You are on page 1of 71

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION PAZ GALVEZ, CARLOS TAM, and TYCOON PROPERTIES,

INC., Petitioners, G.R. No. 157954 Present: PANGANIBAN, C.J. Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ.

- versus -

HON. COURT OF APPEALS and Promulgated: PORFIRIO GALVEZ, Respondents. March 24, 2006 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

The factual antecedents of this case reveal that Timotea F. Galvez died intestate on 28 April 1965.[1] She left behind her children Ulpiano and Paz Galvez. Ulpiano, who died on 24 July 1959,[2] predeceased Timotea and was survived by his son, Porfirio Galvez. Timotea left a parcel of land situated at Pagdaraoan, San Fernando, La Union, covered by Tax Declaration No. 39645 [3] and more particularly described as follows: A parcel of unirrigated riceland situated at Brgy. Pagdaraoan, San Fernando, La Union under Tax Declaration No. 39645, series of 1957, with an area of 4,304.5 square meters, more or less bounded on the North by Valentin and Isidoro Sobrepea; on the East by Nicolas Ducusin; on the South by Victor Ducusin; and on the West by the National Highway. [4]

Considering that all the other compulsory heirs of Timotea already received their respective shares,[5] the property passed by succession, both to Timoteas daughter, PazGalvez, and to the formers grandson, Porfirio, the latter succeeding by right of representation as the son of Ulpiano. Porfirio Galvez was surprised to discover that on 4 May

1970,[6] Paz Galvez executed an affidavit of adjudication stating that she is the true and lawful owner of the said property. Tax Declarations No. 15749[7] and No. 12342[8] were then issued in the name of Paz Galvez. On 22 June 1992, without the knowledge and consent of Porfirio Galvez, Paz Galvez sold the property to Carlos Tam for a consideration of Ten Thousand Pesos (P10,000.00) by way of a Deed of Absolute Sale.
[9]

Carlos Tam thereafter filed an application for registration of said parcel of land under

Land Registration Case No. 2278 before the Regional Trial Court (RTC) of San Fernando, La Union. On 21 January 1994, Original Certificate of Title No. 0-2602 of the Registry of Deeds of San Fernando, La Union, was issued in the name of Carlos Tam.
[10]

Subsequently, on 27 September 1994, Carlos Tam sold the property to Tycoon

Properties, Inc. through a Deed of Absolute Sale executed by the former in favor of the latter.[11] As a result, the title of Carlos Tam over the property was cancelled and a new one, Transfer Certificate of Title (TCT) No. T-40390 [12] was issued in favor of Tycoon Properties, Inc. On 12 May 1994, Porfirio Galvez filed Civil Case No. 4895 before the RTC, Branch 26, of San Fernando, La Union, for Legal Redemption with Damages and Cancellation of Documents[13] against Paz Galvez and Carlos Tam. The Complaint was later amended to implead as additional defendant, Tycoon Properties, Inc. [14] When Tycoon Properties, Inc. filed its Answer, it also filed a cross-claim against Carlos Tam. In a decision[15] dated 15 December 1999, the trial court held: WHEREFORE, in view of the foregoing, judgment is hereby rendered as follows: 1. declaring null and void the Affidavit of Adjudication executed by defendant PAZ GALVEZ dated May 4, 1970; declaring null and void the Deed of Absolute Sale over the property originally covered by Tax Declaration No. 39645 executed by PAZ GALVEZ in favor of CARLOS TAM; the Original Certificate of Title No. 0-2602, in the name of CARLOS TAM be considered cancelled; The Deed of Sale between CARLOS TAM and TYCOON PROPERTIES, Inc. is hereby ordered cancelled with Transfer Certificate of Title No. T40390, being null and void; That CARLOS TAM shall receive from the Clerk of Court, San Fernando City, La Union the amount of Ten Thousand (P10,000.00) pesos, as redemption of the property pursuant to law;

2.

3. 4.

5.

6.

That the property covered by Transfer Certificate of Title No. T-40390, be reconveyed (whole property) to PORFIRIO GALVEZ, he having redeemed one-half () of the property from CARLOS TAM and other half of the property belongs to him as co-heir of TIMOTEA FLORES GALVEZ. Defendant PAZ GALVEZ and CARLOS TAM shall be liable solidarily for the actual damages of the plaintiff in the amount of Ten Thousand (P10,000.00) pesos as well as moral damages in the amount of Fifty Thousand (P50,000.00) Pesos, together with attorney's fees in the amount of Ten Thousand (P10,000.00) Pesos acceptance fee and Five Hundred (P500.00) per appearance fee. [16]

7.

Petitioners Paz Galvez, Carlos Tam and Tycoon Properties, Inc. appealed the decision to the Court of Appeals. [17] In a decision of the Court of Appeals dated 28 August 2002,[18] the appellate court resolved to affirm the decision of the trial court. Petitioners filed a Motion for Reconsideration which was denied in a resolution dated 14 April 2003.[19] Not contented with the decision of the Court of Appeals, petitioners are now before this Court via Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioners Carlos Tam and Tycoon Properties, Inc. separately filed their Memorandum[20] but raised the same issues to wit: I THE HONORABLE COURT OF APPEALS ERRED WHEN IT REFUSED TO HOLD THAT RESPONDENT'S CLAIM OVER THE SUBJECT PROPERTY, WHICH IS BASED ON AN IMPLIED TRUST, HAS ALREADY PRESCRIBED BECAUSE THE ACTION WAS FILED 24 YEARS AFER PETITIONER REPUDIATED THE SAID TRUST. II THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO RECOGNIZE THAT RESPONDENT'S CLAIM IS ALREADY BARRED BY LACHES BECAUSE HE FAILED TO ASSERT HIS ALLEGED RIGHT FOR ALMOST TWENTY FOUR (24) YEARS. III THE HONORABLE COURT ERRED IN FAILING TO RECOGNIZE THAT PETITIONERS [CARLOS TAM AND] TYCOON PROPERTIES ARE BUYERS IN GOOD FAITH AND FOR VALUE AND HAS THE RIGHT TO RELY ON THE FACE OF THE TITLE.[21]

In assailing the decisions of the trial and appellate courts, petitioners cite Article 1451[22] of the Civil Code and claim that an implied or constructive trust which prescribes in ten years, was established between Paz Galvez and Porfirio Galvez. It is petitioners unflinching stand that the implied trust was repudiated when Paz Galvez executed an Affidavit of Self-Adjudication on 4 May 1970, registered the

same before the Register of Deeds of La Union on 4 June 1970 and secured a new tax declaration in her name. From4 May 1970 to the time the complaint was filed on 12 May 1994, 24 years have passed, hence, the action is clearly barred both by prescription and laches. We find the petition bereft of merit. Ostensibly, this case is governed by the rules on co-ownership [23] since both Paz Galvez and Porfirio Galvez are obviously co-owners of the disputed property having inherited the same from a common ancestor. Article 494 of the Civil Code provides that [a] prescription shall not run in favor of a co-owner or co-heir against his co-owners or co-heirs as long as he expressly or impliedly recognizes the co-ownership. It is a fundamental principle that a co-owner cannot acquire by prescription the share of the other co-owners, absent any clear repudiation of the co-ownership.
[24]

InSantos v. Santos,[25] citing the earlier case of Adille v. Court of Appeals,[26] this

Court found occasion to rule that: Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation (of the co-ownership). The act of repudiation, in turn, is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners ; (3) the evidence thereon is clear and conclusive; and (4) he has been in possession through open, continuous, exclusive, and notorious possession of the property for the period required by law.

For title to prescribe in favor of a co-owner there must be a clear showing that he has repudiated the claims of the other co-owners and the latter has been categorically advised of the exclusive claim he is making to the property in question. The rule requires a clear repudiation of the co-ownership duly communicated to the other coowners.[27] It is only when such unequivocal notice has been given that the period of prescription will begin to run against the other co-owners and ultimately divest them of their own title if they do not seasonably defend it. [28] To sustain a plea of prescription, it must always clearly appear that one who was originally a joint owner has repudiated the claims of his co-owners, and that his co-

owners were apprised or should have been apprised of his claim of adverse and exclusive ownership before the alleged prescriptive period began to run. [29] In Salvador v. Court of Appeals ,[30] it was held that the possession of a co-owner is like that of a trustee and shall not be regarded as adverse to the other co-owner but in fact beneficial to all of them.

The case of Huang v. Court of Appeals[31] is instructive on the creation of trust relationships. Trust is a fiduciary relationship with respect to property which involves the existence of equitable duties imposed upon the holder of the title to the property to deal with it for the benefit of another. A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary or cestui que trust. Trust is either express or implied. Express trust is created by the intention of the trustor or of the parties. Implied trust comes into being by operation of law. The latter kind is either constructive or resulting trust. A constructive trust is imposed where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it. The duty to convey the property arises because it was acquired through fraud, duress, undue influence or mistake, or through breach of a fiduciary duty, or through the wrongful disposition of anothers property. On the other hand, a resulting trust arises where a person makes or causes to be made a disposition of property under circumstances which raise an inference that he does not intend that the person taking or holding the property should have the beneficial interest in the property. It is founded on the presumed intention of the parties, and as a general rule, it arises where, and only where such may be reasonably presumed to be the intention of the parties, as determined from the facts and circumstances existing at the time of the transaction out of which it is sought to be established.

Acts which may be considered adverse to strangers may not be considered adverse insofar as co-owners are concerned. Thus, Salvador v. Court of Appeals reiterated what acts constitute proof of exclusive ownership amounting to repudiation, emphasizing that the act must be borne out of clear and convincing evidence of acts of possession which unequivocably amounts to an ouster or deprivation of the right of the other co-owner. The case of Pangan v. Court of Appeals[32] enumerated the following as constituting acts of repudiation: Filing by a trustee of an action in court against the trustor to quiet title to property, or for recovery of ownership thereof, held in possession by the former, may constitute an act of repudiation of the trust reposed on him by the latter.

The issuance of the certificate of title would constitute an open and clear repudiation of any trust, and the lapse of more than 20 years, open and adverse possession as owner would certainly suffice to vest title by prescription. An action for the reconveyance of land based on implied or constructive trust prescribes within 10 years. And it is from the date of the issuance of such title that the effective assertion of adverse title for purposes of the statute of limitation is counted. The prescriptive period may only be counted from the time petitioners repudiated the trust relation in 1955 upon the filing of the complaint for recovery of possession against private respondents so that the counterclaim of the private respondents contained in their amended answer wherein they asserted absolute ownership of the disputed realty by reason of the continuous and adverse possession of the same is well within the 10-year prescriptive period. There is clear repudiation of a trust when one who is an apparent administrator of property causes the cancellation of the title thereto in the name of the apparent beneficiaries and gets a new certificate of title in his own name. It is only when the defendants, alleged co-owners of the property in question, executed a deed of partition and on the strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance of a new one wherein they appear as the new owners of a definite area each, thereby in effect denying or repudiating the ownership of one of the plaintiffs over his alleged share in the entire lot, that the statute of limitations started to run for the purposes of the action instituted by the latter seeking a declaration of the existence of the co-ownership and of their rights thereunder.

In this case, we find that Paz Galvez effected no clear and evident repudiation of the co-ownership. The execution of the affidavit of self-adjudication does not constitute such sufficient act of repudiation as contemplated under the law as to effectively exclude Porfirio Galvez from the property. This Court has repeatedly expressed its disapproval over the obvious bad faith of a co-heir feigning sole ownership of the property to the exclusion of the other heirs essentially stating that one who acts in bad faith should not be permitted to profit from it to the detriment of others. In the cases of Adille[33] and Pangan[34] where, as in this case, a co-heir was excluded from his legal share by the other co-heir who represented himself as the only heir, this Court held that the act of exclusion does not constitute repudiation. On the issue of prescription, while admittedly prescription operates as a bar to recovery of property, the ten-year period commenced to run from date of registration. In this case, Carlos Tam obtained his title to the property on 21 January 1994. Since the complaint of Porfirio Galvez was filed on 12 May 1994, the same was well within the ten-year period to file the action.

On the matter of laches, it is hornbook doctrine that laches is a creation of equity and its application is controlled by equitable considerations. Laches cannot be used to defeat justice or perpetrate fraud and injustice. [35] Neither should its application be used to prevent the rightful owners of a property from recovering what has been fraudulently registered in the name of another. [36] The equitable remedy of laches is, therefore, unavailing in this case. Finally, petitioners claim that if the sale would be nullified, the nullification should extend only to the one-half share of Porfirio Galvez[37] but not to the share of Paz Galvez, who, by her overt act of selling the property, manifested her intention to dispose of her part. Notably, Porfirio Galvezs complaint was captioned legal redemption with

damages, cancellation of documents and reconveyance of share.[38] In his prayer, he sought for the reconveyance of his one-half share in the property and at the same time be subrogated to the other half pertaining to Paz Galvez and sold to Carlos Tam after reimbursement of the amount which the latter paid for the property. The pertinent provisions of the Civil Code on legal redemption are as follows: ART. 1619. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title. ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common.

In the case of Hermoso v. Court of Appeals,[39] this Court, in interpreting the provision of the law on legal redemption, held: The purpose of Article 1067 (of the old Civil Code, now Article 1088 of the present Civil Code) is to keep strangers to the family out of a joint ownership, if, as is often the case, the presence of outsiders be undesirable and the other heir or heirs be willing and in a position to repurchase the share sold (De Jesus vs. Manlapus, 81 Phil. 144). While there should be no question that an heir may dispose his right before partition (Rivero vs. Serrano [CA] 46 O.G. 642; Wenceslao vs. Calimon, 46 Phil. 906; Hernaez vs. Hernaez, 32 Phil. 214), a co-heir would have had to pay only the price for which the vendee acquired it (Hernaez vs. Hernaez, Ibid.).

It is a one-way street. It is always in favor of the redemptioner since he can compel the vendee to sell to him but he cannot be compelled by the vendee to buy the alienated property.

In another case, [40] this Court reiterated that: Legal redemption is in the nature of a privilege created by law partly for reasons of public policy and partly for the benefit and convenience of the redemptioner, to afford him a way out of what might be a disagreeable or [an] inconvenient association into which he has been thrust. (10 Manresa, 4th Ed., 317.) It is intended to minimize coownership. The law grants a co-owner the exercise of the said right of redemption when the shares of the other owners are sold to a third person.

The rule on redemption is liberally construed in favor of the original owner of the property and the policy of the law is to aid rather than defeat him in the exercise of his right of redemption.[41] Thus, petitioners cannot be accommodated in this respect and we agree with the trial court when it held: The provision of Art. 1088 of the Civil Code of the Philippines is very clear on the matter. Art. 1088, provides: Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one (1) month from the time they were notified in writing of the sale by the vendor. There was no written notice sent to Porfirio Galvez by Paz Galvez when she sold her share over the land to Carlos Tam. Porfirio Galvez only discovered on May 12, 1994 that the land was sold to Carlos Tam. Art. 1620, Civil Code of the Philippines, provides: Art. 1620. A co-owner of a thing may exercise the right of redemption in case the share of all the other coowners or any of them are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. No written notice of the sale was given by Paz Galvez (vendor) to Porfirio Galvez, the co-owner as required under Art. 1623 of the Civil Code. The written notice is mandatory. Hence, the right to redeem commenced when plaintiff sought to exercise it by instituting the complaint in the instant case on June 12, 1994. The complaint of legal redemption may be filed even several years after the consummation of sale (Zosima Verdad vs. Court of Appeals, et al.; G.R. No. 10972, April 29, 1996).[42]

As to petitioners Carlos Tam and Tycoon Properties, Inc.s claim that they are buyers in good faith, same fails to persuade. A purchaser in good faith and for value is one who buys the property without notice that some other person has a right to or interest in such property and pays its fair price before he has notice of the adverse claims and interest of another person in the same property. So it is that the honesty of intention which constitutes good faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry.[43] Suffice it to state that both the trial and appellate courts found otherwise as Tam did not exert efforts to determine the previous ownership of the property in question[44]and relied only on the tax declarations in the name of Paz Galvez.[45] It must be noted that Carlos Tam received a copy of the summons and the complaint on 22 September 1994. This notwithstanding, he sold the property to Tycoon Properties, Inc. on 27 September 1994. Significantly, Carlos Tam is also an owner of Tycoon Properties, Inc. to the extent of 45%. [46] A notice of lis pendens dated 8 July 1997 filed with the Registry of Deeds of the Province of La Union was inscribed on TCT No. T- 40390.[47] Despite the inscription, Tycoon Properties, Inc. mortgaged the land to Far East Bank and Trust Company for the sum of P11,172,600.[48] All these attendant circumstances negate petitioners claim of good faith. WHEREFORE, premises considered, the decision of the Court of Appeals dated 28 August 2002 and its Resolution dated 14 April 2003 are AFFIRMED. Costs against petitioners. SO ORDERED.

MINITA V. CHICO-NAZARIO Associate Justice WE CONCUR: ARTEMIO V. PANGANIBAN Chief Justice Chairperson

CONSUELO YNARES-SANTIAGO Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

ROMEO J. CALLEJO, SR. Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 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 Courts Division.

