G.R. No.

161916 January 20, 2006

ARNELITO ADLAWAN, Petitioner,

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

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review is the September 23, 2003 Decision1 of the
Court of Appeals in CA-G.R. SP No. 74921 which set aside the September 13,
2002 Decision2 of the Regional Trial Court (RTC) of Cebu City, Branch 7, in Civil
Case No. CEB-27806, and reinstated the February 12, 2002 Judgment3 of the
Municipal Trial Court (MTC) of Minglanilla, Metro Cebu, in Civil Case No. 392,
dismissing petitioner Arnelito 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 nine12 children including the late Dominador
and herein surviving respondents Emeterio and Narcisa. During the lifetime of
their parents and deceased siblings, all of them lived on the said property.
Dominador and his wife, Graciana Ramas Adlawan, who died without issue, also
occupied the same.13 Petitioner, on the other hand, is a stranger who never had
possession of Lot 7226.

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

Respondents also contended that 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 7226.15 They 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

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

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. 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.

CONSUELO YNARES-SANTIAGO
Associate Justice

WE CONCUR:
ARTEMIO V. PANGANIBAN
Chief Justice

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice ROMEO J. CALLEJO, SR.
Asscociate Justice
MINITA V. CHICO-NAZARIO
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN
Chief Justice
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 178451 July 30, 2014

RURAL BANK OF CABADBARAN, INC., Petitioner,

vs.
JORGITA A. MELECIO-YAP, LILIA MELECIO PACIFICO (deceased,
substituted by her only child ERILL* ISAAC M. PACIFICO, JR.),
REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL,
Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari' are the Decision2 dated February
28, 2006 and the Resolution3 dated June 12, 2007 rendered by the Court of
Appeals (CA) in CA-G.R. CV No. 70933 which (a) set aside the Decision4 dated
November 27, 2000 of the Regional Trial Court (RTC) of Butuan City, Branch 33,
in Civil Case No. 4406; (b) declared the Special Power of Attorney, the Extra-
Judicial Adjudication of a Parcel of Land and the Addendum to th~ Extra-Judicial
Adjudication of the Estate of Isaac Melecio and Trinidad Melecio Both Deceased as
forgeries, and the extrajudicial foreclosure .sale, writ of possession,· and all
proceedings· relative thereto null and void as against respondents; and (c)
ordered the remand of the case to the court a quofor further proceedings.

The Facts

Erna Melecio-Mantala (Erna) and respondents Jorgita A. Melecio-Yap (Jorgita),

Lilia Melecio Pacifico (Lilia), Reynaldo A. Melecio, Rosie Melecio-Deloso (Rosie),
and Sarah Melecio Palma-Gil (Sarah) are the children of the late spouses Isaac
and Trinidad Melecio (Melecio Heirs). They inherited a 3,044 square meter-
residential lot located in Tolosa, Cabadbaran, Agusan del Norte, togetherwith the
ancestral house and two (2) other structures erected thereon (subject
properties). The administration and management of the said properties were left
to the care of Erna5 who was then residing in their ancestral home.6

On August 24, 1990, the Melecio Heirs purportedly executed a notarized Special
Power of Attorney (SPA)7 authorizing Erna to apply for a loan with petitioner
Rural Bank of Cabadbaran, Inc. (RBCI) and mortgage the subject properties.
Armed with the said SPA, Erna applied for and was granted a commercial loan by
RBCI inthe amount of 200,000.00 with 27% interest rate per annum, payable
within a period of 180 days.8 The loan was secured by a Real Estate Mortgage9
over the subject properties which was registered with the Registry of Deeds of
Agusan del Norte10 and annotated on Tax Declaration (TD) No. 425-R11 covering
the mortgaged lot.

Erna, however, defaulted in the payment of her loan obligation when it fell due,
causing RBCI to extra-judicially foreclose the mortgaged properties 12in
accordance with Act No. 3135,13 as amended. In the process, RBCI emerged as
the highest bidder in the public auction sale held on August 26, 1992 for a total
bid price of 405,045.65.14 Since Erna failed to redeem the subject properties
withinthe redemption period despite notice,15 the latest tax declarations16 in the
names of the Melecio Heirs covering the subject properties were cancelled and
new tax declarations in the name of RBCI were issued.17 Thereafter, RBCI
informed Erna of its intent to take physical possession of the subject
properties,18 while the actual occupant thereof, a certain Jimmyrando C. Morales,
was directed to pay rentals to RBCI beginning September 1995.19

In a letter20 dated October 11, 1995, respondents, through counsel, informed

RBCI that they were unaware of the loan obtained by Erna and did not authorize
the mortgage transaction over the subject properties which they co-owned. They
claimed that the SPA submitted by Erna in support of her loan application was
spurious, and that their signatures appearing thereon were falsified. As such,
theydemanded RBCI to release the subject properties from the coverage of Erna's
loan obligation to the extent of their shares.

In reply, RBCI maintained the validityof the SPA and its right to rely on it being a
notarized document. It likewise claimed that it was impossible for respondents
not to have known about the mortgage transaction considering that the
publication and notice requirements in foreclosure proceedings were followed and
that constant reminders were sent to redeem the subject properties which they
failed to heed.21

In view of respondents’ refusal tovacate the premises, RBCI applied for and was
issued a writ ofpossession dated March 22, 1996 by the RTC of Butuan City,
Branch 1 in Special Proceeding No. 899.22 The writ of Possession23 was,
thereafter, served and returned duly satisfied and complied with by the Sheriff
who turned over the subject properties to RBCI on April 11, 1996.24

Consequently, or on April 17, 1996, respondents filed a complaint25 for

declaration of nullity of documents, recovery of possession and ownership, and
damages with prayer for the issuance of a writ of preliminary injunction against
Spouses Erna and Bonifacio Mantala (Sps. Mantala), RBCI, the Office of the
Provincial Sheriff, and Spouses Jimmyrando and Teresita Morales (Sps. Morales)
before the RTC of Butuan City, Branch 2, docketed as Civil Case No. 4406. In the
said complaint, respondents averred that they learned of the foreclosure of the
subject properties only sometime in October 199526 and, upon investigation,
discovered that the said properties were mortgaged by their sister, Erna, bearing
ostensible authority under the subject SPA.27 They alleged that they did not
participate in the execution of the said SPA and prayed that the same, as well as
the mortgage contract, the writ of possession, the sheriff’s turn-over receipt, and
all derivative titles, documents, issuances, and registrations arising therefrom be
declared null and void and that the subject properties be reconveyed back to
them.

Extraterritorial service of summons was effected upon Sps. Mantala28 who, at the
time of the filing of the aforementioned complaint, were found to be already living
in Dubai, United Arab Emirates.29 Despite receipt of the summons and a copy of
the complaint, however, they did not file an answer and, thus, were declared in
default.30

For their part, the other defendants, i.e., RBCI, Sps. Morales, and the Office of
the Provincial Sheriff, maintained the validity of the notarized SPA and the
foreclosure proceedings which carry the presumption of regularity that
respondents failed to overcome.31 Having relied on the SPA, RBCI invoked the
defense of a mortgagee in good faith whose subsequent ownership and
possession of the subject properties must be respected. Said defendants thereby
prayed for the dismissal of the complaint and the payment of damages, attorney’s
fees, and litigation expenses for having been compelled to litigate against the
baseless suit.32 RBCI likewise filed a crossclaim against Sps. Mantala, praying for
reimbursement of the expenses incurred in relation to the foreclosure proceedings
and the present litigation in the event of a favorable judgment.33

During the trial, RBCI presented the notarized Extra-Judicial Adjudication of a

Parcel of Land and the Addendum to the Extra-Judicial Adjudication of the Estate
of Isaac Melecio and Trinidad Melecio Both Deceased (Extra-Judicial Adjudication
Documents) allegedly executed by respondents as further documentary bases for
its grant of Erna’s loan application.34

On rebuttal, respondents denied having executed the Extra-Judicial Adjudication

Documents, contending that their signatures therein were likewise falsified, and
that they never met in Cabadbaran to execute the same before a notary public.
Nonetheless,they admitted to have discovered that the ownership of the subject
properties had already been transferred to RBCI in 1993, contrary to their earlier
claim that they learned about it only in 1995.35

Before the RTC’s resolution of the case, respondent Lilia died36 and was
substituted by her only child, Erll Isaac M. Pacifico.37

The RTC Ruling

On November 27, 2000, the RTC ofButuan City, Branch 33 rendered a Decision38
in favor of RBCI, declaring the real estate mortgage and the consequential
foreclosure proceedingsto be valid and binding against respondents,
notwithstanding the allegation of forgery in the questioned documents. It noted
that despite constructive knowledge of the falsification as early as 1993,
respondents questioned the foreclosure proceedings only in 1996. It, thus,
concluded that they would not have raised the issue on forgeries or falsification
had Sps. Mantala paid the loan obligation or redeemed the properties and,
consequently, held them guilty of acquiescence and estoppel.39 Accordingly, the
RTC declared Sps. Mantala liable to both respondents and RBCI, and adjudged
them jointly and solidarily liable to pay: (a) respondents compensatory damages
in the amount of ₱1,000,000.00 with 12% interest rate for the loss of the family
ancestral house and lot foreclosed by RBCI, as well as moral and exemplary
damages in the amounts of ₱250,000.00 and ₱100,000.00, respectively, and
attorney's fees and litigation expenses in the sum of ₱70,000.00; (b) RBCI
attorney's fees and litigation expensesin the total amount of ₱70,000.00; and (c)
the costs of suit.40

Dissatisfied, respondents appealed to the CA.

The CA Ruling

In a Decision41 dated February 28, 2006, the CA reversed the RTC Decision,
finding that Erna had no authority to mortgage the subject properties to RBCI
since the SPA was actually a forgery, and, hence, null and void.42 It held that
while a notarized document generally carries the evidentiary weight conferred
upon it with respect to its due execution, respondents, nonetheless, were ableto
rebut by clear, positive and convincing evidence that their signatures on the
contested SPA were forged.43 The CA reached the same conclusion with respect
to the ExtraJudicial Adjudication Documents, and likewise declared the same
invalid.44 Moreover, contrary to the findings of the RTC, the CA held that there
was no constructive knowledge of the falsification, noting that the respondents
were not furnished by RBCI with any notice relative to the loan obligation nor
impleaded in the foreclosure proceedings and the ex-partepetition for writ of
possession.45 In this relation, the CA pointed out that acquiescence cannot
validate or ratify an inexistent or void document nor can estoppel lie against
respondents who had no deliberate intent to mislead.46

In view of the foregoing, the CA declared the real estate mortgage executed on
the strength of the falsified SPA as an invalid encumbrance of respondents’
individual shares over the subject properties which cannot be bound by the
subsequent foreclosure proceedings conducted. Nevertheless, it held that a valid
transaction was executed between RBCI and Erna to the extent of the latter’s 1/6
share in the subject properties which portion respondents, as co-owners, may
redeem.47

Further, the CA ordered a remand of the case (a) to determine the exact extent
of the respective rights, interests, shares, and participation of respondents and
RBCI over the subject properties, (b) thereafter, to effect a final division,
adjudication, and partition in accordance with law, and (c) to re-compute the loan
obligation, inclusive of interests, penalties, and other charges due against Sps.
Mantala.48

Finally, the CA deleted the awards of moral and exemplary damages, attorney's
fees, and litigation expenses for lack of factual and legal bases49 and ordered
Sps. Mantala to pay the costs.50

RBCI’s motion for reconsideration was denied by the CA in a Resolution51 dated

June 12, 2007, hence, this petition.

