Aznar Brothers Realty Company vs. Court of Appeals

In an unlawful detainer action, prior physical possession by the plaintiff is not an indispensable requirement; the cause of action is the termination of the defendant’s possession. Moreover, an extrajudicial partition made with preterition of compulsory heirs is not rescinded absent proof of bad faith or fraud, and the inclusion of a non-heir voids the partition only as to that person. Registration of the instrument of conveyance is not necessary for validity as between the parties and their heirs.

Lot No. 4399 in Barangay Mactan, Lapu-Lapu City, containing 34,325 square meters, was originally owned by Crisanta Maloloy-on. Private respondents, claiming to be her descendants and successors, had occupied portions of the land in the concept of owners since the time of their parents and grandparents. Petitioner Aznar Brothers Realty Company (AZNAR) acquired the lot from the heirs of Crisanta Maloloy-on through an Extrajudicial Partition of Real Estate with Deed of Absolute Sale dated 3 March 1964, which was registered under Act No. 3344 on 6 March 1964. AZNAR declared the property for taxation and paid taxes. When AZNAR entered into a joint venture to develop the property into a housing subdivision and beach resort, it demanded that private respondents vacate. The demands were ignored, prompting AZNAR to file an unlawful detainer complaint.

• The Property and AZNAR’s Acquisition: Lot No. 4399, located in Barangay Mactan, Lapu-Lapu City, was owned by Crisanta Maloloy-on. On 3 March 1964, her heirs executed an Extrajudicial Partition of Real Estate with Deed of Absolute Sale conveying the entire 34,325-square-meter lot to petitioner AZNAR. The deed was registered under Act No. 3344 with the Register of Deeds of Lapu-Lapu City on 6 March 1964. Thereafter, AZNAR declared the property under its name for taxation and regularly paid real property taxes.

• Private Respondents’ Possession: Private respondents, claiming to be the successors and descendants of the eight children of Crisanta Maloloy-on, had been occupying portions of Lot No. 4399 in the concept of owners since the time of their parents and grandparents. AZNAR alleged that their occupation was by mere tolerance, subject to the condition that they would vacate upon the company’s demand.

• Demand to Vacate and the Ejectment Suit: When AZNAR entered into a joint venture with Sta. Lucia Realty Development Corporation to develop the lot into a housing subdivision and beach resort, it demanded that private respondents vacate the property. Upon their refusal, AZNAR filed an unlawful detainer case (Civil Case No. R-1027) before the MTCC of Lapu-Lapu City.

• Private Respondents’ Annulment Case: Private respondents filed a separate action (Civil Case No. 2930-L) before the RTC of Lapu-Lapu City to declare the Extrajudicial Partition with Deed of Absolute Sale void ab initio on the grounds that it was simulated and fraudulent. They alleged they only learned of the fraud when AZNAR entered the land in the last quarter of 1991 and destroyed its vegetation.

• MTCC Findings: The MTCC resolved the issue of ownership provisionally and ruled for AZNAR. It found that the deed was registered and that private respondents’ specific denial of the authority of some signatories operated as a negative pregnant, admitting the authority of the other vendors. It further held that the non-participation of some heirs made the deed merely annullable, not void ab initio, and that the action had prescribed. The MTCC ordered private respondents to vacate and pay ₱8,000 attorney’s fees and ₱2,000 litigation expenses. No award of back rentals or reasonable compensation for use of the premises was made.

• Execution and Demolition: While the appeal was pending before the RTC, AZNAR secured an ex parte writ of execution on the ground that private respondents had not filed a supersedeas bond. The sheriff padlocked the houses, but private respondents re-entered. AZNAR moved for a writ of demolition, which the RTC granted after hearing. The RTC affirmed the MTCC on 22 July 1994 and ordered demolition. The writ of demolition was implemented on 3 August 1994; most houses were demolished, except two that were moved elsewhere.

• Finality and Supersedeas Bond: AZNAR argued that the MTCC judgment had become final and immediately executory because private respondents failed to post a supersedeas bond as required by Section 8, Rule 70 of the Rules of Court.

• Prior Physical Possession: AZNAR contended that the Court of Appeals erred in invoking lack of prior physical possession as a ground to reverse the eviction, since such possession is not an element of unlawful detainer.

• Validity of the Extrajudicial Partition: AZNAR maintained that the Extrajudicial Partition with Deed of Absolute Sale is valid, duly notarized, and registered. It argued that any alleged defect, such as lack of participation of all heirs, does not render the deed void ab initio but merely voidable as to the affected shares, and that private respondents presented no competent evidence of forgery, fraud, or bad faith.

