AG.R. No.

168943             October 27, 2006

IGLESIA NI CRISTO, petitioner,
vs.
HON. THELMA A. PONFERRADA, in her capacity as Presiding Judge, Regional Trial Court, Br. 104, Quezon City, and HEIRS OF ENRIQUE G.
SANTOS, respondents.

On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed Santos, and Sonia Santos-Wallin, represented by Enrique G. Santos,
filed a complaint3 for Quieting of Title and/or Accion Reinvindicatoria before the Regional Trial Court (RTC) of Quezon City against the Iglesia Ni
Cristo (INC), defendant therein.

Plaintiffs alleged that during his lifetime, Enrique Santos was the owner of a 936-square-meter parcel of land located in Tandang Sora, Quezon City
covered by Transfer Certificate of Title (TCT) No. 57272 issued by the Register of Deeds on July 27, 1961 which cancelled TCT No. 57193-289. He
had been in possession of the owner’s duplicate of said title and had been in continuous, open, adverse and peaceful possession of the property.
He died on February 9, 1970 and was survived by his wife, Alicia Santos, and other plaintiffs, who were their children. Thereafter, plaintiffs took
peaceful and adverse possession of the property, and of the owner’s duplicate of said title. When the Office of the Register of Deeds of Quezon City
was burned on June 11, 1988, the original copy of said title was burned as well. The Register of Deeds had the title reconstituted as TCT No. RT-
110323, based on the owner’s duplicate of TCT No. 57272. Sometime in February 1996, plaintiffs learned that defendant was claiming ownership
over the property based on TCT No. 321744 issued on September 18, 1984 which, on its face, cancelled TCT No. 320898, under the name of the
Philippine National Bank, which allegedly cancelled TCT No. 252070 in the names of the spouses Marcos and Romana dela Cruz. They insisted that
TCT Nos. 321744, 320898 and 252070 were not among the titles issued by the Register of Deeds of Quezon City and even if the Register of Deeds
issued said titles, it was contrary to law. Enrique Santos, during his lifetime, and his heirs, after his death, never encumbered or disposed the
property. In 1996, plaintiffs had the property fenced but defendant deprived them of the final use and enjoyment of their property.

Plaintiffs prayed that, after due proceedings, judgment be rendered in their favor, thus:

WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered quieting the title of plaintiffs over and/or recover
possession of their said property in the name of deceased Enrique Santos, covered by said TCT No. RT-110323(57272) of the Register of
Deeds at Quezon City and that:

1. The title of defendant, TCT No. 321744 be ordered cancelled by the Register of Deeds of Quezon City;

2. The defendant be ordered to pay plaintiffs’ claims for actual damages in the sum of P100,000.00;

3. The defendant be ordered to pay plaintiffs’ claims for compensatory damages in the sum of at least P1,000,000.00;

4. The defendant be ordered to pay plaintiffs’ claims for reimbursement of the lawyer’s professional fees consisting of the
aforesaid P50,000.00 acceptance fee and reimbursement of the said success fee in par. 10 above; and lawyer’s expenses
of P2,000.00 for each hearing in this case;

5. The defendant be ordered to pay expenses and costs of litigation in the sum of at least P200,000.00.

Other reliefs that are just and equitable in the premises are, likewise, prayed for.4

As gleaned from the caption of the complaint, plaintiffs appear to be the heirs of Enrique Santos, represented by Enrique G. Santos. The latter
signed the Verification and Certificate of Non-Forum Shopping which reads:

I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am one of the children of the late Enrique Santos and I represent the heirs of
said Enrique Santos who are my co-plaintiffs in the above-captioned case and that I directed the preparation of the instant complaint, the
contents of which are true and correct to the best of my knowledge and the attachments are faithful reproductions of the official copies
in my possession.

I hereby certify that I have not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of
Appeals, or different Divisions thereof, or any other tribunal or agency, and to the best of my knowledge, no such action or proceeding is
pending in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency, and that I shall notify
this Commission within three days from notice that a similar action or proceeding has been filed or is pending thereat.

IN WITNESS WHEREOF, I hereby affix my signature this 23rd day of October 2001 at Pasig City, Metro Manila.

(Sgd.)
 ENRIQUE G. SANTOS

SUBSCRIBED AND SWORN to before me this 23rd day of October 2001 at Pasig City, affiant exhibiting to me his CTC No. 07303074 issued
at Sta. Cruz, Laguna on April 16, 2001.

(Sgd.)

PETER FRANCIS G. ZAGALA

Notary Public
Until December 31, 2002
PTR No. 0287069
Issued on 1-10-01
At Pasig City5

Defendant moved to dismiss plaintiffs’ complaint on the following grounds: (1) plaintiffs failed to faithfully comply with the procedural
requirements set forth in Section 5, Rule 7 of the 1997 Rules of Civil Procedure; (2) the action (either Quieting of Title or Accion Reinvindicatoria)
had prescribed, the same having been filed only on October 24, 2001 beyond the statutory ten-year period therefor; and (3) that the complaint is
defective in many respects.6

Defendant asserted that the case involved more than one plaintiff but the verification and certification against forum shopping incorporated in the
complaint was signed only by Enrique Santos. Although the complaint alleges that plaintiffs are represented by Enrique Santos, there is no showing
that he was, indeed, authorized to so represent the other plaintiffs to file the complaint and to sign the verification and certification of non-forum
shopping.7 Thus, plaintiffs failed to comply with Section 5, Rule 7 of the Rules of Court. Defendant cited the ruling of this Court in Loquias v. Office
of the Ombudsman.8

Defendant maintained that the complaint is defective in that, although there is an allegation that Enrique Santos represents the other heirs, there
is nothing in the pleading to show the latter’s authority to that effect; the complaint fails to aver with particularity the facts showing the capacity of
defendant corporation to sue and be sued; and the pleading does not state the address of plaintiffs. Defendant likewise averred that the complaint
should be dismissed on the ground of prescription. It argued that plaintiffs anchor their claim on quieting of title and considering that they are not
in possession of the land in question, their cause of action prescribed after ten years. On the other hand, if the supposed right of plaintiffs is based
on accion reinvindicatoria, prescription would set in after 10 years from dispossession. In both cases, defendant asserts, the reckoning point is 1984
when defendant acquired TCT No. 321744 and possession of the land in question.

In their Comment9 on the motion, plaintiffs averred that the relationship of a co-owner to the other co-owners is fiduciary in character; thus,
anyone of them could effectively act for another for the benefit of the property without need for an authorization. Consequently, Enrique Santos
had the authority to represent the other heirs as plaintiffs and to sign the verification and certification against forum shopping.10 On the issue of
prescription, plaintiffs argued that the prescriptive period for the actions should be reckoned from 1996, when defendant claimed ownership over
the property and barred plaintiffs from fencing their property, not in 1984 when TCT No. 321744 was issued by the Register of Deeds in the name
of defendant as owner.

In its reply, defendant averred that absent any authority from his co-heirs, Enrique Santos must implead them as plaintiffs as they are indispensable
parties. In response, plaintiffs aver that a co-owner of a property can execute an action for quieting of title without impleading the other co-
owners.

The trial court issued an Order11 denying defendant’s motion to dismiss. It declared that since Enrique Santos was one of the heirs, his signature in
the verification and certification constitutes substantial compliance with the Rules. The court cited the ruling of this Court in Dar v. Alonzo-
Legasto.12 The court, likewise, held that prescription had not set in and that failure to state the address of plaintiffs in the complaint does not
warrant the dismissal of the complaint.

Defendant filed a motion for reconsideration, which the court likewise denied in an Order13 dated July 10, 2002.

Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and Prohibition with Prayer for the Issuance of a Temporary Restraining Order
and/or Preliminary Injunction14 before the CA, raising the following issues:

I.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE CERTIFICATION OF
NON-FORUM SHOPPING SIGNED BY ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997
RULES OF CIVIL PROCEDURE, IN CLEAR CONTRAVENTION OF THE RULES OF COURT, AND THE RULING IN LOQUIAS V. OFFICE OF THE
OMBUDSMAN, G.R. NO. 1399396 (SIC), AUGUST 16, 2000, 338 SCRA 62, AND ORTIZ V. COURT OF APPEALS, G.R. NO. 127393, 299 SCRA
708 (DECEMBER 4, 1998).
 II.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION IN APPLYING THE RULING IN DAR, ET. AL. V.
HON. ROSE MARIE ALONZO-LEGASTO, ET. AL., G.R. NO. 143016, AUGUST 30, 2000 TO THE INSTANT CASE.

III.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE AUTHORITY OF
ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE "INC" IS A MATTER OF EVIDENCE.

IV.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE ACTION FOR
QUIETING OF TITLE AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED.15

Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos signed the verification and certification of non-forum shopping. Under
Section 5, Rule 7 of the 1997 Rules of Civil Procedure, all the plaintiffs must sign, unless one of them is authorized by a special power of attorney to
sign for and in behalf of the others. Petitioner argues that the bare claim of Enrique Santos that he signed the verification and certification in his
behalf and of the other plaintiffs who are his co-heirs/co-owners of the property does not even constitute substantial compliance of the rule.
Contrary to the ruling of the trial court, the absence or existence of an authority of Enrique Santos to sign the verification and certification for and
in behalf of his co-plaintiffs is not a matter of evidence. The defect is fatal to the complaint of respondents and cannot be cured by an amendment
of the complaint. The trial court erred in applying the ruling of this Court in Dar v. Alonzo-Legasto.16

Petitioner maintained that the action of respondents, whether it be one for quieting of title or an accion reinvindicatoria, had prescribed when the
complaint was filed on October 24, 2001. Petitioner asserts that this is because when respondents filed their complaint, they were not in actual or
physical possession of the property, as it (petitioner) has been in actual possession of the property since 1984 when TCT No. 321744 was issued to
it by the Register of Deeds. This is evident from the nature of a reinvindicatory action itself – which is an action whereby plaintiff alleges ownership
over the subject parcel of land and seeks recovery of its full possession. By their action, respondents thereby admitted that petitioner was in actual
possession of the property, and as such, respondents’ action for quieting of title or accion reinvindicatoria may prescribe in ten (10) years from
1984 or in 1994, it appearing that it acted in good faith when it acquired the property from the registered owner, conformably with Article 555(4)
of the New Civil Code.

On April 7, 2005, the CA rendered the assailed decision17 dismissing the petition, holding that the RTC did not commit grave abuse of its discretion
amounting to lack or excess of jurisdiction in denying petitioner’s motion to dismiss. As the Court held in DAR v. Alonzo-Legasto18 and in Gudoy v.
Guadalquiver,19 the certification signed by one with respect to a property over which he shares a common interest with the rest of the plaintiffs
(respondents herein) substantially complied with the Rules. As to the issue of prescription, the appellate court held that the prescriptive period
should be reckoned from 1996, when petitioner claimed ownership and barred respondents from fencing the property.

Petitioner is now before this Court on petition for review on certiorari, raising the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY
RESPONDENT ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL
PROCEDURE AND IN APPLYING THE CASE OF GUDOY V. GUADALQUIVER, 429 SCRA 723, WITHOUT REGARD TO MORE RECENT
JURISPRUDENCE.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE AUTHORITY OF RESPONDENT ENRIQUE G. SANTOS TO
REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE PETITIONER IS A MATTER OF EVIDENCE.

III.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION FOR QUIETING OF TITLE AND/OR ACCION
REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED.20

Petitioner reiterated its arguments in support of its petition in the CA as its arguments in support of its petition in the present case.

Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification and certification against forum shopping read:
 Sec. 4. Verification. – Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or
accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his
personal knowledge or based on authentic records.

A pleading required to be verified which contains a verification based on "information and belief" or upon "knowledge, information and
belief," or lacks a proper verification, shall be treated as an unsigned pleading.

Sec. 5. Certification against forum shopping. – The plaintiff or principal party shall certify under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the
best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has
been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading
but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The
submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court,
without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful
and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as
well as a cause for administrative sanctions.

The purpose of verification is simply to secure an assurance that the allegations of the petition (or complaint) have been made in good faith; or are
true and correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does
not necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional requirement.21

The issue in the present case is not the lack of verification but the sufficiency of one executed by only one of plaintiffs. This Court held in Ateneo de
Naga University v. Manalo,22 that the verification requirement is deemed substantially complied with when, as in the present case, only one of the
heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the petition (complaint), signed the verification
attached to it. Such verification is deemed sufficient assurance that the matters alleged in the petition have been made in good faith or are true and
correct, not merely speculative.

The same liberality should likewise be applied to the certification against forum shopping. The general rule is that the certification must be signed
by all plaintiffs in a case and the signature of only one of them is insufficient. However, the Court has also stressed in a number of cases that the
rules on forum shopping were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with such
absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the
contents of the certification. This is because the requirement of strict compliance with the provisions merely underscores its mandatory nature in
that the certification cannot be altogether dispensed with or its requirements completely disregarded.23

The substantial compliance rule has been applied by this Court in a number of cases: Cavile v. Heirs of Cavile,24 where the Court sustained the
validity of the certification signed by only one of petitioners because he is a relative of the other petitioners and co-owner of the properties in
dispute; Heirs of Agapito T. Olarte v. Office of the President of the Philippines,25 where the Court allowed a certification signed by only two
petitioners because the case involved a family home in which all the petitioners shared a common interest; Gudoy v. Guadalquiver,26 where the
Court considered as valid the certification signed by only four of the nine petitioners because all petitioners filed as co-owners pro indiviso a
complaint against respondents for quieting of title and damages, as such, they all have joint interest in the undivided whole; and Dar v. Alonzo-
Legasto,27 where the Court sustained the certification signed by only one of the spouses as they were sued jointly involving a property in which they
had a common interest.

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

Applying the doctrines laid down in the above cases, we find and so hold that the CA did not err in affirming the application of the rule on
substantial compliance. In the instant case, the property involved is a 936-square-meter real property. Both parties have their respective TCTs over
the property. Respondents herein who are plaintiffs in the case below have a common interest over the property being the heirs of the late Enrique
Santos, the alleged registered owner of the subject property as shown in one of the TCTs. As such heirs, they are considered co-owners pro
indiviso of the whole property since no specific portion yet has been adjudicated to any of the heirs. Consequently, as one of the heirs and principal
party, the lone signature of Enrique G. Santos in the verification and certification is sufficient for the RTC to take cognizance of the case. The
commonality of their interest gave Enrique G. Santos the authority to inform the RTC on behalf of the other plaintiffs therein that they have not
commenced any action or claim involving the same issues in another court or tribunal, and that there is no other pending action or claim in another
court or tribunal involving the same issues. Hence, the RTC correctly denied the motion to dismiss filed by petitioner.
Considering that at stake in the present case is the ownership and possession over a prime property in Quezon City, the apparent merit of the
substantive aspects of the case should be deemed as a special circumstance or compelling reason to allow the relaxation of the rule.

Time and again, this Court has held that rules of procedure are established to secure substantial justice. Being instruments for the speedy and
efficient administration of justice, they may be used to achieve such end, not to derail it. In particular, when a strict and literal application of the
rules on non-forum shopping and verification will result in a patent denial of substantial justice, these may be liberally construed.28 The ends of
justice are better served when cases are determined on the merits – after all parties are given full opportunity to ventilate their causes and
defenses – rather than on technicality or some procedural imperfections.29

Indeed, this Court strictly applied the rules on verification and certification against forum shopping as in the cases of Loquias v. Office of the
Ombudsman30 and Tolentino v. Rivera.31 However, in both cases, the commonality of interest between or among the parties is wanting. In Loquias,
the co-parties were being sued in their individual capacities as mayor, vice mayor and members of the municipal board. In Tolentino, the lone
signature of Tolentino was held insufficient because he had no authority to sign in behalf of the Francisco spouses. In such case, the Court
concluded that Tolentino merely used the spouses’ names for whatever mileage he thought he could gain. It is thus clear from these cases that the
commonality of interest is material in the relaxation of the Rules.

Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-plaintiffs, we find no necessity to show such authority.
Respondents herein are co-owners of the subject property. As such co-owners, each of the heirs may properly bring an action for ejectment,
forcible entry and detainer, or any kind of action for the recovery of possession of the subject properties. Thus, a co-owner may bring such an
action, even without joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all.32

We uphold the validity of the complaint because of the following circumstances: (1) the caption of the instant case is Heirs of Enrique Santos v.
Iglesia ni Cristo;33 (2) the opening statement of the complaint states that plaintiffs are the heirs of Enrique Santos and likewise names the particular
heirs of the latter who instituted the complaint below;34 (3) the case involves a property owned by the predecessor-in-interest of plaintiffs
therein;35 and (4) the verification signed by Enrique G. Santos clearly states that he is one of the children of the late Enrique Santos and that he
represents the heirs of said Enrique Santos.36

On the issue of prescription of action, petitioner avers that the action of respondents is one to quiet title and/or accion reinvindicatoria, and that
respondents asserted ownership over the property and sought the recovery of possession of the subject parcel of land. It insists that the very
nature of the action presupposes that respondents had not been in actual and material possession of the property, and that it was petitioner which
had been in possession of the property since 1984 when it acquired title thereon. The action of respondent prescribed in ten years from 1984 when
petitioner allegedly dispossessed respondents, in accordance with Article 555(4) of the New Civil Code.

The contention of petitioner has no merit. The nature of an action is determined by the material allegations of the complaint and the character of
the relief sought by plaintiff, and the law in effect when the action was filed irrespective of whether he is entitled to all or only some of such
relief.37 As gleaned from the averments of the complaint, the action of respondents was one for quieting of title under Rule 64 of the Rules of
Court, in relation to Article 476 of the New Civil Code. The latter provision reads:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.

A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land appearing in some legal form but which is, in
fact, unfounded, or which it would be inequitable to enforce.38 An action for quieting of title is imprescriptible until the claimant is ousted of his
possession.39

The owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if, at the time of the commencement of his action, he was
not in actual possession of real property. After all, under Article 477 of the New Civil Code, the owner need not be in possession of the property. If
on the face of TCT No. 321744 under the name of plaintiff, its invalidity does not appear but rests partly in pais, an action for quieting of title is
proper.40

In the present case, respondents herein, as plaintiffs below, alleged in their complaint, that their father, Enrique Santos, was the owner of the
property based on TCT No. 57272 issued on July 27, 1961; and that, after his death on February 9, 1970, they inherited the property; Enrique
Santos, during his lifetime, and respondents, after the death of the former, had been in actual, continuous and peaceful possession of the property
until 1994 when petitioner claimed ownership based on TCT No. 321744 issued on September 18, 1984 and barred respondents from fencing their
property.

Petitioner’s claim that it had been in actual or material possession of the property since 1984 when TCT No. 321744 was issued in its favor is belied
by the allegations in the complaint that respondents had been in actual and material possession of the property since 1961 up to the time they filed
their complaint on October 24, 2001.
Admittedly, respondents interposed the alternative reinvindicatory action against petitioner. An accion reinvindicatoria does not necessarily
presuppose that the actual and material possession of the property is on defendant and that plaintiff seeks the recovery of such possession from
defendant. It bears stressing that an accion reinvindicatoria is a remedy seeking the recovery of ownership and includes jus possidendi, jus utendi,
and jus fruendi as well. It is an action whereby a party claims ownership over a parcel of land and seeks recovery of its full possession.41 Thus, the
owner of real property in actual and material possession thereof may file an accion reinvindicatoria against another seeking ownership over a
parcel of land including jus vindicandi, or the right to exclude defendants from the possession thereof. In this case, respondents filed an alternative
reinvindicatory action claiming ownership over the property and the cancellation of TCT No. 321744 under the name of petitioner. In fine, they
sought to enforce their jus utendi and jus vindicandi when petitioner claimed ownership and prevented them from fencing the property.

Since respondents were in actual or physical possession of the property when they filed their complaint against petitioner on October 24, 2001, the
prescriptive period for the reinvindicatory action had not even commenced to run, even if petitioner was able to secure TCT No. 321744 over the
property in 1984. The reason for this is that

x x x one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its
effect on his own title, which right can be claimed only by one who is in possession.42

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 72686 is AFFIRMED. Costs against
petitioner. SO ORDERED.

G.R. No.199146

HEIRS OF PACIFICO POCDO, namely, RITA POCDO GASIC, GOLIC POCDO, MARCELA POCDO ALFELOR, KENNETH POCDO, NIXON CADOS,
JACQUELINE CADOS LEE, EFLYN CADOS, and GIRLIE CADOS DAPLIN, herein represented by their Attorney-in-Fact JOHN POCDO, Petitioners,
vs.
ARSENIA AVILA and EMELINDA CHUA, Respondents.

RESOLUTION

CARPIO, J.:

The Case

This petition for review1 assails the 12 October 2011 Decision2 of the Court of Appeals in CA-G.R. CV No. 91039. The Court of Appeals affirmed the
14 January 2008 Resolution of the Regional Trial Court of Baguio City, Branch 61, in Civil Case No. 4710-R, dismissing the complaint for lack
ofjurisdiction.

The Facts

In June 2000, Pacifico Pocdo, who was later substituted by his heirs upon his death, filed a complaint to quiet title over a 1,728-square meter
property (disputed property) located in Camp 7, Baguio City, and covered by Tax Declaration 96-06008-106641. Pacifico claimed that the disputed
property is part of Lot 43, TS-39, which originally belonged to Pacifico’s father, Pocdo Pool. The disputed property is allegedly different from the
one- hectare portion alloted to Polon Pocdo, the predecessor-in-interest of the defendants Arsenia Avila and Emelinda Chua, in a partition made by
the heirs of Pocdo Pool. Pacifico alleged that the defendants unlawfully claimed the disputed property, which belonged to Pacifico.

The facts of the case were summarized by the Court of Appeals as follows:

As it appears, in 1894, Pocdo Pool, who died in 1942, began his occupation and claim on three lots that were eventually surveyed in his name as Lot
43, TS 39-SWO-36431, Lot 44, TS 39-SWO-36420 and Lot 45 TS 39-SWO-36429 with an area of 144,623 [sq.m.], 64,112 [sq.m.], and 9,427 square
meters, respectively, and situated at Residence Section 4, Baguio City. These lots were the subject of a petition to reopen judicial proceedings filed
by the Heirs of Pocdo Pool with the CFI of Baguio City in Civil Reservation Case No. 1, LRC Case 211. The registration of the lots in the names of the
petitioners were [sic] grantedin October 1964, but since the decision was not implemented within the 10 years [sic] prescribed period, the Heirs
filed their ancestral land claims with the DENR. In August 1991, Certificates of Ancestral Lands Claims (CALS) were issued by the DENR for Lots 44
and 45, but Lot 43 was not approved due to Memorandum Order 98-15 issued by the DENR Secretary in September 199[8].

In the meantime, on September 14, 1960, Polon Pocdo, an heir of Pocdo Pool, ceded his rights over the three lots to Pacifico Pocdo in exchange for
a one hectare lot to be taken from Lot 43. However, Pacifico entered into a contract with Florencio Pax and Braulio Yaranon on November 21, 1968
revoking the agreement with Polon. In the contract, the 4,875 square meters where Polon’s house was located became part of the 1-hectare given
to Pax and Yaranon in exchange for their services in the titling of Pacifico’s lands.
Polon filed a complaint in August 1980 [with] the Office of the Barangay Captain at Camp 7, Baguio City, which was settled by an amicable
settlement dated September 3, 1980 between Pacifico and Polon. They agreed that Polon would again retain the 4,875 square meters and Pacifico
would give the 5,125 square meter area, the remaining portion of the 1-hectare share of Polon, to be taken from Lot 43 after a segregation.

On April 18, 1981, Polon entered into a Catulagan with Arsenia Avila authorizing the latter to undertake the segregation of his one-hectare land
from Lot 43 in accord with the amicable settlement of September 3, 1980. In exchange, Polon would award to her 2,000 square meters from the 1-
hectare lot. After spending time, money and effort in the execution of the survey, Avila gave the survey results to Polon prompting Polon to
execute a Waiver of Rights dated January 21, 1987. Accordingly, the subdivided lots were declared for tax purposes and the corresponding tax
declaration issued to Polon and Arsenia, with 8,010 square meters going to Polon and 1,993 square meters to Avila.

On March 10, 2000, finding the amicable settlement, the Catulagan and Waiver of Rights in order, the CENRO of Baguio City issued in favor of Avila
a Certificate of Exclusion of 993 square meters from the Ancestral Land Claim of the Heirs of Pocdo Pool over Lot 43.

On April 27, 2000, however, the Heirs of Polon Pocdo and his wife Konon filed an affidavit of cancellation with OIC-CENRO Teodoro Suaking and on
that basis, Suaking cancelled the Certificate of Exclusion. On May 8, 2000, Avila complained to the Regional Executive Director or RED the unlawful
cancellation of her Certificate of Exclusion, and on June 1, 2000, the RED issued a memorandum setting aside the revocation and restoring the
Certificate of Exclusion. On August 13, 2001, Avila filed an administrative complaint against Suaking, and on July 16, 2002, the RED dismissed the
letter-complaint of Avila and referred the administrative complaint to the DENR Central Office.

Acting on the motion for reconsideration by Avila[against oppositors Pacifico Pocdo, et al.], the RED in an Order on October 28, 2002 set aside the
July 16, 2002 order. The Affidavit of Cancellation dated April 27, 2002 filed by the heirs of Polon Pocdo was dismissed for lack of jurisdiction and the
validity of the Amicable Settlement, Catulagan and Deed of Waiver of Rights were recognized. The letter dated April 28, 2000 and certification
issued on May 31, 2000 by Suaking were ordered cancelled. Accordingly, the RED held that the TSA applications of Arsenia Avila and others under
TSA Application 15313, 15314, 15409 and 15410 should be given due course subject to compliance with existing laws and regulations.

The DENR Secretary affirmed his Order in [his] Decision of May 14, 2004 in DENR Case 5599, with the modification that the TSAs fo[r] the appellee
Avila could now be made the basis of disposition through public bidding and the appellant may participate in the bidding if qualified.

Pacifico Pocdo, as the appellant, went on appeal to the Office of the President which resulted in an affirmance of DENR Secretary’s decision on April
19, 2005 in OP Case 04-H-360.

As mentioned, having exhausted administrative remedies, the Heirs of Pacifico Pocdo challenged the OP resolution before the Court of Appeals, but
this petition was dismissed for having been filed late. The Supreme Court dismissed the Heirs’appeal from this decision.

The instant case, Civil Case 4710-R, before the Regional Trial Court of Baguio City, Branch 61 was filed by Pacifico Pocdo against Arsenia Avila and
Emelinda Chua in June 2000, just after the RED set aside Suaking’s revocation on April 28, 2000 and ordered the restoration of Avila’s Certificate of
Exclusion. Since then, the judicial proceedings have run parallel to the administrative case.3

In a Resolution4 dated 14 January 2008, the Regional Trial Court dismissed the case for lack of jurisdiction. The trial court held that the DENR had
already declared the disputed property as public land, which the State, through the DENR, has the sole power to dispose. Thus, the claim of
petitioners to quiet title is not proper since they do not have title over the disputed property. The trial court agreed with the DENR Secretary’s
ruling that petitioner may participate in the public bidding of the disputed property if qualified under applicable rules.

Petitioners appealed to the Court of Appeals, asserting that the case is not limited to quieting of title since there are other issues not affected by
the DENR ruling, particularly the validity of the Waiver of Rights and the Catulagan. Petitioners maintained that the DENR’s ruling that the disputed
property is public land did not preclude the court from taking cognizance of the issues on who is entitled possession to the disputed property and
whether the questioned documents are valid and enforceable against Pacifico and his heirs.

The Ruling of the Court of Appeals

The Court of Appeals ruled that petitioners, in raising the issue of quieting of title, failed to allege any legal or equitable title to quiet. Under Article
477 of the Civil Code, in an action to quiet title, the plaintiff must have legal or equitable title to, or interest in the real property which is the subject
matter of the action. Instead of an action to quiet title or accion reivindicatoria, the Court of Appeals stated that petitioners should have filed
an accion publiciana based merely on the recovery of possession de jure.

On the validity of the Catulagan and the Waiver of Rights, the Court of Appeals held that petitioners have no right to question these since they
were not parties to said documents had not participated in any manner in their execution. The Court of Appeals ruled that only the contracting
parties are bound by the stipulations of the said documents. Those not parties to the said documents, and for whose benefit they were not
expressly made, cannot maintain an action based on the said documents.

Thus, the Court ofAppeals affirmed the trial court’s resolution, subject to the right of petitioners to file the appropriate action.
 The Issues

Petitioners raise the following issues:

THE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONERS SHOULD JUST FILE THE NECESSARY ACTION FOR RECOVERY OF POSSESSION
BECAUSE SAID COURT HAS FAILED TO TAKE INTO CONSIDERATION THAT RECOVERY OF POSSESSION IS PRECISELY ONE OF THE CAUSES OF ACTION
IN THE PRESENT CASE.

THE COURT OF APPEALS ERRED IN RULING THAT THE RTC HAD NO JURISDICTION SINCE IT IS THE COURTS, NOT THE DENR, THAT HAS JURISDICTION
OVER ACTIONS INVOLVING POSSESSION OF LANDS, EVEN ASSUMING WITHOUT ADMITTING, THAT THE LAND ISAPUBLIC LAND.

THE COURT OFAPPEALS ERRED IN UPHOLDING THE DISMISSAL OF THE CASE BECAUSE THERE ARE OTHER CAUSES OF ACTION OVER WHICH THE RTC
HAS JURISDICTION, i.e. RECOVERY OF POSSESSION, DECLARATION OF NULLITY OF DOCUMENTS.

THE COURT OF APPEALS ERRED IN FINDING THAT THE PETITIONERS HAVE NO TITLE TO THE PROPERTY THAT WOULD SUPPORT AN ACTION FOR
QUIETING OF TITLE WHEN TRIAL HAD NOT YET COMMENCED. NONETHELESS, THE RECORD IS REPLETE OF PROOF THAT THE PETITIONERS HAVE
RIGHTS/TITLE OVER THE SUBJECT PROPERTY.5

The Ruling of the Court

We find the petition without merit.

In the administrative case involving the disputed property,which forms part of Lot 43, the DENR ruled that Lot 43 is public land located within the
Baguio Townsite Reservation. In his Decision dated 14 May 2004 in DENR Case No. 5599, the DENR Secretary stated:

Lot 43 is public land and part of the Baguio Townsite Reservation. This has already been settled by the decision of the Court of First Instance of
Benguet and Mountain Province dated 13 November 1922 in Civil Reservation Case No. 1. The fact that the heirs of Pocdo Pool were able to reopen
Civil Reservation Case No. 1, LRC Case No. 211 and secure a decision in their favor for registration of Lot 43 is of no moment.As held in Republic v.
Pio R. Marcos (52 SCRA 238), the Court of First Instance of Baguio and Benguet had no jurisdiction to order the registration of lands already
declared public in Civil Reservation Case No. 1. Lot 43 being part of the Baguio Townsite Reservation, disposition thereof is under Townsite Sales
Application ("TSA"). Precisely on this bone [sic] that Lot 43 was not awarded a Certificate of Land Ancestral Claim [sic] under DENR Circular No. 03,
series of 1990, because it is within the Baguio Townsite Reservation.6

The DENR Decision was affirmed by the Office of the President which held that lands within the Baguio Townsite Reservation belong to the public
domain and are no longer registrable under the Land Registration Act.7 The Office of the President ordered the disposition of the disputed property
in accordance with the applicable rules of procedure for the disposition of alienable public lands within the Baguio Townsite Reservation,
particularly Chapter X of Commonwealth Act No. 141 on Townsite Reservations and other applicable rules.

