G.R. No. L-67451 September 28, 1987

REALTY SALES ENTERPRISE, INC. and MACONDRAY FARMS, INC., petitioners, vs.INTERMEDIATE APPELLATE COURT (Special Third Civil Cases Division), HON. RIZALINA BONIFACIO VERA, as Judge, Court of First Instance of Rizal, Branch XXIII, MORRIS G. CARPO, QUEZON CITY DEVELOPMENT AND FINANCING CORPORATION, and COMMISSIONER OF LAND REGISTRATION,respondents.

 

CORTES, J.:

The litigation over the ownership of the parcels of land which are the subject of this petition started in 1927 when an application for their registration under the Torrens System was first filed. In the present petition for review Realty Sales Enterprise, Inc. (hereafter referred to as Realty) and Macondray Farms, Inc. (hereafter referred to as Macondray) seek a reversal of the Resolution of May 2, 1984 of the Intermediate Appellate Court, and an affirmance of the Court of Appeals Decision of December 29, 1982.

Two (2) adjacent parcels of land located in Almanza, Las Piñas, Metro Manila, having an aggregate area of 373,868 sq. m., situated in the vicinity of the Ayala Alabang Project and BF Homes Parañaque are covered by three (3) distinct sets of Torrens titles to wit:

1) TCT No. 20408 issued on May 29, 1975 in the name of Realty Sales Enterprise, Inc., which was derived from OCT No. 1609, issued on May 21, 1958, pursuant to Decree No. N-63394 in LRC Cases Nos. 657, 758 and 976, GLRO Record Nos. N-29882, N-33721 and N-43516, respectively.

2) TCT No. 303961 issued on October 13, 1970 in the name of Morris G. Carpo, which was derived from OCT No. 8629, issued on October 13, 1970 pursuant to decree No. N-131349 in LRC Case No. N-11-M (N-6217), GLRO Record No. N-32166.

3) TCTs Nos. 333982 and 333985, issued on July 27, 1971 in the name of Quezon City Development and Financing Corporation, derived from OCT No. 8931 which was issued on July 27, 1971 pursuant to LRC Case No. P-206 GLRO Record No. N-31777.

On December 29, 1977, Morris Carpo filed a complaint with the Court of First Instance of Rizal, Branch XXIII, presided over by Judge Rizalina Bonifacio Vera (hereafter referred to as Vera Court), for "declaration of nullity of Decree No. N-63394

and TCT No. 20408." Named defendants were Realty Sales Enterprise, Inc., Macondray Farms, Inc. and the Commissioner of Land Registration. Subsequently, however, Carpo withdrew his complaint as against the last named defendant, and the answer filed on behalf of said government official was ordered stricken off the record. The complaint alleged that TCT No. 20408 as well as OCT No. 1609 from which it was derived, is a nullity as the CFI of Rizal, Branch VI, then presided over by Judge Andres Reyes (hereafter referred to as the Reyes Court) which issued the order dated May 21, 1958 directing the issuance of a decree of registration, was not sitting as a land registration court, but as a court of ordinary jurisdiction. It was further alleged that the original records of LRC Case No. 657, GLRO Record No. 29882 which was the basis for the issuance of said order of May 21, 1958, were lost and/or destroyed during World War II and were still pending reconstitution; hence, the Reyes Court had no authority to order the issuance of a certificate of title.

Realty and Macondray alleged in their answer that the Reyes Court was acting as a court of land registration and in issuing the order of May 21, 1958, was actually performing a purely ministerial duty for the registration court in Case No. 657, GLRO Record No. 29882 (and the two other cases, Cases Nos. 758 and 976, with which said case had been jointly tried and decided) which on August 19, 1935 had rendered a decision adjudicating the two (2) lots in question to Estanislao Mayuga (father of Dominador Mayuga, predecessor-in-interest of Realty and Macondray), which decision was upheld by the Court of Appeals. It was alleged that it is the title of Carpo which is null and void, having been issued over a parcel of land previously registered under the Torrens System in favor of another.

With leave of court, Realty and Macondray filed a third-party complaint against the Quezon City Development and Financing Corporation (hereafter referred to as QCDFC) and the Commissioner of Land Registration alleging that TCTs Nos. 333982 and 333985 in the name of QCDFC also covered the same parcels of land subject of the dispute between Carpo and the two corporations, Realty and Macondray. They thus prayed that Decree No. N-135938 issued on July 22, 1971, OCT No. 8931 issued on July 27, 1971, as well as TCTs Nos. 333982 and 333985 derived from OCT No. 8931 be declared null and void.

In its answer to the third-party complaint, QCDFC asserted the validity of its own title alleging that it is the title in the name of Realty which is null and void. QCDFC also filed a fourth-party complaint against Carmelino Alvendia, Esperanza Alvendia, Felicisimo Alvendia, Josefina Alvendia, Jacinto G. Miranda, Rosa G. Miranda, Isabel G. Miranda, and Feliciano G. Miranda, alleging that it bought said parcels of land from them. It prayed that in the event of an unfavorable judgment against it, fourth-party defendants be ordered to reimburse the purchase price which the corporation paid to them. However, QCDFC failed to prosecute its case, and the fourth-party complaint was dismissed for lack of interest.

After hearing, the Vera Court rendered judgment on January 20, 1981, sustaining the title of Morris G. Carpo to the two (2) lots in question and declaring the titles of Realty Sales Enterprise, Inc. and QCDFC null and void.

On March 20, 1981, Realty filed a Petition for certiorari with this Court docketed as G.R. No. L-56471 questioning the decision of the lower court. It also asked that it be

allowed to appear directly to this Court as it was raising only questions of law. After respondents filed their comments to said petition, this Court passed a resolution dated October 19, 1981 referring the case to the Court of Appeals "in aid of its appellate jurisdiction for proper determination on the merits of the appeal."

In its decision dated December 29, 1982, the Court of Appeals, through its Ninth Division, with Justice Patajo asponente, concurred in by Justices Gopengco and Kapunan, set aside the decision of the trial court and rendered a new one upholding the validity of the title in the name of Realty Sales Enterprise, Inc. and declaring null and void the titles in the name of Carpo and QCDFC.

Carpo filed a motion for reconsideration with the appellate court. In the meantime, by virtue and pursuant to Batas Pambansa Bldg. 129, or the Judiciary Reorganization Act of 1980, the Court of Appeals was reorganized into the Intermediate Appellate Court (IAC). As a consequence, there was a re-raffling of cases and the case was assigned to the Second Special Cases Division which, however, returned the records of the case for another re-raffling to the Civil Cases Divisions as it deemed itself without authority to act on a civil case in view of the allocation of cases to the different divisions of the IAC under Section 8 of BP 129. The case was then assigned to the Third Civil Cases Division, composed of Justices de la Fuente, Coquia, Zosa and Bartolome.

Justices Coquia and Bartolome inhibited themselves, and Justices Camilon and Bidin were assigned to the Third Civil Cases Division.

On May 2, 1984, the IAC, through its Special Third Civil Cases Division, with Justice Zosa as ponente; concurred in by Justices Camilon and Bidin, promulgated its Resolution granting Carpo's motion for reconsideration, reversing and setting aside the decision of December 29, 1982, and affirming the decision of the trial court. Hence, this petition docketed as G.R. No. 67451.

Petitioners assign the following errors:

I

The SPECIAL THIRD CIVIL CASES DIVISION of the Intermediate Appellate Court (for brevity, referred to herein as SPECIAL DIVISION) which promulgated the disputed RESOLUTION of May 2, 1984 had no legal standing under the provisions of Batas Pambansa Bldg. 129 and, as such, not vested with jurisdiction and adjudicatory power to pronounce any decision of final resolution for the Court.

II

On the assumption that the SPECIAL DIVISION is legally vested with jurisdiction and adjudicatory powers under the provisions of BP 129, it decided questions of substance contrary to law and the applicable decisions of the Supreme Court because:

(a) The SPECIAL DIVISION'S Resolution of May 2, 1984 amounted to a denial to the Petitioners of their right to appeal and judicial review over fundamental issues of law duly raised by them in their Petition for Review on certiorari (G.R. No. 56471), as authorized by the Constitution (Art. X, sec. 5 (2) (e), the provisions of the Judiciary Act of 1948 and Rule 42, Sec. 2 of the Rules of Court; and

(b) By its RESOLUTION of May 2, 1984, it ruled that the decision of the Court of Appeals could not have gained the nature of a proper and valid judgment as the latter had no power to pass upon the appealed judgment of the Court of First Instance of Rizal (the Vera Court), as appeal and not certiorari was the proper remedy;

Furthermore, the said SPECIAL DIVISION grossly departed from the accepted and usual course of judicial proceedings by giving a perverted and obviously unjustified and illogical interpretation of the RESOLUTION of July 25, 1983, of the Ninth Division of the Court of Appeals, holding and declaring that "it has in effect erased or cancelled the validity of (the DECISION of December 29, 1982), when the said RESOLUTION merely "RESOLVED to return the records of the case ... for re-raffling and reassignment ... in view of the allocation of cases to the different Divisions of the Intermediate Appellate Court under Section 8 of BP 129.

III

The SPECIAL DIVISION by confirming the appealed judgment of the lower court in effect sanctioned the contemptible disregard of law and jurisprudence committed by Judge Vera, which call for an exercise of the power of supervision;

IV

The SPECIAL DIVISION did state in its RESOLUTION of May 2, 1984 a deliberate falsehood, namely, that Morris G. Carpo is a purchaser in good faith and for value when there is absolutely no evidence, whether written or testimonial, that was presented by Carpo, or by anyone else that he was, in fact, a purchaser for value and in good faith — a material matter which was neither alleged nor referred to in the complaint and in all the pleadings, nor covered by any of the exhibits presented by all of the parties herein and solely on the bases of which the case at bar was submitted by the parties for consideration and decision.

1. To support their contention that the Special Third Civil Cases Division of the Intermediate Appellate Court which promulgated the Resolution of May 2, 1984 had no legal standing under the provisions of BP 129 and, as such, not vested with jurisdiction and adjudicatory power, petitioners cite Sections 4 and 8 of BP 129, to wit:

Sec. 4. Exercise of powers and functions.—The Intermediate Appellate Court shall exercise its powers, functions and duties, through ten (10) divisions, each composed of five members. The Court may sit en banc only for the purpose of exercise administrative, ceremonial or other non-adjudicatory functions.

Sec. 8. Grouping of Divisions.—Of the ten (10) divisions, of the Court, four (4) divisions, to be known as Civil case Divisions, shall take cognizance of appeals in civil cases originating from the Regional Trial Court; two (2) divisions, to be known as Criminal Cases Divisions, of appeals in cases originating from the Regional Trial Courts; and four (4) divisions, to be known as Special Cases Divisions, of original actions or petitions, petitions for review, and appeals in all other cases, including those from administrative agencies, except as provided in Section 9 hereof.

Except with respect to the Presiding Appellate Justice, the appointment of a member of the court should specifically indicate whether it is for the Civil Cases Divisions, the Criminal Cases Divisions, or the Special Cases Divisions of the Court. No member of the Court appointed to any of the three classes of conclusions shall be assigned to any of the other classes of division except when authorized by the Supreme Court, upon recommendation of the Intermediate Appellate Court en banc, if the exigencies of the service so require. . . . (emphasis supplied)

As officially constituted, the Third Civil Cases Division was composed of Justice B.S. de la Fuente, as Chairman, Justices Jorge Coquia, Mariano Zosa, and Flores Bartolome, as Members. In view, however, of the voluntary inhibition of Justices Coquia and Bartolome from taking part in the case, Justices Bidin and Camilon were reassigned to the Third Civil Cases Division to form the Special Third Civil Cases Division.

Petitioners argue that the so-called Special Third Civil Cases Division, not being one of the ten (10) Divisions of the Court duly vested with jurisdiction, had no adjudicatory powers. It is also alleged that the reassignment of Justices Bidin and Camilon is violative of the injunction against appointment of an appellate Justice to a class of divisions other than that to which he is appointed. (Petition, pp. 21-26.)

This contention has no merit. A reading of the law will readily show that what BP 129 prohibits is appointment from one class of divisions to another class. For instance, a Justice appointed to the Criminal Cases Divisions cannot be assigned to the Civil Cases Divisions.

Justice Bidin was reassigned from the Fourth Civil Cases Division, while Justice Camilon was reassigned from the Second Civil Cases Division. The two therefore come from the same class of divisions to which they were appointed.

Thus, the reassignment of Justices Bidin and Camilon to form the Special Third Civil Cases Division in view of the voluntary inhibition of two (2) "regular" members, is still within legal bounds. Otherwise, a situation would have arisen where a regular division could not decide a particular case because some members thereof inhibited themselves from participating in said case.

2. The second assigned error involves a determination of the correctness of the ruling of the IAC that the CA Decision of December 29, 1982 could not have gained the nature of a proper and valid judgment (since appeal and not certiorari was the proper remedy) and that the Resolution of July 25, 1983 had in effect erased or cancelled the validity of said Decision.

The IAC said in its Resolution of May 2,1984:

Said resolution of July 25, 1983, to Our view, was effectively an acknowledgment by the Division that promulgated it that the earlier Decision dated December 29, 1983 rendered in a Special Civil Action case for certiorari, CA-G.R. No. SP-13530, was not appropriate and beyond the authority of the Ninth Division of the Court of Appeals to promulgate. The said Resolution was actually a statement that the Ninth Division of the Court of Appeals had over-stepped its bounds by reviewing in certiorari proceedings a decision in a purely civil case that should have passed through the processes of an ordinary appeal. We are not aware of any legal doctrine that permits an appellate court to treat a petition for review on certiorari upon purely questions of law, such as that filed by petitioners herein, as an ordinary appeal. Neither can we find any legal basis or justification for the election by the appellate court of the essential requisites then prescribed for the validity of an appeal, such as the submission of a formal notice of appeal, an appeal bond and approved record on appeal. Without any of these mandatory requisites, the appeal could not have been deemed perfected and ought to have been dismissed outright.

