction is null and void.   But if it turns out  that half of the property thus
alienated or mortgaged belongs to the husband as his share in the conjugal
partnership, and half should go to the estate of the wife, then that corresponding to
the husband is valid, and that corresponding to the other is not. Since all these can
be determined only at the time the liquidation is over, it follows logically that a
disposal made by the surviving spouse is not  void ab initio. Thus, it has been held
that the sale of conjugal properties cannot be made by the surviving spouse without
the legal requirements. The sale is void as to the share of the deceased spouse
(except of course as to that portion of the husband's share inherited by her as the
surviving spouse). The buyers of the property that could not be validly sold become
trustees of said portion for the benefit of the husband's other heirs, the cestui que
trust ent. Said heirs shall not be barred by prescription or by laches (See Cuison, et
al. v. Fernandez, et al.,  L-11764, Jan.31, 1959.)[25]

WHEREFORE, we DENY the petition for review on certiorari; and AFFIRM the

decision of the Regional Trial Court.

The petitioners shall pay the costs of suit.

SO ORDERED.

Corona, C.J., (Chairperson), Leonardo-De Castro, Del Castillo,  and Villarama, Jr.,

JJ., concur.

SECOND DIVISION
[ G.R. No. 200274, April 20, 2016 ]
MELECIO DOMINGO, PETITIONER, VS. SPOUSES GENARO
MOLINA AND ELENA B. MOLINA, SUBSTITUTED BY ESTER
MOLINA, RESPONDENTS.

DECISION

BRION, J.: 

We resolve the petition for review on certiorari[1] filed by the petitioner Melecio

Domingo (Melecio) assailing the August 9, 2011 decision[2]and January 10, 2012
resolution[3] of the Court of Appeals (CA) in CA-G.R. CV No. 94160.
 THE FACTS

In June 15, 1951, the spouses Anastacio and Flora Domingo bought a property in
Camiling, Tarlac, consisting of a one-half undivided portion over an 18,164 square
meter parcel of land. The sale was annotated on the Original Certificate of Title
(OCT) No. 16354 covering the subject property.

During his lifetime, Anastacio borrowed money from the respondent spouses
Genaro and Elena Molina (spouses Molina). On September 10, 1978 or 10 years
after Flora's death[4], Anastacio sold his interest over the land to the spouses Molina
to answer for his debts. The sale to the spouses Molina was annotated at the OCT
of the subject property.[5] In 1986, Anastacio died.[6]

In May 19, 1995, the sale of Anastacio's interest was registered under Transfer
Certificate of Title (TCT) No. 272967[7] and transferred the entire one-half undivided
portion of the land to the spouses Molina.

Melecio, one of the children of Anastacio and Flora, learned of the transfer and filed
a Complaint for Annulment of Title and Recovery of Ownership (Complaint) against
the spouses Molina on May 17, 1999.[8]

Melecio claims that Anastacio gave the subject property to the spouses Molina to
serve as collateral for the money that Anastacio borrowed. Anastacio could not have
validly sold the interest over the subject property without Flora's consent, as Flora
was already dead at the time of the sale.

Melecio also claims that Genaro Molina must have falsified the document
transferring Anastacio and Flora's one-half undivided interest over the land. Finally,
Melecio asserts that he occupied the subject property from the time of Anastacio's
death up to the time he filed the Complaint.[9]

Melecio presented the testimonies of the Records Officer of the Register of Deeds of
Tarlac, and of Melecio's nephew, George Domingo (George).[10]

The Records Officer testified that he could not locate the instrument that documents
the transfer of the subject property ownership from Anastacio to the spouses
Molina. The Records Officer also testified that the alleged sale was annotated at the
time when Genaro Molina's brother was the Register of Deeds for Camiling, Tarlac.
[11]

George, on the other hand, testified that he has been living on the subject property
owned by Anastacio since 1986. George testified, however, that aside from himself,
there were also four other occupants on the subject property, namely Jaime
Garlitos, Linda Sicangco, Serafio Sicangco and Manuel Ramos.[12]

The spouses Molina asserted that Anastacio surrendered the title to the subject
property to answer for his debts and told the spouses Molina that they already own
half of the land. The spouses Molina have been in possession of the subject
property before the title was registered under their names and have religiously paid
the property's real estate taxes.

The spouses Molina also asserted that Melecio knew of the disputed sale since he
accompanied Anastacio several times to borrow money. The last loan was even
used to pay for Melecio's wedding. Finally, the spouses Molina asserted that Melecio
built his nipa hut on the subject property only in 1999, without their knowledge and
consent.[13]

The spouses Molina presented Jaime Garlitos (Jaime) as their sole witness and who
is one of the occupants of the subject lot.

Jaime testified that Elena Molina permitted him to build a house on the subject
property in 1993. Jaime, together with the other tenants, planted fruit bearing trees
on the subject property and gave portions of their harvest to Elena Molina without
any complaint from Melecio. Jaime further testified that Melecio never lived on the
subject property and that only George Domingo, as the caretaker of the spouses
Molina, has a hut on the property.

Meanwhile, the spouses Molina died during the pendency of the case and were
substituted by their adopted son, Cornelio Molina.[14]

THE RTC RULING

The Regional Trial Court (RTC) dismissed[15] the case because Melecio failed to
establish his claim that Anastacio did not sell the property to the spouses Molina.

The RTC also held that Anastacio could dispose of conjugal property without Flora's
consent since the sale was necessary to answer for conjugal liabilities.

The RTC denied Melecio's motion for reconsideration of the RTC ruling. From this
ruling, Melecio proceeded with his appeal to the CA.

THE CA RULING

In a decision dated August 9, 2011, the CA affirmed the RTC ruling in toto.

The CA held that Melecio failed to prove by preponderant evidence that there was
fraud in the conveyance of the property to the spouses Molina. The CA gave
credence to the OCT annotation of the disputed property sale.

The CA also held that Flora's death is immaterial because Anastacio only sold his
rights, excluding Flora's interest, over the lot to the spouses Molina. The CA
explained that "[t]here is no prohibition against the sale by the widower of real
property formerly belonging to the conjugal partnership of gains"[16].

Finally, the CA held that Melecio's action has prescribed. According to the CA,
Melecio failed to file the action within one year after entry of the decree of
registration.

Melecio filed a motion for reconsideration of the CA Decision. The CA denied

Melecio's motion for reconsideration for lack of merit.[17]

THE PETITION

Melecio filed the present petition for review on certiorari to challenge the CA ruling.

