G.R. No. L-35529 - Serrano vs. Court of Appeals

Case Summary (G.R. No. L-35529)

Petitioner

Alma Marie Marquez (registered owner under TCT No. T‑81516) contends the alleged sale by Herminio Marquez to Epifania Hernandez is void, that payments were rentals, and that respondents’ claim is time‑barred or otherwise barred by laches and estoppel. She seeks reversal of the CA decision that affirmed the RTC.

Respondents

Heirs of Epifania Hernandez claim a valid sale by Herminio to Epifania (1985) covering the 200 sq. m. where their mother built and occupied a house since 1955, assert full payment was made before Epifania’s death, and pray that title be quieted in their favor and correspondent partition effected.

Key Dates

Occupancy since 1955; sale allegedly executed in 1985 (initial provisional receipt dated October 23, 1985 for P2,000); Epifania died July 28, 1995; demand letters from Marquez dated December 15, 1999 and July 17, 2000; respondents filed complaint November 21, 2000 (amended December 14, 2001); RTC decision January 28, 2016; CA decision September 22, 2017; Supreme Court decision March 23, 2022. Applicable constitution: 1987 Philippine Constitution.

Applicable Law and Authorities Cited

Primary legal sources and authorities relied upon in the decision include the 1987 Constitution (as applicable), Rule 45 of the Revised Rules of Court (jurisdictional posture), Civil Code provisions (notably Articles 491 and 493 on co‑ownership), and jurisprudence cited in the record such as Cabrera v. Ysaac, Pamplona v. Moreto, Alejandrino v. Court of Appeals, and other precedents addressing quieting of title, Torrens certificates, partition, and laches.

Procedural History

Respondents sued for specific performance with damages against Herminio; Marquez was later impleaded as registered owner. After trial the RTC declared the sale valid, ordered partition of the 1,417‑sq. m. TCT parcel to give effect to the sale, and directed cancellation of TCT No. T‑81516 and issuance of separate titles. The CA affirmed the RTC’s findings but deleted the RTC’s partition directives as beyond its jurisdiction; Marquez sought review via Rule 45 to the Supreme Court.

Factual Background (Evidence)

Respondents and their mother occupied the subject parcel since 1955. In 1985 Herminio purportedly sold the 200 sq. m. to Epifania at P400/sq. m.; a provisional receipt (Oct. 23, 1985) for P2,000 signed by Herminio was offered, along with Metrobank checks and a joint account deposit history showing payments. An Extrajudicial Settlement of the Heirs of Epifania (March 2000) stated proceeds of the joint savings account with Herminio constituted full payment for the land; Herminio affixed his signature to that settlement. After the rural bank closed, PDIC issued LBP check No. 97969 for P61,429.87 to Herminio (acknowledged July 16, 2000). An Extrajudicial Settlement with Waiver of Rights between Herminio and Marquez was executed August 4, 1994 transferring Herminio’s interest to Marquez (after the 1985 sale).

Parties’ Principal Contentions

Petitioner’s core arguments: (1) the RTC lacked jurisdiction or erred in converting the action for specific performance into quieting of title; (2) the sale is void because a co‑owner cannot sell a definite portion of an unpartitioned estate without consent (relying on Cabrera); (3) the action is barred by prescription and laches; (4) payments were rentals and not purchase price; and (5) any attempt to annul TCT No. T‑81516 amounts to a prohibited collateral attack. Respondents maintained a perfected contract of sale consummated by delivery and by payment through the joint account and PDIC proceeds, that their possession was continuous and thus imprescriptible for quieting of title, and that the TCT casts a cloud on their equitable title.

RTC Decision

The RTC found in respondents’ favor, holding that a valid sale existed and was consummated upon receipt of the initial payment and constructive delivery (occupation by Epifania). The RTC ordered partition of the 1,417‑sq. m. parcel to effect the sale, cancellation of TCT No. T‑81516, and issuance of separate titles reflecting respective shares; it rejected Marquez’s characterization of payments as rentals and found laches and prescription inapplicable.

