G.R. No. L-58164 - Guerrero vs. St. Clare's Realty Co., Ltd.

Case Summary (G.R. No. L-58164)

Nature of the Petition and Prior Appellate Rulings

Petitioners filed a petition for review by certiorari seeking reversal of the decision of the former Court of Appeals dated April 30, 1981 in CA-G.R. No. 57597-R and its resolution dated September 3, 1981 denying reconsideration. The Court granted due course in a resolution dated May 25, 1983.

Petitioners’ Cause of Action and Requested Relief

In the Court of First Instance, petitioners sought a judgment declaring the “Deed of Sale of Lands” (Annex A), and the “Deeds of Absolute Sale” (Annexes B and C), together with Original Certificate of Title No. 4591 and Transfer Certificates of Title Nos. 339629 and 340842, null and void. They prayed that they be declared owners in fee simple of the property pro indiviso, that respondents be ordered to reconvey the lot, and that a “Joint Venture Agreement” executed by St. Clare’s Realty Company, Ltd. and United Housing Corporation be declared null and void and ineffective insofar as petitioners were concerned. Petitioners further sought actual and exemplary damages, attorney’s fees, and costs.

Petitioners’ Allegations on Ownership, Possession, and the Alleged Fraudulent Transfers

Petitioners asserted that during the lifetime of the spouses Isidoro Guerrero and Panay Ramos, the spouses were the absolute owners of the disputed land. Panay Ramos predeceased Isidoro Guerrero. According to the complaint, Isidoro Guerrero verbally willed and ordained that the lot be assigned to Andres Guerrero as part of inheritance. Petitioners alleged that after Isidoro Guerrero’s death, Andres Guerrero physically possessed and cultivated the land through a tenant, Dominador Ramirez, where the harvest arrangement granted Andres Guerrero a retained owner’s share while the tenant received 50% of the net produce. Petitioners also alleged that shortly after the Japanese occupation began, Andres Guerrero entrusted the land to his sister Cristina Guerrero, allowing her to cultivate it and enjoy the owner’s share in the harvests for as long as she needed the property. Dominador Ramirez allegedly continued as tenant until shortly before Andres Guerrero’s death.

Petitioners alleged that sometime in July 1943, Andres Guerrero died survived by his widow Segunda Laquindanum and their children who are the present petitioners. They stated that Cristina Guerrero continued as trustee of Andres Guerrero. They further alleged that on December 10, 1957, the Bureau of Lands surveyed the land for and in the name of Andres Guerrero as Lot No. 4752 under a named cadastre case, with no other claimant shown in records thereafter until Manuel Guerrero’s asserted activities.

Petitioners then described the circumstances that led them to suspect fraudulent conveyances in the 1970s. They alleged that in the latter part of 1971, people introduced themselves as agents or buyers approached some petitioners to secure consent to sell. Petitioners learned that the land was titled in the name of their cousin, Manuel Guerrero, on the basis of a purported “Deed of Sale of Land” dated April 24, 1948, allegedly executed by Cristina Guerrero. Petitioners alleged that Manuel Guerrero had the lot surveyed in his name and was issued advance plan No. AP-10008 on February 28, 1962, with a notation in the plan reflecting prior survey for Andres Guerrero. They further alleged that Manuel Guerrero filed an application for registration with the Court of First Instance of Rizal in 1963, and despite oppositions of the heirs of Cristina Guerrero, the court ruled that Manuel Guerrero owned the lot. They alleged that despite an appeal by oppositors, the Register of Deeds issued Original Certificate of Title No. 4591.

Petitioners alleged that on September 14, 1971, Manuel Guerrero executed and registered a “Deed of Absolute Sale” in favor of respondents Guerreros, leading to the cancellation of OCT No. 4591 and the issuance of Transfer Certificate of Title No. 339629. On the same day, respondents Guerreros allegedly caused to be notarized Articles of Partnership of St. Clare’s Realty Company, Ltd., and on September 28, 1971, they sold the disputed lot to St. Clare’s Realty Company, Ltd., leading to issuance of Transfer Certificate of Title No. 340842.

Legal Theories in Petitioners’ Complaints

Petitioners alleged the conveyance from Cristina Guerrero to Manuel Guerrero was fraudulent, simulated, and falsified, and that Cristina Guerrero was not the owner at the time of the alleged 1948 sale. They alleged that Manuel Guerrero obtained OCT No. 4591 in fraud of petitioners. As to the subsequent deeds, petitioners alleged that the transfers to respondents and the resultant titles were similarly fraudulent and simulated and were ineffective against them because respondents allegedly knew that the property belonged to Andres Guerrero at the time of the conveyances. Petitioners further alleged that after filing the present case, they discovered that St. Clare’s Realty Company, Ltd. had executed a Joint Venture Agreement with United Housing Corporation to develop the property into a residential subdivision, which petitioners claimed was entered into in bad faith.

Defenses Raised by Respondents and United Housing Corporation

Separate answers were filed by respondents. Respondents Guerreros alleged that Cristina Guerrero was the absolute owner of the property and that petitioners’ action was barred by prescription and that petitioners were guilty of laches. St. Clare’s Realty Company, Ltd. averred that its contract with United Housing Corporation was made in good faith. United Housing Corporation asserted that there was no privity of interest with petitioners because petitioners were not parties to the Joint Venture Agreement.