Melecio principally argues that the sale of land belonging to the conjugal
partnership without the wife's consent is invalid.

Melecio also claims that fraud attended the conveyance of the subject property and
the absence of any document evidencing the alleged sale made the transfer null
and void. Finally, Melecio claims that the action has not yet prescribed.

The respondents, on the other hand, submitted and adopted their arguments in
their Appeal Brief[18].

First, Melecio's counsel admitted that Anastacio had given the lot title in payment of
the debt amounting to Php30,000.00. The delivery of the title is constructive
delivery of the lot itself based on Article 1498, paragraph 2 of the Civil Code.

Second, the constructive delivery of the title coupled with the spouses Molina's
exercise of attributes of ownership over the subject property, perfected the sale
and completed the transfer of ownership.

THE ISSUES

The core issues of the petition are as follows: (1) whether the sale of a conjugal
property to the spouses Molina without Flora's consent is valid and legal; and (2)
whether fraud attended the transfer of the subject property to the spouses Molina.

OUR RULING

We deny the petition.

It is well settled that when the trial court's factual findings have been affirmed by
the CA, the findings are generally conclusive and binding upon the Court and may
no longer be reviewed on Rule 45 petitions.[19] While mere are exceptions[20] to this
rule, the Court finds no applicable exception with respect to the lower courts'
finding that the subject property was Anastacio and Flora's conjugal property.
Records before the Court show that the parties did not dispute the conjugal nature
of the property.

Melecio argues that the sale of the disputed property to the spouses Molina is void
without Flora's consent.
We do not find Melecio's argument meritorious.

Anastacio and Flora's conjugal partnership was dissolved upon Flora's

death.

There is no dispute that Anastacio and Flora Domingo married before the Family
Code's effectivity on August 3, 1988 and their property relation is a conjugal
partnership.[21]

Conjugal partnership of gains established before and after the effectivity of the
Family Code are governed by the rules found in Chapter 4 (Conjugal Partnership of
Gains) of Title IV (Property Relations Between Husband and Wife) of the Family
Code. This is clear from Article 105 of the Family Code which states:
x x x The provisions of this Chapter shall also apply to conjugal partnerships of
gains already established between spouses beforethe effectivity of this
Code, without prejudice to vested rights already acquired in accordance with the
Civil Code or other laws, as provided in Article 256.
The conjugal partnership of Anastacio and Flora was dissolved when Flora
died in 1968, pursuant to Article 175 (1) of the Civil Code[22] (now Article 126 (1)
of the Family Code).

Article 130 of the Family Code requires the liquidation of the conjugal partnership
upon death of a spouse and prohibits any disposition or encumbrance of the
conjugal property prior to the conjugal partnership liquidation, to quote:
Article 130. Upon the termination of the marriage by death, the conjugal
partnership property shall be liquidated in the same proceeding for the
settlement of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate

the conjugal partnership property either judicially or extra-judicially within one year
from the death of the deceased spouse. If upon the lapse of the six month
period no liquidation is made, any disposition or encumbrance involving
the conjugal partnership property of the terminated marriage shall be
void. x x x (emphases supplied)
While Article 130 of the Family Code provides that any disposition involving the
conjugal property without prior liquidation of the partnership shall be void, this rule
does not apply since the provisions of the Family Code shall be "without prejudice
to vested rights already acquired in accordance with the Civil Code or other
laws."[23]

An implied co-ownership among Flora's heirs governed the conjugal

properties pending liquidation and partition.

In the case of Taningco v. Register of Deeds of Laguna,[24] we held that the

properties of a dissolved conjugal partnership fall under the regime of co-ownership
among the surviving spouse and the heirs of the deceased spouse until final
liquidation and partition. The surviving spouse, however, has an actual and vested
one-half undivided share of the properties, which does not consist of determinate
and segregated properties until liquidation and partition of the conjugal partnership.

An implied ordinary co-ownership ensued among Flora's surviving heirs, including

Anastacio, with respect to Flora's share of the conjugal partnership until final
liquidation and partition; Anastacio, on the other hand, owns one-half of the
original conjugal partnership properties as his share, but this is an undivided
interest.

Article 493 of the Civil Code on co-ownership provides:

Article 493. Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the termination of the
co-ownership. (399) (emphases supplied)
Thus, Anastacio, as co-owner, cannot claim title to any specific portion of the
conjugal properties without an actual partition being first done either by agreement
or by judicial decree. Nonetheless, Anastacio had the right to freely sell and dispose
of his undivided interest in the subject property.

The spouses Molina became co-owners of the subject property to the

extent of Anastacio's interest.

The OCT annotation of the sale to the spouses Molina reads that "[o]nly the
rights, interests and participation of Anastacio Domingo, married to Flora
Dela Cruz, is hereby sold, transferred, and conveyed unto the said vendees for the
sum of ONE THOUSAND PESOS (P1,000.00) which pertains to an undivided one-
half (1/2) portion and subject to all other conditions specified in the document x
x x"[25] (emphases supplied). At the time of the sale, Anastacio's undivided interest
in the conjugal properties consisted of: (1) one-half of the entire conjugal
properties; and (2) his share as Flora's heir on the conjugal properties.

Anastacio, as a co-owner, had the right to freely sell and dispose of his undivided
interest, but not the interest of his co-owners. Consequently, Anastactio's sale to
the spouses Molina without the consent of the other co-owners was not totally void,
for Anastacio's rights or a portion thereof were thereby effectively transferred,
making the spouses Molina a co-owner of the subject property to the extent of
Anastacio's interest. This result conforms with the well-established principle that
the binding force of a contract must be recognized as far as it is legally possible to
do so (quando res non valet ut ago, valeat quantum valere potest).[26]

The spouses Molina would be a trustee for the benefit of the co-heirs of Anastacio in
respect of any portion that might belong to the co-heirs after liquidation and
partition. The observations of Justice Paras cited in the case of Heirs of Protacio Go,
Sr. V. Servacio[27] are instructive:
x x x [I]f it turns out that the property alienated or mortgaged really would pertain
to the share of the surviving spouse, then said transaction is valid. If it turns out
that there really would be, after liquidation, no more conjugal assets then the whole
transaction is null and void. But if it turns out that half of the property thus
alienated or mortgaged belongs to the husband as his share in the conjugal
partnership, and half should go to the estate of the wife, then that corresponding to
the husband is valid, and that corresponding to the other is not. Since all these can
be determined only at the time the liquidation is over, it follows logically that a
disposal made by the surviving spouse is not void ab initio. Thus, it has been held
that the sale of conjugal properties cannot be made by the surviving spouse without
the legal requirements. The sale is void as to the share of the deceased spouse
(except of course as to that portion of the husband's share inherited by her as the
surviving spouse). The buyers of the property that could not be validly sold become
trustees of said portion for the benefit of the husband's other heirs, the cestui que
trust ent. Said heirs shall not be barred by prescription or by laches.
Melecio's recourse as a co-owner of the conjugal properties, including the subject
property, is an action for partition under Rule 69 of the Revised Rules of Court. As
held in the case of Heirs of Protacio Go, Sr., "it is now settled that the appropriate
recourse of co-owners in cases where their consent were not secured in a sale of
the entire property as well as in a sale merely of the undivided shares of some of
the co-owners is an action for PARTITION under Rule 69 of the Revised Rules of
Court."[28]

The sale of the subject property to the spouses Molina was not attended
with fraud.

