Philippine Supreme Court Jurisprudence > Year 2019 > August 2019 Decisions > G.R. No. 196743 - SPOUSES LOLITO CHUA AND MYRNA PALOMARIA AND SPOUSES SERGIO CHUA (DECEASED) AND ELENA CHUA, PETITIONERS, v. SPOUSES AGUSTIN LO AND JOSEFINA N. BECINA, VICTOR LO AND AGUSTIN LO REALTY CORPORATION, RESPONDENTS:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court which seeks to reverse and set aside the November 23, 2010 Decision¹ and the April 28, 2011 Resolution² of the Court of Appeals (CA) in CA-G.R. CV No. 85892, denying the appeal and the motion for reconsideration, respectively, for lack of merit.

The case arose from a Complaint for Quieting of Title, Annulment of Sale, Recovery of Possession and Damages, with Preliminary Injunction filed by petitioners spouses Lolito Chua (Lolito) and Myrna Palomaria (Myrna) and spouses Sergio Chua (Sergio) and Elena Chua (Elena) seeking to:

1. Quiet title over the parcel of land of land covered by Transfer Certificate of Title (TCT) No. T-114915³ in the name of petitioner Sergio Chua;
   
   
2. Annul the Deed of Sale dated September 21, 1999 executed by respondent Victor Lo in favor of co-respondent Agustin Lo Realty Corporation over Lot 505-B-3 with an area of 2,078 square meters (sq m); and
   
   
3. Evict the respondents from and recover possession of Lot 505-B-3-A with an area of 600 sq m.

The facts of the case are as follows:

The spouses Lolito and Myrna (spouses Chua) were the owners of a parcel of coconut land (Lot 505) located in Sta. Cruz, Laguna, with an area of 21,644 sq m and covered by Original Certificate of Title No. P-3264. On January 15, 1976, Myrna, with the consent of Lolito, sold to sisters Delia N. Becina (Delia) and Josefina N. Becina (Josefina),⁴ a portion of Lot No. 505 with an area of 4,612 sq m. On August 5, 1977, Lolito, with the consent of Myrna, sold to Delia and Josefina⁵ an additional 400 sq m of Lot No. 505. All in all, Josefina and Delia acquired from the spouses Chua a total area of 5,012 sq m as a result of these two sales.

On March 1, 1978, Lot No. 505 was subdivided into two lots: Lot No. 505-A with an area of 14,492 sq m and Lot No. 505-B with an area of 7,152 sq m. Lot No. 505-B is covered by TCT No. 83840 under the name of Lolito. Subsequently, Lot No. 505-B was subdivided into three lots, namely: Lot No. 505-B-1 (1,540 sq m); Lot No. 505-B-2 (3,534 sq m); and Lot No. 505-B-3 (2,078 sq m). Lot No. 505-B-3 was further subdivided into Lot No. 505-B-3-A (600 sq m) and Lot No. 505-B-3-B (1,478 sq m). For a clearer picture, the following illustration is provided, thus:

Lot No. 505 (21,644 sqm) I----------------------I----------------------I ����� Lot No. 505-A������������������������ ��� Lot No. 505-B ���� (14,492 sq m)�� � � � � � � � � � � �� � � �� � (7,152 sq m) ��������������������������������������������������� � � � � I-----------------------I-----------------------I������������� ������������������������������������������������������ Lot No. 505-B-1������� Lot No. 505 B-2�������� Lot No. 505 B-3 ������������������������������������������������������� (1,540 sq m)���� � � � �� (3,534 sq m)� ����������������� (2,078 sq m) ���������������������������������������������������������������������������������������������������������� � � � �� �� I------------I----------I �������������������������������������������������������������������������������� � � � � �� ��������� � � Lot No. 505 B-3-A����� � � � ��� Lot No. 505 B-3-B ����������������������������������������������������������������������������������� � � � � � � � � � (600 sq m)����������������������� (1,478 sq m) ����� �����������������������������������������������

In view of the 1976 and 1977 sales in favor of Josefina and Delia, Lot No. 505-B-2 and Lot No. 505-B-3 were allotted to them. However, the spouses Lolito and Myrna objected, claiming that Lot Nos. 505-B-2 and 505-B-3 covered a total area of 5,612 sq m or 600 sq m more than what they sold to Josefina and Delia.