Having established that the disputed property is public land, the trial court was therefore correct in dismissing the complaint to quiet title for lack
of jurisdiction.1âwphi1 The trial court had no jurisdiction to determine who among the parties have better right over the disputed property which
is admittedly still part of the public domain. As held in Dajunos v. Tandayag:8

x x x The Tarucs’ action was for "quieting of title" and necessitated determination of the respective rights of the litigants, both claimants to a free
patent title, over a piece of property, admittedly public land. The law, as relied upon by jurisprudence, lodges "the power of executive control,
administration, disposition and alienation of public lands with the Director of Lands subject, of course, to the control of the Secretary of Agriculture
and Natural Resources."

In sum, the decision rendered in civil case 1218 on October 28, 1968 is a patent nullity. The court below did not have power to determine who (the
Firmalos or the Tarucs) were entitled to an award of free patent title over that piece of property that yet belonged to the public domain. Neither
did it have power to adjudge the Tarucs as entitled to the "true equitable ownership" thereof, the latter’s effect being the same: the exclusion of
the Firmalos in favor of the Tarucs.9

In an action for quieting of title, the complainant is seeking for "an adjudication that a claim of title or interest in property adverse to the claimant is
invalid, to free him from the danger of hostile claim, and to remove a cloud upon or quiet title to land where stale or unenforceable claims or
demands exist."10 Under Articles 47611 and 47712 of the Civil Code, the two indispensable requisites in an action to quiet title are: (1) that the
plaintiff has a legal or equitable title to or interest in the real property subject of the action; and (2) that there is a cloud on his title by reason of any
instrument, record, deed, claim, encumbrance or proceeding, which must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity.13

In this case, petitioners, claiming to be owners of the disputed property, allege that respondents are unlawfully claiming the disputed property by
using void documents, namely the "Catulagan" and the Deed of Waiver of Rights. However, the records reveal that petitioners do not have legal or
equitable title over the disputed property, which forms part of Lot 43, a public land within the Baguio Townsite Reservation. It is clear from the
facts of the case that petitioners’ predecessors-in-interest, the heirs of Pocdo Pool, were not even granted a Certificate of Ancestral Land Claim
over Lot 43, which remains public land. Thus, the trial court had no other recourse but to dismiss the case.

There is no more need to discuss the other issues raised since these are intrinsically linked to petitioners' action to quiet title.

WHEREFORE, we DENY the petition. We AFFIRM the 12 October 2011 Decision of the Court of Appeals in CA-G.R. CV No. 91039.

SO ORDERED.

G.R. No. 187633

HEIRS OF DELFIN and MARIA TAPPA, Petitioners,

vs.
HEIRS OF JOSE BACUD, HENRY CALABAZARON and VICENTE MALUPENG, Respondents.

DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court assailing the Decision2 dated February 19, 2009 and
Resolution3 dated April 30, 2009 of the Court of Appeals (CA) in CA-G.R. CV No. 90026, which reversed and set aside the Decision4 dated July 6,
2007 of Branch 5, Regional Trial Court (RTC) ofTuguegarao City, Cagayan in Civil Case No. 5560 for Quieting of Title, Recovery of Possession and
Damages.

The Facts

On September 9, 1999, petitioners Delfin Tappa (Delfin)5 and Maria Tappa (Spouses Tappa) filed a complaint6 for Quieting of Title, Recovery of
Possession and Damages (Complaint) against respondents Jose Bacud (Bacud),7 Henry Calabazaron (Calabazaron), and Vicente Malupeng
(Malupeng).8 The property subject of the complaint is a parcel of land identified as Lot No. 3341, Pls-793 with an area of 21,879 square meters,
located in Kongcong, Cabbo, Pefiablanca, Cagayan (Lot No. 3341).9

In their complaint, Spouses Tappa alleged that they are the registered owners of Lot No. 3341, having been issued an Original Certificate of Title
No. P-69103 (OCT No. P-69103) on September 18, 1992, by virtue of Free Patent No. 021519-92-3194. 10 Delfin allegedly inherited Lot No. 3341
from his father, Lorenzo Tappa (Lorenzo). Spouses Tappa claimed that both Delfin and Lorenzo were in open, continuous, notorious, exclusive
possession of the lot since time immemorial. 11

In their Answer, 12 respondents Bacud, Calabazaron and Malupeng claimed that the original owner of Lot No. 3341 was Genaro Tappa (Genaro) who
had two children, Lorenzo and Irene. Upon Genaro's death, the property passed on to Lorenzo and Irene by operation of law; and they
became ipso facto co-owners of the property. As co-owners, Lorenzo and Irene each owned 10,939 square meters of the lot as their respective
shares. Lorenzo had children namely, Delfin, Primitiva, and Fermina. Upon the death of Irene, her share in tum passed to her heirs, Demetria,
Juanita, Pantaleon and Jose Bacud. 13

Respondents presented before the RTC a joint affidavit dated April 29, 1963 (1963 Affidavit) signed by Delfin, his sisters, Primitiva and Fermina, and
their mother, Modesta Angoluan. 14 The 1963 affidavit stated that Genaro originally owned Lot No. 3341. It further stated that one-half (Yz) of the
property was owned by Lorenzo; but that the whole property was declared as his, only for taxation purposes.

Calabazaron claimed that he became the owner of 2,520 square meters of Lot No. 3341 by virtue of two Deeds of Sale executed in his favor, one
dated October 12, 1970 executed by Demetria, and another dated August 22, 1971 executed by Juanita. 15 After the sale, Calabazaron entered into
possession of his portion and paid the real property taxes. 16 He remains in possession up to this date. 17

Malupeng, on the other hand, claimed that he became the owner of 210 square meters of Lot No. 3341 by virtue of a Deed of Sale executed on
November 30, 1970 by Pantaleon in his favor. 18 After the sale, Malupeng entered into possession of his porcion of propeny and paid the real
property taxes. 19 He remains in possession up to this date. 20

Bacud claimed ownership over 1,690 square meters of Lot No. 3341 in his own right as heir of Irene.21

Respondents started occupying their respective portions after the sale made to each of them. They continued to occupy them despite several
demands to vacate from Spouses Tappa.22
Spouses Tappa claimed that the 1963 Affidavit was executed through force and intimidation.23 Bacud and Malupeng denied this allegation.24

The Ruling of the RTC

The RTC issued its Decision,25 the decretal portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and the Court hereby orders:

1. Plaintiffs to be the owners of Lot 3341, Pls 793 and unqualifiedly vests in them the full and untrammeled rights of ownership:

2. All the defendants must, if still in possession of portions of the lot in issue, convey the same to the plaintiffs;

3. No pronouncement as to costs.

SO ORDERED.26

The R TC ruled that the basic requirement of the law on quieting of title under Article 447 of the Civil Code was met, thus:

Delfin and Maria's title is clear and unequivocal, and its validity has never been assailed by the defendants – nor has any evidence been adduced
that successfully overcomes the presumption of validity and legality that the title of Delfin and Maria enjoys. 27 (Emphasis in the original.)

The RTC ruled that there was no document in the hands of respondents as strong and persuasive as the title in the name of the Spouses Tappa that
will support respondents' claim of ownership and Irene's antecedent ownership.28 The RTC stated that the 1963 Affidavit contains nothing more
than the allegations of the affiants and does not, by itself, constitute proof of ownership of land, especially as against documents such as titles.29

Respondents appealed to the CA, raising the following arguments:

First, respondents alleged that Spouses Tappa fraudulently applied for, and were issued a free patent over Lot No. 3341, and eventually OCT No. P-
69103 dated September 18, 1992.30 They alleged that Spouses Tappa committed fraud because they were not in possession of the lot since 1963,
which possession was required for an applicant for a free patent under the law. 31

Second, respondents argued that the complaint should be dismissed because both extinctive and acquisitive prescription have already set
in.32 Respondents claimed that both ordinary acquisitive prescription of 10 years, and extraordinary acquisitive prescription of 30 years in claiming
ownership of immovable property apply in the case.33 They argued that more than 30 years have already lapsed from the time they entered
possession of the subject lot in 1963 up to the filing of the complaint on September 9, 1999.34 They also pointed out that Spouses Tappa admitted
in their complaint that respondents were in possession of the lot since 1963. 35

Particularly, Calabazaron argued that the 10-year prescriptive period under Article 1134 of the Civil Code applies to him by virtue of the two duly
executed Deeds of Sale in his favor. 36 It was never alleged that he had any participation in the alleged duress, force and intimidation in the
execution of the 1963 Affidavit.37 Hence, he is a purchaser in good faith and for value. Calabazaron entered possession of the lot after the sale to
him in 1970, thus, the prescriptive period of l0 years had long lapsed. 38

Bacud and Malupeng claimed that, even assuming that the execution of the 1963 Affidavit was attended with force and intimidation, the complaint
against them should have been dismissed because the extraordinary acquisitive prescriptive period of 30 years under Article 1137 of the Civil Code
applies to them.39 They also argued that the action for quieting of title had already prescribed since the possession of Bacud and Malupeng started
in 1963, which fact was allegedly admitted by Spouses Tappa in their complaint.40 Thus, Spouses Tappa had only until 1993 to file a complaint,
which they failed to do.

All respondents claimed that from the start of their possession, they (1) have paid real taxes on the lot, (2) have planted crops, and (3) have
continued to possess the lot in the concept of owners. 41

Third, respondents alleged that Spouses Tappa failed to prove their right over the subject lot because they cannot rely on the certificate of title
issued to them on September 18, 1992 by virtue of a free patent.42 They asserted that Spouses Tappa fraudulently obtained the free patent on Lot
No. 3341 by concealing material facts; specifically the fact of not being in possession of the lot since 1963. 43

The Ruling of the CA

The CA set aside the decision of the RTC.44 The relevant dispositive portion of the CA decision reads:
WHEREFORE, premises considered, the appeal is hereby GRANTED. The assailed decision dated July 6, 2007 is hereby REVERSED and SET
ASIDE, and another one entered DISMISSING the complaint.

SO ORDERED.45

On the issue of prescription, the CA ruled in favor of respondents and explained that their possession over Lot No. 3341 already ripened into
ownership through acquisitive prescription.46 The CA noted that Spouses Tappa acknowledged in their complaint that they have not been in
possession of the lot, and that respondents have been continuously occupying portions of it since 1963. 47 It explained:

The substantial length of time between 1963, up to the time of filing of the present complaint on September 9, 1999, which is more than 30 years,
should be considered against [S]pouses Tappa, and in favor of defendants-appellants. Settled is the rule that an uninterrupted adverse possession
of the land for more than 30 years could ripen into ownership of the land through acquisitive prescription, which is a mode of acquiring ownership
and other real rights over immovable property. Hence, appellants' possession of the land has ripened into ownership by virtue of acquisitive
prescription.48 (Citation omitted.)

On the merits of the case, the CA ruled that the two indispensable requisites for an action to quiet title under Articles 476 and 477 of the Civil Code
were not met. 49

The first requisite is absent because Spouses Tappa do not have a legal or an equitable title to or an interest in the property. The CA explained that
the free patent granted to Spouses Tappa produced no legal effect because Lot No. 3341 was a private land, thus:

As heretofore discussed, the open, continuous, exclusive, and notorious possession by appellants of the subject parcel of land within the period
prescribed by law has effectively converted it into a private land. Consequently, the registration in the name of Maria Tappa on September 18, 1992
under OCT [No.] P-69103, by vi1iue of Free Patent No. 021519-92-3194, produces no legal effect. Private ownership of land-as when there is
a prima facie  proof of ownership like a duly registered possessory information or a clear showing of open, continuous, exclusive, and notorious
possession, by present or previous occupants-is not affected by the issuance of a free patent over the same land, becam,e the Public Land [L]aw
applies only to lands of the public domain.50 (Citation omitted.)

The CA further stated that while Spouses Tappa were able to obtain a free patent over the property, and were able to register it under the Torrens
system, they have not become its owners. The CA said that "[r]egistration has never been a mode of acquiring ownership over immovable
prope1ty---it does not create title nor vest one but it simply confirms a title already vested, rendering it forever indefeasible."51

The second requisite that the deed, claim, encumbrance or proceeding claimed to be casting cloud on the title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity is likewise unavailing. The CA ruled that no other evidence (aside from Delfin's own
testimony) was presented to prove the allegation of fraud and intimidation, making the testimony self-serving.52 The CA further noted that Delfin's
own sister, Fermina, one of the signatories of the 1963 Affidavit, belied his testimony. Fermina testified that they went to the house of one Atty.
Carag to sign the affidavit and they did so, on their own. 53

Spouses Tappa filed a Motion for Reconsideration,54 which the CA denied.55

Hence, spouses Tappa filed a petition for review on certiorari before this court, raising the following issues:

I. Whether the CA erred in dismissing Spouses Tappa's complaint for quieting of title against respondents;56

II. Whether the CA erred in not finding that Spouses Tappa's certificate of title cannot be collaterally attacked in this case;57 and

III. Whether the CA erred in finding that respondents have acquired the property through acquisitive prescription. 58

The Ruling of the Court

We affirm the decision of the CA.

The action for quieting of title

should not prosper.

The action filed by Spouses Tappa was one for quieting of title and recovery of possession. In Baricuatro, Jr. v. Court of Appeals,  59 an action for
quieting of title is essentially a common law remedy grounded on equity, to wit:

x x x Originating in equity jurisprudence, its purpose is to secure"... an adjudication that a claim of title to or an interest in property, adverse to that
of the complainant, is invalid, so that the complainant and those claiming under him may be forever afterward free from any danger of hostile
claim." In an action for quieting of title, the competent court is tasked to determine the respective rights of the complainant and other claimants,
"... not only to place things in their proper place,  to make the one who has no rights to said immovable respect and not disturb the other, but also
for the benefit of both, so that he who has the right would see every cloud of doubt over  the property dissipated, and he could afterwards without
fear introduce the improvements he may desire, to use,  and even to abuse the property as he deems best. x x x. "60 (Emphasis in the original.)

In our jurisdiction, the remedy is governed by Article 476 and 477 of the Civil Code, which state:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or
proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to
said title, an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.

Art. 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the subject-matter of the action. He need not be
in possession of said property.

From the foregoing provisions, we reiterate the rule that for an action to quiet title to prosper, two indispensable requisites must concur, namely:
(1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima
facie  appearance of validity or legal efficacy.61

Spouses Tappa failed to meet these two requisites.

First, Spouses Tappa's claim of iegal title over Lot No. 3341 by virtue of the free patent and the certificate of title, OCT No. P-69103 issued in their
name cannot stand. The certificate of title indjcates that it was issued by virtue of Patent No. 021519-92-3194. We agree with the CA that at the
time of the application for free patent, Lot No. 3341 had already become private land by virtue of the open, continuous, exclusive, and notorious
possession by respondents. Hence, Lot No. 3341 had been removed from the coverage of the Public Land Act,62 which governs public patent
applications.

The settled rule is that a free patent issued over a private land is null and void, and produces no legal effects. whatsoever.1awp++i1 Private
ownership of land-as when there is a prima facie proof of ownership like a duly registered possessory information or a clear showing of open,
continuous, exclusive, and notorious possession, by present or previous occupants-is not affected by the issuance of a free patent over the same
land, because the Public Land Law applies only to lands of the public domain. The Director of Lands has no authority to grant free patent to lands
that have ceased to be public in character and have passed to private ownership.63

In Magistrado v. Esplana,  64 we cancelled the titles issued pursuant to a free patent after finding that the lots involved were privately owned since
time immemorial. A free patent that purports to convey land to which the Government did not have any title at the time of its issuance does not
vest any title in the patentee as against the true owner. 65

In this case, the parties were able to show that Lot No. 3341 was occupied by, and has been in possession of the Tappa family, even before the
1963 Affidavit was executed. After the execution of the 1963 Affidavit, respondents occupied their respective portions of the property. Delfin
testified that before his father, Lorenzo, died in 1961, Lorenzo had been occupying the lot since before the war, and that Delfin was born there in
1934.66

Records show that Lorenzo declared Lot No. 3341 for taxation purposes as early as 1948, and paid the real property taxes (evidenced by real
property tax payment receipts in the name of Lorenzo from 1952 until his death in 1961).67 Spouses Tappa were likewise shown to pay the real
property taxes from 1961 to 2000.68 Similarly, respondents also declared their respective portions of Lot No. 3341 for taxation in their names in
1994, and paid real property taxes on those portions from 1967 to 2004.69 Although tax declarations or realty tax payment of property are not
conclusive evidence of ownership, they are good indicia of possession in the concept of owner, for no one in his right mind would be paying taxes
for a property that is not in his actual or constructive possession. They constitute at least proof that the holder has a claim of title over the
property. 70

Spouses Tappa also admitted in their complaint that sometime in 1963, Bacud and Malupeng started occupying portions of Lot No. 3341 and
planted crops on the property, while Calabazaron did the same on another portion of the lot in the 1970's.71 The complaint stated further that since
1963. the respondents "continuously occupied portion of the subject land." 72

In view of the foregoing circumstances that show open, continuous, exclusive and notorious possession and occupation of Lot No. 3341, the
property had been segregated from the public domain. 73 At the time the patent and the certificate of title were issued in 1992, Spouses Tappa and
their predecessors-in-interest were already in possession, at least to the half of the lot, since 1934; and respondents were also in possession of the
other half since 1963. Therefore, the free patent issued covers a land already segregated from the public domain.
In Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago, 74  we ruled, thus:

Considering the open, continuous, exclusive and notorious possession and occupation of the land by respondents and their predecessors in
interests, they are deemed to have acquired, by operation of law, a right to a government grant without the necessity of a certificate of title being
issued. The land was thus segregated from the public domain and the director of lands had no authority to issue a patent. Hence, the free patent
covering Lot 2344, a private land, and the certificate of title issued pursuant thereto, are void.75

Records also show that Spouses Tappa were aware of respondents' possession of the disputed portions of Lot No. 3341. They even admitted such
possession (since 1963) by respondents in their complaint filed in 1999. Despite this, Spouses Tappa were able to obtain a free patent of
the whole  property even if they were not in possession of some of its portions. Therefore, Free Patent No. 021519-92-3194 and OCT No. P-69103
are void not only because it covers a private land, but also because they fraudulently included76 respondents' portion of the property. In Avila v.
Tapucar,  77 we held that "[i]f a person obtains a title under the Torrens system, which includes by mistake or oversight land which can no longer be
registered under the system, he does not, by virtue of the said certificate alone, become the owner of the lands illegally included."78

In an action to quiet title, legal title denotes registered ownership, while equitable title means beneficial ownership. 79 As discussed, the free patent
and the certificate of title issued to Spouses Tappa could not be the source of their legal title.

The second requisite for an action to quiet title is likewise wanting. We find that although an instrument (the 1963 Affidavit) exists, and which
allegedly casts cloud on Spouses Tappa's title, it was not shown to be in fact invalid or ineffective against Spouses Tappa's rights to the property.

A cloud on a title exists when (1) there is an instrument (deed, or contract) or record or claim or encumbrance or proceeding; (2) which is
apparently valid or effective; (3) but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable or extinguished (or terminated) or barred
by extinctive prescription; and (4) and may be prejudicial to the title.80

The 1963 Affidavit it is no  doubt an instrument, which appears to be valid. It is dated and appears to be executed and signed by Delfin, his mother,
and sisters. It is also notarized by a public notary. It states that Genaro originally owns the land described, and that one-half (l/2) of which is
actually owned by Irene as a co-heir. This is contrary to the claim of

Spouses Tappa that the property was solely Lorenzo's. Respondents' argue that this affidavit evidences the title of their predecessor-in-interest
over Lot No. 3341 and effectively, theirs.81

The 1963 Affidavit however, was not proven to be, in fact, invalid, ineffective, voidable, or unenforceable, or extinguished (or terminated) or barred
by extinctive prescription. The CA correctly found that Spouses Tappa's claim of force and intimidation in the execution of the 1963 Affidavit was
"unsubstantiated."82 The CA pointed out that, "[a]side from the testimony of Delfin Tappa, no other evidence was presented to prove the claim of
force and intimidation, hence, it is at most, self-serving."53 Also, the 1963 Affidavit was duly notarized and, as such, is considered a public
document, and enjoys the presumption of validity as to its authenticity and due execution.

Thus, we affirm the ruling of the CA that the requisites for an action to quiet title are wanting in this case.84

There is no collateral attack

on the Certificate of Title.

Spouses Tappa argue that respondents collaterally attacked the certificate of title of Lot No. 3441 when they raised the issue of its validity. Spouses
Tappa used the same argument against the CA when it declared the certificate of title to be without legal effect. 85

Spouses Tappa's argument is without merit. The certificate of title was not collaterally attacked. Section 48 of PD 1529,86 provides that "[a]
certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in accordance
with law." This rule is not applicable in this case.

We reiterate our ruling in Lee Tek Sheng v. Court of Appeals,87  where we stated that, "[ w ]hat cannot be collaterally attacked is the certificate of
title and not the title. The certificate referred to is that document issued by the Register of Deeds x x x. By title, the law refers to ownership which is
represented by that document."88 Ownership is different from a certificate of title, the latter being only the best proof of ownership of a piece of
land. 89 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.90

In Vda. de Figuracion v. Figuracion-Gerilla,  91 citing Lacbayan v. Samay, Jr.,  92 we reaffirm this ruling, and stated that:

Mere issuance of a 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. Stated differently, placing a parcel of land under the mantle of the Torrens
system does not mean that ownership thereof can no longer be disputed. The certificate cannot always be considered as conclusive evidence of
ownership.93

In this case, what respondents dispute, as raised in their Answer, is Spouses Tappa's claim of sole ownership over Lot No. 3341. As affirmative
defense, respondents claimed that Spouses Tappa were owners of only one-half (1/2) of the lot since it was originally owned by Genaro, the father
of Lorenzo and Irene. 94 Respondents claim that Lorenzo and Irene became ipso facto co-owners of the lot. 95 Thus, respondents claim that, by
virtue of a valid transfer from Irene's heirs, they now have ownership and title over portions of Lot No. 3341, and that they have been in
continuous, exclusive, and uninterrupted possession of their occupied portions.96 Malupeng and Calabazaron claim ownership and title over their
respective portions by virtue of a valid sale. Bacud claims ownership and title by virtue of succession. Therefore, it is the ownership and title of
Spouses Tappa which respondents ultimately attack. OCT No. P-69103 only serves as the document representing Spouses Tappas' title.

Respondents cannot likewise argue that the certificate of title of Spouses Tappa is indefeasible.97 We have already ruled that the one-year
prescriptive period does not apply when the person seeking annulment of title or reconveyance is in possession of the property.98 This is because
the action partakes of a suit to quiet title, which is imprescriptible.99 In this case, respondents have been proved to be in possession of the disputed
portions of Lot No. 3341. Thus, their claim against Spouses Tappa cannot be barred by the one-year prescriptive period.

WHEREFORE, in view of the foregoing, the petition is DENIED and the Decision of the Court of Appeals in CA-G.R. CV No. 90026 is AFFIRMED.

SO ORDERED.

G.R. No. 189420, March 26, 2014

RAUL V. ARAMBULO AND TERESITA A. DELA CRUZ, Petitioners, v. GENARO NOLASCO AND JEREMY SPENCER NOLASCO, Respondents.

DECISION

PEREZ, J.:

This is a Petition for Review of the 7 October 2008 Decision1 and 30 July 2009 Resolution2 of the Court of Appeals in CA–G.R. CV No. 76449, which
reversed and set aside the Decision3 of the Regional Trial Court (RTC) of Manila, Branch 51, dated 19 September 2002.

Petitioners Raul V. Arambulo and Teresita A. Dela Cruz, along with their mother Rosita Vda. De Arambulo, and siblings Primo V. Arambulo, Ma.
Lorenza A. Lopez, Ana Maria V. Arambulo, Maximiano V. Arambulo, Julio V. Arambulo and Iraida Arambulo Nolasco (Iraida) are co–owners of two
(2) parcels of land located in Tondo, Manila, with an aggregate size of 233 square meters. When Iraida passed away, she was succeeded by her
husband, respondent Genaro Nolasco and their children, Iris Abegail Nolasco, Ingrid Aileen Arambulo and respondent Jeremy Spencer Nolasco.

On 8 January 1999, petitioners filed a petition for relief under Article 491 of the Civil Code with the RTC of Manila, alleging that all of the co–
owners, except for respondents, have authorized petitioners to sell their respective shares to the subject properties; that only respondents are
withholding their consent to the sale of their shares; that in case the sale pushes through, their mother and siblings will get their respective 1/9
share of the proceeds of the sale, while respondents will get ¼ share each of the 1/9 share of Iraida; that the sale of subject properties constitutes
alteration; and that under Article 491 of the Civil Code, if one or more co–owners shall withhold their consent to the alterations in the thing owned
in common, the courts may afford adequate relief.4

In their Answer, respondents sought the dismissal of the petition for being premature. Respondents averred that they were not aware of the
intention of petitioners to sell the properties they co–owned because they were not called to participate in any negotiations regarding the
disposition of the property.5

After the pre–trial, two (2) issues were submitted for consideration:chanRoblesvirtualLawlibrary

1. Whether or not respondents are withholding their consent in the sale of the subject properties; and
2. In the affirmative, whether or not withholding of consent of sale by the respondents is prejudicial to the petitioners.6

On 19 September 2002, the trial court ruled in favor of petitioners and ordered respondents to give their consent to the sale. The dispositive
portion of the decision reads:chanRoblesvirtualLawlibrary

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the petitioners and against the respondents:

1. Directing respondents Genaro Nolasco and Jeremy Spencer A. Nolasco to give their consent to the sale of their shares on the subject
properties;
2. Allowing the sale of the aforementioned properties;
 3. Directing the petitioners and the co–owners, including the respondents herein to agree with the price in which the subject properties are
to be sold and to whom to be sold; and
4. Directing the distribution of the proceeds of the sale of the aforementioned properties in the following
proportion:chanRoblesvirtualLawlibrary

a.) Rosita V. Vda. De Arambulo –1/9

b.) Primo V. Arambulo  –1/9
c.) Maximiano V. Arambulo –1/9
d.) Ana Maria V. Arambulo  –1/9
e.) Ma. Lorenza A. Lopez –1/9
f.) Julio V. Arambulo –1/9
g.) Raul V. Arambulo –1/9
h.) Teresita A. dela Cruz –1/9
i.) Genaro Nolasco, Jr.  –1/4 of 1/9
j.) Jeremy Spencer A. Nolasco –1/4 of 1/9
k.) Iris Abegail A. Nolasco –1/4 of 1/9
l.) Ingrid Aileen Arambulo –1/4 of 1/97

Going along with petitioners’ reliance on Article 491 of the Civil Code, the trial court found that respondents’ withholding of their consent to the
sale of their shares is prejudicial to the common interest of the co–owners.

Respondents filed a Notice of Appeal and the trial court gave due course to the appeal and the entire records of the case were elevated to the
Court of Appeals.

In a Decision dated 7 October 2008, the Court of Appeals granted the appeal and reversed the trial court’s decision. The Court of Appeals held that
the respondents had the full ownership of their undivided interest in the subject properties, thus, they cannot be compelled to sell their undivided
shares in the properties. It referred to the provisions of Article 493 of the Civil Code. However, the Court of Appeals, implying applicability of Article
491 also observed that petitioners failed to show how respondents’ withholding of their consent would prejudice the common interest over the
subject properties.

Hence, the instant petition seeking the reversal of the appellate court’s decision and praying for the affirmance of the trial court’s decision that
ordered respondents to give their consent to the sale of the subject properties. Petitioners emphasize that under Article 491 of the Civil Code, they
may ask the court to afford them adequate relief should respondents refuse to sell their respective shares to the co–owned properties. They refute
the appellate court’s finding that they failed to show how the withholding of consent by respondents becomes prejudicial to their common
interest. Citing the testimony of petitioner Teresita A. Dela Cruz, they assert that one of the two subject properties has an area of 122 square
meters and if they decide to partition, instead of selling the same, their share would be reduced to a measly 30–square meter lot each. The other
property was testified to as measuring only 111 square meters. Petitioners reiterate that all the other co–owners are willing to sell the property
and give respondents their share of the proceeds of the sale.

At the core of this petition is whether respondents, as co–owners, can be compelled by the court to give their consent to the sale of their shares in
the co–owned properties. Until it reached this Court, the discussion of the issue moved around Article 491 of the Civil Code. We have to remove
the issue out of the coverage of Article 491. It does not apply to the problem arising out of the proposed sale of the property co–owned by the
parties in this case.

The Court of Appeals correctly applied the provision of Article 493 of the Civil Code, which states:chanRoblesvirtualLawlibrary

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

Upon the other hand, Article 491 states:chanRoblesvirtualLawlibrary

Art. 491. None of the co–owners shall, without the consent of the others, make alterations in the thing owned in common, even though benefits
for all would result therefrom. However, if the withholding of the consent by one or more of the co–owners is clearly prejudicial to the common
interest, the courts may afford adequate relief.

As intimated above, the erroneous application of Article 491 is, in this case, an innate infirmity. The very initiatory pleading below was
captioned Petition For Relief Under Article 491 of the New Civil Code. Petitioners, likewise petitioners before the RTC, filed the case on the
submission that Article 491 covers the petition and grants the relief prayed for, which is to compel the respondent co–owners to agree to the sale
of the co–owned property. The trial court took up all that petitioners tendered, and it favored the pleading with the finding
that:chanRoblesvirtualLawlibrary
x x x To this court, the act of respondents of withholding consent to the sale of the properties is not only prejudicial to the common interest of the
co–owners but is also considered as an alteration within the purview of Article 491 of the New Civil Code. x x x. Hence, it is deemed just and proper
to afford adequate relief to herein petitioners under Article 491 of the New Civil Code.8

That a sale constitutes an alteration as mentioned in Article 491 is an established jurisprudence. It is settled that alterations include any act of strict
dominion or ownership and any encumbrance or disposition has been held implicitly to be an act of alteration.9 Alienation of the thing by sale of
the property is an act of strict dominion.10 However, the ruling that alienation is alteration does not mean that a sale of commonly owned real
property is covered by the second paragraph of Article 491, such that if a co–owner withholds consent to the sale, the courts, upon a showing of a
clear prejudice to the common interest, may, as adequate relief, order the grant of the withheld consent. Such is the conclusion drawn by the trial
court, and hinted at, if not relied upon, by the appellate court.

Ruling that the trial court erred in its conclusion, the Court of Appeals correctly relied on Article 493 in support of the finding that respondents
cannot be compelled to agree with the sale. We affirm the reversal by the Court of Appeals of the judgment of the trial court.