Trial Proceedings and the Evidentiary Dispute

The case proceeded to trial and involved witness testimony for petitioners, including Frisco Cervantes, grandson of Cristina Guerrero, who testified that he had in 1968 inquired about a purported mortgage arrangement and that Manuel Guerrero stated that the land had been sold but would be changed with another lot. Frisco Cervantes also testified that in 1970, the children of Cristina Guerrero sought to get the land back and Manuel Guerrero suggested exchanging the lot for another parcel of same area and value. Frisco Cervantes allegedly obtained a copy of a deed of sale in favor of Manuel Guerrero and delivered it to the children of Andres Guerrero.

Petitioners also presented Roman Mataverde, Chief Geodetic Engineer of the Bureau of Lands, who testified on Bureau lot data computation books and the record showing Andres Guerrero listed as claimant in the December 10, 1957 survey, and on subsequent changes in 1962. Petitioners further presented Dominador Ramirez, tenant of Andres Guerrero, who testified about cultivation and the 50% harvest arrangement, and he testified that wartime disruptions ended the cultivation during the early 1940s. Laura Cervantes, daughter of Sotero and Laura Cervantes, testified that Cristina Guerrero had been sick before her death in 1948, that she could walk only inside their house, and that money spent for her illness came from Manuel Guerrero through her children.

When Laura Cervantes continued testifying, defendants Guerreros objected that her testimony related to matters prohibited under Sec. 20(a), Rule 130 of the Rules of Court. The trial court ruled she “may answer,” and defendants registered a continuing objection. The court allowed the witness to continue, subject to the objection. Defendants later filed on October 24, 1973 a written motion to disqualify Laura Cervantes as witness, and on November 16, 1973 the trial court granted the motion. It declared that Laura Cervantes, Jose Cervantes, and other similarly situated witnesses were disqualified and barred from testifying.

Thereafter, petitioners filed a motion on February 12, 1974 to inhibit the presiding judge and/or transfer the case, which the trial court denied on April 26, 1974. At the continuation of the trial on June 14, 1974, petitioners and their counsel failed to appear despite due notice and warnings. The plaintiffs, through counsel, filed an urgent motion to reset the hearing, which defendants opposed. On even date, the trial court ordered that, because of non-appearance, petitioners were deemed to have waived their right to present or formally offer their evidence, and it authorized the clerk of court to receive the defendants’ evidence. After defendants closed their case, defendants were given time for memoranda, and the case was deemed submitted after receipt of stenographic notes. Petitioners later filed a “manifestation” on June 22, 1974 asserting that they did not waive their rights and intended to reserve them pending the outcome of a special civil action filed in the Court of Appeals to disqualify the trial judge. That special civil action was denied outright by the Court of Appeals on June 27, 1974.

Trial Court Decision and Subsequent Motions

On July 17, 1974, the trial court rendered judgment in favor of defendants, dismissing petitioners’ complaints. It ordered petitioners to pay several amounts as actual, moral, exemplary damages, attorney’s fees, and related awards, and it directed the Register of Deeds to cancel Lis Pendens on Transfer Certificate of Title No. 340842. It also ordered United Housing Corporation to proceed and continue its commitments under the Memorandum Agreement dated October 12, 1971. Petitioners received this decision on July 23, 1974. Three days before such receipt, on July 20, 1974, petitioners filed a motion ex abundatia cautela seeking, contingent on an adverse Court of Appeals resolution, to set aside the June 14, 1974 order and allow them to present evidence, cross-examine defense witnesses, and present rebuttal evidence. Petitioners also filed a motion for reconsideration on August 21, 1974.

After a change of judge in early 1975, the new presiding judge, on February 13, 1975,

Case Syllabus (G.R. No. L-58164)

The petitioners sought reversal of the Court of Appeals decisions dated April 30, 1981 and September 3, 1981, which denied their petition and their motion for reconsideration.
The petitioners’ petition for review by certiorari was given due course on May 25, 1983.
The underlying case began in the Court of First Instance of Rizal as an action to declare multiple transfers and related titles null and void, to compel reconveyance, and to obtain damages and attorney’s fees.

Parties and Procedural Posture

The petitioners were Jose Guerrero, Maria Guerrero, Magdalena Guerrero Espiritu, assisted by her husband Candido Espiritu, Gregorlo Guerrero, Clara Guerrero, et al. (the plaintiffs in the trial court).
The respondents included St. Clare’s Realty Co., Ltd., and individual members of the Guerrero family, namely Guillermo T. Guerrero and Cecilia Guerrero, assisted by Angelo Cardeno, and Perlinda Guerrero, etc. (the private defendants in the trial court), plus United Housing Corporation as a defendant.
The trial court dismissed the complaint and awarded substantial damages to the defendants, while directing the Register of Deeds of Rizal to cancel a lis pendens.
The Court of Appeals affirmed the trial court’s ruling with modifications on the amount and types of damages.
The Supreme Court treated the petition as unnecessary to resolve substantive merits because the petitioners had not yet completed the presentation of their evidence.
The Supreme Court set aside the Court of Appeals decision and remanded the case for further proceedings.

