De Guzman vs. Court of Appeals

Where a vendor a retro leaves several heirs, a co-heir who alone exercises the right of repurchase over the entire property becomes a trustee for the shares of the other co-heirs; prescription does not run against the other co-owners as long as the co-ownership is expressly or impliedly recognized. The one-month interval between the first adverse claim and the filing of the partition suit was insufficient to ripen into ownership by prescription.

Teofila Manimtim sold a three-hectare parcel of unregistered land in Talisay, Batangas, on 5 November 1923 — two days before her intestate death — with a right to repurchase within seven years. She was survived by her children: Mercedes U. De Guzman (petitioner), Antonio M. Austria, Roman M. Umali, and Juliana U. Trinidad (private respondents). On 23 July 1930, Mercedes and her husband Francisco De Guzman redeemed the property from the vendee a retro. Thereafter, the tax declaration was cancelled in the mother’s name and replaced with one in Francisco’s name, and the spouses paid the realty taxes. The private respondents nonetheless continued to occupy or derive benefits from the land in a manner consistent with co-ownership. The relationship soured when the De Guzman spouses asserted sole ownership in May 1973, prompting the other siblings to institute an action for partition.

• The Pacto de Retro Sale and Intestate Succession: Teofila Manimtim sold a three-hectare unregistered parcel of land in Talisay, Batangas, on 5 November 1923, reserving the right to repurchase within seven years. She died intestate two days later, on 7 November 1923. Her sole heirs were her children: Mercedes U. De Guzman (petitioner) and Antonio M. Austria, Roman M. Umali, and Juliana U. Trinidad (private respondents).

• The 1930 Redemption: Within the seven-year redemption period, on 23 July 1930, Mercedes De Guzman and her husband Francisco P. De Guzman repurchased the property from the vendee a retro. In her testimony, Mercedes admitted that she redeemed the property “not for herself alone but for the other co-owners.” The tax declaration in the name of Teofila Manimtim was cancelled and a new one issued in the name of Francisco P. De Guzman. From that time, the De Guzman spouses paid real estate taxes on the land.

• Subsequent Possession and Enjoyment: Despite the redemption and the tax declaration in Francisco’s name, private respondent Antonio M. Austria continued to reside on the property and to receive portions of its produce. The trial court found as a fact that he remained on the land for many years and enjoyed its fruits “as a matter of right and not by tolerance or charity on the part of the petitioners.” The other private respondents likewise occasionally shared in the fruits. The parties’ conduct evinced a recognition that the redemption inured to all the heirs, with the De Guzmans acting as administrators or trustees for the co-owners.

• Adverse Claim and Partition Suit: According to the trial court’s factual findings, which the Court of Appeals adopted, the petitioners asserted an exclusive and adverse claim of ownership over the disputed land only in May 1973. The complaint for partition was filed by the private respondents the following month, in June 1973. Before May 1973, the co-ownership was expressly or tacitly acknowledged by the petitioners.

• Amendment of Complaint: Petitioners contended that the trial court erred in allowing an amendment to the complaint after their answer had been filed, arguing that the amendment impermissibly changed the plaintiffs’ theory of the case.

• Exclusive Ownership by Redemption: Petitioners maintained that the repurchase in 1930 was made exclusively for themselves because the vendee a retro intended to sell back the land to them alone, and that they had thereby become the sole owners of the property.

• Acquisitive Prescription: Petitioners argued that they had acquired ownership through extraordinary acquisitive prescription, having possessed the land continuously, publicly, and adversely under a claim of exclusive ownership for 43 years (from 1930 to 1973). They invoked the cases of Ecal v. Ecal, Director of Lands v. Abantao, and Austria v. Laurel.

• Laches and Estoppel: Petitioners asserted that the private respondents were guilty of laches and estopped from claiming co-ownership because they had “slept on their rights” for four decades, allowing the petitioners to bear the burden of redemption and tax payments without asserting any claim.

• Evidentiary Weight of Tax Declarations: Petitioners relied on the tax declarations in Francisco de Guzman’s name and their continuous payment of realty taxes as proof of exclusive ownership and adverse possession.

• Amendment of Complaint: Respondents countered that the amendment merely added an allegation that one of the plaintiffs administered, cultivated, and developed the property, and did not alter the fundamental theory of co-ownership and partition.

• Trust in Favor of All Co-heirs: Respondents argued that under Article 1514 of the old Civil Code (reproduced as Article 1612 of the new Civil Code), the right to repurchase belonged to all the heirs of the vendor a retro. Because Mercedes De Guzman exercised the right of redemption as a co-owner and admitted repurchasing for all the heirs, the redemption inured to the benefit of the entire co-ownership, and the De Guzmans held the shares of the other co-heirs in trust.

