Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 108547 February 3, 1997

FELICIDAD VDA. DE CABRERA, MARYJANE CABRERA and FELICIDAD

TEOKEMIAN, petitioners,
vs.
COURT OF APPEALS and VIRGILIA ORAIS DE FELICIO, represented by her Attorney-in-Fact,
ERNESTO M. ORAIS, respondents.

TORRES, JR., J.:

Assailed in this Petition for Review on Certiorari is the Decision 1 of the respondent Court of Appeals
dated January 7, 1993 in CA-G.R. No. 22407-CV, the dispositive portion of which reads:

WHEREFORE, the decision of the lower court is hereby REVERSED and judgment
is hereby entered ordering defendants Felicidad Vda. de Cabrera and Marykane
Cabrera to vacate the portion of Lot 2238 occupied by them and surrender
possession thereof to plaintiff.

SO ORDERED.

Reversed by the foregoing pronouncements was the decision 2 of the Regional Trial Court, Branch 7,
Baganga, Davao Oriental in Civil Case No. 379, an action for "Quieting of Title to Real Property,
Damages with Preliminary Injunction." The trial court's disposition reads:

WHEREFORE, the plaintiff is hereby ordered:

(a) to execute a reconveyance within thirty (30) days after this decision shall have
become final and executory in favor of defendant Felicidad Vda. De Cabrera
corresponding only to that portion of Lot No. 2239 actually and physically possessed
and occupied by the defendant as seen from the sketch plan of Engr. Enecio Magno
(Exh. "2") and pinpointed and identified during the ocular investigation as to its extent
and boundaries of the said portion bought by defendants Felicidad Vda. De Cabrera
from Felicidad Teokemian;

(b) To reimburse defendants for litigation expenses and attorney's fees in the amount
of P7,000.00; and

(c) To pay the cost.

SO ORDERED.
We are restating the facts as determined by the appellate court, viz:

On January 16, 1950, a Deed of Sale (Exh. B) was executed by Daniel Teokemian
and Albertana Teokemian in favor of Andres Orais over a parcel of unregistered land
situated at Abejod, Cateel, Davao Oriental with an area described as 7.3720
hectares. The property was owned in common by Daniel and Albertana and their
sister Felicidad Teokemian, having inherited the same from their late father, Domingo
Teokemian. However, the Deed of Sale was not signed by Felicidad, although her
name was printed therein as one of the vendors. On January 26, 1950, the parcel of
land was surveyed in the name of Virgilia Orais, daughter of the vendee Andres
Orais, and denominated as Lot No. 2239, PLS-287, Cateel Cadastre. As surveyed,
the property had an area of 11.1000 hectares.

On June 24, 1957, Virgilia Orais was issued Free Patent No. V-79089. Original
Certificate of Title No. P-10908 was issued in her name (Exh. A).

On July 27, 1972, Alberto (sic Albertana) Teokemian executed a Deed of Absolute
Sale conveying to Elano Cabrera, husband of Felicidad Cabrera, "ONE HALF
PORTION OF LOT NO. 2239. Cad-287, eastern portion, containing an area of FIFTY
FIVE THOUSAND FIVE HUNDRED TEN (55,510) SQUARE METERS, more or less"
(Exh. 3), which portion supposedly corresponded to the one-third share in Lot 2239
of Felicidad Teokemian who was not a party to the Deed of Sale earlier executed by
her brother and sister in favor of Andres Orais, Virgilia Orais' predecessor-in-interest.
It was explained by Felicidad Cabrera that the Deed of Sale was signed by Albertana
Teokemian, not by Felicidad Teokemian, because the whole of Lot 2239 was
adjudicated to Albertana in a decision of a cadastral court dated June 8, 1965 as
evidenced by a Certification of an officer-in-charge of the Office of the Clerk of Court,
RTC, Br. 7, Baganga, Davao Oriental (Exh. 4). Felicidad Cabrera and her husband
immediately took possession of the western portion of Lot 2239.

In 1974 and 1978, Virgilia Orais' brothers, Rodolfo and Jimmy Orais went to Cateel,
Davao Oriental and confronted the Cabreras of the latter's alleged encroachment and
illegal occupation of their sister's land, but no concrete action on the matter was
pursued by Virgilia Orais until February 11, 1988 when she filed Civil Case No. 379
against Felicidad Cabrera, now a widow, and her daughter Marykane Cabrera for
"Quieting of Title to Real Property, Damages with Preliminary Mandatory Injunction."

The complaint, which was amended on June 22, 1988 by including Felicidad
Teokemian as party defendant (pp. 42-47, Records), alleged that sometime in 1972
and 1973 the late Elano Cabrera and defendant Felicidad Cabrera, knowing that Lot
2239 was already registered in the name of the plaintiff, prepared a document of sale
and had Felicidad Teokemian sign it conveying a portion of said lot to them as
described in the Sketch Map (Annex D of the Complaint), after which they entered
and possessed said portion and enjoyed the fruits thereon. Plaintiff further averred
that by reason of the document of sale and the declaration of the property involved in
the name of defendant Felicidad Vda. De Cabrera, there created a cloud of doubt on
the former's title on said property.

Plaintiff prayed as follows:

WHEREFORE premises considered, plaintiff through the undersigned

counsel respectfully prays this Honorable Court that:
 a) After due notice and hearing, a Writ of Preliminary Mandatory
Injunction be issued restraining the defendants from further
dispossessing the plaintiff of the land in question;

b) Ordering the defendants to pay jointly the plaintiff the amount of

not less than Sixteen Thousand Two Hundred (P16,200) as total
value of the rice produced from the riceland in question, and the
amount of Twenty One Thousand Six Hundred (P21,600.00) Pesos
as the total proceeds of the nuts of the coconut land in question;

c) The Defendants be ordered to pay the plaintiff the amount of

Twenty Thousand (P20,000.00) Pesos and Ten Thousand
(P10,000.00) Pesos as litigation expenses;

d) The defendants be ordered to pay Six Thousand (P6,000.00)

Pesos for attorney's fees; Four Hundred (P400.00) Pesos as
expenses for every appearance in Court;

e) The document of sale executed by Felicidad Teokemian and the

Tax Declarations issued to the late Elano Cabrera and Felicidad Vda.
De Cabrera and the subsequent Tax Declaration creating a cloud of
doubt on the title, possession, rights and interest be declared null and
void for being fraudulent and without any legal basis and inexistent;
and

f) Such other reliefs and remedies which this Honorable Court may
deem just, proper, and equitable in the premises.'

In their answer with counterclaim (pp. 10-18, Records), defendants alleged that they
acquired a portion of Lot 2239 in good faith and for value; that said portion was
owned by Felicidad Teokemian who was not a party to the Deed of Sale executed by
Daniel and Albertana Teokemian on January 16, 1950 in favor of Andres Orais over
Lot 2239; that not having signed the Deed of Sale, Felicidad Teokemian's one-third
share in Lot 2239 could not have been legally conveyed to Andres Orais; that Virgilia
Orais (successor-in-interest of Andres Orais) committed fraud in including the portion
owned by Felicidad Teokemian in her applying for free patent over Lot 2239 is
concerned pursuant to Art. 1456 of the Civil Code; and that plaintiff is guilty of laches
for not initiating an action against defendants to recover the western portion of Lot
2239 despite plaintiff's knowledge of defendant's acquisition thereof in 1972, as in
fact it was only in 1988 when the complaint for quieting of title was filed in court.

Defendants prayed, thus:

"WHEREFORE, this Honorable Court, after due notice and hearing

on the merits of this case; to issue order or orders;

1. Finding the defendants as the rightful, lawful, and legal owner of

that portion which was sold to them by Felicidad Teokemian and
which was included in the title of plaintiff;
 2. To find that the plaintiff did not own the said portion and that they
have personal knowledge of the same when the plaintiff filed and
secured the title under the Administrative Proceeding;

3. Finding that the plaintiff is only holding the title to that portion only
in an implied trust in favor of the real owner;

4. Finding the plaintiff legally obligated to cause the segregation of

the portion at their expense and deliver formally the said portion to
the real owners, the defendants.

5. To order the plaintiff to execute, prepare and or make any

instrument or document to finally vest in the Defendants absolute,
clear and flawless title or ownership over the portion which the
plaintiff holds title in trust in defendant's favor.

6. To Order the Plaintiff to pay actual damages in the sum of

P2,000.00 as litigation expense and Attorney's fees in the sum of
P5,000.00 in favor of defendants;

7. To direct the plaintiff to account for the share of the real owner of
the portion of land illegally cultivated and planted by plaintiff to rice in
favor of FELICIDAD TEOKEMIAN to be paid thru the Defendants who
are the owners, which consisted in ONE THIRD OF THE RICE
HARVEST every year since the year 1950 to 1972 when the portion
was sold and cultivated by defendant based on the computation of
income by the plaintiff in Paragraph 16, a paragraph in the Second
Cause of Action of the complaint;

and to grant the defendants such other reliefs and remedies proper
and equitable in the premises. 3

On April 27, 1989, the lower court rendered judgment in favor of defendants and against the plaintiff,
ruling that the latter can no longer recover the western portion of Lot 2239 conveyed in 1972 by
Felicidad Teokemian in favor of the late Elano Cabrera and Felicidad Cabrera due to laches. In
support of its findings, the trial court referred to the Court's pronouncements in Lola vs. Court of
Appeals 4, where it was held that although the defense of prescription is unavailing to the petitioners,
because, admittedly, the title to the subject lot was still registered in the name of the respondent, still the
petitioners have acquired title to it by virtue of the equitable principle of laches due to the respondent's
failure to assert her claim and ownership for thirty-two years; and in Republic vs. Court of Appeals 5 that,
while it is true that by themselves tax receipts and declaration of ownership for taxation purposes are not
incontrovertible evidence of ownership, they become strong evidence of ownership acquired by
prescription when accompanied by proof of actual possession of the property; and in Miguel
vs. Catalino, 6 that even granting appellant's proposition that no prescription lies against their fathers'
recorded title, their passivity and inaction for more than thirty four years justifies the defendant appellee in
setting up the equitable defense of laches in his own behalf.

The respondent Court of Appeals reversed such findings upon appeal.

Even as the appellate court observed that the registration made by the plaintiff was fraudulent
insofar as it involved the one-third interest of Felicidad Teokemian, which was not included in the
sale executed by Albertana and Daniel Teokemian, it nevertheless upheld its effects, on the
justification that the defendants' action for reconveyance based on an implied trust had already been
barred by prescription. Furthermore, the action of the plaintiff is not barred by laches as was held by
the lower court.

Said the appellate court:

We disagree with the lower court's ruling that plaintiff is barred from bringing an
action for recovery of ownership. Parenthetically, while the complaint filed by plaintiff
is designated as one for quieting of title, the allegations therein show that it is actually
for recovery of ownership/possession.