1. There is co–ownership whenever, as in this case, the ownership of an undivided thing, belongs to different persons.11 Article 493 of the Code
defines the ownership of the co–owner, clearly establishing that each co–owner shall have full ownership of his part and of its fruits and benefits.

Pertinent to this case, Article 493 dictates that each one of the parties herein as co–owners with full ownership of their parts can sell their fully
owned part. The sale by the petitioners of their parts shall not affect the full ownership by the respondents of the part that belongs to them. Their
part which petitioners will sell shall be that which may be apportioned to them in the division upon the termination of the co–ownership. With the
full ownership of the respondents remaining unaffected by petitioners’ sale of their parts, the nature of the property, as co–owned, likewise stays.
In lieu of the petitioners, their vendees shall be co–owners with the respondents. The text of Article 493 says so.

2. Our reading of Article 493 as applied to the facts of this case is a reiteration of what was pronounced in Bailon–Casilao v. Court of Appeals.12 The
rights of a co–owner of a certain property are clearly specified in Article 493 of the Civil Code. Thus:chanRoblesvirtualLawlibrary

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

As early as 1923, this Court has ruled that even if a co–owner sells the whole property as his, the sale will affect only his own share but not those of
the other co–owners who did not consent to the sale.13 This is because under the aforementioned codal provision, the sale or other disposition
affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in
common.14 Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares,
and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co–owner of
the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment
thereof.15

From the foregoing, it may be deduced that since a co–owner is entitled to sell his undivided share, a sale of the entire property by one co–owner
without the consent of the other co–owners is not null and void. However, only the rights of the co–owner–seller are transferred, thereby making
the buyer a co–owner of the property.16 (Italics theirs).

Nearer to the dispute at hand are the pronouncements in the 1944 case of Lopez v. Vda. De Cuaycong. 17 Citing Manresa on Article 399 which is the
present Article 493 of the Civil Code, the Court said:chanRoblesvirtualLawlibrary

x x x Article 399 shows the essential integrity of the right of each co–owner in the mental portion which belongs to him in the ownership or
community.

xxxx

To be a co–owner of a property does not mean that one is deprived of every recognition of the disposal of the thing, of the free use of his right
within the circumstantial conditions of such judicial status, nor is it necessary, for the use and enjoyment, or the right of free disposal, that the
previous consent of all the interested parties be obtained.18 (Underscoring supplied).

The Court in Lopez further cited Scaevola:chanRoblesvirtualLawlibrary

2nd. Absolute right of each co–owner with respect to his part or share. – With respect to the latter, each co–owner is the same as an individual
owner. He is a singular owner, with all the rights inherent in such condition. The share of the co–owner, that is, the part which ideally belongs to
him in the common thing or right and is represented by a certain quantity, is his and he may dispose of the same as he pleases, because it does not
affect the right of the others. Such quantity is equivalent to a credit against the common thing or right and is the private property of each creditor
(co–owner). The various shares ideally signify as many units of thing or right, pertaining individually to the different owners; in other words, a unit
for each owner.19 (Underscoring supplied).

The ultimate authorities in civil law, recognized as such by the Court, agree that co–owners such as respondents have over their part, the right of
full and absolute ownership. Such right is the same as that of individual owners which is not diminished by the fact that the entire property is co–
owned with others. That part which ideally belongs to them, or their mental portion, may be disposed of as they please, independent of the
decision of their co–owners. So we rule in this case. The respondents cannot be ordered to sell their portion of the co–owned properties. In the
language of Rodriguez v. Court of First Instance of Rizal,20 “each party is the sole judge of what is good for him.”21

3. Indeed, the respected commentaries suggest the conclusion that, insofar as the sale of co–owned properties is concerned, there is no common
interest that may be prejudiced should one or more of the co–owners refuse to sell the co–owned property, which is exactly the factual situation in
this case. When respondents disagreed to the sale, they merely asserted their individual ownership rights. Without unanimity, there is no common
interest.

Petitioners who project themselves as prejudiced co–owners may bring a suit for partition, which is one of the modes of extinguishing co–
ownership. Article 494 of the Civil Code provides that no co–owner shall be obliged to remain in the co–ownership, and that each co–owner may
demand at any time partition of the thing owned in common insofar as his share is concerned. Corollary to this rule, Article 498 of the Civil Code
states that whenever the thing is essentially indivisible and the co–owners cannot agree that it be allotted to one of them who shall indemnify the
others, it shall be sold and its proceeds accordingly distributed. This is resorted to (a) when the right to partition the property is invoked by any of
the co–owners but because of the nature of the property, it cannot be subdivided or its subdivision would prejudice the interests of the co–owners,
and (b) the co–owners are not in agreement as to who among them shall be allotted or assigned the entire property upon proper reimbursement
of the co–owners.22 This is the result obviously aimed at by petitioners at the outset. As already shown, this cannot be done while the co–
ownership exists.

Essentially, a partition proceeding accords all parties the opportunity to be heard, the denial of which was raised as a defense by respondents for
opposing the sale of the subject properties.

The necessity of partition could not be more emphasized than in Rodriguez v. Court of First Instance of Rizal,23 to wit:chanRoblesvirtualLawlibrary

x x x That this recourse would entail considerable time, trouble and expense, unwarranted by the value of the property from the standpoint of the
[respondents], is no legal justification for the apportionment of the property not agreeable to any of the co–owners. Disagreements and
differences impossible of adjustment by the parties themselves are bound to arise, and it is precisely with such contingency in view that the law on
partition was evolved.24

WHEREFORE, based on the foregoing, the petition is DENIED without prejudice to the filing of an action for partition. The Decision of the Court of
Appeals in CA–G.R. CV No. 76449 is AFFIRMED.

SO ORDERED.

G.R. No. 210252               June 16, 2014

VILMA QUINTOS, represented by her Attorney-in-Fact FIDEL I. QUINTOS, JR.; FLORENCIA I. DANCEL, represented by her Attorney-in-Fact FLOVY I.
DANCEL; and CATALINO L. IBARRA, Petitioners,
vs.
PELAGIA I. NICOLAS, NOLI L. IBARRA, SANTIAGO L. IBARRA, PEDRO L. IBARRA, DAVID L. IBARRA, GILBERTO L. IBARRA, HEIRS OF AUGUSTO L.
IBARRA, namely CONCHITA R., IBARRA, APOLONIO IBARRA, and NARCISO IBARRA, and the spouses RECTO CANDELARIO and ROSEMARIE
CANDELARIO, Respondents.

DECISION

VELASCO, JR., J.:

The Case

Before the Court is a Petition for Review on Certiorari filed under Rule 45 challenging the Decision1 and Resolution2 of the Court of Appeals (CA) in
CA-G.R. CV No. 98919 dated July 8, 2013 and November 22, 2013, respectively. The challenged rulings affirmed the May 7, 2012 Decision3 of the
Regional Trial Court (RTC), Branch 68 in Camiling, Tarlac that petitioners and respondents are co-owners of the subject property, which should be
partitioned as per the subdivision plan submitted by respondent spouses Recto and Rosemarie Candelario.

The Facts

As culled from the records, the facts of the case are as follows:

Petitioners Vilma Quintos, Florencia Dancel, and Catalino Ibarra, and respondents Pelagia Nicolas, Noli Ibarra, Santiago Ibarra, Pedro Ibarra, David
Ibarra, Gilberto Ibarra, and the late Augusto Ibarra are siblings. Their parents, Bienvenido and Escolastica Ibarra, were the owners of the subject
property, a 281 sqm. parcel of land situated along Quezon Ave., Poblacion C, Camiling, Tarlac, covered by Transfer Certificate Title (TCT) No.
318717.

By 1999, both Bienvenido and Escolastica had already passed away, leaving to their ten (10) children ownership over the subject property.
Subsequently, sometime in 2002, respondent siblings brought an action for partition against petitioners. The case was docketed as Civil Case No.
02-52 and was raffled to the RTC, Branch 68, Camiling, Tarlac. However, in an Order4 dated March 22, 2004, the trial court dismissed the case
disposing as follows:

For failure of the parties, as well as their counsels, to appear despite due notice, this case is hereby DISMISSED.

SO ORDERED.

As neither set of parties appealed, the ruling of the trial court became final, as evidenced by a Certificate of Finality5 it eventually issued on August
22, 2008.

Having failed to secure a favorable decision for partition, respondent siblings instead resorted to executing a Deed of Adjudication6 on September
21, 2004 to transfer the property in favor of the ten (10) siblings. As a result, TCT No. 318717 was canceled and in lieu thereof, TCT No. 390484 was
issued in its place by the Registry of Deeds of Tarlac in the names of the ten (10) heirs of the Ibarra spouses.

Subsequently, respondent siblings sold their 7/10 undivided share over the property in favor of their co-respondents, the spouses Recto and
Rosemarie Candelario. By virtue of a Deed of Absolute Sale7 dated April 17, 2007 executed in favor of the spouses Candelario and an Agreement of
Subdivision8 purportedly executed by them and petitioners, TCT No. 390484 was partially canceled and TCT No. 434304 was issued in the name of
the Candelarios, covering the 7/10portion.

On June 1, 2009, petitioners filed a complaint for Quieting of Title and Damages against respondents wherein they alleged that during their
parents’ lifetime, the couple distributed their real and personal properties in favor of their ten (10) children. Upon distribution, petitioners alleged
that they received the subject property and the house constructed thereon as their share. They likewise averred that they have been in adverse,
open, continuous, and uninterrupted possession of the property for over four (4) decades and are, thus, entitled to equitable title thereto. They
also deny any participation in the execution of the aforementioned Deed of Adjudication dated September 21, 2004 and the Agreement of
Subdivision. Respondents countered that petitioners’ cause of action was already barred by estoppel when sometime in 2006, one of petitioners
offered to buy the 7/10 undivided share of the respondent siblings. They point out that this is an admission on the part of petitioners that the
property is not entirely theirs. In addition, they claimed that Bienvenido and Escolastica Ibarra mortgaged the property but because of financial
constraints, respondent spouses Candelario had to redeem the property in their behalf. Not having been repaid by Bienvenido and Escolastica, the
Candelarios accepted from their co-respondents their share in the subject property as payment. Lastly, respondents sought, by way of
counterclaim, the partition of the property.

Docketed as Civil Case No. 09-15 of the RTC of Camiling, Tarlac, the quieting of title case was eventually raffled to Branch 68 of the court, the same
trial court that dismissed Civil Case No. 02-52. During pre-trial, respondents, or defendants a quo, admitted having filed an action for partition, that
petitioners did not participate in the Deed of Adjudication that served as the basis for the issuance of TCT No. 390484, and that the Agreement of
Subdivision that led to the issuance of TCT No. 434304 in favor of respondent spouses Candelario was falsified.9 Despite the admissions of
respondents, however, the RTC, through its May 27, 2012 Decision, dismissed petitioners’ complaint. The court did not find merit in petitioners’
asseverations that they have acquired title over the property through acquisitive prescription and noted that there was no document evidencing
that their parents bequeathed to them the subject property. Finding that respondent siblings were entitled to their respective shares in the
property as descendants of Bienvenido and Escolastica Ibarra and as co-heirs of petitioners, the subsequent transfer of their interest in favor of
respondent spouses Candelario was then upheld by the trial court. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the above-entitled case is hereby Dismissed.

Also, defendants-spouses Rosemarie Candelario and Recto Candelario are hereby declared as the absolute owners of the 7/10 portion of the
subject lot.

Likewise, the court hereby orders the partition of the subject lots between the herein plaintiffs and the defendants-spouses Candelarios.

SO ORDERED.

Aggrieved, petitioners appealed the trial court’s Decision to the CA, pleading the same allegations they averred in their underlying complaint for
quieting of title. However, they added that the partition should no longer be allowed since it is already barred by res judicata, respondent siblings
having already filed a case for partition that was dismissed with finality, as admitted by respondents themselves during pre-trial.

On July 8, 2013, the CA issued the assailed Decision denying the appeal. The fallo reads: WHEREFORE, premises considered, the Decision dated May
7, 2012 of the Regional Trial Court of Camiling, Tarlac, Branch 68, in Civil Case No. 09-15, is hereby AFFIRMED.
SO ORDERED.

Similar to the trial court, the court a quo found no evidence on record to support petitioners’ claim that the subject property was specifically
bequeathed by Bienvenido and Escolastica Ibarra in their favor as their share in their parents’ estate. It also did not consider petitioners’ possession
of the property as one that is in the concept of an owner. Ultimately, the appellate court upheld the finding that petitioners and respondent
spouses Candelario co-own the property, 30-70 in favor of the respondent spouses.

As regards the issue of partition, the CA added:

x x x Since it was conceded that the subject lot is now co-owned by the plaintiffs-appellants, (with 3/10 undivided interest) and defendants-
appellees Spouses Candelarios (with 7/10 undivided interest) and considering that plaintiffs-appellants had already constructed a 3-storey building
at the back portion of the property, then partition, in accordance with the subdivision plan (records, p. 378) undertaken by defendants-appellants
[sic] spouses, is in order.10

On November 22, 2013, petitioners’ Motion for Reconsideration was denied. Hence, the instant petition.

Issues

In the present petition, the following errors were raised:

I. THE COURT OF APPEALS MANIFESTLY OVERLOOKED RELEVANT AND UNDISPUTED FACTS WHICH, IF PROPERLY CONSIDERED, WOULD
JUSTIFY PETITIONERS’ CLAIM OF EQUITABLE TITLE.

II. THE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE ORDER OF PARTITION DESPITE THE FACT THAT THE COUNTERCLAIM FOR
PARTITION, BASED ON THE DEED OF ABSOLUTE SALE EXECUTED IN 2007, IS BARRED BY LACHES.

III. THE COURT OF APPEALS RENDERED A SUBSTANTIALLY FLAWED JUDGMENT WHEN IT NEGLECTED TO RULE ON PETITIONERS’
CONTENTION THAT THE COUNTERCLAIM FOR PARTITION IS ALSO BARRED BY PRIOR JUDGMENT, DESPITE ITS HAVING BEEN SPECIFICALLY
ASSIGNED AS ERROR AND PROPERLY ARGUED IN THEIR BRIEF, AND WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY THE DISMISSAL
OF THE COUNTERCLAIM.

IV. THE COURT OF APPEALS ERRED WHEN IT ORDERED PARTITION IN ACCORDANCE WITH THE SUBDIVISION PLAN MENTIONED IN ITS
DECISION, IN CONTRAVENTION OF THE PROCEDURE ESTABLISHED IN RULE 69 OF THE RULES OF CIVIL PROCEDURE.11

To simplify, the pertinent issues in this case are as follows:

1. Whether or not the petitioners were able to prove ownership over the property;

2. Whether or not the respondents’ counterclaim for partition is already barred by laches or res judicata; and

3. Whether or not the CA was correct in approving the subdivision agreement as basis for the partition of the property.

The Court’s Ruling

The petition is meritorious in part.

Petitioners were not able to prove equitable title or ownership over the property

Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to real property.12 For an action to quiet
title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or equitable title to or interest in the
real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on the title must be shown to
be in fact invalid or inoperative despite its prima facie appearance of validity or efficacy.13 In the case at bar, the CA correctly observed that
petitioners’ cause of action must necessarily fail mainly in view of the absence of the first requisite.

At the outset, it must be emphasized that the determination of whether or not petitioners sufficiently proved their claim of ownership or equitable
title is substantially a factual issue that is generally improper for Us to delve into. Section 1, Rule 45 of the Rules of Court explicitly states that the
petition for review on certiorari "shall raise only questions of law, which must be distinctly set forth." In appeals by certiorari, therefore, only
questions of law may be raised, because this Court is not a trier of facts and does not normally undertake the re-examination of the evidence
presented by the contending parties during the trial.14 Although there are exceptions15 to this general rule as eloquently enunciated in
jurisprudence, none of the circumstances calling for their application obtains in the case at bar. Thus, We are constrained to respect and uphold the
findings of fact arrived at by both the RTC and the CA.

In any event, a perusal of the records would readily show that petitioners, as aptly observed by the courts below, indeed, failed to substantiate
their claim. Their alleged open, continuous, exclusive, and uninterrupted possession of the subject property is belied by the fact that respondent
siblings, in 2005, entered into a Contract of Lease with the Avico Lending Investor Co. over the subject lot without any objection from the
petitioners.16 Petitioners’ inability to offer evidence tending to prove that Bienvenido and Escolastica Ibarra transferred the ownership over the
property in favor of petitioners is likewise fatal to the latter’s claim. On the contrary, on May 28, 1998, Escolastica Ibarra executed a Deed of Sale
covering half of the subject property in favor of all her 10 children, not in favor of petitioners alone.17

The cardinal rule is that bare allegation of title does not suffice. The burden of proof is on the plaintiff to establish his or her case by preponderance
of evidence.18 Regrettably, petitioners, as such plaintiff, in this case failed to discharge the said burden imposed upon them in proving legal or
equitable title over the parcel of land in issue. As such, there is no reason to disturb the finding of the RTC that all 10 siblings inherited the subject
property from Bienvenido and Escolastica Ibarra, and after the respondent siblings sold their aliquot share to the spouses Candelario, petitioners
and respondent spouses became co-owners of the same.

The counterclaim for partition is not barred by prior judgment

This brings us to the issue of partition as raised by respondents in their counterclaim. In their answer to the counterclaim, petitioners countered
that the action for partition has already been barred by res judicata.

The doctrine of res judicata provides that the judgment in a first case is final as to the claim or demand in controversy, between the parties and
those privy with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other
admissible matter which must have been offered for that purpose and all matters that could have been adjudged in that case.19 It precludes parties
from relitigating issues actually litigated and determined by a prior and final judgment.20 As held in Yusingco v. Ong Hing Lian:21

It is a rule pervading every well-regulated system of jurisprudence, and is put upon two grounds embodied in various maxims of the common law;
the one, public policy and necessity, which makes it to the interest of the state that there should be an end to litigation — republicae ut sit finis
litium; the other, the hardship on the individual that he should be vexed twice for the same cause — nemo debet bis vexari et eadem causa. A
contrary doctrine would subject the public peace and quiet to the will and neglect of individuals and prefer the gratitude identification of a litigious
disposition on the part of suitors to the preservation of the public tranquility and happiness.22

The rationale for this principle is that a party should not be vexed twice concerning the same cause. Indeed, res judicata is a fundamental concept
in the organization of every jural society, for not only does it ward off endless litigation, it ensures the stability of judgment and guards against
inconsistent decisions on the same set of facts.23

There is res judicata when the following requisites are present: (1) the formal judgment or order must be final; (2) it must be a judgment or order
on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case; (3) it
must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and
second actions, identity of parties, of subject matter and of cause of action.24

In the case at bar, respondent siblings admit that they filed an action for partition docketed as Civil Case No. 02-52, which the RTC dismissed
through an Order dated March 22, 2004 for the failure of the parties to attend the scheduled hearings. Respondents likewise admitted that since
they no longer appealed the dismissal, the ruling attained finality. Moreover, it cannot be disputed that the subject property in Civil Case No. 02-52
and in the present controversy are one and the same, and that in both cases, respondents raise the same action for partition. And lastly, although
respondent spouses Candelario were not party-litigants in the earlier case for partition, there is identity of parties not only when the parties in the
case are the same, but also between those in privity with them, such as between their successors-in-interest.25

With all the other elements present, what is left to be determined now is whether or not the dismissal of Civil case No. 02-52 operated as a
dismissal on the merits that would complete the requirements of res judicata.

In advancing their claim, petitioners cite Rule 17, Sec. 3 of the Rules of Court, to wit:

Section 3. Dismissal due to fault of plaintiff. — If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence
in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the
complaint may be dismissed upon motion of the defendant or upon the court’s own motion, without prejudice to the right of the defendant to
prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless
otherwise declared by the court.

The afore-quoted provision enumerates the instances when a complaint may be dismissed due to the plaintiff's fault: (1) if he fails to appear on the
date for the presentation of his evidence in chief on the complaint; (2) if he fails to prosecute his action for an unreasonable length of time; or (3) if
he fails to comply with the Rules or any order of the court. The dismissal of a case for failure to prosecute has the effect of adjudication on the
merits, and is necessarily understood to be with prejudice to the filing of another action, unless otherwise provided in the order of dismissal. Stated
differently, the general rule is that dismissal of a case for failure to prosecute is to be regarded as an adjudication on the merits and with prejudice
to the filing of another action, and the only exception is when the order of dismissal expressly contains a qualification that the dismissal is without
prejudice.26 In the case at bar, petitioners claim that the Order does not in any language say that the dismissal is without prejudice and, thus, the
requirement that the dismissal be on the merits is present.

Truly, We have had the occasion to rule that dismissal with prejudice under the above-cited rule amply satisfies one of the elements of res
judicata.27 It is, thus, understandable why petitioners would allege res judicata to bolster their claim. However, dismissal with prejudice under Rule
17, Sec. 3 of the Rules of Court cannot defeat the right of a co-owner to ask for partition at any time, provided that there is no actual adjudication
of ownership of shares yet. Pertinent hereto is Article 494 of the Civil Code, which reads:

Article 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time the partition of the thing owned
in common, insofar as his share is concerned.

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 any partition when it is
prohibited by law. 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. (emphasis supplied)

From the above-quoted provision, it can be gleaned that the law generally does not favor the retention of co-ownership as a property relation, and
is interested instead in ascertaining the co-owners’ specific shares so as to prevent the allocation of portions to remain perpetually in limbo. Thus,
the law provides that each co-owner may demand at any time the partition of the thing owned in common.

Between dismissal with prejudice under Rule 17, Sec. 3 and the right granted to co-owners under Art. 494 of the Civil Code, the latter must prevail.
To construe otherwise would diminish the substantive right of a co-owner through the promulgation of procedural rules. Such a construction is not
sanctioned by the principle, which is too well settled to require citation, that a substantive law cannot be amended by a procedural rule.28 This
further finds support in Art. 496 of the New Civil Code, viz:

Article 496.Partition may be made by agreement between the parties or by judicial proceedings.1âwphi1 Partition shall be governed by the Rules of
Court insofar as they are consistent with this Code.

Thus, for the Rules to be consistent with statutory provisions, We hold that Art. 494, as cited, is an exception to Rule 17, Sec. 3 of the Rules of Court
to the effect that even if the order of dismissal for failure to prosecute is silent on whether or not it is with prejudice, it shall be deemed to be
without prejudice.

This is not to say, however, that the action for partition will never be barred by res judicata. There can still be res judicata in partition cases
concerning the same parties and the same subject matter once the respective shares of the co-owners have been determined with finality by a
competent court with jurisdiction or if the court determines that partition is improper for co-ownership does not or no longer exists.

So it was that in Rizal v. Naredo,29 We ruled in the following wise:

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

Pursuant to Article 494 of the Civil Code, no co-owner is obliged to remain in the co-ownership, and his proper remedy is an action for partition
under Rule 69 of the Rules of Court, which he may bring at anytime in so far as his share is concerned. Article 1079 of the Civil Code defines
partition as the separation, division and assignment of a thing held in common among those to whom it may belong. It has been held that the fact
that the agreement of partition lacks the technical description of the parties’ respective portions or that the subject property was then still
embraced by the same certificate of title could not legally prevent a partition, where the different portions allotted to each were determined and
became separately identifiable.

The partition of Lot No. 252 was the result of the approved Compromise Agreement in Civil Case No. 36-C, which was immediately final and
executory. Absent any showing that said Compromise Agreement was vitiated by fraud, mistake or duress, the court cannot set aside a judgment
based on compromise. It is axiomatic that a compromise agreement once approved by the court settles the rights of the parties and has the force
of res judicata. It cannot be disturbed except on the ground of vice of consent or forgery.
Of equal significance is the fact that the compromise judgment in Civil Case No. 36-C settled as well the question of which specific portions of Lot
No. 252 accrued to the parties separately as their proportionate shares therein. Through their subdivision survey plan, marked as Annex "A" of the
Compromise Agreement and made an integral part thereof, the parties segregated and separately assigned to themselves distinct portions of Lot
No. 252. The partition was immediately executory, having been accomplished and completed on December 1, 1971 when judgment was rendered
approving the same. The CA was correct when it stated that no co-ownership exist when the different portions owned by different people are
already concretely determined and separately identifiable, even if not yet technically described. (emphasis supplied)

In the quoted case, We have held that res judicata applied because after the parties executed a compromise agreement that was duly approved by
the court, the different portions of the owners have already been ascertained. Thus, there was no longer a co-ownership and there was nothing left
to partition. This is in contrast with the case at bar wherein the co-ownership, as determined by the trial court, is still subsisting 30-70 in favor of
respondent spouses Candelario. Consequently, there is no legal bar preventing herein respondents from praying for the partition of the property
through counterclaim.

The counterclaim for partition is not barred by laches

We now proceed to petitioners’ second line of attack. According to petitioners, the claim for partition is already barred by laches since by 1999,
both Bienvenido and Escolastica Ibarra had already died and yet the respondent siblings only belatedly filed the action for partition, Civil Case No.
02-52, in 2002. And since laches has allegedly already set in against respondent siblings, so too should respondent spouses Candelario be barred
from claiming the same for they could not have acquired a better right than their predecessors-in-interest.

The argument fails to persuade.

Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which––by the exercise of due diligence––could or
should have been done earlier. It is the negligence or omission to assert a right within a reasonable period, warranting the presumption that the
party entitled to assert it has either abandoned or declined to assert it.30 The principle is a creation of equity which, as such, is applied not really to
penalize neglect or sleeping upon one’s right, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation. As
an equitable defense, laches does not concern itself with the character of the petitioners’ title, but only with whether or not by reason of the
respondents’ long inaction or inexcusable neglect, they should be barred from asserting this claim at all, because to allow them to do so would be
inequitable and unjust to petitioners.31

As correctly appreciated by the lower courts, respondents cannot be said to have neglected to assert their right over the subject property. They
cannot be considered to have abandoned their right given that they filed an action for partition sometime in 2002, even though it was later
dismissed. Furthermore, the fact that respondent siblings entered into a Contract of Lease with Avico Lending Investor Co. over the subject
property is evidence that they are exercising rights of ownership over the same.

The CA erred in approving the Agreement for Subdivision

There is merit, however, in petitioners’ contention that the CA erred in approving the proposal for partition submitted by respondent spouses. Art.
496, as earlier cited, provides that partition shall either be by agreement of the parties or in accordance with the Rules of Court. In this case, the
Agreement of Subdivision allegedly executed by respondent spouses Candelario and petitioners cannot serve as basis for partition, for, as stated in
the pre-trial order, herein respondents admitted that the agreement was a falsity and that petitioners never took part in preparing the same. The
"agreement" was crafted without any consultation whatsoever or any attempt to arrive at mutually acceptable terms with petitioners. It, therefore,
lacked the essential requisite of consent. Thus, to approve the agreement in spite of this fact would be tantamount to allowing respondent spouses
to divide unilaterally the property among the co-owners based on their own whims and caprices. Such a result could not be countenanced.

To rectify this with dispatch, the case must be remanded to the court of origin, which shall proceed to partition the property in accordance with the
procedure outlined in Rule 69 of the Rules of Court.

WHEREFORE, premises considered, the petition is hereby PARTLY GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-
G.R. CV No. 98919 dated July 8, 2013 and November 22, 2013, respectively, are hereby AFFIRMED with MODIFICATION. The case is hereby
REMANDED to the RTC, Branch 68 in Camiling, Tarlac for purposes of partitioning the subject property in accordance with Rule 69 of the Rules of
Court.

SO ORDERED.

G.R. No. 187987               November 26, 2014

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

PEREZ, J.:

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

The facts as reviewed are the following:

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

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

The petitioners prayed that the deed of sale be declared null and void arguing that the sale of a definite portion of a co-owned property without
notice to the other co-owners is without force and effect. Further, the complainants prayed for payment of rental fees amounting to ₱1,000.00 per
month from January 2004 or from the time of deprivation of property in addition to attorney’s fees and litigation expenses.

Answering the allegations, Jesus admitted that there was a partition case between him and the petitioners filed in 1993 involvingseveral parcels of
land including the contested Lot No. 4389. However, he insisted that as early as 6 November 1997, a motion 8 was signed by the co-owners
(including the petitioners) wherein Lot No. 4389 was agreed to be adjudicated to the co-owners belonging to the group of Jesus and the other lots
be divided to the other co-owners belonging to the group of Torres. Jesus further alleged that even prior to the partition and motion, several
coowners in his group had already sold their shares to him in various dates of 1985, 1990 and 2004.9 Thus, when the motion was filed and signed by
the parties on 6 November 1997, his rights asa majority co-owner (73%) of Lot No. 4389 became consolidated. Jesus averred that it was
unnecessary to give notice of the sale as the lot was already adjudicated in his favor. He clarified that he only agreed with the 2001 Compromise
Agreement believing that it only pertained to the remaining parcels of land excluding Lot No. 4389.10

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

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

On 15 October 2007, the trial court dismissed the complaint of petitioners in this wise: Therefore, the Court DISMISSES the Complaint. At the same
time, the Court NULLIFIES the site assignment made by Jesus Velez in the Deed of Sale, dated November 9, 1997, of Lorenzo Lapinid’s portion, the
exact location of which still has to be determined either by agreement of the co-owners or by the Court in proper proceedings.13

Aggrieved, petitioners filed their partial motion for reconsideration which was denied through a 26 November 2007 Order of the
court.14 Thereafter, they filed a notice of appeal on 10 December 2007.15

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

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

We deny the petition.

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

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

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

A co-owner is an owner of the whole and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion
which is truly abstract.18 Hence, his co-owners have no right to enjoin a coowner who intends to alienate or substitute his abstract portion or
substitute a third person in its enjoyment.19

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

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

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

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

We are not unaware of the principle that a co-owner cannot rightfully dispose of a particular portion of a co-owned property prior to partition
among all the co-owners. However, this should not signify that the vendee does not acquire anything atall in case a physically segregated area of
the co-owned lot is in fact sold to him. Since the coowner/vendor’s undivided interest could properly be the object of the contract of sale between
the parties, what the vendee obtains by virtue of such a sale are the same rights as the vendor had asco-owner, in an ideal share equivalent to the
consideration given under their transaction. In other words, the vendee steps into the shoes of the vendor as co-owner and acquires a
proportionate abstract share in the property held in common.24

Also worth noting is the pronouncement in Lopez v. Vda. De Cuaycong:25

x x x The fact that the agreement in question purported to sell a concrete portionof the hacienda does not render the sale void, for it is a
wellestablished principle that the binding force of a contract must be recognized as far as it is legally possible to do so. "Quando res non valet ut
ago, valeat quantumvalere potest." (When a thing is of no force as I do it, it shall have as much force as it can have).26 (Italics theirs).

Consequently, whether the disposition involves an abstract or concrete portion of the co-owned property, the sale remains validly executed.

The validity of sale being settled,it follows that the subsequent compromise agreement between the other co-owners did not affect the rights of
Lapinid as a co-owner.