On the issue of fraud, the lower courts found that there was no fraud in the sale of
the disputed property to the spouses Molina.

The issue of fraud would require the Court to inquire into the weight of evidentiary
matters to determine the merits of the petition and is essentially factual in nature.
It is basic that factual questions cannot be cannot be entertained in a Rule 45
petition, unless it falls under any of the recognized exceptions[29] found in
jurisprudence. The present petition does not show that it falls under any of the
exceptions allowing factual review.

The CA and RTC conclusion that there is no fraud in the sale is supported by the
evidence on record.

Melecio's argument that no document was executed for the sale is negated by the
CA finding that there was a notarized deed of conveyance executed between
Anastacio and the spouses Molina, as annotated on the OCT of the disputed
property.

Furthermore, Melecio's belief that Anastacio could not have sold the property
without his knowledge cannot be considered as proof of fraud to invalidate the
spouses Molina's registered title over the subject property.[30]

Prevailing jurisprudence uniformly holds that findings of facts of the trial court,
particularly when affirmed by the Court of Appeals, are binding upon this Court.[31]
Considering these findings, we find no need to discuss the other issues raised by
Melecio.

WHEREFORE, we hereby DENY the petition for review on certiorari. The decision

dated August 9, 2011 of the Court of Appeals in CA-G.R. CV No. 94160
is AFFIRMED.

SO ORDERED.

Carpio, (Chairperson), Del Castillo, Mendoza, and Leonen, JJ., concur.

THIRD DIVISION
[ G.R. No. 200612, April 05, 2017 ]
RAFAEL C. UY (CABANGBANG STORE), PETITIONER, V.
ESTATE OF VIPA FERNANDEZ, RESPONDENT.

DECISION

REYES, J.: 

This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court

seeking to annul and set aside the Decision[2] dated November 26, 2010 and
Resolution[3] dated January 24, 2012 issued by the Court of Appeals (CA) in CA-G.R.
SP No. 04481.

Facts

Vipa Fernandez Lahaylahay (Vipa) is the registered owner of a parcel of land

situated in Lopez Jaena Street, Jaro, Iloilo City covered by Transfer Certificate of
Title No. T-26576 (subject property).[4] Vipa and her husband, Levi Lahaylahay
(Levi), have two children – Grace Joy Somosierra (Grace Joy) and Jill Frances
Lahaylahay (Jill Frances).[5]

Sometime in 1990, a contract of lease was executed between Vipa and Rafael Uy
(Rafael) over the subject property and the improvements thereon, pursuant to
which, Rafael bound himself to pay Vipa, as consideration for the lease of the
property, the amount of P3,000.00 permonth, with a provision for a 10% increase
every year thereafter.[6]

On March 5, 1994, Vipa died leaving no will or testament whatsoever. Grace Joy
became the de facto administrator of the estate of Vipa. After Vipa's death, Levi
lived in Aklan.[7]

In June 1998, Rafael stopped paying the monthly rents.[8] Consequently, on June

12, 2003, the Estate of Vipa, through Grace Joy, filed a complaint[9] for unlawful
detainer with the Municipal Trial Court in Cities (MTCC) of Iloilo City against Rafael.
It was alleged therein that, as of June 1998, Rafael was already bound to pay rent
at the amount of P3,300.00 per month and that his last payment was made in May
1998. Accordingly, at the time of the filing of the Complaint, Rafael's unpaid rents
amounted to P271,150.00.[10] The Estate of Vipa claimed that despite repeated
demands, Rafael refused to pay the rents due.[11]

In his Answer,[12] Rafael denied that he refused to pay the rent for the lease of the
subject property. He claimed that sometime in June 1998 Patria Fernandez-Cuenca
(Patria), Vipa's sister, demanded for the payment of the rents, claiming that she is
the rightful heir of Vipa.[13]Since he had no idea on who is entitled to receive the
rent for the subject property, he deposited the amount of P10,000.00 with the
Office of the Clerk of Court of the Regional Trial Court (RTC) of Iloilo City on
November 20, 1998 and that Grace Joy was informed of such consignation.[14] He
claimed that a case for the settlement of the Estate of Vipa was instituted by Patria
with the RTC, which was docketed as Special Proceeding No. 6910. He averred that
he is willing to pay the rent on the leased property to the rightful heirs of Vipa and
that he made another consignation with the RTC in the amount of P6,000.00.[15]

On June 12, 2008, the MTCC rendered a Decision,[16] the decretal portion of which
reads:

WHEREFORE, in the light of the foregoing ratiocination, judgment is hereby

rendered in favor of the [Estate of Vipa] and against [Rafael], ordering the latter, to
wit:

1. to vacate the premises subject of this case and covered by TCT No. T-26576
and to peacefully turn over the possession of the same to the [Estate of
Vipa];
2. to pay the [Estate of Vipa] the amount of Php271,150.00 as payment for the
unpaid rentals with 12% interest per annum from the last demand on May 3,
2003 until the whole amount is paid;
3. to pay the [Estate of Vipa] the amount of Php3,000.00 per month with 12%
interest per annum for the use and occupancy of the premises computed
from the date of the filing of this case on June 12, 2003 until fully paid;
4. to pay the [Estate of Vipa] attorney's fees in the amount of Php20,000.00;
[and]
5. to pay the costs of suit.
SO ORDERED.[17]

The MTCC found that after Vipa's death in 1994 until 1998, Rafael was paying the
rent for the lease of the subject property to Grace Joy.[18]That the real reason why
Patria claimed to be the heir of Vipa is because she owed Rafael money which she
could not pay. Patria then charged the debt she owes to Rafael from the monthly
rent of the subject property, an arrangement that Rafael took advantage to avoid
paying Grace Joy the monthly rents. The MTCC further opined that the
consignations made by Rafael in the total amount of P16,000.00 are not valid since
there was no prior tender of payment.[19]

On appeal, the RTC, in its Decision[20] dated April 15, 2009, reversed the MTCC's
Decision dated June 12, 2008 and, thus, dismissed the complaint for unlawful
detainer filed by the Estate of Vipa. Thus:

WHEREFORE, premises considered, the Decision appealed from is REVERSED and

SET ASIDE; and the herein complaint is hereby DISMISSED for lack of merit; and
further DISMISSING [Rafael's] counterclaim for failure to substantiate the same.