ARTEMIO V. PANGANIBAN Chief Justice

COOWNERSHIP
CASE No. 01

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 56550 October 1, 1990 MARINA Z. REYES, AUGUSTO M. ZABALLERO and SOCORRO Z. FRANCISCO, petitioners, vs. THE HONORABLE ALFREDO B. CONCEPCION, Presiding Judge, CFI of Cavite, Tagaytay, Br. IV, SOCORRO MARQUEZ VDA. DE ZABALLERO, EUGENIA Z. LUNA, LEONARDO M. ZABALLERO, and ELENA FRONDA ZABALLERO, respondents. Law Firm of Raymundo A. Armovit for petitioners. Leonardo M. Zaballero for private respondents.

CORTS, J.: On March 13, 1980, petitioners filed with the CFI a complaint for injunction and damages, docketed as Civil Case No. TG-572, seeking to enjoin private respondents Socorro Marquez Vda. De Zaballero, Eugenia Z. Luna and Leonardo M. Zaballero from selling to a third party their pro-indiviso shares as co-owners in eight parcels of registered land (covered by TCT Nos. A-1316 to A-1322) located in the province of Cavite, with an aggregate area of about 96 hectares. Petitioner claimed that under Article 1620 of the new Civil Code, they, as co-owners, had a preferential right to purchase these shares from private respondents for a reasonable price. On March 17, 1980, respondent trial judge denied the ex parte application for a writ of preliminary injunction, on the ground that petitioners' registered notice of lis pendens was ample protection of their rights. On April 24, 1980, private respondents received the summons and copies of the complaint. Private respondents then filed their answer with counterclaim, praying for the partition of the subject properties. Private respondent Elena Fronda Zaballero filed a motion for intervention dated April 29, 1980, adopting therein her co-respondents answer with counterclaim. At the pre-trial hearing, the parties agreed on the following stipulation of facts: xxx xxx xxx 1. That the plaintiffs, the defendants and the intervenor are the proindiviso co-owners of the properties cited and described in the complaint; 2. That six and nine tenth (6-9/10) hectares of the land covered by TCT No. T-1319; approximately twelve (12) hectares of that covered by TCT No. T-1320; and the entire parcel of covered by TCT No. T-1321, are subject of expropriation proceedings instituted by the National Housing Authority (NHA) now pending before this Court in Civil Case Nos. TG-392, TG-396 and TG-417;

3. That based on the evidence presented by the herein parties in the aforecited expropriation cases, the current valuation of the land and the improvements thereon is at P95,132.00 per hectare;

4. That on 16 April 1980, the plaintiffs received a written notice from the defendants and the intervenor that the VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS CORPORATION had offered to buy the latter's share in the properties listed in the complaint subject to the following terms: 1. The selling price shall be net at TWELVE & 50/100 (P12.50) PESOS per square meter, or a total price of NINE MILLION (P9,000,000.00) PESOS for a total area of SEVENTY TWO (72) HECTARES ONLY; 2. A downpayment equivalent to THIRTY (30%) PERCENT of the selling price, or a minimum downpayment of TWO MILLION SEVEN HUNDRED THOUSAND (P2,700,000.00) PESOS; 3. The balance of the purchase price to be payable within THREE (3) YEARS from the date of downpayment in THREE (3) EQUAL, ANNUAL PAYMENTS with interest at the legal rate prevailing at the time of payment; 4. The balance shall be covered by a BANK GUARANTEE of payments and shall not be governed by Art. 1250 of the Civil Code. (Cf. Annexes 1, 2 and 3, Answer) 5. That in said letters (Annexes 1, 2 and 3, Answer), the plaintiffs were requested: a) To exercise their pre-emptive right to purchase defendants' and intervenor's shares under the above-quoted terms; or b) To agree to a physical partition of the properties; or c) To sell their shares, jointly with the defendants and the intervenor, to the VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS CORPORATION at the price and under the terms aforequoted. 6. That the VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS CORPORATION is ready, willing and able to purchase not only the aliquot shares of the defendants and the intervenor, but also that of the plaintiffs, in and to all the properties subject of this case, for and in consideration of the net amount of TWELVE and 50/100 (P12.50) PESOS per square meter and under the afore-quoted terms; xxx xxx xxx [Annex "C" of the Petition, pp. 1-2, Rollo, pp. 43-44.] The parties laid down their respective positions, as follows: PLAINTIFFS

1. That the subject properties are incapable of physical partition; 2. That the price of P12.50 per square meter is grossly excessive; 3. That they are willing to exercise their pre-emptive right for an amount of not more that P95,132.00 per hectare, which is the fair and reasonable value of said properties; 4. That the statutory period for exercising their pre-emptive right was suspended upon the filing of the complaint; DEFENDANTS AND INTERVENOR 1. That the reasonable price of the subject properties is P12.50 per square meter; 2. That plaintiffs' right of legal pre-emption had lapsed upon their failure to exercise the same within the period prescribed in Art. 1623 of the Civil Code of the Philippines; 3. That, assuming the soundness of plaintiffs' claim that the price of P12.50 per square meter is grossly excessive, it would be to the best interest of the plaintiffs to sell their shares to the VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS CORPORATION, whose sincerity, capacity and good faith is beyond question, as the same was admitted by the parties herein; 4. That the subject properties consisting approximately 95 hectares may be physically partitioned without difficulty in the manner suggested by them to plaintiffs, and as graphically represented in the subdivision plan, which will be furnished in due course to plaintiffs' counsel. [Annex "C" of the Petition, pp. 2-3; Rollo, pp. 44-45.] Based on the foregoing, respondent trial judge rendered a pre-trial order dated July 9, 1980 granting petitioners a period of ten days from receipt of the subdivision plan to be prepared by a competent geodetic engineer within which to express their approval or disapproval of the said plan, or to submit within the same period, if they so desire, an alternative subdivision plan. On July 16, 1980, counsel for private respondents sent to the counsel for petitioners a letter enclosed with a subdivision plan. On August 4, 1980, petitioners filed their comment to the pre-trial order, contending that the question of reasonable value of the subject properties remains a contentious issue of fact ascertainable only after a full trial. Petitioners likewise insisted on their preemptive right to purchase private respondents' shares in the co-ownership after due determination of the reasonable price thereof. Thereafter, counsel for private respondents sent the counsel for petitioners another subdivision plan prepared by a geodetic engineer. Still, no definite communication was sent by petitioners signifying their approval or disapproval to the subdivision plans. In order to settle once and for all the controversy between the parties, private respondents filed a motion dated December 16, 1980 requesting that petitioners be required to formally specify which of the two options under Article 498 of the New Civil Code they wished to avail of: that petitioners' shares in the subject properties be sold to private respondents, at the rate of P12.50 per square meter; or that the subject properties be sold to a third party, VOLCANO LAKEVIEW RESORTS, INC. (claimed to have been erroneously referred to in the pre-trial as VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS CORPORATION) and its proceeds thereof distributed among the parties.

Finding merit in the private respondents' request, and for the purpose of determining the applicability of Article 498 of the New Civil Code, respondent trial judge issued an order dated February 4, 1981 which directed the parties to signify whether or not they agree to the scheme of allotting the subject properties to one of the co-owners, at the rate of P12.50 per square meter, or whether or not they know of a third party who is able and willing to buy the subject properties at terms and conditions more favorable than that offered by VOLCANO LAKEVIEW RESORTS, INC. The order contained a series of questions addressed to all the parties, who were thereupon required to submit their answers thereto. Private respondents filed a "Constancia" expressing that they were willing to allot their shares in the subject properties to Socorro Marquez Vda. de Zaballero, at the rate of P12.50 per square meter, and that they did not know of any other party who was willing and able to purchase the subject properties under more favorable conditions than that offered by VOLCANO LAKEVIEW RESORTS, INC. However, instead of submitting their answers to the queries posed by respondent trial judge, petitioners filed a motion for clarification as to the true identity of the third party allegedly willing to purchase the subject properties. On February 26, 1981, respondent trial judge rejected petitioners' motion on the ground that it was irrelevant. Thereupon, on February 27, 1981, petitioners filed a pleading captioned "Compliance and Motion", (1) reiterating the relevance of ascertaining the true identity of the third party buyer, VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS CORPORATION or VOLCANO LAKEVIEW RESORTS, INC., (2) expressing their view that there is actually no bona fide and financially able third party willing to purchase the subject properties at the rate of P12.50 per square meter, and, (3) once again insisting on their pre-emptive right to purchase the shares of private respondents in the coownership at a "reasonable price", which is less than that computed excessively by the latter at the rate of P12.50 per square meter. Petitioners therein prayed that further proceedings be conducted in order to settle the factual issue regarding the reasonable value of the subject properties. On March 16, 1981, respondent trial judge issued an order denying petitioners' motion. The judge ruled that petitioners did not possess a pre-emptive right to purchase private respondents' shares in the co-ownership. Thus, finding that the subject properties were essentially indivisible, respondent trial judge ordered the holding of a public sale of the subject properties pursuant to Article 498 of the New Civil Code. A notice of sale was issued setting the date of public bidding for the subject properties on April 13, 1981. Petitioners then filed a motion for reconsideration from the above order. Respondent trial judge reset the hearing on petitioners' motion for reconsideration to April 6, 1981, and moved the scheduled public sale to April 14, 1981. Without awaiting resolution of their motion for reconsideration, petitioners filed the present petition for certiorari, alleging that the respondent trial judge acted without jurisdiction, or in grave abuse of its discretion amounting to lack of jurisdiction, in issuing his order dated March 16, 1981 which denied petitioners' claim of a pre-emptive right to purchase private respondents' pro-indiviso shares and which, peremptorily ordered the public sale of the subject properties. On April 8, 1981, this Court issued a temporary restraining order enjoining the sale of the subject properties at public auction. With the comment and reply, the Court considered the issues joined and the case submitted for decision. The Court finds no merit in the present petition.

The attack on the validity of respondent trial judge's order dated March 16, 1981 is ultimately premised on petitioners' claim that they had a pre-emptive right to purchase the pro-indiviso shares of their co-owners, private respondents herein, at a "reasonable price". It is this same claim which forms the basis of their complaint for injunction and damages filed against private respondents in the court a quo. This claim is patently without basis. In this jurisdiction, the legal provisions on coownership do not grant to any of the owners of a property held in common a preemptive right to purchase the pro-indiviso shares of his co-owners. Petitioners' reliance on Article 1620 of the New Civil Code is misplaced. Article 1620 provides: A co-owner of a thing may exercise the right of redemption in case the shares of all the co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common [Emphasis supplied]. Article 1620 contemplates of a situation where a co-owner has alienated his proindiviso shares to a stranger. By the very nature of the right of "legal redemption", a coowner's light to redeem is invoked only after the shares of the other co-owners are sold to a third party or stranger to the co-ownership [ See Estrada v. Reyes, 33 Phil. 31 (1915)]. But in the case at bar, at the time petitioners filed their complaint for injunction and damages against private respondents, no sale of the latter's pro-indiviso shares to a third party had yet been made. Thus, Article 1620 of the New Civil Code finds no application to the case at bar. There is likewise no merit to petitioners' contention that private respondents had acknowledged the pre-emptive right of petitioners to purchase their shares at a "reasonable price". Although it appears that private respondents had agreed to sell their pro-indiviso shares to petitioners, the offer was made at a fixed rate of P12.50 per square meter [See Pre-trial Order dated July 9, 1980, Annex "C" of the Petition; Rollo, pp. 43-45]. It cannot be said that private respondents had agreed, without qualification, to sell their shares to petitioners. Hence, petitioners cannot insist on a right to purchase the shares at a price lower than the selling price of private respondents. Neither do petitioners have the legal right to enjoin private respondents from alienating their pro-indiviso shares to a third party. The rights of a co-owner of a property are clearly specified in Article 493 of the New Civil Code, thus: 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 of 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. The law does not prohibit a co-owner from selling, alienating or mortgaging his ideal share in the property held in common. The law merely provides that the alienation or mortgage shall be limited only to the portion of the property which may be allotted to him upon termination of the co-ownership [ See Mercado v. Liwanag, G.R. No. L-14429, June 30, 1962, 5 SCRA 472; PNB v. The Honorable Court of Appeals, G.R. No. L34404, June 25, 1980, 98 SCRA 207; Go Ong v. The Honorable Court of Appeals, G.R. No. 75884, September 24, 1987, 154 SCRA 270,] and, as earlier discussed, that the remaining co-owners have the right to redeem, within a specified period, the shares

which may have been sold to the third party. [Articles 1620 and 1623 of the New Civil Code.] Considering the foregoing, the Court holds that respondent trial judge committed no grave abuse of discretion when he denied petitioners' claim of a pre-emptive right to purchase private respondents' pro-indiviso shares. Moreover, there is no legal infirmity tainting respondent trial judge's order for the holding of a public sale of the subject properties pursuant to the provisions of Article 498 of the New Civil Code. After a careful examination of the proceedings before respondent trial judge, the Court finds that respondent trial judge's order was issued in accordance with the laws pertaining to the legal or juridical dissolution of co-ownerships. It must be noted that private respondents, in their answer with counterclaim prayed for, inter alia, the partition of the subject properties in the event that the petitioners refused to purchase their pro-indiviso shares at the rate of P12.50 per square meter. Unlike petitioners' claim of a pre-emptive right to purchase the other co-owners' proindiviso shares, private respondents' counterclaim for the partition of the subject properties is recognized by law, specifically Article 494 of the New Civil Code which lays down the general rule that no co-owner is obliged to remain in the co-ownership. Article 494 reads as follows: No co-owner shall be obliged to remain in the co-ownership. Each coowner may demand at any time partition of the thing owned in common, insofar as his share is concerned. Nevertheless, an agreement to keep the thing undivided for a certain period of time, not exceeding ten years, shall be valid. This term may be extended by a new agreement. A donor or testator may prohibit partition for a period which shall not exceed twenty years. Neither shall there be partition when it is prohibited by law. No prescription shall run in favor of a co-owner or co-heir against his coowners or co-heirs so long as he expressly or impliedly recognizes the coownership. None of the legal exceptions under Article 494 applies to the case at bar. Private respondents' counterclaim for the partition of the subject properties was therefore entirely proper. However, during the pre-trial proceedings, petitioners adopted the position that the subject properties were incapable of physical partition. Initially, private respondents disputed this position. But after petitioners inexplicably refused to abide by the pretrial order issued by respondent trial judge, and stubbornly insisted on exercising an alleged pre-emptive right to purchase private respondents' shares at a "reasonable price", private respondents relented and adopted petitioner's position that the partition of the subject properties was not economically feasible, and, consequently, invoked the provisions of Article 498 of the New Civil Code [Private respondents' "Motion To Allot Properties To Defendants Or To Sell the Same Pursuant To Article 498 Of The Civil Code", Annex "D" of the Petition; Rollo, pp. 46-49]. Inasmuch as the parties were in agreement as regards the fact that the subject properties should not be partitioned, and private respondents continued to manifest their desire to terminate the co-ownership arrangement between petitioners and themselves, respondent trial judge acted within his jurisdiction when he issued his order dated February 4, 1981 requiring the parties to answer certain questions for the purpose of determining whether or not the legal conditions for the applicability of Article 498 of the New Civil Code were present in the case.

Art. 498 provides that: Whenever the thing is essentially indivisible and the co-owners cannot agree that it be alloted to one of them who shall indemnify the others, it shall be sold and its proceeds distributed. The sale of the property held in common referred to in the above article is resorted to when (1) the right to partition the property among the co-owners is invoked by any of them but because of the nature of the property, it cannot be subdivided or its subdivision [See Article 495 of the New Civil Code] would prejudice the interests of the co-owners (See Section 5 of Rule 69 of the Revised Rules of Court) and (2) the coowners are not in agreement as to who among them shall be allotted or assigned the entire property upon reimbursement of the shares of the other co-owners. Petitioners herein did not have justifiable grounds to ignore the queries posed by respondent trial judge and to insist that hearings be conducted in order to ascertain the reasonable price at which they could purchase private respondents' pro-indiviso shares [Petitioners' "Compliance and Motion" dated February 27, 1981, Annex "H" of the Petition; Rollo, pp. 57-60]. Since at this point in the case it became reasonably evident to respondent trial judge that the parties could not agree on who among them would be allotted the subject properties, the Court finds that respondent trial judge committed no grave abuse of discretion in ordering the holding of a public sale for the subject properties (with the opening bid pegged at P12.50 per square meter), and the distribution of the proceeds thereof amongst the co-owners, as provided under Article 498 of the New Civil Code. Contrary to petitioners' contention, there was no need for further hearings in the case because it is apparent from the various allegations and admissions of the parties made during the pre-trial proceedings, and in their respective pleadings, that the legal requisites for the application of Article 498 of the New Civil Code were present in the case. No factual issues remained to be litigated upon. WHEREFORE, the present petition is DISMISSED for lack of merit. The temporary restraining order issued by the Court is hereby LIFTED. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

COOWNERSHIP
CASE No. 02

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 108952 January 26, 1995 NILO A. MERCADO, petitioner, vs. THE COURT OF APPEALS AND AUREA A. MERCADO, respondents.