The Issues Before the Court

The essential issues for the Court’s resolution are whether or not (a) the
presumption of regularity accorded to the notarized SPA and ExtraJudicial
Adjudication Documents was rebutted by clear and convincing evidence; (b)
respondents are guilty of lachesand, thus, estopped from questioning the validity
of the realestate mortgageand subsequent foreclosure proceedings; and (c) RBCI
can be considered as a mortgagee in good faith.

The Court’s Ruling

The petition is partly granted.

Preliminarily, the rule is settled that the remedy of appeal by certiorari under Rule
45 of the Rules of Court contemplates only questions of law, not of fact. The
theory of forgery advanced by respondents involves a question of fact. While it is
not the function of the Court to undertake a reexamination of the evidence
presented by the contending parties during the trial of the case, there are,
however, recognized exceptions, among which is when the findings of the trial
court and the appellate court are conflicting, as in this case.52

The settled rule is that persons constituting a mortgage must be legally

authorized for the purpose.53 In the present case, while Erna appears to be a co-
owner of the mortgaged properties, she made it appearthat she was duly
authorized to sell the entire properties by virtue of the notarized SPA dated
August 24, 1990.

Generally, a notarized document carries the evidentiary weight conferred upon it

with respect to its due execution, and documents acknowledged before a notary
public have in their favor the presumption of regularity which may only be
rebutted by clear and convincing evidence.54 However, the presumptions that
attach to notarized documents can be affirmed only so long as it is beyond
dispute that the notarization was regular.55 A defective notarization will strip the
document of its public character and reduce it to a private document.56 Hence,
when there is a defect in the notarization of a document, the clear and convincing
evidentiary standard normally attached to a duly-notarized document is
dispensed with, and the measure to test the validity of such document is
preponderance of evidence.57

In the present case, RBCI failed toshow that the subject SPA which it relied upon
as proof of Erna’s ostensibleauthority to mortgage the entirety of the subject
properties was regularlynotarized. Aside from the respondents who denied having
participated in the execution and notarization of the subject SPA, the witnesses to
the instrument, i.e., Guendelyn Lopez Salas- Montaus and Carmelita Cayeta
Bunga, categorically denied having appeared before Notary Public Alan M.
Famador (Atty. Famador) on August 24, 1990 to witness the respondents sign the
SPA in the notary public’s presence.58 Despite this irregularity, RBCI did not
present Atty. Famador to refute the same and establish the authenticity of the
contested SPA. It may not be amiss to point out that the principal function of a
notary public is to authenticate documents. When a notary public certifies to the
due execution and delivery of a document under his hand and seal, he gives the
document the force of evidence.59

Thus, having failed to sufficientlyestablish the regularity in the execution of the

SPA, the presumption of regularity accorded by law to notarized documents can
no longer apply and the questioned SPA is to be examined under the parameters
of Section 20, Rule 132 of the Rules of Court which provides that "[b]efore any
private document offered as authentic is received in evidence, itsdue execution
and authenticity must be proved either (a) [b]y anyone who saw the document
executed or written, or (b) [b]y evidence of the genuineness of the signature or
handwriting of the maker."

Correspondingly, the burden falls upon RBCI to prove the authenticity and due
execution of the subject SPA.60 In the case at bar, RBCI merely relied on the
presumption of authenticity and due execution accorded to a notarized document,
without presenting any other evidence to bolster their case.61 However, these
presumptions had been overcome and effectively negated by respondents’ claims
of forgery which had been duly substantiated by them through their testimonial
and documentary evidence.62 Hence, absent any cogent reason to the contrary,
the Court hereby sustains the CA’s conclusion that respondents were able to
prove, by preponderance of evidence, that the subject SPA was a forgery.

To be clear, the above-stated conclusion is only made with respect to the subject
SPA and not the Extra-Judicial Adjudication Documents as the latter should be
excluded from any forgery analysis since they were not among those documents
sought to benullified by respondents in its complaint. Nevertheless, this
observation bears little significance to the resolution of the ultimate issue at
hand. This is because the forged status of the subject SPA alone is already
enough for the Court to declare the real estate mortgage contract null and void
but only with respect to the shares of the other co-owners (i.e.,
respondents)whose consent thereto was not actually procured by Erna. While
Erna, as herself a co-owner, by virtue of Article 493 of the Civil Code,63 had the
right to mortgage or even sell her undivided interest in the said properties, she,
could not, however, dispose of or mortgage the subject properties in their
entirety without the consent of the other co-owners.64 Accordingly, the validity
ofthe subject real estate mortgage and the subsequent foreclosure proceedings
therefor conducted in favor of RBCI should be limited only to the portion which
may be allotted to it (as the successor-in-interest of Erna) in the event of
partition. In this relation, the CA’s directive to remand the case to the RTC in
order to determine the exact extentof the respective rights, interests, shares and
participation of respondents and RBCI over the subject properties, and thereafter,
effect a final division, adjudication and partition in accordance with law remains in
order.Meanwhile, the writ of possession issued in favor of RBCI, and all
proceedings relative thereto should be set aside considering that the latter’s
specific possessory rights to the said properties remain undetermined.

The Court, however, finds no need to conduct a remand of the case for the
purpose of re-computing the loan obligation inclusive of interests, penalties and
other charges due against Sps. Mantala65 for the reason that the said loan is the
principal obligation to which the subject realestate mortgage is merely an
accessory to. In Philippine National Bank v. Banatao,66 it was enunciated that:

[A] mortgage is merely an accessory agreement and does not affect the principal
contract of loan. The mortgages, while void, [however,] can still be considered as
instruments evidencing the indebtedness x x x.67

Similarly, in Flores v. Lindo, Jr.,68 the Court pronounced that:

The liability of x x x on the principal contract of the loan however subsists

notwithstanding the illegality of the mortgage. Indeed, where a mortgage is not
valid, the principal obligation which it guarantees is not thereby rendered null and
void. Thatobligation matures and becomes demandable in accordance with the
stipulation pertaining to it. Under the foregoing circumstances, what is lost is
merely the right to foreclose the mortgage as a special remedy for satisfying or
settling the indebtedness which is the principal obligation. In case of nullity, the
mortgage deed remains as evidence or proof of a personal obligation of the
debtor and the amount due to the creditor may be enforced in an ordinary
action.69

Based on the foregoing, the partial invalidity of the subject real estate mortgage
brought about by the forged status of the subject SPA would not, therefore, result
into the partial invalidation of the loan obligation principally entered into by RBCI
and Sps. Mantala;thus, absent any cogent reason to hold otherwise, the need for
the recomputation of said loan obligation should be dispensed with.

As for RBCI’s claim that it should be deemed a mortgagee in good faith for having
conducted exhaustive investigations on the history of the mortgagor’s title,70 the
Court finds the same untenable. Two reasons impel this conclusion: first, the
doctrine of mortgagee in good faith applies only to lands registered under the
Torrens system and not to unregistered lands, as the properties in suit;71 and
second, the principle is inapplicable to banking institutions which are behooved to
exercise greater care and prudence before entering into a mortgage contract.
Hence,the ascertainment of the status or condition of properties offered as
security for loans must be a standard and an indispensable part of its
operations.72

In this case, RBCI failed to observethe required level of caution in ascertaining

the genuineness of the SPA considering that Erna owns only an aliquot part of the
properties offered assecurity for the loan. It should not have simply relied on the
face of the documents submitted since its undertaking to lend a considerable
amountof money as a banking institution requires a greater degree of diligence.
Hence, its rights as mortgagee and, now, as co-owner, should only be limited to
Erna’s share to the subject properties and not, absent the other co-owners’
consent, to its entirety.

Finally, the Court cannot subscribe to RBCI's contention that respondents are
barred by lachesfrom laying claim over the subject properties in view of their
inexplicable inaction from the time they learned of the falsification. Lachesis
principally a doctrine of equity. It is negligence or omission to assert a right
within a reasonable time, warranting a presumption that the party entitled
toassert it eitherhas abandoned or declined to assert it.73 In this case, the
complaint for nullification of the SPA was filed before the RTC on April 17,1996, or
barely three years from respondents' discovery of the averred forgery in 1993,
which is within the four-year prescriptive period provided under Article 114674 of
the Civil Code to institute an action upon the injury to their rights over the
subject properties. A delay within the prescriptive period is sanctioned by law and
is not considered to be a delay that would bar relief. Laches applies only in the
absence of a statutory prescriptive period.75 Furthermore, the doctrine of !aches
cannot be used to defeat justice or perpetrate fraud and injustice. It is the more
prudent rule that courts, under the principle of equity, will not be guided or bound
strictly by the statute of limitations or the doctrine of !aches when by doing so,
manifest wrong or injustice would result,76 as in this case.

Neither is there estoppel. Under Article 1431 of the Civil Code, an essential
element of estoppel is that the person invoking it has been influenced and has
relied on the representations or conduct of the person sought to be estopped.
Said element is, however, wanting in this case.1âwphi1

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated February 28,
2006 and the Resolution.dated June 12, 2007 of the Court of Appeals in CA-G.R.
CV No. 70933 are hereby AFFIRMED with MODIFICATIONS deleting (a) the
declaration of nullity of the ExtraJudicial Adjudication of a Parcel of Land and-the
Addendum to the ExtraJudicial Adjudication of the Estate of Isaac Melecio and
Trinidad Melecio Both Deceased, as well as ( b) the order to remand the case for
the purpose of re-computing the loan obligation of Spouses Erna Melecio-Mantala
and Bonifacio Mantala to Rural Bank of Cabadbaran, Inc. (RBCI).
The Writ of Possession issued in favor of RBCI, and all proceedings relative
thereto, are fui;-ther SET ASIDE considering that the latter's specific possessory
rights to the said properties remain undetermined.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION
Associate Justice JOSE PORTUGAL PEREZ
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.

MARIA LOURDES P. A. SERENO

Chief Justice
Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 185745 October 15, 2014

SPOUSES DOMINADOR MARCOS and GLORIA MARCOS, Petitioners,

vs.
HEIRS OF ISIDRO BANGI and GENOVEVA DICCION, represented by
NOLITO SABIANO, Respondents.

DECISION

REYES, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules
of Court seeking to annul and set aside the Decision2 dated September 30, 2008
and Resolution3 dated :Oecember 4, 2008 issued by the Court of Appeals (CA) in
CA-G.R. CV Nb. 89508, which affirmed the Decision4 dated March 26, 2007 of the
Regidnal Trial Court (RTC) of Urdaneta City, Pangasinan, Branch 47, in Civil Case
No. U-6603.

On June 26, 1998, the heirs of Isidro Bangi (Isidro) and Genoveva Diccion
(Genoveva) (respondents), filed with the RTC a complaint,5 docketed as Civil
Case No. U-6603, for annulment of documents, cancellation of transfer
certificates of titles, restoration of original certificate of title and recovery of
ownership plus damages against spouses Dominador Marcos (Dominador) and
Gloria Marcos (Gloria) (petitioners). Likewise impleaded in the said complaint are
spouses Jose Dilla (Jose) and Pacita Dilla (Pacita), Ceasaria Alap (Ceasaria), and
spouses Emilio Sumajit (Emilio) and Zenaida Sumajit (Zenaida).