Records show that on 13 August 2001, a judgment based on compromise agreement was rendered with regard to the previous partition case
involving the same parties pertaining to several parcels of land, including the disputed lot. The words of the compromise state that: COME NOW[,]
the parties and to this Honorable Court, most respectfully state that instead of partitioning the properties, subject matter of litigation, that they will
just sell the properties covered by TCT Nos. 25796, 25797 and 25798 of the Register of Deeds of the Province of Cebu and divide the proceeds
among themselves.
That Jesus Velez, Mariano Velez and Vicente Torres, Jr. are currently authorized to sell said properties, receive the proceeds thereof and distribute
them to the parties.27

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

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

We find unacceptable the argument that Lapinid must pay rental payments to the other co-owners.1âwphi1

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

Clearly specified in the Civil Code are the following rights:

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

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

Affirming these rights, the Court held in Aguilar v. Court of Appeals that:30

x x x Each co-owner of property heldpro indivisoexercises his rights over the whole property and may use and enjoy the same with no other
limitation than that he shall not injure the interests of his co-owners, the reason being that until a division is made, the respective share of each
cannot be determined and every co-ownerexercises, together with his coparticipants joint ownership over the pro indiviso property, in addition to
his use and enjoyment of the same.31 From the foregoing, it is absurd to rule that Lapinid, who is already a co-owner, be ordered to pay rental
payments to his other co-owners. Lapinid’s right of enjoyment over the property owned in common must be respected despite opposition and may
notbe limited as long he uses the property to the purpose for which it isintended and he does not injure the interest of the co-ownership.

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

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

xxxx

1. When exemplary damages are awarded;

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

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

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

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

6. In actions for legal support;

7. In actions for the recovery of wages of household helpers, laborers and skilled workers;
 8. In actions for indemnity under workmen's compensation and employer's liability laws;

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

10. When at least double judicial costs arc awarded;

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

In all cases, the attorney's fees and expenses of litigation must be reasonable.

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

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

SO ORDERED.

RICARDO PARDELL Y CRUZ and VICENTA ORTIZ Y FELIN DE PARDELL, Plaintiffs-Appellees, v. GASPAR DE BARTOLOME Y ESCRIBANO and MATILDE
ORTIZ Y FELIN DE BARTOLOME, Defendants-Appellants.

Gaspar de Bartolome in his own behalf.

B. Gimenez Zoboli for Appellees.

SYLLABUS

1. ESTATES; REALTY; RIGHTS OF COOWNERS OR TENANTS IN COMMON. — Each coowner or tenant in common of undivided realty has the same
rights therein as the others; he may use and enjoy the same without other limitation except that he must not prejudice the rights of his coowners,
but until a division is effected, the respective parts belonging to each can not be determined; each coowner exercises joint dominion and is entitled
to joint use.

2. ID.; ID.; ID; RENT BY ONE COOWNER. — For the use and enjoyment of a particular portion of the lower part of a house, not used as living
quarters, a coowner must, in strict justice, pay rent, in like manner as other people pay for similar space in the house; he has no right to the free
use and enjoyment of such space which, if rented to a third party, would produce income.

3. ID.; ID.; ID.; REPAIRS AND IMPROVEMENT; INTEREST. — Until a cause instituted to determine the liability of the rest of the coowners for repairs
and improvements made by one of their number is finally decided and the amount due is fixed, the persons alleged to be liable can not be
considered in default as to interest, because interest is only due from the date of the decision fixing the principal liability. (Supreme court of Spain,
April 24, 1867, November 19, 1869, November 22, 1901, in connection with arts. 1108-1110 of the Civil Code.)

4. ID.; ID.; ID.; VOLUNTARY ADMINISTRATOR; COMPENSATION. — To an administrator or voluntary manager of property belonging to his wife and
another, both coowners, the property being undivided, the law does not conceded any remuneration, without prejudice to his right to be
reimbursed for any necessary and useful expenditures in connection with the property and for any damages he may have suffered thereby.

5. ID.; ID.; ID.; RIGHT TO DEMAND VALUATION BEFORE DIVISION OR SALE. — Any one of the coowners of undivided property about to be divided or
to be sold in consequence of a mutual petition, has the right to ask that the property be valued by experts, a valuation which would not be
prejudicial but rather beneficial to all.

DECISION

TORRES, J.  :

This is an appeal by bill of exceptions, from the judgment of October 5, 1907, whereby the Honorable Dionisio Chanco, judge, absolved the
defendants from the complaint, and the plaintiff from a counterclaim, without special finding as to costs.

Counsel for the spouses Ricardo Pardell y Cruz and Vicenta Ortiz y Felin de Pardell, the first of whom absent in Spain by reason of his employment,
conferred upon the second sufficient and ample powers to appear before the courts of justice, on June 8, 1905, in his written complaint, alleged
that the plaintiff, Vicenta Ortiz, and the defendant, Matilde Ortiz, are the duly recognized natural daughters of the spouses Miguel Ortiz and Calixta
Felin y Paula who died in Vigan, Ilocos Sur, in 1875 and 1882, respectively; that Calixta Felin, prior to her death, executed, on August 17, 1876, a
nuncupative will in Vigan, whereby she made her four children, named Manuel, Francisca, Vicenta, and Matilde, surnamed Ortiz y Felin, her sole
and universal heirs of all her property; that, of the persons enumerated, Manuel died before his mother and Francisca a few years after her death,
leaving no heirs of the said testatrix are the plaintiff Vicenta Ortiz and the defendant Matilde Ortiz; that, aside from some personal property and
jewelry already divided among the heirs, the testatrix possessed, at the time of the execution of her will, and left at her death the real properties
which, with their respective cash values, are as follows:chanrob1es virtual 1aw library

1. A house of strong material, with the lot on which it is built,

situated on Escalante Street, Vigan, and valued at P6,000.00

2. A house of mixed material, with the

lot on which it

stands, at No. 88 Washington Street, Vigan valued at 1,500.00

3. A lot on Magallanes Street, Vigan;

valued at 100.00

4. A parcel of rice land, situated in

the barrio of San Julian,

Vigan;

valued at 60.00

5. A parcel of rice land in the pueblo

of Santa Lucia; 86.00

6. Three parcels of land in the pueblo

of Candon; valued at 150.00

Total 7,896.00

That, on or about the first months of the year 1888, the defendants, without judicial authorization, nor friendly or extrajudicial agreement, took
upon themselves the administration and enjoyment of the said properties and collected the rents, fruits, and products thereof, to the serious
detriment of the plaintiffs’ interest; that, notwithstanding the different and repeated demands extrajudicially made upon Matilde Ortiz to divide
the aforementioned properties with the plaintiff Vicenta and to deliver to the latter the one-half of the same which rightly belonged to her, or the
value thereof, together with one-half of the fruits and rents collected therefrom, the said defendant and her husband, the said defendant and her
husband, the self-styled administrator of the properties mentioned, had been delaying the partition and delivery of the said properties by means of
unkempt promises and other excuses; and that the plaintiffs, on account of the extraordinary delay in the delivery of one-half of said properties, or
their value in cash, as the case might be, had suffered losses and damages in the sum of P8,000. Said counsel for the plaintiffs therefore asked that
judgment be rendered by sentencing the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de Bartolome, to restore and deliver to the
plaintiffs one-half of the total value in cash, according to appraisal, of the undivided property specified, which one-half amounted approximately to
P3,498, or, if deemed proper, to recognize the plaintiff Vicenta Ortiz to be vested with the full and absolute right of ownership to the said undivided
one-half of the properties in question, as universal testamentary heir thereof together with the defendant Matilde Ortiz, to indemnify the plaintiffs
in the sum of P8,000, for losses and damages, and to pay the costs.

Counsel for the defendants, in his answer denied the facts alleged in paragraphs 1, 4, 6, 7 and 8 thereof, inasmuch as, upon the death of the
litigating sisters’ brother Manuel, their mother, who was still living, was his heir by force of law, and the defendants had never refused to give to
the plaintiff Vicenta Ortiz her share of the said properties; and stated that he admitted the facts alleged in paragraph 2, provided it be understood,
however, that the surname of the defendant’s mother was Felin, and not Felix, and that Miguel Ortiz died in Spain, and not in Vigan; that he also
admitted paragraph 3 of the complaint, with the difference that the said surname should be Felin, and likewise paragraph 5, except the part
thereof relating to the personal property and the jewelry, since the latter had not yet been divided; that the said jewelry was in the possession of
the plaintiffs and consisted of: one Lozada gold chronometer watch with a chain in the form of a bridle curb and a watch charm consisting of the
engraving of a postage stamp on a stone mounted in gold and bearing the initials M.O., a pair of cuff buttons made of gold coins, four small gold
buttons, two finger rings, another with the initials M.O., and a gold bracelet; and that the defendants were willing to deliver to the plaintiffs, in
conformity with petition, one-half of the total value in cash, according to appraisement, of the undivided real properties specified in paragraph 5,
which half amounted to P3,948.
In a special defense said counsel alleged that the defendant had never refused to divide the said property and had in fact several years before
solicited the partition of the same; that, from 1886 to 1901, inclusive, there was collected from the property on Calle Escolta the sum of 288 pesos,
besides a few other small amounts derived from other sources, which were delivered to the plaintiffs with other larger amounts, in 1891, and from
the property on Calle Washington, called La Quinta, 990.95 pesos, which proceeds, added together, made a total of 1,278.95 pesos, saving error or
omission; that, between the years abovementioned, 765.38 pesos were spent on the house situated on Calle Escolta, and on that on Calle
Washington, La Quinta, 376.33, which made a total of 1,141.71, saving error or omission; that, in 1897, the work of reconstruction was begun of
the house on Calle Escolta, which had been destroyed by an earthquake, which work was not finished until 1903 and required an expenditure on
the part of the defendant Matilde Ortiz, of 5,091.52 pesos; that all the collections made up to August 1,1905, including the rent from the stores,
amounted to only P3,654.15, and the expenses to P6,252.32, there being, consequently, a balance of P2,598.18, which, divided between the
sisters, the plaintiff and the defendant, would make the latter’s share P1,299.08; that, as shown by the papers kept by the plaintiffs, in the year
1891 the defendant Bartolome presented to the plaintiffs a statement in settlement of accounts, and delivered to the person duly authorized by
the latter for the purpose, the sum of P2,606.29, which the said settlement showed was owing his principals, from various sources; that, the
defendant Bartolome having been the administrator of the undivided property claimed by the plaintiffs, the latter were owing the former the legal
remuneration of the percentage allowed by law for administration; and that the defendants were willing to pay the sum of P3,948, one-half of the
total value of the said properties, deducting therefrom the amount found to be owing them by the plaintiffs, and asked that the judgment be
rendered in their favor to enable them to recover from the latter that amount, together with the costs and expenses of the suit.

The defendants, in their counterclaim, reported each and all of the allegations contained in each of the paragraphs of section 10 of their answer;
that the plaintiffs were obliged to pay to the administrator of the said property the remuneration allowed him by law; that, as the revenues
collected by the defendants amounted to no more than P3,654.15, and the expenditures incurred by them, to P6,252.32, it followed that the
plaintiffs owed the defendants P1,299.08, that is, one-half of the difference between the amount collected from and that expended on the
properties, and asked that judgment be therefore rendered in their behalf to enable them to collect this sum from the plaintiffs, Ricardo Pardell
and Vicenta Ortiz, with legal interest thereon from December 7, 1904, the date when the accounts were rendered, together with the sums to which
the defendant Bartolome was entitled for the administration of the undivided properties in question.

By a written motion of August 21, 1905, counsel for the plaintiffs requested permission to amend the complaint by inserting immediately after the
words "or respective appraisal," fifth line of paragraph 5, the phrased "in cash in accordance with the assessed value," and likewise further to
amend the same, in paragraph 6 thereof, by substituting the following words in lieu of the petition for the remedy sought: "By reason of all the
foregoing, I beg the court to be pleased to render judgment by sentencing the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de
Bartolome, to restore and deliver to the plaintiffs an exact one-half of the total value of the undivided properties described in the complaint, such
value to be ascertained by the expert appraisal of two competent persons, one of whom shall be appointed by the plaintiffs and the other by the
defendants, and, in case of disagreement between these two appointees such value shall be determined by a third expert appraiser appointed by
the court, or, in a proper case, by the price offered at public auction; or, in lieu thereof, it is requested that the court recognize the plaintiff, Vicenta
Ortiz, to be vested with a full and absolute right to an undivided one-half of the said properties; furthermore, it is prayed that the plaintiffs be
awarded an indemnity of P8,000 for losses and damages, and the costs." Notwithstanding the opposition of the defendants, the said defendants
were allowed a period of three days within which to present a new answer. An exception was taken to this ruling.

The proper proceedings were had with reference to the valuation of the properties concerned in the division sought and incidental issues were
raised relative to the partition of some of them and their award to one or the other of the parties. Due consideration was taken of the averments
and statements of both parties who agreed between themselves, before the court, that any of them might at any time acquire, at the valuation
fixed by the expert judicial appraiser, any of the properties in question, there being none in existence excluded by the litigants. The court,
therefore, by order of December 28, 1905, ruled that the plaintiffs were entitled to acquire, at the valuation determined by the said expert
appraiser, the building known as La Quinta, the lot on which it stands and the warehouses and other improvements comprised within the inclosed
land, and the seed lands situated in the pueblos of Vigan and Santa Lucia; and that the defendants were likewise entitled to acquire the house on
Calle Escolta, the lot on Calle Magallanes, and the three parcels of land situated in the pueblo of Candon.

After this partition had been made, counsel for the defendants, by a writing of March 8, 1908, set forth: That, having petitioned for the
appraisement of the properties in question for the purpose of their partition, it was not to be understood that he desisted from the exception duly
entered to the ruling made in the matter of the amendment to the complaint; that the properties retained by the defendants were valued at
P9,310, and those retained by the plaintiffs, at P2,885, one-half of which amounts each party had to deliver to the other, as they were pro indiviso
properties; that, therefore, the defendants had to pay the plaintiffs the sum of P3,212.50, after deducting the amount which the plaintiffs were
obliged to deliver to the defendants, as one-half of the price of the properties retained by the former; that, notwithstanding that the amount of the
counterclaim for the expenses incurred in the reconstruction of the pro indiviso property should be deducted from the sum which the defendants
had to pay the plaintiffs, the former, for the purpose of bringing the matter of the partition to a close, would deliver to the latter, immediately upon
the signing of the instrument of purchase and sale, the sum of P3,212.50, which was one-half of the value of the properties allotted to the
defendants; such delivery, however, was not to be understood as a renouncement of the said counterclaim, but only as a means for the final
termination of the pro indiviso status of the property.

The case having been heard, the court, on October 5, 1907, rendered judgment holding that the revenues and the expenses were compensated by
the residence enjoyed by the defendant party, that no losses or damages were either caused or suffered, nor likewise any other expense besides
those aforementioned, and absolved the defendants from the complaint and the plaintiffs from the counterclaim, with no special finding as to
costs. An exception was taken to this judgment by counsel for the defendants who moved for a new trial on the grounds that the evidence
presented did not warrant the judgment rendered and that the latter was contrary to law. This motion was denied, exception whereto was taken
by said counsel, who filed the proper bill of exceptions, and the same was approved and forwarded to the clerk of this court, with a transcript of
the evidence.

Both of the litigating sisters assented to a partition by halves of the property left in her will by their mother at her death; in fact, during the course
of this suit, proceedings were had, in accordance with the agreement made, for the division between them of the said hereditary property of
common ownership, which division was recognized and approved in the findings of the trial court, as shown by the judgment appealed from.

The issues raised by the parties, aside from the said division made during the trial, and which have been submitted to this court for decision,
concern: (1) The indemnity claimed for losses and damages, which the plaintiffs allege amount to P8,000, in addition to the rents which should
have been derived from the house on Calle Escolta, Vigan; (2) the payment by the plaintiffs to the defendants of the sum of P1,299.08, demanded
by way of counterclaim, together with legal interest thereon from December 7, 1904; (3) the payment to the husband of the defendant Matilde
Ortiz, of a percentage claimed to be due him as the administrator of the property of common ownership; (4) the division of certain jewelry in the
possession of the plaintiff Vicenta Ortiz; and (5) the petition that the amendment be held to have been improperly admitted, which was made by
the plaintiffs in their written motion of August 21, 1905, against the opposition of the defendants, through which admission the latter were obliged
to pay the former P910.50.

Before entering upon an explanation of the propriety or impropriety of the claims made by both parties, it is indispensable to state that the trial
judge, in absolving the defendants from the complaint, held that they had not caused losses and damages to the plaintiffs, and that the revenues
and the expenses were compensated, in view of the fact that the defendants had been living for several years in the Calle Escolta house, which was
pro indiviso property of joint ownership.

By this finding absolving the defendants from the complaint, and which was acquiesced in by the plaintiffs who made no appeal therefrom, the first
issue has been decided which was raised by the plaintiffs, concerning the indemnity for losses and damages, wherein are comprised the rents
which should have been obtained from the upper story of the said house during the time it was occupied by the defendants, Matilde Ortiz and her
husband, Gaspar de Bartolome.

Notwithstanding the acquiescence on the part of the plaintiffs, assenting to the said finding whereby the defendants were absolved from the
complaint, yet as such absolution is based on the compensation established in the judgment of the trial court, between the amounts which each
party is entitled to claim from the other, it is imperative to determine whether the defendant Matilde Ortiz, as coowner of the house on Calle
Escolta, was entitled, with her husband, to reside therein, without paying to her coowner, Vicenta Ortiz, who, during the greater part of the time,
lived with her husband abroad, one-half of the rents which the upper story would have produced, had it been rented to a stranger.

Article 394 of the Civil Code prescribes:jgc:chanrobles.com.ph

"Each coowner may use the things owned in common, provided he uses them in accordance with their object and in such manner as not to injure
the interests of the community nor prevent the coowners from utilizing them according to their rights."cralaw virtua1aw library

Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling, in the house of joint ownership; but the record shows no
proof that, by so doing, the said Matilde occasioned any detriment to the interests of the community property, nor that she prevented her sister
Vicenta from utilizing the said upper story according to her rights. It is to be noted that the stores of the lower floor were rented and an accounting
of the rents was duly made to the plaintiffs.

Each coowner of realty held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than
that he shall not injure the interests of his coowners, for the reason that, until a division be made, the respective part of each holder can not be
determined and every one of the coowners exercises together with his other coparticipants, joint ownership over the pro indiviso property, in
addition to his use and enjoyment of the same.

As the hereditary properties of the joint ownership of the two sisters, Vicenta Ortiz, plaintiff, and Matilde Ortiz, defendant, were situated in the
Province of Ilocos Sur, and were in the care of the last named, assisted by her husband, while the plaintiff Vicenta with her husband was residing
outside of the said province the greater part of the time between 1885 and 1905, when she left these Islands for Spain, it is not at all strange that
delays and difficulties should have attended the efforts made to collect the rents and proceeds from the property held in common and to obtain a
partition of the latter, especially during several years when, owing to the insurrection, the country was in a turmoil; and for this reason, aside from
that founded on the right of coownership of the defendants, who took upon themselves the administration and care of the property of joint
tenancy for purposes of their preservation and improvement, these latter are not obliged to pay to the plaintiff Vicenta one-half of the rents which
might have been derived from the upper story of the said house on Calle Escolta, and, much less, because one of the living rooms and the
storeroom thereof were used for the storage of some belongings and effects of common ownership between the litigants. The defendant Matilde,
therefore, in occupying with her husband the upper floor of the said house, did not injure the interests of her coowner, her sister Vicenta, nor did
she prevent the latter from living therein, but merely exercised a legitimate right pertaining to her as a coowner of the property.

Notwithstanding the above statements relative to the joint-ownership rights which entitled the defendants to live in the upper story of the said
house, yet, in view of the fact that the record shows it to have been proved that the defendant Matilde’s husband, Gaspar de Bartolome, occupied
for four years a room or a part of the lower floor of the same house on Calle Escolta, using it as an office for the justice of the peace, a position
which he held in the capital of that province, strict justice requires that he pay his sister-in-law, the plaintiff, one-half of the monthly rent which the
said quarters could have produced, had they been leased to another person. The amount of such monthly rental is fixed at P16 in appearance with
the evidence shown in the record. This conclusion as to Bartolome’s liability results from the fact that, even as the husband of the defendant
coowner of the property, he had no right to occupy and use gratuitously the said part of the lower floor of the house in question, where he lived
with his wife, to the detriment of the plaintiff Vicenta who did not receive one-half of the rent which those quarters could and should have
produced, had they been occupied by a stranger, in the same manner that rent was obtained from the rooms on the lower floor that were used as
stores. Therefore, the defendant Bartolome must pay to the plaintiff Vicenta P384, that is, one-half of P768, the total amount of the rents which
should have been obtained during four years from the quarters occupied as an office by the justice of the peace of Vigan.

With respect to the second question submitted for decision to this court, relative to the payment of the sum demanded as a counterclaim, it was
admitted and proved in the present case that, as a result of a serious earthquake on August 15, 1897, the said house on Calle Escolta was left in
ruins and uninhabitable, and that, for its reconstruction or repair, the defendants had to expend the sum of P6,252.32. This expenditure,
notwithstanding that it was impugned, during the trial, by the plaintiffs, was duly proved by the evidence presented by the defendants. Evidence,
unsuccessfully rebutted, was also introduced which proved that the rents produced by all the rural and urban properties of common ownership
amounted, up to August 1, 1905, to the sum of P3,654.15 which, being applied toward the cost of the repair work on the said house, leaves a
balance of P2,598.17, the amount actually advanced by the defendants, for the rents collected by them were not sufficient for the termination of
all the work undertaken on the said building, necessary for its complete repair and to replace it in a habitable condition. It is therefore lawful and
just that the plaintiff Vicenta Ortiz, who was willing to sell to her sister Matilde for P1,500, her share in the house in question, when it was in a
ruinous state, should pay the defendants one-half of the amount expended in the said repair work, since the building after reconstruction was
worth P9,000, according to expert appraisal. Consequently, the counterclaim made by the defendants for the payment to them of the sum of
P1,299.08, is a proper demand, though from this sum a reduction must be made of P384, the amount of one-half of the rents which should have
been collected for the use of the quarters occupied by the justice of the peace, the payment of which is incumbent upon the husband of the
defendant Matilde, as aforesaid, and the balance remaining, P915.08, is the amount which the plaintiff Vicenta must pay to the defendants.

The defendants claim to be entitled to the collection of legal interest on the amount of the counterclaim, from December 7, 1904. This contention
can not be sustained, inasmuch as, until this suit is finally decided, it could not be known whether the plaintiffs would or would not be obliged to
pay any sum whatever in reimbursement of expenses incurred by the plaintiffs in the repair work on the said house on Calle Escolta, whether or
not the defendants in turn, were entitled to collect any such amount, and finally what the net sum would be which the plaintiffs might have to pay
as reimbursement for one-half of the expenditures made by the defendants. Until final disposal of the case, no such net sum can be determined,
nor until then can the debtor be deemed to be in arrears. In order that there be an obligation to pay legal interest in connection with a matter at
issue between the parties, it must be declared in a judicial decision from what date the interest will be due on the principal concerned in the suit.
This rule has been established by the decisions of the supreme court of Spain, in reference to articles 1108, 1109, and 1110 of the Civil Code,
rendered on April 24, 1867, November 19, 1869, and February 22, 1901.

With regard to the percentage, as remuneration claimed by the husband of the defendant Matilde for his administration of the property of
common ownership, inasmuch as no stipulation whatever was made in the matter by and between him and his sister-in-law, the said defendant,
the claimant is not entitled to the payment of any remuneration whatsoever. Of his own accord and as an officious manager, he administered the
said pro indiviso property, one-half of which belonged to his wife who held it in joint tenancy, with his sister-in-law, and the law does not allow him
any compensation as such voluntary administrator. He is merely entitled to a reimbursement for such actual and necessary expenditures as he may
have made on the undivided properties and an indemnity for the damages he may have suffered while acting in that capacity, since at all events it
was his duty to care for and preserve the said property half of which belonged to his wife; and in exchange for the trouble and labor occasioned
him by the administration of his sister-in-law’s half of the said property, he with his wife resided in the upper story of the house aforementioned,
without payment of one-half of the rents said quarters might have produced had they been leased to another person.

With respect to the division of the certain jewelry, petitioned for by the defendants and appellants only in their brief in this appeal, the record of
the proceedings in the lower court does not show that the allegation made by the plaintiff Vicenta is not true, to the effect that the deceased
mother of the litigant sisters disposed of this jewelry during her lifetime, because, had she not done so, the will made by the said deceased would
have been exhibited in which the said jewelry would have been mentioned, at least it would have been proved that the articles in question came
into the possession of the plaintiff Vicenta without the expressed desire and the consent of the deceased mother of the said sisters, for the gift of
this jewelry was previously assailed in the courts, without success; therefore, and in view of its inconsiderable value, there is no reason for holding
that the said gift was not made.

As regards the collection of the sum of P910.50, which is the difference between the assessed value of the undivided real properties and the price
of the same as determined by the judicial expert appraiser, it is shown by the record that the ruling of the trial judge admitting the amendment to
the original complaint, is in accord with the law and principles of justice, for the reason that any of the coowners of a pro indiviso property, subject
to division or sale, is entitled to petition for its valuation is not prejudicial to any of the joint owners, but is beneficial to their interests, considering
that, as a general rule, the assessed value of a building or a parcel of realty is less than the actual real value of the property, and this being
understood by the defendants, they appointed an expert appraiser to determine, in conjunction with the one selected by the plaintiffs, the value of
the properties of joint ownership. These two experts took part in the later proceedings of the suit until finally, and during the course of the latter,
the litigating parties agreed to an amicable division of the pro indiviso hereditary property, in accordance with the price fixed by the judicial expert
appraiser appointed as a third party, in view of the disagreement between and nonconformity of the appraisers chosen by the litigants. Therefore it
is improper now to claim a right to the collection of the said sum, the difference between the assessed value and that fixed by the judicial expert
appraiser for the reason that the increase in price, as determined by this latter appraisal, redounded to the benefit of both parties.

In consideration of the foregoing, whereby the errors assigned to the lower court have been duly refuted, it is our opinion that, with a partial
reversal of the judgment appealed from, in so far as it absolves the plaintiffs from the counterclaim presented by the defendants, we should and
hereby do sentence the plaintiffs to the payment of the sum of P915.08, the balance of the sum claimed by the defendants as a balance of the one-
half of the amount which the defendants advanced for the reconstruction or repair of the Calle Escolta house, after deducting from the total of
such sum claimed by the latter the amount of P384 which Gaspar de Bartolome, the husband of the defendant Matilde, should have paid as one-
half of the rents due for his occupation of the quarters on the lower floor of the said house as an office for the justice of the peace court of Vigan;
and we further find: (1) That the defendants are not obliged to pay one-half of the rents which could have been obtained from the upper story of
the said house; (2) that the plaintiffs can not be compelled to pay legal interest from December 7, 1904, on the sum expended in the reconstruction
of the aforementioned house, but only the interest fixed by law, at the rate of per cent per annum, from the date of the judgment to be rendered
in accordance with this decision; (3) that the husband of the defendant Matilde Ortiz is not entitled to any remuneration for the administration of
the pro indiviso property belonging to both parties; (4) that, neither is he entitled to collect from the plaintiffs the sum of P910.50, the difference
between the assessed valuation and the price set by the expert appraisal solicited by the plaintiffs in their amendment to the complaint; and, (5)
that no partition shall be made of certain jewelry aforementioned now in the possession of the plaintiff Vicenta Ortiz. The said judgment, as relates
to the points appealed, is affirmed, in so far as its findings agree with those of this decision, and is reversed, in so far as they do not. No special
finding is made regarding the costs of both instances. So ordered.

Arellano, C.J., Mapa, Johnson, Carson, and Trent, JJ., concur.

G.R. No. 123509             March 14, 2000

LUCIO ROBLES, EMETERIA ROBLES, ALUDIA ROBLES and EMILIO ROBLES, petitioners,

vs.
COURT OF APPEALS, Spouses VIRGILIO SANTOS and BABY RUTH CRUZ, RURAL BANK OF CARDONA, Inc., HILARIO ROBLES, ALBERTO PALAD JR. in
his capacity as Director of Lands, and JOSE MAULEON in his capacity as District Land Officer of the Bureau Of Lands, respondents.

PANGANIBAN, J.:

To be entitled to the remedy of quieting of title, petitioners must show that they have title to the real property at issue, and that some deed or
proceeding beclouds its validity or efficacy. Buyers of unregistered real property, especially banks, must exert due diligence in ascertaining the titles
of mortgagors and sellers, lest some innocent parties be prejudiced. Failure to observe such diligence may amount to bad faith and may result in
the nullity of the mortgage, as well as of the subsequent foreclosure and/or auction sale. Unless the co-ownership is clearly repudiated, a co-owner
cannot, by prescription, acquire title to the share of the other co-owners.

The Case

Before us is a Petition for Review under Rule 45, assailing the June 15, 1995 Decision and the January 15, 1996 Resolution of the Court of
Appeals 1 (CA) in CA-GR CV No. 34213.2 In its Decision, the CA ruled: 3

WHEREFORE, the trial court's June 17, 1991 decision is REVERSED and SET ASIDE, and in lieu thereof a new one is hereby entered
ordering the dismissal of the plaintiffs-appellees['] second amended complaint.

Earlier, the trial court had disposed as follows:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring free patent Title No. IV-1-010021 issued by the Bureau of Lands as null and void;

2. Ordering the defendant spouses Vergel Santos and Ruth Santos to deliver the property subject of this case to the plaintiff;
and

3. Declaring the heirs of Silvino Robles as the absolute owner of the land in controversy.

The January 15, 1996 CA Resolution denied petitioners' Motion for Reconsideration.

The Facts

The present Petition is rooted in a case for quieting of title before the Regional Trial Court of Morong, Rizal, filed on March 14, 1988, 4 by Petitioners
Lucio Robles, Emeteria Robles, Aludia. Robles and Emilio Robles. The facts were narrated by the trial court in this wise:

There seems to be no dispute that Leon Robles primitively owned the land situated in Kay Taga, Lagundi, Morong, Rizal with an area of
9,985 square meters. He occupied the same openly and adversely. He also declared the same in his name for taxation purposes as early
as 1916 covered by Tax Declaration No. 17865 (Exh. "I") and paid the corresponding taxes thereon (Exh. "B"). When Leon Robles died, his
son Silvino Robles inherited the land, who took possession of the land, declared it in his name for taxation purposes and paid the taxes
thereon.1âwphi1.nêt
 Upon the death of Silvino Robles in 1942, his widow Maria de la Cruz and his children inherited the property. They took adverse
possession of said property and paid taxes thereon. The task of cultivat[ing] the land was assigned to plaintiff Lucio Robles who planted
trees and other crops. He also built a nipa hut on the land. The plaintiffs entrusted the payment of the land taxes to their co-heir and half-
brother, Hilario Robles.