The Court does not agree.

There are two modes by which cases decided by the then Courts of First Instance in their original jurisdiction may be reviewed: (1) an ordinary appeal either to the Supreme Court or to the Court of Appeals, or (2) an appeal on certiorari to the Supreme Court. To the latter category belong cases in which only errors or questions of law are involved. Each of these modes have different procedural requirements.

As stated earlier, Realty originally filed a Petition for certiorari with this Court docketed as G.R. No. L-56471 questioning the decision of the Vera Court, and asking that it be allowed to appeal directly to this Court as it was raising only questions of law.

However, this Court referred the case to the Court of Appeals "in aid of its appellate jurisdiction for proper determination on the merits of the appeal."

It may thus be observed that even this Court treated the petition first filed as an appeal, and not as a special civil action for certiorari. After as, a petition for review by certiorari is also a form of appeal. (People v. Resuello L-30165, August 22, 1969, 69 SCRA 35).

This mode of appeal under Rule 42 is in the form and procedure outlined in Rule 45 which, unlike ordinary appeals, does not require a notice of appeal, an appeal bond and a record on appeal.

Thus it was error for the IAC to hold that the Decision of the Vera Court "cannot be passed upon anymore in the Court of Appeals decision because appeal and not certiorari was the proper remedy." Precisely, petitioners brought the case to this Court on appeal, albeit by way of certiorari.

Respondent Carpo cited authorities holding that certiorari is not a substitute for appeal. Those cases are not in point. They refer to the special civil action of certiorari under Rule 65, and not to appeal by way of certiorari under Rule 45.

Similarly, the IAC Special Civil Cases Division erred in interpreting the Resolution dated July 25, 1983 of the Second Special Cases Division (to which the case was assigned after the reorganization under BP 129) as having "erased or cancellation" the validity of the Decision of the Ninth Division. A perusal of said Resolution shows that it merely made clarification about the nature of the case and why it should be reassigned to the Civil Cases Division of the IAC. There was not the slightest implication that it "erased or cancelled" the validity of the Decision of the Ninth Division.

Even the IAC Special Third Civil Cases Division impliedly admitted the validity of the Decision of the Ninth Division when it granted Carpo's motion for reconsideration. It would have been incongruous to grant a motion to reconsider a decision, reverse and set it aside, if in the first place it did not have any validity. It would have been necessary only to decide its invalidity.

3. In the third assigned error, Petitioners contend that the Vera Court, and the IAC Special Third Civil Cases Division, erred in upholding the validity of the title in the name of Carpo and declaring null and void the titles in the names of Realty and of QCDFC.

The basis of the complaint fired by Carpo, which was the same basis for the of the Vera Court and the IAC Special Division, is that the Reyes Court had no authority to issue the order of May 21, 1958 directing the issuance of a decree of registration in favor of Mayuga, predecessor-in-interest of Realty, as it was not sitting as a land registration court and also because the original records of LRC Case No. 657, Record No. N-29882 were lost and/or destroyed during World War II and were still pending reconstitution.

Under Act No. 496, Land Registration Act, (1902) as amended by Act No. 2347 (1914), jurisdiction over all applications for registration of title to and was conferred upon the Courts of First Instance of the respective provinces in which the land sought to be registered is situated.

Jurisdiction over land registration cases, as in ordinary actions, is acquired upon the filing in court of the application for registration, and is retained up to the end of the litigation. The issuance of a decree of registration is but a step in the entire land registration process; and as such, does not constitute a separate proceeding.

In the case at bar, it appears that it was Estanislao Mayuga, father of Dominador Mayuga, predecessor-in-interest of Realty, who originally filed on June 24, 1927 a registration proceeding docketed as LRC Case No. 657, GLRO Record No. N-29882 in the Court of First Instance of Rizal to confirm his title over parcels of land described as Lots 1, 2 and 3, Plan Psu-47035. (Lots 2 and 3 the subject of the instant litigation among Carpo, RRealty and QCDFC.) Case No. 657 was jointly tried with two other cases, LRC Case No. 976, GLRO Record No. 43516 filed by Eduardo Guico and LRC Case No. 758, GLRO Record No. 33721 filed by Florentino Baltazar, as the three cases involved Identical parcels of land, and Identical applicants/oppositors.

On August 19, 1935 the CFI-Rizal acting as a land registration court issued a consolidated decision on the three cases, the dispositive portion of which reads:

En meritos de to do lo expuesto, se ordena el registro de los lotes, 1, 2 y 3 del plans PSU-47035 a nombre de Estanislao Mayuga, desist oposicion de Florentino Baltazar y Eduardo Guico con respects a dichos lotes....

On appeal, the above decision of the CFI was affirmed by the Court of Appeals in its decision dated November 17, 1939. the dispositive portion of which reads:

Por todas last consideraciones expuestas confirmamos la decision apelada en cuanto adjudica a Estanislao Mayuga los lotes, 1, 2 y 3 de such piano y que equivalent a lost lotes, 4, 5 y 6 del plano de Baltazar y 4 y 5 del plans de Guico.

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Guico filed a petition for review on certiorari before this Court, but the petition was dismissed and the Court of Appeals decision was affirmed (See Guico v. San Pedro, 72 Phil. 415 [1941]).

Before he could secure a decree of registration in his name, Estanislao died.

On May 13, 1958 Dominador Mayuga, son of Estanislao, filed a petition with the Reyes Court docketed as Case No. 2689 alleging that he was the only heir of the deceased Estanislao Mayuga and praying for the issuance of a decree of registration

over the property adjudicated in favor of Estanislao. At this point, it cannot be overemphasized that the petition filed by Dominador is NOT a distinct and separate proceeding from, but a continuation of, the original land registration proceedings initiated by Estanislao Mayuga, Florentino Baltazar and Eduardo Guico. In the same vein, the Reyes Court, as Branch VI of the Court of First Instance of Rizal, was continuing in the exercise of jurisdiction over the case, which jurisdiction was vested in the CFI-Rizal upon filing of the original applications.

On May 21, 1958 the Reyes Court issued an order granting the petition of Dominador Mayuga and directing the Commissioner of Land Registration to issue a decree of registration over Lots 1, 2 and 3 of Plan Psu-47035, substituting therein as registered owner Dominador Mayuga in liue of Estanislao.

Respondent Carpo, however, contends, that since the records of LRC Case No. 657 were not properly reconstituted, then there was no pending land registration case. And since the Reyes Court was acting without a pending case, it was acting without jurisdiction. (Respondent Carpo's Memorandum, pp, 2-8.)

He cites the case of Villegas v. Fernando (L-27347, April 29, 1969, 27 SCRA 1119) where this Court said that upon failure to reconstitute pursuant to law, "the parties are deemed to have waived the effects of the decision rendered in their favor and their only alternative is to file an action anew for the registration in their names of the lots in question," citing the case of Ambat v. Director of Lands, (92) Phil. 567 [1953]) and other cases. The basis of said ruling is Section 29 of Act No. 3110, an Act to provide an adequate procedure for the reconstitution of the records of pending judicial proceedings and books, documents, and files of the office of the register of deeds, destroyed by fire or other public calamities, and for other purposes.

However, the Ambat case, in so far as it ruled on the effect of failure to reconstitute records on the status of the case in its entirety, was modified in the case of Nacua v. de Beltran, (93) Phil. 595 [1953]). where this Court said:

(W)e are inclined to modify the ruling (in the Ambat case) in the sense that Section 29 of Act No. 3110 should be applied only where the records in the Court of First Instance as well as in the appellate court were destroyed or lost and were not reconstituted, but not where the records of the Court of First Instance are intact and complete, and only the records in the appellate court were lost or destroyed, and were not reconstituted. One reason for this view is that section 29 of Act 3110 is found among the sections and provisions dealing with the reconstitution of records in the Court of First Instance in pending civil cases, special proceedings, cadastral cases and criminal cases. A study of Act (No.) 3110 ... who show that there are separate procedures for the reconstitution of records in the Justice of the Peace Courts, from Sec. 48 to Sec. 53; for the reconstitution of records in the Supreme Court, now including the Court of Appeals, from Sec. 54 to Sec. 74; for the reconstitution of records in the office of the Register of Deeds, from Sec. 75 to Sec. 90 and for the reconstitution of destroyed records in the Courts of

First Instance, from Sec. 1 to Sec. 47, under which sections, Sec. 29 is obviously comprehended.

The whole theory of reconstitution is to reproduce or replace records lost or destroyed so that said records may be complete and court proceedings may continue from the point or stage where said proceedings stopped due to the loss of the records. The law contemplates different stages for purposes of reconstitution. . . .

. . . (S)ection 4 covers the stage were a civil case was pending trial in the Court of First Instance at the time the record was destroyed or lost; section 6 evidently refers to the stage where the case had been tried and decided but was still pending in the Court of First Instance at the time the record was destroyed or lost; section 6 covers the stage where the case was pending in the Supreme Court (or Court of Appeals) at the time the record was destroyed or lost. *

If the records up to a certain point or stage are lost and they are not reconstituted, the parties and the court should go back to the next preceding age where records are available, but not beyond that; otherwise to ignore and go beyond the stage next preceding would be voiding and unnecessarily ignoring proceedings which are duly recorded and documented, to the great prejudice not only of the parties and their witnesses, but also of the court which must again perforce admit pleadings, rule upon them and then try the case and decide it anew,-all of these, when the records up to said point or stage are intact and complete, and uncontroverted.

xxx xxx xxx

. . . (T)o require the parties to file their action anew and incur the expenses and (suffer) the annoyance and vexation incident to the filing of pleadings and the conduct of hearings, aside from the possibility that some of the witnesses may have died or left the jurisdiction, and also to require the court to again rule on the pleadings and hear the witnesses and then decide the case, when an along and all the time the record of the former pleadings of the trial and evidence and decision are there and are not disputed, all this would appear to be not exactly logical or reasonable, or fair and just to the parties, including the trial court which has not committed any negligence or fault at all.

The ruling in Nacua is more in keeping with the spirit and intention of the reconstitution law. As stated therein, "Act 3110 was not promulgated to penalize people for failure to observe or invoke its provisions. It contains no penal sanction. It was enacted rather to aid and benefit litigants, so that when court records are destroyed at any stage of judicial proceedings, instead of instituting a new case and

starting all over again, they may reconstitute the records lost and continue the case. If they fail to ask for reconstitution, the worst that can happen to them is that they lose the advantages provided by the reconstitution law" (e.g. having the case at the stage when the records were destroyed).

Applying the doctrine in the Nacua decision to LRC Case No. 657, the parties thereto did not have to commence a new action but only had to go back to the preceding stage where records are available. The land registration case itself re. mained pending and the Court of First Instance of Rizal continued to have jurisdiction over it.

The records were destroyed at that stage of the case when an that remained to be done was the ministerial duty of the Land Registration Office to issue a decree of registration (which would be the basis for the issuance of an Original Certificate of Title) to implement a judgment which had become final (See Government v. Abural, 39 Phil. 996 [1919] at 1002; Sta. Ana v. Menla, 111 Phil. 947 [1961], 1 SCRA 1294; Heirs of Cristobal Marcos v. De Banuvar, 134 Phil. 257 [1968], 26 SCRA 316). There are however authentic copies of the decisions of the CFI and the Court of Appeals adjudicating Lots 1, 2 and 3 of Plan Psu-47035 to Estanislao Mayuga. Moreover, there is an official report of the decision of this Court affirming both the CFI and the CA decisions. A final order of adjudication forms the basis for the issuance of a decree of registration.

Considering that the Reyes court was actually in the exercise of its jurisdiction as a land registration court when it issued the order directing the issuance of a decree of registration, "substituting therein as registered owner Dominador Mayuga, in hue of the original adjudicates, Estanislao Mayuga, based on the affidavit of self-adjudication, subject to the provisions of Sec. 4, Rule 74 of the Rules of Court," which order is in consonance with the ruling of this Court in the Guico decision, and the decisions of the CFI-Rizal and the CA dated August 19, 1935 and November 17, 1939, respectively, We uphold the validity of said order and rule that Judge Vera was without jurisdiction to set it aside.

4. In upholding the title of Carpo as against those of Realty and QCDFC, the Special Division also relied on Carpo's being an innocent purchaser for value.

Whether or not Carpo is an innocent purchaser for value was never raised as an issue in the trial court. A perusal of the records of the case reveals that no factual basis exists to support such a conclusion. Even Carpo himself cites no factual proof of his being an innocent purchaser for value. He merely relies on the presumption of good faith under Article 527 of the Civil Code.

It is settled that one is considered an innocent purchaser for value only if, relying on the certificate of title, he bought the property from the registered owner, "without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property." (Cui v. Henson, 51 Phil. 606 [1928], Fule v. De Legare, 117 Phil. 367 [1963], 7 SCRA 351.) He is not required to explore farther than what the Torrens title upon its face indicates. (Fule v. De Legare supra.)

Carpo bought the disputed property from the Baltazars, the original registered owners, by virtue of a deed executed before Iluminada Figueroa, Notary Public of Manila dated October 9, 1970. However, it was only later, onOctober 13, 1970, that the decree of registration in favor of the Baltazars was transcribed in the Registration Book for the Province of Rizal and that an Original Certificate of Title was issued. It was on the same day, October 13, 1970, that the deed evidencing the sale between the Baltazars and Carpo was inscribed in the Registry of Property, and the Original Certificate of Title was cancelled as Transfer Certificate of Title No. 303961 in the name of Carpo was issued. (Exhibit 12, Rollo pp. 270-273.)

Thus, at the time of sale there was as yet no Torrens title which Carpo could have relied upon so that he may qualify as an innocent purchaser for value. Not being a purchaser for value and in good faith, he is in no better position than his predecessors-in-interest.