In their complaint, the respondents averred that on November 5, 1943, their

parents, Isidro and Genoveva, bought the one-third portion of a 2,138-square
meter parcel of land situated in San Manuel, Pangasinan and covered by Original
Certificate of Title (OCT) No. 22361 (subject property) from Eusebio Bangi
(Eusebio), as evidenced by a Deed of Absolute Sale executed by the latter. OCT
No. 22361 was registered in the name of Alipio Bangi (Alipio), Eusebio’s father.
After the sale, the respondents claimed that Isidro and Genoveva took possession
of the subject property until they passed away. The respondents then took
possession of the same.

Further, the respondents alleged that sometime in 1998, they learned that the
title to the subject property, including the portion sold to Isidro and Genoveva,
was transferred to herein petitioner Dominador, Primo Alap (Primo), Ceasaria’s
husband, Jose, and Emilio through a Deed of Absolute Sale dated August 10,
1995, supposedly executed by Alipio with the consent of his wife Ramona Diccion
(Ramona). The respondents claimed that the said deed of absolute sale is a
forgery since Alipio died in 1918 while Ramona passed away on June 13, 1957.

Consequently, by virtue of the alleged Deed of Absolute Sale dated August 10,
1995, OCT No. 22361 was cancelled and Transfer Certificate of Title (TCT) No.
47829 was issued to Dominador, Primo, Jose and Emilio. On November 21, 1995,
Primo, Jose and Emilio executed another deed of absolute sale over the same
property in favor of herein petitioners. TCT No. T-47829 was then cancelled and
TCT No. T-48446 was issued in the names of herein petitioners. The respondents
claimed that the Deed of Absolute Sale dated November 21, 1995 was likewise a
forgery since Primo could not have signed the same on the said date since he
died on January 29, 1972.

Thus, the respondents sought the nullification of the Deeds of Absolute Sale dated
August 10, 1995 and November 21, 1995 and, accordingly, the cancellation of
TCT Nos. T-47829 and T-48446. The respondents likewise sought the restoration
of OCT No. 22361.

In their answer, herein petitioners, together with the spouses Jose and Pacita,
Ceasaria and the spouses Emilio and Zenaida, denied the allegations of the
respondents, claiming that they are the owners of the subject property, including
the one-third portion thereof allegedly sold by Eusebio to the respondents’
parents Isidro and Genoveva. They averred that the subject property was
originally owned by Alipio; that after his death, his children – Eusebio, Espedita
and Jose Bangi – inherited the same. That on May 8, 1995, Espedita and Jose
Bangi executed a deed of extrajudicial partition with quitclaim wherein they
waived their rights over the subject property in favor of Eusebio’s children –
Ceasaria, Zenaida, Pacita and herein petitioner Gloria.

They further claimed that their father Eusebio could not have validly sold the one-
third portion of the subject property to Isidro and Genoveva. They explained that
Eusebio supposedly acquired the parcel of land covered by OCT No. 22361 by
virtue of a donation propter nuptias from his father Alipio when he married
Ildefonsa Compay (Ildefonsa) in 1928. They claimed that the donation propter
nuptias in favor of Eusebio was fictitious since Alipio died in 1918 and that, in any
case, the said donation, even if not fictitious, is void since the same was not
registered.

They also averred that they had no participation in the execution of the Deed of
Absolute Sale dated August 10, 1995, claiming that it was a certain Dominador
Quero, the one hired by herein petitioner Gloria to facilitate the transfer of OCT
No. 22361 in their names, who caused the execution of the same.

Subsequently, the respondents and Ceasaria and the spouses Emilio and Zenaida
entered into a compromise agreement wherein Ceasaria and spouses Emilio and
Zenaida acknowledged the right of the respondents over the subject property and
admitted the existence of the sale of the one-third portion thereof by Eusebio in
favor of the spouses Isidro and Genoveva. Thus, the case as to Ceasaria and the
spouses Emilio and Zenaida was dismissed.

On March 26, 2007, the RTC rendered a Decision6 the decretal portion of which
reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Declaring the Deed of Absolute Sale dated August 10, 1995 x x x and Deed of
Absolute Sale dated November 21, 1995 x x x as null and void;

2) Declaring Transfer Certificate of Title No. T-47829 issued in the names of

PRIMO ALAP married to [Ceasaria] Alap, JOSE DILLA married to Pacita Dilla,
DOMINADOR MARCOS married to Gloria Marcos, and EMILIO SUMAJIT married to
Zenaida Sumajit x x x and Transfer Certificate of Title No. T-48446 in the name of
Spouses DOMINADOR MARCOS and GLORIA BANGI x x x as null and void.

Consequently, the Registrar of Deeds of Tayug, Pangasinan is hereby directed to

cancel the same and all the other copies thereof and that Original Certificate of
Title No. 22361 in the name of Alipio Bangi married to Romana Diccion be revived
and/or reinstated in the registration book.

3) Declaring the sale by Eusebio Bangi of his share to the land in question in
favor of x x x Isidro Bangi and Genoveva Diccion as valid and effective.

4) For the defendant to pay the costs.

SO ORDERED.7

The RTC opined that the Deed of Absolute Sale dated August 10, 1995 is a
nullity; that the same was falsified considering that Alipio could not have
executed the same in the said date since he died in 1918. Consequently, all the
documents and certificates of title issued as a consequence of the Deed of
Absolute Sale dated August 10, 1995 are void. Thus:

In fact, defendant Gloria Marcos admitted in Court that the Deed of Absolute Sale
was falsified, only it was allegedly falsified by a certain Dominador Quero. This
notwithstanding, the fact still remains, that the Deed of Absolute Sale, which was
the basis for the cancellation of the Original Certificate of Title No. 22361, was
falsified.

xxxx
The Deed of Absolute Sale dated August 10, 1995, being a forged document, is
without question, null and void. This being the case, the land titles issued by
reason thereof are also void because a forged deed conveys no right.8

The RTC upheld the Deed of Absolute Sale dated November 5, 1943 over the one-
third portion of the subject property executed by Eusebio in favor of the spouses
Isidro and Genoveva. The RTC pointed out that the petitioners merely claimed
that the signature of Eusebio appearing on the Deed of Absolute Sale dated
November 5, 1943 was falsified without presenting any other evidence to prove
such claim.

As regards the claim that Eusebio could not have validly sold the one-third
portion of the subject property since his acquisition of the same in 1928 through
a donation propter nuptias by Alipio was fictitious since the latter died in 1918,
the RTC found that the petitioners likewise failed to present any evidence to
prove such allegation. Considering that the Deed of Absolute Sale dated
November 5, 1943 is a notarized document, the RTC ruled that the same must be
sustained in full force and effect since the petitioners failed to present strong,
complete and conclusive proof of its falsity or nullity.

Unperturbed, the petitioners appealed from the RTC Decision dated March 26,
2007 to the CA, maintaining that the sale between Eusebio and the spouses
Isidro and Genoveva was invalid.9 They explained that the Deed of Absolute Sale
dated November 5, 1943 stated that Eusebio acquired the subject property from
his parents Alipio and Ramona through a donation propter nuptias; that Eusebio
got married to Ildefonsa in 1928 and Alipio Bangi could not have executed a
donation then because he died in 1918.

Ruling of the CA

On September 30, 2008, the CA rendered the herein assailed Decision,10 which
affirmed the Decision dated March 26, 2007 of the RTC. The CA upheld the
petitioners’ claim that the supposed donation propter nuptias of the subject
property in favor of Eusebio from his parents was not sufficiently established. The
CA pointed out that the purported Deed of Donation was not recorded in the
Register of Deeds; that there is no showing that the said donation was made in a
public instrument as required by the Spanish Civil Code, the law in effect at the
time of the supposed donation in favor of Eusebio.

Nevertheless, the CA found that Eusebio, at the time he executed the Deed of
Absolute Sale in favor of the spouses Isidro and Genoveva, already owned the
subject property, having inherited the same from his father Alipio who died in
1918. Further, the CA did not give credence to the Deed of Extrajudicial Partition
with Quitclaim purportedly executed by Espedita and Jose Bangi since it appears
to have been caused to be executed by the petitioners as a mere afterthought
and only for the purpose of thwarting the respondents’ valid claim.11
The petitioners sought a reconsideration12 of the Decision dated September 30,
2008, but it was denied by the CA in its Resolution13 dated December 4, 2008.

Hence, the instant petition.

Issue

The issue set forth by the petitioners for this Court’s resolution is whether the CA
committed reversible error in affirming the RTC Decision dated March 26, 2007,
which upheld the Deed of Absolute Sale dated November 5, 1943 over the one-
third portion of the subject property executed by Eusebio in favor of the spouses
Isidro and Genoveva.

Ruling of the Court

The petition is denied.

The appellate court upheld the validity of the sale of the one-third portion of the
subject property to the spouses Isidro and Genoveva mainly on the finding that,
after the death of Alipio in 1918, an oral partition was had between Eusebio and
his siblings Espedita and Jose Bangi; that at the time of the said sale on
November 5, 1943 to the spouses Isidro and Genoveva, Eusebio was already the
owner of the subject property.

On the other hand, the petitioners maintain that the said sale of the one-third
portion of the subject property was not valid. They insinuate that the subject
property, at the time of the sale, was still owned in common by the heirs of
Alipio; that Eusebio could not validly sell the one-third portion of the subject
property as there was no partition yet among the heirs of Alipio.

Ultimately, the resolution of the instant controversy is hinged upon the question
of whether the heirs of Alipio had already effected a partition of his estate prior to
the sale of the one-third portion of the subject property to the spouses Isidro and
Genoveva on November 5, 1943. However, the foregoing question is a factual
question, which this Court may not pass upon in a petition for review under Rule
45 of the Rules of Court.

Section 1, Rule 45 of the Rules of Court categorically states that the petition filed
shall raise only questions of law, which must be distinctly set forth. A question of
law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of
the alleged facts. For a question to be one of law, the same must not involve an
examination of the probative value of the evidence presented by the litigants or
any of them. The resolution of the issue must rest solely on what the law provides
on the given set of circumstances. Once it is clear that the issue invites a review
of the evidence presented, the question posed is one of fact.14
The determination of whether the heirs of Alipio had already partitioned his estate
prior to the sale of the one-third portion of the subject property on November 5,
1943 necessarily requires an examination of the probative value of the evidence
presented by the parties; the doubt arises on the truth or falsity of the allegations
of the parties.

Even granting arguendo that the petition falls under any of the exceptions
justifying a factual review of the findings of the appellate court, the petition
cannot prosper. The Court is of the opinion, and so holds, that the CA did not
commit any reversible error in ruling that an oral partition of the estate of Alipio
had already been effected by his heirs prior to the sale by Eusebio of the one-
third portion of the subject property to the spouses Isidro and Genoveva on
November 5, 1943.

The petitioners claim that the CA erred in ruling that there was already a partition
of the estate of Alipio prior to the sale of the one-third portion of the subject
property by Eusebio to the spouses Isidro and Genoveva. They insist that "there
was no deed of extrajudicial partition by and among Eusebio, Jose and Espedita
[Bangi], wherein Eusebio [was assigned the subject property]."15 Accordingly,
the petitioners aver, the sale in favor of the spouses Isidro and Genoveva on
November 5, 1943 is a nullity and, consequently, the respondents do not have
any right over the subject property.

The Court does not agree.

Partition is the separation, division and assignment of a thing held in common

among those to whom it may belong.16 Every act which is intended to put an end
to indivision among co-heirs and legatees or devisees is deemed to be a
partition.17 Partition may be inferred from circumstances sufficiently strong to
support the presumption. Thus, after a long possession in severalty, a deed of
partition may be presumed.18 Thus, in Hernandez v. Andal,19 the Court
emphasized that:

On general principle, independent and in spite of the statute of frauds, courts of

equity have enforced oral partition when it has been completely or partly
performed.