PUNO, J.: This is a petition for certiorari to review the Decision of the respondent Court of Appeals dated August 30, 1991 declaring private respondent a co-owner of the lot covered by TCT No. 123560 of the Register of Deeds of Quezon City. 1 The facts are well established in the disputed Decision, viz: Plaintiff Aurea A. Mercado seeks the partition and reconveyance to her of one-half of a real property located at No. 181 Esteban Abada Street, Quezon City, described as Lot 17-A, Block 40 in Transfer Certificate of Title No. 123560 of the Registry of Deeds of Quezon City, containing an area of P1,000 square meters, more or less and registered in the name of defendant Nilo A. Mercado. Plaintiff Aurea A. Mercado is 69 years old, still single, a professor, holder of a degree in Ph. D. Data of Philosophy, Research, Statistics and Measurement from the University of Maryland, U.S.A and used to work in the United States. She is a legitimate sister of Nilo A. Mercado. Before she left for the United States in 1964 where she stayed up to 1984, she gave her brother University of the Philippines. She wanted a property near U.P because she planned to teach in the said university when she comes back. She was not given any receipt for the money handed to her brother. Sometime in 1967, she was informed through letters received from the Philippines coming from her mother and sister that her brother Nilo had already purchased a property located at No. 181 Esteban Abada Street, Quezon City. She never saw the title of the property covered by TCT No. 123560. In 1972, her brother went to the United States and visited her in her house at Jersey City. On this occasion, she asked her brother about the purchase of the property. Her brother responded telling her not to worry for he would give her a paper with respect to that property. In 1978, her brother Nilo sent through their mother an affidavit (Exh. A) wherein Nilo admitted the existence of co-ownership over the property. Through letters, she communicated with her brother Nilo regarding the subject property. In one of those letters (Exh. B), she told her brother to pay her for the lot. In two other letters (Exh. C & D), the same property

was the subject matter. She did not receive any reply so she started calling him through the telephone, insisting on the partition of the property because she committed the land as payment to the contractor, Mr. Escora, who constructed her school building in Davao City. Nilo A. Medina (sic), defendant herein, is 57 years old, a graduate of law UP class 1957 and a businessman by occupation. He testified that the plaintiff is his sister. In 1967, he decided to buy a house and lot worth P95,000.00 located at 181 Esteban Abada Street, Quezon City from the spouses Francisco Vargas and Teresita Vargas. Out of his personal savings, money borrowed from his mother and sister Esmeralda and P20,000.00 borrowed from his sister Aurea, he was able to pay the downpayment of P38,000.00 to spouses Vargas. It was only upon his tender of the downpayment that the spouses executed a Deed of Conditional Sale (Exh. 5). He applied for a housing loan with the Social Security System (System for short) and upon its approval by the System, a Deed of Absolute Sale was executed between him and the spouse Vargas (Exhs. 1, 2, 3, 4 & 6). He paid the amortization for the loan (Exh. 11). However, due to financial reverses, the property was foreclosed by the System (Exh. 9). Fortunately, he was able to redeem the property from the System in 1980 out of the insurance proceeds of his burned property in Davao. A certificate of redemption (Exh. 10) was issued to him and he caused the cancellation of the mortgage with the System. As proof of his ownership, he has the tax declaration (Exh. 8), Transfer Certificate of Title No. 123560 in his name (Exh. 7) and real property tax bill receipts evidencing payment of real estate taxes on the property (Exhs. 13, 13-a). The petition for certiorari was initially denied by this Court 2 in its Resolution on May 17, 1993 for non-compliance with our Revised Circular 1-88, for raising factual issues and for lack of reversible error committed by the respondent Court of Appeals. 3The Court also denied with finality petitioner's Motion for Reconsideration in a Resolution dated July 14, 1993. The motion raised no substantial argument and the Court found no compelling reason to grant it. On August 23, 1993, however, petitioner filed a Motion for Leave to file a Second Motion for Reconsideration. He argued, among others, that even assuming the correctness of the factual findings of the respondent Court of Appeals, still, there could not be any co-ownership of the subject property. The Court required private respondent to comment and, in its Resolution of August 22, 1994, granted the Motion "in the interest of justice and considering the crucial importance of the issue of extinguishment of coownership" and gave due course to the petition. 4Extensive memoranda were then filed by the petition. We find no merit in the petition. We sustain the finding of the respondent court that the subject property is co-owned by petitioner and private respondent. This finding is based on the admission made by petitioner himself in his Affidavit (Exh. "A") dated March 2, 1973, which states: AFFIDAVIT That I, NILO A. MERCADO, of legal age, married, Filipino and a resident of Davao City, Philippines, after having been duly sworn to in accordance with law, depose and say the following:

That I am the co-owner of a residential land, including all the improvements existing thereon, located at 81 E. Abada, Loyola Heights, Quezon City, with my sister Aurea A.Mercado; That being co-owners, we share equally over the above-mentioned properties, including all the encumbrances and its obligations and liabilities to the Social Security System and other governmental agencies; That I am executing this affidavit to inform the proper authorities concerned that the parcel of residential land, including the residential house, together with all its liabilities, is owned by me in co-ownership with Aurea A. Mercado. That I am executing this affidavit freely and voluntarily without any force or intimidation imposed upon me. IN WITNESS WHEREOF, I have hereunto set my hand this 2(nd) day of March, 1973, at the City of Davao City, Philippines. (Sgd.) NILO A. MERCADO Affiant This affidavit is high quality evidence. It contains admission against interest on the part of petitioner. As a lawyer, petitioner cannot pretend that the plain meaning of his admission eluded his mind. We now come to the issue of whether the mortgage of the subject property to the SSS, its foreclosure and subsequent redemption by the petitioner extinguished private respondent's co-ownership. The applicable law is Article 493 of the New Civil Code which spells out the rights of co-owners over a co-owned property, viz: Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. (emphasis ours) Pursuant to this law, a co-owner has the right to alienate his pro-indiviso share in the co-owned property even without the consent of the other co-owners. Nevertheless, as a mere part owner, he cannot alienate the shares of the other co-owners. The prohibition is premised on the elementary rule that "no one can give what he does not have" (Nemo dat guod non habet). Thus, we held in Bailon-Casilao vs. Court of Appeals, 5 viz: . . . since a co-owner is entitled to sell his undivided share, a sale of the entire property by one-co-owner without the consent of the other coowners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property. The proper action in cases like this is not for the nullification of the sale or for the recovery of possession of the thing owned in common from the third person who substituted the co-owner or co-owners who alienated their shares, but the DIVISION of the common property of the co-owners who possessed and administered it. In the case at bench, it is established that petitioner, for his own benefit, borrowed money from the SSS and mortgaged the subject property to the SSS on June 5, 1967 without the knowledge and consent of his co-owner, herein private respondent.

Necessarily, private respondent could not have helped in the payment of the SSS loan nor could she have redeemed the subject property from the SSS. Under these circumstances, it will not accord with the letter and intent of Article 493 of the Civil Code to rule private respondent lost her part ownership of the subject property finds no warrant both in law and in equity. It will be the height of absurdity to reward petitioner for his illegal act of appropriating the share of private respondent in the subject property. Prescinding from these premises, petitioner's reliance in the case of Tan vs. Court of Appeals 6 is misplaced. In Tan, the disputed property was mortgaged by spouses Tan Tiong Tick and Tan Ong Hun to China Bank. Tan Tiong Tick died. He was survived by his widow and six children, including D. Annie Tan. Meanwhile, China Bank foreclosed the mortgage. It was the highest bidder at the public auction. Thereafter, the heirs of Tan Tiong Tick sought to nullify the real estate mortgage and the foreclosure sale before the defunct CFI of Manila. The widow, Tan Ong Hun, died. The one-year redemption period lapsed on July 6, 1973, but the heirs of the spouses Tan failed to redeem the property. China Bank then consolidated its ownership over the disputed property and a new title was issued in its name. In the meantime, a compromise agreement was forged between China Bank and the Tan heirs. The Bank allowed the heirs to repurchase the property on or before August 31, 1974, otherwise, it would dispose of the property to another party. Within the agreed period, or on August 30, 1974, only petitioner D. Annie Tan repurchased the entire property using her own funds. The bank, however, insisted that the repurchase be made for or in behalf of the other heirs as well. Left without any choice, D. Annie Tan filed an action in court, asserting her exclusive ownership over the property on the ground that the coownership between her and her brothers and sisters had already been extinguished. We sustained her contention and ruled: The first question which arises is the correctness of the assumption that there was a co-ownership among the children of Tan Tiong Tick and Tan Ong Hun when the petitioner purchased and property. Since the lot and its improvements were mortgaged by the deceased parents, there can be no question that a co-ownership existed amount the heirs during the period given by law to redeem the foreclosed property. Redemption by one during this period would have inured to the benefit of all . . . . The records show, however, that when petitioner purchased the disputed property on August 30, 1974, any co-ownership among the brothers and sisters no longer existed. The period to redeem had expired more than one year earlier, on July 6, 1973. The respondent China Bank consolidated its ownership and a new title was issued in the bank's name. When the heirs allowed the one year period to expire without redeeming their parent's former property and permitted the consolidation of ownership and the issuance of a new title, the co-ownership was extinguished. The challenged ruling of the respondent court is, therefore, based on erroneous premises. Under Section 63-B of Presidential Decree No. 1529, the Property Registration Decree, in case of non-redemption, the purchaser at the foreclosure sale, meaning the respondent Bank in case of nonredemption, the purchaser at the foreclosure sale, meaning the respondent Bank in this case, is entitled to a new certificate of title in his name after filing the necessary papers with the Register of Deeds. (Spouses Teofisto and Eulalia Verceles v. Court of First Instance of Rizal, et al., G.R. No. 62219, February 28, 1989). It becomes a ministerial duty

to place the buyer in possession of the property he now owns. (Banco Filipino v. Intermediate Appellate court, G.R. No. 68878, 142 SCRA 44 [1986]. Ownership, therefore, passed to China Bank and there was no more co-ownership among the heirs. In is thus obvious that the Tan ruling is propped on a different factual setting and hence, is inapplicable to the case at bench. In Tan, ". . . the heirs (i.e., the co-owners) allowed the one year redemption period to expire without redeeming their parents' former property and permitted the consolidation of ownership and the issuance of a new title . . ." 7 in favor of China Bank. By their knowing acts of omission, the heirs in the Tan case allowed the extinction of their co-ownership. As aforestated, private respondent did not know of the mortgage of their co-owned property in favor of the SSS and the expiry date of its period of redemption. In other words, private respondent did not voluntary relinquish at any period of time her pro-indiviso share in the subject property. IN VIEW WHEREOF, the Decision of the respondent Court of Appeals dated August 30, 1991 and its Resolution dated January 29, 1993, are affirmed. Costs against petitioner. SO ORDERED. Narvasa, C.J. and Regalado, J., concur. Mendoza, J., took no part.

COOWNERSHIP
CASE No. 03

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-15242 June 29, 1962

ROSAURO M. TANINGCO and SIMPLICIA RAMOS, petitioners, vs. REGISTER OF DEEDS OF LAGUNA, respondent. Juan A. Baes for petitioners. MAKALINTAL, J.: On August 10, 1958 the spouses Rosauro M. Taningco and Simplicia Ramos took a mortgage, for a loan of P9,000 extended by them to Nieves Mediarito, on all the "rights, interests, and participation" of the latter in six parcels of land registered in the land records of Laguna as conjugal properties of herself and her husband Salvador Roxas, then already deceased. The properties were under judicial administration in the corresponding intestate proceeding and had not yet been liquidated and partitioned between the widow and the heirs. The deed of mortgage was duly signed by the mortgagor and otherwise appears to have been executed with the requisite formalities. When presented to the Register of Deeds for Laguna, however, it was denied registration on two grounds, of which only the first is now in issue, namely, that "mortgagor Nieves Mediarito, the surviving spouse of Salvador Roxas, alienated her one-half () conjugal share without previous liquidation of the conjugal properties." The matter was elevated en consulta by the mortgagees to the Land Registration Commissioner, who sustained the action taken by the Register of Deeds by resolution dated November 22, 1958. A motion for reconsideration was subsequently denied, and petitioners have come to this Court on appeal from both the resolution and the order of denial. The Land Registration Commissioner does not question the legality or validity of the mortgage, but excepts to its registrability because the mortgagor "does not appear yet to be the registered owner of the property being mortgaged." The suggestion is that there must first be a settlement and distribution of the conjugal estate because before then the interest of the wife therein is merely inchoate. The premise of the reasoning is inaccurate. The interest of the wife is registered, the titles to the lands being in the names of the spouses. After the dissolution of the conjugal partnership, as by death of the husband, this interest ceases to be inchoate and becomes actual and vested with respect to an undivided one-half share of the said properties. It is one thing to say that the widow's share, being undivided, does not consist of determinate and segregated properties and an entirely different thing to consider her interest as still inchoate. The partnership having been dissolved, if the deceased husband leave heirs other than the wife, as in this case, the properties come under the regime of co-ownership among them until final liquidation and partition. In the language of Chief Justice Arellano in Marisga vs. Macabuntoc, 17 Phil. 107, 110: "The community property of the marriage, at the dissolution of this bond by the death of one of the spouses, ceases to belong to the legal partnership and becomes the property of a community, by operation of law, between the surviving spouse and the heirs of the deceased spouse, or the exclusive property of the widower or the widow if he or she be the heir of the deceased spouse." Article 484, Civil Code. And as provided in article 493 of the same Code, 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, although 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.

The application of this article, which was taken from article 399 of the old Civil Code, has been elucidated in the case of Maria Lopez vs. Magdalena Gonsaga Vda. de Cuaycong, et al., 74 Phil. 601. Citing Manresa, Volume 3, pp. 486-487, 3rd ed., this Court said: "Each co-owner owns the whole, and over it he exercises rights of dominion, but at the same time he is the owner of a share which is really abstract, because until the division is effected, such share is not concretely determined. The rights of the co-owners are, therefore, as absolute as dominion requires, because they may enjoy and dispose of the common property, without any limitation other than that they should not, in the exercise of their right, prejudice the general interest of the community, and possess, in addition, the full ownership of their share, which they may alienate, convey or mortgage; which share, we repeat, will not be certain until the community ceases. The right of ownership, therefore, as defined in Art. 348 of the present Civil Code, with its absolute features and its individualized character, is exercised in co-ownership, with no other differences between sole and common ownership than that which is rightly established by the Portuguese Code (Arts. 2175 and 2176), when it says "that the sole owner exercises his rights exclusively, and the co-owner exercises them jointly with the other coowners"; but we shall add, to each co-owner pertains individually, over his undivided share, all the rights of the owner , aside from the use and enjoyment of the thing, which is common to all the co-owners." (Emphasis supplied.) In the case at bar the mortgage sought to be registered by appellants does not refer to any specific portions of the six parcels of land described in the mortgage instrument but to the mortgagor-wife's rights, interest and participation therein whatever they may actually turn out to be upon liquidation and partition. If such mortgage is legal and valid, as the law says it is, there can be no justifiable reason why it should not be registered, registration being an essential requirement in order that the mortgage may be validly constituted. Article 2125, Civil Code. The registration will in no way affect the rights of the deceased husband's creditors, if any, or of his heirs, for their interest is limited to the husband's half of the estate not covered by the mortgage. As far as the debt if any, of the conjugal partnership are concerned, their payment is provided for by law before the one-half share of the wife-mortgagor is finally determined, and therefore would not be affected by the mortgage. Articles 182 and 185. A roughly analogous case is Gotauco & Co. vs. Register of Deeds of Tayabas , 59 Phil. 756, where a levy of execution was sought to be inscribed in the registry against the share of a judgment debtor in several tracts of land registered in the name of a deceased of whom he was one of the heirs. The inscription was denied by the register of deeds; the question was elevated en consulta to the Fourth Branch of the Court of First Instance of Manila and then appealed therefrom to the Supreme Court. In ordering the acceptance of the levy of execution for inscription in the Registry, this court said that "although the value of the participation of the (judgment debtor) in the state of the (decedent) was indeterminable before the final liquidation of the estate, nevertheless, the right of participation in the estate and the lands thereof may be attached and sold, the real test being, as laid down in Reyes vs. Grey, 21 Phil. 73, 76, whether or not the judgment debtor holds such a beneficial interest in the property that he can sell or otherwise dispose of for value. WHEREFORE, the resolution and the order appealed from are set aside and respondent-appellee Register of Deeds of Laguna is ordered to register the document in question upon compliance with the legal requisites concerning the payment of taxes and registration fees. No pronouncement as to costs. 1wph1.t Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon and Regala, JJ., concur. Reyes, J.B.L., J., took no part.

COOWNERSHIP
CASE No. 04

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-47378 February 27, 1987 MERCEDES U. DE GUZMAN, FRANCISCO P. DE GUZMAN (Deceased) Now His Heirs, Represented by FELICITACION G. ROXAS (Daughter), petitioners, vs. THE HONORABLE COURT OF APPEALS (Sixth Division), ANTONIO M. AUSTRIA, ROMAN M. UMALI and JULIANA U. TRINIDAD, respondents.

