360 Phil. 703
MARTINEZ, J.:
"Emilio Hermoso, now dceased, and plaintiff Clarita Hermoso were husband and wife whose union was blessed with the following children: Rogelio, Victoria (another plaintiff-appellee), Agustinito and Danilo Ciriaco, all surnamed Hermoso (the latter two being third party defendants-appellees). Emilio Hermoso died on June 22, 1957, leaving as his surviving heirs, his wife Clarita, and the four above-named children. Among the properties left by Emilio Hermoso is an undivided one-third portion of a parcel of land, the whole of which consisting of 7,842 square meters, more or less, is now covered by OCT No. 0-1054 (M) issued in 1983, situated at Calvario, Meycauayan, Bulacan.Consequently, considering the adamant refusal of the private respondents to resell the disputed lots, petitioners on October 8, 1984 filed a complaint for legal redemption before the Regional Trial Court of Bulacan, Branch 7, Malolos, with prayer for the issuance of a writ of preliminary injunction to enjoin defendants third-party plaintiffs from proceeding with the construction of the building thereon. The trial court issued the writ prayed for. After trial on the merits, the court a quo issued its decision dated February 15, 1990, the dispositive portion of which reads:
"The property was originally owned by Agrifina Francia and the ownership thereof was transmitted upon her death to her three (3) children, to wit: Isidro, Consolacion, and Emilio (herein appellees’ predecessor-in-interest) in the proportion of one-third (1/3) each. Consolacion Hermoso, married to Manuel Cruz, later bought the one-third (1/3) undivided share of her brother, Isidro Hermoso. Thus, as indicated in OCT No. 0-1054 (M), Consolacion Hermoso owns two-thirds (2/3) thereof and the remaining one-third (1/3) is in the name of the Heirs of Emilio Hermoso [Exhibit ‘A’].
"On May 29, 1974, the Heirs of Emilio Hermoso executed a duly notarized 'Agreement’ Exh. "1-A"], the pertinent portion of which reads, as follows:‘2. That it is hereby agreed that for the convenience of all parties the following shall be observed in the partition of the above-mentioned properties: that the share of CLARITA P. CARIN shall in all cases be adjacent to the properties adjudicated to CONSOLACION HERMOSO CRUZ; then following by the shares pertaining to DANILO CIRIACO HERMOSO, VICTORINA P. HERMOSO, ROGELIO P. HERMOSO and AGUSTINITO P. HERMOSO, respectively, except in the partition of the parcel of land situated in Calvario, Meycauayan, Bulacan, which is the subject of the DEED OF EXCHANGE above-mentioned, in which case the share pertaining to CLARITA P. CARIN shall be adjacent to the stonewall that segregates the share of CONSOLACION HERMOSO CRUZ, then followed by the shares pertaining to ROGELIO P. HERMOSO, DANILO CIRIANO HERMOSO, VICTORINA P. HERMOSO, and AGUSTINITO P. HERMOSO, at the extreme end, respectively’ [Emphasis and underscoring Ours]"Sometime in July, 1979, third party defendants-appellees Agustinito hermoso and Danilo Hermoso (‘Hermoso brothers’ for brevity) offered to sell their respective shares to the land in dispute to one Benjamin Palaganas, brother of appellees Ceferino Palaganas and Amanda Palaganas, who are old family acquaintances of the Hermosos since the lifetime of their late landlord, Don Marcos Hermoso.
"Upon being shown a copy of the duly notarized ‘Agreement’ [Exh. ‘1-A’], Ben Palaganas, together with the Hermoso brothers, approached Atty. Ireneo E. Guardiano concerning the preparation of a contract of sale, with the latter noting that the shares offered for sale are separated by the share of Victoria Hermoso; hence, it would be more feasible for Danilo Ciriaco to execute a deed of exchange with his sister, Victoria [TSN, 29 October 1986, p. 8]. A ‘Deed if Exchange’ [Exh. ‘11’] was thereafter drawn and signed by Danilo Ciriaco Hermoso but the same was not however signed by Victoria Hermoso.