A confrontation was held among the parties at the Office of Atty. Tomas A�onuevo (Atty. A�onuevo). To settle the dispute, the parties eventually agreed that Lot No. 505-B-2 (3,534 sq m) be conveyed and transferred to Josefina (wife of Agustin Lo [Agustin]),⁶ but the title to Lot No. 505-B-3 would remain in the name of Lolito. Lot No. 505-B-3 will be further subdivided into two lots to segregate the excess area of 600 sq m therefrom. Thus, Lot No. 505-B-3 was subdivided into Lot No. 505-B-3-A (600 sq m) and Lot No. 505-B-3-B (1,478 sq m).⁷

To carry-out their agreement, a Deed of Sale was executed on February 25, 1984, whereby Lolito sold to Josefina Lot No. 505-B-2 for a consideration of P94,180.00 where TCT No. T-101045 was issued in Josefina's name. Lot No. 505-B-3 became TCT No. T-101046 and was registered under the name of Lolito. Since this Lot No. 505-B-3 was subdivided into two, the other half (Lot No. 505-B-3-A) comprising of 600 sq m was sold by Lolito to his brother, Sergio, and is now covered by TCT No. T-114915. However, in violation of the agreement, Josefina and her spouse Agustin forcibly occupied the whole area of Lot No. 505-B-3, even encroaching upon Lot No. 505-B-3-A.

Meanwhile, on January 23, 1987, Delia died, leaving her husband Victor Lo (Victor) and children, Nelia Lo (Nelia), Henry Lo (Henry), Vicky Lo (Vicky) and Bernie Lo (Bernie), as heirs. On September 12, 1999, Victor sold to Agustin Lo Realty Corporation, the entire Lot No. 505-B-3 (2,078 sq m) and another non-existent Lot No. 505-B-4 with an area of 428 sq m.⁸ Pursuant thereto, Agustin Lo Realty Corporation occupied the entire Lot No. 505-B-3 comprising of Lot No. 505-B-3-A and Lot No. 505-B-3-B and started constructing a building thereon.⁹

The spouses Chua demanded from them to vacate Lot No. 505-B-3-A which is the alleged excess area consisting of 600 sq m and to remove the construction being built thereon, but to no avail. The parties failed to reach an amicable settlement. This prompted the spouses Chua to file the instant action.

Respondents Agustin, Josefina and Agustin Lo Realty Corporation admitted the existence of the 1976 and 1977 Deeds of Sale in favor of Delia and Josefina. However, they claimed that prior to that or on December 30, 1975, Myrna sold to Josefina a portion of the lot containing 500 sq m. Further, they alleged that it was the spouses Chua who caused the subdivision of Lot No. 505 into two lots (Lot No. 505-A and Lot No. 505-B). And that on February 15, 1980 and February 21, 1981, the spouses Chua, with bad faith, mortgaged Lot No. 505-B and on September 23, 1983, mortgaged Lot No. 505-A-3-B,¹⁰ even though said lots were already sold to them.¹¹

It was on February 25, 1984 when Lolito, with the conformity of his wife Myrna, conveyed by way of registrable deed of sale in favor of Josefina the whole Lot No. 505-B-2 with an area of 3,534 sq m which consists of the following: (a) the 500 sq m subject of the 1975 sale; (b) 2,506 sq m, Josefina's share in the 1976 and 1977 sale; and (c) the 528 sq m portion which was subject of an amicable settlement between the parties as compensation for the damages suffered by Josefina arising from the delay in the transfer of the 500 sq m lot to her, the Department of Public Works and Highways (DPWH) road widening, the river easement, the disturbance caused on the portion of Lot No. 505 sold to her, and the mortgage done by the spouses Chua (for three times) of the said portion of lot. Josefina took possession of Lot No. 505-B-2 (now registered in her name) together with the additional 528 sq m in the concept of an owner.