In 1962, for unknown reasons, the tax declaration of the parcel of land in the, name of Silvino Robles was canceled and transferred to one
Exequiel Ballena (Exh. "19"), father of Andrea Robles who is the wife of defendant Hilario Robles. Thereafter, Exequiel Ballena secured a
loan from the Antipolo Rural Bank, using the tax declaration as security. Somehow, the tax declaration was transferred [to] the name of
Antipolo Rural Bank (Exh. "17") and later on, was transferred [to] the name of defendant Hilario Robles and his wife (Exh. "16").

In 1996, Andrea Robles secured a loan from the Cadona Rural Bank, Inc., using the tax declaration as security. Andrea Robles testified
without contradiction that somebody else, not her husband Hilario Robles, signed the loan papers because Hilario Robles was working in
Marinduque at that time as a carpenter.

For failure to pay the mortgage debt, foreclosure proceedings were had and defendant Rural Bank emerged as the highest bidder during
the auction sale in October 1968.

The spouses Hilario Robles failed to redeem the property and so the tax declaration was transferred in the name of defendant Rural Bank.
On September 25, 1987, defendant Rural Bank sold the same to the Spouses Vergel Santos and Ruth Santos.

In September 1987, plaintiff discovered the mortgage and attempted to redeem the property, but was unsuccessful. On May 10, 1988,
defendant spouses Santos took possession of the property in question and was able to secure Free Patent No. IV-1-010021 in their
names. 5

On the other hand, the Court of Appeals summarized the facts of the case as follows:

The instant action for quieting of title concerns the parcel of land bounded and more particularly described as follows:

A parcel of land located at Kay Taga, Lagundi, Morong, Rizal. Bounded [i]n the north by the property of Venancio Ablay y
Simeon Ablay; [i]n the east by the property of Veronica Tulak y Dionisio Ablay; [i]n the south by the property of Simeon Ablay y
Dionisio Ablay; and [i]n the west by the property of Dionisio Ablay y Simeon Ablay, with an area of 9,985 square meters, more
or less, assessed in the year 1935 at P60.00 under Tax Declaration No. 23219.

As the heirs of Silvino Robles who, likewise inherited the above-described parcel from Leon Robles, the siblings Lucio, Emeteria, Aludia
and Emilio, all surnamed Robles, commenced the instant suit with the filing of their March 14, 1988 complaint against Spouses Virgilio
and Ruth Santos, as well as the Rural Bank of Cardona, Inc. Contending that they had been in possession of the land since 1942, the
plaintiff alleged, among other matters, that it was only in September of 1987 that they came to know of the foreclosure of the real estate
mortgage constituted thereon by the half-brother, Hilario Robles, in favor of defendant Rural Bank; and that they likewise learned upon
further inquiry, that the latter had already sold the self-same parcel in favor of the Santos spouses (pp. 1-3, orig, rec.). Twice amended to
implead Hilario Robles (pp. 76-80, orig. rec) and, upon subsequent discovery of the issuance of Free Patent No. IV-I-010021 in favor of the
defendant spouses, the Director of Land as parties-defendants (pp. 117-121, orig. rec). The plaintiffs' complaint sought the following
reliefs on the theory that the encumbrance of their half-brother, constituted on the land, as well as all proceedings taken subsequent
thereto, were null and void, to wit:

Wherefore, it is respectfully prayed that (a) a preliminary mandatory injunction be issued forthwith restoring plaintiffs to their possession
of said parcel of land; (b) an order be issued annulling said Free Patent No. IV-I-010021 in the name of defendants spouses Vergel Santos
and Ruth C. Santos, the deed of sale aforementioned and any tax declaration which have been issued in the name of defendants; and (c)
ordering defendants jointly and severally, to pay plaintiffs the sum of P10,000.00 as attorney's fees.

Plaintiffs pray for other relief as [may be] just and equitable under the premises. (pp. 120-121, orig. rec.)

x x x           x x x          x x x

With the termination of the pre-trial stage upon the parties-litigants' agreement (p. 203, orig. rec.) the trial court proceeded to try the case on the
merits. It thereafter rendered the challenged June 17, 1991 decision upon the following findings and conclusions:

The real estate, mortgage allegedly executed by Hilario Robles is not valid because his signature in the mortgage deed was forged. This
fact, which remains unrebutted, was admitted by Andrea Robles.

Inasmuch as the real estate mortgage executed allegedly by Hilario Robles in favor of the defendant Cardona Rural Bank, Inc. was not
valid, it stands to reason that the foreclosure proceedings therein were likewise not valid. Therefore, the defendant bank did not acquire
 any right arising out of the foreclosure proceedings. Consequently, defendant bank could not have transferred any right to the spouses
Santos.

The fact that the land was covered by a free patent will not help the defendant Santos any.

There can be no question that the subject [property was held] in the concept of owner by Leon Robles since 1916. Likewise, his successor-
in-interest, Silvino Robles, his wife Maria de la Cruz and the plaintiffs occupied the property openly, continuously and exclusively until
they were ousted from their possession in 1988 by the spouses Vergel and Ruth Santos.

Under the circumstances, therefore, and considering that "open, exclusive and undisputed possession of alienable public lands for the
period prescribed by law (30 years), creates the legal fiction whereby the land, upon completion of the requisite period, ipso jure and
without the need of judicial or other action, ceases to be public land and becomes private property. Possession of public land . . . which is
[of] the character and duration prescribed by the statute is the equivalent of an express grant from the State, considering the dictum of
the statute itself[:]; "The . . . shall be conclusively presumed to have performed all the conditions essential to a government grant and
shall be entitled to a certificate of title . . ." No proof is admissible to overcome a conclusive presumption[,] and confirmation proceedings
would be a little more than a formality, at the most limited to ascertaining whether the possession claimed is of the required character
and length of time. Registration thereunder would not confer title, but simply recognize a title already vested. (Cruz v. IAC, G.R. No.
75042, November 29, 1988) The land in question has become private land.

Consequently, the issuance of [a] free patent title to the Spouses Vergel Santos and Ruth C. Santos is not valid because at the time the
property subject of this case was already private land, the Bureau of Lands having no jurisdiction to dispose of the same. (pp. 257-259,
orig. rec.)

Dissatisfied with the foregoing decision, the Santos spouses and the defendant Rural Bank jointly filed their July 6, 1991 Notice of Appeal (p. 260,
orig. rec.) . . . . 6

Ruling of the Court of Appeals

In reversing the trial court, the Court of Appeals held that petitioners no longer had any title to the subject property at the time they instituted the
Complaint for quieting of title. The CA ratiocinated as follows:

As correctly urged by the appellants, the plaintiff-appellees no longer had any title to the property at the time of the institution of the
instant complaint. (pp. 25-27, rec.) The latter's claim of continuous possession notwithstanding (pp. 3-5, TSN, July 5, 1990; p. 12, TSN, July
12, 1990), the aforesaid loss of title is amply evidenced by the subsequent declaration of the subject realty for taxation purposes not only
in the name of Exequiel Ballena (Exhibits "1" and "2", pp. 23-24, orig, rec.) but also in the name of the Rural Bank of Antipolo (Exhibit 17,
vol. II orig. rec). On the theory that tax declarations can be evincive of the transfer of a parcel of land or a portion thereof (Gacos v. Court
of Appeals, 212 SCRA 214), the court a quo clearly erred in simply brushing aside the apparent transfers [which] the land in litigation had
undergone. Whether legal or equitable, it cannot, under the circumstances, be gainsaid that the plaintiff-appellees no longer had any title
to speak of when Exequiel Ballena executed the November 7, 1966 Deed of Absolute Sale transferring the land in favor of the spouses
Hilario and Andrea Robles (Exhibit "3", p. 25, orig. rec.)

Even on the theory that the plaintiffs-appellees and their half-brother, Hilario Robles, are co-owners of the land left behind by their
common father, Silvino Robles, such title would still be effectively discounted by what could well serve as the latter's acts of repudiation
of the co-ownership, i.e., his possession (p. 22, TSN, November 15, 1990) and declaration thereof for taxation purposes in his own name
(Exhibit "4", p. 26, orig. rec.). In view of the plaintiffs-appellees' inaction for more than twenty (20) years from the time the subject realty
was transferred in favor of Hilario Robles, the appellants correctly maintain that prescription had already set in. While it may be readily
conceded that an action to quiet title to property in the possession of the plaintiff is imprescriptible (Almanza vs. Arguelles, 156 SCRA
718; Coronel vs. Intermediate Appellate Court, 155 SCRA 270; Caragay-Layno vs. Court of Appeals, 133 SCRA 718; Charon Enterprises vs.
Court of Appeals, 124 SCRA 784; Faja vs. Court of Appeals, 75 SCRA 441; Burton vs. Gabar, 55 SCRA 4999), it equally bears emphasis that a
co-owner or, for that matter, the said co-owner[']s successors-in-interest who occupy the community property other than as co-owner[s]
can claim prescription as against the other co-owners (De Guzman vs. Austria, 148 SCRA 75; Ramos vs. Ramos, 45 Phil. 362; Africa vs.
Africa, 42 Phil. 902; Bargayo vs. Camumot, 40 Phil. 857; De Castro vs. Echarri, 20 Phil. 23). If only in this latter sense, the appellants
correctly argue that the plaintiffs-appellees have lost their cause of action by prescription.

Over and above the foregoing considerations, the court a quo gravely erred in invalidating the real estate mortgage constituted on the
land solely on the basis of Andrea Robles' testimony that her husband's signature thereon was forged (p. 257, orig. rec.),

x x x           x x x          x x x

In according to the foregoing testimony . . . credibility which, while admittedly unrebutted, was altogether uncorroborated, the trial court
lost sight of the fact that the assailed deed of real estate mortgage (Exhibit "5", Vol. II, orig. rec.) is a public document, the
acknowledgment of which is a prima facie evidence of its due execution (Chua vs. Court of Appeals, 206 SCRA 339). As such, it retains the
 presumption of validity in the absence of a full, clear and convincing evidence to overcome such presumption (Agdeppa vs. Ibe, 220 SCRA
584).

The foregoing principles take even more greater [sic] when it is, moreover, borne in mind that Hilario Robles made the following
admissions in his March 8, 1989 answer, viz:

3. The complaint filed against herein answering defendant has no legal basis considering that as the lawful owner of the subject
real property, defendant Hilario Robles has the right to mortgage the said real property and could dispose the same in whatever
manner he wishe[s] to do. (p. 96, orig. rec.)

Appropriately underscored by the appellants, the foregoing admission is binding against Hilario [Robles]. Judicial admissions, verbal or
written, made by the parties in the pleadings or in the course of the trial or other proceedings in the same case are conclusive, no
evidence being required to prove the same. They cannot be contradicted unless shown to have been made through [a] palpable mistake
or [unless] no such admission was actually made (Philippine American General Insurance, Inc. vs. Sweet Lines, Inc., 212 SCRA 194).

It does not help the plaintiffs-appellees cause any that, aside from complying with the requirements for the foreclosure of the subject real
estate mortgage (Exhibits "6", "7", "8" and "10", Volume II [)], the appellant Rural Bank had not only relented to the mortgagor's request
to postpone the (Exhibit "g", Vol. II, orig. rec.) but had likewise granted the latter's request for an extension of the redemption period
therefor (Exhibits "11" and "12", pp. 35-36, orig. rec.). Without going into minute detail in discussing the Santos spouses' rights as
purchasers for value and in good faith (Exhibit "21", Vol. II, orig. rec.), the mortgagor and the plaintiffs'-appellees cannot now be heard to
challenge the validity of the sale of the land after admittedly failing to redeem the same within the extension the appellant, Rural Bank
granted (pp. 10-11, TSN, November 15, 1990).

Being dependent on the supposed invalidity of the constitution and foreclosure of the subject real estate mortgage, the plaintiffs-
appellees' attack upon . . . Free Patent No. IV-I must necessarily fail. The trial court, therefore, misread, and ignored the evidence o[n]
record, to come up with erroneous conclusion.

Contending that such ruling was contrary to law and jurisprudence, Petitioners Lucio, Emeteria, Aludia and Emilio — all surnamed Robles — filed
this Petition for Review. 7

The Assigned Error

Petitioners ascribe the following error to the respondent court:

Respondent Court of Appeals grievously erred in ruling that with the transfers of the tax declaration over the parcel of land in question
from Silvino Robles to Exequiel Ballena, then to the Rural Bank of Antipolo, then to Respondent Hilario Robles, then to Respondent Rural
Bank of Cardona Inc., and then finally to Respondent Spouses Santos, petitioners, who by themselves and their predecessors in interest
have been in open, actual and adverse possession of said parcel of land since 1916 up to their forced removal therefrom in 1988, have
lost their title to said property by prescription to their half-brother, Respondent Hilario Robles, and then finally, to Respondent Spouses
Santos. 8

For a better understanding of the case, the above issue will be broken down into three points: first, the nature of the remedy of quieting of title;
second, the validity of the real estate mortgage; and third, the efficacy of the free patent granted to the Santos spouses.

First Issue:

Quieting of Title

Art. 476 of the Civil Code provides:

Whenever there is cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or
proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein.

Based on the above definition, an action to quiet title is a common-law remedy for the removal of any cloud or doubt or uncertainty on the title to
real property. 9 It is essential for the plaintiff or complainant to have a legal or an equitable title to or interest in the real property which is the
subject matter of the action. 10 Also, the deed, claim, encumbrance or proceeding that is being alleged as a cloud on plaintiff's title must be shown
to be in fact invalid or inoperative despite its  prima facie appearance of validity or legal efficacy. 11
That there is an instrument or a document which, on its face, is a valid and efficacious is clear in the present case. Petitioners allege that their title
as owners and possessors of the disputed property is clouded by the tax declaration and, subsequently, the free patent thereto granted to Spouses
Vergel and Ruth Santos. The more important question to be resolved, however, is whether the petitioners have the appropriate title that will
entitle them to avail themselves of the remedy of quieting of title.

Petitioners anchor their claim to the disputed property on their continued and open occupation and possession as owners thereof. They allege that
they inherited it from their father, Silvino, who in turn had inherited it from his father, Leon. They maintain that after their father's death, they
agreed among themselves that Petitioner Lucio Robles would be tending and cultivating it for everyone, and that their half-brother Hilario would
be paying the land taxes.

Petitioners insist that they were not aware that from 1962 until 1987, the subject property had been declared in the names of Exequiel Ballena, the
Rural Bank of Antipolo, Hilario Robles, the Rural Bank of Cardona, Inc., and finally, Spouses Vergel and Ruth Santos. Maintaining that as co-owners
of the subject property, they did agree to the real estate mortgage constituted on it, petitioners insist that their shares therein should not have
been prejudiced by Hilario's actions.

On the other hand, Private Respondents Vergel and Ruth Santos trace their claim to the subject property to Exequiel Ballena, who had purportedly
sold it to Hilario and Andrea Robles. According to private respondents, the Robles spouses then mortgaged it to the Rural Bank of Cardona, Inc. —
not as co-owners but as absolute owners — in order to secure an agricultural loan worth P2,000. Upon their failure to pay their indebtedness, the
mortgage was foreclosed and the property sold to the bank as the highest bidder. Thereafter, private respondents purchased the property from the
bank.

Undisputed is the fact that the land had previously been occupied by Leon and later by Silvino Robles, petitioners' predecessor-in-interest, as
evidenced by the different tax declarations issued in their names. Also undisputed is the fact that the petitioners continued occupying and
possessing the land from the death of Silvino in 1942 until they were allegedly ousted therefrom in 1988. In 1962, the subject property was
declared in the name of Exequiel for taxation purposes. On September 30, 1965, it was again declared in the same name; on October 28, 1965, in
the name of the Rural Bank of Antipolo; on November 7, 1966, in the name of Hilario and Andrea; and thereafter, in the name of the Rural Bank of
Cardona and, finally, in the name of the Santos spouses.

Ostensibly, the Court of Appeals failed to consider irregularities in the transactions involving the disputed property. First, while it was declared in
the name of Exequiel in 1962, there was no instrument or deed of conveyance evidencing its transfer from the heirs of Silvino to him. This fact is
important, considering that the petitioners are alleging continued possession of the property. Second, Exequiel was the father-in-law of Hilario, to
whom petitioners had entrusted the payment of the land taxes. Third, considering that the subject property had been mortgaged by Exequiel to
the Rural Bank of Antipolo, and that it was foreclosed and in fact declared in the bank's name in 1965, why was he able to sell it to Spouses Hilario
and Andrea in 1966? Lastly, inasmuch as it was an unregistered parcel of land, the Rural Bank of Cardona, Inc., did not observe due diligence in
determining Hilario's title thereto.

The failure to show the indubitable title of Exequiel to the property in question is vital to the resolution of the present Petition. It was from him
that Hilario had allegedly derived his title thereto as owner, an allegation which thereby enabled him to mortgage it to the Rural Bank of Cardona.
The occupation and the possession thereof by the petitioners and their predecessors-in-interest until 1962 was not disputed, and Exequiel's
acquisition of the said property by prescription was not alleged. Thus, the deed of conveyance purportedly evidencing the transfer of ownership
and possession from the heirs of Silvino to Exequiel should have been presented as the best proof of that transfer. No such document was
presented, however.

Therefore, there is merit to the contention of the petitioners that Hilario mortgaged the disputed property to the Rural Bank of Cardona in his
capacity as a mere co-owner thereof. Clearly, the said transaction did not divest them of title to the property at the time of the institution of the
Complaint for quieting of title.

Contrary to the disquisition of the Court of Appeals, Hilario effected no clear and evident repudiation of 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. In
order that the title may prescribe in favor of a co-owner, the following requisites must concur: (1) the co-owner has performed unequivocal acts of
repudiation amounting to an ouster of the other co-owners; (2) such positive acts of repudiation have been made known to the other co-owner;
and (3) the evidence thereof is clear and convincing. 12

In the present case, Hilario did not have possession of the subject property; neither did he exclude the petitioners from the use and the enjoyment
thereof, as they had indisputably shared in its fruits. 13 Likewise, his act of entering into a mortgage contract with the bank cannot be construed to
be a repudiation of the co-ownership. As absolute owner of his undivided interest in the land, he had the right to alienate his share, as he in fact
did. 14 Neither should his payment of land taxes in his name, as agreed upon by the co-owners, be construed as a repudiation of the co-ownership.
The assertion that the declaration of ownership was tantamount to repudiation was belied by the continued occupation and possession of the
disputed property by the petitioners as owners.

Second Issue:
 Validity of the Real Estate Mortgage

In a real estate mortgage contract, it is essential that the mortgagor be the absolute owner of the property to be mortgaged; otherwise, the
mortgage is void. 15 In the present case, it is apparent that Hilario Robles was not the absolute owner of the entire subject property; and that the
Rural Bank of Cardona, Inc., in not fully ascertaining his title thereto, failed to observe due diligence and, as such, was a mortgagee in bad faith.

First, the bank was utterly remiss in its duty to establish who the true owners and possessors of the subject property were.1âwphi1 It acted with
precipitate haste in approving the Robles spouses' loan application, as well as the real estate mortgage covering the disputed parcel of land. 16 Had
it been more circumspect and assiduous, it would have discovered that the said property was in fact being occupied by the petitioners, who were
tending and cultivating it.

Second, the bank should not have relied solely on the Deed of Sale purportedly showing that the ownership of the disputed property had been
transferred from Exequiel Ballena to the Robles spouses, or that it had subsequently been declared in the name of Hilario. Because it was dealing
with unregistered land, and the circumstances surrounding the transaction between Hilario and his father-in-law Exequiel were suspicious, the
bank should have exerted more effort to fully determine the title of the Robleses. Rural Bank of Compostela vs. Court Appeals 17 invalidated a real
estate mortgage after a finding that the bank had not been in good faith. The Court explained: "The rule that persons dealing with registered lands
can rely solely on the certificate of title does not apply to banks." In Tomas v. Tomas, the Court held:

. . . Banks, indeed, should exercise more care and prudence in dealing even with registered lands, than private individuals, for their business is one
affected with public interest, keeping in trust money belonging to their depositors, which they should guard against loss by not committing any act
of negligence which amounts to lack of good faith by which they would be denied the protective mantle of land registration statute, Act 496,
extended only to purchasers for value and in good faith, as well as to mortgagees of the same character and description. . . . 18

Lastly, the Court likewise finds it unusual that, notwithstanding the bank's insistence that it had become the owner of the subject property and had
paid the land taxes thereon, the petitioners continued occupying it and harvesting the fruits therefrom. 19

Considering that Hilario can be deemed to have mortgaged the disputed property not as absolute owner but only as a co-owner, he can be
adjudged to have disposed to the Rural Bank of Cardona, Inc., only his undivided share therein. The said bank, being the immediate predecessor of
the Santos spouses, was a mortgagee in bad faith. Thus, justice and equity mandate the entitlement of the Santos spouses, who merely stepped
into the shoes of the bank, only to what legally pertains to the latter — Hilario's share in the disputed property.

Third Issue:

Efficacy of Free Patent Grant

Petitioners repeatedly insist that the disputed property belongs to them by private ownership and, as such, it could not have been awarded to the
Santos spouses by free patent. They allege that they possessed it in the concept of owners — openly, peacefully, publicly and continuously as early
as 1916 until they were forcibly ousted therefrom in 1988. They likewise contend that they cultivated it and harvested its fruits. Lucio Robles
testified:

x x x           x x x          x x x

Q By the way, why do you know this parcel of land?

A Because before my father died, he showed me all the documents.

Q Before the death of your father, who was the owner of this parcel of land?

A My father, sir.

Q How did your father acquire this parcel of land?

A My father knew that it [was] by inheritance, sir.

Q From whom?

A From his father, Leon Robles, sir.

Q And do you know also [from] whom Leon Robles acquired this land?
 A It was inherited from his father, sir.

Q What is the nature of this parcel of land?

A It's an agricultural land, sir.

Q Now, at the time of the death of your father, this land was planted with what crops?

A Mango trees, santol trees, and I was the one who planted those trees, sir.

Q When did you plant those trees?

A Before the death of my father, sir.

Q Now, after the death of your father, who cultivated this parcel of land?

A I took charge of the land after the death of my father, sir.

Q Up to when?

A Up to the present, sir, after this case was already filed. 20

The preceding claim is an assertion that the subject property is private land. The petitioners do not concede, and the records do not show, that it
was ever an alienable land of the public domain. They allege private ownership thereof, as evidenced by their testimonies and the tax declarations
issued in the names of their predecessors-in-interest. It must be noted that while their claim was not corroborated by other witnesses, it was not
controverted by the other parties, either.

Carlos Dolores insisted that the Rural Bank of Cardona, Inc., of which he was the manager, had acquired and possessed the subject property. He did
not, however, give any reason why the petitioners had continued occupying it, even as he admitted on the stand that he had visited it twice. 21

In the light of their open, continuous, exclusive and notorious possession and occupation of the land, petitioners are "deemed to have acquired, by
operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued." 22 The land was "segregated
from the public domain." Accordingly, the director of lands had no authority to issue a free patent thereto in favor of another person. Verily,
jurisprudence holds that a free patent covering private land is null and void. 23

Worth quoting is the disquisition of the Court in Agne v. Director of Lands, 24 in which it held that a riparian owner presently in possession had a
better right over an abandoned river bed than had a registered owner by virtue of a free patent.

Under the provisions of Act 2874 pursuant to which the title of private respondents' predecessor-in-interest was issued, the President of
the Philippines, or his alter ego, the Director of Lands, has no authority to grant a free patent for land that has ceased to be a public land
and has passed to private ownership and a title so issued is null and void. The nullity arises, not from fraud or deceit, but from the fact
that the land is not under the jurisdiction of the Bureau of Lands. The jurisdiction of the Director of Lands is limited only to public lands
and does not cover lands publicly owned. The purpose of the Legislature in adopting the former Public Land Act, Act No. 2874, was and is
to limit its application to lands of the public domain, and lands held in private ownership are not included therein and are not affected in
any manner whatsoever thereby. Land held in freehold or fee title, or of private ownership, constitutes no part of the public domain, and
cannot possibly come within the purview of said act 2874, inasmuch as the "subject" of such freehold or private land is not embraced in
any manner in the title of the Act and the same is excluded from the provisions of the text thereof.

We reiterate that private ownership of land is not affected by the issuance of the free patent over the same land because the Public Land
Act applies only to lands of the public domain. Only public land may be disposed of by the Director of Lands. Since as early as 1920, the
land in dispute was already under the private ownership of herein petitioners and no longer a part of the lands of the public domain, the
same could not have been the subject matter of a free patent. The patentee and his successors-in-interest acquired no right or title to
said land. Necessarily, Free Patent No. 23263 issued to Herminigildo Agpoon is null and void and the subsequent titles issued pursuant
thereto cannot become final and indefeasible. Hence we ruled in Director of Lands v. Sicsican, et al. that if at the time the free patents
were issued in 1953 the land covered therein were already private property of another and, therefore, not part of the disposable land of
the public domain, then applicants patentees acquired no right or title to the land.

Now, a certificate of title fraudulently secured is null and void ab initio if the fraud consisted in misrepresenting that the land is part of
the public domain, although it is not. As earlier stated, the nullity arises, not from the fraud or deceit, but from the fact that the land is
 not under the jurisdiction of the Bureau of Lands. Being null and void, the free patent granted and the subsequent titles produce no legal
effect whatsoever. Quod nullum est, nullum producit effectum.

A free patent which purports to convey land to which the government did not have any title at the time of its issuance does not vest any
title in the patentee as against the true owner. The Court has previously held that the Land Registration Act and the Cadastral Act do not
give anybody who resorts to the provisions thereof a better title than what he really and lawfully has.

x x x           x x x          x x x

We have, therefore, to arrive at the unavoidable conclusion that the title of herein petitioners over the land in dispute is superior to the
title of the registered owner which is a total nullity. The long and continued possession of petitioners under a valid claim of title cannot
be defeated by the claim of a registered owner whose title is defective from the beginning.

The Santos spouses argue that petitioners do not have the requisite personality to question the free patent granted them, inasmuch as "it is a well-
settled rule that actions to nullify free patents should be filed by the Office of the Solicitor General at the behest of the Director of Lands." 25

Private respondents' reliance on this doctrine is misplaced. Indeed, the Court held in Peltan Development, Inc. v. Court of Appeals 26 that only the
solicitor general could file an action for the cancellation of a free patent. Ruling that the private respondents, who were applicants for a free
patent, were not the proper parties in an action to cancel the transfer certificates covering the parcel of land that was the subject of their
application, the Court ratiocinated thus:

The Court also holds that private respondents are not the proper parties to initiate the present suit. The complaint, praying as it did for
the cancellation of the transfer certificates of title of petitioners on the ground that they were derived from a "spurious" OCT No. 4216,
assailed in effect the validity of said title. While private respondents did not pray for the reversion of the land to the government, we
agree with the petitioners that the prayer in the complaint will have the same result of reverting the land to the government under the
Regalian Doctrine. Gabila v. Barinaga 27 ruled that only the government is entitled to this relief. . . . .

Because the cancellation of the free patent as prayed for by the private respondents in Peltan would revert the property in question to the public
domain, the ultimate beneficiary would be the government, which can be represented by the solicitor general only. Therefore, the real party-in-
interest is the government, not the private respondents.

This ruling does not, however, apply to the present case. While the private respondents in Peltan recognized that the disputed property was part of
the public domain when they applied for free patent, 28 herein petitioners asserted and proved private ownership over the disputed parcel of land
by virtue of their open, continued and exclusive possession thereof since 1916.

Neither does the present case call for the reversion of the disputed property to the State. By asking for the nullification of the free patent granted
to the Santos spouses, the petitioners are claiming the property which, they contend, rightfully belongs to them.

Indeed, the same issue was resolved by this Court in Heirs of Marciano Nagano v. Court of Appeals. 29 In that case, the trial court dismissed a
Complaint seeking the declaration of nullity of an Original Certificate of Title issued pursuant to a free patent, reasoning that the action should have
been instituted by the solicitor general. In reversing the trial court, the Supreme Court held:

It is settled that a Free Patent issued over private land is null and void, and produces no legal effect whatsoever. Quod nullum est, nullum
producit affectum. Moreover, private respondents' claim of open, peaceful, continuous and adverse possession of the 2,250 square meter
portion since 1920, and its illegal inclusion in the Free Patent of petitioners and in their original certificate of title, gave private
respondents a cause of action for quieting of title which is imprescriptible.

In any event, the Office of the Solicitor General was afforded an opportunity to express its position in these proceedings. But it manifested that it
would not file a memorandum, because "this case involves purely private interests." 30

The foregoing considered, we sustain the contention of petitioners that the free patent granted to the Santos spouses is void. It is apparent that
they are claiming ownership of the disputed property on the basis of their possession thereof in the concept of owners — openly, peacefully,
publicly, continuously and adversely since 1916. Because they and their predecessors-in-interest have occupied, possessed and cultivated it as
owners for more than thirty years, 31 only one conclusion can be drawn — it has become private land and is therefore beyond the authority of the
director of lands.

Epilogue

We recognize that both the petitioners and the Santos spouses fell victim to the dubious transaction between Spouses Hilario and Andrea Robles
and the Rural Bank of Cardona, Inc. However, justice and equity mandate that we declare Petitioners Lucio, Emerita, Aludia and Emilio Robles to
have the requisite title essential to their suit for quieting of title. Considering the circumstances peculiar to this complicated problem, the Court
finds this conclusion the logical and just solution.

The claim that petitioners were guilty of laches in not asserting their rights as owners of the property should be viewed in the light of the fact that
they thought their brother was paying the requisite taxes for them, and more important, the fact that they continued cultivating it and harvesting
and gaining from its fruits.

From another viewpoint, it can even be said that it was the Rural Bank of Cardona, Inc., which was guilty of laches because, granting that it had
acquired the subject property legally, it failed to enforce its rights as owner. It was oblivious to the petitioners' continued occupation, cultivation
and possession thereof. Considering that they had possessed the property in good faith for more than ten years, it can even be argued that they
thus regained it by acquisitive prescription. In any case, laches is a remedy in equity, and considering the circumstances in this case, the petitioners
cannot be held guilty of it.

In sum, the real estate mortgage contract covering the disputed property — a contract executed between Spouses Hilario and Andrea on the one
hand and the Rural Bank of Cardona, Inc., on the other — is hereby declared null and void insofar as it prejudiced the shares of Petitioners Lucio,
Emerita, Aludia and Emilio Robles; it is valid as to Hilario Robles' share therein. Consequently, the sale of the subject property to the Santos spouses
is valid insofar as it pertained to his share only. Likewise declared null and void is Free Patent No. IV-1-010021 issued by the Bureau of Lands
covering the subject property.

WHEREFORE, the Petition is hereby GRANTED. The assailed Decision is REVERSED and SET ASIDE. Except as modified by the last paragraph of this
Decision, the trial court's Decision is REINSTATED. No costs.1âwphi1.nêt

SO ORDERED.

G.R. No. L-46001 March 25, 1982

LUZ CARO, petitioner,

vs.
HONORABLE COURT OF APPEALS and BASILIA LAHORRA VDA. DE BENITO, AS ADMINISTRATRIX OF THE INTESTATE ESTATE OF MARIO BENITO,
respondents.