CRUZ, J.: This is one of the many unfortunate cases where a dispute over property rights has marred the amity that should characterize the Filipino family, which the Constitution to strengthen as a basic social institution. Regrettably, the adage that blood is thicker than water is not always true. There are times when that amalgam is diluted and so enervated by the venom of misunderstanding, if not cupidity turning affectionate siblings into hostile strangers. Rejected then are memories of a more amiable past when they sat together as children at the foot of a common parent, learning tender lessons of selflessness and sharing. This particular case arose from a complaint for partition of a 3-hectare parcel of unregistered land in Talisay Batangas, filed in 1973 by the herein respondents against their sister and her husband, the present petitioners. At the pre-trial conference, the parties stipulated that they were the sole heirs of their mother, Teofila Manimtim, who died on November 7, 1923, without a will; that the said land was sold by her two days before her death with right of repurchase within seven years; that the defendants redeemed the said property on July 23, 1930; that the tax declaration on the land in favor of Teofila Manimtim was then cancelled and another one was issued in the name of Francisco P. de Guzman; and that since then the real estate taxes thereon had been paid by the defendants. 1On the basis of this stipulation of facts, the following issues were submitted by the parties for resolution by the trial court: 1. Whether under the deed of repurchase, the ownership of the land in dispute was in the defendants or in an the heirs of the deceased Teofila Manimtim; and 2. Assuming arguendo that the repurchase by the defendants was made for and in behalf of all the heirs, whether or not, as alleged by defendants, they became the owners of the property by virtue of prescription through adverse, actual continuous, public and exclusive possession and cultivation and whether or not, as alleged by defendants, plaintiffs are guilty of laches and estoppel. 2 At the trial, the plaintiffs waived the presentation of their evidence in chief, relying on the stipulation of facts, but later caned rebuttal witnesses. The defendants, for their part, sought to prove that the land had been resold to them exclusively and that in any event

they had acquired ownership over it under the rules of prescription, laches and estoppel. 3 In its decision of December 11, 1974, the trial court held that the repurchase could not have been made by the defendants by themselves alone because the right belonged in common to the heirs of Teofila Manimtim. This was true even if it were assumed that the vendee a retro had intended to sell back the land to the defendants only, as the repurchase was subject to the limitations of the Civil Code and the stipulations in the original contract. Possession as a fact was not held exclusively by the defendant spouses but shared with Antonio M. Austria, who remained in the disputed land until 1971. As for the tax declarations in the name of the defendants, these could not be considered proof of ownership or, indeed, even of adverse possession. The trial court ruled that the cases invoked by the defendants, to wit, Ecal v. Ecal, 4 Director of Lands v. Abantao, 5 and Austria v. Laurel, 6 were not applicable because of certain factual and legal differences. Appealed to the Court of Appeals, the said decision was af t firmed in toto 7 on September 29, 1977, and the motion for reconsideration was denied in a resolution dated November 22, 1977. The petitioners are now before us on certiorari. In their first assignment of error, the petitioners fault the trial court for having allowed amendment of the complaint that they claim changed the theory of the case after the answer had been filed. We see no such change. The amendment was subject to the discretion of the court and this discretion was not abused or improperly exercised because the amendment did not change the plaintiffs' original posture. Their basic theory was that they were co-owners of the land in dispute, which was in fact the reason they had filed their complaint for its partition, This theory was not substantially altered by the amendment, which added to the original allegation that one of the plaintiffs administered, cultivated and developed the property. They had never originally asserted that the defendants were in exclusive possession of the disputed land, and the amendment did not so aver. It was not necessary for the respondents to prove at the trial that they were entitled to the partition of the disputed property as co-owners thereof by right of intestate succession. The reason is that these matters were already covered by the abovementioned stipulation of facts. The respondents were willing to submit the issue for resolution by the trial court without presentation of further proof. The stipulated facts were already deemed admitted by the parties. The trial court was also correct in holding that the repurchase of the land in 1930 was subject to the specified condition of the pacto de retro concluded in 1923, to wit, that the repurchase was to be made by the vendor or her successors. Obviously, petitioner Mercedes de Guzman was not the only successor, and her husband was not even an heir, of Teofila Manimtim. A sale during the period of redemption to any other person other than the heirs of the deceased mother, as co-owners of the subject land, could not have been made by the vendee a retro. Any of the co-owners could have successfully invalidated such a transaction. Concerning the petitioners' third assignment of error, we cannot over-emphasize the principle that this Court is not a trier of facts. We review the factual findings of the lower courts only when there appears to be a grave abuse of discretion or it is shown that they are not supported by substantial evidence. We do not find such a flaw in this case. On the contrary, we note from the decision of the trial court, which the respondent Court of Appeals has affirmed, that there was ample evidence of the petitioners asserting an adverse and exclusive claim of ownership over the disputed land only from 1973. Before that date, they had acknowledged, expressly and tacitly the rights of the private respondents as co-owners of the land in question. The petitioners' claim of acquisitive prescription by reason of uninterrupted and adverse possession since 1930, or for 43 years, must be rejected. Significantly, the petitioners make much of one of the respondent's statement that they over did Rip Van Winkle

"because Rip Van Winkle slept only for twenty years ... but we slept for forty-three years," which they quote from the record. 8 To say the least, we find it censurable, as smacking of bad faith, that they did not, in fairness, continue with the immediately succeeding sentence. The next statement read: "But we admit that we slept on the land, not outside the land." 9 Such suppression of a very meaningful qualification sharpens

the contrast between the credibilities of the parties and further weakens the petitioners' case against the respondents. Article 494 of the Civil Code provides that prescription does not run against a co-owner "so long as he expressly or impliedly recognizes the co-ownership." As the adverse claim in this case was found by the trial court to have been made by the petitioners only in May 1973, no acquisitive prescriptive rights had as yet attached to the petitioners when the complaint for partition was filed against them in June 1973. By the same token, laches or estoppel cannot be invoked against the private respondents because they were not sleeping on their rights as long as the co-ownership continued to be recognized by the herein petitioners. To quote from one of the respondents: We, the plaintiffs (private respondents) in this case are prepared to admit that we slept like Rip Van Winkle as Atty. Amador Roxas said, and we admit that we even over did Rip Van Winkle because Rip Van Winkle slept only for twenty (20) years ... but we slept for forty-three years. But we admit that we slept on the land, not outside the land. 10 Elaborating, he declared: We merely followed the custom of the people among brothers and sisters. It is not usual to mistrust each other. That is the meaning of the statement that I made when I said it is true we slept, but it is not the sleep that is understood by the defendants (petitioners herein). We slept because we knew are along that the defendants (petitioners) would not cheat us, would not deny us our right with respect to the land, sir. 11 In Ecal v. Ecal 12 the Court of Appeals held through then Associate Justice Fred Ruiz Castro: Under Article 1514 of the old Civil Code and Article 1612 of the new Civil Code, "if several persons, jointly and in the same contract should sell an undivided immovable with the right to repurchase, none of them may exercise this right for more than his respective share. The same rule applies if the person who sold the immovable alone has left several heirs, in which case each of the latter may only redeem the part which he may have acquired." Should one of the co-owners or co-heirs succeed in alone redeeming the whole property, such co-owner or co-heir shall be considered as a mere trustee with respect to the shares of his co-owners or co-heirs; accordingly, no prescription will lie against the right to any coowner or co-heir to demand from the redemptioner his respective share in the property redeemed, which share is subject of course to a lien in favor of the redemptioner for the amount paid by him corresponding to the value of the share. The applicable provision was Article 1514 of the old Civil Code, which was reproduced verbatim in the new Civil Code as Article 1612, reading as follows: Art. 1612. If several persons, jointly and in the same contract, should sell an undivided immovable with a right of repurchase, none of them may exercise this right for more than his respective share.

The same rule shall apply if the person who sold an immovable alone has left several heirs, in which case each of the latter may only redeem the part which he may have acquired. There is nothing in the above provision suggesting that it is applicable only to registered land and does not cover unregistered land like the property in question. Obviously, we cannot read any distinction into the law where it is not obvious or even obviously

intended. In fact, the private respondents' case is even stronger than in Ecal because the redemptioner there repurchased the property in his own right. In this case, there is the express admission from petitioner Mercedes de Guzman that she was repurchasing the property in question not for herself alone but for the other co-owners. 13 The Abantao case, 14 also invoked by the petitioners, is not applicable because the factual antecedents are different. There was no exercise in that case of the right of repurchase by one co-owner that injured to the advantage of the other co-owners because the period for the redemption of the property after it had been acquired by the government at a tax sale had already expired. Indeed, it was only after twelve years that one of the heirs offered to, and actually did, buy back the property from the government. She did so, however, in her own personal capacity and not by virtue of a right of redemption, and certainly not as a co-owner. In the instant case, it has been established that Mercedes de Guzman exercised the right of repurchase during the stipulated period of seven years and in her capacity as a co-owner. The case of Austria v. Laurel, 15 is also not in point because although there was here a categorical rejection by the defendant of the plaintiff's claim of ownership, the latter took all of seventeen years to assert his right. By contrast, the petitioners in the instant case, according to the evidence adduced, asserted their exclusive claim of ownership only in May 1973, or barely a month before the partition case was instituted by the private respondents. There are abundant authorities to support the holding of the court a quo that tax declarations are not conclusive evidence of ownership or even claims of adverse possession. 16 While it was not denied that the petitioners paid the real estate taxes on the lance the payment came presumably from the fruits thereof, which they occasionally shared with the private respondents. Significantly, it was also established that respondent Austria stayed in the disputed land for many years and enjoyed some of its proceeds as a matter of right and not by tolerance or charity on the part of the petitioners. 17 We are satisfied with the factual findings of the trial judge, as affirmed by the Court of Appeals, and see no reason for disturbing then We also sustain the legal conclusions of the respondent court as a correct interpretation and application of the pertinent law and jurisprudence. What we see here is a deplorable attempt on the part of the petitioners to deprive the private respondents of their lawful shares in the property derived by them from their mother, and through a method hardly worthy of a sister. The argument that the private respondents have by their neglect forfeited whatever rights they might have had feeble enough as it is becomes all the more unseemly among members of the same family, where love normally takes precedence over law. We are saddened by this regrettable case but, even so, are gratified by the results we reach today. Happily, it proves once again that this is a Court not only of law but also of justice. WHEREFORE, the appealed decision is affirmed in to with costs against the petitioners. SO ORDERED. Yap (Chairman), Narvasa, Melencio-Herrera, Feliciano, Gancayco and Sarmiento, JJ., concur.

COOWNERSHIP
CASE No.06

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 131968 June 29, 2001

Spouses ERNESTO and JESUSA PENGSON, petitioners, vs. MIGUEL OCAMPO, JR., for himself and as Attorney-in-Fact of MELCHOR G. OCAMPO, FERNANDO G. OCAMPO and ROBLEDO G. OCAMPO, respondents. QUISUMBING, J.: This is a petition to review on certiorari the judgment dated December 18, 1997 of the Court of Appeals in CA-G.R. SP No. 44147 annulling the decisions of the Regional Trial Court (RTC), Branch 15 in Malolos, Bulacan and the Municipal Trial Court (MTC) of San Miguel, Bulacan dated November 15, 1996 and January 16, 1996, respectively. The factual antecedents of this case are as follows: On October 20, 1995, respondents filed an ejectment case against petitioners before the MTC of San Miguel, Bulacan. In their complaint, respondents alleged: that they are the registered owners of a parcel of land situated in San Jose, San Miguel, Bulacan, and covered by TCT No. 275405 (RT-40973); that on a 60 to 80 square meter portion of said lot, they permitted petitioners to reside without rent; that since they already needed the same portion, they demanded that petitioners vacate the lot, but the latter refused; that the refusal prompted them to bring a complaint before the barangay authorities but no settlement was reached, hence a certification to file action was issued; that respondents again demanded from the petitioners to vacate the land but petitioners still ignored said demand; that respondents were therefore constrained to lodge an ejectment case before the MTC for which they sought damages in the form of rentals and attorney's fees. Petitioners denied that their stay on the property was by mere tolerance. They averred that petitioner Jesusa Pengson is a co-owner of the land in question, being a compulsory heir of spouses Fabian Santos and Consorcia Ocampo, who died without issue;1 that Consorcia Ocampo is the sister of Miguel Ocampo Sr., the father of private respondents; that Miguel Ocampo Sr. and Consorcia Ocampo's parents (Clemente Ocampo and Remedios Maniquiz) died intestate, leaving behind several pieces of properties including the subject property; that when petitioners were married, they were persuaded by Consorcia Ocampo to remain in their residence as she is a co-owner of the lot where their house stands as evidenced by TCT No. 275408; that when TCT No. 275403 was reconstituted, the name of Consorcia Ocampo was fraudulently deleted, thus depriving Jesusa Pengson of her right as compulsory heir of Consorcia Ocampo

who should participate in the settlement of the estate of Clemente and Remedios Ocampo by right of representation. In their reply, respondents denied their relationship to petitioner Jesusa Pengson. They pointed out that Consorcia Ocampo and Fabian Santos died without any issue, as admitted by petitioners, and that Jesusa Pengson was just raised by them in their household without the benefit of a legal adoption. On January 16, 1996, the MTC rendered judgment in favor of petitioners. It held that petitioner Jesusa Pengson is a legitimate daughter of Fabian Santos and Consorcia

Ocampo who is a co-owner of the property in question. It ruled that by virtue of the right of ownership of Consorcia Ocampo, petitioner Jesusa Pengson should be considered co-owner of the subject property, hence, respondents have no cause of action against petitioners. On appeal, the RTC affirmed MTC's judgment. A motion for reconsideration filed by respondents was denied. On review, the Court of Appeals nullified the judgments of both MTC and RTC. In lieu thereof, a new one was entered directing petitioners to vacate the property in question and deliver the possession thereof to respondents. It held that MTC's judgment was void for having been rendered without jurisdiction when it declared that Jesusa Pengson is a legitimate child of Consorcia Ocampo and a co-owner of the property in question. Undaunted, petitioners filed this petition for review on certiorari under Rule 45 of the Rules of Court, raising the following issues for resolution: [I] DID THE COURT A QUO ACT IN EXCESS OF ITS JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT REVERSED THE DECISION OF THE MUNICIPAL TRIAL COURT THAT THE LATTER CAN PASS UPON THE ISSUE OF OWNERSHIP IN ORDER TO DETERMINE THE RIGHT OF POSSESSION ONLY IF THE HEREIN PETITIONERS INVOKED THE DEFENSE OF OWNERSHIP IN THEIR ANSWER TO THE COMPLAINT? [II] DID THE COURT A QUO ACT IN EXCESS OF ITS JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DECLARED NULL AND VOID THE DECISION OF THE MUNICIPAL TRIAL COURT ADMITTING THE BIRTH CERTIFICATE OF PETITIONER JESUSA PENGSON AS PROOF OF HER FILIATION? [III] IS THE CONDITIONAL PRESENTATION OF A XEROX COPY OF TRANSFER CERTIFICATE OF TITLE, RT-40973 WITHOUT HAVING PRODUCED THE ORIGINAL THEREOF AS ORDERED BY THE MUNICIPAL TRIAL COURT ADMISSIBLE IN EVIDENCE TO PROVE OWNERSHIP OF THE LOT IN QUESTION BY THE RESPONDENTS? [IV]

CAN A CO-HEIR (PETITIONER JESUSA PENGSON) OF PARCEL OF LAND BE LEGALLY EXCLUDED BY SOME OF THE CO-HEIRS (RESPONDENTS) FROM THE EXTRA-JUDICIAL SETTLEMENT AND HAVE THE PARCEL OF LAND TITLED AMONG THEMSELVES WITHOUT THE KNOWLEDGE, CONSENT AND PARTICIPATION OF THE OTHER CO-HEIR?2 In this recourse, petitioners impute grave abuse of discretion on the part of the Court of Appeals in rendering the assailed decision. They raise jurisdictional questions which are proper in a special civil action for certiorari under Rule 65 of the Rules of Court. Moreover, they raise factual issues which have not yet been resolved in the proper court. They urge this Court to re-evaluate the Court of Appeals' appreciation of evidence which cannot be done by certiorari. It must be stressed that the jurisdiction of Supreme Court in cases brought before it from the Court of Appeals viaRule 45, as in this case, is limited to reviewing errors or questions of law.3 It is the burden of the party seeking review of a decision of the Court of Appeals or other lower tribunals to distinctly set forth in his petition for review, not only the existence of questions of law fairly and logically arising therefrom, but also questions substantial enough to merit consideration, or show that there are special and important reasons warranting the review that he seeks. If these are not shown prima facie in his petition, this Court will be justified in summarily spurning the petition as lacking in merit.4 In our view, the fundamental question for resolution here is whether or not the Court of Appeals erred in reversing the judgment of the RTC which affirmed the ruling of the MTC. The pertinent point of inquiry is whether or not private respondents have valid ground to evict petitioners from the subject property. It is settled that a person who occupies a 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 proper remedy against him. 5 In ejectment cases, the sole question for resolution is the physical or material possession (possession de facto) of the property in question and neither a claim of juridical possession ( possession de jure) nor an averment of ownership by the defendant can outrightly deprive the court from taking due cognizance of the case. So that, even if the question of ownership is raised in the pleadings, as in this case, the court may pass upon such issue but only to determine the question of possession especially if the former is inseparably linked with the latter. Thus, all that the trial court may do is to make an initial determination of who is the owner of the property so that it can resolve who is entitled to its possession absent other evidence to resolve the latter. But such determination of ownership is not clothed with finality. Neither will it affect ownership of the property nor constitute a binding and conclusive adjudication on the merits with respect to the issue of ownership. Such judgment shall not bar an action between the same parties respecting title to the land or building, nor shall it be held conclusive of the facts therein found in the case between the same parties upon a different cause of action not involving possession. 6 In this case, respondents' cause of action for ejectment is grounded on their alleged ownership of land covered by TCT No. 275405. They insist that they merely tolerated petitioners' stay. Respondents assert that petitioners were unlawfully holding the subject property after such possession had become illegal in view of their demands to vacate and petitioners' refusal to do so. However, petitioners counter that they are co-owners of said property, thus, they have also the right to possess said property. Petitioners stress that their possession of the subject property is just a continuation of the possession of Consorcia Ocampo as co-owner. Now, since the issue of ownership was raised, it was necessary for the MTC to address such issue in the resolution of the question of possession. Therefore, the MTC correctly received evidence of ownership as the question of possession is intertwined with the question of ownership. However, a close scrutiny of the evidence reveals grounds for finding fairly that the MTC and RTC had erred in concluding that Jesusa Pengson co-owns the property which is

the subject matter of the ejectment case. As the Court of Appeals observed, the ejectment complaint involved the lot covered by TCT No. 275405 which was subsequently reconstituted and became TCT No. RT-40973. The said lot is described in the complaint as Lot No. 587-C of the subdivision plan LRC Psd-308144 containing an area of 149 square meters. On the other hand, petitioners claim that Jesusa Pengson's mother was a co-owner of the property covered by TCT No. 275408 which was allegedly reconstituted into TCT No. RT-40973. To support their claim, petitioners presented a photocopy of TCT No. 275408. We note though that what is referred in petitioners' title (TCT No. 275408) is Lot No. 587-F which contains an area of 229 square meters. Obviously, this is a different lot from that claimed by respondents as the particulars between the two lots are at substantial variance from each other, to wit:

TCT-275405 Lot 587-C Area Bounded by NE SE SW NW 149 sq. m. Lot 587-D Lot 587-E Lot 587-B Lot 623

TCT-275408 587-F 229 sq. m. Lot 588 Progreso Road Lot 586 Lot 587-B

In the case at bar, the MTC declared Jesusa Pengson as co-owner of the subject property covered by TCT-275405 despite its obvious disparities from the lot described in TCT-275408 purportedly owned by petitioners. This declaration of co-ownership now appears to us precipitate and devoid of factual and legal basis. Except for her claim of being a co-owner of the subject property, Jesusa Pengson presented no other justification for her continued stay thereat. Consequently, it cannot be persuasively contended that petitioners have valid grounds to remain in the subject property. Accordingly, we are constrained to hold that the Court of Appeals did not err in declaring as null and void the judgments of the MTC dated January 16, 1996 and RTC dated November 15, 1996, and in ordering petitioners to vacate the subject property. Needless to stress, this ruling merely settles the issue of physical possession and not the question of ownership over the disputed property which may be ruled upon by the proper court at the proper time in a case where such issue of dominion is squarely raised. It could be in that forum where petitioners' allegation of fraud in the settlement of the estate and forgery of the reconstituted title RT-40973 could be validly ventilated.7 Similarly, the issue of Jesusa Pengson's filiation could only be resolved in an action specifically brought for that purpose before a proper tribunal. Those substantive issues could hardly be made fit for settlement in an ejectment suit, without straining the fragile fabric of judicial competence below. 1wphi1.nt WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision of the Court of Appeals isAFFIRMED. Costs against petitioners. SO ORDERED. Bellosillo, Mendoza, Buena, De Leon, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 165427 March 21, 2011

BETTY B. LACBAYAN, Petitioner, vs. BAYANI S. SAMOY, JR., Respondent. DECISION VILLARAMA, JR., J.: This settles the petition for review on certiorari filed by petitioner Betty B. Lacbayan against respondent Bayani S. Samoy, Jr. assailing the September 14, 2004 Decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 67596. The CA had affirmed the February 10, 2000 Decision2 of the Regional Trial Court (RTC), Branch 224, of Quezon City declaring respondent as the sole owner of the properties involved in this suit and awarding to himP100,000.00 as attorneys fees. This suit stemmed from the following facts. Petitioner and respondent met each other through a common friend sometime in 1978. Despite respondent being already married, their relationship developed until petitioner gave birth to respondents son on October 12, 1979. 3 During their illicit relationship, petitioner and respondent, together with three more incorporators, were able to establish a manpower services company. 4 Five parcels of land were also acquired during the said period and were registered in petitioner and respondents names, ostensibly as husband and wife. The lands are briefly described as follows: 1. A 255-square meter real estate property located at Malvar St., Quezon City covered by TCT No. 303224 and registered in the name of Bayani S. Samoy, Jr. "married to Betty Lacbayan."5 2. A 296-square meter real estate property located at Main Ave., Quezon City covered by TCT No. 23301 and registered in the name of "Spouses Bayani S. Samoy and Betty Lacbayan."6 3. A 300-square meter real estate property located at Matatag St., Quezon City covered by TCT No. RT-38264 and registered in the name of Bayani S. Samoy, Jr. "married to Betty Lacbayan Samoy."7 4. A 183.20-square meter real estate property located at Zobel St., Quezon City covered by TCT No. 335193 and registered in the name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."8

5. A 400-square meter real estate property located at Don Enrique Heights, Quezon City covered by TCT No. 90232 and registered in the name of Bayani S. Samoy, Jr. "married to Betty L. Samoy."9 Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City. In 1983, petitioner left her parents and decided to reside in the property located in Malvar St. in Project 4, Quezon City. Later, she and their son transferred to Zobel St., also in Project 4, and finally to the 400-square meter property in Don Enrique Heights. 10

Eventually, however, their relationship turned sour and they decided to part ways sometime in 1991. In 1998, both parties agreed to divide the said properties and terminate their business partnership by executing a Partition Agreement. 11 Initially, respondent agreed to petitioners proposal that the properties in Malvar St. and Don Enrique Heights be assigned to the latter, while the ownership over the three other properties will go to respondent. 12 However, when petitioner wanted additional demands to be included in the partition agreement, respondent refused. 13 Feeling aggrieved, petitioner filed a complaint for judicial partition 14 of the said properties before the RTC in Quezon City on May 31, 1999. In her complaint, petitioner averred that she and respondent started to live together as husband and wife in 1979 without the benefit of marriage and worked together as business partners, acquiring real properties amounting toP15,500,000.00.15 Respondent, in his Answer,16 however, denied petitioners claim of cohabitation and said that the properties were acquired out of his own personal funds without any contribution from petitioner.17 During the trial, petitioner admitted that although they were together for almost 24 hours a day in 1983 until 1991, respondent would still go home to his wife usually in the wee hours of the morning.18 Petitioner likewise claimed that they acquired the said real estate properties from the income of the company which she and respondent established.19 Respondent, meanwhile, testified that the properties were purchased from his personal funds, salaries, dividends, allowances and commissions. 20 He countered that the said properties were registered in his name together with petitioner to exclude the same from the property regime of respondent and his legal wife, and to prevent the possible dissipation of the said properties since his legal wife was then a heavy gambler.21 Respondent added that he also purchased the said properties as investment, with the intention to sell them later on for the purchase or construction of a new building.22 On February 10, 2000, the trial court rendered a decision dismissing the complaint for lack of merit.23 In resolving the issue on ownership, the RTC decided to give considerable weight to petitioners own admission that the properties were acquired not from her own personal funds but from the income of the manpower services company over which she owns a measly 3.33% share.24 Aggrieved, petitioner elevated the matter to the CA asserting that she is the pro indiviso owner of one-half of the properties in dispute. Petitioner argued that the trial courts decision subjected the certificates of title over the said properties to collateral attack contrary to law and jurisprudence. Petitioner also contended that it is improper to thresh out the issue on ownership in an action for partition. 25 Unimpressed with petitioners arguments, the appellate court denied the appeal, explaining in the following manner: Appellants harping on the indefeasibility of the certificates of title covering the subject realties is, to say the least, misplaced. Rather than the validity of said certificates which was nowhere dealt with in the appealed decision, the record shows that what the trial court determined therein was the ownership of the subject realties itself an issue

correlative to and a necessary adjunct of the claim of co-ownership upon which appellant anchored her cause of action for partition. It bears emphasizing, moreover, that the rule on the indefeasibility of a Torrens title applies only to original and not to subsequent registration as that availed of by the parties in respect to the properties in litigation. To our mind, the inapplicability of said principle to the case at bench is even more underscored by the admitted falsity of the registration of the selfsame realties in the parties name as husband and wife.

The same dearth of merit permeates appellants imputation of reversible error against the trial court for supposedly failing to make the proper delineation between an action for partition and an action involving ownership. Typically brought by a person claiming to be co-owner of a specified property against a defendant or defendants whom the plaintiff recognizes to be co-owners, an action for partition may be seen to present simultaneously two principal issues, i.e., first, the issue of whether the plaintiff is indeed a co-owner of the property sought to be partitioned and, second assuming that the plaintiff successfully hurdles the first the issue of how the property is to be divided between plaintiff and defendant(s). Otherwise stated, the court must initially settle the issue of ownership for the simple reason that it cannot properly issue an order to divide the property without first making a determination as to the existence of co-ownership. Until and unless the issue of ownership is definitely resolved, it would be premature to effect a partition of the properties. This is precisely what the trial court did when it discounted the merit in appellants claim of co-ownership. 26 Hence, this petition premised on the following arguments: I. Ownership cannot be passed upon in a partition case. II. The partition agreement duly signed by respondent contains an admission against respondents interest as to the existence of co-ownership between the parties. III. An action for partition cannot be defeated by the mere expedience of repudiating co-ownership based on self-serving claims of exclusive ownership of the properties in dispute. IV. A Torrens title is the best evidence of ownership which cannot be outweighed by respondents self-serving assertion to the contrary. V. The properties involved were acquired by both parties through their actual joint contribution of money, property, or industry. 27 Noticeably, the last argument is essentially a question of fact, which we feel has been squarely threshed out in the decisions of both the trial and appellate courts. We deem it wise not to disturb the findings of the lower courts on the said matter absent any showing that the instant case falls under the exceptions to the general rule that questions of fact are beyond the ambit of the Courts jurisdiction in petitions under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The issues may be summarized into only three: I. Whether an action for partition precludes a settlement on the issue of ownership; II. Whether the Torrens title over the disputed properties was collaterally attacked in the action for partition; and III. Whether respondent is estopped from repudiating co-ownership over the subject realties. We find the petition bereft of merit.

Our disquisition in Municipality of Bian v. Garcia 28 is definitive. There, we explained that the determination as to the existence of co-ownership is necessary in the resolution of an action for partition. Thus: The first phase of a partition and/or accounting suit is taken up with the determination of whether or not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally proscribed) and may be made by voluntary agreement of all the parties interested in the property. This phase may end with a declaration that plaintiff is not entitled to have a partition either because a co-ownership does not exist, or partition is legally prohibited. It may end, on the other hand, with an adjudgment that a coownership does in truth exist, partition is proper in the premises and an accounting of rents and profits received by the defendant from the real estate in question is in order. x xx The second phase commences when it appears that "the parties are unable to agree upon the partition" directed by the court. In that event[,] partition shall be done for the parties by the [c]ourt with the assistance of not more than three (3) commissioners. This second stage may well also deal with the rendition of the accounting itself and its approval by the [c]ourt after the parties have been accorded opportunity to be heard thereon, and an award for the recovery by the party or parties thereto entitled of their just share in the rents and profits of the real estate in question. x x x 29 (Emphasis supplied.) While it is true that the complaint involved here is one for partition, the same is premised on the existence or non-existence of co-ownership between the parties. Petitioner insists she is a co-owner pro indiviso of the five real estate properties based on the transfer certificates of title (TCTs) covering the subject properties. Respondent maintains otherwise. Indubitably, therefore, until and unless this issue of co-ownership is definitely and finally resolved, it would be premature to effect a partition of the disputed properties.30 More importantly, the complaint will not even lie if the claimant, or petitioner in this case, does not even have any rightful interest over the subject properties.31 Would a resolution on the issue of ownership subject the Torrens title issued over the disputed realties to a collateral attack? Most definitely, it would not. There is no dispute that a Torrens certificate of title cannot be collaterally attacked, 32 but that rule is not material to the case at bar. What cannot be collaterally attacked is the certificate of title and not the title itself.33 The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the title referred to by law means ownership which is, more often than not, represented by that document.34 Petitioner apparently confuses title with the certificate of title. Title as a concept of ownership should not be confused with the certificate of title as evidence of such ownership although both are interchangeably used. 35 Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title, the latter only serving as the best proof of ownership over a piece of land. The certificate cannot always be considered as conclusive evidence of ownership.36 In fact, mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate, or that the registrant may only be a trustee, or that other parties may have acquired interest over the property subsequent to the issuance of the certificate of title.37 Needless to say, registration does not vest ownership over a property, but may be the best evidence thereof.1avvphi1 Finally, as to whether respondents assent to the initial partition agreement serves as an admission against interest, in that the respondent is deemed to have admitted the existence of co-ownership between him and petitioner, we rule in the negative.

An admission is any statement of fact made by a party against his interest or unfavorable to the conclusion for which he contends or is inconsistent with the facts alleged by him.38 Admission against interest is governed by Section 26 of Rule 130 of the Rules of Court, which provides: Sec. 26. Admissions of a party. The act, declaration or omission of a party as to a relevant fact may be given in evidence against him. To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitters interests, otherwise it would be self-serving and inadmissible. 39 A careful perusal of the contents of the so-called Partition Agreement indicates that the document involves matters which necessitate prior settlement of questions of law, basic of which is a determination as to whether the parties have the right to freely divide among themselves the subject properties. Moreover, to follow petitioners argument would be to allow respondent not only to admit against his own interest but that of his legal spouse as well, who may also be lawfully entitled co-ownership over the said properties. Respondent is not allowed by law to waive whatever share his lawful spouse may have on the disputed properties. Basic is the rule that rights may be waived, unless the waiver is contrary to law, public order, public policy, morals, good customs or prejudicial to a third person with a right recognized by law. 40 Curiously, petitioner herself admitted that she did not assent to the Partition Agreement after seeing the need to amend the same to include other matters. Petitioner does not have any right to insist on the contents of an agreement she intentionally refused to sign. As to the award of damages to respondent, we do not subscribe to the trial courts view that respondent is entitled to attorneys fees. Unlike the trial court, we do not commiserate with respondents predicament. The trial court ruled that respondent was forced to litigate and engaged the services of his counsel to defend his interest as to entitle him an award of P100,000.00 as attorneys fees. But we note that in the first place, it was respondent himself who impressed upon petitioner that she has a right over the involved properties. Secondly, respondents act of representing himself and petitioner as husband and wife was a deliberate attempt to skirt the law and escape his legal obligation to his lawful wife. Respondent, therefore, has no one but himself to blame the consequences of his deceitful act which resulted in the filing of the complaint against him. WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the Court of Appeals in CA-G.R. CV No. 67596 is AFFIRMED with MODIFICATION. Respondent Bayani S. Samoy, Jr. is hereby declared the sole owner of the disputed properties, without prejudice to any claim his legal wife may have filed or may file against him. The award of P100,000.00 as attorneys fees in respondents favor is DELETED. No costs. SO ORDERED. MARTIN S. VILLARAMA, JR. Associate Justice WE CONCUR: CONCHITA CARPIO MORALES Associate Justice Chairperson ARTURO D. BRION Associate Justice LUCAS P. BERSAMIN Associate Justice

MARIA LOURDES P. A. SERENO 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 Courts Division.

CONCHITA CARPIO MORALES Associate Justice Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairpersons 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 Courts Division.

RENATO C. CORONA Chief Justice

COOWNERSHIP
CASE No.07

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-29320 September 19, 1988 FELIPE SEGURA, ANTONIA SEGURA, NICANORA SEGURA, BERNANDINA SEGURA, ALIPIO SEGURA and MONSERRAT SEGURA, plaintiffs-appellants, vs. NICOLAS SEGURA, SANTIAGO SEGURA, GAUDENCIO SEGURA, EMILIANO AMOJIDO, MILDRED ELISON VDA. DE JAVELOSA, ERNESTO AMOJIDO, EPIFANIA DE AMOJIDO, IGMEDIO AMOJIDO, and THE RURAL BANK OF SANTA BARBARA, defendants-appellees. Robert B. Maroma for plaintiffs-appellants. Estefano Caspe for defendants-appellees.

