G.R. No. 214410 - Technology Resource Center vs. Heirs of Alvarez

Petitioners: Technology Resource Center (TRC), formerly Technology and Livelihood Resources Center.
Respondents: Heirs of Rodolfo Manipol Alvarez (hereinafter, Heirs of Alvarez), represented by Beatriz Alvarez, widow of Rodolfo.
Subject property: Lot No. 4310, located in Barrio Maahas, Los Baños, Laguna, with a size of 2,696 square meters.

The Heirs of Alvarez filed a Complaint on February 19, 2002, seeking annulment of:

against Spouses Pablo and Fidela Zarate and TRC.

Rodolfo, married to Beatriz with three children, was one of ten children of the late Miguel Alvarez and Vicenta Manipol Alvarez. The parents distributed their properties among children via "toka" (oral giving), with half of Lot No. 4310 given to Rodolfo and the other half to Fidela Alvarez Zarate (sister of Rodolfo and wife of Pablo Zarate).
Rodolfo built a house on his half-share in 1975 and his family continued occupying it.
After Rodolfo’s death in 2001, Beatriz discovered that her late husband’s one-half share had been transferred in the name of Spouses Zarate through the May 30, 1978 DOS, with allegedly forged signatures of Miguel and Vicenta Alvarez and an improperly commissioned notary public.
The entire property was mortgaged to TRC by the Spouses Zarate, which caused fear in the heirs of foreclosure and possible loss of their home.

Spouses Zarate claimed ownership through a valid DOS executed by Miguel and Vicenta Alvarez on May 30, 1978. They asserted possession and payment of real property taxes since 1994.
TRC’s version:

Approved and granted a P2,500,000.00 loan to Princesa Cotton Corporation (owned by Pablo Zarate) secured by mortgages over multiple properties including the subject property.
Multiple loan documents, mortgage contracts, promissory notes, and restructuring agreements were executed by borrower/mortgagor and co-mortgagors (Sps. Zarate).
Princesa Cotton Corporation defaulted on loan payments after extensions and restructurings.
TRC initiated foreclosure proceedings and obtained certificates of sale for the mortgaged properties.
TRC argued that the Heirs of Alvarez were barred by laches, asserting their claim too late (24 years after the DOS execution, 14 years after its registration).

Declared the oral donation in favor of the heirs void due to non-compliance with formal donation requisites.
Upheld the validity of the May 30, 1978 DOS, deeming it a valid contract with all formalities.
Confirmed the validity of the mortgage in favor of TRC.
Applied the doctrine of laches to bar the heirs' complaint for delay in asserting claimed rights.
Dismissed the heirs’ complaint and the spouses Zarate’s counterclaim.

Reversed and set aside the RTC decision.
Declared the May 30, 1978 DOS, tax declarations based thereon, and the real estate mortgage null and void insofar as the heirs’ one-half share is concerned.
Upheld validity of the oral partition (“toka”) between the late Miguel and Vicenta Alvarez, and their children Rodolfo and Fidela.
Held that the oral partition was valid and enforceable because the successors exercised exclusive possession and ownership of respective portions, estopping the Zarates from denying the oral partition.
Ruled that the mortgage was invalid for the heirs’ half-share because a mortgagor must be the absolute owner of the property mortgaged under Article 2085 of the Civil Code.
Rejected the laches defense, finding that the heirs’ delay could be excused since they only discovered the DOS and tax declaration in Zarates’ names after Rodolfo’s death.
Affirmed heirs’ ownership over one-half of the property.

Whether the Court of Appeals erred in ruling that the principle of laches did not apply to bar the heirs' claim.
Whether the Court of Appeals erred in giving probative weight to the oral partition ("toka") over the written Deed of Absolute Sale executed in 1978.