• Estoppel: AZNAR asserted that its statement in the petition for reconstitution — that the certificates of title “were not conveyed” — referred to the certificates of title themselves, not the property, and thus no estoppel arose.

• Application of Legaspi v. Avendaño: AZNAR argued that the Court of Appeals erroneously applied the equitable suspension doctrine in Vda. de Legazpi v. Avendaño because the demolition had already been fully implemented, rendering any injunctive relief moot.

• Nullity of the Deed: Private respondents argued that the Extrajudicial Partition with Deed of Absolute Sale is void ab initio for being simulated and fraudulent. They contended that not all known heirs of Crisanta Maloloy-on participated; two signatories were not heirs; some signatories were already dead, others were minors, and signatures were forged. A family tree and a photocopy of a death certificate were offered to support these claims.

• Notarial Irregularity: They claimed that the lawyer who prepared and notarized the document was AZNAR’s representative, in violation of the Spanish Notarial Law of 1889, which disqualified a notary from authenticating a contract containing provisions in his favor or in favor of his relatives.

• Non-Registration and Ownership: Private respondents pointed out that the deed was never annotated on the reconstituted Original Certificate of Title No. RO-2856, and that AZNAR’s own petition for reconstitution stated that the certificates of title “were not conveyed,” allegedly estopping AZNAR from claiming ownership.

• Possession and Equity: Private respondents asserted that they had been in peaceful, continuous, and adverse possession since time immemorial, and that AZNAR never had prior physical possession. They invoked Vda. de Legazpi v. Avendaño to support the suspension of the writ of demolition, arguing that their right of possession was seriously placed in issue in the pending annulment case.

• Finality and Supersedeas Bond: Whether the MTCC judgment had become final and executory due to private respondents’ failure to post a supersedeas bond, and whether the RTC’s writ of execution and demolition were validly issued.

• Prior Physical Possession: Whether prior physical possession by the plaintiff is an indispensable requirement in an unlawful detainer action.

• Validity of the Extrajudicial Partition: Whether the Court of Appeals erred in declaring the Extrajudicial Partition with Deed of Absolute Sale null and void on grounds of preterition of heirs, inclusion of non-heirs, forgery, minority, death of signatories, and notarial disqualification.

• Effect of Non-Registration: Whether the failure to annotate the deed on the reconstituted certificate of title rendered the conveyance invalid.

• Estoppel: Whether AZNAR was estopped from asserting ownership by virtue of its allegation in the reconstitution petition that the certificates of title “were not conveyed.”

• Equitable Suspension of Execution (Legaspi v. Avendaño): Whether the execution and demolition should have been suspended pending final determination of the annulment case under the doctrine in Vda. de Legazpi v. Avendaño.

• Finality and Supersedeas Bond: The MTCC judgment did not become final because private respondents seasonably appealed. The failure to post a supersedeas bond did not authorize immediate execution because the MTCC judgment did not award any back rentals, arrears, or damages for use and occupation. The ₱8,000 attorney’s fees and ₱2,000 litigation expenses are not the “rents, damages, and costs” contemplated under Section 8, Rule 70; those refer to the reasonable compensation for the use and occupation of the premises. Moreover, no rental was fixed in the judgment, so there was no obligation to make periodic deposits. The writ of execution issued by the RTC was therefore erroneous. Nevertheless, the writ of demolition subsequently issued after due hearing substantially complied with the requirements of a writ of execution, and the demolition was already a fait accompli.

• Prior Physical Possession: Prior physical possession by the plaintiff is not an indispensable element in unlawful detainer. It is required only in forcible entry. In unlawful detainer, the plaintiff’s cause of action is precisely to terminate the defendant’s possession, which was initially lawful but became unlawful upon the expiration or termination of the right to possess. The absence of prior physical possession on AZNAR’s part was therefore immaterial.

• Validity of the Extrajudicial Partition: The deed was not rendered void. Under Article 1104 of the Civil Code, a partition made with preterition of a compulsory heir shall not be rescinded unless bad faith or fraud is proved; no such evidence was presented. Under Article 1105, a partition that includes a person believed to be an heir but who is not shall be void only with respect to that person. The allegations of minority, death of signatories, misspelled names, thumbmarks, and forged signatures were bare assertions unsupported by competent evidence. The notarized deed enjoys a presumption of regularity and due execution, and the burden to prove forgery by clear and convincing evidence was not discharged. The claim of notarial disqualification under the Spanish Notarial Law of 1889 was rejected because that law was repealed, and the applicable Notarial Law at the time (Chapter 11 of the Revised Administrative Code) only disqualified persons convicted of crimes involving moral turpitude. There was no proof that the notary was AZNAR’s representative in 1964.