As impleaded defendants, the heirs of Delia alleged that it was only on February 25, 1984 when they discovered that the spouses Chua, in conspiracy with Josefina and Agustin caused the execution of a Deed of Sale of a portion of Lot No. 505 with an area of 3,534 sq m (Lot No. 505-B-2) to Josefina instead of only 2,506 sq m reducing the pro-indiviso portion pertaining to Delia by 1,028 sq m. The children of Delia, namely, Nelia, Henry, Vicky and Bernie claim that they are not selling their share of their deceased mother's portion of the lot and if ever their father sold the same to Agustin Lo Realty Corporation, the same is valid only to one-fifth pro-indiviso share of their father, Victor.

On October 29, 2004, the Regional Trial Court (RTC) rendered a Decision in favor of respondents, thereby dismissing the complaint of the petitioners. The CA affirmed the Decision of the RTC. The spouses Chua filed the instant Petition with this Court questioning both the ownership and possessory rights of the respondents over Lot No. 505-B-3-A comprising of 600 sq m.

The spouses Chua contend that respondents are only entitled to 5,012 sq m of Lot No. 505 as it is the only area sold to them by virtue of the contracts to sell executed in 1976 and 1977. By virtue of the February 25, 1984 Deed of Sale, Lot No. 505-B-2 comprising of 3,534 sq m was already given to Josefina. If Delia (represented by her heirs) will be given Lot No. 505-B-3 comprising of 2,078 sq m, they would own a total of 5,612 sq m which is 600 sq m more than the original 5,012 sq m sold to Josefina and Delia. The instant action sought to recover the said 600 sq m.

The lone issue in this case is:

WHETHER OR NOT PETITIONERS ARE ENTITLED TO RECOVER LOT NO. 505-B-3-A CONTAINING AN AREA OF 600 SQ M ALLEGEDLY REPRESENTING THE EXCESS AREA SOLD TO DELIA AND JOSEFINA.

In resolving the issue, we laid down first some important premises on the basis of the evidence on records, such as documents presented by the parties and admissions which they made.

There is no doubt as to the existence of the 1976 and 1977 sale transactions between the spouses Chua and Delia and Josefina, the subject matter of which pertains respectively to 4,612 sq m and the 400 sq m portion of Lot No. 505. Extant on records are the Deeds of Sale dated January 15, 1976 (Exhibit "E") and August 5, 1977 (Exhibit "F").¹²

The spouses Chua contend that said sale transactions were essentially contracts to sell such that a contract of sale (transferring the ownership) will be executed upon full payment by the vendees of the purchase price. If indeed ownership over the lot is reserved in favor of the vendor and transfer thereof would only be effected upon full payment of the price, then no doubt, the 1976 and 1977 sale transactions are Contracts to Sell. By law, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, the full payment of the purchase price.¹³

True enough, at the time of the execution of the said Deeds of Sale, ownership to the subject lot was not yet transferred to the buyers, Josefina and Delia. As a matter of fact, Josefina and Delia even acquiesced to the subdivision of Lot No. 505 on March 1, 1978, with title issued in the name of the spouses Chua, but reserving a portion of the land sold to Josefina and Delia. Also admitted by respondents, was the fact that the subject lot was mortgaged by the spouses Chua for three times, suggesting that the latter were still the owners of the said Lot No. 505.

As seen on records, the Contract of Sale executed in February 25, 1984 was indeed an off-shoot of the 1976 and 1977 Deeds of Sale, which we ruled to be, in reality, Contracts to Sell. This is categorically admitted by the spouses Chua and was admitted by Josefina and Delia's heirs when they were referring to said 1976 and 1977 sale transactions as bases of their present claims. In other words, the February 25, 1984 Contract of Sale is not a separate transaction from the 1976 and 1977 Deeds of Sale.