The Baltazars, predecessors-in-interest of Carpo are heirs of Florentino Baltazar, an oppositor in the original application filed by Estanislao Mayuga in 1927. As stated earlier, the CFI-Rizal confirmed the title of Estanislao to Lots 1, 2 and 3 of Plan Psu-47035 "desestimando oposicion de Florentino Baltazar . . . con respeto a dichos lotes . . ." As such successors of Florentino, they could not pretend ignorance of the land registration proceedings over the disputed parcels of land earlier initiated by Eduardo Guico, Florentino Baltazar and Estanislao Mayuga, as when as the decisions rendered therein.

Moreover, it is not disputed that the title in the name of Dominador Mayuga, from whom Realty derived its title, was issued in 1958, or twelve years before the issuance of the title in the name of the Baltazars in 1970.

In this jurisdiction, it is settled that "(t)he general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in date prevails . . . . In successive registrations, where more than one certificate is issued in respect of a particular estate or interest in land, the person claiming under the prior certificate is entitled to the estate or interest; and that person is deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or indirectly from the person who was the holder of the earliest certificate issued in respect thereof . . . ." (Legarda and Prieto v. Saleeby, 31 Phil. 590 [1915] at 595-596; Garcia V. CA, Nos. L-48971 and 49011, January 22, 1980, 95 SCRA 380.)

TCT No. 20408 derived from OCT 1609, is therefore superior to TCT No. 303961 derived from OCT 8629.

5. For its part, respondent Quezon City Development and Financing Corporation (QCDFC) alleges that it has been improperly impleaded as thirty-party defendant inasmuch as Realty's alleged cause of action against it is neither for contribution, indemnity, subrogation or any other relief in respect of Carpo's claim against Realty. It likewise alleges that Realty had no cause of action against it since the third party complaint did not allege that QCDFC violated any legal right of Realty, QCDFC also assails the Vera Court decision in that it declares QCDFC directly liable to Carpo and not to Realty.

In the first place, QCDFC did not appeal from the decision of the Vera Court, nor from the decision of the Court of Appeals dated December 29, 1982, nor from the resolution of the IAC Special Third Civil Cases Division dated May 2, 1984 — all of which voided QCDFCs title to the disputed property. Hence, said decisions/resolution have become final and executory as regards QCDFC.

Moreover, even as this Court agrees with QCDFC that the third-party complaint filed against it by Realty was procedurally defective in that the relief being sought by the latter from the former is not in respect of Carpo's claim, policy considerations and the factual circumstances of the case compel this Court now to rule as well on QCDFC's claim to the disputed property. ** To rule on QCDFC's claim now is to avoid multiplicity of suits and to put to rest these conflicting claims over the property. After an, QCDFC was afforded fun opportunity, and exercised its right, to prove its claim over the land. It presented documentary as well as testimonial evidence. It was even permitted to file a fourth-party complaint which, however, was dismissed since it failed to prosecute its case.

QCDFC derived its title from Carmelino Alvendia et. al., the original registered owners. Original Certificate of Title No. 8931 in the name of Spouses Carmelino Alvendia, et. al. was issued on July 27, 1971, or thirteen (13) years after the issuance of Mayuga's title in 1958.

Since Realty is claiming under TCT No. 1609 which was issued earlier than OCT No. 8931 from which QCDFC's title was derived, Realty's title must prevail over that of QCDFC.

6. During the pendency of this case, Petitioners filed a manifestation alleging that the case at bar is closely connected with G.R. No. L-469953, Jose N. Mayuga et. al. v. The Court of Appeals, Macondray Farms, Inc., Realty Sales Enterprise, inc., et. al. and moved for consolidation of the two cases involving as they do the same property. By Resolution of August 29, 1984, this Court denied the motion for consolidation.

In this connection, it must be emphasized that the action filed by Carpo against Realty is in the nature of an action to remove clouds from title to real property. By asserting its own title to the property in question and asking that Carpo's title be declared null and void instead, and by filing the third-party complaint against QCDFC, Realty was similarly asking the court to remove clouds from its own title. Actions of such nature are governed by Articles 476 to 481, Quieting of Title, Civil Code (Republic Act No. 386), and Rule 64, Declaratory Relief and Similar Remedies, Rules of Court.

Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against the person in respect of the res, these proceedings are characterized as quasi in rem. (McDaniel v. McElvy, 108 So. 820 [1926].) The judgment in such proceedings is conclusive only between the parties. (Sandejas v. Robles, 81 Phil. 421 [1948]).

The ruling in this case is therefore without any prejudice to this Court's final determination of G.R. No. L-46953.

WHEREFORE, the Resolution of May 2,1984 of the Intermediate Appellate Court and the Decision of January 20, 1981 of the CFI-Rizal Branch XXIII, are SET ASIDE and the Decision of December 29, 1982 of the Court of Appeals is AFFIRMED.

SO ORDERED.

Fernan and Feliciano, JJ., concur.

Gutierrez, Jr. and Bidin, JJ., took no part.

G.R. No. 157493             February 5, 2007

RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and FERNANDO, ERNESTO, LEONORA, BIBIANO, JR., LIBRADO and ENRIQUETA, all surnamed OESMER, Petitioners, vs.PARAISO DEVELOPMENT CORPORATION, Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to reverse and set aside the Court of Appeals Decision1 dated 26 April 2002 in CA-G.R. CV No. 53130 entitled, Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, Enriqueta, Adolfo, and Jesus, all surnamed Oesmer vs. Paraiso Development Corporation, as modified by its Resolution2 dated 4 March 2003, declaring the Contract to Sell valid and binding with respect to the undivided proportionate shares of the six signatories of the said document, herein petitioners, namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer); and ordering them to execute the Deed of Absolute Sale concerning their 6/8 share over the subject parcels of land in favor of herein respondent Paraiso Development Corporation, and to pay the latter the attorney’s fees plus costs of the suit. The assailed Decision, as modified, likewise ordered the respondent to tender payment to the petitioners in the amount of P3,216,560.00 representing the balance of the purchase price of the subject parcels of land.

The facts of the case are as follows:

Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all surnamed Oesmer, together with Adolfo Oesmer (Adolfo) and Jesus Oesmer (Jesus), are brothers and sisters, and the co-owners of undivided shares of two parcels of

agricultural and tenanted land situated in Barangay Ulong Tubig, Carmona, Cavite, identified as Lot 720 with an area of 40,507 square meters (sq. m.) and Lot 834 containing an area of 14,769 sq. m., or a total land area of 55,276 sq. m. Both lots are unregistered and originally owned by their parents, Bibiano Oesmer and Encarnacion Durumpili, who declared the lots for taxation purposes under Tax Declaration No. 34383(cancelled by I.D. No. 6064-A) for Lot 720 and Tax Declaration No. 34374 (cancelled by I.D. No. 5629) for Lot 834. When the spouses Oesmer died, petitioners, together with Adolfo and Jesus, acquired the lots as heirs of the former by right of succession.

Respondent Paraiso Development Corporation is known to be engaged in the real estate business.

Sometime in March 1989, Rogelio Paular, a resident and former Municipal Secretary of Carmona, Cavite, brought along petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso Development Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of brokering the sale of petitioners’ properties to respondent corporation.

Pursuant to the said meeting, a Contract to Sell5 was drafted by the Executive Assistant of Sotero Lee, Inocencia Almo. On 1 April 1989, petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell. A check in the amount of P100,000.00, payable to Ernesto, was given as option money. Sometime thereafter, Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said Contract to Sell. However, two of the brothers, Adolfo and Jesus, did not sign the document.

On 5 April 1989, a duplicate copy of the instrument was returned to respondent corporation. On 21 April 1989, respondent brought the same to a notary public for notarization.

In a letter6 dated 1 November 1989, addressed to respondent corporation, petitioners informed the former of their intention to rescind the Contract to Sell and to return the amount of P100,000.00 given by respondent as option money.

Respondent did not respond to the aforesaid letter. On 30 May 1991, herein petitioners, together with Adolfo and Jesus, filed a Complaint7 for Declaration of Nullity or for Annulment of Option Agreement or Contract to Sell with Damages before the Regional Trial Court (RTC) of Bacoor, Cavite. The said case was docketed as Civil Case No. BCV-91-49.

During trial, petitioner Rizalino died. Upon motion of petitioners, the trial court issued an Order,8 dated 16 September 1992, to the effect that the deceased petitioner be substituted by his surviving spouse, Josefina O. Oesmer, and his children, Rolando O. Oesmer and Fernando O. Oesmer. However, the name of Rizalino was retained in the title of the case both in the RTC and the Court of Appeals.

After trial on the merits, the lower court rendered a Decision9 dated 27 March 1996 in favor of the respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and binding only to the undivided proportionate share of the signatory of this document and recipient of the check, [herein petitioner] co-owner Ernesto Durumpili Oesmer. The latter is hereby ordered to execute the Contract of Absolute Sale concerning his 1/8 share over the subject two parcels of land in favor of herein [respondent] corporation, and to pay the latter the attorney’s fees in the sum of Ten Thousand (P10,000.00) Pesos plus costs of suit.

The counterclaim of [respondent] corporation is hereby Dismissed for lack of merit.10

Unsatisfied, respondent appealed the said Decision before the Court of Appeals. On 26 April 2002, the appellate court rendered a Decision modifying the Decision of the court a quo by declaring that the Contract to Sell is valid and binding with respect to the undivided proportionate shares of the six signatories of the said document, herein petitioners, namely: Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The decretal portion of the said Decision states that:

WHEREFORE, premises considered, the Decision of the court a quo is hereby MODIFIED. Judgment is hereby rendered in favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and binding with respect to the undivided proportionate share of the six (6) signatories of this document, [herein petitioners], namely, Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The said [petitioners] are hereby ordered to execute the Deed of Absolute Sale concerning their 6/8 share over the subject two parcels of land and in favor of herein [respondent] corporation, and to pay the latter the attorney’s fees in the sum of Ten Thousand Pesos (P10,000.00) plus costs of suit.11

Aggrieved by the above-mentioned Decision, petitioners filed a Motion for Reconsideration of the same on 2 July 2002. Acting on petitioners’ Motion for Reconsideration, the Court of Appeals issued a Resolution dated 4 March 2003, maintaining its Decision dated 26 April 2002, with the modification that respondent tender payment to petitioners in the amount of P3,216,560.00, representing the balance of the purchase price of the subject parcels of land. The dispositive portion of the said Resolution reads:

WHEREFORE, premises considered, the assailed Decision is hereby modified.1awphi1.net Judgment is hereby rendered in favor of herein [respondent] Paraiso Development Corporation. The assailed Contract to Sell is valid and binding with respect to the undivided proportionate shares of the six (6) signatories of this document, [herein petitioners], namely, Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer). The said [petitioners] are hereby ordered to execute the Deed of Absolute Sale concerning their 6/8 share over the subject two parcels of land in favor of herein [respondent] corporation, and to pay the latter attorney’s fees in the sum of Ten Thousand Pesos (P10,000.00) plus costs of suit. Respondent is likewise ordered to tender payment to the above-named [petitioners] in the amount of Three Million Two Hundred Sixteen Thousand Five Hundred Sixty Pesos (P3,216,560.00) representing the balance of the purchase price of the subject two parcels of land. 12

Hence, this Petition for Review on Certiorari.

Petitioners come before this Court arguing that the Court of Appeals erred:

I. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is not binding upon petitioner Ernesto Oesmer’s co-owners (herein petitioners Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora).

II. On a question of law in not holding that, the supposed Contract to Sell (Exhibit D) is void altogether considering that respondent itself did not sign it as to indicate its consent to be bound by its terms. Moreover, Exhibit D is really a unilateral promise to sell without consideration distinct from the price, and hence, void.

Petitioners assert that the signatures of five of them namely: Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora, on the margins of the supposed Contract to Sell did not confer authority on petitioner Ernesto as agent to sell their respective shares in the questioned properties, and hence, for lack of written authority from the above-named petitioners to sell their respective shares in the subject parcels of land, the supposed Contract to Sell is void as to them. Neither do their signatures signify their consent to directly sell their shares in the questioned properties. Assuming that the signatures indicate consent, such consent was merely conditional. The effectivity of the alleged Contract to Sell was subject to a suspensive condition, which is the approval of the sale by all the co-owners.

Petitioners also assert that the supposed Contract to Sell (Exhibit D), contrary to the findings of the Court of Appeals, is not couched in simple language.

They further claim that the supposed Contract to Sell does not bind the respondent because the latter did not sign the said contract as to indicate its consent to be bound by its terms. Furthermore, they maintain that the supposed Contract to Sell is really a unilateral promise to sell and the option money does not bind petitioners for lack of cause or consideration distinct from the purchase price.

The Petition is bereft of merit.

It is true that the signatures of the five petitioners, namely: Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora, on the Contract to Sell did not confer authority on petitioner Ernesto as agent authorized to sell their respective shares in the questioned properties because of Article 1874 of the Civil Code, which expressly provides that:

Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.

The law itself explicitly requires a written authority before an agent can sell an immovable. The conferment of such an authority should be in writing, in as clear and precise terms as possible. It is worth noting that petitioners’ signatures are found in

the Contract to Sell. The Contract is absolutely silent on the establishment of any principal-agent relationship between the five petitioners and their brother and co-petitioner Ernesto as to the sale of the subject parcels of land. Thus, the Contract to Sell, although signed on the margin by the five petitioners, is not sufficient to confer authority on petitioner Ernesto to act as their agent in selling their shares in the properties in question.

However, despite petitioner Ernesto’s lack of written authority from the five petitioners to sell their shares in the subject parcels of land, the supposed Contract to Sell remains valid and binding upon the latter.

As can be clearly gleaned from the contract itself, it is not only petitioner Ernesto who signed the said Contract to Sell; the other five petitioners also personally affixed their signatures thereon. Therefore, a written authority is no longer necessary in order to sell their shares in the subject parcels of land because, by affixing their signatures on the Contract to Sell, they were not selling their shares through an agent but, rather, they were selling the same directly and in their own right.