Court of Appeals Decision

The CA affirmed the RTC’s substantive findings that a perfected contract of sale existed, that the action was properly one for quieting of title, and that respondents were not guilty of laches. The CA modified the RTC decision by deleting the RTC’s directives ordering partition and cancellation of TCT No. T‑81516, holding that partition is a special proceeding and therefore beyond the scope of the ordinary civil action for quieting of title.

Issues Presented to the Supreme Court

Marquez raised jurisdictional, substantive and procedural assignments of error: (1) conversion of specific performance case to quieting of title deprived the RTC of jurisdiction; (2) prescription and laches bar respondents’ action; (3) the purported sale is void for lack of co‑owner consent; (4) absence of essential elements of sale (noncompliance with formality for sale of real property); and (5) CA erred in upholding the RTC regarding the sale and laches.

Supreme Court: Existence and Consummation of Contract of Sale

The Supreme Court affirmed that a valid, perfected contract of sale existed between Herminio and Epifania. It relied on the October 23, 1985 provisional receipt signed by Herminio, subsequent checks and deposits into the joint account, the PDIC check acknowledging insured deposit received by Herminio, and the Extra‑Judicial Settlement of the Heirs of Epifania which declared the joint account proceeds to be full payment and which Herminio signed. The Court credited these documents and the parties’ consistent pleadings to conclude intention and execution of a sale. The Court accepted the RTC’s finding that delivery (actual or constructive) took place when Herminio allowed occupation, thereby consummating the sale notwithstanding unpaid balance, citing the principle that delivery transfers ownership even if purchase price remains unpaid.

Supreme Court: Co‑ownership, Cabrera, and Pamplona Distinction

Addressing petitioner’s reliance on Cabrera v. Ysaac (sale of a definite portion of unpartitioned land void without co‑owner consent), the Court distinguished Cabrera on the facts: here, Marquez had knowledge of and acquiesced in respondents’ occupation and the boundaries of the portion sold; the alleged co‑ownership evidence (an Extrajudicial Settlement between Herminio and Marquez) post‑dated the 1985 sale. The Court applied Pamplona v. Moreto to hold that where a vendor points out the boundaries and the other co‑owners acquiesce, a factual partial partition may arise that precludes later denial of the sale. Consequently, the Court found the sale valid and not void for lack of co‑owner consent.

Supreme Court: Nature of the Action and Prescription/Laches

The Court held the action was properly one for quieting of title (in addition to specific performance) because the amended complaint alleged and sought relief to remove the cloud over respondents’ equitable title; the nature of the action is determined by material allegations and relief sought. Two requisites for quieting of title were present: respondents’ equitable title derived from the consummated sale/delivery, and the extrajudicial settlement and resulting TCT in petitioner’s name constituted a cloud. The Court found respondents’ continuous and actual possession rendered their right to sue for quieting of title imprescriptible and that they filed suit promptly after receiving petitioner’s demand letters (1999–2000), so laches did not apply.

Supr

Case Syllabus (G.R. No. L-35529)

Case Caption, Court and Decision Date

Supreme Court of the Philippines, Second Division, G.R. No. 236826, Decision promulgated March 23, 2022.
Petition for review on certiorari under Rule 45 filed by petitioners Heirs of Herminio Marquez, represented by Alma Marie Marquez (hereafter "Marquez").
Petition seeks reversal and setting aside of the Court of Appeals Decision dated September 22, 2017 and Resolution dated January 19, 2018 in CA-G.R. CV No. 107241, which affirmed with modifications the Regional Trial Court (RTC), Branch 10, Malolos City, Bulacan Decision dated January 28, 2016 and Resolution dated June 14, 2016 in Civil Case No. 780-M-2000.