Regardless of whether a parol partition or agreement to partition is valid and

enforceable at law, equity will in proper cases, where the parol partition has
actually been consummated by the taking of possession in severalty and the
exercise of ownership by the parties of the respective portions set off to each,
recognize and enforce such parol partition and the rights of the parties
thereunder. Thus, it has been held or stated in a number of cases involving an
oral partition under which the parties went into possession, exercised acts of
ownership, or otherwise partly performed the partition agreement, that equity will
confirm such partition and in a proper case decree title in accordance with the
possession in severalty.
xxxx

A parol partition may also be sustained on the ground that the parties thereto
have acquiesced in and ratified the partition by taking possession in severalty,
exercising acts of ownership with respect thereto, or otherwise recognizing the
existence of the partition.20

The evidence presented by the parties indubitably show that, after the death of
Alipio, his heirs – Eusebio, Espedita and Jose Bangi – had orally partitioned his
estate, including the subject property, which was assigned to Eusebio. On this
score, the CA’s disquisition is instructive, viz:

Even so, We are of the considered view that in 1943, when Eusebio Bangi
executed the deed of sale in favor of Isidro Bangi, Eusebio already had acquired
interest in the property covered by OCT No. 22361 through succession from his
father, Alipio Bangi, who died in 1918.

Further, it appears that such interest extends to the entire property embraced by
OCT No. 22361. This much can be gleaned from the testimony of appellant Gloria
Marcos herself, who said that her father Eusebio owned the entire lot because his
siblings Espedita and Jose already had their share from other properties.

That there was no written memorandum of the partition among Alipio Bangi’s
heirs cannot detract from appellee’s cause.1âwphi1 It has been ruled that oral
partition is effective when the parties have consummated it by the taking of
possession in severalty and the exercise of ownership of the respective portions
set off to each. Here, it is obvious that Eusebio took possession of his share and
exercised ownership over it. Thus, the preponderant evidence points to the
validity of the sale executed between Eusebio Bangi and Isidro Bangi on
November 5, 1943 over the one-third portion of the property covered by OCT No.
22361. x x x.21 (Emphasis ours)

Further, the CA did not err in not giving credence to the Deed of Extrajudicial
Partition with Quitclaim supposedly executed by Espedita and Jose Bangi on May
8, 1995. The Court notes that Alipio died in 1918 while his wife Ramona died on
June 13, 1957. It is quite suspect that Espedita and Jose Bangi executed the said
Deed of Extrajudicial Partition, wherein they waived their rights over the subject
property in favor of Eusebio’s children, only on May 8, 1995. That only several
months thereafter, the subject property was supposedly sold to the spouses of
Eusebio’s children and, later, to herein petitioners spouses Dominador and Gloria.

The foregoing circumstances cast doubt as to the petitioners’ insinuation that the
estate of Alipio had only been partitioned in 1995, when Espedita and Jose Bangi
executed the said Deed of Extrajudicial Partition with Quitclaim. As pointed out by
the CA, the execution of the Deed of Extrajudicial Partition with Quitclaim is but a
ruse to defeat the rights of the respondents over the one-third portion of the
subject property. If at all, the Deed of Extrajudicial Partition with Quitclaim
executed by Espedita and Jose Bangi merely confirms the partition of Alipio’s
estate that was earlier had, albeit orally, in which the subject property was
assigned to Eusebio.

Accordingly, considering that Eusebio already owned the subject property at the
time he sold the one-third portion thereof to the spouses Isidro and Genoveva on
November 5, 1943, having been assigned the same pursuant to the oral partition
of the estate of Alipio effected by his heirs, the lower courts correctly nullified the
Deeds of Absolute Sale dated August 10, 1995 and November 21, 1995, as well
as TCT No. T-47829 and T-48446.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is

DENIED. The Decision dated September 30, 2008 and Resolution dated December
4, 2008 of the Court of Appeals in CA-G.R. CV No. 89508 are hereby AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

WE CONCUR:

DIOSDADO M. PERALTA*
Associate Justice
Acting Chairperson

MARTIN S. VILLARAMA, JR.

Associate Justice ESTELA M. PERLAS-BERNABE**
Associate Justice
FRANCIS H. JARDELEZA
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.

DIOSDADO M. PERALTA
Associate Justice
Acting Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Acting
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.

MARIA LOURDES P.A. SERENO

Chief Justice
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, 20032 and 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. 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

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.53 Respondent 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:

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.

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.

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 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.

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.103 Therefore, 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

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.1âwphi1 For petitioner’s 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
Associate Justice MARIANO C. DEL CASTILLO
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.

MARIA LOURDES P.A. SERENO

Chief Justice
Republic of the Philippines
SUPREME COURT
Manila

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,
vs.
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 Corni 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
totheir 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 ₱1,000.00 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 involvingseveral parcels of land
including the contested Lot No. 4389. However, he insisted that as early as 6
November 1997, a motion 8 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 coowners 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 asa 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 insistedon 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 notexceeding
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: 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 coowners. 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 ofland to Lapinid on 9 November 1997. To

simplify, the question now iswhether Jesus, as a co-owner, can validly sell a
portion of the property heco-owns in favor of another person. We answer in the
affirmative.

A co-owner has an absolute ownership of his undivided and proindiviso 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 rightswill be affected. This is evident from the provision of the Civil
Code:

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 coowner 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 atall in case a physically segregated area of the co-owned lot is in fact
sold to him. Since the coowner/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 asco-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

portionof the hacienda does not render the sale void, for it is a wellestablished
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 quantumvalere
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 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: 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 tothe 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.1âwphi1

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:

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 havethe 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 rightsare 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 heldpro 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-ownerexercises, together with his coparticipants 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
notbe limited as long he uses the property to the purpose for which it isintended
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:

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;

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 cnme;

10. When at least double judicial costs arc awarded;

11. In any other case where the court deems it just and equitable that attorney's
fees and expenses oflitigation 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.

JOSE PORTUGAL PEREZ

Associate Justice

WE CONCUR:

MARIA LOURDES P.A. SERENO

Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO

Associate Justice LUCAS P. BERSAMIN
Associate Justice
MARTIN S. VILLARAMA, JR.*
Associate Justice

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

MARIA LOURDES P.A. SERENO

Chief Justice
FIRST DIVISION

June 04, 2018

G.R. No. 202324

CONCHITA GLORIA and MARIA LOURDES GLORIAPA YDUAN, Petitioners

vs.
BUILDERS SAVINGS AND LOAN ASSOCIATION, INC., Respondent

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the March 13, 2012 Decision2 and
June 18, 2012 Resolution3 of the Cou1t of Appeals (CA) in CA-G.R. CV No.
82774, which respectively reversed the March 12, 2004 Order4 of the Quezon
City Regional Trial Court, Branch 224 (RTC) in Civil Case No. Q-93-16621 and
denied herein petitioners' Motion for Reconsideration.5

Factual Antecedents

Spouses Juan and herein petitioner Conchita Gloria (Conchita) are registered
owners of a parcel of land located in Kamuning, Quezon City covered by Transfer
Certificate of Title No. 35814 (TCT 35814).6 Petitioner Maria Lourdes Gloria-
Payduan (Lourdes) is their daughter. 7

On August 14, 1987, Juan passed away.8

On December 7, 1993, Conchita and Lourdes filed before the RTC a Second
Amended Complaint9 against respondent Builders Savings and Loan Association,
Inc. (Builders Savings), Benildo Biag (Biag), and Manuel F. Lorenzo for
"declaration of null and void real estate mortgage, promissory note, cancellation
of notation in the transfer certificate of title, and damages"10 with prayer for
injunctive relief The case was docketed as Civil Case No. Q-93-16621. Petitioners
claimed that Biag duped them into surrendering TCT 35814 to him under the
pretense that Biag would verify the title, which he claimed might have been
fraudulently transferred to another on account of a fire that gutted the Quezon
City Registry of Deeds; that Biag claimed that the title might need to be
reconstituted; that Biag instead used the title to mortgage the Kamuning property
to respondent Builders Savings; that Conchita was fraudulently made to sign the
subject loan and mortgage documents by Biag, who deceived Conchita into
believing that it was actually Lourdes who requested that these documents be
signed; that the subject Mortgage 11 and Promissory Note12 contained the
signature not only of Conchita, but of Juan, who was by then already long
deceased, as mortgagor and co-maker; that at the time the loan and mortgage
documents were supposedly executed, Conchita was already sickly and senile,
and could no longer leave her house; that Biag and Builders Savings conspired in
the execution of the forged loan and mortgage documents; that the forged loan
and mortgage documents were not signed/affirmed before a notary public; that
on account of Biag and Builders Savings' collusion, the subject property was
foreclosed and sold at auction to the latter; and that the loan and mortgage
documents, as well as the foreclosure and sale proceedings, were null and void
and should he annulled. Petitioners thus prayed that the Mortgage and
Promissory Note be declared null and void; that the encumbrances/annotations in
the subject title be cancelled; that the certificate of title be returned to them; and
that they be awarded ₱500,000.00 moral damages, ₱50,000.00 exemplary
damages, ₱20,000.00 actual damages, ₱20,000.00 attorney's fees and other legal
expenses, and costs of suit.

On the other hand, Builders Savings claimed that -

xx x Lourdes Payduan had neither the capacity to sue nor the authority and
interest to file the case a quo. She was merely an "ampon" or "palaki" of the
Spouses Juan and Conchita Gloria and was not legally adopted by them.
Moreover, Conchita neither signed the verification attached to the complaint nor
executed a special power of attorney to authorize her daughter Maria Lourdes to
pursue the case a quo. Further, Conchita never appeared in court to testify during
trial. BLSA presented its Credit Investigator Danilo Reyes who testified that he
personally met Spouses Juan and Conchita Gloria, Maria Lomdes and her
husband, and Benildo Biag when they went to their office to apply for a loan. He
also saw the identification card presented by Juan to verify and confi1m his
identity. Likewise, Conchita was a retired public school teacher who could not be
cajoled by Benildo to execute a real estate mo1tgage on her propetty against her
will. In the same vein, the fact that Conchita submitted floor plans of her house
and its tax declarations only signified that she voluntarily mortgaged her
property. 13

Ruling of the Regional Trial Court

On September 26, 2003, the RTC issued its Decision in Civil Case No. Q- 93-
16621 dismissing petitioners' complaint for lack of merit. The counterclaims and
crossclaims were likewise dismissed.

Petitioners moved to reconsider.

On March 12, 2004, the RTC issued its Order granting petitioners' motion for
reconsideration. The trial court held:

When plaintiff Marides Gloria Payduan testified, she told the Court that Benildo
Biag was introduced to her by her husband for the purpose of reconstituting
TCTNo. 35814 because it was one of those burned. Benildo Biag told them that he
[knows] of someone who could help them reconstitute the title. This happened
sometime [in] June of 1988. So, they gave him the original copy of the title on
June 26 at their residence at 161 K-3rd Street, Kamuning, Quezon City. Mr.
Benildo Biag promised to return the title to them, but failed to [do so) until they
knew that it has already been mo1tgaged. (TSN April 25, 1997, pp. 21 to 26).

xxxx

[Thus, when p]laintiff Conchita Gloria xx x signed the promissory note and the
real estate mortgage [,she] was not acting freely and with all her faculties
functioning. She signed the papers given to her by Benildo Biag under the
thought that this will be used in the reconstitution of her original certificate of title
but it turned out however that Benildo Biag used them to secure the loan
proceeds from the defendant Builders.