First. The Deed of Absolute Sale dated May 27, 1972 (Exh. 3) executed by Albertana
Teokemian in favor of Elcano Cabrera over the portion of 55,510 square meters of
Lot 2238 which allegedly pertained to the one-third interest of Felicidad Teokemian
did not convey any title to Elcano Cabrera, assuming that Felicidad Teokemian still
owned a one-third portion of Lot 2238 which was already registered in plaintiffs
name, considering that Albertana did not have any authority from Felicidad
Teokemian to effect such conveyance. Consequently, defendants Felicidad vda. De
Cabrera and Marykane Cabrera had acquired no title upon which to anchor their
claim of ownership over the one-third portion. Such being the case, plaintiffs cannot
be barred by laches from instituting the action to quiet title against defendants

xxx xxx xxx

Second. There was no allegation, much less proof, that Lot 2239 had been
partitioned among the co-owners Daniel, Albertana, and Felicidad, all surnamed
Teokemian, before the land was sold to Andres Orais in 1950 when the same was
still unregistered. This being the case, and assuming that Felicidad Teokemian had
retained ownership over an undivided one-third portion of Lot 2239 despite its being
titled in plaintiffs name in 1958, Felicidad Teokemian could only dispose her
undivided interest, not a definite portion described in the Deed of Sale executed on
July 27, 1972 (Exh. 3) as "eastern part". Worse, the supposed vendee, Elcano
Cabrera, and her successors-in-interest, defendants Felicidad vda. de Cabrera and
Marykane Cabrera, occupied the western portion of Lot 2239, not the eastern portion
which was the subject of the sale. Their occupation of a definite portion of an
undivided property, without any color of title, could not have ripened into ownership
on the principle of laches.

Third. As testified to by Jimmy Orais, plaintiff's brother, it was only in 1974 when
plaintiff came to know that her property was occupied by Elcano Cabrera. According
to Jimmy, he and his elder brother Dr. Rodolfo Orais went to the house of Elcano
Cabrera three times in 1974 and in 1979 complaining of the latter's occupancy of
their sister's property. Jimmy further declared that after Elcano Cabrera was shown
plaintiffs title to the property, Elcano Cabrera proposed a relocation survey of the
area to determine whether the premises occupied by him were included in the
plaintiff's title (T.S.N. pp. 39-44, January 3, 1989). It appears, however, that nothing
came out of the proposal to conduct a relocation survey. From the time plaintiff
became aware of Cabrera's possession of the western portion of Lot 2239, which
was in 1974, up to the time she instituted the action for quieting of title in 1988, only
fourteen (14) years had elapsed. This case, therefore, has no congruency with those
cases where the Supreme Court ruled that the registered owner is barred by laches
from recovering his property. Thus, in Lola vs. Court of Appeals (145 SCRA 439), the
 petitioners acquired title to the land owned by respondent by virtue of the equitable
principles of laches due, according to the Supreme Court, to respondent's failure to
assert her claims and ownership for thirty-two (32) years.' In Miguel vs. Catalino (26
SCRA 234), the Supreme Court said that appellants 'passivity and inaction for more
than 34 years (1928-1962) justifies the defendant-appellee in setting up the equitable
defense of laches in his behalf.' In Mejia vs. Gampomana (100 Phil 277), it was held
that "the original owner's right to recover back the possession of the property and title
thereto from the defendant has by the long period of 37 years and by the patentee's
inaction and neglect been converted into a stale demand."

Laches, in a general sense, is failure or neglect, for an unreasonable and

unexplained length of time, to do that which, by the exercise of due diligence, could
or should have been done earlier; it is negligence or omission to assert a right within
a reasonable time, warranting a presumption that the party entitled to assert it (Tijam
vs. Sibonghanoy, 32 SCRA 29). Since imprescriptibility is one of the basic features of
a Torrens title, it is not an ordinary delay in asserting one's right that will give rise to
the application of the principle of laches, otherwise, registered title can easily be
defeated by prescription. This is precisely the reason why, in the cases cited, the
delay or inaction by the registered owners in asserting their rights was considered
unreasonable and unexplained because it took them from 32 to 37 years to do so. In
contrast, the delay in the case at bar was only fourteen years.

While possession of defendants Felicidad vda. De Cabrera and Marykane Cabrera

could not have ripened into ownership as already discussed, they are possessors in
good faith of the portion occupied by them and, therefore, entitled to the benefits
accorded by the Civil Code as such. 7

Sisters Felicidad Vda. de Cabrera and Marykane Cabrera, together with Felicidad Teokemian are
now before the Court as Petitioners in this Petition for Review on Certiorari, seeking relief from the
respondent court's decision, assigning as errors the following:

RESPONDENT COURT OF APPEALS ERRED IN RULING THAT PRIVATE

RESPONDENT'S COMPLAINT FILED IN 1988 FOR QUIETING OF TITLE WHICH
ACTUALLY IS ONE FOR RECOVERY OF OWNERSHIP AND POSSESSION AS
FOUND BY RESPONDENT COURT IS NOT BARRED BY LACHES BECAUSE:

1. A PERIOD OF 30 YEARS HAD ELAPSED FROM 1958 WHEN

TORRENS TITLE WAS ISSUED TO PRIVATE RESPONDENT TO
1988 WHEN HER COMPLAINT BELOW WAS FILED DURING
WHICH PERIOD OF TIME THE PROPERTY HAS BEEN IN OPEN,
CONTINUOUS AND ADVERSE POSSESSION OF THE ORIGINAL
OWNER, FELICIDAD TEOKEMIAN, FROM 1958, OR EVEN
EARLIER IN 1941 WHEN SHE INHERITED THE PROPERTY, TO
1972 WHEN SHE SOLD IT TO THE CABRERAS WHO CONTINUED
THE PRIOR POSSESSION UNTIL 1988 WHEN PRIVATE
RESPONDENT'S COMPLAINT WAS FILED.

2. ASSUMING ARGUENDO RESPONDENT COURT'S HOLDING

THAT ONLY 14 YEARS HAD ELAPSED COUNTED FROM 1974
WHEN CABRERAS' POSSESSION WAS QUESTIONED BY
PRIVATE RESPONDENT'S BROTHERS, STILL THAT PERIOD
CONSTITUTES LACHES.
 B

RESPONDENT COURT OF APPEALS ERRED IN HOLDlNG THAT LACHES DOES

NOT APPLY BECAUSE WHAT WAS SOLD TO THE CABRERAS WAS A DEFINITE
PORTION OF THE COMMUNITY PROPERTY BEFORE PARTITION, HENCE,
VOID AND THAT ALBERTANA TEOKEMIAN WHO SIGNED THE DOCUMENT OF
SALE IN FAVOR OF THE CABRERAS HAD NO AUTHORITY FROM HER SISTER-
CO-OWNER FELICIDAD TEOKEMIAN TO EXECUTE THE DEED OF
CONVEYANCE. 8

The bone of the petitioners' contention rests on the alleged waiver of the plaintiff to recover any
interest she had in the one-third portion of the property inherited by Daniel, Albertana and Felicidad
Teokemian from their late father, Domingo, due to the long period of time which lapsed from the time
the plaintiff's title was registered until the action for quieting of title was instituted.

We find merit in the petition.

At the outset, it must be observed that the Certificate of Title of the plaintiff, which was derived from
Free Patent No. V-79089, issued in the name of Virgilia Orais, leaves much to be desired in
propriety, considering that the Deed of Sale executed by Daniel and Albertana Teokemian, on one
hand and Andres Orais on the other, did not bear the signature of Felicidad Teokemian and
therefore did not cover the latter's share.

It was the respondent appellate court which observed that "the registration of the plaintiff's title over
the subject property was fraudulent insofar as it involved the one-third interest of Felicidad
Teokemian who did not sign the Deed of Sale in favor of plaintiff's predecessor-in-interest and,
therefore, the latter held that portion as a trustee of an implied trust for the benefit of Felicidad,
pursuant to Art. 1456 of the Civil Code." 9 Needless to state, these conclusions, being matters of fact,
are entitled to our full affirmation, since they are congruent with the findings of trial court, thus:

It would seem from the facts of the case that the basis of the right of plaintiff over the
land in litigation specifically Lot No. 2239 now titled in the name of the plaintiff,
located at Buayahon, Abejod, Cateel, Davao Oriental, proceeded from the Deed of
Sale executed by Daniel Teokemian and Albertana Teokemian on January 16, 1950
acknowledged before Judge Proserador Danao as Notary Ex Oficio. Taking a hard
look over the aforesaid deed of sale (Exh. "B") the said document apparently
included the third heir of Domingo Teokemian Felicidad Teokemian because her
name was typewritten together with her sister Albertana and brother Daniel all
surnamed Teokemian in the said document. Again this fact will come to mind that the
vendee Andres Orais was anticipating at the time Felicidad Teokemian will also sell
her share in this portion of land (Lot No. 2239) which at the time of the sale it was still
unregistered land. The non-signing of Felicidad Teokemian over her typewritten
name in this deed of sale (Exh. "B") will attest to the fact that she did not sell her
share in the lot in question. Alter this sale the vendee Andres Orais through his
encargado Melecio Capilitan and later Servillano Abarca immediately took
possession of the two third portion of said parcel of land respecting the third portion
owned by Felicidad Teokemian." 10

However, the appellate court stated further that nonetheless, the plaintiff's attempt to recover the
property is justified because defendant Felicidad Teokemian's own action for reconveyance has
already been barred by prescription, 11 which is the same as stating that the very tardiness of the
plaintiff in pursuing the present action for reconveyance of the subject property has rendered the
defendants' defense nugatory, and has made the fortress of the plaintiff's case impregnable.

This conclusion is incorrect. As can be discerned from the established facts, the Certificates of Title
of the vendees Orais are, to say the least, irregular, and were issued in a calculated move to deprive
Felicidad Teokemian of her dominical rights over the property reserved to her by descent. Plaintiff
could not have registered the part reserved to Felicidad Teokemian, as this was not among those
ceded in the Deed of Sale between Daniel/Albertana Teokemian and Andres Orais. It must be
remembered that registration does not vest title, it is merely evidence of such title over a particular
property. (Embrado vs. Court of Appeals) 12

The defense of indefeasibility of the Torrens Title does not extend to a transferee who takes the
certificate of title with notice of a flaw in his title.

(Anonuevo vs. Court of Appeals) 13 The principle of indefeasibility of title is unavailing where
there was fraud that attended the issuance of the free patents and titles.(Meneses vs. Court of
Appeals) 14

Be that as it may, that the right of the defendants for reconveyance of the subject property arising
from an implied trust under Article 1456 of the Civil Code is material to the instant case, such
remedy has not yet lapsed, as erroneously submitted by the plaintiff, and, is thus, a bar to the
plaintiff's action. In the case of Heirs of Jose Olviga vs. Court of Appeals, 15 we observed that an
action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten years,
the point of reference being the date of registration of the deed or the date of the issuance of the
certificate of title over the property, but this rule applies only when the plaintiff or the person enforcing the
trust is not in possession of the property, since if a person claiming to be the owner thereof is in actual
possession of the property, as the defendants are in the instant case, the right to seek reconveyance,
which in effect seeks to quiet title to the property, does not prescribe. The reason for this is that one who
is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being,
that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to
ascertain and determine the nature of the adverse claim of a third party and its effect on his own title,
which right can be claimed only by one who is in possession.