Parties and Their Representatives

Petitioners: Heirs of Herminio Marquez, represented by Alma Marie Marquez.
Respondents: Heirs of Epifania M. Hernandez — Lourdes Hernandez-Tiongson (also spelled Tiongson/Tionson in records), Hernando H. Hernandez, Gliceria Hernandez-ADe Dios, Remedios Hernandez-Castro, Dionisia Hernandez-Panopio, Aurora Hernandez-Pascual, and Oscar M. Hernandez (collectively, "respondents").
Trial judge: Presiding Judge Corazon A. Domingo-RaAola (RTC Decision).
Court of Appeals panel: Decision penned by Associate Justice Fernanda Lampas Peralta, concurred in by Associate Justices Carmelita Salandanan Manahan and Maria Elisa Sempio Diy.
Supreme Court ponente: Justice HERNANDO; concurring Justices Zalameda, Rosario, and Marquez; Senior Associate Justice Perlas-Bernabe on official leave.

Nature of the Action and Reliefs Sought

Original pleading: Complaint for specific performance with damages filed by respondents on November 21, 2000 against Herminio Marquez (Herminio).
Amended complaint: Respondents impleaded Alma Marie Marquez (Marquez) as defendant and prayed for judgment directing Herminio and Marquez to execute a deed of absolute sale in favor of respondents and to transfer title over the subject property to respondents' names.
Characterization by lower courts and SC: The action, despite original label, was treated as including quieting of title in addition to specific performance based on material allegations and reliefs sought.

Factual Background — Occupation, Ownership History and Transactions

Occupation:
- Since 1955, respondents and their mother Epifania Hernandez (Epifania) occupied a parcel in Matungao (Matunago), Bulacan, area specified as 200 square meters (the "subject property"), on which they built their house with consent and tolerance of prior owners.
Prior ownership:
- The subject property formed part of a larger 1,417-square-meter parcel previously owned by spouses Anastacio and Lourdes Sakay and spouses Godofredo and Florsita Cruz.
- In 1967, the 1,417-square-meter property was sold by the spouses Sakay and spouses Cruz to Herminio.
Sale from Herminio to Epifania (1985):
- In 1985 Herminio sold to Epifania the 200-square-meter portion where her house stood, at P400.00 per square meter.
- Agreement terms: Epifania was to pay the total price within the year of purchase or before the end of 1985; failure to comply would convert the sale into a lease with amounts paid treated as rentals or advances under a continuing lease (as stated in the sale agreement).
Payments and receipts:
- Initial payment: Provisional receipt dated October 23, 1985, signed by Herminio, acknowledging receipt of P2,000.00 as initial payment for the lot, with the notation "Ang bawat metro ay P400."
- Subsequent payments: Epifania deposited amounts in a joint account with Herminio at Rural Bank of Del Pilar, Inc., and issued various Metrobank checks to Herminio, mostly P500.00 each.
- Extrajudicial Settlement and joint account: Respondents in March 2000 executed an Extrajudicial Settlement of the Heirs of Epifania Hernandez stating proceeds of the joint savings account of their mother and Herminio would be considered full payment for the subject property; Herminio affixed his signature signifying conformity to that provision.
- Bank closure and PDIC settlement: Rural Bank of Del Pilar, Inc. ceased operations; after processing with Philippine Deposit Insurance Corporation (PDIC), PDIC released a check in the amount of P61,429.87 as insured deposit proceeds which Herminio received on June 16, 2000 (acknowledgment receipt dated July 16, 2000 referenced).
Deaths and later instruments:
- Epifania died on July 28, 1995.
- On August 4, 1994 (prior to Epifania's death), Marquez and Herminio executed an Extrajudicial Settlement of Estate with Waiver of Rights whereby Herminio purportedly waived all his rights, interest and participation over the 1,417-square-meter property in favor of Marquez (instrument dated 1994, i.e., nine years after the 1985 sale to Epifania).