"Nonetheless, this transaction did no materialize for the reasons that Clarita Carin subsequently offered to redeem the shares sold by her children by returning the amount already received by her son, Agustinito. By reason of their good relations and it appearing that the sale was made without the knowledge and consent of Clarita Carin, Ben Palaganas accepted the offer without suspiration.
"In the month of October of the same year, Agustinito, then reviewing for the Bar Examinations, and Danilo, in dire need of money, for the second time offered to sell their respective shares to Ben Palaganas who acted for and in behalf of his brother, Dr. Ceferino Palaganas, and sister, Dr. Amanda Palaganas (Palaganases, for brevity), this time giving assurance that their mother (Clarita Carin) had already consented to the transaction and that they could convince their sister, Victoria, to finally agree to an exchange of shares with Danilo. Elated with this development, the Palaganases even offered a higher price [P500,000.00] for the sale.
"Thus, with these assurances, the parties executed on January 30, 1980 a duly notarized ‘Deed of Absolute Sale Over Two Undivided Shares To A Parcel of Land’ (Annex ‘B,' Plaintiffs-Appellees; Exhibit 2, Appellants) with the Hermoso brothers receiving P300,000.00 upon the execution of the contract, P100,000.00 to be paid upon the eviction of the squatters/tenants thereon, and the balance of P100,000.00 to be paid upon the issuance of title in the name of the vendees.
"Upon the commencement of the present action (October 8, 1984), the Hermoso brothers have already received a total amount of P401,500.00 with the last condition---transfer of title---not having been yet fulfilled.
"Contrary to the assurances made by the Hermoso brothers, plaintiffs-appellees allegedly came to have known of the transation only sometime between May, 1983 and January, 1984 (Complaint, par. 8 in relation to TSN, 21 Nov. 1984, p. 32, Victoria Hermoso). Thereafter, plaintiffs-appellees allegedly made arrangements to negotiate for the redemption of the shares sold by the Hermoso brothers. This time, however, the Palaganases were not so open to the idea of the offered repurchase for the value of the property in dispute had considerably increased and that they have already set foothold on said property by reason of their investments and the plans made for its development. Furthermore, they relied upon the assurances made by the Hermoso brothers that the transaction is known to Clarita Carin and Victoria Hermoso."[3]
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants and third-party defendants as follows:On appeal, the issues were simplified by the respondent court as follows:
1. Ordering the defendants to allow the redemption of the shares sold to them by their vendors, the third party defendants herein, and upon payment of the amount of Four Hundred One Thousand Five Hundred (P401,500.00) Pesos, to surrender the possession of the portion of the land covered by OCT No.0-1054 (N), together with whatever improvement they have constructed on the property, to the plaintiffs;
2. Ordering the defendants to pay the plaintiffs, the amount of Twenty Thousand (P20,000.00) Pesos by way of actual damages to cover the transportation expenses of the plaintiffs from Cebu to Malolos and back and also attorney’s fees in the amount of Fifteen Thousand (P15,000.00) Pesos which plaintiffs have paid or are bound to pay their counsel;
3. Ordering the third party defendants to pay the defendants, damages by way of legal interest in the amount computed at the rate of twelve (12%) per cent of the P401,500.00 which shall commence from the date of the filing of the complaint on October 8, 1984 until the said amount of P401,500.00 shall have been completely paid to the defendants by the said plaintiffs.
Costs against the defendants."[4]
1. Whether or not the property in dispute is still co-owned or has actually been partitioned thereby terminating the co-ownership;The respondent court disagreed with the findings of the trial court and was of the view "that laws and jurisprudence favor the appellants, hence we reverse." The dispositive portion of the appellate court’s decision reads:
2. If otherwise, whether or not the plaintiffs-appellees could still exercise the rights of redemption.
"WHEREFORE, premises considered, the judgment appealed from is hereby REVERSED, and a new one is entered dismissing the Complaint and ordering Third-Party Defendants to pay on the Third Party Complaint, the Third Party Plaintiffs the amount of P10,000.00 by way of attorney’s fees.In this petition for review, Clarita P. Hermoso, now Clarita Carin after her remarriage, and her daughter Victoria P. Hermoso, raise the following grounds:
"The parties shall bear their respective costs."[5]
The trial and appellate courts disagreed as to the interpretation to be given to the agreements and contracts and to the notice of sale involved in this case."I.