CRUZ, J.: This is another distasteful case where kin is pitted against kin in a bitter dispute over property inherited from a common ancestor who probably would have been distressed to see her progeny quarreling over it as if they were hostile strangers. The land in question consists of 4,060 square meters and was originally registered under Original Certificate of Title No. 1994 in the Registry of Deeds of Iloilo in the name of Gertrudes Zamora. 1 She died intestate and without debts in 1936 and was survived by four children, who never got around to dividing the property among themselves. This controversy is not among the four brothers, who are now also deceased. It is Gertrudes's grandchildren by three of her sons (the fourth having died without issue) who are involved in this complaint for recovery of ownership and possession of the disputed inheritance, plus damages. The conflict began when on April 6, 1941, three of these nine grandchildren, namely, Nicolas, Santiago and Gaudencio Segura, executed a deed of extrajudicial partition arrogating the entire property to themselves alone as equal pro indiviso owners 2 (thereby, curiously, excluding Nicolas and Santiago's own brother and

two sisters, and Gaudencio's own sister, besides the other two co-heirs.) This partition was not registered immediately, but only in 1946, or five years later. Before and after such registration, the following developments transpired: 1. The land was sold for P50.00 to Emiliano Amojido, with right to repurchase on or before February 15, 1942. This right was not exercised. 3 2. On November 28, 1946, Amojido executed an affidavit of consolidation of ownership and obtained TCT No. 28336, with a reservation of the rights of the other heirs annotated therein. 4 3. On March 31, 1953, Amojido sold the land for P1,500.00 to Mirope Mascareias vda. de Elison, who obtained TCT No. T-19396 in her name, which did not retain the annotation. 5 4. On May 28, 1956, the plaintiffs filed Civil Case No. 3941, for recovery of possession and ownership of the subject land from Nicolas, Santiago and Gaudencio Segura. 6 5. On February 14, 1957, Elison sold the land for P1,000.00 to Mildred Elison vda. de Javelosa, who obtained TCT No. 22074 in her name. 7 6. On January l5, 1958, Mildred sold the land for P1,500.00 to Ernesto and Igmedio Amojido, who obtained TCT No 24342 in their names. 8 7. On January 16,1958, Civil Case No. 3941 was dismissed on motion of the plaintiffs' counsel. 8. On July 23, 1961, the land was mortgaged to the Rural Bank of Sta. Barbara, which is one of the appellees herein. The complaint in the case at bar was filed on January 11, 1968, and docketed as Civil Case No. 7477 in the Court of First Instance of Iloilo. In it, the six excluded grandchildren alleged that the partition and all subse quent transfers of the subject land were null and void insofar as these transactions deprived them of their shares as coowners of the said property. The defendants moved to dismiss, contending that the action was barred by prior judgment and that in any event whatever rights might have pertained to the plaintiffs had already prescribed under the Rules of Court and the Civil Code. The plaintiffs opposed the motion. Thereafter, issues having been joined, the trial courts 9 issued its order of March 28, 1968, dismissing the complaint on the ground of prescription. The motion for reconsideration was denied in an order dated May 28, 1968, on the further ground, as if it were an afterthought, of res judicata. The plaintiffs then appealed to this Court and now ask that the said orders be reversed and the complaint reinstated. We hold at the outset that the present action is not barred by prior judgment as the dismissal of the earlier complaint was without prejudice to its refiling at a future date. It appears that when Civil Case No. 3941 was called for hearing, the plaintiffs' counsel himself moved for its dismissal on the ground that his clients had gone to Mindanao and he did not know when they would be returning. 10 There is here no showing of failure to prosecute, such as an unreasonable delay on the part of the complainants, and the appellees have not so contended. It was clear that the plaintiffs' counsel had the intention of reviving the case, and that must have been the impression too of the trial judge because his order of dismissal did not state that it was with prejudice to the refiling of the case. 11The applicable rule is Rule 17, Section 2, of the Rules of Court reading thus: Dismissal by order of the court. -Except as provided in the preceding section, an action shall not be dismissed at the plaintiffs instance save upon order of the court and upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiffs motion to dismiss, the action shall not

be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court. Unless otherwise specified in the order, a dismissal under this paragraph shall be without prejudice. It follows that even, if, as noted by the trial court in its Order of May 28, 1968, "the same case Civil Case No. 3941 of this Court. Exh. 'A' with the same subject matter, with the same plaintiffs, almost with the same defendants, and the same theory, was dismissed by this Court on January 16,1958," the present action is not barred by res judicata. The second ground is not as simple. The claim of prescription is based first on the contention that under the Rules of Court the deed of extrajudicial partition should have been impugned within two years from the date of its execution in 1941. As the challenge in the instant case was made only in 1956, when Civil Case No. 3941 was filed, that first case, and more so the case at bar which was commenced in 1968, should be and were properly dismissed for tardiness under Rule 74, Section 4, of the Rules of Court. This section provides in gist that a person who has been deprived of his lawful participation in the estate of the decedent, whether as heir or as creditor, must assert his claim within two years after the extrajudicial or summary settlement of such estate under Sections 1 and 2 respectively of the same Rule 74. Thereafter, he will be precluded from doing so as the right will have prescribed. It is clear that Section 1 of Rule 74 does not apply to the partition in question which was null and void as far as the plaintiffs were concerned. The rule covers only valid partitions. The partition in the present case was invalid because it excluded six of the nine heirs who were entitled to equal shares in the partitioned property. Under the rule, "no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof." As the partition was a total nullity and did not affect the excluded heirs, it was not correct for the trial court to hold that their right to challenge the partition had prescribed after two years from its execution in 1941. The appellees invoke a second basis for their claim of prescription and argue that even under the Civil Code the complaint should also be deemed prescribed pursuant to the following provisions: Art. 1134. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years (1957a). Art. 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment. It is recalled that following the execution of the deed of partition, the owners named therein sold the entire land to Emiliano Amojido who, after the vendors had failed to exercise their right of repurchase, executed an affidavit of consolidation in his favor on November 28, 1946. He subsequently obtained a transfer certificate of title in his name, but this contained the following annotation: This land is subject to any claim that may be presented by any heir or any other person deprived of his lawful participation in the estate of Gertrudes Zamora, within two years from date of the Extra-judicial Settlement and distribution of the estate. 12

As a person can sell only what he owns or is authorized to sell, the buyer can as a consequence acquire no more than what the seller can legally transfer. The deed of partition being invalid as to the other heirs, the vendors could dispose only of their respective shares in the land, or one-third only of the property and not the other twothirds as well which did not belong to them. Article 493 of the Civil Code reads as follows: Each co-owner shall have the full ownership of his part and 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 coownership. Applying this provision, we have held in previous cases: When a real property belongs pro indiviso to three persons, who acquired it by inheritance from a common ancestor, the action for recovery by the legal representative of one of the heirs can only concern one-third of the property; and if the other co-owners have, by sale to third person, disposed of one-third of the said pro indivisoproperty, the plaintiff who sues for recovery is not entitled to ask for the annulment of the sale, inasmuch as the latter merely exercised their rights; such alienation does not affect the rights of the heir who claims only one-third, which belongs to the other two co-owners whose rights must be respected by the plaintiff. 13 Every co-heir has the absolute ownership of his share in the community property and may alienate, assign or mortgage the same, except as to purely personal rights, but the effect of any such transfer is limited to the portion which may be awarded to him upon the partition of the property. 14 None of the other co-heirs who did not participate in the sale can demand the nullification of the same, inasmuch as every co-owner may alienate, transfer, or mortgage his share in the common thing, and even substitute another person in the enjoyment thereof, unless personal rights are in question; although the effect of the alienation or mortgage, in relation to the co-owners shall be limited to the portion that may be adjudicated to him when the community ceased. 15 To repeat, the general rule is that no one can give what he does not have nemo dat quod non habet. Hence, even if it be assumed that Amojido had bought the land in good faith from the parties to the extrajudicial partition, only so much of their share could be validly acquired by him, with the rest of the property remaining under the ownership of the six excluded co-heirs In other words, Amojido became pro indiviso coowner of the land with the other six heirs, who retained title to their respective shares although he had possession of the entire property. The portion pertaining to the herein appellants should be deemed held by Amojido under an implied trust for their benefit, conformably to the ruling in Bargayo v. Camumot, 16 thus: In law it is understood that the co-owners or co-heir who is in possession of an inheritance pro indivisofor himself and in representation of his coowners or co-heirs, if, as such owner, he administers or takes care of the rest thereof with the obligation of delivering it to his co-owners or co-heirs, is under the same situation as a depository, a lessee, or a trustee. There is no question that an action for reconveyance of property held in implied trust is imprescriptible. 17However, this is true only as long as the trustee continues to acknowledge the title of the cestui que trust, or, otherwise stated, provided he does not repudiate such title." 18 The moment he does so, the prescriptive period will begin to run

and may eventually operate to divest the real owners of their right to the property after the lapse of the applicable statutory period. Under the provision above-quoted, that period is fixed at ten years, whether the claim be based upon an obligation created by law under Article 1144 or covered by Article 1134 on rights over immovable property. When did such prescriptive period start in the case at bar? It is noted that when Amojido secured the registration of the land in his name following the deed of sale executed in his favor by the parties to the extrajudicial partition, his certificate of title carried an express reservation of whatever rights might pertain to the other heirs. This annotation constituted an acknowledgement of the possibility that a portion of the land might not belong to him and the commitment that he would be holding such part as impliedly conveyed to him in trust by and for its true owners. However, when Amojido himself sold the land to Mirope Mascareas vda. de Elison on March 13, 1953, the transfer certificate of title issued in her name no longer carried the said encumbrance. By the deletion of this annotation, Mirope, as the new transferee, repudiated as of the date of registration the claim of the other heirs to their shares in the property. From then on her assertion of ownership over the whole land became adverse even as against the appellants herein. And as the certificate of title was notice to the whole world of her exclusive title to the land, such rejection was binding on the said heirs and started as against them the period of prescription. The record does not show when TCT No. T-19396 in the name of Mirope Mascareas vda. de Elison was issued, but it can be conjectured that this was done before February 14, 1957, when she sold the land to Mildred Elison vda. de Javelosa. On the assumption that the land was registered in the name of Mirope in 1953 following her purchase without acknowledgement of the co-heirs' rights, the 10-year prescriptive period would have started from that year. Suspended on May 28, 1956, when the first complaint was filed, it began running again on February 16, 1958, 30 days after it was dismissed, and was completed after seven more years in 1965, two years before the second complaint was filed in 1968. Hence, that complaint was barred by prescription, as correctly held by the trial court, although the different starting point it used, erroneously, was 1941, date of the extrajudicial partition. The unavoidable consequence of all this is that whatever claims the co-heirs could have validly asserted before can no longer be invoked by them at this time. They have let the time inexorably pass while they were slumbering on their rights, and now it is too late. WHEREFORE, the appeal is DISMISSED, with costs against the appellants. It is so ordered. Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

CO-OWNERSHIP CASE N0.06


This is another distasteful case where kin is pitted against kin in a bitter dispute over property inherited from a common ancestor who probably would have been distressed to see her progeny quarreling over it as if they were hostile strangers. Article 493 Each co-owner shall have the full ownership of his part and 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. Article 1134. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years (1957a). Article 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 75886 August 30, 1988 CONCEPCION ROQUE, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT, ERNESTO ROQUE, FILOMENA OSMUNDO, CECILIA ROQUE, MARCELA ROQUE, JOSE ROQUE and RUBEN ROQUE, respondents. Lorenzo J. Liwag for petitioner. Dominador Ad Castillo for private respondents.

FELICIANO, J.: The subject of the present Petition for Review is the 31 July 1986 Decision of the former Intermediate Appellate Court in AC-G.R. CV No. 02248 (entitled, "Concepcion Roque, plaintiff-appellee, vs. Ernesto Roque, Filomena Osmunda Cecilia Roque, Marcela Roque, Jose Roque and Ruben Roque, defendants-appellants") which reversed and set aside on appeal the decision of the Regional Trial Court of Malolos, Branch 9. The controversy here involves a 312 square meter parcel of land situated in San Juan, Malolos, Bulacan and designated as Lot No. 1549 of the Cadastral Survey of Malolos. The property was registered originally in the name of Januario Avendao, a bachelor who died intestate and without issue on 22 October 1945. On 21 September 1959, the intestate heirs of Januario Avendafio executed a document entitled "Paghahati at Pagtagabuyan ng Mana sa Labas ng Hukuman." 1 Through this instrument, extrajudicial partition of Lot No. 1549 was effected among the intestate heirs as follows: a. One-fourth (1/4) undivided portion to Illuminada Avendao.

b. One-fourth (1/4) undivided portion to Gregorio Avendafio and Miguel Avendao. c. One-fourth (1/4) undivided portion to Bernardino, Bienvenido, Numeriano and Rufina, all surnamed Avendao. d. One-fourth (1/4) undivided portion to respondent Emesto Roque and Victor Roque. 2 On 28 September 1959, co-owners Illuminada, Gregorio, Miguel, Bernardino, Bienvenido, Numeriano and Rufina, all surnamed Avendao, in consideration of the aggregate amount of P500.00, transferred their collective and undivided threefourths (3/4) share in Lot No. 1549 to respondent Ernesto Roque and Victor Roque, thereby vesting in the latter full and complete ownership of the property. The transactions were embodied in two (2) separate deeds of sale both entitled "Kasulatan ng Bilihang Patuluyan" 3 and both duly notarized. Subsequently, in an unnotarized "Bilihan Lubos at Patuluyan" 4 dated 27 November 1961, Emesto and Victor Roque purportedly sold a three-fourths (3/4) undivided portion of Lot No. 1549 to their half-sister, petitioner Concepcion Roque, for the same amount. The property, however, remained registered in the name of the decedent, Januario Avendao. Upon the instance of petitioner Concepcion Roque and allegedly of respondent Ernesto Roque, Lot No. 1549 was surveyed on 20 September 1975. Consequent thereto, a Subdivision Plan 5 was drawn up by the Geodetic Engineer Identifying and delineating a one-fourth (1/4) portion (78 square meters) of the property as belonging to respondent Ernesto Roque and Victor Roque (who had died on 14 April 1962), upon the one hand, and a three-fourths (3/4) portion (234 square meters) of the same property as belonging to petitioner Concepion Roque, upon the other hand. Petitioner claimed that preparation of the Subdivision Plan, which was approved on 3 November 1975 by the Land Registration Commission was a preliminary step leading eventually to partition of Lot No. 1549, partition allegedly having been previously agreed upon inter se by the coowners. Respondents Ernesto Roque and the legal heirs of Victor Roque, however, refused to acknowledge petitioner's claim of ownership of any portion of Lot No. 1549 and rejected the plan to divide the land. Attempts at amicable settlement having fallen through, petitioner Concepcion Roque, on 6 December 1977, filed a Complaint for "Partition with Specific Performance" 6 (docketed as Civil Case No. 5236-M) with Branch 2 of the then Court of First Instance of Malolos against respondents Emesto Roque and the heirs of Victor Roque. In her complaint, petitioner (plaintiff below) claimed legal ownership of an undivided threefourths (3/4) portion of Lot No. 1549, by virtue of the 27 November 1961 "Bilihan Lubos at Patuluyan" executed in her favor by Emesto Roque and Victor Roque. In support of this claim, petitioner also presented an undated and unnotarized "Kasulatang Pagkilala sa Bilihan Patuluyan ng Bahagui at Pagmamana sa Labas ng Hukuman at Paghahati-hati at Abuyan ng Bahagui" 7 said to have been signed by the respondents in acknowledgment of the existence and validity of the Bilihan in favor of petitioner. Finally, petitioner alleged that, as a coowner of Lot No. 1549, she had a right to seek partition of the property, that she could not be compelled to remain in the coownership of the same. In an Answer with Compulsory Counterclaim 8 filed on 28 December 1977, respondents (defendants below) impugned the genuineness and due execution of the "Bilihan Lubos at Patuluyan" dated 27 November 1961 on the ground "that the signatures appearing thereon are not the authentic signatures of the supposed signatories ...." It was also alleged that petitioner Concepcion Roque, far from being a co-owner of Lot No. 1549, "occupied a portion of the lot in question by mere tolerance of the [defendants]." Respondents also refused to honor the unnotarized Kasulatan and, additionally, denied having had any participation in the preparation of the Subchvision Plan. On 27 June 1983, the trial court (now Branch 9, Regional Trial Court of Malolos) rendered a Decision, 9 the dispositive portion of which read:

WHEREFORE, judgment is hereby rendered, in favor of the plaintiff and against the defendants; 1. Ordering the heirs of the late Victor Roque namely Filomena Osmunda his spouse, his children, Cecilia Roque, Marcela Roque, Jose Roque and Ruben Roque and their uncle and co-defendant Emesto Roque, to execute a deed of confirmation of the sale made by Emesto and Victor Roque in favor of plaintiff Concepcion Roque, entitled "Bilihan Lubos at Patuluyan," executed on November 27, 1961, Exh. E, over the 3/4 portion of the subject property; 2. Ordering the partition of the parcel of land described in par. 3 of tie complaint covered by Original Certificate of Title No. 1442 Bulacan issued in the name of Januario Avendafio, in the proportion of 3/4 to pertain to Concepcion Roque, and 1/4 to pertain to Emesto Roque and his codefendants, his sister-in-law, nephews and nieces, in accordance with the approved subdivision plan (LRC Psd-230726). 3. Ordering defendants,jointly and severally, to pay to plaintiff the sum of P2,000.00 as and for attomey's fees and the costs of suit. SO ORDERED. The respondents appealed from this decision alleging the following errors: I The lower court erred when it decided and ordered defendantsappellants to execute a confirmation of the "Bilihan Lubos at Patuluyan," Exh. "E." II The lower court erred when it decided and ordered the defendantsappellant,s to deliver unto the plaintiff [a] 3/4 share of the land in question. III The lower court erred in deciding this case in favor of the plaintiff-appellee, based on an unnotarized and forged signature of defendantappellant Ernesto Roque. IV The lower court erred in giving credence to the testimony of the plaintiffappellee Concepcion Roque despite [its] gross inconsistencies. 10 Acting on the appeal (docketed as A.C.-G.R. CV No. 02248), the Intermediate Appellate Court, in a Decision 11dated 31 July 1986, reversed the judgment of the trial court and dismissed both the petitioner's complaint and the respondents' appeal. A Motion for Reconsideration of petitioner Concepcion Roque was denied. The present Petition for Review was filed with this Court on 18 September 1986. In a resolution dated 27 July 1987, we gave due course to the Petition and required the parties to submit their respective Memoranda. 1. On the matter of dismissal of petitioner's complaint, the Intermediate Appellate Court stated in its decision: While the action filed by the plaintiff is for partition, the defendantz, after denying plaintiff's assertion of co-ownership, asserted that they are the

exclusive and sole owners of the 314 portion of the parcel of land claimed by the plaintiff. Upon the issue thusjoined by the pleadings, it is obvious that the case has become one ofownership of the disputed portion of the subject lot. It is well settled that an action for partition will not prosper as such from the moment an alleged co-owner asserts an adverse title. The action that may be brought by an aggrieved co-owner is accion reivindicatoria or action for recovery of title and possession (Jardin vs. Hallasgo, 11 7 SCRA 532, 536, 537; Paner vs. Gaspar, 3 CA Rep. 155, 158). (Emphasis supplied) Viewed in the light of the facts of the present case, the Intermediate Appellate Court's decision appears to imply that from the moment respondents (defendants below) alleged absolute and exclusive ownership of the whole of Lot No. 1549 in their Answer, the trial court should have immediately ordered the dismissal of the action for partition and petitioner (plaintiff below), if she so desired, should have refiled the case but this time as an accionreinvindicatoria. Taking this analysis a step further should the reivindicatory action prosper i.e., a co-ownership relation is found to have existed between the parties a second action for partition would still have to be instituted in order to effect division of the property among the co-owners. We do not agree with the above view. An action for partition-which is typically brought by a person claiming to be co-owner of a specified property against a defendant or defendants whom the plaintiff recognizes to be co-owners may be seen to present simultaneously two principal issues. First, there is the issue of whether the plaintiff is indeed a co-owner of the property sought to be partitioned. Second, assuming that the plaintiff successfully hurdles the first issue, there is the secondary issue of how the property is to be divided between plaintiff and defendant(s) i.e., what portion should go to which co-owner. Should the trial court find that the defendants do not dispute the status of the plaintiff as co-owner, the court can forthwith proceed to the actual partitioning of the property involved. In case the defendants assert in their Answer exclusive title in themselves adversely to the plaintiff, the court should not dismiss the plaintiffs action for partition but, on the contrary and in the exercise of its general jurisdiction, resolve the question of whether the plaintiff is co-owner or not. Should the trial court find that the plaintiff was unable to sustain his claimed status as co-owner, or that the defendants are or have become the sole and exclusive owners of the property involved, the court will necessarily have to dismiss the action for partition. This result would be reached, not because the wrong action was commenced by the plaintiff, but rather because the plaintiff having been unable to show co-ownership rights in himself, no basis exists for requiring the defendants to submit to partition the property at stake. If, upon the other hand, the court after trial should find the eidstence of co-ownership among the parties litigant, the court may and should order the partition of the property in the same action. Judgment for one or the other party being on the merits, the losing party (respondents in this case) may then appeal the same. In either case, however, it is quite unnecessary to require the plaintiff to file another action, separate and independent from that for partition originally instituted. Functionally, an action for partition may be seen to be at once an action for declaration of coownership and for segregation and conveyance of a determinate portion of the property involved. This is the import of our jurisprudence on the matter. 12 and is sustained by the public policy which abhors multiplicity of actions. The question of prescription also needs to be addressed in this connection. It is sometimes said that "the action for partition of the thing owned in common ( actio communi dividendo or actio familiae erciscundae) does not prescribe." 13 This statement bears some refinement. In the words of Article 494 of the Civil Code, "each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concemed." No matter how long the co-ownership has lasted, a co-owner can always opt out of the co-ownership, and provided the defendant co-owners or co-heirs have theretofore expressly or impliedly recognized the co-ownership, they cannot set up

as a defense the prescription of the action for partition. But if the defendants show that they had previously asserted title in themselves adversely to the plaintiff and for the requisite period of time, the plaintiffs right to require recognition of his status as a coowner will have been lost by prescription and the court cannot issue an order requiring partition. This is precisely what happened in Jardin v. Hallasgo, 117 SCRA 532 (1982), which the respondent appellate court cited to support its position quoted above. The case of Jardin involved, among others, two (2) parcels of land which were inherited in 1920 by the brothers Catalino jardin and Galo Jardin together with their half-brother, Sixto Hallasgo. The three (3) held these lands in co-ownership until Sixto later (the date was not specified) repudiated the coownership and occupied and possessed both parcels of land, claiming the same exclusively as his own. Sometime in 1973, the heirs of Catalino and Galo instituted an action for partition of the two (2) properties against Sixto's heirs, who had refused to surrender any portion of the same to the former. The trial court, assuming that prescription had started to run in that case even before the Civil Code took effect, held that the action for partition filed by the heirs of Catalino and Galo had already prescribed. On appeal, this Court affirmed the trial court on this point in the following terms: Article 494 of the Civil Code provides that "no co-owner shall be obliged to remain in the co- ownership" and that "each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concerned." It also provides that 'no prescription shall run in favor of a coowner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership. While the action for the partition of the thing owned in common ( actio communi dividendo or actio familiae erciscundae) does not prescribe, the co-ownership does not last forever since it may be repudiated by a coowner [i.e., Sixto]. In such a case, the action for partition does not lie. What may be brought by the aggrieved co-owner [i.e., the heirs of Catalino and Galo] is an accion reivindicatoria or action for recovery of title and possession. That action may be barred by prescription. If the co-heir or co-owner having possession of the hereditary or community property, holds the same in his own name, that is, under claim of exclusive ownership, he may acquire the property by prescription if his possession meets all the other requirements of the law, and after the expiration of the prescriptive period, his co-heir or co-owner may lose their right to demand partition, and their action may then be held to have prescribed (De los Santos vs. Santa Teresa, 44 Phil. 811). xxx xxx xxx (Emphasis supplied) In the light of the foregoing discussion, it will be seen that the underscored portion of the Court's opinion in Jardinis actually obiter. For there, the Court simply held the action for partition by the heirs of Catalino and Galo had prescribed and did not require such heirs to start a new action (which would have been quite pointless); on the other hand, the Court remanded the case to the lower court for further proceedings in respect of the recovery of a 350 square meter lot which the evidence showed was owned by the plaintiffs but wrongfully included by Sixto in the cadastral survey of his share of the adjoining lot. In Jardin, the claim of co-ownership asserted by the heirs of Catalino and Galo was effectively refuted by the heirs of Sixto, who not only claimed for themselves absolute and exclusive ownership of the disputed properties but were also in actual and adverse possesion thereof for a substantial length of time. The Court found, further, that the action for partition initially available to the heirs of Catalino and Galo had, as a result of the preceding circumstance, already prescribed.

An entirely different situation, however, obtains in the case at bar. First of all, petitioner Concepcion Roque-the co-owner seeking partition has been and is presently in open and continuous possession of a three-fourths (3/4) portion of the property owned in common. The Court notes in this respect the finding of the trial court that petitioner, following execution of the "Bilihan Lubos at Pattlluyan" on 27 November 1961, had been in "continuous occupancy of the 3/4 portion of the lot ... up to the present, and whereon plaintifrs house and that of her son are erected. " 14 Respondents do not dispute this finding of fact, although they would claim that petitioner's possession is merely tolerated by them. Second, prior to filing in 1977 of the Complaint in Civil Case No. 5236M,neither of the parties involved had asserted or manifested a claim of absolute and exclusive ownership over the whole of Lot No. 1549 adverse to that of any of the other co-owners: in other words, co-ownership of the property had continued to be recognized by all the owners. Consequently, the action for partition could not have and, as a matter of fact, had not yet prescribed at the time of institution by Concepcion of the action below. 2. Coming now to the matter regarding dismissal of the respondents'appeal, the Intermediate Appellate Court held that inasmuch as the attack on the validity of the "Bilihan Lubos at Patuluyan" was predicated on fraud and no action for annulment of the document had been brought by respondents within the four (4) year prescriptive period provided under Article 1391 of the Civil Code, such action had already prescribed. We find it unnecessary to deal here with the issue of prescription discussed by the respondent court in its assailed decision. The facts on record clearly show that petitioner Concepcion Roque had been in actual, open and continuous possession of a three-fourths (3/4) portion of Lot No. 1549 ever since execution of the "Bilihan Lubos at Patuluyan" in November of 1961. The Court notes that it was only in their Answer with Compulsory Counterclaim filed with the trial court in December of 1977 more than sixteen (16) years later that respondents first questioned the genuineness and authenticity of the "Bilihan Lubos at Patuluyan." Not once during those sixteen (16) years did respondents contest petitioner's occupation of a three-fourths (3/4) portion of Lot No. 1549. Furthermore, if indeed it is true that respondents, as they claim, are the absolute owners of the whole of Lot No. 1549, it is most unusual that respondents would have allowed or tolerated such prolonged occupation by petitioner of a major portion (3/4) of the land while they, upon the other hand, contented themselves with occupation of only a fourth thereof. This latter circumstance, coupled with the passage of a very substantial length of time during which petitioner all the while remained undisturbed and uninterrupted in her occupation and possession, places respondents here in laches: respondents may no longer dispute the existence of the co-ownership between petitioner and themselves nor the validity of petitioner's claim of a threefourths (3/4) interest in Lot No. 1549, as they are deemed, by their unreasonably long inaction, to have acquiesced in the coow,aership. 15 In this respect, we affirm the decision of the respondent appellate court presently under review. WHEREFORE, the Decision of the Intermediate Appellate Court dated 31 July 1986 in A.C.-G.R. CV No. 02248 is SET ASIDE with respect to that portion which orders the dismissal of the Complaint in Civil Case No. 5236-M, but is AFFIRMED with respect to that portion which orders the dismissal of the respondents'appeal in A.C.-G.R. CV No. 02248. The Decision of Branch 9 of the Regional Trial Court of Malolos dated 27 June 1983 in Civil Case No. 5236-M is hereby REINSTATED. No pronouncement as to costs. SO ORDERED. Fernan, C.J., Gutierrez, Jr. and Cortes, JJ., concur. Bidin, J., took no part.

CO-OWNERSHIP CASE No. 07


An entirely different situation, however, obtains in the case at bar. First of all, petitioner Concepcion Roque-the co-owner seeking partition has been and is presently in open and continuous possession of a three-fourths (3/4) portion of the property owned in common. The Court notes in this respect the finding of the trial court that petitioner, following execution of the "Bilihan Lubos at Pattlluyan" on 27 November 1961, had been in "continuous occupancy of the 3/4 portion of the lot ... up to the present, and whereon plaintifrs house and that of her son are erected. " 14 Respondents do not dispute this finding of fact, although they would claim that petitioner's possession is merely tolerated by them. Second, prior to filing in 1977 of the Complaint in Civil Case No. 5236M,neither of the parties involved had asserted or manifested a claim of absolute and exclusive ownership over the whole of Lot No. 1549 adverse to that of any of the other co-owners: in other words, co-ownership of the property had continued to be recognized by all the owners. Consequently, the action for partition could not have and, as a matter of fact, had not yet prescribed at the time of institution by Concepcion of the action below. Article 494 of the Civil Code Provides that "no co-owner shall be obliged to remain in the co- ownership" and that "each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concerned." It also provides that 'no prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership.

Republic of the Philippines Supreme Court Manila THIRD DIVISION

G.R. No. 152319

Present:

HEIRS OF THE LATE JOAQUIN LIMENSE, namely: CONCESA LIMENSE, Surviving Spouse; and DANILO and JOSELITO, both surnamed Limense, children, Petitioners,

QUISUMBING,* J., CARPIO, J., Chairperson, CHICO-NAZARIO, PERALTA, and

- versus -

ABAD,** JJ.

RITA VDA. DE RAMOS, RESTITUTO RAMOS, VIRGILIO DIAZ, IRENEO RAMOS, BENJAMIN RAMOS, WALDYTRUDES RAMOS-BASILIO, TRINIDAD RAMOSBRAVO, PAZ RAMOS-PASCUA, FELICISIMA RAMOS-REYES, and JACINTA RAMOS, Respondents.

Promulgated:

October 28, 2009

X-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X

DECISION

PERALTA, J.,

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision [1] of the Court of Appeals dated December 20, 2001 in CA-G.R. CV No. 33589 affirming in toto the Decision[2] of the Regional Trial Court of Manila, Branch 15, dated September 21, 1990 in Civil Case No. 83-16128. The antecedent facts are as follows: Dalmacio Lozada was the registered owner of a parcel of land identified as Lot No. 12, Block No. 1074 of the cadastral survey of the City of Manila covered by Original Certificate of Title (OCT) No. 7036 issued at the City of Manila on June 14, 1927, [3] containing an area of 873.80 square meters, more or less, located in Beata Street, Pandacan, Manila. Dalmacio Lozada subdivided his property into five (5) lots, namely: Lot Nos. 12-A, 12-B, 12-C, 12-D and 12-E. Through a Deed of Donation dated March 9, 1932,[4] he donated the subdivided lots to his daughters, namely: Isabel, Salud, Catalina, and Felicidad, all surnamed Lozada. The Deed of Donation was registered with the office of the Register of Deeds of Manila on March 15, 1932. Under the said Deed of Donation, the lots were adjudicated to Dalmacio's daughters in the following manner:

a. b. c. d. e.

Lot No. 12-A in favor of Isabel Lozada, married to Isaac Limense; Lot No. 12-B in favor of Catalina Lozada, married to Sotero Natividad; Lot No. 12-C in favor of Catalina Lozada, married to Sotero Natividad; Isabel Lozada, married to Isaac Limense; and Salud Lozada, married to Francisco Ramos, in equal parts; Lot No. 12-D in favor of Salud Lozada, married to Francisco Ramos; and Lot No. 12-E in favor of Isabel Lozada, married to Isaac Limense, and Felicidad Lozada, married to Galicano Centeno.

By virtue of the Deed of Donation executed by Dalmacio Lozada, OCT No. 7036, which was registered in his name, was cancelled and, in lieu thereof, Transfer Certificates of Title (TCTs) bearing Nos. 40041, 40042, 40043, 40044, and 40045 were issued in favor of the donees, except TCT No. 40044, which remained in his name. These new TCTs were annotated at the back of OCT No. 7036. [5]

TCT No. 40043, which covered Lot No. 12-C, was issued in the name of its coowners Catalina Lozada, married to Sotero Natividad; Isabel Lozada, married to Isaac Limense; and Salud Lozada, married to Francisco Ramos. It covered an area of 68.60 square meters, more or less, was bounded on the northeast by Lot No. 12-A, on the southwest by Calle Beata, and on the northwest by Lot No. 12-D of the subdivision plan. In 1932, respondents' predecessor-in-interest constructed their residential building on Lot No. 12-D, adjacent to Lot No. 12-C.

On May 16, 1969, TCT No. 96886 [6] was issued in the name of Joaquin Limense covering the very same area of Lot No. 12-C.

On October 1, 1981, Joaquin Limense secured a building permit for the construction of a hollow block fence on the boundary line between his aforesaid property and the adjacent parcel of land located at 2759 Beata Street, Pandacan, Manila, designated as Lot No. 12-D, which was being occupied by respondents. The fence, however, could not be constructed because a substantial portion of respondents' residential building in Lot No. 12-D encroached upon portions of Joaquin Limense's property in Lot No. 12-C. Joaquin Limense demanded the removal of the encroached area; however, respondent ignored both oral and written demands. The parties failed to amicably settle the differences between them despite referral to the barangay. Thus, on March 9, 1983, Joaquin Limense, duly represented by his Attorney-in-Fact, Teofista L. Reyes, instituted a Complaint[7] against respondents before the Regional Trial Court (RTC) of Manila, Branch 15, for removal of obstruction and damages.

Joaquin Limense prayed that the RTC issue an order directing respondents, jointly and severally, to remove the portion which illegally encroached upon his property on Lot No. 12-C and, likewise, prayed for the payment of damages, attorneys fees and costs of suit.

Respondents, on the other hand, averred in their Answer [8] that they were the surviving heirs of Francisco Ramos,[9] who, during his lifetime, was married to Salud Lozada, one of the daughters of Dalmacio Lozada, the original owner of Lot No. 12. After subdividing the said lot, Dalmacio Lozada donated Lot No. 12-C in favor of his daughters Catalina, married to Sotero Natividad; Isabel, married to Isaac Limense; and Salud, married to Francisco Ramos. Being the surviving heirs of Francisco Ramos, respondents later became co-owners of Lot No. 12-C. Lot No. 12-C has served as right of way or common alley of all the heirs of Dalmacio Lozada since 1932 up to the present. As a common alley, it could not be closed or fenced by Joaquin Limense without causing damage and prejudice to respondents.