• Effect of Non-Registration: Registration is not necessary to give a conveyance legal effect as between the parties and the vendor’s heirs. The purpose of registration is to protect innocent third parties and subsequent transferees who rely on the clean title of the property. Since no rights of innocent third persons or subsequent transferees were involved, the conveyance was valid and binding upon private respondents as heirs of the vendors. The annotation of the deed on the reconstituted title was not required to make it effective inter partes.

• Estoppel: The statement in the reconstitution petition that the certificates of title “were not conveyed” referred to the certificates of title themselves, not to the property. It did not constitute an admission that the lot had not been sold. Estoppel therefore did not lie.

• Equitable Suspension of Execution (Legaspi v. Avendaño): The doctrine in Vda. de Legazpi v. Avendaño — that a court may suspend the enforcement of an ejectment judgment where the right to possess is seriously placed in issue in another proceeding — applies when a petition for preliminary injunction is filed before the writ is enforced. Here, the petition for a temporary restraining order was filed on appeal but was received by the Court of Appeals only after the demolition had already been carried out. The acts sought to be enjoined had become a fait accompli; injunction would no longer lie. The issue was therefore rendered moot and academic.

• Supersedeas Bond in Unlawful Detainer (Rule 70, Sec. 8, old Rules) — To stay the immediate execution of an adverse MTCC judgment in an ejectment case, the defendant must perfect an appeal, file a supersedeas bond to answer for rents, damages, and costs, and periodically deposit the rentals falling due during the appeal. However, if the judgment does not award any back rentals or damages for use and occupation, no supersedeas bond is required. Attorney’s fees and litigation expenses are not the “damages” contemplated by the rule; the damages referred to are the reasonable compensation for the use and occupation of the property.

• Prior Physical Possession in Ejectment — Prior physical possession by the plaintiff is an indispensable requirement only in forcible entry (accion publiciana or accion interdictal where possession was acquired by force, intimidation, threat, strategy, or stealth). In unlawful detainer, the plaintiff’s cause of action is the termination of the defendant’s lawful possession that has become unlawful by reason of the expiration or violation of the terms of the right to possess; prior physical possession of the plaintiff is not required.

• Provisional Determination of Ownership in Ejectment — In an ejectment suit, the only issue is possession de facto. When the issue of possession cannot be resolved without addressing ownership, the court may receive evidence on title but solely for the purpose of determining possession. Such determination is provisional and does not prejudice a separate action for the final resolution of ownership.

• Effect of Preterition and Inclusion of Non-Heirs in Partition (Articles 1104 and 1105, Civil Code) — A partition made with preterition of a compulsory heir shall not be rescinded unless bad faith or fraud is proved; the persons who benefited are proportionately obliged to pay the omitted heir the share due. A partition that includes a person believed to be an heir but who is not shall be void only with respect to that person. Thus, the participation of non-heirs does not invalidate the entire partition.

• Presumption of Regularity of Notarized Documents — A notarized document carries the presumption of regularity and due execution. It is admissible without further proof of authenticity and is entitled to full faith and credit upon its face. The party alleging forgery bears the burden of proving it by clear and convincing evidence. The same burden applies to claims that a party did not appear before the notary.

• Registration Not Necessary for Validity Between Parties — Under the Torrens system, registration is never necessary to give a conveyance legal effect as between the parties and the vendor’s heirs. The purpose of registration is to protect innocent third parties and subsequent transferees for value who rely on the certificate of title. Where no rights of innocent third persons are involved, the non-registration of the deed does not affect its validity and binding effect upon the parties.

• Repeal of Spanish Notarial Law Disqualifications — The Spanish Notarial Law of 1889, which disqualified a notary from authenticating contracts in his favor or in favor of relatives, was repealed. Under the Notarial Law in force at the time (Chapter 11 of the Revised Administrative Code), only conviction for a crime involving moral turpitude disqualified a person from notarizing documents.

• Mootness of Injunction Against Consummated Acts — When a writ of demolition has been fully implemented and the structures have been demolished, any petition for injunction to restrain the enforcement of the writ becomes moot and academic. An injunction will not issue to enjoin a fait accompli.