THE RESPONDENT COURT ERRED IN NOT AGREEING WITH THE HOLDING OF THE TRIAL COURT THAT THE AGREEMENT, MARKED AS EXHIBIT ‘1-A,’ IS NOT A DEED OF PARTITION BUT IS A MERE SCHEME AS TO HOW TO PARTITION THE PROPERTY IN QUESTION WHICH IS TEMPORARY IN CHARACTER AND SUBJECT TO CHANGE AT ANY TIME AND IS NULL AND VOID AS FAR AS PETITIONER VICTORIA P. HERMOSO IS CONCERNED BECAUSE SHE WAS STILL A MINOR WHEN SAID AGREEMENT WAS EXECUTED AND HER CO-PETITIONER CLARITA P. HERMOSO HAD NO AUTHORITY TO SIGN SAID AGREEMENT IN HER BEHALF;II.
THE RESPONDENT COURT ERRD IN NOT HOLDING THAT THE PROPERTY IN QUESTION WAS STILL UNDIVIDED AND WAS STILL UNDER CO-OWNERSHIP DESPITE THE EXECUTION OF THE AGREEMENT MARKED AS EXHIBIT ‘1-A’ BECAUSE CONSOLACION HERMOSO, CO-OWNER OF 2/3 OF SAID PROPERTY, WAS NOT A PARTY TO SAID AGREEMENT;III.
THE RESPONDENT COURT ERRED IN COUNTING THE DATE WHEN THE RIGHT OF REDEMPTION SHOULD BE EXERCISED FROM THE TIME THE PETITIONERS MADE A FORMAL OFFER TO REDEEM INSTEAD OF FROM THE TIME THE PETITIONERS STARTED NEGOTIATING FOR THE REDEMPTION OF THE TWO UNDIVIDED SHARES AFTER THEY WERE CERTAIN THAT SAID UNDIVIDED SHARES WERE SOLD TO THE PRIVATE RESPONDENTS."[6]
"In fact, there is no division yet between the spouses, Manuel Cruz and Consolacion Hermoso Cruz on one hand and the Heirs of Emilio Hermoso on the other. This fact of co-ownership is easily discernible in the title itself which has not yet been cancelled, and therefore still susbsisting.In overturning the aforequoted opinion of the trial court, the respondent court said that:
‘Therefore, it is ordered by the Court that said land be registered in accordance with the provisions of the Land Registration Act, as amended, in the name of said spouses, Manuel C. Cruz and Consolacion Hermoso; and heirs of Emilio Hermoso, namely: Clarita Pajo, Victoria Hermoso, Rogelio Hermoso, Agustinito Hermoso, and Danilo Hermoso as their exclusive property, --'
"The documents relating to the shares of the third party defendants readily show this fact of co-ownership. Thus, in the untitled instrument introduced by the defendants marked as Exhibit 3 which is an agreement to sell purportedly bearing the date October 10, 1979 signed by the Hermoso brothers, Agustinito and Danilo and stating how the P500,000.00 consideration of the sale shall be paid, what was referred to have been sold were the shares, rights and interests over the land of the said vendors. This document states, among others:
‘That we have agreed to sell, transfer and convey unto spouses Dr. Ceferino C. Palaganas and Azucena R. Palaganas, both of legal age, Filipinos and with residence and postal address at Bañga, Meycauayan, Bulacan all our shares, rights and interests over the above-desribed parcel of land free from all liens and encumbrances under the following terms and conditions x x x’ Cf.Exhibit 3, def., underlining supplied.
"The document signed by the two brothers on January 30, 1980 was obviously prepared at the instance of Ben Palaganas. Acknowledged before Notary Public Irineo Guardiano whose advice was sought by Ben Palaganas, its title is immediately revealing, as it is titled ‘Deed of Absolute Sale Over Two Undivided Shares to a Parcel of Land’ Cf. Exhibit C, pl., Exhibit 2, def., underlining supplied. It is also stated in this document that what was sold by the Hermoso brothers were "shares, rights and interests over the above-described parcel of land’ (which obviously refers to the land in question).