SO ORDERED.[21]

The RTC opined that Grace Joy was actually the plaintiff in the case and not the
Estate of Vipa. It then pointed out that Grace Joy failed to bring the dispute to the
barangay for conciliation prior to filing the complaint for unlawful detainer.[22]

The RTC further held that the MTCC erred in including the entire subject property as
part of the Estate of Vipa. The RTC explained that the subject property was
acquired by Vipa during the subsistence of her marriage with Levi and, as such, is
part of their conjugal properties. That after Vipa's death, the conjugal partnership
was terminated, entitling Levi to one-half of the property.[23] The RTC then pointed
out that Levi sold his share in the subject property to Rafael, as evidenced by a
Deed of Sale[24] dated December 29, 2005.[25] Accordingly, the RTC ruled that
Rafael, as co-owner of the subject property, having bought Levi's one-half share
thereof, had the right to possess the same.[26]

The Estate of Vipa sought a reconsideration[27] of the Decision dated April 15, 2009,
but it was denied by the RTC in its Order dated July 28; 2009.[28]

The Estate of Vipa then filed a Petition for Review[29] with the CA. On November 26,
2010, the CA rendered a Decision,[30] which declared:

WHEREFORE, in view of all the foregoing, the instant petition for review is
GRANTED and the April 15, 2009 Decision of the court a quo in Civil Case No. 08-
29842 is hereby REVERSED and SET ASIDE. Accordingly, the June 12, 2008
Decision of the Municipal Trial Court, Branch 4, Iloilo City, in Civil Case No. 03-208
is hereby REINSTATED.

SO ORDERED.[31]
The CA held that there was no necessity to bring the dispute before the barangay
for conciliation since the Estate of Vipa, being a juridical person, cannot be
impleaded to a barangay conciliation proceeding. The CA likewise pointed out that
any allegations against Grace Joy's authority to represent the Estate of Vipa had
been laid to rest when she was appointed as administrator of the Estate of Vipa in
Special Proceedings No. 6910 pending before the RTC.[32]

Further, the CA held that Rafael raised the issue of ownership of the subject
property, i.e., Levi's sale of his one-half share in the subject property to Rafael,
only for the first time in his appeal with the RTC. Accordingly, it was error on the
part of the RTC to have resolved the issue of ownership of the subject property.
[33]
 Furthermore, the CA agreed with the MTCC that Rafael's consignation of the rent
to the RTC is ineffective. It ruled that Rafael made the consignation only twice and
the amount consigned was patently insignificant compared to the amount of rent
due.[34]

Rafael's motion for reconsideration[35] was denied by the CA in its

Resolution[36] dated January 24, 2012.

Hence, the instant petition.

Rafael maintains that Grace Joy has no authority to represent the Estate of Vipa
and, when she filed the complaint for unlawful detainer with the MTCC, she did so
in her personal capacity. Thus, Rafael claims that the dispute should have been
brought to the barangay for conciliation before the complaint was filed in the MTCC.
[37]
 He further claims that the CA erred in . reversing the RTC's ruling on the issue of
ownership of the subject property. He insists that he already purchased Levi's one-
half share in the subject property.[38]

On the other hand, the Estate of Vipa, in its Comment,[39] avers that the supposed
lack of authority of Grace Joy to file the complaint for unlawful detainer and the
ownership of the subject property were never raised in the proceedings before the
MTCC and, hence, could not be passed upon by the RTC in the appellate
proceedings. In any case, it pointed out that the RTC's Decision[40] dated October
28, 2005 in Special Proceedings No. 6910, which appointed Grace Joy as the
administrator of the intestate estate of Vipa, recognized that the latter and Jill
Frances are legitimate children of Vipa and Levi.

Issue

Essentially, the issue set forth for the Court's resolution is whether the CA erred in
reversing the RTC's Decision dated April 15, 2009.

Ruling of the Court

The petition is partly meritorious.

Rafael's claim that the complaint below should have been dismissed since Grace Joy
has no authority to represent the Estate of Vipa and that there was lack of prior
barangay conciliation is untenable. Unlawful detainer cases are covered by the
Rules on Summary Procedure.[41]Section 5 of the 1991 Revised Rules on Summary
Procedure provides that affirmative and negative defenses not pleaded in the
answer shall be deemed waived, except lack of jurisdiction over the subject matter.

Rafael failed to plead in the answer he filed with the MTCC that Grace Joy has no
authority to represent the Estate of Vipa. Neither did he raise therein the lack of
barangay conciliation between the parties herein prior to the filing of the complaint
for unlawful detainer. Accordingly, the foregoing defenses are already deemed
waived.

In any case, the issue of the supposed lack of authority of Grace Joy to represent
the Estate of Vipa had already been rendered moot with the RTC's appointment of
Grace Joy as the administrator of the Estate of Vipa in Special Proceedings No.
6910.

Also, there was no need to refer the dispute between the parties herein to the
barangay for conciliation pursuant to the Katarungang Pambarangay Law.[42] It
bears stressing that only individuals may be parties to barangay conciliation
proceedings either as complainants or respondents. Complaints by or against
corporations, partnerships or other juridical entities may not be filed with, received
or acted upon by the barangay for conciliation.[43] The Estate of Vipa, which is the
complainant below, is a juridical entity that has a personality, which is separate and
distinct from that of Grace Joy.[44] Thus, there is no necessity to bring the dispute to
the barangay for conciliation prior to filing of the complaint for unlawful detainer
with the MTCC.