• “[P]rior physical possession by the plaintiff of the subject property is not an indispensable requirement in unlawful detainer cases, although it is indispensable in an action for forcible entry. The lack of prior physical possession on the part of AZNAR is therefore of no moment, as its cause of action in the unlawful detainer case is precisely to terminate private respondents’ possession of the property in question.”

• “[T]he damages referred to therein are the reasonable compensation for the use and occupation of the property which are generally measured by its fair rental value and cannot refer to other damages which are foreign to the enjoyment or material possession of the property.” (On the scope of “rents, damages, and costs” for purposes of the supersedeas bond under Rule 70)

• “[A] partition made with preterition of any of the compulsory heirs shall not be rescinded, unless it be proved that there was bad faith or fraud on the part of the persons interested; but the latter shall be proportionately obliged to pay to the person omitted the share which belongs to him.” (Citing Article 1104, Civil Code)

• “A partition which includes a person believed to be an heir, but who is not, shall be void only with respect to such person.” (Citing Article 1105, Civil Code)

• “[T]he act of registering a document is never necessary to give the conveyance legal effect as between the parties and the vendor’s heirs. As between the parties to a sale, registration is not indispensable to make it valid and effective. The peculiar force of a title is exhibited only when the purchaser has sold to innocent third parties the land described in the conveyance.”

• “Injunction would not lie anymore, as the acts sought to have been enjoined had already become a fait accompli or an accomplished or consummated act.”

• Vda. de Legazpi v. Avendaño, 79 SCRA 135 (1977) — The Court distinguished the application of this case. While the doctrine allows a court to suspend the enforcement of an ejectment judgment pending a more substantive case involving legal possession or ownership, such suspension presupposes that a petition for preliminary injunction is filed before the execution is carried out. Here, the demolition had already occurred, rendering the issue moot.

• Once v. Gonzales, 76 SCRA 258 (1977) — Followed. Where no back rentals are adjudged in the appealed judgment, no supersedeas bond is necessary to stay execution. The writ of execution premised on the failure to file a bond is groundless and void.

• Sapto v. Fabiana, 103 Phil. 683 (1958) — Followed. Registration is not necessary to give a conveyance legal effect as between the parties. The principle that registration is the operative act applies only to cases involving conflicting rights over registered property and innocent transferees who relied on the clean title.

• Kapunan v. Casilan, 109 Phil. 889 (1960) — Relied upon for the proposition that the Spanish Notarial Law of 1889 on disqualification of notaries was repealed by Act No. 496.

• Lunsod v. Ortega, 46 Phil. 664 (1921) — Applied. No obligation to deposit rentals during pendency of appeal existed because the appealed judgment did not fix the reasonable rental or compensation for the use of the premises.

• Aguilar v. Cabrera, 74 Phil. 658 (1944); Pangilinan v. Aguilar, 43 SCRA 136 (1972); Sumulong v. Court of Appeals, 232 SCRA 372 (1994); Javelosa v. Court of Appeals, 265 SCRA 493 (1996) — Consistently followed the rule that prior physical possession is indispensable in forcible entry but not in unlawful detainer.

• Section 8, Rule 70, Rules of Court (now Section 19, Rule 70, 1997 Rules) — Governs immediate execution of an MTCC judgment in ejectment and the requisites for a stay: perfection of appeal, filing of a supersedeas bond for rents, damages, and costs, and periodic deposit of rentals. Applied to hold that no bond was required because no back rentals or damages for use and occupation were awarded.

• Section 4, Rule 70, Rules of Court — Allows the court in ejectment cases to receive evidence on ownership solely for the purpose of determining possession de facto. The Court’s ruling on the validity of the extrajudicial partition was explicitly provisional.

• Section 21, Revised Rules of Summary Procedure — Repealed Section 10 of Rule 70 and made the RTC decision in ejectment cases immediately executory upon affirmance, without prejudice to appeal. The writ of demolition issued by the RTC was deemed to substantially comply with the writ of execution.

• Articles 1104 and 1105, Civil Code — Provided the substantive rules on the effect of preterition of compulsory heirs and inclusion of non-heirs in an extrajudicial partition. Applied to reject the claim that the partition was void ab initio.

• Spanish Notarial Law of 1889, Sections 22 and 28 — Raised by private respondents to argue notarial disqualification. The Court held that these provisions had been repealed and were no longer in force.

Justices Reynato S. Puno, Santiago M. Kapunan, Bernardo P. Pardo, and Consuelo Ynares-Santiago concurred.

N/A — The decision was unanimous; no dissenting opinions were registered.