Procedural Chronology Prior to Supreme Court Review

Respondents filed complaint for specific performance with damages against Herminio on November 21, 2000; amended complaint impleaded Marquez (amended complaint filed December 14, 2001).
Marquez sent demand letters to respondents to vacate the property on December 15, 1999 and July 17, 2000.
Herminio died and was substituted by his heir(s); Marquez later became registered owner of the 1,417-square-meter parcel covered by Transfer Certificate of Title No. T-81516.
Trial proceedings ensued: Evidence, witnesses, documentary exhibits (including provisional receipt, bank checks, PDIC acknowledgment, Extrajudicial Settlement of Heirs).
RTC Decision dated January 28, 2016 rendered judgment in favor of respondents (see RTC dispositive reproduced in record).
Marquez filed motion for reconsideration before RTC; denied in RTC Resolution dated June 14, 2016.
Marquez appealed to the Court of Appeals (CA): CA Decision dated September 22, 2017 denied appeal for lack of merit but modified RTC Decision by deleting paragraphs (2) and (3) of the RTC dispositive (those relating to partition and cancellation/issuance of titles); CA Resolution dated January 19, 2018 denied Marquez's motion for reconsideration.
Petition for review on certiorari to the Supreme Court under Rule 45 followed; SC decision promulgated March 23, 2022.

RTC Ruling — Findings and Disposition (January 28, 2016)

Findings:
- Validity of sale: RTC found the contract of sale between Herminio and Epifania was consummated when Herminio accepted the initial payment of P2,000.00 on October 23, 1985.
- Delivery and transfer of ownership: RTC held that when Herminio allowed Epifania and her children to occupy the subject property consequent to the agreement, ownership was transferred to Epifania (delivery by placing property in control and possession of vendee).
- Effect of non-payment: RTC concluded that failure to pay full purchase price in 1985 did not convert the contract into a lease nor render the contract inoperative.
- Alienation by co-owner: Even if Herminio alienated a portion of the 1,417-square-meter property without consent of Marquez, the sale affected only Herminio's proportionate share and did not invalidate the sale as to Epifania's share.
- Prescription / laches: RTC held action for quieting of title does not prescribe against possessor in actual possession; respondents' possession rendered their right to file imprescriptible and not barred by laches or estoppel.
- Rejection of rental characterization: RTC disregarded Marquez's contention that proceeds of the joint account and amounts received were rentals for use and occupancy; to treat them as rentals would disregard consummated contract of sale.
Disposition:
- Declared as valid the sale between Herminio and Epifania as to approximately 190 square meters (the RTC mentions 190 square meters "more or less" in dispositive).
- Directed partition of the 1,417-square-meter parcel to give full effect to the contract of sale between Herminio and Epifania.
- Directed Register of Deeds of Guiguinto, Bulacan to, after partition, cancel TCT No. T-81516 and issue separate titles in the names of Epifania Hernandez and Alma Marie Marquez reflecting respective shares.
- Ordered Alma Marie Marquez to pay plaintiffs the amount of Twenty Thousand Pesos (P20,000.00) as attorneys' fees.
- No pronouncements as to costs in RTC Decision.

Court of Appeals Ruling — Findings and Modification (September 22, 2017)

CA affirmed RTC on core findings:
- Agreed that the complaint was not merely for specific performance but involved quieting of title; found perfected contract of sale between Herminio and Epifania as established by evidence.
- Held respondents not guilty of laches because their continuous, actual possession rendered their right to bring quieting of title action imprescriptible.
- Recognized existence of cloud on respondents' equitable title due to Extrajudicial Settlement of Estate with Waiver of Rights executed by Herminio in favor of Marquez.
CA modification:
- Deleted paragraphs (2) and (3) of the RTC dispositive (those that directed partition of the 1,417-square-meter parcel and cancellation/issuance of separate titles by the Register of Deeds), reasoning that partition of real pro