Confusion arose when the February 25, 1984 Contract of Sale was executed, which conveyed in favor of Josefina alone Lot No. 505-B-2 with an area of 3,534 sq m. This erroneous execution of the Contract of Sale, which was supposed to reflect the intent of the parties in the earlier "Contract to Sell" gave rise to the parties' different and conflicting claims.

As shown by records, the execution of the February 25, 1984 Contract of Sale was a result of the agreement made by all the parties which took place during the confrontation at the office of Atty. A�onuevo. The parties came into an agreement to execute a Contract of Sale in favor of Josefina conveying upon her Lot No. 505-B-2 with an area of 3,534 sq m. No one from the parties disputed this agreement which they voluntarily made. Consequently, TCT No. T-101045 was issued in the name of Josefina.

There was no showing that the other buyer, Delia, objected to the said agreement nor to the issuance of the TCT in favor of Josefina. From 1984, the time of the execution of the said Contract of Sale up to her death in 1987, no opposition came from her part. If Delia consented to the agreement, more so her heirs, who should be bound by her (Delia's) actions. As a matter of fact, after Delia's death, her heirs (spouse and children) executed a Deed of Extra-judicial Partition and Sale of the Estate¹⁴ of the deceased Delia. To carry-out their intention, a Deed of Sale¹⁵ dated September 21, 1999 was executed by Victor over Lot No. 505-B-3 with an area of 2,078 sq m in favor of Agustin Lo Realty Corporation, presumably owned by Josefina's spouse, Agustin. Even the children of Delia, namely, Henry, Nelia, Vicky and Bernie subsequently sold their perceived respective shares in Lot No. 505 in favor of Agustin Lo Realty Corporation, as evidenced by the Deeds of Sale which they each executed on February 26, 1998 except for Nelia who executed hers on May 27, 1998.¹⁶

This only shows that from the 5,012 sq m which Delia bought with her sister Josefina from the spouses Chua, Delia agreed that the 3,534 sq m would go to Josefina and the remaining area would go to her. Nothing from the law would prohibit co-owners to agree with the said sharing. On the part of the sellers (spouses Chua), it is no longer their concern how the buyers would divide the property which they jointly purchased. Thus, when Delia agreed to issue Lot No. 505-B-2 in favor of Josefina, she, in effect, agreed to the physical partition of their undivided portion of the co-ownership. Hence, her heirs are now precluded to question the area of the lot that was delivered to their predecessor.

Since the 3,534 sq m was already physically delivered to Josefina by the issuance of the TCT in her favor, then Delia, as per their agreement, is only entitled to 1,478 sq m. What was puzzling, however, is how Victor, Delia's spouse, was able to sell the entire Lot No. 505-B-3 with an area of 2,078 sq m in favor of Agustin Lo Realty Corporation. Evidently, the said sale in favor of Agustin Lo Realty Corporation is in excess of 600 sq m which is now the subject of the dispute in the instant case.

By mathematical precision, the parties cannot deny that the total area delivered to Josefina and Delia was in excess of 600 sq m. Out of the total area of 5,012 sq m, subject of the 1976 and 1977 Contracts to Sell, what were already given by the spouses Chua were Lot No. 505-B-2 with an area of 3,534 sq m to Josefina (by virtue of the Contract of Sale in favor of Josefina) and Lot No. 505-B-3 to Delia with an area of 2,078 sq m (by implied acquiescence of Delia based on the parties' agreement). Adding up the areas of the two lots that were delivered, the spouses Chua had conveyed a total of 5,612 sq m (3,534 sq m + 2,078 sq m) or 600 sq m more of the 5,012 sq m agreed upon by the parties in their 1976 and 1977 sale transactions.

Josefina and Delia cannot feign ignorance of this excess area. As in fact records show that all the parties (spouses Chua, Josefina and Delia) voluntarily agreed to subdivide Lot No. 505-B-3 into two lots, purposely to segregate the excess 600 sq m which was inadvertently delivered by the spouses Chua in favor of Josefina and Delia. The segregated 600 sq m was even already transferred by Lolito to his brother Sergio and a TCT was issued in the name of the latter. Up until the filing of the complaint by the spouses Chua, no opposition/objection was heard from Josefina nor from Delia or the latter's heirs on the issuance of a certificate of title in favor of Sergio.