Under Alticle 1330 of the Civil Code, a contract where consent is given through
mistake, violence, intimidation, W1Clue influence or fraud is voidable.

xxxx

Under the circumstances, defendant Builders should have exe1ted extra diligence
before it approved the loan application of Benildo Biag and had it [exerted) extra
effort in investigating the factual circumstances of the loan application, it could
have discovered that plaintiff Conchita Gloria's signature in the prornisso1y note x
x x and the deed of real estate mortgage x x x were not authorized and that her
husband Juan Gloria had died xx x before the filing of the loan application. These
are factual milieu which militates against Builders. As held in Gatioan vs. Gatfud
(27 SCRA 706), before a bank grants a loan on the security of land, it must
unde11ake a careful examination of the title of the applicant as well as a physical
and on the spot investigation of the land offered as a security. There is a dearth
of proof in the Builders evidence that it has investigated the person of plaintiff
Conchita Gloria and the land offered as a collateral.

The case of Rural Bank of Caloocan City vs. CA (104 SCRA 151) is also four
square. It was held therein that 'A contract may be annulled on the ground of
vitiated consent, if deceit by a third person, even without connivance or
complicity with one of the contracting patties, resulted in mutual error on the part
of the parties to the contract. x x x The possibility of her not knowing that she
signed the promissory note as co-maker x x x, and that her prope1ty was
mo1tgaged to secure the xx x loans, in view of her personal circumtances -
ignorance, lack of education and old age - should have placed the Bank on
prudent inqui1y to protect its interest and that of the public it serves. With the
recent occurrence of events that have supposedly affected adversely our banking
system, attributable to laxity in the conduct of bank business by its bank officials,
the need [for] extreme caution and prudence by said officials and employees in
the discharge of their functions cannot be overemphasized.'

Art. 2085 of the Civil Code, is also appropriate. It provides that:

xxxx

3. The mortgagor should have the free disposal of the property mortgaged and in
the absence thereof, he should be authorized for the purpose.

Thus, it is settled that if a forger mortgages another's property, the mo1tgage is

void. (De Lara vs. Ayroso, 95 Phil. 185)

xxxx

Similarly, in Parqui vs. PNB (96 Phil. 157), the Court said, ' there can be no
question that the mortgage under consideration is a nullity, the san1e having
been executed by an impostor without the authority of the owner of the interest
mortgaged. Its registration under the Land Registration Law lends no validity
because, according to the last proviso to the second paragraph of Section 55 of
that law, registration procured by the presentati0n of a forged deed is null and
void.’

The evidence extant in the records being preponderant to establish the

negligence of Builders, the Court next looks at plaintiffs' claim for damages. x x x

xxxx

Under Article 2217 of the New Civil Code, moral damages include physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury Though
incapable of pecuniary estimation, moral damages may be recovered if they are
the proximate result of the defendant's wrongful act or omission. An amount of
₱2200,000.00 to answer for her sufferings, anguish and ·fright appears to be
reasonable and fair.

The Court likewise finds it proper to award an attorney's fees in the amount of
₱20,000.00 in favor of the plaintiffs as they were compelled to litigate the instant
case through their counsel. x x x

xxxx

Accordingly, therefore, the decision of U1e Court dated September 26, 2003 is
hereby reconsidered and set aside and a new one is entered in favor of the
plaintiff[s] and as against the defendant:

a) declaring the real estate mortgage dated June 26, 200 l and the promissory
note dated June 28, 2001 null and void;

b) directing the cancellation of the annotations in the TCT No. 358 14 of Conchita
Gloria;
c) directing the defendant Builders Savings and Loan Association, Inc. to return to
plaintiffs TCT No. 35814 of the Registry of Deeds of Quezon City free from all
liens and encumbrances;

d) directing the defendant Builders to pay plaintiffs moral damages in the amount
of ₱200,000.00; and

e) directing the defendant builders to pay plaintiffs attorney's fees in the amount
of ₱20,000.00.

SO ORDERED. 14

Ruling of the Court of Appeals

Respondent interposed an appeal before the CA. On March 13, 2012, the CA
issued the assailed Decision, decreeing as follows:

In fine, BSLA asse1ts that x x x Conchita voluntarily executed the real estate
mortgage who submitted supporting documents to secure the loan of Benildo
Biag. The testimony of Maria Lourdes assailing the contract was merely hearsay
and could not be used as evidence and basis for the nullification of the contract.

xxxx

The appeal is impressed with merit.

xxxx

Here, after a careful perusal of the records, this Court finds that there are
procedural infumities that warrant the dismissal of the complaint a quo.

First, the complaint sought for the nullification of real estate mortgage contract
and promissory note executed by Conchita to secure the loan of Benildo with
BSLA on the ground that Conchita's signature was obtained through fraud,
without her full knowledge of the import of her act.

The parties to a contract are the real parties in interest in an action upon it. Thus,
Rule 3 of the Rules of Court defines a real party in interest, thus:

Sec. 2. Parties in interest. - A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the patty entitled to the avails
of the suit. Unless othe1wise authorized by law or these Rules, every action must
be prosecuted or defended in the name of the real patty in interest.

The aforestated provision has two (2) requirements: 1) to institute an action, the
plaintiff must be the real patty in interest, and 2) the action must be prosecuted
in the nan1e of the real patty in interest. x x x When the plaintiff is not the real
patty in interest, the case is dismissible on the ground of lack of cause of action.
Accordingly, only the contracting parties are bound by the stipulations in the
contract since they are the ones who would benefit from and could violate it.
Hence, one who is not a party thereto, and for whose benefit it was not expressly
made, cannot maintain an action on it. x xx In the case at bar, the real party in
interest was Conchita being the person who executed the real estate mo1tgage
contract. It was she who would stand to suffer by the fu fulfillment of its terms
because she obligated herself as a mortgagor who would ar1swer to BSLA upon
the default of Benildo.

On the other hand, Maria Lourdes claimed that she is a real party in interest
because she is a co-owner of the properly for having inherited a portion thereof
from her deceased father, Juan.

We are not persuaded.

When an alleged heir [sues] to nullify a document which would impair her interest
as such heir, heirs, her successional rights must first be determined in a special
proceedings. x x x

xxxx

Thus, in order that Maria Lourdes be clothed with personality to institute the
complaint a quo, she must show that she has a real interest which would suffer
any detriment by its perfo1mance or annulment. This she must do only after
establishing that she is a legal heir of Juan and that she inherited the property
subject of the mortgage and accordingly, a co-owner thereof. This, however,
Maria failed to do. Nothing in the records appear that a judicial or extrajudicial
partition was made by Juan's heirs. Neither does it appear that the only prope1ty
left by Juan is the same prope1ty subject of the mortgage. Further, Maria Lourdes
did not present ru1y evidence to establish her rights as heir or prove that Juru1
had no other heirs who are not pa1ties in this case. Apparently, there is yet a
need to first determine Maria Lourdes' rights through a special proceeding.
Clearly, then, Maria Lourdes could not be considered a real party in interest to
institute the action in the court a quo to nullify the real estate mortgage executed
by Conchita absent any proof to show that she has an interest over the subject
property.

On this note, this brings us to the second point in issue. A careful perusal of the
record shows that plaintiffs-appellees' Second Amended Complaint appears to
have been accompanied with a defective verification which was signed by Maria
Lourdes only and not Conchita, with no reasonable justification for the omission
whatsoever. It was likewise not accompanied by a certification against non-forum
shopping [sic] with no justification presented by plaintiffs-appellees. x x x

xxxx
It is true that detect in the verification will not render the pleading fatally
defective. This, however, does not hold true for a certification against forum
shopping which must be signed by all the plaintiffs. Failure to do so will result to
the dropping of the patties who did not sign. Here, the failure of Conchita to sign
the certification against non-forum shopping [sic], not once, but thrice, [in) the
Complaint, Amended Complaint, and Second Amended Complaint, would result to
dropping her from the case as plaintiff therein. She was not able to provide any
justification for this omission to warrant the relaxation of the rules. Moreover,
Conchita and Maria Lourdes do not hold a common interest because Conchita was
the party who executed the real estate mortgage contract and the registered
owner of the subject property, while as above-discussed, Maria Lourdes's interest
was not established.

Assuming arguendo that Conchita will not be dropped as party to the case, the
evidence presented by plaintiffs-appellees arc not sufficient to support the grant
of their complaint. The allegations of fraud were established only through the
testimony of Maria Lourdes who had no personal knowledge of the circumstances
that would constitute the fraud allegedly committed by BSLA. She merely relied
on the statement made by Conchita that she was misled into signing the contract
making her believe that it was for the reconstitution of her title with the Register
of Deeds. Thus, Maria Lourdes' statement has no probative value absent ru1y
showing that the evidence falls within the exception to the hearsay evidence rule.

Based on the foregoing, this Court is constrained to dismiss plaintiffs-appellees'

complaint.

WHEREFORE, the Order dated March 12, 2004 of the Regional Trial Cou1t (RTC),
National Capital Judicial Region, Branch 224, Quezon City, in Civil

Case No. Q-93-16621, entitled "Conchita Gloria, et al., Plaintiffs, versus Builders
Savings and Loan Association Inc., et al., Defendants, is REVERSED AND SET
ASIDE. The Second Amended Complaint dated December 3, 1993 filed by
plaintiffs-appellees Conchita Gloria and Maria Lourdes Payduan is DISMISSED.

SO ORDERED.15

Petitioners moved to reconsider, but in a June 18, 2012 Resolution, the CA held
its ground. Hence, the present Petition.

Issues

Petitioners submit the following issues to be resolved:

1. WHETHER xx x PETITIONER MARIA LOURDES GLORIA-PA YDUAN AS CO-

OWNER OF SUBJECT REAL PROPERTY, IS A REAL PARTY IN INTEREST IN THIS
CASE.
2. WHETHER x x x IT IS APPROPRIATE FOR THE APPELLATE COURT TO PASS
UPON ISSUE NOT RAISED BY APPELLANT IN ITS APPELLANT'S BRIEF'S
ASSIGNMENT OF ERRORS.16

Petitioners' Arguments

Petitioners contend that Lourdes had proved that she was the daughter of
Conchita and Juan; that the subject property was conjugal property belonging to
both Juan and Conchita; that when Juan died in 1987, Lourdes became a co-
owner of the subject property by virtue of her being a compulsory heir of Juan;
that as co-owner of the subject property, she has the required interest to
prosecute Civil Case No. Q-93-16621 ; that the CA erred in declaring that Lourdes
must first obtain a declaration of heirship, since Article 777 of the Civil Code
specifically provides that successional rights are transmitted from the decedent to
his/her heirs from the moment of death of the former; that even if there were no
pending settlement proceedings for the distribution of a decedent's estate, there
was no need for a prior declaration of heirship before the heirs may commence an
action arising from any right of the deceased, such as the right to bring an action
to annul a sale; 17 that the issue of lack or improper verification was never raised
by the respondent at any stage of the proceedings, yet the CA unduly took
cognizance thereof; that even if Conchita failed to sign the amended complaint,
this could not affect the same since both she and Lourdes shared a common
interest in the subject property as co-owners thereof; and that the subject real
estate mortgage and promissory note were null and void for being simulated,
since they were supposedly signed and executed by Juan in 1991, when he
actually passed away in 1987.

Petitioners pray that the CA dispositions be annulled and in lieu thereof, the RTC's
March 12, 2004 Order be reinstated.

Respondent's Arguments

Respondent, on the other hand, failed to comment on the Petition despite

repeated directives from the Court.