The CA, nevertheless, erred in hastily dismissing Rafael's allegation as regards the
ownership of the subject property. In disregarding Rafael's claim that he owns
Levi's one-half undivided share in the subject property, the CA ruled that the said
issue was raised for the first time on appeal and should thus not have been
considered by the RTC, viz.:

On the second issue, the records show that [Rafael] raised the issue of ownership
only for the first time on appeal; hence, the [RTC] erred in deciding the appeal
before it on the findings that part of the subject premises is owned by petitioners,
allegedly having bought the same from [Levi], the husband of [Vipa].

The Court is not unmindful that in forcible entry and unlawful detainer cases, the
MTC may rule on the issue [of] ownership in order to determine the issue of
possession. However, the issue of ownership must be raised by the defendant on
the earliest opportunity; otherwise, it is already deemed waived. Moreover, the
instant case was covered by the Rules on Summary Procedure, which expressly
provide that affirmative and negative defenses not pleaded therein shall be deemed
waived, except for lack of jurisdiction over the subject matter. Thus, the [RTC]
erred in resolving the issue of ownership for the first time on appeal.[45] (Citations
omitted)

It is true that fair play, justice, and due process dictate that parties should not raise
for the first time on appeal issues that they could have raised but never did during
trial. However, before a party may be barred from raising an issue for the first time
on appeal, it is imperative that the issue could have been raised during the trial.
[46]
 What escaped the appellate court's attention is that the sale of the one-half
undivided share in the subject property to Rafael was consummated only on
December 29, 2005, more than two years after Rafael filed with the MTCC his
answer to the complaint for unlawful detainer on July 18, 2003.[47] Obviously, Rafael
could not have raised his acquisition of Levi's share in the subject property as an
affirmative defense in the answer he filed with the MTCC.

Moreover, Rafael's ownership of the one-half undivided share in the subject

property would necessarily affect the property relations between the parties herein.
Thus, the CA should have exerted efforts to resolve the said issue instead of
dismissing the same on the flimsy ground that it was not raised during the
proceedings before the MTCC.

Levi and Vipa were married on March 24, 1961[48] and, in the absence of a marriage
settlement, the system of conjugal partnership of gains governs their property
relations.[49] It is presumed that the subject property is part of the conjugal
properties of Vipa and Levi considering that the same was acquired during the
subsistence of their marriage and there being no proof to the contrary.[50]

When Vipa died on March 5, 1994, the conjugal partnership was automatically
terminated.[51] Under Article 130 of the Family Code, the conjugal partnership
property, upon its dissolution due to the death of either spouse, should be
liquidated either in the same proceeding for the settlement of the estate of the
deceased or, in the absence thereof, by the surviving spouse within one year from
the death of the deceased spouse. That absent any liquidation, any disposition or
encumbrance of the conjugal partnership property is void. Thus:

Article 130. Upon the termination of the marriage by death, the conjugal
partnership property shall be liquidated in the same proceeding for the settlement
of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse

shall liquidate the conjugal partnership property either judicially or extra-
judicially within six months from the death of the deceased spouse. If upon
the lapse of the six-month period no liquidation is made, any disposition or
encumbrance involving the conjugal partnership property of the
terminated marriage shall be void.

Should the surviving spouse contract a subsequent marriage without compliance

with the foregoing requirements, a mandatory regime of complete separation of
property shall govern the property relations of the subsequent marriage. (Emphasis
ours)

Article 130 of the Family Code is applicable to conjugal partnership of gains already
established between the spouses prior to the effectivity of the Family Code pursuant
to Article 105 thereof, viz.:

Article 105. In case the future spouses agree in the marriage settlements that the
regime of conjugal partnership of gains shall govern their property relations during
marriage, the provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of

gains already established between spouses before the effectivity of this
Code, without prejudice to vested rights already acquired in accordance with the
Civil Code or other laws as provided in Article 256. (Emphasis ours)

Rafael bought Levi's one-half share in the subject property in consideration of

P500,000.00 as evidenced by the Deed of Sale[52] dated December 29, 2005. At that
time, the conjugal partnership properties of Levi and Vipa were not yet liquidated.
However, such disposition, notwithstanding the absence of liquidation of the
conjugal partnership properties, is not necessarily void.

It bears stressing that under the regime of conjugal partnership of gains, the
husband and wife are co-owners of all the property of the conjugal partnership.
[53]
 Thus, upon the termination of the conjugal partnership of gains due to the death
of either spouse, the surviving spouse has an actual and vested one-half undivided
share of the properties, which does not consist of determinate and segregated
properties until liquidation and partition of the conjugal partnership.[54] With
respect, however, to the deceased spouse's share in the conjugal partnership
properties, an implied ordinary co-ownership ensues among the surviving spouse
and the other heirs of the deceased.[55]

Thus, upon Vipa's death, one half of the subject property was automatically
reserved in favor of the surviving spouse, Levi, as his share in the conjugal
partnership. The other half, which is Vipa's share, was transmitted to Vipa's heirs –
Grace Joy, Jill Frances, and her husband Levi, who is entitled to the same share as
that of a legitimate child. The ensuing implied co-ownership is governed by Article
493 of the Civil Code, which provides:

Article 493. Each co-owner shall have the full ownership of his part and of the fruits
and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or the mortgage,
with respect to the co-owners, shall be limited to the portion which may be
allotted to him in the division upon the termination of the co-
ownership. (Emphasis ours)
Although Levi became a co-owner of the conjugal partnership properties with Grace
Joy and Jill Frances, he could not yet assert or claim title to any specific portion
thereof without an actual partition of the property being first done either by
agreement or by judicial decree. Before the partition of a land or thing held in
common, no individual or co-owner can claim title to any definite portion thereof.
All that the co-owner has is an ideal or abstract quota or proportionate share in the
entire land or thing.[56]

Nevertheless, a co-owner could sell his undivided share; hence, Levi had the right
to freely sell and dispose of his undivided interest. Thus, the sale by Levi of his one-
half undivided share in the subject property was not necessarily void, for his right
as a co-owner thereof was effectively transferred, making the buyer, Rafael, a co-
owner of the subject property. It must be stressed 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).[57]

However, Rafael became a co-owner of the subject property only on December 29,
2005 – the time when Levi sold his one-half undivided share over the subject
property to the former. Thus, from December 29, 2005 Rafael, as a co-owner, has
the right to possess the subject property as an incident of ownership. Otherwise
stated, prior to his acquisition of Levi's one-half undivided share, Rafael was a mere
lessee of the subject property and is thus obliged to pay the rent for his possession
thereof.