The Court also finds untenable the following arguments raised by petitioners to the effect that the Contract to Sell is not binding upon them, except to Ernesto, because: (1) the signatures of five of the petitioners do not signify their consent to sell their shares in the questioned properties since petitioner Enriqueta merely signed as a witness to the said Contract to Sell, and that the other petitioners, namely: Librado, Rizalino, Leonora, and Bibiano, Jr., did not understand the importance and consequences of their action because of their low degree of education and the contents of the aforesaid contract were not read nor explained to them; and (2) assuming that the signatures indicate consent, such consent was merely conditional, thus, the effectivity of the alleged Contract to Sell was subject to a suspensive condition, which is the approval by all the co-owners of the sale.

It is well-settled that contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the offeror. From that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. To produce a contract, the acceptance must not qualify the terms of the offer. However, the acceptance may be express or implied. For a contract to arise, the acceptance must be made known to the offeror. Accordingly, the acceptance can be withdrawn or revoked before it is made known to the offeror.13

In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to the respondent of their shares in the subject parcels of land by affixing their signatures on the said contract. Such signatures show their acceptance of what has been stipulated in the Contract to Sell and such acceptance was made known to respondent corporation when the duplicate copy of the Contract to Sell was returned to the latter bearing petitioners’ signatures.

As to petitioner Enriqueta’s claim that she merely signed as a witness to the said contract, the contract itself does not say so. There was no single indication in the said contract that she signed the same merely as a witness. The fact that her signature appears on the right-hand margin of the Contract to Sell is insignificant. The contract

indisputably referred to the "Heirs of Bibiano and Encarnacion Oesmer," and since there is no showing that Enriqueta signed the document in some other capacity, it can be safely assumed that she did so as one of the parties to the sale.

Emphasis should also be given to the fact that petitioners Ernesto and Enriqueta concurrently signed the Contract to Sell. As the Court of Appeals mentioned in its Decision,14 the records of the case speak of the fact that petitioner Ernesto, together with petitioner Enriqueta, met with the representatives of the respondent in order to finalize the terms and conditions of the Contract to Sell. Enriqueta affixed her signature on the said contract when the same was drafted. She even admitted that she understood the undertaking that she and petitioner Ernesto made in connection with the contract. She likewise disclosed that pursuant to the terms embodied in the Contract to Sell, she updated the payment of the real property taxes and transferred the Tax Declarations of the questioned properties in her name.15 Hence, it cannot be gainsaid that she merely signed the Contract to Sell as a witness because she did not only actively participate in the negotiation and execution of the same, but her subsequent actions also reveal an attempt to comply with the conditions in the said contract.

With respect to the other petitioners’ assertion that they did not understand the importance and consequences of their action because of their low degree of education and because the contents of the aforesaid contract were not read nor explained to them, the same cannot be sustained.

We only have to quote the pertinent portions of the Court of Appeals Decision, clear and concise, to dispose of this issue. Thus,

First, the Contract to Sell is couched in such a simple language which is undoubtedly easy to read and understand. The terms of the Contract, specifically the amount of P100,000.00 representing the option money paid by [respondent] corporation, the purchase price of P60.00 per square meter or the total amount ofP3,316,560.00 and a brief description of the subject properties are well-indicated thereon that any prudent and mature man would have known the nature and extent of the transaction encapsulated in the document that he was signing.

Second, the following circumstances, as testified by the witnesses and as can be gleaned from the records of the case clearly indicate the [petitioners’] intention to be bound by the stipulations chronicled in the said Contract to Sell.

As to [petitioner] Ernesto, there is no dispute as to his intention to effect the alienation of the subject property as he in fact was the one who initiated the negotiation process and culminated the same by affixing his signature on the Contract to Sell and by taking receipt of the amount of P100,000.00 which formed part of the purchase price.

x x x x

As to [petitioner] Librado, the [appellate court] finds it preposterous that he willingly affixed his signature on a document written in a language (English) that he purportedly does not understand. He testified that the document was just brought to

him by an 18 year old niece named Baby and he was told that the document was for a check to be paid to him. He readily signed the Contract to Sell without consulting his other siblings. Thereafter, he exerted no effort in communicating with his brothers and sisters regarding the document which he had signed, did not inquire what the check was for and did not thereafter ask for the check which is purportedly due to him as a result of his signing the said Contract to Sell. (TSN, 28 September 1993, pp. 22-23)

The [appellate court] notes that Librado is a 43 year old family man (TSN, 28 September 1993, p. 19). As such, he is expected to act with that ordinary degree of care and prudence expected of a good father of a family. His unwitting testimony is just divinely disbelieving.

The other [petitioners] (Rizalino, Leonora and Bibiano Jr.) are likewise bound by the said Contract to Sell. The theory adopted by the [petitioners] that because of their low degree of education, they did not understand the contents of the said Contract to Sell is devoid of merit. The [appellate court] also notes that Adolfo (one of the co-heirs who did not sign) also possess the same degree of education as that of the signing co-heirs (TSN, 15 October 1991, p. 19). He, however, is employed at the Provincial Treasury Office at Trece Martirez, Cavite and has even accompanied Rogelio Paular to the Assessor’s Office to locate certain missing documents which were needed to transfer the titles of the subject properties. (TSN, 28 January 1994, pp. 26 & 35) Similarly, the other co-heirs [petitioners], like Adolfo, are far from ignorant, more so, illiterate that they can be extricated from their obligations under the Contract to Sell which they voluntarily and knowingly entered into with the [respondent] corporation.

The Supreme Court in the case of Cecilia Mata v. Court of Appeals (207 SCRA 753 [1992]), citing the case of Tan Sua Sia v. Yu Baio Sontua (56 Phil. 711), instructively ruled as follows:

"The Court does not accept the petitioner’s claim that she did not understand the terms and conditions of the transactions because she only reached Grade Three and was already 63 years of age when she signed the documents. She was literate, to begin with, and her age did not make her senile or incompetent. x x x.

At any rate, Metrobank had no obligation to explain the documents to the petitioner as nowhere has it been proven that she is unable to read or that the contracts were written in a language not known to her. It was her responsibility to inform herself of the meaning and consequence of the contracts she was signing and, if she found them difficult to comprehend, to consult other persons, preferably lawyers, to explain them to her. After all, the transactions involved not only a few hundred or thousand pesos but, indeed, hundreds of thousands of pesos.

As the Court has held:

x x x The rule that one who signs a contract is presumed to know its contents has been applied even to contracts of illiterate persons on the ground that if such persons are unable to read, they are negligent if they fail to have the contract read to them. If a person cannot read the instrument, it is as much his duty to procure some reliable persons to read and explain it to him, before he signs it, as it would be to read it

before he signed it if he were able to do and his failure to obtain a reading and explanation of it is such gross negligence as will estop from avoiding it on the ground that he was ignorant of its contents."16

That the petitioners really had the intention to dispose of their shares in the subject parcels of land, irrespective of whether or not all of the heirs consented to the said Contract to Sell, was unveiled by Adolfo’s testimony as follows:

ATTY. GAMO: This alleged agreement between you and your other brothers and sisters that unless everybody will agree, the properties would not be sold, was that agreement in writing?

WITNESS: No sir.

ATTY. GAMO: What you are saying is that when your brothers and sisters except Jesus and you did not sign that agreement which had been marked as [Exhibit] "D", your brothers and sisters were grossly violating your agreement.

WITNESS: Yes, sir, they violated what we have agreed upon.17

We also cannot sustain the allegation of the petitioners that assuming the signatures indicate consent, such consent was merely conditional, and that, the effectivity of the alleged Contract to Sell was subject to the suspensive condition that the sale be approved by all the co-owners. The Contract to Sell is clear enough. It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control.18 The terms of the Contract to Sell made no mention of the condition that before it can become valid and binding, a unanimous consent of all the heirs is necessary. Thus, when the language of the contract is explicit, as in the present case, leaving no doubt as to the intention of the parties thereto, the literal meaning of its stipulation is controlling.

In addition, the petitioners, being owners of their respective undivided shares in the subject properties, can dispose of their shares even without the consent of all the co-heirs. Article 493 of the Civil Code expressly provides:

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

Consequently, even without the consent of the two co-heirs, Adolfo and Jesus, the Contract to Sell is still valid and binding with respect to the 6/8 proportionate shares of the petitioners, as properly held by the appellate court.

Therefore, this Court finds no error in the findings of the Court of Appeals that all the petitioners who were signatories in the Contract to Sell are bound thereby.

The final arguments of petitioners state that the Contract to Sell is void altogether considering that respondent itself did not sign it as to indicate its consent to be bound by its terms; and moreover, the Contract to Sell is really a unilateral promise to sell without consideration distinct from the price, and hence, again, void. Said arguments must necessarily fail.

The Contract to Sell is not void merely because it does not bear the signature of the respondent corporation. Respondent corporation’s consent to be bound by the terms of the contract is shown in the uncontroverted facts which established that there was partial performance by respondent of its obligation in the said Contract to Sell when it tendered the amount of P100,000.00 to form part of the purchase price, which was accepted and acknowledged expressly by petitioners. Therefore, by force of law, respondent is required to complete the payment to enforce the terms of the contract. Accordingly, despite the absence of respondent’s signature in the Contract to Sell, the former cannot evade its obligation to pay the balance of the purchase price.

As a final point, the Contract to Sell entered into by the parties is not a unilateral promise to sell merely because it used the word option money when it referred to the amount of P100,000.00, which also form part of the purchase price.

Settled is the rule that in the interpretation of contracts, the ascertainment of the intention of the contracting parties is to be discharged by looking to the words they used to project that intention in their contract, all the words, not just a particular word or two, and words in context, not words standing alone.19

In the instant case, the consideration of P100,000.00 paid by respondent to petitioners was referred to as "option money." However, a careful examination of the words used in the contract indicates that the money is not option money but earnest money. "Earnest money" and "option money" are not the same but distinguished thus: (a) earnest money is part of the purchase price, while option money is the money given as a distinct consideration for an option contract; (b) earnest money is given only where there is already a sale, while option money applies to a sale not yet perfected; and, (c) when earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gives option money, he is not required to buy, but may even forfeit it depending on the terms of the option.20

The sum of P100,000.00 was part of the purchase price. Although the same was denominated as "option money," it is actually in the nature of earnest money or down payment when considered with the other terms of the contract. Doubtless, the agreement is not a mere unilateral promise to sell, but, indeed, it is a Contract to Sell as both the trial court and the appellate court declared in their Decisions.

WHEREFORE, premises considered, the Petition is DENIED, and the Decision and Resolution of the Court of Appeals dated 26 April 2002 and 4 March 2003, respectively, are AFFIRMED, thus, (a) the Contract to Sell isDECLARED valid and binding with respect to the undivided proportionate shares in the subject parcels of

land of the six signatories of the said document, herein petitioners Ernesto, Enriqueta, Librado, Rizalino, Bibiano, Jr., and Leonora (all surnamed Oesmer); (b) respondent is ORDERED to tender payment to petitioners in the amount ofP3,216,560.00 representing the balance of the purchase price for the latter’s shares in the subject parcels of land; and (c) petitioners are further ORDERED to execute in favor of respondent the Deed of Absolute Sale covering their shares in the subject parcels of land after receipt of the balance of the purchase price, and to pay respondent attorney’s fees plus costs of the suit. Costs against petitioners.

SO ORDERED.

MINITA V. CHICO-NAZARIOAssociate Justice

INOCENCIO Y. LUCASAN for himself and as the Judicial Administrator of the Intestate Estate of the late JULIANITA SORBITO LUCASAN,

Petitioner, 

          - versus -  PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) as receiver and liquidator of the defunct PACIFIC BANKING CORPORATION,

Respondent. 

G.R. No. 176929 Present: YNARES-SANTIAGO,   Chairperson,AUSTRIA-MARTINEZ,CHICO-NAZARIO,NACHURA, andREYES, JJ. Promulgated:    July 4, 2008 

DECISION 

NACHURA, J.:                             

          On appeal is the March 23, 2006 Decision[1] of the Court of Appeals (CA) in CA-

G.R. CV No. 81518, affirming the July 24, 2003 Order[2] of the Regional Trial Court

(RTC) of Bacolod City, Branch 43, granting respondent’s motion to dismiss, as well as

its subsequent Resolution[3] denying petitioner’s motion for reconsideration. 

 

        The factual antecedents are as follows.

 

          Petitioner Inocencio Y. Lucasan (Lucasan) and his wife Julianita Sorbito (now

deceased) were the owners of Lot Nos. 1500-A and 229-E situated in BacolodCity,

respectively covered by TCT Nos. T-68115 and T-13816.  

 

On August 3, 1972, Pacific Banking Corporation (PBC) extended

a P5,000.00 loan to Lucasan, with Carlos Benares as his co-maker. Lucasan

and Benares failed to pay the loan when it became due and

demandable.  Consequently, PBC filed a collection case with the RTC of Bacolod

City, docketed as Civil Case No. 12188.

 

On April 30, 1979, the RTC rendered a decision ordering Lucasan

and Benares to jointly and severally pay PBC P7,199.99 with interest at 14% per

annum computed from February 7, 1979, until the full payment of the obligation.

Lucasan failed to pay the monetary award; thus, to satisfy the judgment, the RTC

issued a writ of execution directing the sheriff to effect a levy on the properties owned

by Lucasan and sell the same at public auction. 

 

In compliance with the writ, the City Sheriff of Bacolod issued a Notice of

Embargo on January 8, 1981, which was annotated on Lucasan’s TCT Nos. T-68115

and T-13816 as Entry No. 110107. Annotated as prior encumbrances on the same

titles were the mortgages in favor of Philippine National Bank (PNB) and Republic

Planter’s Bank (RPB) executed to secure Lucasan’s loans with the banks.