Our Ruling

The Petition is granted.

The evidence reveals that Lourdes is the daughter of Juan and Conchita. There is
on record a Certification of Birth 18 issued by the Lipa City Office of the Local Civil
Registrar indicating that Lourdes was born to Juan and Conchita; this document
was marked as Exhibit "H" during the proceedings below, and remains
uncontested. Moreover, Lourdes categorically testified during trial that she was
the natural child of Juan and Conchita, thus:

CROSS-EXAMINATION
ATTY. TAMPOC - Ms. Marides Gloria, you claimed to be the daughter of Conchita
Gloria, one of the plaintiffs in this case?

A - Yes, sir.

Q - You are, however, claiming only to be the adopted daughter of plaintiff

Conchita Gloria, correct?

- No, sir, I am the true daughter, sir.

COURT - Tunay na anak?

A - I was the daughter, Yow· Honor.

Q - Being a daughter she is a compulsory heir, Atty. Tampo.

xxxx

COURT - Ano ka ba, tunay na anak o adopted ka lang?

A - I am a true daughter, Your Honor. In fact, I have a birth certificate. 19

Being the daughter of the deceased Juan and Conchita, Lourdes has an interest in
the subject property as heir to Juan and co-owner with Conchita The fact that she
was not judicially declared as heir is of no moment, for, as correctly argued by
petitioners, there was no need for a prior declaration of heirship before heirs may
commence an action arising from any right of their predecessor, such as one for
annulment of mortgage. "[N]o judicial declaration of heirship is necessary in
order that an heir may assert his or her right to the property of the deceased."20

x x x. A prior settlement of the estate is not essential before the heirs can
commence any action originally pertaining to the deceased as we explained in
Quison v. Salud-

Claro Quison died in 1902. It was proven at the trial that the present plaintiffs are
next of kin and heirs, but it is said by the appellants that they [were] not entitled
to maintain this action because there [was] no evidence that any proceedings
[had] been taken in court for the settlement of the estate of Claro Quison; and
that without such settlement, the heirs cannot maintain this action. There is
nothing in this point. [Under) the Civil Code [and/or] Code of Civil Procedure, the
title to the property owned by a person who dies intestate passes at once to his
heirs. Such transmission is, under the present law, subject to the claims of
administration and the property may be taken from the heirs for the pw-pose of
paying debts and expenses, but this does not prevent an immediate passage of
the title, upon the death of the intestate, from himself to his heirs. Without some
showing that a judicial administrator had been appointed in proceedings to settle
the estate of Claro Quison, the right of the plaintiffs to maintain this action is
established.

Conformably with the ·foregoing and taken in conjunction with Atty. 777 and 494
of the Civil Code, from the death of Lourdes Sampayo her rights as a co-owner,
incidental to which is the right to ask for partition at any time or to te1minate the
co-ownership, were transmitted to her rightful heirs. In so demanding partition
private respondents merely exercised the right originally pe1tai1ling to the
decedent, their predecessor-in-interest.21 (Citations omitted)

As regards the supposed defective verification occasioned by Conchita's failure to

sign the amended complaint with its concomitant verification and certification
against forum shopping, the Court has repeatedly held that in a case involving co-
owners of property where said property is the subject matter of the suit, the
failure of the other co-owners to sign the verification and certification against
forum shopping is not fatal, as the signing by only one or some of them
constitutes substantial compliance with the rule.

Finally, we find no merit in respondents' argument that the present petition

should be dismissed for failure of the od1er co-heirs/co-petitioners to sign the
verification and certification against forw11-shopping as required by Sections 4
and 5, Rule 7 of the 1997 Rules of Civil Procedure.

In the case of Iglesia Ni Cristo v. Judge Ponferrada we expounded on the purpose

and sufficiency of compliance with the verification and ce1tification against forum
shopping requirements, viz.:

The issue in the present case is not the lack of verification but the sufficiency of
one executed by only one of (the] plaintiffs. This Cou1t held in Ateneo de Naga
University v. Manalo, that the verification requirement is deemed substantially
complied with when, as in the present case, only one of the heirs-plaintiffs, who
has sufficient knowledge and belief to swear to the truth of the allegations in the
petition (complaint), signed the verification attached to it. Such verification is
deemed sufficient assurance that the matters alleged in the petition have been
made in good faith or are true and correct, not merely speculative.

The same liberality should likewise be applied to the certification against forum
shopping.1âwphi1 The general rule is that the certification must be signed by all
plaintiffs in a case and the signature of only one of them is insufficient. However,
the Court has also stressed in a number of cases that the rules on form shopping
were designed to promote and facilitate the orderly administration of justice and
thus should not be interpreted with such absolute literalness as to subve1t its
own ultin1ate and legitimate objective. The rule of substantial compliance may be
availed of with respect to the contents of the certification. This is because the
requirement of strict compliance with the provisions merely w1derscores its
mandatory nature in that the certification cannot be altogether dispensed with or
its requirements completely disregarded.
The substantial compliance rule has been applied by this Court in a number of
cases: Cavile v. Heirs of Cavile, where the Court sustained the validity of the
certification signed by only one of petitioners because he is a relative of the other
petitioners and co-owner of the prope1ties in dispute; Heirs of Agapito T Olarte v.
Office of the President of the Philippines, where the Cou1t allowed a certification
signed by only two petitioners because the case involved a family home in which
all the petitioners shared a common interest; Gudoy v. Guadalquiver, where the
Court considered as valid the ce1tification signed by only four of the nine
petitioners because all petitioners filed as co-owners pro indiviso a complaint
against respondents for quieting of title and damages, as such, they all have joint
interest in the undivided whole; and Dar v. Alonzo-Legasto, where the Court
sustained the certification signed by only one of the spouses as they were sued
jointly involving a prope1ty in which they had a common interest.

It is noteworthy that in all of the above cases, the Court applied the rule on
substantial compliance because of the commonality of interest of all the parties
with respect to the subject of the controversy.22 (Citations omitted)

"As such co-owners, each of the heirs may properly bring an action for ejectment,
forcible entry and detainer, or any kind of action for the recovery of possession of
the subject properties. Thus, a co-owner may bring such an action, even without
joining all the other co-owners as co-plaintiffs, because the suit is deemed to be
instituted for the benefit of all."23

Finally, the Court finds the trial court to be correct in issuing the March 12, 2004
Order granting petitioners' motion for reconsideration and declaring the mortgage
and promissory note as null and void. The evidence indicates that these
documents were indeed simulated; as far as petitioners were concerned, they
merely entrusted the title to the subject property to Biag for the purpose of
reconstituting the same as he claimed that the title on file with the Registrar of
Deeds of Quezon City may have been lost by fire. Petitioners did not intend for
Biag to mortgage the subject property in 1991 to secure a loan; yet the latter,
without petitioners' knowledge and consent, proceeded to do just that, and in the
process, he falsified the loan and mortgage documents and the accompanying
promissory note by securing Conchita's signatures thereon through fraud and
misrepresentation and taking advantage of her advanced age and naivete and
forged Juan's signature and made it appear that the latter was still alive at the
time, when in truth and in fact, he had passed away in 1987. A Certificate of
Death24 issued by the Quezon City Local Civil Registrar and marked as Exhibit
"D" and admitted by the trial court proves this fact. Under the Civil Code,

Art. 1346. An absolutely simulated or fictitious contract is void. x x x

Art. 1409. The following contracts are inexistent and void from the beginning:

(l)xxx;
(2) Those which are absolutely simulated or fictitious;

In the case of Spouses Solivel v. Judge Francisco,25 the Court made the following
pronouncement:

x x x Thus, in Ayroso, this Court annulled a mortgage executed by an impostor

who had unauthorizedly gained possession of the ce1tificate of title thru the
owner's daughter and forged said owner's name to the deed of mo1tgage which
was subsequently registered. In so doing, the Court found more applicable the
case of Ch. Veloso vs. La Urbana and Del Mar, which also voided a mortgage of
real prope1ty owned by plaintiff Veloso constituted by her brother-in-law, the
defendant Del Mar, using two powers-of-attorney to which he had forged the
signatures of said plaintiff and her husband, and which mortgage was later
registered with the aid of the ce1tificate of title that had come into Del Mar’s
possession by unknown means. x x x

Even more in point and decisive of the issue here raised, however, is the much
later case of Joaquin vs. Madrid, where the spouses Abundio Madrid and
Rosalinda Yu, owners of a residential lot in Makati, seeking a building construction
loru1 from the then Rehabilitation Finance Corporation, entrusted their ce1tificate
of title for Surrender to the RFC to Rosalinda's godmother, a ce1tain Carmencita
de Jesus, who had offered to expedite the approval of the loan. Later having
obtained a loan from another source, the spouses decided to withdraw the
application they had filed with the RFC and asked Carmencita to retrieve their
title and return it to them. Carmencita failed to do so, giving the excuse that the
employee in charge of keeping the title was on leave. It turned out, however, that
through the machinations of Carmencita, the property had been mortgaged to
Constancio Joaquin in a deed signed by two persons posing as the owners and
that after said deed had been registered, the amount for which the mortgage was
constituted had been given to the person who had passed herself off as Rosalinda
Yu. x x x (Citations omitted)

As a consequence of Biag's fraud and forgery of the loan and mortgage

documents, the same were rendered null and void. This proceeds from the fact
that Biag was not the owner of the subject property and may not thus validly
mortgage it, as well as the well-entrenched rule that a forged or fraudulent deed
is a nullity and conveys no title. "In a real estate mo1igage contract, it is
essential that the mortgagor be the absolute owner of the property to be
mortgaged; otherwise, the mortgage is void."26 And "when the instrument
presented for registration is forged, even if accompanied by the owner's duplicate
certificate of title, the registered owner does not thereby lose his title, and neither
does the mortgagee acquire any right or title to the property. In such a case, the
mortgagee under the forged instrument is not a mortgagee protected by law."27
Lastly, when "the person applying for the loan is other than the registered owner
of the real property being mortgaged[, it] should have already raised a red flag
and xx x should have induced the [mortgagee] to make inquiries into and confirm
[the authority of the mortgagor]."28

WHEREFORE, the Petition is GRANTED. The assailed March 13, 2012 Decision and
June 18, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 82774 are
ANNULLED and SET ASIDE. The March 12, 2004 Order of the Quezon City
Regional Trial Court, Branch 224 in Civil Case No. Q-90-16621 is REINSTATED

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO

Associate Justice FRANCIS H. JARDELEZA
Associate Justice
(On official leave)
NOEL GIMENEZ TIJAM
Associate Justice ALEXANDER G. GESMUNDO
Associate Justice
ATTESTATION

I attest that the conclusions in the above Decisionhad been reached in

consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice
Acting Chairperson

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution and the Division Acting
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.

ANTONIO T. CARPIO
Acting Chief Justice
THIRD DIVISION

JULY 9, 2018

G.R. No. 222297

FORTUNATO ANZURES, Petitioner

vs.
SPOUSES ERLINDA VENTANILLA and ARTURO VENTANILLA, Respondents

DECISION

GESMUNDO, J.:

This is an appeal by certiorari seeking to reverse and set aside the July 24, 2015
Decision1 and the December 18, 2015 Resolution2 of the Court of Appeals (CA) in
CA-G.R. SP No. 136514. The CA affirmed the decision of the Regional Trial Court,
Branch 83, Malolos City (RTC) rendered in favor of the Spouses Erlinda Ventanilla
(Erlinda) and Arturo Ventanilla (collectively, respondents), in an action for
unlawful detainer.