"It is significant to note that in the deed of sale marked as Exhibit 2, defendant, the area of the shares of the vendors, the Hermoso brothers were not specified. What was mentioned on the matter of area is that of the whole parcel which is 7,829 square meters. If there was a partition or separation of the portions of the whole land assigned to the owners named in the title, the parcels conveyed could have been described with their specified metes and bounds.
"There was no subdivision plan presented by the defendants. In fact, there was none as yet executed by a duly licensed geodetic engineer on that registered land. Ben Palaganas who was then dealing with the Hermoso brothers, the named vendors in the document, is a highly educated man. As he had testified, he is an accountant by profession and he had served as head of a department of the Central Bank until his retirement from the government. In the opinion of this court, he knew all along that what he or his principals were buying at the time were the undivided shares, participation and interests of the vendors to the land. His claim later in court that the shares of the vendors could already be identified and separated is difficult to believe. If his claim were true, Ben Palaganas with his experience and educational background could have easily managed to executed the proper document as a basis of an ultimate issuance of title in the name of the vendees. The document which he relied upon which is Exhibit 1-A as the basis for his conclusion that the Hermoso brothers were selling definite parcels of land is belied by the recitals of the documents he himself introduced to the court, viz. Exhibits 2 and 3. The document, Exhibit 1-A, if at all, could at best be considered as a scheme how the land could be divided in the future among the heirs of Emilio Hermoso. Temporary in nature and subject to the conformity of the 2 sets of co-owners to the land, the spouses Manuel Cruz and Consolacion Hermoso Cruz had not participated in its execution. As it was, there was no sound basis for Ben Palaganas or his principals to have assumed that Exhibit 1-A could be enforced against the spouses Manuel Cruz and Consolacion Cruz and other third persons."[7]
"In ascertaining whether the community still subsists, or that it had already been extinguished by partition among the co-owners, it is not a mandatory requirement that the property co-owned had been determined with unmistakable definiteness and clarity, as where the property has been given a technical description after proper geodetic survey; it is only required that the shares are properly determinable and the proper arrangements thereof identifiable, as when nothing is left for the co-owners to do but to actually occupy the portion pertaining to their share without any dispute arising over the extent of their respective shares and the respective position of the parcels they are entitled to occupy.We agree with the trial court’s findings that the records show co-ownership of undivided property instead of definite portions of land having been assigned and separately owned by each of the co-owners.
"Although OCT No. 0-1054 (M) reveals on its face the existence of co-ownership between Consolacion Hermoso-Cruz and the Heirs of Emilio Hermoso, the fact that the shares are separated by a stonewall (Cf. Exh. 1-A) unmistakably reveals the determinate or determinable character of the property described under said certificate of title.
"The court a quo subscribed to the theory that Exhibit 1-A is merely a scheme [of] how the land could be divided in the future among the heirs of Emilio Hermoso.’ (g.v., Decision, p. 5) Be that as it may, there is nothing more left to be done but the actual subdivision of the property by a duly licensed geodetic engineer prior to the actual titling of their respective shares. The corresponding shares of each of the heirs of Emilio Hermoso is not in dispute---one fifth each; and their proper respective arrangements, one after another, had likewise been included under Exhibit 1-A."[8]
"In the opinion of this court, he knew all along that what he or his principals were buying at the time were the undivided shares, participation and interests of the vendors to the land. His claim later in court that the shares of the vendors could already be identified and segregated is difficult to believe. If his claim were true, Ben Palaganas with his experience and educational background could have easily managed to execute the proper document as a basis of an ultimate issuance of title in the name of the vendees. The document which he relied upon which is Exhibit 1-A as the basis for his conclusion that the Hermoso brothers were selling definite parcels of land is belied by the recitals of the documents he himself introduced to the court, viz., Exhibits 2 and 3."[10]Ben Palaganas’ understanding and interpretation must necessarily prevail over that of the private respondents’ who were not present during the transaction and whose claims are colored by self-interest. In fact, the same document refers to the brothers as co-owners of undivided shares in the disputed property.[11]