After trial on the merits, the RTC rendered a Decision [10] dated September 21, 1990 dismissing the complaint of Joaquin Limense. It ruled that an apparent easement of right of way existed in favor of respondents. Pertinent portions of the decision read as follows:

The Court finds that an apparent easement of right of way exists in favor of the defendants under Article 624 of the Civil Code. It cannot be denied that there is an alley which shows its existence. It is admitted that this alley was established by the original owner of Lot 12 and that in dividing his property, the alley established by him continued to be used actively and passively as such. Even when the division of the property occurred, the non-existence of the easement was not expressed in the corresponding titles nor were the apparent sign of the alley made to disappear before the issuance of said titles.

The Court also finds that when plaintiff acquired the lot (12-C) which forms the alley, he knew that said lot could serve no other purpose than as an alley. That is why even after he acquired it in 1969, the lot continued to be used by defendants and occupants of the other adjoining lots as an alley. The existence of the easement of right of way was therefore known to plaintiff who must respect the same in spite of the fact that his transfer certificate of title does not mention the lot of defendants as among those listed therein as entitled to such right of way. It is an established principle that actual notice or knowledge is as binding as registration.[11]

Aggrieved by said decision, Joaquin Limense filed a notice of appeal. The records of the case were transmitted to the Court of Appeals (CA). During the pendency of the appeal with the CA, Joaquin Limense died in 1999. [12]

The CA, Seventh Division, in CA-G.R. CV No. 33589, in its Decision [13] dated December 20, 2001 dismissed the appeal and affirmed in toto the decision of the RTC.

Frustrated by this turn of events, petitioners, as surviving heirs of Joaquin Limense, elevated the case to this Court via a Petition for Review on Certiorari[14] raising the following issues:

1. DID THE HONORABLE COURT OF APPEALS COMMIT A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION, IN HOLDING, LIKE THE TRIAL COURT DID, THAT RESPONDENTS' LOT 12-D HAS AN EASEMENT OF RIGHT OF WAY OVER JOAQUIN LIMENSE'S LOT 12-C?

2. DID THE HONORABLE COURT OF APPEALS COMMIT A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION, IN FAILING TO HOLD, LIKE THE TRIAL COURT DID, THAT THE PROTRUDING PORTIONS OF RESPONDENTS' HOUSE ON LOT 12-D EXTENDING INTO JOAQUIN LIMENSE'S LOT 12-C CONSTITUTE A NUISANCE AND, AS SUCH, SHOULD BE REMOVED?

Petitioners aver that the CA erred in ruling that since Lot No. 12-C was covered by two TCT's, i.e., TCT Nos. 40043 and 96886, and there was no evidence on record to show how Joaquin Limense was able to secure another title over an already titled property, then one of these titles must be of dubious origin. According to the CA, TCT No. 96886, issued in the name of Joaquin Limense, was spurious because the Lozada sisters never disposed of the said property covered by TCT No. 40043. The CA further ruled that a co-ownership existed over Lot No. 12-C between petitioners and respondents. Petitioners countered that TCT No. 96886, being the only and best legitimate proof of ownership over Lot No. 12-C, must prevail over TCT No. 40043.

Respondents allege that it was possible that TCT No. 96886, in the name of Joaquin Limense, was obtained thru fraud, misrepresentation or falsification of documents because the donees of said property could not possibly execute any valid transfer of title to Joaquin Limense, as they were already dead prior to the issuance of TCT No. 96886 in 1969. Respondents further allege that petitioners failed to produce proof substantiating the issuance of TCT No. 96886 in the name of Joaquin Limense. Apparently, respondents are questioning the legality of TCT No. 96886, an issue that this Court cannot pass upon in the present case. It is a rule that the validity of a torrens title cannot be assailed collaterally. [15] Section 48 of Presidential Decree (PD) No. 1529 provides that:

[a] certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.

In the case at bar, the action filed before the RTC against respondents was an action for removal of obstruction and damages. Respondents raised the defense that Joaquin Limense's title could have been obtained through fraud and misrepresentation in the trial proceedings before the RTC. Such defense is in the nature of a collateral attack, which is not allowed by law.

Further, it has been held that a certificate of title, once registered, should not thereafter be impugned, altered, changed, modified, enlarged or diminished, except in a direct proceeding permitted by law. Otherwise, the reliance on registered titles would be lost. The title became indefeasible and incontrovertible after the lapse of one year from the time of its registration and issuance. Section 32 of PD 1529 provides that upon the expiration of said period of one year, the decree of registration and the certificate of title shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or other persons responsible for the fraud.[16] It has, therefore, become an ancient rule that the issue on the validity of title, i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted for that purpose. [17] In the present case, TCT No. 96886 was registered in 1969 and respondents never instituted any direct proceeding or action to assail Joaquin Limense's title.

Additionally, an examination of TCT No. 40043 would readily show that there is an annotation that it has been CANCELLED.[18] A reading of TCT No. 96886 would also reveal that said title is a transfer from TCT No. 48866 [19] and not TCT 40043. Thus, it is possible that there was a series of transfers effected from TCT No. 40043 prior to the issuance of TCT No. 96886. Hence, respondents' position that the issuance of TCT No. 96886 in the name of Joaquin Limense is impossible, because the registered owners of TCT No. 40043 were already dead prior to 1969 and could not have transferred the property to Joaquin Limense, cannot be taken as proof that TCT No. 96886 was obtained through fraud, misrepresentation or falsification of documents.

Findings of fact of the CA, although generally deemed conclusive, may admit review by this Court if the CA failed to notice certain relevant facts that, if properly

considered, would justify a different conclusion, and if the judgment of the CA is premised on a misapprehension of facts. [20] As with the present case, the CA's observation that TCT No. 96886 is of dubious origin, as TCT No. 40043 does not appear to have been disposed of by Catalina, Isabel and Salud Lozada, is improper and constitutes an indirectattack on TCT No. 96886. As we see it, TCT No. 96886, at present, is the best proof of Joaquin Limenses ownership over Lot No. 12-C. Thus, the CA erred in ruling that respondents and petitioners co-owned Lot No. 12-C, as said lot is now registered exclusively in the name of Joaquin Limense.

Due to the foregoing, Joaquin Limense, as the registered owner of Lot 12-C, and his successors-in-interest, may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted thereon.[21]

However, although the owner of the property has the right to enclose or fence his property, he must respect servitudes constituted thereon. The question now is whether respondents are entitled to an easement of right of way.

Petitioners contend that respondents are not entitled to an easement of right of way over Lot No. 12-C, because their Lot No. 12-D is not duly annotated at the back of TCT No. 96886 which would entitle them to enjoy the easement, unlike Lot Nos. 12-A-1, 12-A-2, 12-A-3, 12-A-4, 12-A-5, and 12-A-6. Respondents, on the other hand, allege that they are entitled to an easement of right of way over Lot No. 12-C, which has been continuously used as an alley by the heirs of Dalmacio Lozada, the residents in the area and the public in general from 1932 up to the present. Since petitioners are fully aware of the long existence of the said alley or easement of right of way, they are bound to respect the same.

As defined, an easement is a real right on another's property, corporeal and immovable, whereby the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his property, for the benefit of another person or tenement.[22]

Easements may be continuous or discontinuous, apparent or non-apparent.

Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man. Discontinuous easements are those which are used at intervals and depend upon the acts of man. Apparent easements are those which are made known and are continually kept in view by external signs that reveal the use and enjoyment of the same. Non-apparent easements are those which show no external indication of their existence.[23]

In the present case, the easement of right of way is discontinuous and apparent. It is discontinuous, as the use depends upon the acts of respondents and

other persons passing through the property. Being an alley that shows a permanent path going to and from Beata Street, the same is apparent.

Being a discontinuous and apparent easement, the same can be acquired only by virtue of a title.[24]

In the case at bar, TCT No. 96886, issued in the name of Joaquin Limense, does not contain any annotation that Lot No. 12-D was given an easement of right of way over Lot No. 12-C. However, Joaquin Limense and his successors-in-interests are fully aware that Lot No. 12-C has been continuously used and utilized as an alley by respondents and residents in the area for a long period of time.

Joaquin Limense's Attorney-in-Fact, Teofista L. Reyes, testified that respondents and several other residents in the area have been using the alley to reach Beata Street since 1932. Thus:

Atty. Manuel B. Tomacruz: Q: Mrs. Witness, by virtue of that Deed of Donation you claim that titles were issued to the children of Dalmacio Lozada namely Salud Lozada, Catalina Lozada and Isabel Lozada, is that right? A: Yes, sir.

Q: And after the said property was adjudicated to his said children the latter constructed their houses on their lots. A: Yes, sir.

Q: As a matter of fact, the herein defendants have constructed their houses on the premises alloted to them since the year 1932? A: Yes, sir, they were able to construct their house fronting Beata Street.

Q:

And that house they have constructed on their lot in 1932 is still existing today?

A: Yes, sir and they still used the alley in question and they are supposed to use Beata Street but they are not using Beata Street.

Q: A:

They are using the alley? Yes, sir, they are using the alley and they do not pass through Beata Street.

Q:

And they have been using the alley since 1932 up to the present?

A: Yes, sir they have been using the alley since that time. That was their mistake and they should be using Beata Street because they are fronting Beata Strret.

Q: As a matter of fact, it is not only herein defendants who have been using that alley since 1932 up to the present? A: Yes, sir they are using the alley up to now.

Q: As a matter of fact, in this picture marked as Exh. C-1 the alley is very apparent. This is the alley? A: Yes, sir.

Q: A:

And there are houses on either side of this alley? Yes, sir.

Q: As a matter of fact, all the residents on either side of the alley are passing through this alley? A: Yes, sir, because the others have permit to use this alley and they are now allowed to use the alley but the Ramos's family are now [not] allowed to use this alley. [25]

In Mendoza v. Rosel,[26] this Court held that:

Petitioners claim that inasmuch as their transfer certificates of title do not mention any lien or encumbrance on their lots, they are purchasers in good faith and for value, and as such have a right to demand from respondents some payment for the use of the alley. However, the Court of Appeals found, as a fact, that when respondents acquired the two lots which form the alley, they knew that said lots could serve no other purpose than as an alley. The existence of the easement of right of way was therefore known to petitioners who must respect the same, in spite of the fact that their transfer certificates of title do not mention any burden or easement. It is an established principle that actual notice or knowledge is as binding as registration. Every buyer of a registered land who takes a certificate of title for value and in good faith shall hold the same free of all encumbrances except those noted on said certificate. It has been held, however, that where the party has knowledge of a prior existing interest that was unregistered at the time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him.[27]

In the case at bar, Lot No. 12-C has been used as an alley ever since it was donated by Dalmacio Lozada to his heirs. It is undisputed that prior to and after the

registration of TCT No. 96886, Lot No. 12-C has served as a right of way in favor of respondents and the public in general. We quote from the RTC's decision:

x x x It cannot be denied that there is an alley which shows its existence. It is admitted that this alley was established by the original owner of Lot 12 and that in dividing his property the alley established by him continued to be used actively and passively as such. Even when the division of the property occurred, the non-existence of the easement was not expressed in the corresponding titles nor were the apparent sign of the alley made to disappear before the issuance of said titles.

The Court also finds that when plaintiff acquired the lot (12-C) which forms the alley, he knew that said lot could serve no other purpose than as an alley. That is why even after he acquired it in 1969 the lot continued to be used by defendants and occupants of the other adjoining lots as an alley. x x x[28]

Thus, petitioners are bound by the easement of right of way over Lot No. 12-C, even though no registration of the servitude has been made on TCT No. 96886.

However, respondents right to have access to the property of petitioners does not include the right to continually encroach upon the latters property. It is not disputed that portions of respondents' house on Lot No. 12-D encroach upon Lot No. 12-C. Geodetic Engineer Jose Agres, Jr. testified on the encroachment of respondents' house on Lot No. 12-C, which he surveyed. [29] In order to settle the rights of the parties relative to the encroachment, We should determine whether respondents were builders in good faith.

Good faith is an intangible and abstract quality with no technical meaning or statutory definition; and it encompasses, among other things, an honest belief, the absence of malice and the absence of a design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. [30]

Good faith is always presumed, and upon him who alleges bad faith on the part of the possessor rests the burden of proof. [31] It is a matter of record that respondents' predecessor-in-interest constructed their residential building on Lot No. 12-D, adjacent to Lot No. 12-C, in 1932.[32] Respondents' predecessor-in-interest owned the 1/3 portion of Lot No. 12-C at the time the property was donated to them by Dalmacio Lozada in 1932. The Deed of Donation executed by the late Dalmacio Lozada, dated March 9, 1932, specifically provides that:

I hereby grant, cede and donate in favor of Catalina Lozada married to Sotero Natividad, Isabel Lozada married to Isaac Simense and Salud Lozada married to Francisco Ramos, all Filipinos, of legal age, the parcel of land known as Lot No. 12C, in equal parts.[33]

The portions of Lot No. 12-D, particularly the overhang, covering 1 meter in width and 17 meters in length; the stairs; and the concrete structures are all within the 1/3 share alloted to them by their donor Dalmacio Lozada and, hence, there was absence of a showing that respondents acted in bad faith when they built portions of their house on Lot No. 12-C.

Using the above parameters, we are convinced that respondents' predecessorsin-interest acted in good faith when they built portions of their house on Lot 12C. Respondents being builders in good faith, we shall now discuss the respective rights of the parties relative to the portions encroaching upon respondents' house. Articles 448 and 546 of the New Civil Code provide: Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and, in case of disagreement, the court shall fix the terms thereof. Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. In Spouses Del Campo v. Abesia,[34] this provision was applied to one whose house, despite having been built at the time he was still co-owner, overlapped with the land of another. In that case, this Court ruled: The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in common for then he did not build, plant or sow upon the land that exclusively belongs to another but of which he is a coowner. The co-owner is not a third person under the circumstances, and the situation is governed by the rules of co-ownership. However, when, as in this case, the ownership is terminated by the partition and it appears that the house of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448 of the new Civil Code should apply. x x x [35]

In other words, when the co-ownership is terminated by a partition, and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner, but the encroachment was in good faith, then the provisions of Article 448 should apply to determine the respective rights of the parties. In this case, the co-ownership was terminated due to the transfer of the title of the whole property in favor of Joaquin Limense.

Under the foregoing provision, petitioners have the right to appropriate said portion of the house of respondents upon payment of indemnity to respondents, as provided for in Article 546 of the Civil Code. Otherwise, petitioners may oblige respondents to pay the price of the land occupied by their house. However, if the price asked for is considerably much more than the value of the portion of the house of respondents built thereon, then the latter cannot be obliged to buy the land. Respondents shall then pay the reasonable rent to petitioners upon such terms and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course, respondents may demolish or remove the said portion of their house, at their own expense, if they so decide. [36] The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. [37] Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land.[38] The obvious benefit to the builder under this article is that, instead of being outrightly ejected from the land, he can compel the landowner to make a choice between two options: (1) to appropriate the building by paying the indemnity required by law, or (2) to sell the land to the builder. [39] The raison detre for this provision has been enunciated, thus: Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the option, because his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing.[40] In accordance with Depra v. Dumlao,[41] this case must be remanded to the trial court to determine matters necessary for the proper application of Article 448 in relation to Article 546. Such matters include the option that petitioners would take and the amount of indemnity that they would pay, should they decide to appropriate the improvements on the lots. Anent the second issue, although it may seem that the portions encroaching upon respondents' house can be considered a nuisance, because it hinders petitioners' use of their property, it cannot simply be removed at respondents' expense, as prayed for by petitioner. This is because respondents built the subject encroachment in good faith, and the law affords them certain rights as discussed above.

WHEREFORE, the petition is DENIED, the Decision of the Court of Appeals dated December 20, 2001 in CA-G.R. CV No. 33589 is AFFIRMED with the followingMODIFICATIONS:

1.

No co-ownership exists over Lot No. 12-C, covered by TCT No. 96886, between petitioners and respondents. The case is REMANDED to the Regional Trial Court, Branch 15, Manila, for further proceedings without further delay to determine the facts essential to the proper application of Articles 448 and 546 of the Civil Code.

2.

SO ORDERED.

DIOSDADO M. PERALTA Associate Justice

WE CONCUR: LEONARDO A. QUISUMBING Associate Justice

ANTONIO T. CARPIO Associate Justice Chairperson

MINITA V. CHICO-NAZARIO Associate Justice

ROBERTO A. ABAD 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 Courts Division.

ANTONIO T. CARPIO Associate Justice Third Division, Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO Chief Justice

CO-OWNERSHIP CASE No. 07


The records of the case were transmitted to the Court of Appeals (CA). During the pendency of the appeal with the CA, Joaquin Limense died in 1999. [12] . The CA further ruled that a co-ownership existed over Lot No. 12-C between petitioners and respondents. Petitioners countered that TCT No. 96886, being the only and best legitimate proof of ownership over Lot No. 12-C, must prevail over TCT No. 40043. If properly considered, would justify a different conclusion, and if the judgment of the CA is premised on a misapprehension of facts.[20]

Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and, in case of disagreement, the court shall fix the terms thereof.

Article 546.

Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

You might also like