As it is, before the period of prescription may start, it must be shown that (a) the trustee has
performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust, (b) such
positive acts of repudiation have been made known to the cestui que trust, and, (c) the evidence
thereon is clear and positive. 16

In the case at bar, the defendant Felicidad Teokemian, and thereafter, the Cabreras, were in actual
possession of the property since it was left to Felicidad Teokemian by her father in 1941, which
possession had not been interrupted, despite the sale of the two-third portion thereof to the plaintiff
in 1950, and the latter's procurement of a Certificate of Title over the subject property in 1957. Until
the institution of the present action in 1988, plaintiff, likewise, had not displayed any unequivocal act
of repudiation, which could be considered as an assertion of adverse interest from the defendants,
which satisfies the above-quoted requisites. Thus, it cannot be argued that the right of reconveyance
on the part of the defendants, and its use as defense in the present suit, has been lost by
prescription.

On the other hand, the action for reconveyance (quieting of title) of the plaintiff was instituted only in
1988, that is, thirty years from the time the plaintiff's husband was able to acquire Certificate of Title
covering the properties inherited by the Teokemians, and apparently including that portion belonging
to Felicidad Teokemian. In the meantime, defendant Felicidad vda. De Cabrera and her late
husband have been actively in possession of the same, tilling it, and constructing an irrigation
system thereon. This must surely constitute such tardiness on the part of the plaintiff constituting the
basis for laches.

Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence could or should have been done earlier, it is
negligence or omission to assert a right within a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned it or declined to assert it. 17 The defense of laches is an
equitable one and does not concern itself with the character of the defendants title, but only with whether
or not by reason of plaintiffs long inaction or inexcusable neglect, he should be barred from asserting his
claim at all, because to allow him to do so would be inequitable and unjust to defendant. Laches is not
concerned merely with lapse of time, unlike prescription. While the latter deals with the fact of delay,
laches deals with the effect of unreasonable delay. 18

This Court emphasized in Mejia de Lucas vs. Gampona, 19 the reason upon which the rule is based is
not alone the lapse of time during which the neglect to enforce the right has existed, but the changes of
condition which may have arisen during the period in which there has been neglect. In other words, where
a court finds that the position of the parties has to change, that equitable relief cannot be afforded without
doing injustice, or that the intervening rights of third persons may be destroyed or seriously impaired, it
will not exert its equitable powers in order to save one from the consequences of his own neglect.

In our jurisdiction, it is an enshrined rule that even a registered owner of property may be barred
from recovering possession of property by virtue of laches. Under the Land Registration Act (now the
Property Registration Decree), no title to registered land in derogation to that of the registered owner
shall be acquired by prescription or adverse possession. The same is not true with regard to
Laches. 20 As we have stated earlier in Mejia de Lucas vs. Gamponia, while the defendant may not be
considered as having acquired title by virtue of his and his predecessor's long continued possession (37
years) the original owner's right to recover back the possession of the property and the title thereto from
the defendant has, by the latter's long period of possession and by patentee's inaction and neglect, been
converted into a stale demand.

The argument that laches does not apply because what was sold to the Cabreras was a definite
portion of the community property, and, therefore, void, is likewise untenable.

Under Article 493 of the Civil Code:

Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and even 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.

In Go Ong vs. Court of Appeals, 21 this Court ruled that the heirs, as co-owners, shall each have the full
ownership of his part and the fruits and benefits pertaining to it. An heir may, therefore, alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when the personal rights are
involved. But the effect of the alienation or mortgage, with respect to the co-owners, shall be limited to the
portion which may be allotted to him in the division upon the termination of the co-ownership.

Undisputed is the fact that since the sale of the two-third portion of the subject property to the
plaintiff, the latter had allowed Felicidad Teokemian to occupy that one-third portion allotted to her.
There has, therefore, been a partial partition, where the transferees of an undivided portion of the
land allowed a co-owner of the property to occupy a definite portion thereof and has not disturbed
the same, for a period too long to be ignored--the possessor is in a better condition or right (Potior
est conditio possidentis).

Clearly, the plaintiff in this instance is barred from asserting her alleged right over the portion subject
matter in the instant case on the ground that their right has been lost by laches. In Bailon-Casilao
vs. Court of Appeals, we ruled that:

As early as 1923, this Court has ruled that even if a co-owner sells the whole
property as his, the sale will affect only his own share but not those of the other co-
owners who did not consent to the sale (Punzalan vs. Boon Liat, 44 Phil 320 [1923]).
This is because under the aforementioned codal provision, the sale or other
disposition affects only his undivided share and the transferee gets only what would
correspond to his grantor in the partition of the things owned in common (Ramirez vs.
Bautista, 14 Phil 528 [1909]). . . . For Article 494 of the Civil Code explicitly declares:
"No prescription shall lie in favor of a co-owner or co-heir so long as he expressly or
impliedly recognizes the co-ownership. 22

IN VIEW WHEREOF, the petition is hereby GRANTED. The decision of the Court of Appeals dated
January 7, 1993 is hereby SET ASIDE. The decision of the trial court dated April 27, 1989 is hereby
REINSTATED in toto.

SO ORDERED.

Regalado, Puno and Mendoza, JJ., concur.

Romero, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-4656 November 18, 1912

RICARDO PARDELL Y CRUZ and

VICENTA ORTIZ Y FELIN DE PARDELL, plaintiffs-appellees,
vs.
GASPAR DE BARTOLOME Y ESCRIBANO and
MATILDE ORTIZ Y FELIN DE BARTOLOME, defendants-appellants.

Gaspar de Bartolome, in his own behalf.

B. Gimenez Zoboli, for appellees.

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

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

1. A house of strong material, with the lot on which it is built, situated on Escolta
P6,000.00
Street, Vigan, and valued at
2. A house of mixed material, with the lot on which it stands, at No. 88
1,500.00
Washington Street, Vigan; valued at
3. A lot on Magallanes Street, Vigan; valued at 100.00

4. A parcel of rice land, situated in the barrio of San Julian, Vigan; valued at 60.00

5. A parcel of rice land in the pueblo of Santa Lucia; valued at 86.00

6. Three parcels of land in the pueblo of Candon; valued at 150.00

Total 7,896.00

That, on or about the first months of the year 1888, the defendants, without judicial authorization, nor
friendly or extrajudicial agreement, took upon themselves the administration and enjoyment of the
said properties and collected the rents, fruits, and products thereof, to the serious detriment of the
plaintiffs' interest; that, notwithstanding the different and repeated demands extrajudicially made
upon Matilde Ortiz to divide the aforementioned properties with the plaintiff Vicente and to deliver to
the latter the one-half thereof, together with one-half of the fruits and rents collected therefrom, the
said defendant and her husband, the self-styled administrator of the properties mentioned, had been
delaying the partition and delivery of the said properties by means of unkept promises and other
excuses; and that the plaintiffs, on account of the extraordinary delay in the delivery of one-half of
said properties, or their value in cash, as the case might be, had suffered losses and damages in the
sum of P8,000. Said counsel for the plaintiffs therefore asked that judgment be rendered by
sentencing the defendants, Gaspar de Bartolome, and Matilde Ortiz Felin de Bartolome, to restore
and deliver to the plaintiffs one-half of the total value in cash, according to appraisal, of the undivided
property specified, which one-half amounted approximately to P3,948, or if deemed proper, to
recognize the plaintiff Vicenta Ortiz to be vested with the full and absolute right of ownership to the
said undivided one-half of the properties in question, as universal testamentary heir thereof together
with the defendant Matilde Ortiz, to indemnify the plaintiffs in the sum of P8,000, for losses and
damages, and to pay the costs.
Counsel for the defendants, in his answer denied the facts alleged in paragraphs 1, 4, 6, 7, and 8
thereof, inasmuch as, upon the death of the litigating sister's brother Manuel, their mother, who was
still living, was his heir by force of law, and the defendants had never refused to give to the plaintiff
Vicente Ortiz her share of the said properties; and stated that he admitted the facts alleged in
paragraph 2, provided it be understood, however, that the surname of the defendant's mother was
Felin, and not Feliu, and that Miguel Ortiz died in Spain, and not in Vigan; that he also admitted
paragraph 3 of the complaint, with the difference that the said surname should be Felin, and likewise
paragraph 5, except the part thereof relating to the personal property and the jewelry, since the latter
had not yet been divided; that the said jewelry was in the possession of the plaintiffs and consisted
of: one Lozada gold chronometer watch with a chain in the form of a bridle curb and a watch charm
consisting of the engraving of a postage stamp on a stone mounted in gold and bearing the initials
M. O., a pair of cuff buttons made of gold coins, four small gold buttons, two finger rings, another
with the initials M. O., and a gold bracelet; and that the defendants were willing to deliver to the
plaintiffs, in conformity with their petitions, one-half of the total value in cash, according to
appraisement, of the undivided real properties specified in paragraph 5, which half amounted to
P3,948.

In a special defense said counsel alleged that the defendants had never refused to divide the said
property and had in fact several years before solicited the partition of the same; that, from 1886 to
1901, inclusive, there was collected from the property on Calle Escolta the sum of 288 pesos,
besides a few other small amounts derived from other sources, which were delivered to the plaintiffs
with other larger amounts, in 1891, and from the property on Calle Washington, called La Quinta,
990.95 pesos, which proceeds, added together, made a total of 1,278.95 pesos, saving error or
omission; that, between the years abovementioned, Escolta, and that on Calle Washington, La
Quinta, 376.33, which made a total of 1,141.71, saving error or omission; that, in 1897, the work of
reconstruction was begun of the house on Calle Escolta, which been destroyed by an earthquake,
which work was not finished until 1903 and required an expenditure on the part of the defendant
Matilde Ortiz, of 5,091.52 pesos; that all the collections made up to August 1, 1905, including the
rent from the stores, amounted to only P3,654.15, and the expenses, to P6,252.32, there being,
consequently, a balance of P2,598.17, which divided between the sisters, the plaintiff and the
defendant, would make the latter's share P1,299.08; that, as shown by the papers kept by the
plaintiffs, in the year 1891 the defendant Bartolome presented to the plaintiffs a statement in
settlements of accounts, and delivered to the person duly authorized by the latter for the purpose,
the sum of P2,606.29, which the said settlement showed was owing his principals, from various
sources; that, the defendant Bartolome having been the administrator of the undivided property
claimed by the plaintiffs, the latter were owing the former legal remuneration of the percentage
allowed by law for administration; and that the defendants were willing to pay the sum of P3,948,
one-half of the total value of the said properties, deducting therefrom the amount found to be owing
them by the plaintiffs, and asked that judgment be rendered in their favor to enable them to recover
from the latter that amount, together with the costs and expenses of the suit.