 

On May 13, 1981, the lots were sold at public auction and were awarded to

PBC as the highest bidder.  A certificate of sale was executed in its favor and was

registered and annotated on TCT Nos. T- 68115 and T-13816 as Entry No. 112552

on June 5, 1981. Neither PNB nor RPB, the mortgagees, assailed the auction sale.

 

          Lucasan, as well as the mortgagee banks, PNB and RPB, did not redeem the

properties within the redemption period. Nevertheless, PBC did not file a petition for

consolidation of ownership.

 

In January 1997, Lucasan, through counsel, wrote a letter to the Philippine

Deposit Insurance Corporation (PDIC), PBC’s receiver and liquidator seeking the

cancellation of the certificate of sale and offering to pay PBC’s claim against Lucasan.

[4] 

 

Not long thereafter, Lucasan paid his loans with the PNB and

RPB.  Consequently, the mortgagee banks executed their respective releases of

mortgage, resulting in the cancellation of the prior encumbrances in favor of PNB and

RPB.

 

On August 13, 2001, PDIC denied Lucasan’s request for the cancellation of

the certificate of sale stating:

 Please be informed that based on our records, TCT Nos.

T-68115 and T-13816 have already become part of the acquired assets of Pacific Banking Corporation by virtue of a Certificate of Sale dated May 13, 1981 executed by the City Sheriff of Bacolod.  Subsequently, this document was registered on the titles on June 5, 1981 so that the last day of the redemption period was June 5, 1982.

 With regard to your request, we regret to inform you that

reacquisition of the subject properties have to be through sale following PDIC’s policy on disposal.  Accordingly, these properties can be disposed through public bidding using the latest appraised value in the total amount of P2,900,300.00 as of March 29, 2000 as a minimum bid.  If you are still interested to acquire the properties, please get in touch with our Asset Management Group x x x.[5]

  

Lucasan then filed a petition denominated as declaratory relief with the RTC

of Bacolod City docketed as Civil Case No. 02-11874. [6]   He sought confirmation of

his rights provided in the second paragraph of Section 1, Rule 63 of the Rules of

Court in relation to Section 75 of Presidential Decree (P.D.) No. 1529.  Lucasan also

pleaded for the lifting and/or cancellation of the notice of embargo and the certificate

of sale annotated on TCT Nos. T-68115 and T-13816, and offered to payP100,000.00

or such amount as may be determined by the RTC, as consideration for the

cancellation. 

 

PDIC moved to dismiss the complaint for lack of cause of action. It averred

that an action to quiet title under Section 1 of Rule 63 may only be brought when

there is a cloud on, or to prevent a cloud from being cast upon, the title to real

property.  It asseverated that a cloud on the title is an outstanding instrument record,

claim, encumbrance or proceeding which is actually invalid or inoperative, but which

may nevertheless impair or affect injuriously the title to property.  PDIC claimed that

the notice of embargo was issued pursuant to a writ of execution in Civil Case No.

12188, while the certificate of sale was executed as a result of a public bidding. Thus,

their annotations on the titles were valid, operative or effective.  PDIC asserted that

Lucasan’s petition is nothing but a disguised attempt to compel PDIC to resell the

properties at a reduced price of P100,000.00. Accordingly, it prayed for the dismissal

of the petition.[7]  

 

Lucasan opposed the motion.[8]  He countered that the subject properties

were still in his possession, and neither PBC nor PDIC instituted an action for

consolidation of ownership. Since the certificate of title was still in his name, he

contended that he could pursue all legal and equitable remedies, including those

provided for in Section 1, Rule 63 of the Rules of Court to reacquire the

properties.  He also claimed that PDIC’s policy of disposing the subject properties

through public bidding at the appraised value of P2,900,300.00 was unjust, capricious

and arbitrary, considering that the judgment debt amounted only to P7,199.99 with

interest at 14% per annum.  Lucasan urged the RTC to apply the liberal construction

of the redemption laws stressed in Cometa v. Court of Appeals.[9] 

 

In its Order[10] dated July 24, 2003, the RTC granted PDIC’s motion to

dismiss, thus:

 The clouds contemplated by the provision of law under

Article 476 of the Civil Code is one where the instrument, record, claim, encumbrance or proceeding is apparently valid or effective on its face that nothing appears to be wrong, but in reality, is null and void.  Hence, the petition filed by [Lucasan] pursuant to the said article is equivalent to questioning the validity of the subsequent annotation of Entry No. 110107 and Entry No. 112522 in TCT Nos. T-13816 and T-68115.

 Records disclose that Entry No. 110107 which is a Notice

of Embargo was issued by virtue of a valid judgment rendered in Civil Case No. 12188 entitled “Pacific Banking Corporation vs. [Inocencio] Lucasan, et al.,” whereby the Court found [Lucasan] liable in favor of [PBC] the sum of P7,199.99 with 14% interest per annum to be computed from February 7, 1979 until fully paid.

 As mandated in Sec. 12, Rule 39 of the Revised Rules of

Court, such levy on execution create a lien in favor of [PBC] over the right, title and interest of [Lucasan] over the two (2) subject parcels of land covered by TCT Nos. T-13816 and T-68115, subject to liens and encumbrances then existing.  The fact that [Lucasan] has redeemed the mortgage properties from the first mortgages (sic), PNB and PNB (sic) Republic Bank, does not vest him any title free from the lien of [PBC].

 While the law requires that the judgment debtor, [Lucasan]

must be served with a notice of levy and even if not served therewith, the defect is cured by service on him of the notice of sale prior to the sale, nowhere in the petition which alleges that [Lusasan] refutes the validity of the execution sale.  Thus, he is deemed to have received and recognized the same.

 As support for his thesis, [Lucasan] cites the case of

Balanga vs. Ca., et al. (supra). However this Court is unable to agree that it is applicable to the present case.  As correctly argued by [PDIC], in that case the proceedings under execution suffered infirmity from the very start as the levy and sale made by the sheriff of the land of petitioner Balanga included the house erected on the land [and] constituted as a family home which, under the law, exempt from execution.  In the case at bar, no objection was interposed by [Lucasan] as a valid levy has been made pursuant to Sec. 7, Rule 57 of the Revised Rules of Court, as a consequence of which, the sale made pursuant to Sec. 11 of the same rule is also valid and effective.[11]

  

The dispositive portion of the RTC Order reads:

 WHEREFORE, finding the claim of any cloud over the

titles of [Lucasan] to be bereft of basis in fact and in law, the Motion to Dismiss filed by [PDIC] is granted.  Accordingly, this is hereby ordered DISMISSED.

 SO ORDERED.[12]    

Lucasan filed a motion for reconsideration, but the RTC denied it on October 20,

2003.[13]

 

On appeal, the CA affirmed in toto the RTC ruling. It declared that Lucasan

already lost his right to redeem the properties when he failed to exercise it within the

prescribed period. The effect of such failure was to vest in PBC absolute ownership

over the subject properties.[14]

The CA disposed, thus:

 WHEREFORE, in view of all the foregoing premises, the

appeal is hereby DENIED.  Accordingly, the assailed Order of the Regional Trial Court of Bacolod City, Branch 43 dated 24 July 2003 dismissing [Lucasan’s] Petition for Declaratory Relief and the subsequent Order of the same Court dated 20 October 2003 denying [Lucasan’s] motion for reconsideration from the Order of Denial (sic) are hereby affirmed in toto.  No costs.

 SO ORDERED.[15]

  

Lucasan sought a reconsideration of the CA Decision, but the same was denied

on February 7, 2007.[16]

 

Before us, Lucasan impugns the CA Decision on the following grounds:

 1- THE COURT OF APPEALS ERRED AND GRAVELY

ABUSED ITS DISCRETION IN AFFIRMING THE ORDER OF DISMISSAL OF THE PETITIONER’S PETITION IN THE REGIONAL TRIAL COURT WHEN IT DISREGARDED THE CLEAR PROVISION OF SECTION 75 OF PRESIDENTIAL

DECREE NO. 1529 AND PUT TO NAUGHT THE APPLICABLE JURISPRUDENCE  IN ZACARIAS COMETA x x x AND THE CASES CITED THEREIN, INSPITE (sic) OF THE CLEAR AND OUTSTANDING SIMILARITY OF FACTS WITH THE CASE UNDER CONSIDERATION. 

2- THE COURT OF APPEALS ALSO ERRED AND GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO CONSIDER THAT THE NOTICE OF EMBARGO AND CERTIFICATE OF SALE ISSUED BY THE CITY SHERIFF WERE ONLY LEVY ON THE INTEREST OF THE PETITIONER ON THE TWO (2) SUBJECT LOTS, AS DECREED IN QUEZON BEARING & PARTS CORPORATION, x x x, WHICH IS LIKEWISE APPLICABLE TO THE CASE AT BAR.[17]

  

Lucasan posits that he has sufficient cause of action against PDIC; thus, he

chides the RTC for dismissing his complaint, and the CA for affirming the dismissal. In

support of his thesis, he cites Section 75 of Presidential Decree (PD) No. 1529, or the

Property Registration Decree[18] and Cometa v. Court of Appeals.[19]  

As gleaned from the averments of the complaint, Lucasan’s action was one

for quieting of title under Rule 63 of the Rules of Court.  Essentially, he sought the

cancellation of the notice of embargo and the certificate of sale annotated on TCT

Nos. T-68115 and T-13816 claiming that the said annotations beclouded the validity

and efficacy of his title.   The RTC, however, dismissed his complaint for lack of

cause of action which was affirmed by the CA in its assailed Decision.  Thus, the key

issue for our consideration is whether the dismissal of Lucasan’s complaint was

proper.

 

Quieting of title is a common law remedy for the removal of any cloud of

doubt or uncertainty with respect to real property.  The Civil Code authorizes the said

remedy in the following language:

 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.

  

To avail of the remedy of quieting of title, two (2) 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 a cloud on his title must be shown

to be in fact invalid or inoperative despite its prima facie appearance of validity or

legal efficacy.[20]  Stated differently, the plaintiff must show that he has a legal or at

least an equitable title over the real property in dispute, and that some deed or

proceeding beclouds its validity or efficacy.

 

Unfortunately, the foregoing requisites are wanting in this case.

 

Admittedly, the subject parcels of land were levied upon by virtue of a writ of

execution issued in Civil Case No. 12188.  On May 13, 1981, a public auction of the

subject parcels of land was held and the lots were awarded to PBC as the highest

bidder.  A certificate of sale in favor of PBC was issued on the same day, and was

registered and annotated on TCT Nos. T-68115 and T-13816 as Entry No. 112552

on June 5, 1981.

 

Under the 1964 Rules of Court, which were in effect at that time, the

judgment debtor or redemptioner had the right to redeem the property from PBC

within twelve (12) months from the registration of the certificate of sale. [21]    With the

expiration of the twelve-month period of redemption and no redemption having been

made, as in this case, the judgment debtor or the redemptioner lost whatever right he

had over the land in question.[22] 

 

Lucasan admitted that he failed to redeem the properties within the

redemption period, on account of his then limited financial situation. [23] It was only in

January 1997 or fifteen (15) years later that he manifested his desire to reacquire the

properties.  Clearly thus, he had lost whatever right he had over Lot Nos. 1500-A and

229-E.

 

The payment of loans made by Lucasan to PNB and RPB in 1997 cannot, in

any way, operate to restore whatever rights he had over the subject properties. Such

payment only extinguished his loan obligations to the mortgagee banks and the liens

which Lucasan claimed were subsisting at the time of the registration of the notice of

embargo and certificate of sale. 

 

Neither can Lucasan capitalize on PBC’s failure to file a petition for

consolidation of ownership after the expiration of the redemption period.  As we

explained inCalacala v. Republic:[24]

 [P]etitioners' predecessors-in-interest lost whatever right they had over [the] land in question from the very moment they failed to redeem it during the 1-year period of redemption. Certainly, the Republic's failure to execute the acts referred to by the petitioners within ten (10) years from the registration of the Certificate of Sale cannot, in any way, operate to restore whatever rights petitioners' predecessors-in-interest had over the same. For sure, petitioners have yet to cite any provision of law or rule of jurisprudence, and we are not aware of any, to the effect that the failure of a buyer in a foreclosure sale to secure a Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership and obtain a writ of possession over the property thus acquired, within ten (10) years from the registration of the Certificate of Sale will operate to bring ownership back to him whose property has been previously foreclosed and sold.

             x x x x

 

Moreover, with the rule that the expiration of the 1-year redemption period forecloses the obligor's right to redeem and that the sale thereby becomes absolute, the issuance thereafter of a final deed of sale is at best a mere formality and mere confirmation of the title that is already vested in the purchaser. As this Court has said in Manuel vs. Philippine National Bank, et al.: 

Note must be taken of the fact that under the Rules of Court the expiration of that one-year period forecloses the owner's right to redeem, thus making the sheriff's sale absolute. The issuance thereafter of a final deed of sale becomes a mere formality, an act merely confirmatory of the title that is already in the purchaser and constituting official evidence of that fact.  (Emphasis supplied.)  

Certainly, Lucasan no longer possess any legal or equitable title to or interest over

the subject parcels of land; hence, he cannot validly maintain an action for  quieting of

title.

 

Furthermore, Lucasan failed to demonstrate that the notice of embargo and

the certificate of sale are invalid or inoperative. In fact, he never put in issue the

validity of the levy on execution and of the certificate of sale duly registered on June

5, 1981. It is clear, therefore, that the second requisite for an action to quiet title is,

likewise, absent.    

 

Concededly, Lucasan can pursue all the legal and equitable remedies to

impeach or annul the execution sale prior to the issuance of a new certificate of title in

favor of PBC.  Unfortunately, the remedy he had chosen cannot prosper because he

failed to satisfy the requisites provided for by law for an action to quiet title. Hence,

the RTC rightfully dismissed Lucasan’s complaint. 

 

          Lucasan tries to find solace in our ruling in Cometa v. Court of Appeals.  Sadly

for him, that case is not on all fours with his case, for it was not for quieting of title but

a petition for issuance of a writ of possession and cancellation of lis

pendens.  Likewise, in Cometa the registered owner assailed the validity of the levy

and sale, which Lucasan failed to do. 