Clearly, the sale of Victor in favor of Agustin Lo Realty Corporation is in excess of the area of 600 sq m. The heirs of Delia could only dispose of Delia's rightful share, which as per their agreement, is up to 1,478 sq m area only. This is consistent with the rule that one cannot sell what he does not own and this rule has much force when the subject of the sale is a titled land that belongs to another person.¹⁷ Thus, the Deed of Sale executed by Victor in favor of Agustin Lo Realty Corporation (which conveyed upon the latter 2,078 sq m of the lot) should be nullified as it includes the 600 sq m portion of a land not owned by the seller.

On this score, we rule that petitioners' action to quiet title stands on legal grounds. In an action for quieting of title, the complainant is seeking for an adjudication that a claim of title or interest in property adverse to the claimant is invalid, to free him from the danger of hostile claim, and to remove a cloud upon or quiet title to land where stale or unenforceable claims or demands exist.¹⁸

For an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.¹⁹

Both requisites are present in the instant case.

No doubt the 600 sq m portion of the lot (designated as Lot No. 505-B-3-A) is covered by TCT No. T-114915 in the name of Sergio. Clearly, Sergio has a legal title to the said portion of the disputed lot. It is fundamental that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein.²⁰ After the expiration of the one year period from the issuance of the decree of registration upon which it is based, it becomes incontrovertible.²¹

Secondly, the Deed of Sale executed by Victor, conveying the entire Lot No. 505-B-2 in favor of Agustin Lo Realty Corporation, which appears to be valid, but in fact invalid, casts a cloud on the title of Sergio. As earlier discussed, Lot No. 505-B-2 was not entirely owned by Victor, the spouse of Delia. Hence, the latter has no right to dispose of that said portion by virtue of the Deed of Sale. By reason of the void sale, Agustin Lo Realty Corporation has no right, whatsoever, over the said 600 sq m portion of the lot. Possession thereof must be returned to the registered owner, Sergio.

In a last ditch attempt to show that the spouses Chua is still obligated to deliver the other half-portion of the 5,012 sq m, subject of the sale which is 2,506 sq m in favor of Delia's heirs, respondent spouses Josefina and Agustin claim that the 3,534 sq m subject of the February 25, 1984 Contract of Sale in favor of Josefina comprised not only of Josefina's share (2,506 sq m or one-half of 5,012 sq m) in the lot sold to her by the spouses Chua, but also includes the 500-sq m lot earlier sold to Josefina by Myrna in 1975 and the 528 sq m subject of an amicable settlement as compensation given by the spouses Chua for the damages sustained by Josefina arising from the delay in the transfer of the 500-sq m lot to her, the DPWH road widening, the river easement, the disturbance caused on the portion of Lot No. 505 sold to her, and the mortgage done by the spouses Chua (for three times) of the said portion of lot. Thus:

Lot sold to Josefina in 1975	500 sq m
One-half of the Lot sold to Josefina in 1976 and 1977	2,506 sq m
Compensation for damages	������� 528 sq m
TOTAL area conveyed (as per Contract of Sale)	3,534 sq m

We do not subscribe. Their claim, while characterized with exactness, was not supported by sufficient evidence. Quite telling is the fact that even the 1984 Contract of Sale itself does not mention of this arrangement, where the breakdown of the 3,534 sq m, subject matter of the sale, was specifically delineated. What was clear, from the above discussion, are the parties' admission that the 1984 Contract of Sale was an off-shoot of the Contracts to Sell executed by the parties in 1976 and 1977 and was never a separate contract from one another and their compromise agreement to convey the said Lot No. 505-B-2 with an area of 3,534 sq m in favor of Josefina.