The Antecedents

On October 12, 2012, respondents filed a Complaint for Unlawful Detainer3

before the Municipal Trial Court of Bulacan (MTC) against Fortunato Anzures
(petitioner). In their complaint, respondents alleged, among others, that they
were the owners of a residential house situated in Barangay Sta. Ines, Bulakan,
Bulacan; that the house had been declared for taxation purposes in their names
for the year 2012;4 that the property stands on a 289 square meters parcel of
land under OCT No. 2011000008 and registered in the names of petitioner and
his wife Carolina Anzures (Carolina); that later, by virtue of a Deed ofDonation,5
dated March 21, 2011, petitioner and his wife Carolina donated 144 square
meters portion of the land in favor of respondents; that Erlinda Ventanilla
"indicated to partition the said property,"6 but the house situated on said
property constitutes a stumbling block on the partition of the said property; that
being the owners of the property, respondents merely tolerated the occupation of
the property by petitioner; that they demanded he vacate the house to give way
to the subdivision and partition of the property but to no avail; and that
respondents filed a complaint with the office of the Barangay but no amicable
settlement was effected.

In his Answer with Counterclaim,7 petitioner sought the dismissal of the

complaint for lack of cause of action. He averred that he and his late spouse
Carolina were the owners of the residential house; that he was also the registered
owner of the 289 square meters parcel of land, having bought the same from
Erlinda Ventanilla for ₱150,000.00 as evidenced by the Pagpapamana sa Labas ng
Hukuman na may Pagtalikod sa Bahagi ng Lupa at Bilihang Tuluyan sa Lupa, 8
dated August 2, 2000; that his possession and ownership of the land was
evidenced by Original Certificate of Title (OCT) No. 2011000008; that he was the
rightful owner of the residential house as shown by the tax receipts confirming
the religious payments he made from 1998 to 2011.9

Petitioner also denied the genuineness and authenticity of the March 21, 2011
deed of donation because at that time, Carolina was mentally and physically
incompetent to execute the same. He contended that he had no knowledge of the
deed and he never affixed his signature thereon. 10

The MTC Ruling

On August 16, 2013, the MTC ruled in favor of respondents and granted their
complaint for unlawful detainer against petitioner. It rendered judgment as
follows:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against

defendant ordering the latter and all persons claiming rights under him-

1. To vacate the residential house consisting of 144 square meters standing on

the lot embraced in OCT No. 2911000008 (sic) situated in Sta. Ines, Bulakan,
Bulacan and surrender possession thereof to plaintiffs;

2. To pay plaintiffs the sum of ₱1,000.00 a month as reasonable compensation

for the use and occupation of the subject property from filing of the complaint
(October 19, 2012), until the same is vacated or the possession thereof is
surrendered to plaintiffs;

3. To pay plaintiffs the sum of ₱5,000.00 as attorney's fees, aside from the costs.

SO ORDERED.11

Unconvinced, petitioner appealed to the RTC.

The RTC Ruling

On June 30, 2014, the RTC affirmed in toto the judgment of the MTC. It held that
respondents have a better right over the subject property than petitioner. The
RTC also affirmed that respondents merely tolerated the possession of petitioner.
The dispositive portion of the RTC ruling reads:

WHEREFORE, premises considered, the Decision rendered by the Municipal Trial

Court of Bulakan, Bulacan, dated August 16, 2013 is AFFIRMED IN TOTO.

SO ORDERED.12
Aggrieved, petitioner sought relief before the CA arguing that the RTC committed
grave error in affirming the MTC's decision as it is not in accord with law and
jurisprudence and, if not corrected, said error will cause injustice and irreparable
damage to petitioner. 13

In his petition for review with the CA, petitioner raised two (2) points: 1] that
respondents have no cause of action as they failed to sufficiently aver in their
complaint the jurisdictional fact of unlawful withholding of the subject premises -
when and how the matter of the entry and dispossession thereof were effected;
14 and 2] the deed of donation was a forged document as his wife Carolina was
seriously ill at the time of its alleged execution. 15

The CA Ruling

In its decision dated July 24, 2015, the CA denied the petition.

On the issue of lack of cause of action, it concluded that respondents' allegations

in their complaint clearly make a case for unlawful detainer. The CA explained
that the complaint sufficiently averred the unlawful withholding of the subject
residential house by petitioner, constitutive of unlawful detainer, although the
exact words "unlawful withholding" were not used. 16

The CA also noted that respondents asserted that petitioner's occupancy was
through their tolerance. Thus, it reiterated the ruling that a person who occupies
the land of another at the latter's tolerance or permission, without any contract
between them, is necessarily bound by an implied promise that he will vacate
upon demand, failing which a summary action for ejectment is the proper remedy
against him. Possession by tolerance is lawful, but such possession becomes
unlawful when the possessor by tolerance refuses to vacate upon demand made
by the owner. 17

With regard to the forgery of the deed of donation, the CA stated that forgery
cannot be presumed. It must be proved by clear, positive and convincing
evidence. 18 The CA observed that not a modicum of evidence was adduced by
petitioner to substantiate his claim of forgery and, thus, such claim was merely
self-serving. 19

Ultimately, the CA reiterated the oft-repeated doctrine that factual findings of the
trial courts should be accorded great weight and are generally not disturbed on
appeal. 20

Petitioner filed a motion for reconsideration but it was denied by the CA.

Hence, this petition raising the following:

ISSUES
I

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE

REGIONAL TRIAL COURT'S DECISION AFFIRMING THE MUNICIPAL TRIAL
COURT'S DECISION THAT THE RESPONDENT SPOUSES HAVE A CAUSE OF
ACTION TO EJECT PETITIONER BASED ON TOLERANCE.

II

WHETHER THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE

VALIDITY OF THE DEED OF DONATION DATED MARCH 21, 2011.

The primary issue for resolution is whether or not respondents have a cause of
action to eject petitioner from the subject property.

The Court's Ruling

The petition is meritorious.

Petition for Review

Under Rule 45

Under Rule 45 of the Rules of Court, only questions of law should be raised in
petitions filed because the Court is not a trier of facts. It will not entertain
questions of fact as the factual findings of the appellate courts are final, binding
or conclusive on the parties and upon this court when supported by substantial
evidence.21

As in every rule, there are exceptions which have been enunciated in a plethora
of cases. These are:

(l) When the conclusion is a finding grounded entirely on speculation, surmises or

conjectures;

(2) When the inference made is manifestly mistaken, absurd or impossible;

(3) Where there is a grave abuse of discretion;

(4) When the judgment is based on a misapprehension of facts

(5) When the findings of fact are conflicting;

(6) When the Court of Appeals, in making its findings, went beyond the issues of
the case and the same is contrary to the admissions of both appellant and
appellee;
(7) The findings of the Court of Appeals are contrary to those of the trial court;

(8) When the findings of fact are conclusions without citation of specific evidence
on which they are based;

(9) When the facts set forth in the petition as well as in the petitioner's main and
reply briefs are not disputed by the respondents; and

(10) The finding of fact of the Court of Appeals is premised on the supposed
absence of evidence and is contradicted by the evidence on record. 22

This case falls under one of the exceptions as there are certain relevant facts that
would warrant a different conclusion if properly considered.

Recovery of possession
in general

There are four (4) remedies available to one who has been deprived of possession
of real property. These are: (1) an action for unlawful detainer; (2) a suit for
forcible entry; (3) ace ion publiciana; and (4) ace ion reinvidicatoria.23

Unlawful detainer and forcible entry are summary ejectment suits where the only
issue to be determined is who between the contending parties has a better
possession of the contested property.24 On the other hand, an accion publiciana,
also known as accion plenaria de posesion, is a plenary action for recovery of
possession in an ordinary civil proceeding in order to determine the better and
legal right to possess, independently of title, 25 while an ace ion reinvidicatoria,
involves not only possession, but ownership of the property.26

The present case is one for unlawful detainer, which is "an action to recover
possession of real property from one who unlawfully withholds possession after
the expiration or termination of his right to hold possession under any contract,
express or implied."27 In this case, respondents alleged that petitioner has been
occupying their property by tolerance and has refused to vacate it despite their
repeated demands.

The possession of the defendant in an unlawful detainer case is originally legal

but becomes illegal due to the expiration or termination of the right to possess.
The sole issue for resolution in an unlawful detainer case is physical or material
possession of the property involved, independent of any claim of ownership by
any of the parties. When the defendant, however, raises the defense of ownership
in his pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession. 28 (italics supplied)

The Present Controversy

In this case, both parties claim ownership over the subject property. Each
presented documents to support their respective claim, enumerated in their
chronological sequence as follows:

DATEDOCUMENT DETAILS PRESENTED BY

May 31, 2000
Waiver of Rights over the Unregistered Parcel of Land Executed by Filomena
Rodriguez Rivera, Enriqueta Rodriguez and Rosa.Ima Rodnguez Sta. Ana m favor
of their nieces, Erlinda and Carolina Respondents
August 2, 2000 Deed of Absolute Sale of Unregistered Land Executed by Filomena
Rodriguez Rivera, Enriqueta Rodriguez and Rosalina Rodriguez Sta. Ana in favor
of their nieces, -same-
Pagpapamana sa Labas ng Hukuman na may Pagtalikod sa Bahagi ng Lupa
at Bilihang Tuluyan sa Lupa a) Waiver of rights over parcel of land in favor of
Erlinda
b) Absolute sale in favor of Carolina Petitioner
October 31, 2008 Pagkakaloob ng Bahagi ng Lupa na May Kasunduan a)
Emiliano, brother of Erlinda and Carolina was given 1/3 share of the 289 sqm.
land
b) All 3 siblings agreed to have the land registered under the name of Carolina
Respondents
January 19, 2010 Pagwawaksi ng Karapatan sa Pag-aari ng Bahagi ng Lupa
Emiliano waived his share in favor of his 2 siblings -same-
September 23, 2010 OCT No. 2011000008 Registered in Carolina's name
Petitioner
March 21, 2011 Deed of Donation Executed by Carolina in favor of Erlinda,
with their respective spouses as signatories Respondents
October 11, 2011 Extrajudicial Settlement of Estate with Waiver of Rights
Executed by Filomena and Rosalina in favor or Erlinda covering a residential
house -same-
As can be gleaned from the records, the preponderance of the evidence shows
that the property was originally owned by one Vicenta Galvez, who died intestate
on October 6, 1967. After her death, Filomena Rodriguez Rivera, Enriqueta
Rodriguez and Rosalina Rodriguez, claiming to be her sole heirs, executed a
"Waiver of Rights over the Unregistered Parcel of Land"29 in favor of their nieces,
Erlinda Rodriguez and Carolina Rodriguez on May 31, 2000. The property contains
289 square meters more or less.

To confirm and firm up the waiver and transfer, on August 2, 2000, Filomena
Rodriguez Rivera, Enriqueta Rodriguez and Rosalina Rodriguez executed a "Deed
of Absolute Sale of Unregistered Land"30 in favor of Erlinda and Carolina. In said
document, the three sold, transferred and conveyed, absolutely and
unconditionally, the subject "parcel of land with improvements" to the two, "their
heirs or assigns, free from all liens and encumbrances."

The waiver of rights over unregistered parcel of land and the deed of absolute
sale of unregistered land were both notarized by Atty. Jose S. Tayo on September
22, 2000 and were identified as Document Nos. 231 and 232, respectively, on
Page No. 48; Book 31, Series of 2000, of his notarial book.