Accordingly, Rafael could no longer be directed to vacate the subject property since
he is already a co-owner thereof. Nevertheless, Rafael is still bound to pay the
unpaid rentals from June 1998 until April 2003 in the amount of P271,150.00.
In Nacar v. Gallery Frames, et al.,[58]the Court pointed out that pursuant to
Resolution No. 796 of the Bangko Sentral ng Pilipinas Monetary Board, the interest
rate of loans or forbearance of money, in the absence of stipulation shall be six
percent (6%) effective only from July 1, 2013. Thus, prior to July 1, 2013, the rate
of interest on loans or forbearance of money, in the absence of stipulation, is still
12%. Accordingly, the amount of P271,150.00, representing the unpaid rentals
shall earn interest at the rates of 12% per annum from the date of the last demand
on May 3, 2003 until June 30, 2013 and 6% per annum from July 1, 2013 until fully
paid.

Further, Rafael is likewise bound to pay reasonable rent for the use and occupancy
of the subject property from May 2003 until December 28, 2005 at the rate of
P3,000.00 per month with interest at the rate of 12% per annum from the date of
the last demand, i.e., the filing of the complaint with the MTCC on June 12, 2003,
until June 30, 2013 and 6% per annum from July 1, 2013 until fully paid.

The award of attorney's fees of P20,000.00 is likewise proper. Attorney's fees can
be awarded in the cases enumerated in Article 2208 of the Civil Code, specifically:

Article 2208. x x x
xxxx

(2) Where the defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest[.]

Certainly, because of Rafael's unjustified refusal to pay the rents due on the lease
of the subject prope1iy, the Estate of Vipa was put to unnecessary expense and
trouble to protect its interest under paragraph (2), Article 2208 of the Civil Code. In
unlawful detainer cases, where attorney's fees are awarded, the same shall not
exceed P20,000.00.[59]

WHEREFORE, in view of the foregoing disquisitions, the petition for review

on certiorari is PARTIALLY GRANTED. The Decision dated November 26, 2010
and Resolution dated January 24, 2012 issued by the Court of Appeals in CA-G.R.
SP No. 04481 are hereby REVERSED and SET ASIDE. Petitioner Rafael C. Uy is
hereby directed to pay the Estate of Vipa Fernandez the following:

1. The amount of P271,150.00, representing the unpaid rentals, with interest at

the rates of twelve percent (12%) per annum from the date of the last
demand on May 3, 2003 until June 30, 2013, and six percent (6%) per
annum from July 1, 2013 until fully paid;
2. Reasonable rent for the use and occupancy of the subject property from May
2003 until December 28, 2005 at the rate of P3,000.00 per month with
interest at the rates of twelve percent (12%) per annum from the date of the
last demand,  i.e., the filing of the complaint for unlawful detainer on June
12, 2003, until June 30, 2013, and six percent (6%) per annum from July 1,
2013 until fully paid; and
3. The amount of P20,000.00 as attorney's fees.

SO ORDERED.

Velasco, Jr. (Chairperson), Bersamin, Jardeleza, and Tijam, JJ., concur. 

THIRD DIVISION
[ G.R. No. 234533, June 27, 2018 ]
 SPOUSES JULIETA B. CARLOS AND FERNANDO P. CARLOS,
PETITIONERS, V. JUAN CRUZ TOLENTINO, RESPONDENT.

DECISION

VELASCO JR., J.: 

Nature of the Case

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the April 5, 2017 Decision[1] and the September 27, 2017
Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 106430. The
challenged rulings reversed and set aside the October 16, 2015 Decision[3] and the
December 9, 2015 Order[4] of the Regional Trial Court (RTC) of Quezon City, Branch
87 which dismissed respondent's complaint for annulment of title against the
petitioners.

The Facts

The instant case arose from a complaint for annulment of title with damages filed
by respondent Juan Cruz Tolentino (Juan) against his wife, Mercedes Tolentino
(Mercedes), his grandson, Kristoff M. Tolentino (Kristoff), herein petitioners
Spouses Julieta B. Carlos (Julieta) and Fernando P. Carlos (Spouses Carlos), and
the Register of Deeds of Quezon City.

The subject matter of the action is a parcel of land with an area of 1,000 square
meters and all the improvements thereon located in Novaliches,[5] Quezon City,
covered by Transfer Certificate of Title (TCT) No. RT-90746 (116229) issued on
March 17, 1967 and registered in the name of Juan C. Tolentino, married to
Mercedes Tolentino (the subject property).[6]

Without Juan's knowledge and consent, Mercedes and Kristoff, who were then
residing in the subject property, allegedly forged a Deed of Donation[7] dated
February 15, 2011, thereby making it appear that Juan and Mercedes donated the
subject property to Kristoff. Thus, by virtue of the alleged forged Deed of Donation,
Kristoff caused the cancellation of TCT No. RT-90764 (116229), and in lieu thereof,
TCT No. 004-2011003320[8] was issued in his name on March 9, 2011. [9]

In April 2011, Kristoff offered the sale of the subject property to Julieta's brother,
Felix Bacal (Felix), who is also the administrator of the lot owned by Julieta which is
adjacent to the subject property. When Felix informed Julieta of the availability of
the subject property, Spouses Carlos then asked him to negotiate for its purchase
with Kristoff. Kristoff and Felix then arranged for the ocular inspection of the
subject property. Thereafter, Kristoff surrendered to Felix copies of the title and tax
declaration covering the said property.[10]

After a series of negotiations, Kristoff and Julieta executed a Memorandum of

Agreement[11] (MOA) dated April 12, 2011 stating that Kristoff is selling the subject
property to Julieta in the amount of Two Million Three Hundred Thousand Pesos
(P2,300,000.00), payable in two (2) installments. On May 28, 2011, Julieta made
the first payment in the amount of Two Million Pesos (P2,000,000.00)[12] while the
second payment in the amount of Three Hundred Thousand Pesos (P300,000.00)
was made on June 30, 2011.[13] On the same day, a Deed of Absolute Sale[14] was
executed between Kristoff and Julieta.