"2. That it is hereby agreed that for the convenience of all parties the following shall be observed in the partition of the above-mentioned properties: that the share of CLARITA P. CARIN shall in all cases be adjacent to the properties adjudicated to CONSOLACION HERMOSO CRUZ; then followed by the shares pertaining to DANILO CIRIACO HERMOSO, VICTORINA P. HERMOSO, ROGELIO P. HERMOSO and AGUSTINITO P. HERMOSO, respectively, except in the partition of the parcel of land situated in Calvario, Meycauayan, Bulacan, which is the subject of the DEED OF EXCHANGE above-mentioned, in which case the share pertaining to CLARITA P. CARIN shall be adjacent to the stonewall that segregates the share of CONSOLACION HERMOSO CRUZ, then followed by the shares pertaining to ROGELIO P. HERMOSO, DANILO CIRIACO HERMOSO, VICTORINIA P. HERMOSO, and AGUSTINITO P. HERMOSO, at the extreme end, respectively."We agree with the trial court that this Agreement was merely a scheme as to how the land would be subdivided in the future among the heirs. The owner of two-thirds (2/3) of the property, Consolacion Hermoso, was not a party to the agreement. As a majority owner of the undivided property, she should have demanded and insisted on getting the particular portions which the respondent court ruled had already been segregated in favor of the two vendors-brothers. The agreement among the heirs of Emilio Hermoso as to shares following one another in a specific order cannot be binding on the co-owner who owns 2/3 of the entire parcel but who was not a signatory or party to the document.
"Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners.An identical provision governing co-heirs is found in Article 1088 of the Civil Code, quoted hereunder:
"The right of redemption of co-owners excludes that of adjoining owners."
Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor."It is to be noted that Article 1623 stresses the need for notice in writing in three other species of legal redemption namely: (1) redemption in a case where the share of all the other co-owners or any of them are sold to a third person;[17] (2) redemption by owners of adjoining lands when a piece of rural land not exceeding one hectare in area is alienated;[18] and (3) redemption by owners of adjoining lands in the sale of a piece of an urban land so small and so situated that the portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation.[19]
"The purpose of Article 1067 (of the old Civil Code, now Article 1088 of the present Civil Code) is to keep strangers to the family out of a joint ownership, if, as is often the case, the presence of outsiders be undesirable and the other heir or heirs be willing and in a position to repurchase the share sold (De Jesus vs. Manlapus, 81 Phil. 144). While there should no question that an heir may dispose his right before partition (Rivero vs. Serrano (CA) 46 O.G. 642; Wenceslao vs. Calimon, 46 Phil. 906; Hernaez vs. Hernaez, 32 Phil. 214), a co-heir would have had to pay only the price for which the vendee acquired it (Hernaez vs. Hernaez, Ibid.)."[21]It is a one-way street. It is always in favor of the redemptioner since he can compel the vendee to sell to him but he cannot be compelled by the vendee to buy the alienated property.
"It is evident from the evidence in the record that the vendors, i.e., the Hermoso brothers, Agustinito and Danilo had not notified in writing or even verbally their co-heirs which include the plaintiffs herein before or during the execution of the sale of their shares to Ben Palaganas or the defendants. The transaction of these two brothers had with Ben Palaganas was kept out of the knowledge of their mother and sister, the plaintiffs herein. Their need for funds must have been urgent and it was obvious that their mother if advised what they intended to do with the land could have objected to it. This reaction from the plaintiffs was easily expected because when Agustinito Hermoso sold his share to Ben Palaganas in July 1979, the same was aborted by the plaintiff, Clarita Carin. On this regard, Agustinito Hermoso, one of the two third party defendants testified:Ben Palaganas confirmed the offer to redeem. When questioned why the private respondents agreed to the return of the sold shares in 1979 but refused to do so in 1980, this witness waxed sentimental and gave a lengthy narration of the debt of gratitude his family owed to the Hermoso family. Ben Palaganas related that the patriarch Marcos Hermoso allowed the Palaganas clan to build their house on his land and to stay there for 27 years without paying rent. And, when three sons and one daughter of the Palaganases were in medical school, and the family ran out of funds, Marcos Hermoso extended financial assistance without interest and payable only when the Palaganases could afford to pay. Out of respect for the Hermoso family, Ben Palaganas related, the private respondents agreed to the cancellation of the 1979 sale. However, in 1984 when the offer to redeem the share sold in 1980 was made, the Palaganas clan no longer wanted to resell the property. Considering that over the intervening years, they had paid on a piecemeal basis the amount of P400,000.00 to the two brothers and out of "self-respect" refused to agree to the redemption. But since the property purchased had already increased in value not only "self-respect" but apparently self-interest had entered the picture.