It appears that on the same day of August 2, 2000, the three heirs of Vicenta
Galvez, namely, Filomena Rodriguez Rivera, Enriqueta Rodriguez and Rosalina
Rodriguez, executed a "Pagpapamana sa Labas ng Hukuman na may Pagtalikod
sa Bahagi ng Lupa at Bilihang Tuluyan sa Lupa "31 embodying a) a waiver of
rights over parcel of land in favor of Erlinda; and b) an absolute sale by Erlinda of
the said parcel of land in favor of Carolina.

The document was notarized by Atty. Jose S. Tayo, but the date of its
notarization is unknown. It was, however, likewise identified as Document No.
231; Page No. 48, Book No. 31, Series of 2000, of his notarial book.

Based on the foregoing, the Court agrees with the MTC that as between the
Waiver of Rights over Unregistered Parcel of Land and the Deed of Absolute Sale
of Unregistered Land on one hand, and the Pagpapamana sa Labas ng Hukuman
na may Pagtalikod sa Bahagi ng Lupa at Bilihang Tuluyan sa Lupa on the other,
the two former documents prevail because they bore the rubber stamp of the
notary public and the signatures appearing thereon were similar with each
other.32

Further, the Pagpapamana sa Labas ng Hukuman na may Pagtalikod sa Bahagi ng

Lupa at Bilihang Tuluyan sa Lupa, which shows that the heirs of Vicenta waived
their rights over the entire parcel of land in favor of only Erlinda, who in turn sold
the same to Carolina, is clearly inconsistent with the intention of the said heirs of
Vicenta to absolutely and unconditionally transfer the property to both their
nieces, Erlinda and Carolina.

On October 31, 2008, citing as the basis of their right the Deed of Absolute Sale
of Unregistered Land,33 Carolina and Erlinda executed a "Pagkakaloob ng Bahagi
ng Lupa na may Kasunduan, "34 whereby the two gave 1/3 of the subject
property to their brother, Emiliano; the three siblings agreed to place the
property in the name of Carolina; and that they stated that although the property
would be registered in her name, the three of them would still be the co-owners
of the property.

On January 19, 2010, Emiliano executed a "Pagwawaksi ng Karapatan sa Pag-aari

ng Bahagi ng Lupa, "35 whereby he waived his right over 1/3 of the property in
favor of Carolina and Erlinda, thus, cementing the coownership of the two sisters.

On September 23, 2010, the property was placed under the operation of the
Torrens system of land registration with the issuance of the OCT No.
2011000008. Pursuant to their agreement, it was registered in the name of
"Carolina R. Anzures, Filipino, na may sapat na gulang, kasal kay Fortunato
Anzures."36
On March 21, 2011, Carolina executed a deed of donation, 37 which donated 144
square meters of the subject property to Erlinda as an acknowledgement of their
co-ownership thereof. The donation does not appear to have been registered, but
it is a recognition that they are both co-owners with equal shares.

On October 11, 2011, Filomena and Rosalina executed an "Extrajudicial

Settlement of Estate with Waiver of Rights,"38 whereby they waived their rights
over the house in favor of Erlinda.

On the basis of this extrajudicial settlement of estate with waiver of rights, the
respondents claim that they are the owners of the house; that the petitioner is
occupying the house by virtue of their tolerance; that they have demanded that
he vacate the same; and that despite demands, he refused to do so. As petitioner
refuses to vacate the premises, respondents claim they were constrained to file
an action for unlawful detainer.

Carolina and Erlinda are

co-owners of the house
subject of litigation

From the documentary records, the property covered by OCT No. 2011000008 is
co-owned by Carolina and Erlinda. Being co-owners of the property, they are also
the co-owners of the improvement thereon, including the subject house. This is
clear from the Deed of Absolute Sale of Unregistered Land39 dated August 2,
2000, executed in favor of Erlinda and Carolina, whereby the three heirs of
Vicenta Galvez, namely, Filomena Rodriguez Rivera, Enriqueta Rodriguez and
Rosalina Rodriguez sold, transferred and conveyed, absolutely and
unconditionally, the subject "parcel of land, with improvements" to the "two,"
"their heirs or assigns, free from all liens and encumbrances."40

Respondents cannot rely on the Extrajudicial Settlement of Estate with Waiver of

Rights41 dated October 11, 2011, whereby Filomena and Rosalina waived their
rights over the house in favor of Erlinda. The reason is as clear as daylight. On
said date, Filomena and Rosalina no longer had the right to convey the house as
they were no longer the owners thereof. As evidenced by the August 2, 2000
deed of sale of unregistered land, they already sold the property together with
the improvements to the two sisters, Carolina and Erlinda. In fact, the title has
been placed in Carolina's name, pursuant to their agreement, "Pagkakaloob ng
Bahagi ng Lupa na may Kasunduan. "42 No one can give what one does not have
(Nemo dat quad non habet). 43

Petitioner cannot claim

sole ownership either

Although the Court found that Carolina and Erlinda are co-owners, it must also be
determined whether petitioner is the absolute owner of the subject property and
the house erected thereon to remove all doubts.
Petitioner insists that the March 21, 2011 deed of donation allegedly executed by
his wife, Carolina, in favor of Erlinda, was a forgery.

There is, however, no evidence of forgery. Thus, the Court agrees with the CA
that it was a self-serving claim. The CA wrote:

As a rule, forgery cannot be presumed. It must be proved by clear, positive and

convincing evidence. Mere allegation of forgery is not evidence and the burden of
proof lies on the party alleging it. One who alleges forgery has the burden to
establish his case by a preponderance of evidence, or evidence which is of greater
weight or more convincing than that which is offered in opposition to it.

Here, not a modicum of evidence was adduced by petitioner to substantiate his

claim of forgery. No sufficient and convincing proof was proffered to demonstrate
that the signature of his wife Carolina on the Deed of Donation was not hers, and
therefore forged. Perceivably, his claim of forgery is merely self-serving. 44

Moreover, petitioner did not assail the genuineness and authenticity of the waiver
of rights over the unregistered parcel of land, dated May 31, 2000, as well as the
deed of absolute sale of unregistered land, dated August 2, 2000. In fact, he
acknowledged that their aunts waived their rights over the parcel of land in favor
of the siblings, Erlinda and Carolina, and then sold it to them.

Further, there were two (2) other documents that would disprove his claim. First,
the Pagkakaloob ng Bahagi ng Lupa na may Kasunduan, dated October 31, 2008,
executed by the siblings Erlinda and Carolina with their brother, Emiliano, stated
the following:

Na kami, ERLINDA R. VENT ANILLA kasal kay Arturo C. Ventanilla at CAROLINA R.

ANZURES kasal kay Fortunato Anzures, mga Filipino, may mga sapat na gulang at
naninirahan sa Brgy. Sta. Ines, Bulakan, Bulacan.

Na sa bisa ng "DEED OF ABSOLUTE SALE OF UNREGISTERED LAND, Doc. No.

232, Page No. 48, Book No. 31, Series of 2000, Jose S. Tayo-NP" ay kami na ang
mga lihitimung nagmamay-ari ng isang (1) parsela ng lupa na matatagpuan sa
Brgy. Sta. Ines, Bulakan, Bulacan na nakatala sa pangalan ni VICENT A GALVEZ
na mas makikilala sa ganitong palatandaan:

Tax Declaration No. 2006-05012-00356

Lot No.: 1020
Area:289 sq. m.
Boundaries: North: Lot I 021 (039) South: Lot 1019 (042)
East: Rio del Barrio (Sta. Ana River) West: Barrio Road
Na dahil at alang-alang sa pagmamahal namin sa aming kapatid na si EMILIANO
A. RODRIGUEZ kasal kay Alicia Z. Rodriguez ay aming PINAGKAKALOOBAN ng
IKA TLONG PARTE o 1/3 SHARE ng karapatan sa pagmamay-ari sa lupang aming
binabanggit si Emiliano A. Rodriguez.

Na kami, ERLINDA R. VENT ANILLA, CAROLINA R. ANZURES at EMILIANO A.

RODRIGUEZ ay nagkaruon ng kasunduan na ipangalan sa aming kapatid na si
CAROLINA R. ANZURES ang titulo ng lupa na binabanggit sa kasulatang ito na
aming kasalukuyang ina-apply sa Bureau of Lands.

Na, kahit iisang tao lamang ipapangalan ang titulo nito, ang lupang binabanggit
sa kasulatang ito ay pag-aari pa rin naming tatlong (3) magkakapatid. [emphases
in the original]45

Second, the Pagwawaksi ng Karapatan sa Pag-aari ng Bahagi ng Lupa, dated

January 19, 2010, where Emiliano waived his 1/3 share in favor of his two
siblings, thereby returning his share to his two sisters. In these documents,
petitioner was a signatory.

Evidently, by his participation, petitioner is estopped from questioning them. He

cannot be permitted to assail the genuineness of the March 21, 2011 deed of
donation because the execution of the said deed by Carolina in favor of Erlinda
was merely in keeping with the wishes of Filomena, Enriqueta and Rosalina to
transfer the property to both of them.

In sum, the totality of documentary evidence inevitably shows that Carolina and
Erlinda are co-owners of the 289 square meters parcel of land with improvement
thereon, as originally intended by their predecessors-ininterest, Filomena,
Enriqueta and Rosalina.

Being a co-owner,
petitioner cannot be ordered to
vacate the house

Being a co-owner of the property as heir of Carolina, petitioner cannot be ejected

from the subject property. In a co-ownership, the undivided thing or right belong
to different persons, with each of them holding the property pro indiviso and
exercising [his] rights over the whole property. Each co-owner may use and enjoy
the property with no other limitation than that he shall not injure the interests of
his co-owners. The underlying rationale is that until a division is actually made,
the respective share of each cannot be determined, and every co-owner
exercises, together with his co-participants, joint ownership of the pro indiviso
property, in addition to his use and enjoyment of it.46

Ultimately, respondents do not have a cause of action to eject petitioner based on

tolerance because the latter is also entitled to possess and enjoy the subject
property. Corollarily, neither of the parties can assert exclusive ownership and
possession of the same prior to any partition. If at all, the action for unlawful
detainer only resulted in the recognition of co-ownership between the parties over
the residential house.

The remedy of the

respondents is partition

The Court notes that respondents have recognized the co-ownership insofar as
the parcel of land is concerned when they alleged47 in their complaint for
unlawful detainer their intention to partition the same. They assert, however,
exclusive ownership over the residential house standing thereon by virtue of the
deed of donation and extra judicial settlement of estate. The documentary
evidence, however, shows that the parties are also co-owners of the residential
house.

The parties, being co-owners of both the land and the building, the remedy of the
respondents is to file an action for partition.1âwphi1 Article 494 of the New Civil
Code reads:

No co-owner shall be obliged to remain in the co-ownership. Each co-owner may

demand at any time the partition of the thing owned in common, insofar as his
share is concerned.

WHEREFORE, the petition is GRANTED. The July 24, 2015 Decision and the
December 18, 2015 Resolution of the Court of Appeals, in CA-G.R. SP No.
136514, are REVERSED and SET ASIDE. The complaint for unlawful detainer is
DISMISSED, without prejudice to the filing of the appropriate action.

SO ORDERED.

ALEXANDER G. GESMUNDO
Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

LUCAS P. BERSAMIN
Associate Justice (On official Business)
MARVIC M.V.F. LEONEN
Associate Justice
SAMUEL R. MARTIRES
Associate Justice

ATTESTATION
I attest that the conclusions in the above Decisionhad been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to the 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.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296, The Judiciary Act of 1948, as amended)