Upon learning of the foregoing events, Juan executed an Affidavit of Adverse Claim
which was annotated on TCT No. 004-2011003320 on July 15, 2011, to wit:

NOTICE OF ADVERSE CLAIM : EXECUTED UNDER OATH BY JUAN C. TOLENTINO,

CLAIMING FOR THE RIGHTS, INTEREST AND PARTICIPATION OVER THE PROPERTY,
STATING AMONG OTHERS THAT HE DISCOVERED ON JULY 14, 2011 THAT SAID
PARCEL OF LAND HAS BEEN DONATED TO KRISTOFF M. TOLENTINO BY VIRTUE OF
A DEED OF DONATION PU[R]PORTEDLY EXECUTED BY JUAN C. TOLENTINO &
MERCEDES SERRANO ON FEB. 15, 2011. THAT AS A RESULT OF THE FORGED DEED
OF DONATION, HIS TITLE WAS CANCELLED. THAT HE DECLARE THAT HE HAVE
NOT SIGNED ANY DEED OF DONATION IN FAVOR OF SAID KRISTOFF M.
TOLENTINO. NEITHER DID HE SELL, TRANSFER NOR WAIVE IDS RIGHTS OF
OWNERSHIP OVER THE SAID PROPERTY. OTHER CONDITIONS SET FORTH IN DOC.
NO. 253, PAGE NO. 52, BOOK NO. V, SERIES OF 2011 OF NOTARY PUBLIC OF QC,
MANNY GRAGASIN. DATE INSTRUMENT – JUNE 15, 2011[15]

Juan also filed a criminal complaint for Falsification of Public Document before the
Office of the City Prosecutor of Quezon City against Kristoff.[16] A Resolution for the
filing of Information for Falsification of Public Document against Kristoff was then
issued on January 10, 2012. Accordingly, an Information dated February 15, 2012
was filed against him.[17]

Meanwhile, Kristoff and Julieta executed another Deed of Absolute Sale[18] dated

September 12, 2011 over the subject property and, by virtue thereof, the Register
of Deeds of Quezon City cancelled TCT No. 004- 2011003320 and issued TCT No.
004-2011013502[19] on December 5, 2011 in favor of Spouses Carlos. The affidavit
of adverse claim executed by Juan was duly carried over to the title of Spouses
Carlos.

On February 23, 2012, Juan filed a complaint for annulment of title with damages
against Mercedes, Kristoff, Spouses Carlos, and the Register of Deeds of Quezon
City before the RTC of Quezon City. The case was raffled to Branch 87 and docketed
as Civil Case No. Q-12-70832.

RTC Ruling
In its October 16, 2015 Decision, the RTC found that Juan's signature in the Deed
of Donation dated February 15, 2011 was a forgery.[20]Despite such finding,
however, it dismissed Juan's complaint.

The RTC found that at the time Spouses Carlos fully paid the agreed price in the
MOA on June 30, 2011, which culminated in the execution of the Deed of Absolute
Sale on even date, Kristoff was the registered owner of the subject property
covered by TCT No. 004-2011003320. Further, when the MOA and the Deed of
Absolute Sale dated June 30, 2011 were executed, nothing was annotated on the
said title to indicate the adverse claim of Juan or any other person. It was only on
July 15, 2011 when Juan's adverse claim was annotated on Kristoff's title.[21]

The fact that a second Deed of Absolute Sale dated September 12, 2011 was
executed is immaterial since the actual sale of the subject property took place on
June 30, 2011 when Spouses Carlos fully paid the purchase price. Thus, relying on
the face of Kristoff's title without any knowledge of irregularity in the issuance
thereof and having paid a fair and full price of the subject property before they
could be charged with knowledge of Juan's adverse claim, the RTC upheld Spouses
Carlos' right over the subject property. The dispositive portion of the October 16,
2015 Decision states:

WHEREFORE, viewed in the light of the foregoing, the instant complaint for
Annulment of Title and Damages against the defendant spouses Fernando and
Julieta Carlos is hereby DISMISSED for failure of the plaintiff to prove his cause of
action. This is without prejudice, however to any appropriate remedy the plaintiff
may take against Kristoff Tolentino and Mercedes Tolentino.

The defendant spouses' counterclaim is DISMISSED for lack of merit.

SO ORDERED.[22]

Juan moved for reconsideration of the said decision but was denied by the RTC in
its December 9, 2015 Order. Thus, he interposed an appeal before the CA.

CA Ruling

On appeal, the CA found that Spouses Carlos were negligent in not taking the
necessary steps to determine the status of the subject property prior to their
purchase thereof. It stressed that Julieta failed to examine Kristoff s title and other
documents before the sale as she merely relied on her brother, Felix.
[23]
 Accordingly, the CA ruled that Juan has a better right over the subject property.
The fallo of the April 5, 2017 Decision reads:

WHEREFORE, the appeal is GRANTED. The appealed Decision of the RTC of

Quezon City dated October 16, 2015 is hereby REVERSED and SET ASIDE.
Accordingly, plaintiff-appellant Juan Cruz Tolentino is recognized to have a better
right over the subject property. The Register of Deeds of Quezon City
is ORDERED to reinstate TCT No. RT-90746 (116229) in the name of Juan Cruz
Tolentino and to cancel TCT No. 004-2011013502 in the names of Spouses Julieta
and Fernando Carlos, and the latter to surrender possession of the subject property
to Juan Cruz Tolentino.

SO ORDERED.[24]

Spouses Carlos then filed a motion for reconsideration but the same was denied by
the CA in its September 27, 2017 Resolution.

Hence, the instant petition.

The Issue

Spouses Carlos anchor their plea for the reversal of the assailed Decision on the
following grounds:[25]

The Court of Appeals acted injudiciously, and with grievous abuse of discretion in
the appreciation of facts and in disregard of jurisprudence, when it granted
respondent's appeal, and thereby arbitrarily and despotically ratiocinated that -

I. Petitioners are not buyers in good faith of the litigated real property, but who are
otherwise devoid of notice let alone knowledge of any flaw or infirmity in the title of
the person selling the property at the time of purchase.

II. Petitioners are not purchasers in good faith, on the basis of the Memorandum of
Agreement dated April 12, 2011 and the Deed of Absolute Sale dated June 30,
2011.

III. Respondent Juan Cruz Tolentino was the previous registered owner of the land
in dispute, thereby acting on oblivion to the fact that the real property is essentially
conjugal in nature.

IV. In failing to rule and rationalize that at least one-half of the subject real
property should belong to petitioners.

V. The litigated property must be awarded and returned m favour of respondent

Juan Cruz Tolentino in its entirety.

At bottom, the crux of the controversy is who, between Juan and Spouses Carlos,
has the better to right to claim ownership over the subject property.