 

Undoubtedly, Lucasan’s right to redeem the subject properties had elapsed

on June 5, 1982.  His offer to redeem the same in 1997 or long after the expiration of

the redemption period is not really one for redemption but for repurchase.   Thus, PBC

and PDIC, its receiver and liquidator, are no longer bound by the bid price. It is

entirely within their discretion to set a higher price. As we explained in De Robles v.

Court of Appeals:[25]

 The right to redeem becomes functus officio on the date of

its expiry, and its exercise after the period is not really one of redemption but a repurchase. Distinction must be made because redemption is by force of law; the purchaser at public auction is bound to accept redemption.  Repurchase however of foreclosed property, after redemption period, imposes no such obligation.  After expiry, the purchaser may or may not re-sell the property but no law will compel him to do so.  And, he is not bound by the bid price; it is entirely within his discretion to set a higher price, for after all, the property already belongs to him as owner.

  

Accordingly, the condition imposed by the PDIC for the re-acquisition of the property

cannot be considered unjust or unreasonable.

 

Verily, in several cases,[26] this Court allowed redemption even after the

lapse of the redemption period.  But in those cases a valid tender was made by the

original owners within the redemption period.  Even in Cometa, the redemption was

allowed beyond the redemption period because a valid tender of payment was made

within the redemption period.  The same is not true in the case before us.

 

In fine, we find that the RTC correctly dismissed Lucasan’s complaint

for quieting of title.  Thus, the CA committed no reversible error in sustaining the RTC.

 

          WHEREFORE, the petition is DENIED.  The Decision and Resolution of the

Court of Appeals in CA-G.R. CV No. 81518, are AFFIRMED. Costs against the

petitioner. 

         

SO ORDERED.

G.R. No. 101522 May 28, 1993

LEONARDO MARIANO, AVELINA TIGUE, LAZARO MARIANO, MERCEDES SAN PEDRO, DIONISIA M. AQUINO, and JOSE N.T. AQUINO, petitioners, vs.HON. COURT OF APPEALS, (Sixteenth Division), GRACE GOSIENGFIAO, assisted by her husband GERMAN GALCOS; ESTER GOSIENGFIAO, assisted by her husband AMADOR BITONA; FRANCISCO GOSIENGFIAO, JR., NORMA GOSIENGFIAO, and PINKY ROSE GUENO, respondents.

The Baristers Law Office for petitioners.

Simeon T. Agustin for private respondents.

 

NOCON, J.:

Before Us is a petition foe review of the decision, dated May 13, 1991 of the Court of Appeals in CA-G.R. CV No. 13122, entitled Grace Gosiengfiao, et al. v. Leonardo Mariano v. Amparo Gosiengfiao 1 raising as issue the distinction between Article 1088 2 and Article 1620 3 of the Civil Code.

The Court of Appeals summarized the facts as follows:

It appears on record that the decedent Francisco Gosiengfiao is the registered owner of a residential lot located at Ugac Sur, Tuguegarao, Cagayan, particularly described as follows, to wit:

"The eastern portion of Lot 1351, Tuguegarao Cadastre, and after its segregation now designated as Lot 1351-A, Plan PSD-67391, with an area of 1,1346 square meters."

and covered by Transfer Certificate of Title No. T-2416 recorded in the Register of Deeds of Cagayan.

The lot in question was mortgaged by the decedent to the Rural Bank of Tuguegarao (designated as Mortgagee bank, for brevity) on several occasions before the last, being on March 9, 1956 and 29, 1958.

On August 15, 1958, Francisco Gosiengfiao died intestate survived by his heirs, namely: Third-Party Defendants: wife Antonia and Children Amparo, Carlos, Severino and herein plaintiffs-appellants Grace, Emma, Ester, Francisco, Jr., Norma, Lina (represented by daughter Pinky Rose), and Jacinto.

The loan being unpaid, the lot in dispute was foreclosed by the mortgagee bank and in the foreclosure sale held on December 27, 1963, the same was awarded to the mortgagee bank as the highest bidder.

On February 7, 1964, third-party defendant Amparo Gosiengfiao-Ibarra redeemed the property by paying the amount of P1,347.89 and the balance of P423.35 was paid on December 28, 1964 to the mortgagee bank.

On September 10, 1965, Antonia Gosiengfiao on her behalf and that of her minor children Emma, Lina, Norma together with Carlos and Severino executed a "Deed of Assignment of the Right of Redemption" in favor of Amparo G. Ibarra appearing in the notarial register of Pedro (Laggui) as Doc. No. 257, Page No. 6, Book No. 8, Series of 1965.

On August 15, 1966, Amparo Gosiengfiao sold the entire property to defendant Leonardo Mariano who subsequently established residence on the lot subject of this controversy. It appears in the Deed of Sale dated August 15, 1966 that Amparo, Antonia, Carlos and Severino were signatories thereto.

Sometime in 1982, plaintiff-appellant Grace Gosiengfiao learned of the sale of said property by the third-party defendants. She went to the Barangay Captain and asked for a confrontation with defendants Leonardo and Avelina Mariano to present her claim to said property.

On November 27, 1982, no settlement having been reached by the parties, the Barangay captain issued a certificate to file action.

On December 8, 1982, defendant Leonardo Mariano sold the same property to his children Lazaro F. Mariano and Dionicia M. Aquino as evidenced by a Deed of Sale notarized by Hilarion L. Aquino as Doc. No. 143, Page No. 19, Book No. V, Series of 1982.

On December 21, 1982, plaintiffs Grace Gosiengfiao, et al. filed a complaint for "recovery of possession and legal redemption with damages" against defendants Leonardo and Avelina Mariano. Plaintiffs alleged in their complaint that as co-heirs and co-owners of the lot in question, they have the right to recover their respective shares in the same, and property as they did not sell the same, and the right of redemption with regard to the shares of other co-owners sold to the defendants.

Defendants in their answer alleged that the plaintiffs has (sic) no cause of action against them as the money used to redeem lot in question was solely from the personal funds of third-party defendant Amparo Gosiengfiao-Ibarra, who consequently became the sole owner of the said property and thus validly sold the entire property to the defendants, and the fact that defendants had already sold the said property to the children, Lazaro Mariano and Dionicia M. Aquino. Defendants further contend that even granting that the plaintiffs are co-owners with the third-party defendants, their right of redemption had already been barred by the Statute of Limitations under Article 1144 of the Civil Code, if not by laches. 4

After trial on the merits, the Regional Trial Court of Cagayan, Branch I, rendered a decision dated September 16, 1986, dismissing the complaint and stating that respondents have no right of ownership or possession over the lot in question. The trial court further said that when the subject property foreclosed and sold at public auction, the rights of the heirs were reduced to a mere right of redemption. And when Amparo G. Ibarra redeemed the lot from the Rural Bank on her own behalf and with her own money she became the sole owner of the property. Respondents' having failed to redeem the property from the bank or from Amparo G. Ibarra, lost whatever rights the might have on the property. 5

The Court of Appeals in its questioned decision reversed and set aside the ruling of the trial court and declared herein respondents as co-owners of the property in the question. The Court of Appeals said:

The whole controversy in the case at bar revolves on the question of "whether or not a co-owner who redeems the whole property with her own personal funds becomes the sole owner of said property and terminates the existing state of co-ownership."

Admittedly, as the property in question was mortgaged by the decedent, a co-ownership existed among the heirs during the period given by law to redeem the foreclosed property. Redemption of the whole property by a co-owner does not vest in him sole ownership over said property but will inure to the benefit of all co-owners. In other words, it will not end to the existing state of co-ownership. Redemption is not a mode of terminating a co-ownership.

xxx xxx xxx

In the case at bar, it is undisputed and supported by records, that third-party defendant Amparo G. Ibarra redeemed the propety in dispute within the one year redemption period. Her redemption of the property, even granting that the money used was from her own personal funds did not make her the exclusive owner of the mortgaged property owned in common but inured to the benefit of all co-owners. It would have been otherwise if third-party defendant Amparo G. Ibarra purchased the said property from the mortgagee bank (highest, bidder in the foreclosure sale) after the redemption period had already expired and after the mortgagee bank had consolidated it title in which case there would no longer be any co-ownership to speak of . 6

The decision of the Court of Appeals is supported by a long line of case law which states that a redemption by a co-owner within the period prescribed by law inures to the benefit of all the other co-owners. 7

The main argument of petitioners in the case at bar is that the Court of Appeals incorrectly applied Article 1620 of the Civil Code, instead of Article 1088 of the same code which governs legal redemption by co-heirs since the lot in question, which forms part of the intestate estate of the late Francisco Gosiengfiao, was never the subject of partition or distribution among the heirs, thus, private respondents and third-party defendants had not ceased to be co-heirs.

On that premise, petitioners further contend that the right of legal redemption was not timely exercised by the private respondents, since Article 1088 prescribes that the same must be done within the period of one month from the time they were notified in writing of the sale by the vendor.

According to Tolentino, the fine distinction between Article 1088 and Article 1620 is that when the sale consists of an interest in some particular property or properties of the inheritance, the right redemption that arises in favor of the other co-heirs is that recognized in Article 1620. On the other hand, if the sale is the hereditary right itself, fully or in part, in the abstract sense, without specifying any particular object, the right recognized in Article 1088 exists. 8

Petitioners allege that upon the facts and circumstances of the present case, respondents failed to exercise their right of legal redemption during the period provided by law, citing as authority the case of Conejero, et al., v. Court of Appeals, et al.9 wherein the Court adopted the principle that the giving of a copy of a deed is equivalent to the notice as required by law in legal redemption.

We do not dispute the principle laid down in the Conejero case. However, the facts in the said case are not four square with the facts of the present case. In Conejero, redemptioner Enrique Conejero was shown and given a copy of the deed of sale of the subject property. The Court in that case stated that the furnishing of a copy of the deed was equivalent to the giving of a written notice required by law. 11

The records of the present petition, however, show no written notice of the sale being given whatsoever to private respondents. Although, petitioners allege that sometime on October 31, 1982 private respondent, Grace Gosiengfiao was given a copy of the questioned deed of sale and shown a copy of the document at the Office of the Barangay Captain sometime November 18, 1982, this was not supported by the evidence presented. On the contrary, respondent, Grace Gosiengfiao, in her testimony, declared as follows:

Q. When you went back to the residence of Atty. Pedro Laggui were you able to see him?

A. Yes, I did.

Q. When you saw him, what did you tell?

A. I asked him about the Deed of Sale which Mrs. Aquino had told me and he also showed me a Deed of Sale. I went over the Deed of Sale and I asked Atty. Laggui about this and he mentioned here about the names of the legal heirs. I asked why my name is not included and I was never informed in writing because I would like to claim and he told me to better consult my own attorney.

Q. And did you go?

A. Yes, I did.

Q. What kind of copy or document is that?

A. It is a deed of sale signed by my mother, sister Amparo and my brothers.

Q. If shown to you the copy of the Deed of Sale will you be able to identify it?

A. Yes, sir. 11

Thereafter, Grace Gosiengfiao explicitly stated that she was never given a copy of the said Deed of Sale.

Q. Where did Don Mariano, Dr. Mariano and you see each other?

A. In the house of Brgy. Captain Antonio Bassig.

Q. What transpired in the house of the Brgy. Captain when you saw each other there?

A. Brgy. Captain Bassig informed my intention of claiming the lot and I also informed him about the Deed of Sale that was not signed by me since it is mine it is already sold and I was informed in writing about it. I am a legal heir and I have also the right to claim.

Q. And what was the reply of Don Mariano and Dr. Mariano to the information given to them by Brgy. Captain Bassig regarding your claim?

A. He insisted that the lot is already his because of the Deed of Sale. I asked for the exact copy so that I could show to him that I did not sign and he said he does not have a copy. 12

The above testimony was never refuted by Dr. Mariano who was present before Brgy. Captain Bassig.

The requirement of a written notice has long been settled as early as in the case of Castillo v. Samonte, 13 where this Court quoted the ruling in Hernaez v. Hernaez, 32 Phil., 214, thus:

Both the letter and spirit of the New Civil Code argue against any attempt to widen the scope of the notice specified in Article 1088 by including therein any other kind of notice, such as verbal or by registration. If the intention of the law had been to include verbal notice or any other means of information as sufficient to give the effect of this notice, then there would have been no necessity or reasons to specify in Article 1088 of the New Civil Code that the said notice be made in writing for, under the old law, a verbal notice or information was sufficient. 14

Moreover, petitioners themselves adopted in their argument respondents' allegation In their complaint that sometime on October, 1982 they sought the redemption of the property from spouses Leonardo Mariano and Avelina Tigue, by tendering the repurchase money of P12,000.00, which the spouses rejected. 15 Consequently, private respondents exercised their right of redemption at the first opportunity they have by tendering the repurchase price to petitioners. The complaint they filed, before the Barangay Captain and then to the Regional Trial Court was necessary to assert their rights. As we learned in the case of Castillo, supra:

It would seem clear from the above that the reimbursement to the purchaser within the period of one month from the notice in writing is a requisite or condition precedent to the exercise of the right of legal redemption; the bringing of an action in court is the remedy to

enforce that right in case the purchaser refuses the redemption. The first must be done within the month-period; the second within the prescriptive period provided in the Statute of Limitation. 16

The ruling in Castillo v. Samonte; supra, was reiterated in the case of Garcia v. Calaliman, where We also discussed the reason for the requirement of the written notice. We said:

Consistent with aforesaid ruling, in the interpretation of a related provision (Article 1623 of the New Civil Code) this Court had stressed that written notice is indispensable, actual knowledge of the sale acquired in some other manners by the redemptioner, notwithstanding. He or she is still entitled to written notice, as exacted by the code to remove all uncertainty as to the sale, its terms and its validity, and to quiet and doubt that the alienation is not definitive. The law not having provided for any alternative, the method of notifications remains exclusive, though the Code does not prescribe any particular form of written notice nor any distinctive method written notification of redemption (Conejero et al. v. Court of Appeals et al., 16 SCRA 775 [1966]; Etcuban v. Court of Appeals, 148 SCRA 507 [1987]; Cabrera v. Villanueva, G.R. No. 75069, April 15, 1988). 17 (Emphasis ours)

We likewise do not find merit in petitioners' position that private respondents could not have validly effected redemption due to their failure to consign in court the full redemption price after tender thereof was rejected by the petitioners. Consignation is not necessary, because the tender of payment was not made to discharge an obligation, but to enforce or exercise a right. It has been previously held that consignation is not required to preserve the right of repurchase as a mere tender of payment is enough on time as a basis for an action to compel the vendee a retro to resell the property; no subsequent consignation was necessary to entitle private respondents to suchreconveyance. 18

Premises considered, respondents have not lost their right to redeem, for in the absence of a written notification of the sale by the vendors, the 30-day period has not even begun to run.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED. Cost against petitioners.