The defendants, in their counter claim, repeated each and all of the allegations contained in each of
the paragraphs of section 10 of their answer; that the plaintiffs were obliged to pay to the
administrator of the said property the remuneration allowed him by law; that, as the revenues
collected by the defendants amounted to no more than P3,654.15 and the expenditures incurred by
them, to P6,252.32, it followed that the plaintiffs owed the defendants P1,299.08, that is one-half of
the difference between the amount collected from and that extended on the properties, and asked
that judgment be therefore rendered in their behalf to enable them to collect this sum from the
plaintiffs, Ricardo Pardell and Vicenta Ortiz, with legal interest thereon from December 7, 1904, the
date when the accounts were rendered, together with the sums to which the defendant Bartolome
was entitled for the administration of the undivided properties in question.
By a written motion of August 21, 1905, counsel for the plaintiffs requested permission to amend the
complaint by inserting immediately after the words "or respective appraisal," fifth line of paragraph 5,
the phrase "in cash in accordance with the assessed value," and likewise further to amend the same,
in paragraph 6 thereof, by substituting the following word in lieu of the petition for the remedy sought:
"By reason of all the foregoing, I beg the court to be pleased to render the judgment by sentencing
the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de Bartolome, to restore and deliver to
the plaintiffs an exact one-half of the total vale of the undivided properties described in the
complaint, such value to be ascertained by the expert appraisal of two competent persons, one of
whom shall be appointed by the plaintiffs and the other by the defendants, and, in case of
disagreement between these two appointees such value shall be determined by a third expert
appraiser appointed by the court, or, in a proper case, by the price offered at public auction; or, in
lieu thereof, it is requested that the court recognize the plaintiff, Vicenta Ortiz, to be vested with a full
and absolute right to an undivided one-half of the said properties; furthermore, it is prayed that the
plaintiffs be awarded an indemnity of P8,000 for losses and damages, and the costs."
Notwithstanding the opposition of the defendants, the said amendment was admitted by the court
and counsel for the defendants were allowed to a period of three days within which to present a new
answer. An exception was taken to this ruling.

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

After this partition had been made counsel for the defendants, by a writing of March 8, 1906, set
forth: That, having petitioned for the appraisement of the properties in question for the purpose of
their partition, it was not to be understood that he desired from the exception duly entered to the
ruling made in the matter of the amendment to the complaint; that the properties retained by the
defendants were valued at P9,310, and those retained by the plaintiffs, at P2,885, one-half of which
amounts each party had to deliver to the other, as they were pro indivisoproperties; that, therefore,
the defendants had to pay the plaintiffs the sum of P3,212.50, after deducting the amount which the
plaintiffs were obliged to deliver to the defendants, as one-half of the price of the properties retained
by the former; that, notwithstanding that the amount of the counterclaim for the expenses incurred in
the reconstruction of the pro indiviso property should be deducted from the sum which the
defendants had to pay the plaintiffs, the former, for the purpose of bringing the matter of the partition
to a close, would deliver to the latter, immediately upon the signing of the instrument of purchase
and sale, the sum of P3,212.50, which was one-half of the value of the properties alloted to the
defendants; such delivery, however, was not to be understood as a renouncement of the said
counterclaim, but only as a means for the final termination of the pro indiviso status of the property.

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

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

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

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

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

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

Article 394 of the Civil Code prescribes:

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

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

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

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

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

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

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

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

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

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

In consideration of the foregoing, whereby the errors assigned to the lower court have been duly
refuted, it is our opinion that, with a partial reversal of the judgment appealed from, in so far as it
absolves the plaintiffs from the counterclaim presented by the defendants, we should and hereby do
sentence the plaintiffs to the payment of the sum of P915.08, the balance of the sum claimed by the
defendants as a balance of the one-half of the amount which the defendants advanced for the
reconstruction or repair of the Calle Escolta house, after deducting from the total of such sum
claimed by the latter the amount of P384 which Gaspar de Bartolome, the husband of the defendant
Matilde, should have paid as one-half of the rents due for his occupation of the quarters on the lower
floor of the said house as an office for the justice of the peace court of Vigan; and we further find: (1)
That the defendants are not obliged to pay one-half of the rents which could have been obtained
from the upper story of the said house; (2) that the plaintiffs can not be compelled to pay the legal
interest from December 7, 1904, on the sum expanded in the reconstruction of the aforementioned
house, but only the interest fixed by law, at the rate of 6 per cent per annum, from the date of the
judgment to be rendered in accordance with this decision; (3) that the husband of the defendant
Matilde Ortiz is not entitled to any remuneration for the administration of thepro indiviso property
belonging to both parties; (4) that, neither is he entitled to collect from the plaintiffs the sum of
P910.50, the difference between the assessed valuation and the price set by the expert appraisal
solicited by the plaintiffs in their amendment to the complaint; and, (5) that no participation shall be
made of jewelry aforementioned now in the possession of the plaintiff Vicenta Ortiz. The said
judgment, as relates to the points appealed, is affirmed, in so far as its findings agree with those of
this decision, and is reversed, in so far as they do not. No special finding is made regarding the
costs of both instances. So ordered.

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

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 76351 October 29, 1993

VIRGILIO B. AGUILAR, petitioner,

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

Jose F. Manacop for petitioner.

Siruello, Muyco & Associates Law Office for private respondent.

BELLOSILLO, J.:

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

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

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

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

Because of the refusal of respondent to give in to petitioner's demands, the latter filed on 12 January
1979 an action to compel the sale of the house and lot so that the they could divide the proceeds
between them.
In his complaint, petitioner prayed that the proceeds of the sale, be divided on the basis of two-thirds
(2/3) in his favor and one-third (1/3) to respondent. Petitioner also prayed for monthly rentals for the
use of the house by respondent after their father died.

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

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

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

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

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

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

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

The trial court likewise ordered defendant to vacate the property and pay plaintiff P1,200.00 as
rentals 2 from January 1975 up to the date of decision plus interest from the time the action was filed.

On 17 September 1979, defendant filed an omnibus motion for new trial but on 22 October 1979 the
trial court denied the motion.

Defendant sought relief from the Court of Appeals praying that the following orders and decision of
the trial court be set aside: (a) the order of 23 April 1970 denying defendants motion for
postponement of the pre-trial set on 26 April 1979; (b) the order of 26 April 1979 declaring him in
default and authorizing plaintiff to present his evidenceex-parte; (e) the default judgment of 26 July
1979; and, (d) the order dated 22 October 1979 denying his omnibus motion for new trial.
On 16 October 1986, the Court of Appeals set aside the order of the trial court of 26 April 1979 as
well as the assailed judgment rendered by default., The appellate court found the explanation of
counsel for defendant in his motion to cancel pre-trial as satisfactory and devoid of a manifest
intention to delay the disposition of the case. It also ruled that the trial court should have granted the
motion for postponement filed by counsel for defendant who should not have been declared as in
default for the absence of his counsel.

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

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

We find merit in the petition.

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

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

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

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

With regard to the merits of the judgment of the trial court by default, which respondent appellate
court did not touch upon in resolving the appeal, the Court holds that on the basis of the pleadings of
the parties and the evidence presented ex parte, petitioner and respondents are co-owners of
subject house and lot in equal shares; either one of them may demand the sale of the house and lot
at any time and the other cannot object to such demand; thereafter the proceeds of the sale shall be
divided equally according to their respective interests.
Private respondent and his family refuse to pay monthly rentals to petitioner from the time their
father died in 1975 and to vacate the house so that it can be sold to third persons. Petitioner alleges
that respondent's continued stay in the property hinders its disposal to the prejudice of petitioner. On
the part of petitioner, he claims that he should be paid two-thirds (2/3) of a monthly rental of
P2,400.00 or the sum of P1,600.00.

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

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

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

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

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

When petitioner filed an action to compel the sale of the property and the trial court granted the
petition and ordered the ejectment of respondent, the co-ownership was deemed terminated and the
right to enjoy the possession jointly also ceased. Thereafter, the continued stay of respondent and
his family in the house prejudiced the interest of petitioner as the property should have been sold
and the proceeds divided equally between them. To this extent and from then on, respondent should
be held liable for monthly rentals until he and his family vacate.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated 16
October 1986 is REVERSED and SET ASIDE. The decision of the trial court in Civil Case No. 69.12-
P dated 16 July 1979 is REINSTATED, with the modification that respondent Senen B. Aguilar is
ordered to vacate the premises in question within ninety (90) days from receipt of this and to pay
petitioner Virgilio B. Aguilar a monthly rental of P1,200.00 with interest at the legal rate from the time
he received the decision of the trial court directing him to vacate until he effectively leaves the
premises.

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

SO ORDERED.

Cruz, Davide, Jr., Quiason, JJ., concur

[G.R. No. 108228. February 1, 2001]

SPOUSES MANUEL and SALVACION DEL CAMPO, petitioners, vs. HON.

COURT OF APPEALS and HEIRS OF JOSE REGALADO,
SR., respondents.

DECISION
QUISUMBING, J.:

This is a petition for review on certiorari of a decision of the Court of Appeals which
affirmed the judgment of the Regional Trial Court of Roxas City, Branch 15 in Civil Case No.
V-5369, ordering the dismissal of the action for repartition, resurvey and reconveyance filed by
petitioners.
Pure questions of law are raised in this appeal as the following factual antecedents are
undisputed:
Salome, Consorcia, Alfredo, Maria, Rosalia, Jose, Quirico and Julita, all surnamed Bornales,
were the original co-owners of Lot 162 of the Cadastral Survey of Pontevedra, Capiz under
Original Certificate of Title No. 18047. As appearing therein, the lot, which consisted of a total
area of 27,179 square meters was divided in aliquot shares among the eight (8) co-owners as
follows:
Salome Bornales 4/16
Consorcia Bornales 4/16
Alfredo Bornales 2/16
Maria Bornales 2/16
Jose Bornales 1/16
Quirico Bornales 1/16
Rosalia Bornales 1/16
Julita Bornales 1/16

On July 14, 1940, Salome sold part of her 4/16 share in Lot 162 for P200.00 to Soledad
Daynolo. In the Deed of Absolute Sale signed by Salome and two other co-owners, Consorcia
and Alfredo, the portion of Lot 162 sold to Soledad was described as having more or less the
following measurements:

63-1/2 meters from point 9 to 10, 35 meters from point 10 to point 11, 30 meters from
point 11 to a certain point parallel to a line drawn from points 9 to "10; and then from
this Certain Point to point 9 and as shown in the accompanying sketch, and made an
integral part of this deed, to SOLEDAD DAYNOLO, her heirs and assigns.[1]