The Court's Ruling

The present controversy necessitates an inquiry into the facts. While, as a general
rule, factual issues are not within the province of this Court, nonetheless, in light of
the conflicting factual findings of the two courts below, an examination of the facts
obtaining in this case is in order.[26]
Juan and Mercedes appear to have been married before the effectivity of the Family
Code on August 3, 1988. There being no indication that they have adopted a
different property regime, the presumption is that their property relations is
governed by the regime of conjugal partnership of gains.[27] Article 119 of the Civil
Code thus provides:

Article 119. The future spouses may in the marriage settlements agree upon
absolute or relative community of property, or upon complete separation of
property, or upon any other regime. In the absence of marriage settlements, or
when the same are void, the system of relative community or conjugal partnership
of gains as established in this Code, shall govern the property relations between
husband and wife.

Likewise, the Family Code contains terms governing conjugal partnership of gains
that supersede the terms of the conjugal partnership of gains under the Civil Code.
Article 105 of the Family Code states:

Article 105. In case the future spouses agree in the marriage settlements that the
regime of conjugal partnership of gains shall govern their property relations during
marriage, the provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of gains
already established between spouses before the effectivity of this Code, without
prejudice to vested rights already acquired in accordance with the Civil Code or
other laws, as provided in Article 256.

Since the subject property was acquired on March 17, 1967[28] during the marriage
of Juan and Mercedes, it formed part of their conjugal partnership.[29] It follows then
that Juan and Mercedes are the absolute owners of their undivided one-half
interest, respectively, over the subject property.

Meanwhile, as in any other property relations between husband and wife, the
conjugal partnership is terminated upon the death of either of the spouses.[30] In
respondent Juan's Comment filed before the Court, the Verification which he
executed on February 9, 2018 states that he is already a widower. Hence, the Court
takes due notice of the fact of Mercedes' death which inevitably results in the
dissolution of the conjugal partnership.

In retrospect, as absolute owners of the subject property then covered by TCT No.
RT-90746 (116229), Juan and Mercedes may validly exercise rights of ownership by
executing deeds which transfer title thereto such as, in this case, the Deed of
Donation dated February 15, 2011 in favor of their grandson, Kristoff.

With regard to Juan's consent to the afore-stated donation, the RTC, however,
found that such was lacking since his signature therein was forged. Notably, the CA
did not overturn such finding, and in fact, no longer touched upon the issue of
forgery. On the other hand, it must be pointed out that the signature of Mercedes in
the Deed of Donation was never contested and is, therefore, deemed admitted.
In Arrogante v. Deliarte,[31] We ruled that a deed of sale of the subject lot therein
executed by the Deliarte siblings in favor of their brother, respondent Beethoven
Deliarte (Beethoven), was void for being a conveyance of future inheritance.
Nonetheless, the provisions in the written agreement and the Deliarte siblings'
signature thereon are equivalent to an express waiver of all their rights and
interests. Thus, the Court upheld the quieting of title in favor of respondent
Beethoven after finding that the deed of sale, albeit void, evidenced the consent
and acquiescence of each Deliarte sibling to said transaction.

In the present case, while it has been settled that the congruence of the wills of the
spouses is essential for the valid disposition of conjugal property,[32] it cannot be
ignored that Mercedes' consent to the disposition of her one-half interest in the
subject property remained undisputed. It is apparent that Mercedes, during her
lifetime, relinquished all her rights thereon in favor of her grandson, Kristoff.

Furthermore, Mercedes' knowledge of and acquiescence to the subsequent sale of

the subject property to Spouses Carlos is evidenced by her signature appearing in
the MOA[33] dated April 12, 2011 and the Deed of Absolute Sale[34] dated September
12, 2011. We are also mindful of the fact that Spouses Carlos had already paid a
valuable consideration in the amount of Two Million Three Hundred Thousand Pesos
(P2,300,000.00) for the subject property before Juan's adverse claim was
annotated on Kristoffs title. The said purchase and acquisition for valuable
consideration deserves a certain degree of legal protection.

Given the foregoing, the Court is disinclined to rule that the Deed of Donation is
wholly void  ab initio and that the Spouses Carlos should be totally stripped of their
right over the subject property. In consonance with justice and equity, We deem it
proper to uphold the validity of the Deed of Donation dated February 15, 2011 but
only to the extent of Mercedes' one half share in the subject property. And rightly
so, because why invalidate Mercedes' disposition of her one-half portion of the
conjugal property that will eventually be her share after the termination of the
conjugal partnership? It will practically be absurd, especially in the instant case,
since the conjugal partnership had already been terminated upon Mercedes' death.

Accordingly, the right of Kristoff, as donee, is limited only to the one half undivided
portion that Mercedes owned. The Deed of Donation insofar as it covered the
remaining one-half undivided portion of the subject property is null and void, Juan
not having consented to the donation of his undivided half.

Upon the foregoing perspective, Spouses Carlos' right, as vendees in the

subsequent sale of the subject property, is confined only to the one-half undivided
portion thereof. The other undivided half still belongs to Juan. As owners  pro
indiviso of a portion of the lot in question, either Spouses Carlos or Juan may ask
for the partition of the lot and their property rights shall be limited to the portion
which may be allotted to them in the division upon the termination of the co-
ownership.[35] This disposition is in line with the well-established principle that the
binding force of a contract must be recognized as far as it is legally possible to do
so—quando res non valet ut ago, valeat quantum valere potest.[36]
Lastly, as a matter of fairness and in line with the principle that no person should
unjustly enrich himself at the expense of another,[37]Kristoff should be liable to
reimburse Spouses Carlos of the amount corresponding to one-half of the purchase
price of the subject property.

WHEREFORE, in view of the foregoing, the petition is PARTIALLY GRANTED. The

donation and subsequent sale of the subject property is
declared NULL and VOID with respect to the undivided 1/2 portion owned by Juan
Cruz Tolentino, but VALID with respect to the other undivided 1/2 portion
belonging to Mercedes Tolentino. Accordingly, petitioners Spouses Carlos and
respondent Juan Cruz Tolentino are hereby declared as co-owners of the subject
property. The Register of Deeds of Quezon City is ordered to cancel TCT No. 004-
2011013502 and to issue a new transfer certificate of title in the names of Julieta
B. Carlos, married to Fernando P. Carlos, and Juan Cruz Tolentino on a 50-50
undivided interest in the lot.

We order Kristoff M. Tolentino to pay Spouses Carlos the amount of One Million One
Hundred Fifty Thousand Pesos (P1,150,000.00) corresponding to one-half of the
amount paid by Spouses Carlos for the subject property, with legal interest at the
rate of 6% computed from the finality of this Decision.

SO ORDERED.

Bersamin, Leonen, Martires, and Gesmundo, JJ., concur.

July