SO ORDERED.

Narvasa, C.J., Padilla and Nocon, JJ., concur.

 

ULPIANO BALO, LYDIA BALO-LUMPAS, EUGENIO BALO, ULPIANO BALO, JR., NIDA BALO-MORALETA, NORA BALO-CATANO, ZAIDA BALO, JUDITH BALO-MANDREZA, DANILO BALO and RONILO BALO,

          P e t i t i o n e r s,

          -  versus 

THE HON. COURT OF APPEALS, HON. JUDGE ENRIQUE ASIS and JOSEFINA GARRIDO,

          R e s p o n d e n t s.

  G.R. No.  129704  Present:

 

     PUNO,         Chairman,     AUSTRIA-MARTINEZ,

     CALLEJO, SR.,

     TINGA, and

     CHICO-NAZARIO, JJ.

Promulgated:

September 30, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - -  - - - - - - - - - - - - - - - - - - - - - -x

 

D E C I S I O N

 

 

CHICO-NAZARIO, J.:

 

          A complaint for Judicial Partition of Real Properties and Accounting with Damages, docketed as Civil Case No. 279, was filed by private respondent Josefina Garrido against petitioners Ulpiano Balo, Lydia Balo-Lumpas, Eugenio Balo, Ulpiano Balo, Jr., Nida Balo-Moraleta, Nora Balo-Catano, Zaida Balo, Judith Balo-Mandreza, Danilo Balo and Ronilo Balo, before the Regional Trial Court (RTC) of Abuyog, Leyte, Branch 10, alleging that she (private respondent) and petitioners are the co-owners of undivided parcels of land located at Mayorga, Leyte.  According to her, these lands were originally owned by the spouses Eugenio Balo, Sr. and Ma. Pasagui-Balo, who, at the time of the filing of the complaint, were already deceased.  The Balo spouses were survived by their two (2) children, Ulpiano, Sr. and Maximino, the latter likewise deceased.  Private respondent is the daughter of Maximino Balo and Salvacion Sabulao.  Petitioner Ulpiano Balo is the son of Eugenio Balo, Sr., while the other petitioners, the children of Ulpiano, are Eugenio’s grandchildren.              Private respondent further alleged in her complaint that immediately upon the death of her grandfather, Eugenio Sr., the petitioners took possession of the said real properties without her knowledge and consent.  The petitioners being her uncle and cousins, private respondent earnestly requested them that they come up with a fair and equal partition of the properties left by her grandparents.  The petitioners having outrightly refused her proposal, private respondent filed the complaint.[1]

 

          In lieu of an Answer, petitioners filed a Motion to Dismiss [2] on the following

grounds:

 1.                Failure to state a cause of action - plaintiff, though she

claims to be a daughter of Maximino who died sometime in 1946, failed to allege whether or not she is a legitimate child. Plaintiff’s failure to allege legitimacy is fatal considering the provision of Article 992 of the Civil Code.[3]  To allow Plaintiff to inherit from the estate of the spouses Eugenio and Maria Balo in representation of her father Maximino Balo would be to permit intestate succession by an illegitimate child from the legitimate parent of his father, assuming that she is the child of Maximino Balo.

 

2.                The complaint does not show that the estate of the spouses Eugenio and Maria Balo have been settled and its obligations have been paid.

 

3.                The properties enumerated in the Complaint were proceeded against by way of execution to satisfy a judgment against Eugenio and Maria Balo. Subsequently, defendant Ulpiano repurchased the said properties and has been, together with his children, openly, exclusively and adversely in possession of the real estate properties in question.

     Private respondent filed her comment/opposition to the motion to dismiss.

[4]   In an Order dated 12 September 1996, the RTC denied the motion to dismiss for lack of merit.[5]  The trial court held:

            The complaint clearly states that the late Eugenio Balo, Sr., and Maria Pasagui Balo had two (2) children, namely:  Ulpiano, Sr. and Maximino.  The plaintiff is the daughter of the late Maximino Balo and Salvacion Sabulao; while the defendants are children of the late Ulpiano Balo, Sr. and Felicidad Superio.             The complaint enumerates/annexes 13 tax declarations in the name of Eugenio Balo, Sr. marked as Annexes “A” to “M.”  The plaintiff as an heir prays that these parcels of land be partitioned in accordance with Article 982 of the Civil Code which states: 

                        “The grandchildren and other descendants shall inherit by right of representation, and if any one of them should have died, leaving several heirs, the portion pertaining to him shall be divided among the latter in equal portions.”  

            No evidence may be alleged or considered to test the sufficiency of the complaint except the very facts pleaded therein.  It would be improper to inject into the allegation, facts not alleged and use them as basis for the decision on the motion.             The Court is not permitted to go beyond and outside of the allegations in the complaint for data or facts.             Therefore, the allegation of illegitimacy and claim of absolute ownership are modifications and unreasonable inferences.  If there is doubt to the truth of the facts averred in the complaint, the Court does not dismiss the complaint but requires an answer and proceeds to hear the case on the merit.[6]

   

          Petitioners filed a Motion for Reconsideration[7] which the RTC denied in its Order[8] dated 07 November 1996.

           Petitioners filed a Petition for Certiorari[9] before the Court of Appeals.  After the filing of Comment and other pleadings, the case was deemed submitted for decision.  In a resolution dated 16 April 1997, the Court of Appeals denied due course to the petition and accordingly dismissed the same.  The Court of Appeals justified the dismissal in the following manner:

             It is an established rule that an order denying a motion to dismiss is basically interlocutory in character and cannot be the proper subject of a petition for certiorari.  When a motion to dismiss is denied, the proper procedure is to proceed with the trial and if the decision be adverse to the movant, the remedy is to take an appeal from said decision, assigning as one of the errors therefore the denial of the motion to dismiss.[10]

   

          Petitioners filed a Motion for Reconsideration[11] which the Court of Appeals denied in a resolution dated 30 June 1997.[12]  Hence this petition for review[13]under Rule 45 of the Rules of Court.            Petitioners cite the following grounds for the allowance of their petition, to wit: 

IWHETHER OR NOT THE FAILURE TO ALLEGE THE NATURE AND EXTENT OF PLAINTIFF’S TITLE IN A PETITION FOR PARTITION IS FATAL TO ITS CAUSE OF ACTION. 

II 

WHETHER OR NOT THE ACTION FOR JUDICIAL PARTITION AND ACCOUNTING HAS PRESCRIBED, WAS WAIVED, OR WAS OTHERWISE ABANDONED.[14]

   

          At the threshold of the instant petition for review is the correctness of the appellate court’s dismissal of the petition for certiorari filed by the petitioners.               In resolving to deny the petition, the Court of Appeals relied on the long established jurisprudence that an order denying a motion to dismiss is interlocutory and cannot be the proper subject of a petition for certiorari.  

 

          The general rule regarding denial of a motion to dismiss as a basis of a resort

to the extraordinary writ of certiorari is that: 

          . . . [A]n order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case as it leaves something to be done by the court before the case is finally decided on the merits.  As such, the general rule is that the denial of a motion to dismiss cannot be questioned in a special civil action forcertiorari which is a remedy designed to correct errors of jurisdiction and not errors of judgment.             To justify the grant of the extraordinary remedy of certiorari, therefore, the denial of the motion to dismiss must have been tainted with grave abuse of discretion.  By “grave abuse of discretion” is meant, such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.  The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act all in contemplation of law.[15]

   

          Specific instances whereby the rule admits certain exceptions are provided as

follows: 

             . . . Under certain situations, recourse to certiorari or mandamus is considered appropriate, i.e., (a)  when the trial court issued the order without or in excess of jurisdiction; (b) where there is patent grave abuse of discretion by the trial court; or (c)  appeal would not prove to be a speedy and adequate remedy as when an appeal would not promptly relieve a defendant from the injurious effects of the patently mistaken order maintaining the plaintiff’s baseless action and compelling the defendant needlessly to go through a protracted trial and clogging the court dockets by another futile case.[16]    

          Applying the foregoing, the Court of Appeals should not have dismissed the petition outright as the same alleges grave abuse of discretion.  Instead, it should have proceeded to determine whether or not the trial court did commit grave abuse of discretion as alleged by the petitioners.  The Court of Appeals having failed in this regard, it behooves upon this Court to discuss the merits of the petition to put to rest the issues raised by the petitioners.                Contrary to petitioners’ contention, allegations sufficient to support a cause of action for partition may be found in private respondent’s complaint.[17]

           Nothing is more settled than the rule that in a motion to dismiss for failure to state a cause of action, the inquiry is into the sufficiency, not the veracity, of the material allegations.[18]  Moreover, the inquiry is confined to the four corners of the complaint, and no other.[19]

             In a motion to dismiss a complaint based on lack of cause of action, the question submitted to the court for determination is the sufficiency of the allegations made in the complaint to constitute a cause of action and not whether those allegations of fact are true, for said motion must hypothetically admit the truth of the facts alleged in the complaint.             The test of the sufficiency of the facts alleged in the complaint is whether or not, admitting the facts alleged, the court could render a valid judgment upon the same in accordance with the prayer of the complaint.  (Garcon vs. Redemptorist Fathers, 17 SCRA 341)              If the allegations of the complaint are sufficient in form and substance but their veracity and correctness are assailed, it is incumbent upon the court to deny the motion to dismiss and require the defendant to answer and go to trial to prove his defense.  The veracity of the assertions of the parties can be ascertained at the trial of the case on the merits.  (Galeon vs. Galeon, 49 SCRA 516-521)[20]

   

          Section 1, Rule 8 of the 1997 Rules of Civil Procedure provides that the

complaint needs only to allege the ultimate facts upon which private respondent

bases her claim. 

 

            The rules of procedure require that the complaint must make a concise statement of the ultimate facts or the essential facts constituting the plaintiff’s cause of action.  A fact is essential if it cannot be stricken out without leaving the statement of the cause of action inadequate.  A complaint states a cause of action only when it has its three indispensable elements, namely:  (1)  a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2)  an obligation on the part of the named defendant to respect or not to violate such right; and (3)  an act or omission on the part of such defendant violate of the right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages.[21]

   

          In her Complaint, the private respondent made the following assertions:

                  . . . That the afore-described parcels of lands were originally owned by Eugenio Balo, Sr. and Ma. Pasagui-Balo, who are now both deceased and after their death, were inherited into two (2) equal shares by their two (2) children, namely:  Ulpiano, Sr. and Maximino, both surnamed Balo, the later (sic)  being already dead.             That plaintiff is the daughter of the late Maximino Balo and Salvacion Sabulao, who after her father’s death, had inherited her father’s share of the inheritance.             That defendant Ulpiano Balo, Sr. aside from being the son of Eugenio Balo, Sr., is married to Felicidad Superio, and is the father of all the other defendants in this case.             The defendants took possession of the above-described real properties immediately after the death of plaintiff’s grandfather Eugenio Balo, Sr. without her knowledge and consent.             That plaintiff is desirous that the above-described real properties be partitioned between her and defendants.             That plaintiff has proposed to the defendants that the above-described real properties be amicably partitioned between them by mutual agreement in a very fair and practical division of the same, but said defendants refused and continue to do so without any justifiable cause or reason to accede to the partition of the said properties.[22]

  

           The foregoing allegations show substantial compliance with the formal and substantial requirements of a Complaint for Partition as required under Section 1, Rule 69 of the 1997 Rules of Civil Procedure.[23]

           On the insistence of petitioners that private respondent first prove her legitimacy before an action for partition may be maintained, this Court, in the case of Briz v. Briz,[24] pronounced that proof of legal acknowledgment is not a prerequisite before an action for partition may be filed.  We said:[25]

             . . . In other words, there is no absolute necessity requiring that the action to compel acknowledgment should have been instituted and prosecuted to a successful conclusion prior to the action in which that same plaintiff seeks additional relief in the character of heir.  Certainly, there is nothing so peculiar to the action to compel acknowledgment as to require that a rule should be here applied different from that generally applicable in other cases.  For instance, if the plaintiff had in this action impleaded all of the persons who would be necessary parties defendant to an action to compel acknowledgement, and had asked for relief of that character, it would have been permissible for the court to make the judicial pronouncement declaring that the plaintiff is entitled to be recognized as the natural child of Maximo Briz, and at the same time to grant the additional relief sought in this case against the present defendants; that is, a decree compelling them to surrender to the plaintiff the parcel of land sued for and to pay her the damages awarded in the appealed decision.             The conclusion above stated, though not heretofore explicitly formulated by this court, is undoubtedly to some extent supported by our prior decisions.  Thus, we have held in numerous cases, and the doctrine must be considered well settled, that a natural child having a right to compel acknowledgment, but who has not been in fact legally acknowledged, may maintain partition (proceedings for the division of the inheritance against his coheirs (Siguiong vs. Siguiong, 8 Phil. 5; Tiamson vs. Tiamson, 32 Phil 62); and the same person may intervene in proceedings for the distribution of the estate of his deceased natural father, or mother (Capistrano vs. Fabella, 8 Phil. 135; Conde vs. Abaya, 13 Phil. 249; Ramirez vs. Gmur, 42 Phil 855).  In neither of these situations has it been thought necessary for the plaintiff to show a prior decree compelling acknowledgment.  The obvious reason is that in partition suits and distribution proceedings the other persons who might take by inheritance are before the court; and the declaration of heirship is appropriate to such proceedings.   