Thereafter, Soledad Daynolo immediately took possession of the land described above and
built a house thereon. A few years later, Soledad and her husband, Simplicio Distajo, mortgaged
the subject portion of Lot 162 as security for a P400.00 debt to Jose Regalado, Sr. This
transaction was evidenced by a Deed of Mortgage[2] dated May 1, 1947.
On April 14, 1948, three of the eight co-owners of Lot 162, specifically, Salome, Consorcia
and Alfredo, sold 24,993 square meters of said lot to Jose Regalado, Sr.
On May 4, 1951, Simplicio Distajo, heir of Soledad Daynolo who had since died, paid the
mortgage debt and redeemed the mortgaged portion of Lot 162 from Jose Regalado, Sr. The
latter, in turn, executed a Deed of Discharge of Mortgage[3] in favor of Soledads heirs, namely:
Simplicio Distajo, Rafael Distajo and Teresita Distajo-Regalado. On same date, the said heirs
sold the redeemed portion of Lot 162 for P1,500.00 to herein petitioners, the spouses Manuel Del
Campo and Salvacion Quiachon.
Meanwhile, Jose Regalado, Sr. caused the reconstitution of Original Certificate of Title No.
18047. The reconstituted OCT No. RO-4541 initially reflected the shares of the original co-
owners in Lot 162.However, title was transferred later to Jose Regalado, Sr. who subdivided the
entire property into smaller lots, each covered by a respective title in his name. One of these
small lots is Lot No. 162-C-6 with an area of 11,732 square meters which was registered on
February 24, 1977 under TCT No. 14566.
In 1987, petitioners Manuel and Salvacion del Campo brought this complaint for repartition,
resurvey and reconveyance against the heirs of the now deceased Jose Regalado, Sr. Petitioners
claimed that they owned an area of 1,544 square meters located within Lot 162-C-6 which was
erroneously included in TCT No. 14566 in the name of Regalado. Petitioners alleged that they
occupied the disputed area as residential dwelling ever since they purchased the property from
the Distajos way back in 1951. They also declared the land for taxation purposes and paid the
corresponding taxes.
On April 1, 1987, summons were served on Regalados widow, Josefina Buenvenida, and
two of her children, Rosemarie and Antonio. Josefina and Rosemarie were declared in default on
May 10, 1989 because only Antonio filed an answer to the complaint.
During trial, petitioners presented the Deed of Absolute Sale[4] executed between Soledad
Daynolo and Salome Bornales as well as the Deed of Mortgage[5] and Deed of Discharge[6] signed
by Jose Regalado, Sr. The Deed of Absolute Sale[7] showing the purchase by the Del Campos of
the property from the Distajos was likewise given in evidence.
Despite the filing of an answer, Antonio failed to present any evidence to refute the claim of
petitioners. Thus, after considering Antonio to have waived his opportunity to present evidence,
the trial court deemed the case submitted for decision.
On November 20, 1990, the trial court rendered judgment dismissing the complaint. It held
that while Salome could alienate her pro-indiviso share in Lot 162, she could not validly sell an
undivided part thereof by metes and bounds to Soledad, from whom petitioners derived their
title. The trial court also reasoned that petitioners could not have a better right to the property
even if they were in physical possession of the same and declared the property for taxation
purposes, because mere possession cannot defeat the right of the Regalados who had
a Torrens title over the land.
On appeal, the Court of Appeals affirmed the trial courts judgment, with no pronouncement
as to costs.[8]
Petitioners now seek relief from this Court and maintain that:
I.

THE FACT THAT THE SALE OF THE SUBJECT PORTION CONSTITUTES

A SALE OF A CONCRETE OR DEFINITE PORTION OF LAND OWNED IN
COMMON DOES NOT ABSOLUTELY DEPRIVE HEREIN PETITIONERS
OF ANY RIGHT OR TITLE THERETO;
II.

IN ANY EVENT, HEREIN PRIVATE RESPONDENTS ARE ALL ESTOPPED

FROM DENYING THE RIGHT AND TITLE OF HEREIN PETITIONERS.[9]

In resolving petitioners appeal, we must answer the following questions: Would the sale by a
co-owner of a physical portion of an undivided property held in common be valid? Is respondent
estopped from denying petitioners right and title over the disputed area? Under the facts and
circumstances duly established by the evidence, are petitioners entitled to repartition, resurvey
and reconveyance of the property in question?
On the first issue, it seems plain to us that the trial court concluded that petitioners could not
have acquired ownership of the subject land which originally formed part of Lot 162, on the
ground that their alleged right springs from a void sale transaction between Salome and Soledad.
The mere fact that Salome purportedly transferred a definite portion of the co-owned lot by
metes and bounds to Soledad, however, does not per se render the sale a nullity. This much is
evident under Article 493[10] of the Civil Code and pertinent jurisprudence on the matter. More
particularly in Lopez vs. Vda. De Cuaycong, et.al.[11] which we find relevant, the Court, speaking
through Mr. Justice Bocobo, held that:

The fact that the agreement in question purported to sell a concrete portion of the
hacienda does not render the sale void, for it is a well-established principle that the
binding force of a contract must be recognized as far as it is legally possible to do so.
Quando res non valet ut ago, valeat quantum valere potest. (When a thing is of no
force as I do it, it shall have as much force as it can have.)[12]

Applying this principle to the instant case, there can be no doubt that the transaction entered
into by Salome and Soledad could be legally recognized in its entirety since the object of the sale
did not even exceed the ideal shares held by the former in the co-ownership. As a matter of fact,
the deed of sale executed between the parties expressly stipulated that the portion of Lot 162 sold
to Soledad would be taken from Salomes 4/16 undivided interest in said lot, which the latter
could validly transfer in whole or in part even without the consent of the other co-owners.
Salomes right to sell part of her undivided interest in the co-owned property is absolute in
accordance with the well-settled doctrine that a co-owner has full ownership of his pro-
indiviso share and has the right to alienate, assign or mortgage it, and substitute another person in
its enjoyment[13] Since Salomes clear intention was to sell merely part of her aliquot share in Lot
162, in our view no valid objection can be made against it and the sale can be given effect to the
full extent.
We are not unaware of the principle that a co-owner cannot rightfully dispose of a particular
portion of a co-owned property prior to partition among all the co-owners. However, this should
not signify that the vendee does not acquire anything at all in case a physically segregated area of
the co-owned lot is in fact sold to him. Since the co-owner/vendors undivided interest could
properly be the object of the contract of sale between the parties, what the vendee obtains by
virtue of such a sale are the same rights as the vendor had as co-owner, in an ideal share
equivalent to the consideration given under their transaction. In other words, the vendee steps
into the shoes of the vendor as co-owner and acquires a proportionate abstract share in the
property held in common.
Resultantly, Soledad became a co-owner of Lot 162 as of the year 1940 when the sale was
made in her favor. It follows that Salome, Consorcia and Alfredo could not have sold the entire
Lot 162 to Jose Regalado, Sr. on April 14, 1948 because at that time, the ideal shares held by the
three co-owners/vendors were equivalent to only 10/16 of the undivided property less the aliquot
share previously sold by Salome to Soledad. Based on the principle that no one can give what he
does not have,[14] Salome, Consorcia and Alfredo could not legally sell the shares pertaining to
Soledad since a co-owner cannot alienate more than his share in the co-ownership. We have
ruled many times that even if a co-owner sells the whole property as his, the sale will affect only
his own share but not those of the other co-owners who did not consent to the sale. Since a co-
owner is entitled to sell his undivided share, a sale of the entire property by one co-owner will
only transfer the rights of said co-owner to the buyer, thereby making the buyer a co-owner of
the property.[15]
 In this case, Regalado merely became a new co-owner of Lot 162 to the extent of the shares
which Salome, Consorcia and Alfredo could validly convey. Soledad retained her rights as co-
owner and could validly transfer her share to petitioners in 1951. The logical effect of the second
disposition is to substitute petitioners in the rights of Soledad as co-owner of the land. Needless
to say, these rights are preserved notwithstanding the issuance of TCT No. 14566 in Regalados
name in 1977.
Be that as it may, we find that the area subject matter of this petition had already been
effectively segregated from the mother lot even before title was issued in favor of Regalado. It
must be noted that 26 years had lapsed from the time petitioners bought and took possession of
the property in 1951 until Regalado procured the issuance of TCT No. 14566. Additionally, the
intervening years between the date of petitioners purchase of the property and 1987 when
petitioners filed the instant complaint, comprise all of 36 years. However, at no instance during
this time did respondents or Regalado, for that matter, question petitioners right over the land in
dispute. In the case of Vda. de Cabrera vs. Court of Appeals,[16] we had occasion to hold that
where the transferees of an undivided portion of the land allowed a co-owner of the property to
occupy a definite portion thereof and had not disturbed the same for a period too long to be
ignored, the possessor is in a better condition or right than said transferees. (Potior est condition
possidentis). Such undisturbed possession had the effect of a partial partition of the co-owned
property which entitles the possessor to the definite portion which he occupies. Conformably,
petitioners are entitled to the disputed land, having enjoyed uninterrupted possession thereof for
a total of 49 years up to the present.
The lower courts reliance on the doctrine that mere possession cannot defeat the right of a
holder of a registered Torrens title over property is misplaced, considering that petitioners were
deprived of their dominical rights over the said lot through fraud and with evident bad faith on
the part of Regalado. Failure and intentional omission to disclose the fact of actual physical
possession by another person during registration proceedings constitutes actual fraud. Likewise,
it is fraud to knowingly omit or conceal a fact, upon which benefit is obtained to the prejudice of
a third person.[17] In this case, we are convinced that Regalado knew of the fact that he did not
have a title to the entire lot and could not, therefore, have validly registered the same in his name
alone because he was aware of petitioners possession of the subject portion as well as the sale
between Salome and Soledad.
That Regalado had notice of the fact that the disputed portion of Lot 162 was under claim of
ownership by petitioners and the latters predecessor is beyond question. Records show that the
particular area subject of this case was mortgaged by Soledad and her husband to Jose Regalado,
Sr. as early as May 1, 1947 or one year prior to the alienation of the whole lot in favor of the
latter. Regalado never questioned the ownership of the lot given by Soledad as security for
the P400.00 debt and he must have at least known that Soledad bought the subject portion from
Salome since he could not have reasonably accepted the lot as security for the mortgage debt if
such were not the case. By accepting the said portion of Lot 162 as security for the mortgage
obligation, Regalado had in fact recognized Soledads ownership of this definite portion of Lot
162. Regalado could not have been ignorant of the fact that the disputed portion is being claimed
by Soledad and subsequently, by petitioners, since Regalado even executed a Release of
Mortgage on May 4, 1951, three years after the entire property was supposedly sold to him. It
would certainly be illogical for any mortgagee to accept property as security, purchase the
mortgaged property and, thereafter, claim the very same property as his own while the mortgage
was still subsisting.
Consequently, respondents are estopped from asserting that they own the subject land in
view of the Deed of Mortgage and Discharge of Mortgage executed between Regalado and
petitioners predecessor-in-interest. As petitioners correctly contend, respondents are barred from
making this assertion under the equitable principle of estoppel by deed, whereby a party to a
deed and his privies are precluded from asserting as against the other and his privies any right or
title in derogation of the deed, or from denying the truth of any material fact asserted in it. [18] A
perusal of the documents evidencing the mortgage would readily reveal that Soledad, as
mortgagor, had declared herself absolute owner of the piece of land now being litigated. This
declaration of fact was accepted by Regalado as mortgagee and accordingly, his heirs cannot
now be permitted to deny it.
Although Regalados certificate of title became indefeasible after the lapse of one year from
the date of the decree of registration, the attendance of fraud in its issuance created an implied
trust in favor of petitioners and gave them the right to seek reconveyance of the parcel
wrongfully obtained by the former. An action for reconveyance based on an implied trust
ordinarily prescribes in ten years. But when the right of the true and real owner is recognized,
expressly or implicitly such as when he remains undisturbed in his possession, the said action is
imprescriptible, it being in the nature of a suit for quieting of title.[19] Having established by clear
and convincing evidence that they are the legal owners of the litigated portion included in TCT
No. 14566, it is only proper that reconveyance of the property be ordered in favor of petitioners.
The alleged incontrovertibility of Regalados title cannot be successfully invoked by respondents
because certificates of title merely confirm or record title already existing and cannot be used to
protect a usurper from the true owner or be used as a shield for the commission of fraud.[20]
WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals
in CA-G.R. CV No. 30438 is REVERSED and SET ASIDE. The parties are directed to cause a
SURVEY for exact determination of their respective portions in Lot 162-C-6. Transfer
Certificate of Title No. 14566 is declared CANCELLED and the Register of Deeds of Capiz is
ordered to ISSUE a new title in accordance with said survey, upon finality of this decision.
Costs against respondents.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.
 SECOND DIVISION

[G.R. No. 153802. March 11, 2005]

HOMEOWNERS SAVINGS & LOAN BANK, petitioner, vs. MIGUELA C.