Key Factual Allegations

The petitioners alleged that the disputed property was a parcel of land in San Dionisio, Paranaque, Rizal, with an area of 42,299 square meters, more or less.
The petitioners alleged that the spouses Isidoro Guerrero and Panay Ramos were the absolute owners during their lifetime, and that Panay Ramos predeceased Isidoro Guerrero.
The petitioners alleged that Isidoro Guerrero verbally willed that the questioned lot be assigned to Andres Guerrero as his inheritance share while the other children received other lots.
The petitioners alleged that Andres Guerrero physically possessed and cultivated the land through tenant Dominador Ramirez, who received 50% of the net produce while Andres Guerrero paid cultivation expenses and real estate taxes.
The petitioners alleged that during the Japanese occupation, Andres entrusted the land to his sister Cristina Guerrero and allowed her to cultivate it and retain the owner’s share in harvests for as long as needed.
The petitioners alleged that Dominador Ramirez continued tenancy until shortly before the death of Andres Guerrero.
The petitioners alleged that in July 1943, Andres Guerrero died survived by his widow Segunda Laquindanum and their children, the petitioners.
The petitioners alleged that Cristina Guerrero continued as trustee of the deceased Andres Guerrero.
The petitioners alleged that on December 10, 1957, the land was surveyed for and in the name of Andres Guerrero as Lot No. 4752, Case No. 4, Cadastre No. 229 of the Paranaque Cadastre.
The petitioners alleged that in the latter part of 1971, individuals claiming to be agents or buyers approached them and stated the land was titled in the name of their cousin Manuel Guerrero.
The petitioners alleged that Manuel Guerrero caused the lot to be titled in his name through a Deed of Sale of Lands dated April 24, 1948 allegedly executed by Cristina Guerrero.
The petitioners alleged that Manuel Guerrero caused a survey in his name as Lot No. 4752, was issued advance Plan No. AP-10008 on February 28, 1962, and in the advance plan it was noted that the lot had been previously surveyed for Andres Guerrero.
The petitioners alleged that in 1963, Manuel Guerrero, assisted by Felicisimo Guerrero, filed an application for registration, and despite opposition, the trial court ruled Manuel Guerrero owned the lot.
The petitioners alleged that after opposition and appeal, Original Certificate of Title No. 4591 was issued to Manuel Guerrero and later replaced through subsequent deeds of sale.
The petitioners alleged that on September 14, 1971, a Deed of Absolute Sale purportedly executed by Manuel Guerrero in favor of the Guerrero respondents was filed with the Register of Deeds, and the Register of Deeds canceled OCT No. 4591 and issued Transfer Certificate of Title No. 339629.
The petitioners alleged that on the same day the deed of sale was registered, the Guerrero respondents caused to be notarized Articles of Partnership for St. Clare’s Realty Company, Ltd..
The petitioners alleged that on September 28, 1971, the Guerrero respondents sold the disputed lot to St. Clare’s Realty Company, Ltd. via a Deed of Absolute Sale, leading to TCT No. 340842 in the realty company’s name.
The petitioners alleged that the deed in favor of Manuel Guerrero was fraudulent, simulated, and falsified, and that Manuel Guerrero obtained OCT No. 4591 in fraud of the petitioners.
The petitioners alleged that subsequent deeds and transfers to the respondents were likewise fraudulent, simulated, and ineffective because the respondents allegedly knew the property belonged to Andres Guerrero at the time of execution.
The petitioners alleged that they learned only long after filing the case that St. Clare’s Realty, Ltd. executed a Joint Venture Agreement with United Housing Corporation for development into a residential subdivision, and that the agreement was entered into in bad faith.

Defenses and Trial Court Findings

The defendant Guerrero respondents alleged that Cristina Guerrero was the absolute owner and that the petitioners’ action was prescribed and barred by laches.
St. Clare’s Realty Co., Ltd. asserted that its contract with United Housing Corporation was made in good faith.
United Housing Corporation asserted that it had no privity of interest with the petitioners because the petitioners were not parties to the joint venture agreement.
The trial court dismissed the complaint and awarded damages and attorney’s fees to all defendants in substantial sums.
The trial court ordered cancellation of lis pendens in TCT No. 340842 and directed United Housing Corporation to continue commitments under the Memorandum Agreement dated October 12, 1971.

Evidence Presented Below

Frisco Cervantes, a grandson of Cristina Guerrero, testified that in 1968, he inquired about a mortgage at Manuel Guerrero’s house after information that the disputed lot had been borrowed from Andres Guerrero.
Frisco Cervantes testified that Manuel Guerrero stated the land had been sold and would be replaced with another lot of similar area.
Frisco Cervantes testified that in 1970, he and Cristina Guerrero’s children sought to get the land back at Sta. Rita Church and were again met with offers to replace the land.
Frisco Cervantes testified that dissatisfaction led him to obtain from the Office of the Register of Deeds in Pasig a copy of the deed of sale in favor of Manuel Guerrero, which he d