But this does not mean that we invalidate the sale by Myrna of the 500 sq m in favor of Josefina in 1975. On the contrary, we sustain its validity and the binding force and effect of the said contract as between the parties. Apart from the fact that said sale was well-supported by a Certification²² dated December 30, 1975 signed by Myrna, attesting to the sale of 500 sq m in favor of Josefina, no one from the parties disputed its existence and genuineness. For this reason, the spouses Chua is obligated to execute a separate contract/agreement to fortify this 1975 sale transaction and to deliver the said 500 sq m apart from the 5,012 sq m subject matter of the 1976 and 1977 sale transactions.

We, however, cannot sustain the veracity of 528 sq m, which was allegedly subject of the amicable settlement as compensation for the damages sustained by Josefina. Apart from respondents' bare allegation, no other clear, concrete and convincing evidence was presented that the spouses Chua were amenable to compensate Josefina of the damages and that they are expressly relinquishing their 528 sq m interest in Lot No. 505.

As to the claim of Delia's children that they did not agree to the sale made by their father Victor to Agustin Lo Realty Corporation, this is effectively belied by their execution of the Deed of Extra-Judicial Partition and Sale²³ of the estate of the deceased Delia and the Deeds of Sale²⁴ which they executed in favor of Agustin Lo Realty Corporation.

WHEREFORE, the instant Petition is GRANTED. The questioned Decision dated November 23, 2010 and the April 28, 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 85892 are REVERSED and SET ASIDE. Accordingly, a new one is issued, as follows:

1. Petitioners' action to quiet TCT No. T-114915 is GRANTED.
   
   
2. The Deed of Sale dated September 21, 1999 executed by Victor Lo in favor of Agustin Lo Realty Corporation is declared NULL and VOID insofar as the 600 sq m area is concerned.
   
   
3. Agustin Lo Realty Corporation is ordered to SURRENDER POSSESSION of Lot No. 505-B-3-A with an area of 600 sq m in favor of the estate of the deceased petitioner Sergio Chua.
   
   
4. Petitioner spouses Lolito and Myrna Chua are ordered to DELIVER in favor of Josefina Lo the 500 sq m subject of the 1975 sale transaction between Myrna Chua and Josefina Lo.
   
   No costs.

SO ORDERED.

Caguioa,^** (Acting Chairperson), Lazaro-Javier, and Zalameda, JJ., concur.
Carpio, (Chairperson), J., on official leave.

Endnotes:

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^** Per Special Order No. 2688 dated July 30, 2019.

¹ Penned by Associate Justice Rosalinda Asuncion-Vicente, with retired Presiding Justice Romeo F. Barza and Associate Justice Franchito N. Diamante, concurring; rollo, pp. 36-47.

² Id. at 49-51.

³ As referred to in the Petition and in the CA Decision, but as per RTC, it is TCT No. T-114916, Exhibit "B" (for Sergio Chua), id. at 57.

⁴ Exhibit "E," id.

⁵ Exhibit "F," id.

⁶ Id. at 56

⁷ See illustration.

⁸Rollo, p. 57.

⁹ Supra note 6.

¹⁰ Referred to as Lot No. 503-A-3-B in the RTC Decision, id. at 58.

¹¹ Id.

¹² Id. at 57.

¹³Spouses Edrada v. Spouses Ramos, 505 Phil. 672, 680 (2005).

¹⁴ Exhibit "18," rollo, p. 61.

¹⁵ Exhibit "13," id.

¹⁶ Exhibits "14" � "17," id.

¹⁷Cervantes v. Court of Appeals, 404 Phil. 651, 660 (2001).

¹⁸Heirs of Pocdo v. Avila, 730 Phil. 215, 224 (2014).

¹⁹Salvador v. Patricia, Inc., 799 Phil. 116, 134 (2016).

²⁰Arjonillo v. Pagulayan, G.R. No. 196074, October 4, 2017, 841 SCRA 588, 597.

²¹Republic v. Hachero, 785 Phil. 784, 796 (2016); citations omitted.

²² Exhibit "1," rollo, p. 59.

²³ Exhibit" 18," supra note 14.

²⁴ Exhibits "14"�"17," supra note 16.