GUERRERO, J.:

This is a petition for certiorari under Rule 45 of the Revised Rules of Court seeking a review of the decision of the Court of Appeals, 1 promulgated
on February 11, 1977, in CA-G.R. No. 52570-R entitled "Basilia Lahorra Vda. de Benito, as Administratrix of the Intestate Estate of Mario Benito vs.
Luz Caro", as well as the resolution of the respondent Court, dated May 13, 1977, denying petitioner's Motion for Reconsideration.

The facts of the case are as follows:

Alfredo Benito, Mario Benito and Benjamin Benito were the original co-owners of two parcels of land covered by Transfer Certificates of Title Nos.
T-609 and T-610 of the Registry of Deeds of Sorsogon. Mario died sometime in January, 1957. His surviving wife, Basilia Lahorra and his father,
Saturnino Benito, were subsequently appointed in Special Proceeding No. 508 of the Court of First Instance of Sorsogon as joint administrators of
Mario's estate.

On August 26, 1959, one of the co-owners, Benjamin Benito, executed a deed of absolute sale of his one-third undivided portion over said parcels
of land in favor of herein petitioner, Luz Caro, for the sum of P10,000.00. This was registered on September 29, 1959. Subsequently, with the
consent of Saturnino Benito and Alfredo Benito as shown in their affidavits both dated September 15, 1960, Exhibits G and F respectively, a
subdivision title was issued to petitioner Luz Caro over Lot I-C, under T.C.T. No. T-4978.

Sometime in the month of May, 1966, private respondent Basilia Lahorra Vda. de Benito learned from an allegation in a pleading presented by
petitioner in Special Proceeding No. 508 that the latter acquired by purchase from Benjamin Benito the aforesaid one-third undivided share in each
of the two parcels of land. After further verification, she sent to petitioner thru her counsel, a written offer to redeem the said one-third undivided
share dated August 25, 1966. Inasmuch as petitioner ignored said offer, private respondent sought to intervene in Civil Case No. 2105 entitled
"Rosa Amador Vda. de Benito vs. Luz Caro" for annulment of sale and mortgage and cancellation of the annotation of the sale and mortgage
involving the same parcels of land, but did not succeed as the principal case was dismissed on a technicality, that is, for failure to prosecute and the
proposed intervenor failed to pay the docketing fees. Private respondent, thus, filed the present case as an independent one and in the trial sought
to prove that as a joint administrator of the estate of Mario Benito, she had not been notified of the sale as required by Article 1620 in connection
with Article 1623 of the New Civil Code.
On the other hand, petitioner presented during the hearing of the case secondary evidence of the service of written notice of the intended sale to
possible redemptioners in as much as the best thereof, the written notices itself sent to and Saturnino Benito, could not be presented for the
reason that said notices were sent to persons who were already dead when the complaint for legal redemption was brought. Instead, the affidavit
of Benjamin Benito, executed ante litem motam, attesting to the fact that the possible redemptioners were formally notified in writing of his
intention to sell his undivided share, was presented in evidence. The deposition of Saturnino's widow was likewise taken and introduced in
evidence, wherein she testified that she received and gave to her husband the written notice of the intended sale but that the latter expressed
disinterest in buying the property.

After hearing the evidence, the trial judge dismissed the complaint on the grounds that: (a) private respondent, as administratrix of the intestate
estate of Mario Benito, does not have the power to exercise the right of legal redemption, and (b) Benjamin Benito substantially complied with his
obligation of furnishing written notice of the sale of his one-third undivided portion to possible redemptioners.

Private respondent's Motion for Reconsideration of the trial court's decision having been denied, she appealed to the respondent Court of Appeals
contending that the trial Judge erred in

I. . . not inhibiting himself from trying and deciding the case because his son is an associate or member of the law office of Atty.
Rodolfo A. Madrid, the attorney of record of defendant-appellee in the instant case;

II. . contending that Benjamin Benito complied with the provisions of Article 1623 of the Revised Civil Code that before a co-
owner could sell his share of the property owned in common with the other co-heirs, he must first give written notice of his
desire to his co-heirs; (p. 49, R.A.)

III. concluding that the fact that one of the administrators who was actively managing the estate was furnished a written notice
by the co-owner of his desire to sell his share was enough compliance of the provisions of Article 1623 of the Civil Code for the
reason that the intention of the law is only to give a chance to the new co-owner to buy the share intended to be sold if he
desires to buy the same; (p. 50, R.A.)

IV. . refusing to allow plaintiff to redeem the subject property upon authority of Butte vs. Manuel Uy & Sons, L-15499, Feb. 28,
1962 (p. 51, R.A.) and in consequently dismissing the complaint (p. 52, R.A.).

In disposing of the aforesaid errors, the Court of Appeals finding for plaintiff (herein private respondent) held:

1. That it is not clear that Atty. Arcangel, son of the trial Judge, was legally associated as practitioner with counsel for Luz Caro; that it is not shown
at any rate that plaintiff had asked for Judge Arcangel's disqualification and that at any rate also, in such factual situation, an optional ground for
disqualification is addressed to his sound discretion with which it would not be correct for appellate court to interfere or overrule.

2. That since the right of the co-owner to redeem in case his share be sold to a stranger arose after the death of Mario Benito, such right did not
form part of the hereditary estate of Mario but instead was the personal right of the heirs, one of whom is Mario's widow. Thus, it behooved either
the vendor, Benjamin, or his vendee, Luz Caro, to have made a written notice of the intended or consummated sale under Article 1620 of the Civil
Code.

3. That the recital in the deed of sale that the vendor notified his co-owners of his desire to dispose of his share, who all declined to buy, was but a
unilateral statement and could not be proof of the notice required by the law.

4. That the registration of the deed of sale did not erase that right.

5. That the affidavit of notice executed on January 20, 1960 of Benjamin Benito declaring that written notices of the sale as required by law were
duly sent to Alfredo Benito and Saturnino Benito, the latter in his capacity as administrator of the estate of Mario Benito, as well as the sworn
statement of Saturnino Benito's widow dated November 18, 1968 confirming that her husband received the written notice of the sale referred to in
Benjamin Benito's affidavit of notice would not satisfy that there was clear notice in writing of the specific term of the intended sale. Worse,
Saturnino was only a co-administrator and hence, his unilateral act could not bind the principal because there was no less than a renunciation of a
right pertaining to the heirs, under Article 1818, NCC, apart from the fact that the right of redemption is not within their administration.

6. That the further claim of defendant that offer to redeem was filed out of time and that there was no actual tender loses all importance, there
being no date from which to count the 30-day period to redeem because there was no notice given.

The dispositive part of the decision of the Court of Appeals reads as follows:

IN VIEW THEREOF, this Court is constrained to reverse, as it now reverses, judgment appealed from, upon payment by plaintiff
or deposit in Court, within 30 days after this judgment should have become final, of the sum of P10,000.00, defendant is
ordered to execute a deed of redemption over the one-third share of BENJAMIN BENITO in favor of plaintiff for herself and as
 representative of the children of Mario Benito and therefrom, to deliver said one-third share of BENJAMIN BENITO, costs
against defendant-appellee.

SO ORDERED.

Upon denial of the motion for reconsideration, petitioner brought this petition for review raising the following errors:

1. Respondent Court erred in allowing the exercise of the right of legal redemption with respect to the lots in question.

2. Respondent Court erred when it made the finding that there was no notice in law from which to count the tolling of the period of redemption
and that the sale was not made known at all to private respondent.

The alleged first error of respondent Court is premised on the fact that the lot in question sought to be redeemed is no longer owned in common.
Petitioner contends that the right sought to be exercised by private respondent in the case assumes that the land in question is under co-
ownership, the action being based on Article 1620 of the New Civil Code which provides:

A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or any of them, are
sold to a third person. If the price of alienation is grossly excessive, the petitioner shall pay only a reasonable price.

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.

However, the fact is that as early as 1960, co-ownership of the parcels of land covered by Transfer Certificates of Title Nos. T-609 and T-610 was
terminated when Alfredo Benito, Luz Caro and the Intestate Estate of Mario Benito, represented by administrators Saturnino Benito, as trustee and
representative of the heirs of Mario Benito, agreed to subdivide the property.

An agreement of partition, though oral, is valid and consequently binding upon the parties. (Hernandez vs. Andal, et al., 78 Phil.
196)

A petition for subdivision was then filed for the purpose. This was accompanied by the affidavits of Alfredo Benito and Saturnino Benito, both dated
September 15, 1960 to the effect that they agree to the segregation of the land formerly owned in common by Mario Benito, Alfredo Benito and
Benjamin Benito. A subdivision plan was made and by common agreement Lot I-C thereof, with an area of 163 hectares, more or less, was ceded to
petitioner. Thereafter, the co-owners took actual and exclusive possession of the specific portions respectively assigned to them. A subdivision title
was subsequently issued on the lot assigned to petitioner, to wit, Transfer Certificate of Title No. T-4978.

In Caram, et al. vs. Court of Appeals, et al., 101 Phil. 315, a case squarely in point, this Court held:

Inasmuch as the purpose of the law in establishing the right of legal redemption between co-owners is to reduce the number of
participants until the community is done away with (Viola vs. Tecson, 49 Phil. 808), once the property is subdivided and
distributed among the co-owners, the community has terminated and there is no reason to sustain any right of legal
redemption.

Although the foregoing pronouncement has reference to the sale made after partition, this Court therein saw no difference with respect to a
conveyance which took place before the partition agreement and approval by the court. Thus, it held:

Nevertheless, the result is the same, because We held in Saturnino vs. Paulino, 97 Phil. 50, that the right of redemption under
Article 1067 may be exercised only before partition. In this case the right was asserted not only after partition but after the
property inherited had actually been subdivided into several parcels which were assigned by lot to the several heirs.

In refutation, private respondent argues that petitioner Luz Caro acted in bad faith and in fraud of the rights of the heirs of a deceased Mario
Benito in obtaining a subdivision title over a one-third portion of the land in question which she brought from Benjamin Benito, and for this reason,
she is deemed to hold said property in trust for said heirs. The rule, however, is it fraud in securing the registration of titles to the land should be
supported by clear and convincing evidence. (Jaramil vs. Court of Appeals, 78 SCRA 420). As private respondent has not shown and proved the
circumstances constituting fraud, it cannot be held to exist in this case.

As aforesaid, a subdivision title has been issued in the name petitioner on the lot ceded to her. Upon the expiration of the term of one year from
the date of the entry of the subdivision title, the Certificate of Title shall be incontrovertible (Section 38, Act 496). Since the title of petitioner is now
indefeasible, private respondent cannot, by means of the present action, directly attack the validity thereof.
Even on the assumption that there still is co-ownership here and that therefore, the right of legal redemption exists, private respondent as
administratrix, has no personality to exercise said right for and in behalf of the intestate estate of Mario Benito. She is on the same footing as co-
administrator Saturnino Benito. Hence, if Saturnino's consent to the sale of the one-third portion to petitioner cannot bind the intestate estate of
Mario Benito on the ground that the right of redemption was not within the powers of administration, in the same manner, private respondent as
co-administrator has no power exercise the right of redemption — the very power which the Court of Appeals ruled to be not within the powers of
administration.

While under Sec. 3, Rule 85, Rules of Court, the administrator has the right to the possession of the real and personal estate of
the deceased, so far as needed for the payment of the expenses of administration, and the administrator may bring and defend
action for the recovery or protection of the property or right of the deceased (Sec. 2, Rule 88), such right of possession and
administration do not include the right of legal redemption of the undivided share sold to a stranger by one of the co-owners
after the death of another, because in such case, the right of legal redemption only came into existence when the sale to the
stranger was perfected and formed no part of the estate of the deceased co-owner; hence, that right cannot be transmitted to
the heir of the deceased co-owner. (Butte vs. Manuel Uy and Sons, Inc., 4 SCRA 526).

Private respondent cannot be considered to have brought this action in her behalf and in behalf of the heirs of Mario Benito because the
jurisdictional allegations of the complaint specifically stated that she brought the action in her capacity as administratrix of the intestate estate of
Mario Benito.

It is petitioner's contention that, assuming that private respondent may exercise the right of redemption, there was no compliance with the
conditions precedent for the valid exercise thereof.

In Conejero et al. vs. Court of Appeals, et al.,  16 SCRA 775, this Court explained the nature of the right of redemption in this wise:

While the co-owner's right of legal redemption is a substantive right, it is exceptional in nature, limited in its duration and
subject to strict compliance with the legal requirements. One of these is that the redemptioner should tender payment of the
redemption money within thirty (30) days from written notice of the sale by the co-owner.

It has been held that this thirty-day period is peremptory because the policy of the law is not to leave the purchaser's title in uncertainty beyond
the established 30-day period. (Butte vs. Manuel Uy and Sons, Inc., 4 SCRA 526). It is not a prescriptive period but is more a requisite or condition
precedent to the exercise of the right of legal redemption.

In the case at bar, private respondent alleged in her complaint that she learned of the sale sometime in May, 1966 upon receipt of a pleading in
Special Proceeding No. 508 of the Court of First Instance of Sorsogon. She likewise alleged that she gave a letter informing petitioner of her desire
to redeem the land on August 25, 1966. Clearly, three months have elapsed since the notice of the sale. Hence, petitioner claims that the thirty-day
period of redemption has already expired. In addition, petitioner makes capital of the admission of private respondent that she already knew of the
said transaction even before receipt of the said pleading (t.s.n., p. 16) as well as of the evidence presented that Saturnino Benito, the admittedly
active administrator until 1966, duly received a written notice of the intended sale of Benjamin Benito's share. Said evidence consists of the
affidavit of the vendor stating that the required notice had been duly given to possible redemptioners, the statement in the deed of sale itself and
the deposition of Saturnino Benito's widow with respect to her receipt of the written notice. Finally, petitioner points to the records which disclose
that private respondent knew of the subdivision (t.s.n., p. 25) and hence, rationalized that private respondent should have known also of the
previous sale.

Since We have ruled that the right of legal redemption does not exist nor apply in this case because admittedly a subdivision title (T.C.T. No. T-
4978) has already been issued in the name of the petitioner on Lot I-C sold to her, it becomes moot and academic, if not unnecessary to decide
whether private respondent complied with the notice requirements for the exercise of the right of legal redemption under Article 1623 of the New
Civil Code.

WHEREFORE, IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is hereby REVERSED and SET ASIDE, and judgment is hereby
rendered DISMISSING the complaint.

G.R. No. 76351 October 29, 1993

VIRGILIO B. AGUILAR, petitioner,
vs.
COURT OF APPEALS and SENEN B. AGUILAR, respondents.

Jose F. Manacop for petitioner.

Siruello, Muyco & Associates Law Office for private respondent.

BELLOSILLO, J.:

This is a petition for review on certiorari seeking to reverse and set aside the Decision of the Court of Appeals in CA-GR CV No. 03933 declaring null
and void the orders of 23 and 26 April, 1979, the judgment by default of 26 July 1979, and the order of 22 October 1979 of the then Court of First
Instance of Rizal, Pasay City, Branch 30, and directing the trial court to set the case for pre-trial conference.

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

Since Virgilio was then disqualified from obtaining a loan from SSS, the brothers agreed that the deed of sale would be executed and the title
registered in the meantime in the name of Senen. It was further agreed that Senen would take care of their father and his needs since Virgilio and
his family were staying in Cebu.

After Maximiano Aguilar died in 1974, petitioner demanded from private respondent that the latter vacate the house and that the property be sold
and proceeds thereof divided among them.

Because of the refusal of respondent to give in to petitioner's demands, the latter filed on 12 January 1979 an action to compel the sale of the
house and lot so that the they could divide the proceeds between them.

In his complaint, petitioner prayed that the proceeds of the sale, be divided on the basis of two-thirds (2/3) in his favor and one-third (1/3) to
respondent. Petitioner also prayed for monthly rentals for the use of the house by respondent after their father died.

In his answer with counterclaim, respondent alleged that he had no objection to the sale as long as the best selling price could be obtained; that if
the sale would be effected, the proceeds thereof should be divided equally; and, that being a co-owner, he was entitled to the use and enjoyment
of the property.

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

On 20 April 1979, Atty. Manuel S. Tonogbanua, counsel for respondent, filed a motion to cancel pre-trial on the ground that he would be
accompanying his wife to Dumaguete City where she would be a principal sponsor in a wedding.

On 23 April 1979, finding the reasons of counsel to be without merit, the trial court denied the motion and directed that the pre-trial should
continue as scheduled.

When the case was called for pre-trial as scheduled on 26 April 1979, plaintiff and his counsel appeared. Defendant did not appear; neither his
counsel in whose favor he executed a special power of attorney to represent him at the pre-trial. Consequently, the trial court, on motion of
plaintiff, declared defendant as in default and ordered reception of plaintiff's evidence ex parte.

On 7 May 1979, defendant through counsel filed an omnibus motion to reconsider the order of default and to defer reception of evidence. The trial
court denied the motion and plaintiff presented his evidence.

On 26 July 1979, rendering judgment by default against defendant, the trial court found him and plaintiff to be co-owners of the house and lot, in
equal shares on the basis of their written agreement. However, it ruled that plaintiff has been deprived of his participation in the property by
defendant's continued enjoyment of the house and lot, free of rent, despite demands for rentals and continued maneuvers of defendants, to delay
partition. The trial court also upheld the right of plaintiff as co-owner to demand partition. Since plaintiff could not agree to the amount offered by
defendant for the former's share, the trial court held that this property should be sold to a third person and the proceeds divided equally between
the parties.

The trial court likewise ordered defendant to vacate the property and pay plaintiff P1,200.00 as rentals2 from January 1975 up to the date of
decision plus interest from the time the action was filed.

On 17 September 1979, defendant filed an omnibus motion for new trial but on 22 October 1979 the trial court denied the motion.
Defendant sought relief from the Court of Appeals praying that the following orders and decision of the trial court be set aside: (a) the order of 23
April 1970 denying defendants motion for postponement of the pre-trial set on 26 April 1979; (b) the order of 26 April 1979 declaring him in default
and authorizing plaintiff to present his evidence  ex-parte; (e) the default judgment of 26 July 1979; and, (d) the order dated 22 October 1979
denying his omnibus motion for new trial.

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

Petitioner now comes to us alleging that the Court of Appeals erred (1) in not holding that the motion of defendant through counsel to cancel the
pre-trial was dilatory in character and (2) in remanding the case to the trial court for pre-trial and trial.

The issues to be resolved are whether the trial court correctly declared respondent as in default for his failure to appear at the pre-trial and in
allowing petitioner to present his evidence ex-parte, and whether the trial court correctly rendered the default judgment against respondent.

We find merit in the petition.

As regards the first issue, the law is clear that the appearance of parties at the pre-trial is mandatory.3 A party who fails to appear at a pre-trial
conference may be non-suited or considered as in default.4 In the case at bar, where private respondent and counsel failed to appear at the
scheduled pre-trial, the trial, court has authority to declare respondent in default.5

Although respondent's counsel filed a motion to postpone pre-trial hearing, the grant or denial thereof is within the sound discretion of the trial
court, which should take into account two factors in the grant or denial of motions for postponement, namely: (a) the reason for the
postponement and (b) the merits of the case of movant.6

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

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

With regard to the merits of the judgment of the trial court by default, which respondent appellate court did not touch upon in resolving the
appeal, the Court holds that on the basis of the pleadings of the parties and the evidence presented ex parte, petitioner and respondents are co-
owners of subject house and lot in equal shares; either one of them may demand the sale of the house and lot at any time and the other cannot
object to such demand; thereafter the proceeds of the sale shall be divided equally according to their respective interests.

Private respondent and his family refuse to pay monthly rentals to petitioner from the time their father died in 1975 and to vacate the house so
that it can be sold to third persons. Petitioner alleges that respondent's continued stay in the property hinders its disposal to the prejudice of
petitioner. On the part of petitioner, he claims that he should be paid two-thirds (2/3) of a monthly rental of P2,400.00 or the sum of P1,600.00.

In resolving the dispute, the trial court ordered respondent to vacate the property so that it could be sold to third persons and the proceeds
divided between them equally, and for respondent to pay petitioner one-half (1/2) of P2,400.00 or the sum of P1,200.00 as monthly rental,
conformably with their stipulated sharing reflected in their written agreement.

We uphold the trial court in ruling in favor of petitioner, except as to the effectivity of the payment of monthly rentals by respondent as co-owner
which we here declare to commence only after the trial court ordered respondent to vacate in accordance with its order of 26 July 1979.

Article 494 of the Civil Code provides that no co-owner shall be obliged to remain in the co-ownership, and that each co-owner may demand at any
time partition of the thing owned in common insofar as his share is concerned. Corollary to this rule, Art. 498 of the Code states that whenever the
thing is essentially, indivisible and the co-owners cannot agree that it be, allotted to one of them who shall indemnify the others, it shall be sold
and its proceeds accordingly distributed. This is resorted to (1) when the right to partition the property is invoked by any of the co-owners but
because of the nature of the property it cannot be subdivided or its subdivision would prejudice the interests of the co-owners, and (b) the co-
owners are not in agreement as to who among them shall be allotted or assigned the entire property upon proper reimbursement of the co-
owners. In one case,8 this Court upheld the order of the trial court directing the holding of a public sale of the properties owned in common
pursuant to Art. 498 of the Civil Code.

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

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

When petitioner filed an action to compel the sale of the property and the trial court granted the petition and ordered the ejectment of
respondent, the co-ownership was deemed terminated and the right to enjoy the possession jointly also ceased. Thereafter, the continued stay of
respondent and his family in the house prejudiced the interest of petitioner as the property should have been sold and the proceeds divided
equally between them. To this extent and from then on, respondent should be held liable for monthly rentals until he and his family vacate.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated 16 October 1986 is REVERSED and SET ASIDE. The
decision of the trial court in Civil Case No. 69.12-P dated 16 July 1979 is REINSTATED, with the modification that respondent Senen B. Aguilar is
ordered to vacate the premises in question within ninety (90) days from receipt of this and to pay petitioner Virgilio B. Aguilar a monthly rental of
P1,200.00 with interest at the legal rate from the time he received the decision of the trial court directing him to vacate until he effectively leaves
the premises.

The trial court is further directed to take immediate steps to implement this decision conformably with Art. 498 of the Civil Code and the Rules of
Court. This decision is final and executory.

SO ORDERED.

G.R. No. 196403, December 07, 2016

ARSENIO TABASONDRA, FERNANDO TABASONDRA, CORNELIO TABASONDRA, JR., MIRASOL TABASONDRA-MARIANO, FAUSTA TABASONDRA-
TAPACIO, GUILLERMO TABASONDRA, MYRASOL TABASONDRA-ROMERO, AND MARLENE TABASONDRA-MANIQUIL, Petitioners, v. SPOUSES
CONRADO CONSTANTINO AND TARCILA TABASONDRA-CONSTANTINO,* PACITA ARELLANO-TABASONDRA AND HEIRS OF SEBASTIAN
TABASONDRA, Respondents.

DECISION

BERSAMIN, J.:

This case for partition and accounting concerns a property owned in common, and focuses on the right of two of the co-owners to alienate their
shares before the actual division of the property.chanroblesvirtuallawlibrary

The Case

Under appeal is the adverse decision promulgated on November 30,  20101 whereby the Court of Appeals (CA) modified the judgment rendered on
September 22, 2008 by the Regional Trial Court (RTC), Branch 64, in Tarlac City ordering the partition of all the three parcels of land owned in
common among the parties.2 The modification by the CA, which expressly recognized the alienation by the two co-owners of their shares, consisted
in limiting the partition of the property owned in common to only the unsold portion with an area of 33,450.66 square
meters.chanroblesvirtuallawlibrary

Antecedents

The parties herein were the children of the late Cornelio Tabasondra from two marriages. The respondents Tarcila Tabasondra-Constantino and the
late Sebastian Tabasondra were the children of Cornelio by his first wife, Severina; the petitioners, namely: Arsenio Tabasondra, Fernando
Tabasondra, Cornelio Tabasondra, Jr., Mirasol Tabasondra-Mariano, Fausta Tabasondra-Tapacio, Myrasol Tabasondra-Romero, Marlene
Tabasondra-Maniquil, and Guillermo Tabasondra, were children of Cornelio by his second wife, Sotera.

The CA summarized the undisputed factual findings and procedural antecedents as follows:chanRoblesvirtualLawlibrary
Cornelio, Valentina, and Valeriana, all surnamed Tabasondra. were siblings. They were also the registered owners of the three (3) parcels of land
located at Dalayap, Tarlac City, identified as Lot No. 2536, containing an area of seventy-seven thousand one hundred and forty-seven (77,147) sq.
m.; Lot No. 3155, with an area of thirteen thousand six hundred fifty-nine (13,659) sq. m.; and, Lot No. 3159, with an area of nine thousand five
hundred forty-six (9,546) sq. m., covered by Transfer Certificate of Title (TCT) No. 106012.

xxxx

Cornelio died on March 15, 1991, while Valentina and Valeriana both died single on August 19, 1990 and August 4, 1998, respectively. They all died
intestate and without partitioning the property covered by TCT No. 106012. Thus, the Plaintiffs-Appellees and the Defendants-Appellants, as
descendants of Cornelio, possessed and occupied the property.

The Controversy:

On August 22, 2002, the Plaintiffs-Appellees filed the complaint below against the Defendants-Appellants. In essence, they claimed that the parcels
of land are owned in common by them and the Defendants-Appellants but the latter does not give them any share in the fruits thereof. Hence, they
asked for partition but the Defendants-Appellants refused without valid reasons. They maintained that they tried to amicably settle the dispute
before the Lupon, but to no avail. Thus, their filing of the suit praying that the subject land be partitioned, that new titles be issued in their
respective names, that the Defendants-Appellants be ordered to render an accounting on the fruits thereon, and that such fruits also be
partitioned.

In their Answer, the Defendants-Appellants averred that they do not object to a partition provided that the same should be made only with respect
to Cornelio's share. They contended that they already own the shares of Valentina and Valeriana in the subject land by virtue of the Deed of
Absolute Sale that the said sisters executed in their favor on August 18, 1982. Moreover, they alleged that the Plaintiffs-Appellees are the ones who
should account for the profits of the property because it is the latter who enjoy the fruits thereof. By way of counterclaim, they, thus, prayed that
the Plaintiffs-Appellees be ordered to render an accounting and to pay for damages.

After the issues were joined and the pre-trial conference was conducted, a full blown trial followed in view of the parties' failure to settle amicably.

On September 22, 2008, the RTC rendered the assailed disposition, the fallo  of which reads:chanRoblesvirtualLawlibrary
WHEREFORE, on the basis of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs, ordering [the] partition of the
three (3) parcels of land covered by TCT No. 16012 among the compulsory and legal heirs of Cornelio, Valentina[,] and Valeriana, all surnamed
Tabasondra. Sotero Duenas Tabasondra shall be entitled to 3,040 square meters while plaintiffs and defendants shall be entitled to 6,690 square
meters each.

SO ORDERED.3
chanrobleslaw
Dissatisfied, the respondents appealed the judgment of the RTC to the CA, assigning the following as the reversible errors, to
wit:chanRoblesvirtualLawlibrary
I.

THE HONORABLE COURT A- [sic] QUO GRAVELY ERRED AND COMMITTED A REVERSIBLE ERROR IN NOT CONSIDERING AND APPRECIATING THE FACT
THAT THE DEED OF ABSOLUTE SALE EXECUTED BY THE DECEASED VALENTINA TABASONDRA AND VALERIANA TABASONDRA, IN FAVOR OF
DEFENDANTS TARCILA TABASONDRA AND SEBASTIAN TABASONDRA, WAS VALID AND SUBSISTING AT THE TIME THE COURT CONSIDERED IT TO
HAVE NO VALID LEGAL FORCE AND EFFECT[.]

II.

THE HONORABLE COURT A-[sic] QUO GRAVELY ERRED AND COMMITTED A REVERSIBLE ERROR IN ORDERING FOR THE PARTITION OF THE PROPERTY
IN QUESTION WITHOUT ANY LEGAL AND VALID GROUNDS[.]4
chanrobleslaw
On November 30, 2010, the CA promulgated the decision under review,5 disposing:chanRoblesvirtualLawlibrary
WHEREFORE, the appeal is GRANTED. The assailed disposition is AFFIRMED with MODIFICATION in that the partition and the accounting is ordered
to be made only with respect to a thirty-three thousand four hundred fifty point sixty-six (33,450.66) sq.m. portion of the property. With costs.

SO ORDERED.6
chanrobleslaw
The petitioners moved for reconsideration,7 but the CA denied their motion on April 4, 2011.8

Hence, this appeal.chanroblesvirtuallawlibrary

Issues
The petitioners submit in support of their appeal:chanRoblesvirtualLawlibrary

1. THAT THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN
SUMMARILY DISMISSING THE NEW MATTERS OF SUBSTANCE RAISED IN MOTION FOR RECONSIDERATION

2. THAT THE COURT OF APPEALS IN SUMMARILY DISMISSING MOTION FOR RECONSIDERATION OF PLAINTIFFS-PETITIONERS RENEGED IN ITS
DUTY TO RESOLVE LEGAL AND FACTUAL ISSUES OF SUBSTANCE IN A WAY NOT PROBABLY IN ACCORD WITH LAW OR APPLICABLE
DECISIONS OF THE SUPREME COURT;ChanRoblesVirtualawlibrary

3. THAT THE COURT OF APPEALS DECISION IN DECLARING THE QUESTIONED DEED OF SALE VALID AND IN SUMMARILY DISMISSING
PLAINTIFFS-PETITIONERS['] MOTION FOR RECONSIDERATION RAISING NEW ARGUMENTS AND MATTERS OF SUBSTANCE NOT RAISED IN
THE APPEAL BY DEFENDANTS-RESPONDENTS, ARE CONTRARY TO LAW, JURISPRUDENCE, ADMISSIONS OF FACTS/TESTIMONY OF TARCILA
TABASONDRA, ONLY WITNESS FOR DEFENDANTS-RESPONDENTS AND EVIDENCE PRESENTED BY PLAINTIFFS-PETITIONERS AT THE
TRIAL;ChanRoblesVirtualawlibrary

4. THAT SUCH COURSE OF ACTION TAKEN BY THE COURT OF APPEALS OR DEPARTURE THEREFROM IN EXERCISING OR FAILING TO EXERCISE
ITS POWER OF JUDICIAL REVIEW CERTAINLY CALLS FOR THE EXERCISE BY THE SUPREME COURT OF ITS POWER OF JUDICIAL REVIEW TO
AFFORD COMPLETE RELIEF TO PARTIES IN THIS CASE AND TO AVOID MULTIPLICITY OF SUITS.9

In other words, did the CA correctly order the partition and accounting with respect to only 33,450.66 square meters of the property registered
under TCT No. 10612?

Ruling of the Court

The appeal lacks merit.

There is no question that the total area of the three lots owned in common by Cornelio, Valentina and Valeriana was 100,352 square meters; and
that each of the co-owners had the right to one-third of such total area.