DAILO, respondent.

DECISION
TINGA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court, assailing the Decision[1] of the Court of Appeals in CA-G.R. CV No. 59986
rendered on June 3, 2002, which affirmed with modification the October 18,
1997 Decision[2] of the Regional Trial Court, Branch 29, San Pablo City, Laguna in Civil
Case No. SP-4748 (97).
The following factual antecedents are undisputed.
Respondent Miguela C. Dailo and Marcelino Dailo, Jr. were married on August 8,
1967. During their marriage, the spouses purchased a house and lot situated at
Barangay San Francisco, San Pablo City from a certain Sandra Dalida. The subject
property was declared for tax assessment purposes under Assessment of Real Property
No. 94-051-2802. The Deed of Absolute Sale, however, was executed only in favor of
the late Marcelino Dailo, Jr. as vendee thereof to the exclusion of his wife. [3]
On December 1, 1993, Marcelino Dailo, Jr. executed a Special Power of Attorney
(SPA) in favor of one Lilibeth Gesmundo, authorizing the latter to obtain a loan from
petitioner Homeowners Savings and Loan Bank to be secured by the spouses Dailos
house and lot in San Pablo City. Pursuant to the SPA, Gesmundo obtained a loan in the
amount of P300,000.00 from petitioner. As security therefor, Gesmundo executed on
the same day a Real Estate Mortgage constituted on the subject property in favor of
petitioner. The abovementioned transactions, including the execution of the SPA in
favor of Gesmundo, took place without the knowledge and consent of respondent. [4]
Upon maturity, the loan remained outstanding. As a result, petitioner instituted
extrajudicial foreclosure proceedings on the mortgaged property. After the extrajudicial
sale thereof, a Certificate of Sale was issued in favor of petitioner as the highest bidder.
After the lapse of one year without the property being redeemed, petitioner, through its
vice-president, consolidated the ownership thereof by executing on June 6, 1996 an
Affidavit of Consolidation of Ownership and a Deed of Absolute Sale.[5]
In the meantime, Marcelino Dailo, Jr. died on December 20, 1995. In one of her
visits to the subject property, respondent learned that petitioner had already employed a
certain Roldan Brion to clean its premises and that her car, a Ford sedan, was razed
because Brion allowed a boy to play with fire within the premises.
 Claiming that she had no knowledge of the mortgage constituted on the subject
property, which was conjugal in nature, respondent instituted with the Regional Trial
Court, Branch 29, San Pablo City, Civil Case No. SP-2222 (97) for Nullity of Real Estate
Mortgage and Certificate of Sale, Affidavit of Consolidation of Ownership, Deed of Sale,
Reconveyance with Prayer for Preliminary Injunction and Damages against petitioner. In
the latters Answer with Counterclaim, petitioner prayed for the dismissal of the
complaint on the ground that the property in question was the exclusive property of the
late Marcelino Dailo, Jr.
After trial on the merits, the trial court rendered a Decision on October 18, 1997.
The dispositive portion thereof reads as follows:

WHEREFORE, the plaintiff having proved by the preponderance of evidence the

allegations of the Complaint, the Court finds for the plaintiff and hereby orders:

ON THE FIRST CAUSE OF ACTION:

1. The declaration of the following documents as null and void:

(a) The Deed of Real Estate Mortgage dated December 1, 1993 executed
before Notary Public Romulo Urrea and his notarial register entered
as Doc. No. 212; Page No. 44, Book No. XXI, Series of 1993.

(b) The Certificate of Sale executed by Notary Public Reynaldo Alcantara

on April 20, 1995.

(c) The Affidavit of Consolidation of Ownership executed by the

defendant

(c) The Affidavit of Consolidation of Ownership executed by the

defendant over the residential lot located at Brgy. San Francisco, San
Pablo City, covered by ARP No. 95-091-1236 entered as Doc. No.
406; Page No. 83, Book No. III, Series of 1996 of Notary Public
Octavio M. Zayas.

(d) The assessment of real property No. 95-051-1236.

2. The defendant is ordered to reconvey the property subject of this complaint to the
plaintiff.

ON THE SECOND CAUSE OF ACTION

1. The defendant to pay the plaintiff the sum of P40,000.00 representing the value
of the car which was burned.
 ON BOTH CAUSES OF ACTION

1. The defendant to pay the plaintiff the sum of P25,000.00 as attorneys fees;

2. The defendant to pay plaintiff P25,000.00 as moral damages;

3. The defendant to pay the plaintiff the sum of P10,000.00 as exemplary

damages;

4. To pay the cost of the suit.

The counterclaim is dismissed.

SO ORDERED. [6]

Upon elevation of the case to the Court of Appeals, the appellate court affirmed the
trial courts finding that the subject property was conjugal in nature, in the absence of
clear and convincing evidence to rebut the presumption that the subject property
acquired during the marriage of spouses Dailo belongs to their conjugal
partnership.[7] The appellate court declared as void the mortgage on the subject property
because it was constituted without the knowledge and consent of respondent, in
accordance with Article 124 of the Family Code. Thus, it upheld the trial courts order to
reconvey the subject property to respondent.[8] With respect to the damage to
respondents car, the appellate court found petitioner to be liable therefor because it is
responsible for the consequences of the acts or omissions of the person it hired to
accomplish the assigned task.[9] All told, the appellate court affirmed the trial
courtsDecision, but deleted the award for damages and attorneys fees for lack of
basis.[10]
Hence, this petition, raising the following issues for this Courts consideration:

1. WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE

MARCELINO DAILO, JR. ON THE SUBJECT PROPERTY AS CO-OWNER
THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.

2. WHETHER OR NOT THE CONJUGAL PARTNERSHIP IS LIABLE FOR THE

PAYMENT OF THE LOAN OBTAINED BY THE LATE MARCELINO DAILO,
JR. THE SAME HAVING REDOUNDED TO THE BENEFIT OF THE FAMILY. [11]

First, petitioner takes issue with the legal provision applicable to the factual milieu of
this case. It contends that Article 124 of the Family Code should be construed in relation
to Article 493 of the Civil Code, which states:

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

Article 124 of the Family Code provides in part:

ART. 124. The administration and enjoyment of the conjugal partnership property
shall belong to both spouses jointly. . . .

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or
encumbrance which must have the authority of the court or the written consent of the
other spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. . . .

Petitioner argues that although Article 124 of the Family Code requires the consent
of the other spouse to the mortgage of conjugal properties, the framers of the law could
not have intended to curtail the right of a spouse from exercising full ownership over the
portion of the conjugal property pertaining to him under the concept of co-
ownership.[12] Thus, petitioner would have this Court uphold the validity of the mortgage
to the extent of the late Marcelino Dailo, Jr.s share in the conjugal partnership.
In Guiang v. Court of Appeals,[13] it was held that the sale of a conjugal property
requires the consent of both the husband and wife. [14] In applying Article 124 of the
Family Code, this Court declared that the absence of the consent of one renders the
entire sale null and void, including the portion of the conjugal property pertaining to the
husband who contracted the sale. The same principle in Guiang squarely applies to the
instant case. As shall be discussed next, there is no legal basis to construe Article 493
of the Civil Code as an exception to Article 124 of the Family Code.
Respondent and the late Marcelino Dailo, Jr. were married on August 8, 1967. In
the absence of a marriage settlement, the system of relative community or conjugal
partnership of gains governed the property relations between respondent and her late
husband.[15] With the effectivity of the Family Code on August 3, 1988, Chapter 4
on Conjugal Partnership of Gainsin the Family Code was made applicable to conjugal
partnership of gains already established before its effectivity unless vested rights have
already been acquired under the Civil Code or other laws.[16]
The rules on co-ownership do not even apply to the property relations of respondent
and the late Marcelino Dailo, Jr. even in a suppletory manner. The regime of conjugal
partnership of gains is a special type of partnership, where the husband and wife place
in a common fund the proceeds, products, fruits and income from their separate
properties and those acquired by either or both spouses through their efforts or by
chance.[17] Unlike the absolute community of property wherein the rules on co-ownership
apply in a suppletory manner,[18] the conjugal partnership shall be governed by the rules
on contract of partnership in all that is not in conflict with what is expressly determined
in the chapter (on conjugal partnership of gains) or by the spouses in their marriage
settlements.[19] Thus, the property relations of respondent and her late husband shall be
governed, foremost, by Chapter 4 on Conjugal Partnership of Gains of the Family Code
and, suppletorily, by the rules on partnership under the Civil Code. In case of conflict,
the former prevails because the Civil Code provisions on partnership apply only when
the Family Code is silent on the matter.
The basic and established fact is that during his lifetime, without the knowledge and
consent of his wife, Marcelino Dailo, Jr. constituted a real estate mortgage on the
subject property, which formed part of their conjugal partnership. By express provision
of Article 124 of the Family Code, in the absence of (court) authority or written consent
of the other spouse, any disposition or encumbrance of the conjugal property shall be
void.
The aforequoted provision does not qualify with respect to the share of the spouse
who makes the disposition or encumbrance in the same manner that the rule on co-
ownership under Article 493 of the Civil Code does. Where the law does not distinguish,
courts should not distinguish.[20] Thus, both the trial court and the appellate court are
correct in declaring the nullity of the real estate mortgage on the subject property for
lack of respondents consent.
Second, petitioner imposes the liability for the payment of the principal obligation
obtained by the late Marcelino Dailo, Jr. on the conjugal partnership to the extent that it
redounded to the benefit of the family.[21]
Under Article 121 of the Family Code, [T]he conjugal partnership shall be liable for: .
. . (3) Debts and obligations contracted by either spouse without the consent of the
other to the extent that the family may have been benefited; . . . . For the subject
property to be held liable, the obligation contracted by the late Marcelino Dailo, Jr. must
have redounded to the benefit of the conjugal partnership. There must be the requisite
showing then of some advantage which clearly accrued to the welfare of the spouses.
Certainly, to make a conjugal partnership respond for a liability that should appertain to
the husband alone is to defeat and frustrate the avowed objective of the new Civil Code
to show the utmost concern for the solidarity and well-being of the family as a unit.[22]
The burden of proof that the debt was contracted for the benefit of the conjugal
partnership of gains lies with the creditor-party litigant claiming as such.[23] Ei incumbit
probatio qui dicit, non qui negat (he who asserts, not he who denies, must
prove).[24] Petitioners sweeping conclusion that the loan obtained by the late Marcelino
Dailo, Jr. to finance the construction of housing units without a doubt redounded to the
benefit of his family, without adducing adequate proof, does not persuade this Court.
Other than petitioners bare allegation, there is nothing from the records of the case to
compel a finding that, indeed, the loan obtained by the late Marcelino Dailo, Jr.
redounded to the benefit of the family. Consequently, the conjugal partnership cannot
be held liable for the payment of the principal obligation.
 In addition, a perusal of the records of the case reveals that during the trial,
petitioner vigorously asserted that the subject property was the exclusive property of the
late Marcelino Dailo, Jr. Nowhere in the answer filed with the trial court was it alleged
that the proceeds of the loan redounded to the benefit of the family. Even on appeal,
petitioner never claimed that the family benefited from the proceeds of the loan. When a
party adopts a certain theory in the court below, he will not be permitted to change his
theory on appeal, for to permit him to do so would not only be unfair to the other party
but it would also be offensive to the basic rules of fair play, justice and due process. [25] A
party may change his legal theory on appeal only when the factual bases thereof would
not require presentation of any further evidence by the adverse party in order to enable
it to properly meet the issue raised in the new theory.[26]
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-44546 January 29, 1988