"Q - Did you inform your mother and sister about the sale of these properties?
"A - During that time?
"Q - Yes.
"A - I did not.
x x x x x x x x x
"ATTY. GARCIA:
"Q - Do you know when, for the first time, did your mother and your sister came to know of this sale?
"A - Personally, I do not know when they came upon that knowledge.
"(TSN, 5-22-86, pp. 10-11)
"ATTY. HERMOSO:
"Q - Did you ever consult your mother or your sister of your desire to sell the property?
"A - No, sir.
"Q - Why not?
"A - Because I personally believe that what we were selling then were but our right to the said property.
"Q - How about your brother Danilo Hermoso, did he inform your mother and sister about the sale of the property?
x x x x x x x x x
"A - Danilo Hermoso, my brother, told me that he did not inform our mother and our sister about his desire to sell his share on the property.
"(TSN, 5-21-87, pp. 12-13 &15)
"ATTY. OSORIO:
"Q - How about the second sale which included the share of your brother?
"A - No, we did not inform our mother regarding our desire to sell our respective properties, sir.
"Article 1088 of the Civil Code is applicable in the instant case. But whether it is under this article 1623 of same Code, the period of 30 days has not began to run.
"When the plaintiffs had become certain after Ben Palaganas had confirmed the transaction that there was such a sale covering the shares of the third party defendants (tsn, 6-19-86, pp. 20-21) sometime in 1984, the vendors had to admit to the herein plaintiffs the fact of sale. Plaintiffs immediately started negotiations with Ben Palaganas to redeem the shares sold by the vendors. Ben Palaganas or the defendants after all, had not completely paid the whole consideration of the sale by that time. Ben Palaganas did not want to give money anymore to the vendors as the amounts already paid ad amounted to P401,500.00 (see footnote of Ben Palaganas in Exhibit 10). The several payments made to the vendors are evidenced by Exhibits 3, 4, 5, 6, 7, 8, 9 and 10. Ben Palaganas acting for himself or for the defendants refused the offers of the plaintiffs to redeem the land, claiming that the rights to the land of his principals to the vendors’ shares to the land was already established. The formal demand to redeem was sent by the plaintiffs through counsel to the defendants (Exhibit B, p. 203, record). Still the defendants did not respondent accordingly. They had instead constructed a building within the land covered by the title and in a place therein, relying on the temporary scheme of partition marked as Exhibit 1-a. To the plaintiffs, there was no other recourse except to go to court. And they did by filing this complaint on October 4, 1984 with the court."[23]
"It is obvious that the acts of Ben Palaganas or his principals would be considered as done in bad faith. Ben Palaganas should not be allowed to say that he had relied merely on the impressions given by the vendors, the Hermoso brothers. Aside from what was obvious in the documents executed by the Hermoso brothers, he should have inquired or verified said impressions made by the vendors from the plaintiffs or any of the co-owners to the property. The evidence in the record shows that it was their intense desire to own a property in the place where the land is located because of the business potentials thereat stated herein above. They did not exercise the diligence of a good father of a family because they did not want to, what with their experience with the first transaction affecting the share of the third party defendant, Agustinito Hermoso which took place only in July, 1979 a few months earlier to the transaction in question."[29]There can be no doubt that the Palaganas clan were in bad faith at the time they bought the disputed property from the Hermoso brothers. We cannot thus close our eyes to the injustice which would befall the petitioners considering that this is not the first time that they have expressed their desire to redeem the property sold by the Hermoso brothers. Under the circumstances, it is just and equitable to rule in favor of the exercise of legal redemption.