It was established that Valentina and Valeriana executed the Deed of Absolute Sale,10 whereby they specifically disposed of their shares in the
property registered under TCT No. 10612 in favor of Sebastian Tabasondra and Tarcila Tabasondra as follows:chanRoblesvirtualLawlibrary
NOW, THEREFORE, for and in consideration of the sum of TEN THOUSAND PESOS (10,000.00), Philippine Currency, to us in hand paid, receipt
whereof is hereby acknowledged in full to our entire satisfaction, by SEBASTIAN TABASONDRA and TARCILA TABASONDRA, married to Pacita
Arellano and Conrado Constantino, respectively, both of legal ages, Filipinos, and residents of Dalayap, Tarlac, Tarlac, we do hereby SELL, CEDE,
TRANSFER and CONVEY, by way of ABSOLUTE SALE, unto the said Sebastian Tabasondra and Tarcila Tabasondra, their heirs and assigns, all our
shares, rights, interests and participations in the above-described parcel of land free from liens and incumbrances. That we hereby certify that the
herein VENDEES are the actual tillers or tenants of the above-described parcel of land subject matter of this deed of absolute sale and, as such,
have the prior right of pre-emption and redemption, under the Land Reform Code. (Bold underscoring supplied for emphasis)
chanrobleslaw
We uphold the right of Valentina and Valeriana to thereby alienate their pro indiviso shares to Sebastian and Tarcila even without the knowledge
or consent of their co-owner Cornelio because the alienation covered the disposition of only their respective interests in the common property.
According to Article 493 of the Civil 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, 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." Hence, the petitioners as the successors-in-interest of Cornelio could not validly
assail the alienation by Valentina and Valeriana of their shares in favor of the respondents.11

Accordingly, the Court declares the following disposition by the CA to be correct and in full accord with law, to wit:chanRoblesvirtualLawlibrary
x x x [T]here is no dispute that the subject property was owned in common by the siblings Cornelio, Valentina, and Valeria. Corollarily, the records
at bench glaringly show that the genuineness and due execution of the Deed of Absolute Sale executed by Valeriana and Valentina in favor of the
Defendants-Appellants was not rebutted by the Plaintiffs-Appellees. A fortiori, such deed is prima facie evidence that a contract of sale was,
indeed, entered into and consummated between Valeriana and Valentina as sellers and the Defendants-Appellants as vendors.

The foregoing facts, juxtaposed with the laws and the jurisprudential precepts mentioned elsewhere herein, lead to no other conclusion but that
the sale by Valeriana and Valentina of their pro indiviso shares in favor of the Defendants-Appellants is valid. As enunciated by the Supreme Court
in Alejandrino v. CA, et al.:
x x x Under a co-owners/tip, the ownership of an undivided thing or right belongs to different persons. Each co-owner of property which is held
pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure
the interests of his co-owners.  The underlying rationale is that until a division is made, the respective share of each cannot be determined and
every co-owner exercises, together with his co-participants, joint ownership over the pro indiviso property, in addition to his use and enjoyment of
the same.
Although the right of a heir over the property of the decedent is inchoate as long as the estate has not been fully settled and partitioned, the law
allows a co-owner to exercise rights of ownership over such inchoate right.  Thus, the Civil Code provides:
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore
alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership.
chanrobleslaw
With respect to properties shared in common by virtue of inheritance, alienation of a pro indiviso portion thereof is specifically governed by Article
1088 that provides:
Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of 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 month from the time they were
notified in writing of the sale by the vendor.
chanrobleslaw
In the instant case, Laurencia was within her hereditary rights in selling her pro indiviso share in Lot No. 2798. However, because the property had
not yet been partitioned in accordance with the Rules of Court, no particular portion of the property could be identified as yet and delineated as the
object of the sale. Thus, interpreting Article 493 of the Civil Code providing that an alienation of a co-owned property "shall be limited to the portion
which may be allotted to (the seller) in the division upon the termination of the co-ownership, the Court said:
... (p)ursuant to this law,  a co-owner has the right to alienate his pro-indiviso share in the co-owned property even witlwut the consent of the
other co-owners.  x x x
chanrobleslaw
Using the foregoing disquisitions as guidelines, there is no denying that the RTC erred in granting the complaint and ordering a partition without
qualifying that such should not include the shares previously pertaining to Valeria and Valentina. Simply put, since the aggregate area of the subject
property is one hundred thousand three hundred fifty-two (100,352) sq.m., it follows that Cornelio, Valentina, and Valeriana each has a share
equivalent to thirty-three thousand four hundred fifty point sixty-six (33,450.66) sq. m. portion thereof. Accordingly, when Valentina and Valeriana
sold their shares, the Defendants-Appellants became co-owners with Cornelio. Perforce, upon Cornelio's death, the only area that his heirs, that is,
the Plaintiffs-Appellees and the Defendants-Appellants, are entitled to and which may be made subject of partition is only a thirty-three thousand
four hundred fifty point sixty-six (33,450.66) sq.m. portion of the property.

All told, finding the RTC's conclusions to be not in accord with the law and jurisprudence, necessarily, the same cannot be sustained.12
chanrobleslaw
As a result of Valentina and Valeriana's alienation in favor of Sebastian and Tarcila of their pro indiviso  shares in the three lots, Sebastian and
Tarcila became co-owners of the 100,352-square meter property with Cornelio (later on, with the petitioners who were the successors-in-interest
of Cornelio). In effect, Sebastian and Tarcila were co-owners of two-thirds of the property, with each of them having one-third pro indiviso share in
the three lots, while the remaining one-third was co-owned by the heirs of Cornelio, namely, Sebastian, Tarcila and the petitioners.

Nonetheless, we underscore that this was a case for partition and accounting. According to Vda. de Daffon v. Court of Appeals,13 an action for
partition is at once an action for declaration of co-ownership and for segregation and conveyance of a determinate portion  of the properties
involved. If the trial court should find after trial the existence of co-ownership among the parties, it may and should order the partition of the
properties in the same action.14

Although the CA correctly identified the co-owners of the three lots, it did not segregate the 100,352-square meter property into determinate
portions among the several co-owners. To do so, the CA should have followed the manner set in Section 11, Rule 69 of the Rules of Court,  to
wit:chanRoblesvirtualLawlibrary
Section 11. The judgment and its effect; copy to be recorded in registry of deeds.  If actual partition of property is made, the judgment shall state
definitely, by metes and bounds and adequate description, the particular portion of the real estate assigned to each party, and the effect of the
judgment shall be to vest in each party to the action in severalty the portion of the real estate assigned to him. xxxs (Bold emphasis supplied.)
chanrobleslaw
Accordingly, there is a need to remand the case to the court of origin for the purpose of identifying and segregating, by metes and bounds,  the
specific portions of the three lots assigned to the co-owners, and to effect the physical partition of the property in the following proportions:
Tarcila, one-third; the heirs of Sebastian, one-third; and the petitioners (individually), along with Tarcila and the heirs of Sebastian (collectively),
one-third. That physical partition was required, but the RTC and the CA uncharacteristically did not require it. Upon remand, therefore, the RTC
should comply with the express terms of Section 2, Rule 69 of the Rules of Court,  which provides:chanRoblesvirtualLawlibrary
Section 2. Order for partition, and partition by agreement thereunder. - If after the trial the court finds that the plaintiff has the right thereto, it
shall order the partition of the real estate among all the parties in interest. Thereupon the parties may, if they are able to agree, make the
partition among themselves by proper instruments of conveyance, and the court shall confirm the partition so agreed upon by all the parties,
and such partition, together with the order of the court confirming the same, shall be recorded in the registry of deeds of the place in which the
property is situated.(2a)

A final order decreeing partition and accounting may be appealed by any party aggrieved thereby. (n)
chanrobleslaw
Should the parties be unable to agree on the partition, the next step for the RTC will be to appoint not more than three competent and
disinterested persons as commissioners to make the partition, and to command such commissioners to set off to each party in interest the part and
proportion of the property as directed in this decision.15
Moreover, with the Court having determined that the petitioners had no right in the two-thirds portion that had been validly alienated to Sebastian
and Tarcila, the accounting of the fruits shall only involve the one-third portion of the property inherited from Cornelio. For this purpose, the RTC
shall apply the pertinent provisions of the Civil Code, particularly Article 500 and Article 1087 of the Civil Code, viz.:
Article 500. Upon partition, there shall be a mutual accounting for benefits received and reimbursements for expenses made. Likewise, each co-
owner shall pay for damages caused by reason of his negligence or fraud. (n)

Article 1087. In the partition the co-heirs shall reimburse one another for the income and fruits which each one of them may have received from
any property of the estate, for any useful and necessary expenses made upon such property, and for any damage thereto through malice or
neglect. (1063)
chanrobleslaw
WHEREFORE, the Court AFFIRMS WITH MODIFICATION the decision of the Court of Appeals promulgated on November 30, 2010 in CA-G.R. CV No.
92920 in that the accounting is to be made only with respect to the fruits of the one-third portion of the property still under the co-ownership of all
the parties; REMANDS the case to the Regional Trial Court, Branch 64, in Tarlac City for further proceedings in accordance with this decision, and to
determine the technical metes and bounds and description of the proper share of each co-owner of the property covered by Transfer Certificate of
Title No. 10612, including the improvements thereon, in accordance with the Civil Code  and Rule 69 of the Rules of Court; and ORDERS  the
petitioners to pay the costs of suit.

SO ORDERED.ChanRoblesVirtualawlibrary

G.R. No. 206038

MARY E. LIM, represented by her Attorney-in-fact, REYNALDO V. LIM, Petitioner,

vs.
MOLDEX LAND, INC., 1322 ROXAS BOULEVARD CONDOMINIUM CORPORATION, and JEFFREY JAMINOLA, EDGARDO MACALINTAL, JOJI MILANES,
and CLOTHILDA ANNE ROMAN, in their capacity as purported MENDOZA, and LEONEN,JJ. members of the Board of Directors of 1322 Golden
Empire Corporation,, Respondents.

DECISION

MENDOZA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March 4, 2013 Decision 1 of the Regional Trial
Court of Manila, Branch 24, (RTC)  in Civil Case No. 12-128478, which dismissed the complaint against the respondents for 1] annulment of the July
21, 2012 general membership meeting of 1322 Roxas Boulevard Condominium Corporation (Condocor);  2] annulment of election of Jeffrey
Jaminola (Jaminola), Edgardo Macalintal (Macalintal),  Joji Milanes (Milanes), and Clothilda Anne Roman (Roman) (collectively referred to as
"individual respondents") as members of the Board of Directors; and 3] accounting.

The primordial issue presented before the R TC, acting as a special commercial court, was the validity, legality and effectivity of the July 21, 2012
Annual General Membership Meeting and Organizational Meeting of Condocor's Board of Directors.2

Initially, the Court, in its Resolution3 dated April 1, 2013, denied the petition for having availed of the wrong mode of appeal because Lim raised
mixed questions of fact and law, which should have been filed before the Court of Appeals (CA).4Upon motion for reconsideration, however, the
Court granted it. Thereafter, the respondents filed their Comment5 and Lim filed a Reply6 thereto.

The Antecedents

Lim is a registered unit owner of 1322 Golden Empire Tower (Golden Empire Tower),  a condominium project of Moldex Land, Inc. (Moldex), a real
estate company engaged in the construction and development of high-end condominium projects and in the marketing and sale of the units
thereof to the general public. Condocor, a non-stock, non-profit corporation, is the registered condominium corporation for the Golden Empire
Tower. Lim, as a unit owner of Golden Empire Tower, is a member of Condocor.

Lim claimed that the individual respondents are non-unit buyers,  but all are members of the Board of Directors of Condocor, having been elected
during its organizational meeting in 2008. They were again elected during the July 21, 2012 general membership meeting.7

Moldex became a member of Condocor on the basis of its ownership of the 220 unsold units in the Golden Empire Tower. The individual
respondents acted: as its representatives.

On July 21, 2012, Condocor held its annual general membership meeting. Its corporate secretary certified, and Jaminola, as Chairman, declared the
existence of a quorum even though only 29 of the 1088 unit buyers were present. The declaration of quorum was based on the presence of the
majority of the voting rights, including those pertaining to the 220 unsold units held by Moldex through its representatives. Lim, through her
attorney-in-fact, objected to the validity of the meeting. The objection was denied. Thus, Lim and all the other unit owners present, except for one,
walked out and left the meeting.
Despite the walkout, the individual respondents and the other unit owner proceeded with the annual general membership meeting and elected the
new members of the Board of Directors for 2012-2013. All four (4) individual respondents were voted as members of the board, together with
three (3) others whose election was conditioned on their subsequent confirmation.9 Thereafter, the newly elected members of the board
conducted an organizational meeting and proceeded with the election of its officers. The individual respondents were elected as follows:

1. Atty. Jeffrey Jaminola - Chairman of the Board and President

2. Ms. Joji Milanes - Vice-President

3. Ms. Clothilda Ann Roman - Treasurer

4. Mr. Edgardo Macalintal - Corporate Secretary

5. Atty. Ma. Rosario Bernardo - Asst. Corporate Secretary

6. Atty. Mary Rose Pascual - Asst. Corporate Secretary

7. Atty. Jasmin Cuizon - Asst. Corporate Secretary10

Consequently, Lim filed an election protest before the RTC. Said court, however, dismissed the complaint holding that there was a quorum during
the July 21, 2012 annual membership meeting; that Moldex is a member of Condocor, being the registered owner of the unsold/unused
condominium units, parking lots and storage areas; and that the individual respondents, as Moldex's representatives, were entitled to exercise all
membership rights, including the right to vote and to be voted. 11 In so ruling, the trial court explained that the presence or absence of a quorum in
the subject meeting was determined on the basis of the voting rights of all the units owned by the members in good standing. 12 The total voting
rights of unit owners in good standing was 73,376 and, as certified by the corporate secretary, 83.33% of the voting rights in good standing were
present in the said meeting, inclusive of the 5 8,504 voting rights of Moldex. 13

Not in conformity, Lim filed the subject petition raising the following

ISSUES

A. THE LOWER COURT GRAVELY ERRED IN RULING THAT IN DETERMINING THE PRESENCE OR ABSENCE OF QUORUM AT GENERAL OR ANNUAL
MEMBERSHIP MEETINGS OF RESPONDENT CONDOCOR, EVEN NONUNIT BUYERS SHOULD BE INCLUDED DESPITE THE EXPRESS PROVISION OF ITS
BY-LAWS, THE LAW AND SETTLED JURISPRUDENCE;

B. THE LOWER COURT ERRED IN RULING THAT RESPONDENT MOLDEX IS A MEMBER OF RESPONDENT CONDOCOR AND THAT IT MAY APPOINT
INDIVIDUAL RESPONDENTS TO REPRESENT IT THEREIN;

C. EVEN ASSUMING THAT RESPONDENT MOLDEX MAY BE A MEMBER OF RESPONDENT CONDOCOR, THERE IS STILL NO BASIS FOR IT TO BE
ELECTED TO THE BOARD OF DIRECTORS OF RESPONDENT CONDOCOR BECAUSE IT IS A JURIDICAL PERSON;

D. ASSUMING FURTHER THAT DESPITE BEING A JURIDICAL PERSON, IT MAY BE ELECTED TO THE BOARD OF DIRECTORS OF RESPONDENT
CONDOCOR, THERE IS NO LEGAL BASIS FOR THE LOWER COURT TO HOLD THAT RESPONDENT MOLDEX HAS AUTOMATICALLY RESERVED FOUR
SEATS THEREIN; AND,

E. THE LOWER COURT GRAVELY ERRED IN RULING TO RECOGNIZE RESPONDENT MOLDEX AS OWNERDEVELOPER HAVING FOUR RESERVED SEATS
IN RESPONDENT CONDOCOR BOARD, AS SUCH RULING EFFECTIVELY ALLOWED THE VERY EVIL THAT PD 957 SOUGHT TO PREVENT FROM
DOMINATING THE CONTROL AND MANAGEMENT OF RESPONDENT CONDOCOR TO THE GRAVE AND IRREPARABLE DAMAGE AND INJURY OF
PETITIONER AND THE OTHER UNIT BUYERS, WHO ARE THE BONA FIDE MEMBERS OF RESPONDENT CONDOCOR.

In sum, the primordial issues to be resolved are: 1) whether the July 21, 2012 membership meeting was valid; 2) whether Moldex can be deemed a
member of Condocor; and 3) whether a non-unit owner can be elected as a member of the Board of Directors of Condocor.

Procedural Issues

The issues raised being purely legal, the Court may properly entertain the subject petition.

The subject case was initially denied because it appeared that Lim raised mixed questions of fact and law which should have been filed before the
CA. After judicious perusal of Lim's arguments, however, the Court ascertained that a reconsideration of its April 1, 2013 Resolution14 was in order.
It has been consistently held that only pure questions of law can be entertained in a petition for review under Rule 45 of the Rules of Court.
In Century Iron Works, Inc. v. Banas, 15the Court held:

A petition for review on certiorari  under Rule 45 is an appeal from a ruling of a lower tribunal on pure questions of law. It is only in exceptional
circumstances that we admit and review questions of fact.

A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises
as to the truth or falsity of the alleged facts. For a question to be one of law, the question must not involve an examination of the probative value
of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact.

Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it
is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of
law; otherwise it is a question of fact. 16 [Emphasis supplied]

Respondents argued that the initial denial of the petition was correct because Lim availed of the wrong mode of appeal. As the assailed judgment
involved an intra-corporate dispute cognizable by the RTC, the appeal should have been filed before the CA, and not before this Court.

Doubtless, this case involves intra-corporate controversies and, thus, jurisdiction lies with the R TC, acting as a special commercial court. Section 5.2
of Republic Act No. 8799 (R.A. No. 8799)17effectively transferred to the appropriate RTCs jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A (P.D. No. 902-A), to wit:

a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partnership, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public and/ or of the stockholder, partners, members of associations or
organizations registered with the Commission;

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any
or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between
such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity; and

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or
associations. [Emphases supplied]

Pursuant to A.M. No. 04-9-07-SC, all decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation and the Interim
Rules of Procedure Governing Intra-Corporate Controversies shall be appealable to the CA through a petition for review under Rule 43 of the Rules
of Court. Such petition shall be taken within fifteen (15) days from notice of the decision or final order of the RTC.18

In turn, Rule 43 governs the procedure for appeals from judgments or final orders of quasi-judicial agencies to the CA, whether it involves questions
of fact, of law, or mixed questions of fact and law. Nevertheless, a party may directly file a petition for review on certiorari  before the Court to
question the judgment of a lower court, especially when the issue raised is purely of law and is one of novelty.

Substantive Issues

Lim is still a member of Condocor

Respondents argued that Lim had no cause of action to file the subject action because she was no longer the owner of a condominium unit by
virtue of a Deed of Assignment19 she executed in favor of Reynaldo Valera Lim and Dianna Mendoza Lim, her nephew and niece.

Section 90 of the Corporation Code states that membership in a non-stock corporation and all rights arising therefrom are personal and non-
transferable, unless the articles of incorporation or the by-laws otherwise provide. A perusal of Condocor's By-Laws as regards membership and
transfer of rights or ownership over the unit reveal that:

Membership in the CORPORATION is a mere appurtenance of the ownership of any unit in the CONDOMINIUM and may not therefore be sold,
transferred or otherwise encumbered separately from the said unit. Any member who sells or transfer his/her/its unit/s in the CONDOMINIUM
shall automatically cease to be a member of the CORPORATION, the membership being automatically assumed by the buyer or transferee upon
registration of the sale or transfer and ownership of the latter over the unit with the Register of Deeds for the City of Manila.20 [Emphasis
supplied.]

Likewise, the Master Deed of Condocor provides:

Section 11 : MORTGAGES, LIENS, LEASES, TRANSFERS OF RIGHTS AND SALE OF UNITS: All transactions involving the transfer of the ownership or
occupancy of any UNIT, such as sale, transfer of rights or leases, as well as encumbrances involving said UNIT, such as mortgages, liens and the
like, shall be reported to the CORPORATION within five (5) days after the effectivity of said transactions. 21

Nothing in the records showed that the alleged transfer made by Lim was registered with the Register of Deeds of the City of Manila or was
reported to the corporation. Logically, until and unless the registration is effected, Lim remains to be the registered owner of the condominium unit
and thus, continues to be a member of Condocor.

Moreover, even assuming that there was a transfer by virtue of the Deed of Assignment, the Confirmatory Special Power of Attorney22 executed
later by Lim, wherein she reiterated her membership in Condocor and constituted Reynaldo V. Lim as her true and lawful Attorney-in-Fact,
strengthened the fact that she still owns the condominium unit and that there has been no transfer of ownership over the said property to her
nephew, but only a mere assignment of rights to the latter. As held by the Court in Casabuena v.  CA,23 at most, an assignee can only acquire rights
duplicating those which his assignor is entitled by law to exercise. 24 Had it been otherwise, Reynaldo V. Lim himself would have questioned and
objected to the granting of the special power of attorney, and would have insisted that he was really the owner of the condominium unit.

In non-stock corporations, quorum

is determined by the majority
of its actual members

In corporate parlance, the term "meeting" applies to every duly convened assembly either of stockholders, members, directors, trustees, or
managers for any legal purpose, or the transaction of business of a common interest.25 Under Philippine corporate laws, meetings may either be
regular or special. A stockholders' or members' meeting must comply with the following requisites to be valid:

1. The meeting must be held on the date fixed in the By-Laws or in accordance with law;26

2. Prior written notice of such meeting must be sent to all stockholders/members of record;27

3. It must be called by the proper party;28

4. It must be held at the proper place;29 and

5. Quorum and voting requirements must be met. 30

Of these five (5) requirements, the existence of a quorum is crucial. Any act or transaction made during a meeting without quorum is rendered of
no force and effect, thus, not binding on the corporation or parties concerned.

In relation thereto, Section 52 of the Corporation Code of the Philippines (Corporation Code)  provides:

Section 52. Quorum in meetings. - Unless otherwise provided for in this Code or in the by-laws, a quorum shall consist of the stockholders
representing a majority of the outstanding capital stock or a majority of the members in the case of non-stock corporations.

Thus, for stock corporations, the quorum is based on the number of outstanding voting stocks while for non-stock corporations, only those who
are actual, living members with voting rights shall be counted in determining the existence of a quorum. 31

To be clear, the basis in determining the presence of quorum in non-stock corporations is the numerical equivalent of all members who are entitled
to vote, unless some other basis is provided by the By-Laws of the corporation. The qualification "with voting rights" simply recognizes the power of
a non-stock corporation to limit or deny the right to vote of any of its members.32 To include these members without voting rights in the total
number of members for purposes of quorum would be superfluous for although they may attend a particular meeting, they cannot cast their vote
on any matter discussed therein.

Similarly, Section 6 of Condocor's By-Laws reads: "The attendance of a simple majority of the members who are in good standing shall constitute a
quorum ... x x x." The phrase, "members in good standing," is a mere qualification as to which members will be counted for purposes of quorum. As
can be gleaned from Condocor's By-Laws, there are two (2) kinds of members: 1) members in good standing; and 2) delinquent members. Section 6
merely stresses that delinquent members are not to be taken into consideration in determining quorum. In relation thereto, Section 733 of the By-
Laws, referring to voting rights, also qualified that only those members in good standing are entitled to vote. Delinquent members are stripped off
their right to vote. Clearly, contrary to the ruling of the RTC, Sections 6 and 7 of Condocor's By-Laws do not provide that majority of the total voting
rights, without qualification, will constitute a quorum.

It must be emphasized that insofar as Condocor is concerned, quorum is different from voting rights. Applying the law and Condocor's By-Laws, if
there are 100 members in a non-stock corporation, 60 of which are members in good standing, then the presence of 50% plus 1 of those members
in good standing will constitute a quorum. Thus, 31 members in good standing will suffice in order to consider a meeting valid as regards the
presence of quorum. The 31 members will naturally have to exercise their voting rights. It is in this instance when the number of voting rights each
member is entitled to becomes significant. If 29 out of the 31 members are entitled to 1 vote each, another member (known as A) is entitled to 20
votes and the remaining member (known as B) is entitled to 15 votes, then the total number of voting rights of all 31 members is 64. Thus, majority
of the 64 total voting rights, which is 33 (50% plus 1), is necessary to pass a valid act. Assuming that only A and B concurred in approving a specific
undertaking, then their 35 combined votes are more than sufficient to authorize such act.

The By-Laws of Condocor has no rule different from that provided in the Corporation Code with respect the determination of the existence of a
quorum. The quorum during the July 21, 2012 meeting should have been majority of Condocor's members in good standing. Accordingly, there was
no quorum during the July 21, 2012 meeting considering that only 29 of the 108 unit buyers were present.

As there was no quorum, any resolution passed during the July 21, 2012 annual membership meeting was null and void and, therefore, not binding
upon the corporation or its members. The meeting being null and void, the resolution and disposition of other legal issues emanating from the null
and void July 21, 2012 membership meeting has been rendered unnecessary.

To serve as a guide for the bench and the bar, however, the Court opts to discuss and resolve the same.

Moldex is a member
Of Condocor

Matters involving a condominium are governed by Republic Act No. 4726 (Condominium Act). Said law sanctions the creation of a condominium
corporation which is especially formed for the purpose of holding title to the common areas, including the land, or the appurtenant interests in
such areas, in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to
the appurtenant interest of their respective units in the common areas. 34 In relation thereto, Section 10 of the same law clearly provides that the
condominium corporation shall constitute the management body of the project.

Membership in a condominium corporation is limited only to the unit owners of the condominium project. This is provided in Section 10 of the
Condominium Act which reads:

Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be transferable separately from
the condominium unit of which it is an appurtenance. When a member or stockholder ceases to own a unit in the project in which the
condominium corporation owns or holds the common areas, he shall automatically cease to be a member or stockholder of the condominium
corporation.35 [Emphases supplied]

Although the Condominium Act provides for the minimum requirement for membership in a condominium corporation, a corporation's articles of
incorporation or by-laws may provide for other terms of membership, so long as they are not inconsistent with the provisions of the law, the
enabling or master deed, or the declaration of restrictions of the condominium project.

In this case, Lim argued that Moldex cannot be a member of Condocor. She insisted that a condominium corporation is an association of
homeowners for the purpose of managing the condominium project, among others. Thus, it must be composed of actual unit buyers or residents of
the condominium project.36 Lim further averred that the ownership contemplated by law must result from a sale transaction between the owner-
developer and the purchaser. She advanced the view that the ownership of Moldex was only in the nature of an owner-developer and only for the
sole purpose of selling the units.37 In justifying her arguments, Lim cited Section 30 of Presidential Decreee No. 957, known as The Subdivision and
Condominium Buyers' Protective Decree (P.D. No. 957), to wit:

Section 30. Organization of Homeowners Association.  The owner or developer of a subdivision project or condominium project shall initiate the
organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their
mutual interest and assist in their community development. [Emphasis in the original.]

Furthermore, in distinguishing between a unit buyer and an owner-developer of a project, Lim cited Section 25 of P.D. No. 957, which provides:

Section 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. xxx

Likewise, Lim relied on Sunset View Condominium Corp. v. Hon. Campos, Jr.,  38 where the Court wrote:

The share of stock appurtenant to the unit will be transferred accordingly to the purchaser of the unit only upon full payment of the purchase
price at which time he will also become the owner of the unit. Consequently, even under the contract, it is only the owner of a unit who is a
shareholder of the Condominium Corporation.

Inasmuch as owners is conveyed only upon full payment of the purchase price, it necessarily follows that a purchaser of a unit who has not paid
the full purchase price thereof is not the owner of the unit and consequently is not a shareholder of the Condominium Corporation. [Emphasis in
the original]
On these grounds, Lim asserted that only unit buyers are entitled to become members of Condocor. 39

The Court finds itself unable to agree.

Lim's reliance of P.D. No. 957 is misplaced. There is no provision in P.D. No. 957 which states that an owner-developer of a condominium project
cannot be a member of a condominium corporation. Section 30 of P.D. No. 957 determines the purposes of a homeowners association - to
promote and protect the mutual interest of the buyers and residents, and to assist in their community development. A condominium corporation,
however, is not just a management body of the condominium project. It also holds title to the common areas, including the land, or the
appurtenant interests in such areas. Hence, it is especially governed by the Condominium Act. Clearly, a homeowners association is different from a
condominium corporation. P.D. No. 957 does not regulate condominium corporations and, thus, cannot be applied in this case.

Sunset View  merely delineated the difference between a "purchaser" and an "owner," whereby the former could be considered an owner only
upon full payment of the purchase price. The case merely clarified that not every purchaser of a condominium unit could be a shareholder of the
condominium corporation.

Respondents, for their part, countered that a registered owner of a unit in a condominium project or the holders of duly issued condominium
certificate of title (CCT),40automatically becomes a member of the condominium corporation,41 relying on Sections 2 and 10 of the Condominium
Act, the Master Deed and Declaration of Restrictions, as well as the By-Laws of Condocor. For said reason, respondents averred that as Moldex is
the owner of 220 unsold units and the parking slots and storage areas attached thereto, it automatically became a member of Condocor upon the
latter's creation.42

On this point, respondents are correct.

Section 2 of the Condominium Act states:

Sec. 2. A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and
an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A
condominium may include, in addition, a separate interest in other portions of such real property. Title to the common areas, including the land,
or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the
"condominium corporation") in which the holders of separate interest shall automatically be members or shareholders,  to the exclusion of
others, in proportion to the appurtenant interest of their respective units in the common areas. [Emphasis supplied]

In Sunset View,43the Court elucidated on what constitutes "separate interest," in relation to membership, as mentioned in the Condominium Act, to
wit:

By necessary implication, the "separate interest" in a condominium, which entitles the holder to become automatically a shareholder in the
condominium corporation, as provided in Section 2 of the Condominium Act, can be no other than ownership of a unit.  This is so because
nobody can be a shareholder unless he is the owner of a unit and when he ceases to be the owner, he also ceases automatically to be a
shareholder. 44 [Emphasis supplied.]

Thus, law and jurisprudence dictate that ownership of a unit entitles one to become a member of a condominium corporation.1âwphi1 The
Condominium Act does not provide a specific mode of acquiring ownership. Thus, whether one becomes an owner of a condominium unit by virtue
of sale or donation is of no moment.

It is erroneous to argue that the ownership must result from a sale transaction between the owner-developer and the purchaser. Such
interpretation would mean that persons who inherited a unit, or have been donated one, and properly transferred title in their names cannot
become members of a condominium corporation.

The next issue is - may Moldex appoint duly authorized representatives who will exercise its membership rights, specifically the right to be voted as
corporate directors/officers?

Moldex may appoint a

duly authorized representative

A corporation can act only through natural persons duly authorized for the purpose or by a specific act of its board of directors.45 Thus, in order for
Moldex to exercise its membership rights and privileges, it necessarily has to appoint its representatives.