RUSTICO ADILLE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO, DOMINGO
ASEJO, JOSEFA ASEJO and SANTIAGO ASEJO, respondents.

SARMIENTO, J.:

In issue herein are property and property rights, a familiar subject of controversy and a wellspring of
enormous conflict that has led not only to protracted legal entanglements but to even more bitter
consequences, like strained relationships and even the forfeiture of lives. It is a question that
likewise reflects a tragic commentary on prevailing social and cultural values and institutions, where,
as one observer notes, wealth and its accumulation are the basis of self-fulfillment and where
property is held as sacred as life itself. "It is in the defense of his property," says this modern thinker,
that one "will mobilize his deepest protective devices, and anybody that threatens his possessions
will arouse his most passionate enmity." 1

The task of this Court, however, is not to judge the wisdom of values; the burden of reconstructing
the social order is shouldered by the political leadership-and the people themselves.

The parties have come to this Court for relief and accordingly, our responsibility is to give them that
relief pursuant to the decree of law.
The antecedent facts are quoted from the decision 2 appealed from:

xxx xxx xxx

... [T]he land in question Lot 14694 of Cadastral Survey of Albay located in Legaspi
City with an area of some 11,325 sq. m. originally belonged to one Felisa Alzul as
her own private property; she married twice in her lifetime; the first, with one Bernabe
Adille, with whom she had as an only child, herein defendant Rustico Adille; in her
second marriage with one Procopio Asejo, her children were herein plaintiffs, — now,
sometime in 1939, said Felisa sold the property in pacto de retro to certain 3rd
persons, period of repurchase being 3 years, but she died in 1942 without being able
to redeem and after her death, but during the period of redemption, herein defendant
repurchased, by himself alone, and after that, he executed a deed of extra-judicial
partition representing himself to be the only heir and child of his mother Felisa with
the consequence that he was able to secure title in his name alone also, so that
OCT. No. 21137 in the name of his mother was transferred to his name, that was in
1955; that was why after some efforts of compromise had failed, his half-brothers
and sisters, herein plaintiffs, filed present case for partition with accounting on the
position that he was only a trustee on an implied trust when he redeemed,-and this is
the evidence, but as it also turned out that one of plaintiffs, Emeteria Asejo was
occupying a portion, defendant counterclaimed for her to vacate that, —

Well then, after hearing the evidence, trial Judge sustained defendant in his position
that he was and became absolute owner, he was not a trustee, and therefore,
dismissed case and also condemned plaintiff occupant, Emeteria to vacate; it is
because of this that plaintiffs have come here and contend that trial court erred in:

I. ... declaring the defendant absolute owner of the property;

II. ... not ordering the partition of the property; and

III. ... ordering one of the plaintiffs who is in possession of the portion of the property
to vacate the land, p. 1 Appellant's brief.

which can be reduced to simple question of whether or not on the basis of evidence and law,
judgment appealed from should be maintained. 3

xxx xxx xxx

The respondent Court of appeals reversed the trial Court, 4 and ruled for the plaintiffs-appellants, the
private respondents herein. The petitioner now appeals, by way of certiorari, from the Court's decision.

We required the private respondents to file a comment and thereafter, having given due course to
the petition, directed the parties to file their briefs. Only the petitioner, however, filed a brief, and the
private respondents having failed to file one, we declared the case submitted for decision.

The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the
property held in common?

Essentially, it is the petitioner's contention that the property subject of dispute devolved upon him
upon the failure of his co-heirs to join him in its redemption within the period required by law. He
relies on the provisions of Article 1515 of the old Civil Article 1613 of the present Code, giving the
vendee a retro the right to demand redemption of the entire property.

There is no merit in this petition.

The right of repurchase may be exercised by a co-owner with aspect to his share alone. 5 While the
records show that the petitioner redeemed the property in its entirety, shouldering the expenses therefor,
that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-
ownership.

Necessary expenses may be incurred by one co-owner, subject to his right to collect reimbursement
from the remaining co-owners. 6 There is no doubt that redemption of property entails a necessary
expense. Under the Civil Code:

ART. 488. Each co-owner shall have a right to compel the other co-owners to
contribute to the expenses of preservation of the thing or right owned in common and
to the taxes. Any one of the latter may exempt himself from this obligation by
renouncing so much of his undivided interest as may be equivalent to his share of
the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-
ownership.

The result is that the property remains to be in a condition of co-ownership. While a vendee a retro,
under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the
redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership
over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the
property and consolidate title thereto in his name. 7But the provision does not give to the redeeming co-
owner the right to the entire property. It does not provide for a mode of terminating a co-ownership.

Neither does the fact that the petitioner had succeeded in securing title over the parcel in his name
terminate the existing co-ownership. While his half-brothers and sisters are, as we said, liable to him
for reimbursement as and for their shares in redemption expenses, he cannot claim exclusive right to
the property owned in common. Registration of property is not a means of acquiring ownership. It
operates as a mere notice of existing title, that is, if there is one.

The petitioner must then be said to be a trustee of the property on behalf of the private respondents.
The Civil Code states:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it
is, by force of law, considered a trustee of an implied trust for the benefit of the
person from whom the property comes.

We agree with the respondent Court of Appeals that fraud attended the registration of the property.
The petitioner's pretension that he was the sole heir to the land in the affidavit of extrajudicial
settlement he executed preliminary to the registration thereof betrays a clear effort on his part to
defraud his brothers and sisters and to exercise sole dominion over the property. The aforequoted
provision therefore applies.

It is the view of the respondent Court that the petitioner, in taking over the property, did so either on
behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under Article
2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud, and must act
as trustee, the private respondents being the beneficiaries, under the Article 1456. The evidence, of
course, points to the second alternative the petitioner having asserted claims of exclusive ownership
over the property and having acted in fraud of his co-heirs. He cannot therefore be said to have
assume the mere management of the property abandoned by his co-heirs, the situation Article 2144
of the Code contemplates. In any case, as the respondent Court itself affirms, the result would be
the same whether it is one or the other. The petitioner would remain liable to the Private
respondents, his co-heirs.

This Court is not unaware of the well-established principle that prescription bars any demand on
property (owned in common) held by another (co-owner) following the required number of years. In
that event, the party in possession acquires title to the property and the state of co-ownership is
ended . 8 In the case at bar, the property was registered in 1955 by the petitioner, solely in his name,
while the claim of the private respondents was presented in 1974. Has prescription then, set in?

We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must

have been preceded by repudiation (of the co-ownership). The act of repudiation, in turn is subject to
certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is
clearly made known to the other co-owners; (3) the evidence thereon is clear and conclusive, and (4)
he has been in possession through open, continuous, exclusive, and notorious possession of the
property for the period required by law. 9

The instant case shows that the petitioner had not complied with these requisites. We are not
convinced that he had repudiated the co-ownership; on the contrary, he had deliberately kept the
private respondents in the dark by feigning sole heirship over the estate under dispute. He cannot
therefore be said to have "made known" his efforts to deny the co-ownership. Moreover, one of the
private respondents, Emeteria Asejo, is occupying a portion of the land up to the present, yet, the
petitioner has not taken pains to eject her therefrom. As a matter of fact, he sought to recover
possession of that portion Emeteria is occupying only as a counterclaim, and only after the private
respondents had first sought judicial relief.

It is true that registration under the Torrens system is constructive notice of title, 10 but it has likewise
been our holding that the Torrens title does not furnish a shield for fraud. 11 It is therefore no argument to
say that the act of registration is equivalent to notice of repudiation, assuming there was one,
notwithstanding the long-standing rule that registration operates as a universal notice of title.

For the same reason, we cannot dismiss the private respondents' claims commenced in 1974 over
the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten
years, 12 reckoned from the date of the registration of the property, 13 we, as we said, are not prepared to
count the period from such a date in this case. We note the petitioner's sub rosa efforts to get hold of the
property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral affidavit of
extrajudicial settlement that he is "the only heir and child of his mother Feliza with the consequence that
he was able to secure title in his name also." 14 Accordingly, we hold that the right of the private
respondents commenced from the time they actually discovered the petitioner's act of
defraudation. 15 According to the respondent Court of Appeals, they "came to know [of it] apparently only
during the progress of the litigation." 16 Hence, prescription is not a bar.

Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in a
motion to dismiss or in the answer otherwise it is deemed waived, 17 and here, the petitioner never
raised that defense. 18 There are recognized exceptions to this rule, but the petitioner has not shown why
they apply.

WHEREFORE, there being no reversible error committed by the respondent Court of Appeals, the
petition is DENIED. The Decision sought to be reviewed is hereby AFFIRMED in toto. No
pronouncement as to costs.
SO ORDERED,

Yap (Chairman), Melencio-Herrera, Paras and Padilla, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 48049 June 29, 1989

EMILIO TAN, JUANITO TAN, ALBERTO TAN and ARTURO TAN, petitioners,
vs.
THE COURT OF APPEALS and THE PHILIPPINE AMERICAN LIFE INSURANCE
COMPANY, respondents.