          To further reiterate that in partition proceedings, dismissal prior to answer is

premature, this Court has held:

             In a complaint for partition, the plaintiff seeks, first, a declaration that he is a co-owner of the subject properties; and second, the conveyance of his lawful shares.  As the Court of Appeals correctly held, an action for partition is at once an action for declaration of co-ownership and for segregation and conveyance of a determine portion of the properties involved.  If the defendant asserts exclusive title over the property, the action for partition should not be dismissed.  Rather, the court should resolve the case and if the plaintiff is unable to sustain his claimed status as a co-owner, the court should dismiss the action, not because the wrong remedy was availed of, but because no basis exists for requiring the defendant to submit to partition.  If, on the other hand, the court after trial should find the existence of co-ownership among the parties, the court may and should order the partition of the properties in the same action.[26]

   

          The case of Vda. De Daffon v. Court of Appeals[27] is almost most appropriate.  In said case, the action for partition filed by the plaintiffs was met by a motion to dismiss filed by the defendants based on the grounds of failure of the complaint to state a cause of action, waiver, abandonment and extinguishment of the obligation.  The trial court denied the motion to dismiss and the denial was affirmed by the appellate court and by this Court.  We held there that the trial court and the Court of Appeals were correct in dismissing the petition for certiorari absent a clear showing of grave abuse of discretion amounting to lack or excess of jurisdiction.  We further expressed our dismay over the delay in the resolution of the said case due to the fact that the issue of the denial of the Motion to Dismiss was elevated to this Court by petitioner and counsel instead of just filing an Answer and meeting the issues head-on.           On the matter of prescription cited by the petitioners as a ground for the dismissal of the complaint, it is noteworthy that the motion to dismiss filed by the petitioners did not ipso facto establish prescription.  An allegation of prescription can effectively be used in a motion to dismiss only when the complaint on its face shows that indeed the action has already prescribed;[28] otherwise, the issue of prescription is one involving evidentiary matters requiring a full-blown trial on the merits and cannot be determined in a mere motion to dismiss.[29]

           WHEREFORE, premises considered, the instant Petition is DENIED and the decision of the Court of Appeals in CA-G.R. SP No. 42803, affirming the Order of the Regional Trial Court dated 12 September 1996, is AFFIRMED.  This case is ordered

remanded to the court of origin which is directed to resolve the case with dispatch.  Costs against petitioners.           SO ORDERED. 

G.R. No. L-52361 April 27, 1981

SUNSET VIEW CONDOMINIUM CORPORATION, petitioner, vs.THE HON. JOSE C. CAMPOS, JR. OF THE COURT OF FIRST INSTANCE, BRANCH XXX, PASAY CITY and AGUILAR-BERNARES REALTY, respondents.

G.R. No. L-52524 April 27, 1981

SUNSET VIEW CONDOMINIUM CORPORATION, petitioner, vs.THE HON. JOSE C. CAMPOS, JR., PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE, BRANCH XXX, PASAY CITY, and LIM SIU LENG, respondents.

FERNANDEZ, J.:

These two cases which involve similar facts and raise Identical questions of law were ordered consolidated by resolution of this Court dated March 17, 1980. 1

The petitioner, Sunset View Condominium Corporation, in both cases, is a condominium corporation within the meaning of Republic Act No. 4726 in relation to a duly registered Amended Master Deed with Declaration of Restrictions of the Sunset View Condominium Project located at 2230 Roxas Boulevard, Pasay City of which said petitioner is the Management Body holding title to all the common and limited common areas. 2

G.R. NO. 52361

The private respondent, Aguilar-Bernares Realty, a sole proprietorship with business name registered with the Bureau of Commerce, owned and operated by the spouses Emmanuel G. Aguilar and Zenaida B. Aguilar, is the assignee of a unit, "Solana", in the Sunset View Condominium Project with La Perla Commercial, Incorporated, as assignor. 3 The La Perla Commercial, Incorporated bought the "Solana" unit on installment from the Tower Builders, Inc. 4 The petitioner, Sunset View Condominium Corporation, filed for the collection of assessments levied on the unit against Aguilar-Bernares Realty, private respondent herein, a complaint dated June 22, 1979 docketed as Civil Case No. 7303-P of the Court of First Instance of Pasay City, Branch XXX. The private respondent filed a Motion to Dismiss the complaint on the grounds (1) that the complaint does not state a cause of action: (2) that the court has no jurisdiction over the subject or nature other action; and (3) that there is another action pending between the same parties for the same cause. The petitioner filed its opposition thereto. The motion to dismiss was granted on December 11, 1979 by the

respondent Judge who opined that the private respondent is, pursuant to Section 2 of Republic Act No. 4726, a "holder of a separate interest" and consequently, a shareholder of the plaintiff condominium corporation; and that "the case should be properly filed with the Securities & Exchange Commission which has exclusive original jurisdiction on controversies arising between shareholders of the corporation." the motion for reconsideration thereof having been denied, the petitioner, alleging grave abuse of discretion on the part of respondent Judge, filed the instant petition for certiorari praying that the said orders be set aside.

G.R. NO. 52524

The petitioner filed its amended complaint dated July 16, 1979 docketed as Civil Case No. 14127 of Branch I of the City Court of Pasay City for the collection of overdue accounts on assessments and insurance premiums and the interest thereon amounting to P6,168 06 as of March 31, 1979 against the private respondent Lim Siu Leng 5 to whom was assigned on July 11, 1977 a unit called "Alegria" of the Sunset. View Condominium Project by Alfonso Uy 6 who had entered into a "Contract to Buy and Sell" with Tower Builders, Inc. over the said unit on installment basis. 7

The private respondent filed a motion to dismiss on the ground of lack of jurisdiction, alleging that the amount sought to be collected is an assessment. The correctness and validity of which is certain to involve a dispute between her and the petitioner corporation; that she has automatically become, as a purchaser of the condominium unit, a stockholder of the petitioner pursuant to Section 2 of the Condominium Act, Republic Act No. 4726; that the dispute is intra-corporate and is consequently under the exclusive jurisdiction of the Securities & Exchange Commission as provided in Section 5 of P.D. No. 902-A. 8

The petitioner filed its opposition thereto, alleging that the private respondent who had not fully paid for the unit was not the owner thereof, consequently was not the holder of a separate interest which would make her a stockholder, and that hence the case was not an intra-corporate dispute. 9

After the private respondent had filed her answer to the opposition to the motion to dismiss 10 of the petitioner, the trial court issued an order dated August 13, 1979 denying the motion to dismiss. 11 The private respondent's motion for reconsideration thereof was denied by the trial court in its Order dated September 19, 1979. 12

The private respondent then appealed pursuant to Section 10 of Rule 40 of the Rules of Court to the Court of First Instance, where the appeal was docketed as Civil Case No. 7530P. The petitioner filed its "Motion to Dismiss Appeal" on the ground that the order of the trial court appealed from is interlocutory. 13

The motion to dismiss the appeal was denied and the parties were ordered to submit their respective memorandum on the issue raised before the trial court and on the disputed order of the trial judge. 14 After the parties had submitted their respective memoranda on the matter, the respondent Judge issued an order dated December 14, 1979 in which he directed that "the appeal is hereby dismissed and d the judgment of the lower court is reversed. The case is dismissed and the parties are

directed to ventilate their controversy with the Securities & Exchange Commission. 15 The petitioner's motion for reconsideration thereof was denied in an order dated January 14, 1980. 16 Hence this petition for certiorari, alleging grave abuse of discretion on the part of the respondent Judge.

Issues Common to Both Cases

It is admitted that the private respondents in both cases have not yet fully paid the purchase price of their units. The Identical issues raised in both petitions are the following:

1. Is a purchaser of a condominium unit in the condominium project managed by the petitioner, who has not yet fully paid the purchase price thereof, automaticaly a ,stockholder of the petitioner Condominium Corporation

2. Is it the regular court or the Securities & Exchange Commission that has jurisdiction over cases for collection of assessments assessed by the Condominium Corporation on condominium units the full purchase price of which has not been paid?

The private respondents in both cases argue that every purchaser of a condominium unit, regardless of whether or not he has fully paid the purchase price, is a "holder of a separate interest" mentioned in Section 2 of Republic Act No. 4726, otherwise known as "The Condominium Act" and is automatically a shareholder of the condominium corporation.

The contention has no merit. Section 5 of the Condominium Act expressly provides that the shareholding in the Condominium Corporation will be conveyed only in a proper case. Said Section 5 provides:

Any transfer or conveyance of a unit or an apartment, office or other space therein, shall include the transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership or shareholding in the condominium corporation ...

It is clear then that not every purchaser of a condominium unit is a shareholder of the condominium corporation. The Condominium Act leaves to the Master Deed the determination of when the shareholding will be transferred to the purchaser of a unit. Thus, Section 4 of said Act provides:

The provisions of this Act shall apply to property divided or to be divided into condominium only if there shall be recorded in the Register of Deeds of the province or city in which the property lies and duly annotated in the corresponding certificate of title of the land ... an enabling or master deed which shall contain, among others, the following:

xxx xxx xxx

(d) Astatement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in the common areas of the condominium project ...

The Amended Master Deeds in these cases, which were duly registered in the Register of Deeds, and which contain, by mandate of Section 4, a statement of the exact nature of the interest acquired by a purchaser of a unit, provide in Section 6 of Part 1:

(d) Each Unit owner shall, as an essential condition to such ownership, acquire stockholding in the Condominium Corporation herein below provided ... 17

The Amended Master Deeds likewise provide in Section 7 (b), thus.

(b) All unit owners shall of necessity become stockholders of the Condominium Corporation. TOWER shall acquire all the shares of stock of SUNSET VIEW and shall allocate the said shares to the units in proportion to the appurtenant interest in the COMMON AREAS and LIMITED COMMON AREAS as provided in Section 6 (b) above. Said shares allocated are mere appurtenances of each unit, and therefore, the same cannot be transferred, conveyed, encumbered or otherwise disposed of separately from the Unit ... 18

It is clear from the above-quoted provisions of the Master Deeds that the shareholding in the Condominium Corporation is inseparable from the unit to which it is only an appurtenant and that only the owner of a unit is a shareholder in the Condominium Corporation.

Subparagraph (a) of Part 1, Section 6, of the Master Deeds determines when and under what conditions ownership of a unit is acquired by a purchaser thus:

(a) The purchaser of a unit shall acquire title or ownership of such Unit, subject to the terms and conditions of the instrument conveying the unit to such purchaser and to the terms and conditions of any subsequent conveyance under which the purchaser takes title to the Unit, and subject further to this MASTER DEED ... 19

The instrument conveying the unit "Solana" in G.R. NO. 52361 is the "Contract to Buy and Sell" dated September 13, 1977, Annex "D", while that conveying the unit "Alegria" in G.R. NO. 52524 is the "Contract to Buy and Sell" dated May 12, 1976, Annex "C". In both deeds of conveyance, it is provided:

4. Upon full payment by the BUYER of the total purchase price and full compliance by the BUYER of an its obligations herein, the SELLER will convey unto the BUYER, as soon as practicable after completion of the construction, full and absolute title in and to the

subject unit, to the shares of stock pertaining thereto and to an rights and interests in connection therewith ... 20

The share of stock appurtenant to the unit win 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.

That only the owner of a unit is a stockholder of the Condominium Corporation is inferred from Section 10 of the Condominium Act which reads:

SEC. 10. ... 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 is 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.

Pursuant to the above statutory provision, ownership of a unit is a condition sine qua non to being a shareholder in the condominium corporation. It follows that a purchaser of a unit who is not yet the owner thereof for not having fully paid the full purchase price, is not a shareholder By necessary implication, the "separate interest" in a condominium, which entitles the holder to become automatically a share holder 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.

The private respondents, therefore, who have not fully paid the purchase price of their units and are consequently not owners of their units are not members or shareholders of the petitioner condominium corporation,

Inasmuch as the private respondents are not shareholders of the petitioner condominium corporation, the instant case for collection cannot be a "controversy arising out of intracorporate 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" which controversies are under the original and exclusive jurisdiction of the Securities & Exchange Commission, pursuant to Section 5 (b) of P.D. No. 902- A. The subject matters of the instant cases according to the allegations of the complaints are under the jurisdiction of the regular courts: that of G.R. NO. 52361, which is for the collection of P8,335.38 with interest plus attorney's fees equivalent to the principal or a total of more than P10,000.00 is under the jurisdiction of the Court of First Instance; and that of G.R. NO. 52524, which is for the collection of P6,168-06 is within the jurisdiction of the City Court.

In view of the foregoing, it is no longer necessary to resolve the issue raised in G.R. NO. 52524 of whether an order of the City Court denying a motion to dismiss on the ground of lack of jurisdiction can be appealed to the Court of First Instance.

WHEREFORE, the questioned orders of the respondent Judge dated December 11, 1979 and January 4, 1980 in Civil Case No. 7303-P, subject matter of the Petition in G.R. No. 52361, are set aside and said Judge is ordered to try the case on the merits. The orders dated December 14, 1979 and January 14, 1980 in Civil Case No. 7530-P, subject matter of the petition in G.R. No. 52524 are set aside and the case is ordered remanded to the court a quo, City Court of Pasay City, for trial on the merits, with costs against the private respondents.

SO ORDERED.

Teehankee (Chairman), Makasiar, Guerrero and Melencio-Herrera, JJ., concur.