Section 58 of the Corporation Code mandates:

Section 58. Proxies.  - Stockholders and members may vote in person or by proxy in all meetings of stockholders or members. Proxies shall in
writing, signed by the stockholder or member and filed before the scheduled meeting with the corporate secretary. Unless otherwise provided in
the proxy, it shall be valid only for the meeting for which it is intended. No proxy shall be valid and effective for a period longer than five (5) years at
any one time. [Emphasis supplied]

Relative to the above provision is Section 1, Article II of Condocor's By-Laws, 46 which grants registered owners the right to designate any person or
entity to represent them in Condocor, subject to the submission of a written notification to the Secretary of such designation. Further, the owner's
representative is entitled to enjoy and avail himself of all the rights and privileges, and perform all the duties and responsibilities of a member of
the corporation. The law and Condocor's By-Laws evidently allow proxies in members' meeting.

Prescinding therefrom, Moldex had the right to send duly authorized representatives to represent it during the questioned general membership
meeting. Records showed that, pursuant to a Board Resolution, as certified47 by Sandy T. Uy, corporate secretary of Moldex, the individual
respondents were instituted as Moldex's representatives. This was attested to by Mary Rose V. Pascual, Assistant Corporate Secretary of Condocor,
in a sworn statement48 she executed on August 31, 2012.

Next question is - can the individual respondents be elected as directors of Condocor?

Individual respondents who

are non-members cannot be
elected as directors and officers
of the condominium corporation

The governance and management of corporate affairs in a corporation lies with its board of directors in case of stock corporations, or board of
trustees in case of non-stock corporations. As the board exercises all corporate powers and authority expressly vested upon it by law and by the
corporations' by-laws, there are minimum requirements set in order to be a director or trustee, one of which is ownership of a share in one's name
or membership in a non-stock corporation. Section 23 of the Corporation Code provides:

Section 23. The Board of Directors or Trustees.  - Unless otherwise provided in this Code, the corporate powers of all corporations formed under this
Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be
elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one
(1) year until their successors are elected and qualified.

Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which share shall stand in his name
on the books of the corporation. Any director who ceases to be the owner of at least one (1) share of the capital stock of the corporation of which
he is a director shall thereby cease to be a director. Trustees of non-stock corporations must be members thereof. A majority of the directors or
trustees of all corporations organized under this Code must be residents of the Philippines. [Emphases supplied]

This rule was reiterated in Section 92 of the Corporation Code, which states:

Section 92. Election and term of trustees. – x x x No person shall be elected as trustee unless he is a member of the corporation. x x x

While Moldex may rightfully designate proxies or representatives, the latter, however, cannot be elected as directors or trustees of
Condocor. First, the Corporation Code clearly provides that a director or trustee must be a member of record of the corporation. Further,  the
power of the proxy is merely to vote. If said proxy is not a member in his own right, he cannot be elected as a director or proxy.

Respondents cannot rely on the Securities and Exchange Commission (SEC)  Opinions they cited to justify the individual respondents' election as
directors. In Heirs of Gamboa v.  Teves,49 the Court En Banc  held that opinions issued by SEC legal officers do not have the force and effect of SEC
rules and regulations because only the SEC en banc  can adopt rules and regulations.

Following Section 25 of the Corporation Code, the election of individual respondents, as corporate officers, was likewise invalid.

Section 25 of the Corporation Code mandates that the President shall be a director. As previously discussed, Jaminola could not be elected as a
director. Consequently, Jaminola's election as President was null and void.

The same provision allows the election of such other officers as may be provided for in the by-laws. Condocor's By-Laws, however, require that the
Vice-President shall be elected by the Board from among its member-directors in good standing, and the Secretary may be appointed  by the Board
under the same circumstance. Like Jaminola, Milanes and Macalintal were not directors and, thus, could not be elected and appointed as Vice-
President and Secretary, respectively.

Insofar as Roman's election as Treasurer is concerned, the same would have been valid, as a corporate treasurer may or may not be a director of
the corporation's board. The general membership meeting of Condocor, however, was null and void. As a consequence, Roman's election had no
legal force and effect.
In fine, the July 21, 2012 annual general membership meeting of Condocor being null and void, all acts and resolutions emanating therefrom are
likewise null and void.

WHEREFORE, the petition is GRANTED. The March 4, 2013 Decision of the Regional Trial Court, Branch 24, Manila, in Civil Case No. 12-128478 is
hereby REVERSED and SET ASIDE. The Court declares that:

a) The July 21, 2012 Annual General Membership Meeting of Condocor is null and void;

b) The election of members of the Board of Directors in the annual general membership meeting is likewise null and void; and

c) The succeeding Organizational Meeting of Condocor's Board of Directors as well as the election of its corporate officers are of no force and
effect.

Costs against respondents.

SO ORDERED.

G.R. No. 205838, November 29, 2017

JOSEPH HARRY WALTER POOLE-BLUNDEN, Petitioner, v. UNION BANK OF THE PHILIPPINES, Respondent.

DECISION

LEONEN, J.:

Banks are required to observe a high degree of diligence in their affairs. This encompasses their dealings concerning properties offered as security
for loans. A bank that wrongly advertises the area of a property acquired through foreclosure because it failed to dutifully ascertain the property's
specifications is grossly negligent as to practically be in bad faith in offering that property to prospective buyers. Any sale made on this account is
voidable for causal fraud. In actions to void such sales, banks cannot hide under the defense that a sale was made on an as-is-where-is basis. As-is-
where-is stipulations can only encompass physical features that are readily perceptible by an ordinary person possessing no specialized skills.

This resolves a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure praying that the assailed November 15, 2012
Decision2 and February 12, 2013 Resolution3 of the Court of Appeals in CA-G.R. CV No. 95369 be reversed and set aside and that judgment be
rendered annulling or rescinding the Contract to Sell between petitioner Joseph Harry Walter Poole-Blunden (Poole-Blunden) and respondent
Union Bank of the Philippines (UnionBank).

The assailed Court of Appeals Decision affirmed the April 20, 2010 Decision of the Regional Trial Court, Branch 65, Makati City which dismissed the
Complaint for Rescission of Contract and Damages filed by Poole-Blunden against respondent UnionBank.4 The assailed Court of Appeals Resolution
denied Poole-Blunden's Motion for Reconsideration. 5

Sometime in March 2001, Poole-Blunden came across an advertisement placed by Union Bank in the Manila Bulletin. The ad was for the public
auction of certain properties. One of these properties was a condominium unit, identified as Unit 2-C of T-Tower Condominium (the "Unit"),
located at 5040 P. Burgos corner Calderon Streets, Makati City.6 UnionBank had acquired the property through foreclosure proceedings "after the
developer defaulted in the payment of its loan from [UnionBank]."7

The Unit was advertised to have an area of 95 square meters. Thinking that it was sufficient and spacious enough for his residential needs, Poole-
Blunden decided to register for the sale and bid on the unit.8

About a week prior to the auction, Poole-Blunden visited the unit for inspection. He was accompanied by a representative of UnionBank. The unit
had an irregular shape; it was neither a square nor a rectangle and included a circular terrace. Poole-Blunden did not doubt the unit's area as
advertised. However, he found that the ceiling was in bad condition, that the parquet floor was damaged, and that the unit was in need of other
substantial repairs to be habitable.9

On the day of the auction, Poole-Blunden inspected the Master Title of the project owner to the condominium in the name of Integrated Network
(TCT No. 171433) and the Condominium Certificate of Title of UnionBank (CCT No. 36151) to verify once again the details as advertised and the
ownership of the unit. Both documents were on display at the auction venue.10

Poole-Blunden placed his bid and won the unit for P2,650,000.00.11 On May 7, 2001, Poole-Blunden entered into a Contract to Sell with UnionBank.
This Contract stipulated that Poole-Blunden would pay 10% of the purchase price as down payment 12 and that the balance shall be paid over a
period of 15 years in equal monthly instalments, with interest of 15% per annum starting July 7, 2001.13
Poole-Blunden started occupying the unit in June 2001. By July 20, 2003, he was able to fully pay for the Unit, paying a total amount of
P3,257,142.49.14

In late 2003, Poole-Blunden decided to construct two (2) additional bedrooms in the Unit. Upon examining it, he noticed apparent problems in its
dimensions. He took rough measurements of the Unit, which indicated that its floor area was just about 70 square meters, not 95 square meters,
as advertised by UnionBank.15

Poole-Blunden got in touch with an officer of UnionBank to raise the matter, but no action was taken.16 On July 12, 2004, Poole-Blunden wrote to
UnionBank, informing it of the discrepancy. He asked for a rescission of the Contract to Sell, along with a refund of the amounts he had paid, in the
event that it was conclusively established that the area of the unit was less than 95 square meters.17

In a letter dated December 6, 2004,18 UnionBank informed Poole-Blunden that after inquiring with the Housing and Land Use Regulatory Board
(HLURB), the Homeowners' Association of T-Tower Condominium, and its appraisers, the Unit was confirmed to be 95 square meters, inclusive of
the terrace and the common areas surrounding it.19

Poole-Blunden was not satisfied with UnionBank's response as the condominium's Master Title expressly stated that the "boundary of each unit are
the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof."20 Thus, he hired an independent geodetic engineer, Engr.
Gayril P. Tagal (Engr. Tagal) of the Filipinas Dravo Corporation, to survey the Unit and measure its actual floor area. Engr. Tagal issued a certification
stating that the total floor area of the Unit was only 74.4 square meters.21 Poole-Blunden gave UnionBank a copy of Engr. Tagal's certification on
July 12, 2005.22

In a letter dated February 1, 2006, UnionBank explained:

[T]he total area of the subject unit based on the ratio allocation maintenance cost submitted by the developer to HLURB is 98 square meters (60
square meters as unit area and 38 square meters as share on open space). On the other hand, the actual area thereof based on the measurements
made by its surveyor is 74.18 square meters which was much higher than the unit area of 60 square meters that was approved by HLURB.23

Poole-Blunden's dissatisfaction with UnionBank's answer prompted him to file his Complaint for Rescission of Contract and Damages with the
Regional Trial Court, Makati City.24

On April 20, 2010, the Regional Trial Court dismissed Poole-Blunden's complaint for lack of merit. The dispositive portion of its Decision read:

WHEREFORE, premises considered, the instant complaint for rescission of contract and damages is hereby DISMISSED for lack of merit. The
counterclaim is likewise DENIED.

SO ORDERED.25

On appeal, the Court of Appeals affirmed the ruling of the Regional Trial Court.26 It noted that the sale was made on an "as-is-where-is" basis as
indicated in Section 12 of the Contract to Sell.27 Thus, Poole-Blunden supposedly waived any errors in the bounds or description of the unit.28 The
Court of Appeals added that Poole-Blunden failed to show, by clear and convincing evidence that causal fraud can be attributed to UnionBank.29 It
added that the sale was made for a lump-sum amount and that, in accordance with Article 1542, paragraph 1 of the Civil Code,30 Poole-Blunden
could not demand a reduction in the purchase price.31

Following the denial of his Motion for Reconsideration, Poole-Blunden filed the present Petition before this Court.32

Poole-Blunden charges UnionBank with fraud in failing to disclose to him that the advertised 95 square meters was inclusive of common
areas.33 With the vitiation of his consent as to the object of the sale, he asserts that the Contract to Sell may be voided. He insists that UnionBank is
liable for breach of warranty despite the "as-is-where-is" clause in the Contract to Sell.34 Finally, he assails the Court of Appeals' application of
Article 1542 of the Civil Code.35

For resolution is the sole issue of whether or not respondent Union Bank of the Philippines committed such a degree of fraud as would entitle
petitioner Joseph Harry Walter Poole-Blunden to the voiding of the Contract to Sell the condominium unit identified as Unit 2C, T-Tower
Condominium, 5040 P. Burgos corner Calderon Streets, Makati City.

No longer in dispute at this juncture is how the Unit's interior area is only 74.4 square meters. While respondent has maintained that the Unit's
total area is in keeping with the advertised 95 square meters, it has conceded that these 95 square meters is inclusive of outside spaces and
common areas.
 Even before litigation commenced, in a December 6, 2004 letter,36 respondent informed petitioner that, following inquiries with the HLURB, the
Homeowners' Association of T-Tower Condominium, and its appraisers, it had confirmed that the Unit's 95 square meters was inclusive of "the
terrace and the common areas surrounding it."37

During trial, respondent's former Assistant Vice President of the Asset and Recovery Group, Atty. Elna N. Cruz (Atty. Cruz), testified on how there
would have been documents (such as an appraisal report) relating to inspections made by respondent's personnel at the time the unit was being
offered as a collateral to a loan. These would have concerned the unit's area.38 She affirmed respondent's statements in its December 6, 2004 letter
and indicated that, based on an appraisal report, the declared 95 square meters was not exclusive to the Unit's interiors but included common
areas:

Q: So my impression, Madam Witness, is that before you accepted the property as a collateral, Union Bank already knew what was the actual area
of the unit?

A: Yes, sir.

   

Q: But you do not know what was the actual area as found by your inspector?

A: It would be 95 square meters as per the record, sir.

   

Q: That was the actual findings of your inspector, Madam Witness?

A: Yes, sir.

   

Q: What's your basis for saying that?

A: The appraisal report, sir.

   

Q: Do you have now with you that appraisal report showing that the actual area of the unit is indeed 95 square meters?

A: We gathered the appraisal report and in the December 06, 2004 letter that we gave Mr. Blunden, we consulted the appraiser of the Bank and
we were informed that the area was indeed 95 square meters.  But that area was brought about by measuring not just the inside of the unit, sir,
but including also the terrace, and the common area.39 (Emphasis supplied)

Respondent has not disavowed Atty. Cruz's testimony. In its Comment, it merely asserted that the "[e]xtensive reference to the [transcript of
stenographic notes] is unmistakable proof that the litigated issue is one of fact, not of law" and insisted that this Court should not take cognizance
of the present Petition.40

Respondent's insistence on how common spaces should be included in reckoning the Unit's total area runs afoul of how Republic Act No. 4726,
otherwise known as the Condominium Act, reckons what forms part of a condominium unit.

Section 3(b) of the Condominium Act defines a condominium unit, as follows:

Section 3. As used in this Act, unless the context otherwise requires:

....

(b) "Unit" means a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or
spaces located in one or more floors (or part or parts of floors) in a building or buildings and such accessories as may be appended thereto.

Section 6(a) of the Condominium Act specifies the reckoning of a condominium unit's bounds. It also specifies that areas of common use "are not
part of the unit":

Section 6. Unless otherwise expressly provided in the enabling or master deed or the declaration of restrictions, the incidents of a condominium
grant are as follows:

(a) The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof. The following are
not part of the unit bearing walls, columns, floors, roofs, foundations and other common structural elements of the building; lobbies, stairways,
 hallways, and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air-conditioning
equipment, reservoirs, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits, wires and other utility
installations, wherever located, except the outlets thereof when located within the unit. (Emphasis supplied.)

Thus, the unit sold to petitioner was deficient in relation to its advertised area. This advertisement having been made by respondent, it is equally
settled there was a falsity in the declarations made by respondent prior to, and with the intention of enticing buyers to the sale. What remains in
issue is whether or not this falsity amounts to fraud warranting the voiding of the Contract to Sell.

II

For there to be a valid contract, all the three (3) elements of consent, subject matter, and price must be present.41 Consent wrongfully obtained is
defective. The party to a contract whose consent was vitiated is entitled to have the contract rescinded. Accordingly, Article 1390 of the Civil
Code42 stipulates that a contract is voidable or annullable even if there is no damage to the contracting parties where "consent is vitiated by
mistake, violence, intimidation, undue influence or fraud."

Under Article 1338 of the Civil Code "[t]here is fraud when, through insidious words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not have agreed to." However, not all instances of fraud enable the voiding of
contracts. Article 1344 clarifies that in order to make a contract voidable, the fraud "should be serious and should not have been employed by both
contracting parties."43

Thus, Tankeh v. Development Bank of the Philippines 44 explained, "There are two types of fraud contemplated in the performance of
contracts: dolo incidente  or incidental fraud and dolo causante  or fraud serious enough to render a contract voidable."45 The fraud required to
annul or avoid a contract "must be so material that had it not been present, the defrauded party would not have entered into the contract."46 The
fraud must be "the determining cause of the contract, or must have caused the consent to be given."47

Petitioner's contention on how crucial the dimensions and area of the Unit are to his decision to proceed with the purchase is well-taken. The
significance of space and dimensions to any buyer of real property is plain to see. This is particularly significant to buyers of condominium units in
urban areas, and even more so in central business districts, where the scarcity of space drives vertical construction and propels property values. It
would be immensely guileless of this Court to fail to appreciate how the advertised area of the Unit was material or even indispensable to
petitioner's consent. As petitioner emphasized, he opted to register for and participate in the auction for the Unit only after determining that its
advertised area was spacious enough for his residential needs.48

III

The significance of the Unit's area as a determining cause of the Contract to Sell is readily discernible. Falsity on its area is attributable to none but
to respondent, which, however, pleads that it should not be considered as having acted fraudulently given that petitioner conceded to a sale on an
as-is-where-is basis, thereby waiving "warranties regarding possible errors in boundaries or description of property."49

Section 12 of the Contract to Sell spells out the "as-is-where-is" terms of the purchase:

Section 12. The BUYER recognizes that he is buying the property on an "as-is-where-is" basis including errors in boundaries or description of
property, if any etc. and among others, he shall be responsible for the eviction of the occupants on the property, if any, or for the repair of the
property, if needed. It shall be understood that the SELLER makes no warranty whatsoever on the authenticity, accuracy, or title over
property.50 (Emphasis supplied.)

Reliance on Section 12's as-is-where-is stipulation is misplaced for two (2) reasons. First, a stipulation absolving a seller of liability for hidden
defects can only be invoked by a seller who has no knowledge of hidden defects. Respondent here knew that the Unit's area, as reckoned in
accordance with the Condominium Act, was not 95 square meters. Second, an as-is-where-is stipulation can only pertain to the readily perceptible
physical state of the object of a sale. It cannot encompass matters that require specialized scrutiny, as well as features and traits that are
immediately appreciable only by someone with technical competence.

A seller is generally responsible for warranty against hidden defects of the thing sold. As stated in Article 1561 of the New Civil Code:

Article 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have, should they render it unfit for
the use for which it is intended, or should they diminish its fitness for such use to such an extent that, had the vendee been aware thereof, he
would not have acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent defects or those which may
be visible, or for those which are not visible if the vendee is an expert who, by reason of his trade or profession, should have known.
Article 1566, paragraph 2 states the seller's liability for hidden defects shall be inapplicable if there is a stipulation made to the contrary. However,
a mere stipulation does not suffice. To be fully absolved of liability, Article 1566, paragraph 2 also requires a seller to be unaware of the hidden
defects in the thing sold.

Article 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was not aware thereof.

This provision shall not apply if the contrary has been stipulated, and the vendor was not aware of the hidden faults or defects in the thing
sold. (Emphasis supplied.)

It is clear from the records that respondent fully knew that the Unit's area, reckoned strictly in accordance with the Condominium Act, did not total
95 square meters. Respondent admits that the only way the Unit's area could have amounted to 95 square meters was if some areas for common
use were added to its interior space. It acknowledged knowing this fact through the efforts of its appraisers and even conceded that their findings
were documented in their reports.

In  Hian v. Court of Tax Appeals,51 this Court construed an as-is-where-is stipulation as pertaining to the "physical condition" of the thing sold and
"not to [its] legal situation."52 As further explained in National Development Company v. Madrigal Wan Hai Lines Corporation:53

In Hian vs. Court of Tax Appeals, we had the occasion to construe the phrase "as is, where is" basis, thus:

"We cannot accept the contention in the Government's Memorandum of March 31, 1976 that Condition No. 5 in the Notice of Sale to the effect
that 'The above-mentioned articles (the tobacco) are offered for sale 'AS IS' and the Bureau of Customs gives no warranty as to their condition'
relieves the Bureau of Customs of liability for the storage fees in dispute. As we understand said Condition No. 5, it refers to the physical condition
of the tobacco and not to the legal situation in which it was at the time of the sale, as could be implied from the right of inspection to prospective
bidders under Condition No. 1 [.]" (Emphasis ours)

The phrase "as is, where is" basis pertains solely to the physical condition of the thing sold, not to its legal situation. In the case at bar, the US tax
liabilities constitute a potential lien which applies to NSCP's legal situation, not to its physical aspect. Thus, respondent as a buyer, has no obligation
to shoulder the same.54

A condominium unit's area is a physical attribute. In Hian's contemplation, it appeared that the total area of a condominium unit is a valid object of
an as-is-where-is clause. However, while as-is-where-is clauses exclusively apply to the physical attributes of a thing sold, they apply only to
physical features that are readily observable. The significance of this Court's pronouncements in Hian and National Development Company  are in
clarifying that legal status, which is a technical matter perceptible only by lawyers and regulators, cannot be encompassed by an as-is-where-is
stipulation. Hian and National Development Company  are not a sweeping approbation of such stipulations' coverage of every corporeal attribute or
tangible trait of objects being sold. Thus, in Asset  Privatization v. T.J. Enterprises,55 the as-is-where-is stipulation was understood as one which
"merely describes the actual state and location of the machinery and equipment sold,"56 and nothing else. Features that may be physical but which
can only be revealed after examination by persons with technical competence cannot be covered by as-is-where-is stipulations. A buyer cannot be
considered to have agreed "to take possession of the things sold 'in the condition where they are found and from the place where they are
located'"57 if the critical defect is one which he or she cannot even readily sense.

In inspecting the Unit prior to the auction sale, petitioner took note of its actual state: "he noticed that the ceilings were down, [that] there was
water damage from the leaks coming from the unit above, and [that] the parquet floor was damaged."58 He also took note of its irregular shape and
the circular terrace outside it. These observations represent the full extent of what was readily perceptible to petitioner. The precise measurement
of the Unit's area, in contrast, could only be determined by someone with specialized or technical capabilities. While ordinary persons, such as
petitioner, may hold such opinions that the Unit looks small, their perception could not be ascertained until after an examination by someone
equipped with peculiar skills and training to measure real property. Indeed, petitioner's suspicions were not roused until years after he had
occupied the Unit and confirmed until after a certification was issued by a surveyor.

Any waiver of warranties under Section 12 of the Contract to Sell could have only been concerned with the readily apparent subpar condition of the
Unit. A person not equipped with technical knowledge and expertise to survey real property could not reasonably be expected to recognize
deficiencies in measurement at the first instance especially if that property was of "irregular shape," "neither square nor rectangle," and having a
"circular terrace."59

IV

Contrary to the Court of Appeals' assertion, Article 1542 of the Civil Code does not bar the voiding of the Contract to Sell.

Article 1542 of the Civil Code states:

Article 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no
increase or decrease of the price, although there be a greater or less area or number than that stated in the contract.
The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is
indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all
that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he
shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee
does not accede to the failure to deliver what has been stipulated. (Emphasis supplied.)

Article 1542 has nothing to do with annulling fraudulently made sales. What it is concerned with is the proportionate reduction of the purchase
price in relation to the measurable units of the thing sold. Petitioner does not seek a reduction of the purchase price. He seeks judicial relief to have
the entirety of his purchase annulled, his consent having been fraudulently obtained. By filing an action under Article 1390 of the Civil Code,
petitioner declared that his consent to the entire subject matter of the contract was vitiated. What suffices as relief is the complete annulment of
the sale, not the partial reimbursement upon which Article 1542 is premised.

Likewise, Article 1542 does not contemplate the seller's delivery to the buyer of things other than the agreed object of the sale. While it is true that
petitioner did not buy the unit on a per-square-meter basis, it remains that what he bought was a condominium unit. A condominium unit's bounds
are reckoned by "the interior surfaces of [its] perimeter walls, floors, ceilings, windows and doors."60 It excludes common areas. Thus, when
petitioner agreed to purchase the Unit at a lump-sum price, he never consented to including common areas as part of his purchase. Article 1542's
concern with a ratable reduction of the price delivered by the buyer assumes that the seller correctly delivered, albeit deficiently, the object of the
sale.

In any case, for Article 1542 to operate, "the discrepancy must not be substantial."61 Article 1542 remains anchored on a sense of what is
reasonable. An estimate given as a premise for a sale should be "more or less" the actual area of the thing sold.62 Here, the area advertised and
stipulated in the Contract to Sell was 95 square meters but the actual area of the unit was only 74.4 square meters.63 By no stretch of the
imagination can a 21.68% deficiency be discounted as a mere minor discrepancy.

By definition, fraud presupposes bad faith or malicious intent. It transpires when insidious words or machinations are deliberately employed to
induce agreement to a contract. Thus, one could conceivably claim that respondent could not be guilty of fraud as it does not appear to have
crafted a deceptive strategy directed specifically at petitioner. However, while petitioner was not a specific target, respondent was so callously
remiss of its duties as a bank. It was so grossly negligent that its recklessness amounts to a wrongful willingness to engender a situation where any
buyer in petitioner's shoes would have been insidiously induced into buying a unit with an actual area so grossly short of its advertised space.

In Spouses Carbonell v. Metropolitan Bank and Trust Company,64 this Court considered gross negligence, in relation to the fiduciary nature of banks:

Gross negligence connotes want of care in the performance of one's duties; it is a negligence characterized by the want of even slight care, acting
or omitting to act in a situation where there is duty to act, not inadvertently but wilfully and intentionally, with a conscious indifference to
consequences insofar as other persons may be affected. It evinces a thoughtless disregard of consequences without exerting any effort to avoid
them.

In order for gross negligence to exist as to warrant holding the respondent liable therefor, the petitioners must establish that the latter did not
exert any effort at all to avoid unpleasant consequences, or that it wilfully and intentionally disregarded the proper protocols or procedure . . . and
in selecting and supervising its employees.65 (Emphasis supplied)

Banks assume a degree of prudence and diligence higher than that of a good father of a family, because their business is imbued with public
interest66 and is inherently fiduciary.67 Thus, banks have the obligation to treat the accounts of its clients "meticulously and with the highest degree
of care."68 With respect to its fiduciary duties, this Court explained:

The law imposes on banks high standards in view of the fiduciary nature of banking. Section 2 of Republic Act No. 8791 ("RA 8791"), which took
effect on 13 June 2000, declares that the State recognizes the "fiduciary nature of banking that requires high standards of integrity and
performance." This new provision in the general banking law, introduced in 2000, is a statutory affirmation of Supreme Court decisions, starting
with the 1990 case of Simex International v. Court of Appeals, holding that "the bank is under obligation to treat the accounts of its depositors with
meticulous care, always having in mind the fiduciary nature of their relationship.

This fiduciary relationship means that the bank's obligation to observe "high standards of integrity and performance" is deemed written into every
deposit agreement between a bank and its depositor. The fiduciary nature of banking requires banks to assume a degree of diligence higher than
that of a good father of a family. Article 1172 of the Civil Code states that the degree of diligence required of an obligor is that prescribed by law or
contract, and absent such stipulation then the diligence of a good father of a family. Section 2 of RA 8791 prescribes the statutory diligence
required from banks — that banks must observe "high standards of integrity and performance" in servicing their depositors.69 (Citations omitted)

The high degree of diligence required of banks equally holds true in their dealing with mortgaged real properties, and subsequently acquired
through foreclosure, such as the Unit purchased by petitioner. In the same way that banks are "presumed to be familiar with the rules on land
registration," given that they are in the business of extending loans secured by real estate mortgage,70 banks are also expected to exercise the
highest degree of diligence. This is especially true when investigating real properties offered as security, since they are aware that such property
may be passed on to an innocent purchaser in the event of foreclosure. Indeed, "the ascertainment of the status or condition of a property offered
to it as security for a loan must be a standard and indispensable part of a bank's operations":71

When the purchaser or the mortgagee is a bank, the rule on innocent purchasers or mortgagees for value is applied more strictly. Being in the
business of extending loans secured by real estate mortgage, banks are presumed to be familiar with the rules on land registration. Since the
banking business is impressed with public interest, they are expected to be more cautious, to exercise a higher degree of diligence, care and
prudence, than private individuals in their dealings, even those involving registered lands. Banks may not simply rely on the face of the certificate of
title. Hence, they cannot assume that, simply because the title offered as security is on its face free of any encumbrances or lien, they are relieved
of the responsibility of taking further steps to verify the title and inspect the properties to be mortgaged. As expected, the ascertainment of the
status or condition of a property offered to it as security for a loan must be a standard and indispensable part of a bank's operations. It is of judicial
notice that the standard practice for banks before approving a loan is to send its representatives to the property offered as collateral to assess its
actual condition, verify the genuineness of the title, and investigate who is/are its real owner/s and actual possessors.72 (Citations omitted)

Credit investigations are standard practice for banks before approving loans and admitting properties offered as security. It entails the assessment
of such properties: an appraisal of their value, an examination of their condition, a verification of the authenticity of their title, and an investigation
into their real owners and actual possessors.73 Whether it was unaware of the unit's actual interior area; or, knew of it, but wrongly thought that its
area should include common spaces, respondent's predicament demonstrates how it failed to exercise utmost diligence in investigating the Unit
offered as security before accepting it. This negligence is so inexcusable; it is tantamount to bad faith.

Even the least effort on respondent's part could have very easily confirmed the Unit's true area. Similarly, the most cursory review of the
Condominium Act would have revealed the proper reckoning of a condominium unit's area. Respondent could have exerted these most elementary
efforts to protect not only clients and innocent purchasers but, most basically, itself. Respondent's failure to do so indicates how it created a
situation that could have led to no other outcome than petitioner being defrauded.

VI

The Regional Trial Court and the Court of Appeals gravely erred in finding that causal fraud is not attendant in this case. Quite the contrary, it is
evident that respondent orchestrated a situation rife for defrauding buyers of the advertised unit. Therefore, the assailed Decision and Resolution
must be reversed, the Contract to Sell between petitioner and respondent be annulled, and petitioner be refunded all the amounts he paid to
respondent in respect of the purchase of the Unit.

Under Article 2232, in relation to Article 2229 of the Civil Code, "[i]n contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner," "by way of example or correction for the public good." By
awarding exemplary damages to petitioner, this case shall serve as an example and warning to banks to observe the requisite care and diligence in
all of their affairs.

Consistent with Article 2208 of the Civil Code,74 respondent is equally liable to petitioner for attorney's fees and the costs of litigation.

WHEREFORE, the Petition is GRANTED. The assailed November 15, 2012 Decision and February 12, 2013 Resolution of the Court of Appeals in CA-
G.R. CV No. 95369 are REVERSED and SET ASIDE.

The Contract to Sell entered into by petitioner Joseph Harry Walter Poole-Blunden and respondent Union Bank of the Philippines is declared null
and void. Respondent is ordered to pay petitioner the amount of P3,257,142.49 to refund the amounts petitioner has paid to purchase Unit 2C of T-
Tower Condominium located at 5040 P. Burgos corner Calderon Streets, Makati City. This refund shall earn legal interest at twelve percent (12%)
per annum from the date of the filing of petitioner's Complaint for Rescission of Contract and Damages up to June 30, 2013; and six percent (6%)
per annum, reckoned from July 1, 2013 until fully paid. Respondent is ordered to pay petitioner P100,000.00 as exemplary damages, P100,000.00
as attorney's fees, and the costs of litigation. SO ORDERED.