O.F. Santos & P.C. Nolasco for petitioners.

Ferry, De la Rosa and Associates for private respondent.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the Court of Appeals' decision affirming the decision of the
Insurance Commissioner which dismissed the petitioners' complaint against respondent Philippine
American Life Insurance Company for the recovery of the proceeds from their late father's policy.
The facts of the case as found by the Court of Appeals are:

Petitioners appeal from the Decision of the Insurance Commissioner dismissing

herein petitioners' complaint against respondent Philippine American Life Insurance
Company for the recovery of the proceeds of Policy No. 1082467 in the amount of P
80,000.00.

On September 23,1973, Tan Lee Siong, father of herein petitioners, applied for life
insurance in the amount of P 80,000.00 with respondent company. Said application
was approved and Policy No. 1082467 was issued effective November 6,1973, with
petitioners the beneficiaries thereof (Exhibit A).

On April 26,1975, Tan Lee Siong died of hepatoma (Exhibit B). Petitioners then filed
with respondent company their claim for the proceeds of the life insurance policy.
However, in a letter dated September 11, 1975, respondent company denied
petitioners' claim and rescinded the policy by reason of the alleged misrepresentation
and concealment of material facts made by the deceased Tan Lee Siong in his
 application for insurance (Exhibit 3). The premiums paid on the policy were
thereupon refunded .

Alleging that respondent company's refusal to pay them the proceeds of the policy
was unjustified and unreasonable, petitioners filed on November 27, 1975, a
complaint against the former with the Office of the Insurance Commissioner,
docketed as I.C. Case No. 218.

After hearing the evidence of both parties, the Insurance Commissioner rendered
judgment on August 9, 1977, dismissing petitioners' complaint. (Rollo, pp. 91-92)

The Court of Appeals dismissed ' the petitioners' appeal from the Insurance Commissioner's
decision for lack of merit

Hence, this petition.

The petitioners raise the following issues in their assignment of errors, to wit:

A. The conclusion in law of respondent Court that respondent insurer has the right to
rescind the policy contract when insured is already dead is not in accordance with
existing law and applicable jurisprudence.

B. The conclusion in law of respondent Court that respondent insurer may be allowed
to avoid the policy on grounds of concealment by the deceased assured, is contrary
to the provisions of the policy contract itself, as well as, of applicable legal provisions
and established jurisprudence.

C. The inference of respondent Court that respondent insurer was misled in issuing
the policy are manifestly mistaken and contrary to admitted evidence. (Rollo, p. 7)

The petitioners contend that the respondent company no longer had the right to rescind the contract
of insurance as rescission must allegedly be done during the lifetime of the insured within two years
and prior to the commencement of action.

The contention is without merit.

The pertinent section in the Insurance Code provides:

Section 48. Whenever a right to rescind a contract of insurance is given to the insurer
by any provision of this chapter, such right must be exercised previous to the
commencement of an action on the contract.

After a policy of life insurance made payable on the death of the insured shall have
been in force during the lifetime of the insured for a period of two years from the date
of its issue or of its last reinstatement, the insurer cannot prove that the policy is
void ab initio or is rescindable by reason of the fraudulent concealment or
misrepresentation of the insured or his agent.

According to the petitioners, the Insurance Law was amended and the second paragraph of Section
48 added to prevent the insurance company from exercising a right to rescind after the death of the
insured.
The so-called "incontestability clause" precludes the insurer from raising the defenses of false
representations or concealment of material facts insofar as health and previous diseases are
concerned if the insurance has been in force for at least two years during the insured's lifetime. The
phrase "during the lifetime" found in Section 48 simply means that the policy is no longer considered
in force after the insured has died. The key phrase in the second paragraph of Section 48 is "for a
period of two years."

As noted by the Court of Appeals, to wit:

The policy was issued on November 6,1973 and the insured died on April 26,1975.
The policy was thus in force for a period of only one year and five months.
Considering that the insured died before the two-year period had lapsed, respondent
company is not, therefore, barred from proving that the policy is void ab initio by
reason of the insured's fraudulent concealment or misrepresentation. Moreover,
respondent company rescinded the contract of insurance and refunded the premiums
paid on September 11, 1975, previous to the commencement of this action on
November 27,1975. (Rollo, pp. 99-100)

xxx xxx xxx

The petitioners contend that there could have been no concealment or misrepresentation by their
late father because Tan Lee Siong did not have to buy insurance. He was only pressured by
insistent salesmen to do so. The petitioners state:

Here then is a case of an assured whose application was submitted because of

repeated visits and solicitations by the insurer's agent. Assured did not knock at the
door of the insurer to buy insurance. He was the object of solicitations and visits.

Assured was a man of means. He could have obtained a bigger insurance, not just P
80,000.00. If his purpose were to misrepresent and to conceal his ailments in
anticipation of death during the two-year period, he certainly could have gotten a
bigger insurance. He did not.

Insurer Philamlife could have presented as witness its Medical Examiner Dr. Urbano
Guinto. It was he who accomplished the application, Part II, medical. Philamlife did
not.

Philamlife could have put to the witness stand its Agent Bienvenido S. Guinto, a
relative to Dr. Guinto, Again Philamlife did not. (pp. 138139, Rollo)

xxx xxx xxx

This Honorable Supreme Court has had occasion to denounce the pressure and
practice indulged in by agents in selling insurance. At one time or another most of us
have been subjected to that pressure, that practice. This court took judicial
cognizance of the whirlwind pressure of insurance selling-especially of the agent's
practice of 'supplying the information, preparing and answering the
application, submitting the application to their companies, concluding the
transactions and otherwisesmoothing out all difficulties.
We call attention to what this Honorable Court said in Insular Life v. Feliciano, et al., 73 Phil. 201; at
page 205:

It is of common knowledge that the selling of insurance today is subjected to the

whirlwind pressureof modern salesmanship.

Insurance companies send detailed instructions to their agents to solicit and procure
applications.

These agents are to be found all over the length and breadth of the land. They are
stimulated to more active efforts by contests and by the keen competition offered by
the other rival insurance companies.

They supply all the information, prepare and answer the applications, submit the
applications to their companies, conclude the transactions, and otherwise smooth out
all difficulties.

The agents in short do what the company set them out to do.

The Insular Life case was decided some forty years ago when the pressure of
insurance salesmanship was not overwhelming as it is now; when the population of
this country was less than one-fourth of what it is now; when the insurance
companies competing with one another could be counted by the fingers. (pp. 140-
142, Rollo)

xxx xxx xxx

In the face of all the above, it would be unjust if, having been subjected to the
whirlwind pressure of insurance salesmanship this Court itself has long denounced,
the assured who dies within the two-year period, should stand charged of fraudulent
concealment and misrepresentation." (p. 142, Rollo)

The legislative answer to the arguments posed by the petitioners is the "incontestability clause"
added by the second paragraph of Section 48.

The insurer has two years from the date of issuance of the insurance contract or of its last
reinstatement within which to contest the policy, whether or not, the insured still lives within such
period. After two years, the defenses of concealment or misrepresentation, no matter how patent or
well founded, no longer lie. Congress felt this was a sufficient answer to the various tactics employed
by insurance companies to avoid liability. The petitioners' interpretation would give rise to the
incongruous situation where the beneficiaries of an insured who dies right after taking out and
paying for a life insurance policy, would be allowed to collect on the policy even if the insured
fraudulently concealed material facts.

The petitioners argue that no evidence was presented to show that the medical terms were
explained in a layman's language to the insured. They state that the insurer should have presented
its two medical field examiners as witnesses. Moreover, the petitioners allege that the policy intends
that the medical examination must be conducted before its issuance otherwise the insurer "waives
whatever imperfection by ratification."

We agree with the Court of Appeals which ruled:

 On the other hand, petitioners argue that no evidence was presented by respondent
company to show that the questions appearing in Part II of the application for
insurance were asked, explained to and understood by the deceased so as to prove
concealment on his part. The same is not well taken. The deceased, by affixing his
signature on the application form, affirmed the correctness of all the entries and
answers appearing therein. It is but to be expected that he, a businessman, would
not have affixed his signature on the application form unless he clearly understood its
significance. For, the presumption is that a person intends the ordinary consequence
of his voluntary act and takes ordinary care of his concerns. [Sec. 5(c) and (d), Rule
131, Rules of Court].

The evidence for respondent company shows that on September 19,1972, the
deceased was examined by Dr. Victoriano Lim and was found to be diabetic and
hypertensive; that by January, 1973, the deceased was complaining of progressive
weight loss and abdominal pain and was diagnosed to be suffering from hepatoma,
(t.s.n. August 23, 1976, pp. 8-10; Exhibit 2). Another physician, Dr. Wenceslao Vitug,
testified that the deceased came to see him on December 14, 1973 for consolation
and claimed to have been diabetic for five years. (t.s.n., Aug. 23,1976, p. 5; Exhibit 6)
Because of the concealment made by the deceased of his consultations and
treatments for hypertension, diabetes and liver disorders, respondent company was
thus misled into accepting the risk and approving his application as medically
standard (Exhibit 5- C) and dispensing with further medical investigation and
examination (Exhibit 5-A). For as long as no adverse medical history is revealed in
the application form, an applicant for insurance is presumed to be healthy and
physically fit and no further medical investigation or examination is conducted by
respondent company. (t.s.n., April 8,1976, pp. 6-8). (Rollo, pp. 96-98)

There is no strong showing that we should apply the "fine print" or "contract of adhesion" rule in this
case. (Sweet Lines, Inc. v. Teves, 83 SCRA 361 [1978]). The petitioners cite:

It is a matter of common knowledge that large amounts of money are collected from
ignorant persons by companies and associations which adopt high sounding titles
and print the amount of benefits they agree to pay in large black-faced type, following
such undertakings by fine print conditions which destroy the substance of the
promise. All provisions, conditions, or exceptions which in any way tend to work a
forfeiture of the policy should be construed most strongly against those for whose
benefit they are inserted, and most favorably toward those against whom they are
meant to operate. (Trinidad v. Orient Protective Assurance Assn., 67 Phil. 184)

There is no showing that the questions in the application form for insurance regarding the insured's
medical history are in smaller print than the rest of the printed form or that they are designed in such
a way as to conceal from the applicant their importance. If a warning in bold red letters or a boxed
warning similar to that required for cigarette advertisements by the Surgeon General of the United
States is necessary, that is for Congress or the Insurance Commission to provide as protection
against high pressure insurance salesmanship. We are limited in this petition to ascertaining whether
or not the respondent Court of Appeals committed reversible error. It is the petitioners' burden to
show that the factual findings of the respondent court are not based on substantial evidence or that
its conclusions are contrary to applicable law and jurisprudence. They have failed to discharge that
burden.

WHEREFORE, the petition is hereby DENIED for lack of merit. The questioned decision of the Court
of Appeals is AFFIRMED.
SO ORDERED.

Fernan, (C.J., Chairman), Bidin and Cortes, JJ., concur.

Feliciano, took no part.