• No Acquisitive Prescription: Respondents maintained that prescription did not run in their favor because the petitioners continuously recognized the co-ownership until May 1973, as shown by the fact that Antonio Austria lived on and derived benefits from the land as a matter of right. Only one month elapsed between the first adverse claim and the filing of the partition suit — a period far short of that required for prescription.

• Laches Inapplicable: Respondents argued they were not sleeping on their rights; they were “sleeping on the land, not outside the land,” relying on the familial trust customarily observed among siblings, and acted promptly once the co-ownership was repudiated.

• Tax Declarations Not Conclusive: Respondents contended that tax declarations and tax receipts are not conclusive proof of ownership or adverse possession, particularly where the taxes were paid from the fruits of the land shared with the co-owners.

• Amendment of Complaint: Whether the trial court abused its discretion in allowing an amendment to the complaint after the answer had been filed, thereby changing the theory of the case.

• Effect of the Redemption: Whether the redemption of the entire property by Mercedes De Guzman and her husband in 1930 made them the exclusive owners, or whether the redemption inured to the benefit of all the co-heirs, creating a trust in their favor.

• Acquisitive Prescription: Whether the petitioners acquired title over the disputed land by extraordinary acquisitive prescription through 43 years of continuous, adverse, and exclusive possession.

• Laches and Estoppel: Whether the private respondents’ claim was barred by laches or estoppel due to their failure to assert their rights for more than four decades.

• Evidentiary Value of Tax Declarations: Whether the tax declarations in Francisco de Guzman’s name and the petitioners’ payment of realty taxes established exclusive ownership or adverse possession as against the private respondents.

• Amendment of Complaint: The amendment was properly allowed. The trial court’s discretion was not abused because the amendment did not alter the plaintiffs’ basic theory: that they were co-owners entitled to partition. The additional allegation that one plaintiff administered and developed the property merely supplemented, rather than substituted, the original cause of action. The stipulation of facts at pre-trial already covered the essential matters of co-ownership and succession, rendering the respondents’ case sufficient without further proof.

• Effect of the Redemption: The redemption inured to the benefit of all the heirs. Under Article 1514 of the old Civil Code (now Article 1612), where the vendor has left several heirs, each heir may redeem only his respective share. If one co-heir alone redeems the whole property, that co-heir is considered a mere trustee of the shares of the other co-heirs and does not become the exclusive owner. Here, Mercedes De Guzman exercised the right of repurchase within the stipulated period and in her capacity as a co-owner; by her own admission, she repurchased “not for herself alone but for the other co-owners.” Consequently, the De Guzmans held the property as trustees for the co-heir siblings. Any purported sale by the vendee a retro solely to the petitioners during the redemption period would have been subject to invalidation by the other co-owners.

• Acquisitive Prescription: No title by prescription was acquired. Article 494 of the Civil Code provides that prescription does not run against a co-owner “so long as he expressly or impliedly recognizes the co-ownership.” The trial court’s factual determination, affirmed by the Court of Appeals, was that the petitioners’ adverse and exclusive claim of ownership was asserted only in May 1973. The partition complaint was filed in June 1973. The required periods for either ordinary or extraordinary acquisitive prescription had not even begun to run, much less matured. The case of Ecal v. Ecal was controlling: a co-heir who redeems the whole property is a trustee, and prescription does not lie against the other co-heirs’ right to demand their shares. Director of Lands v. Abantao was distinguished on the ground that the redemptioner there had purchased the property from the government in her personal capacity after the redemption period had expired, not as a co-owner under a subsisting pacto de retro.

• Laches and Estoppel: The defense of laches was unavailing. The private respondents were not “sleeping on their rights” in a manner that would forfeit their claims. The trial court found that Antonio Austria remained on the land for many years and enjoyed its fruits as of right, and the petitioners expressly or impliedly acknowledged the co-ownership until shortly before suit. The respondents’ explanation — that they “slept on the land, not outside the land,” trusting their sister as is customary among siblings — was credited. Austria v. Laurel was inapplicable because in that case the plaintiff took 17 years to assert his claim after a categorical rejection, whereas here the adverse claim was only a month old when the partition suit was filed.

• Evidentiary Value of Tax Declarations: Tax declarations and tax receipts were not deemed conclusive evidence of ownership or proof of adverse possession in this case. It was not disputed that the petitioners paid the realty taxes, but the payment was presumed to come from the fruits of the land, which were occasionally shared with the private respondents. Moreover, the fact that respondent Austria stayed on the land and received proceeds as a matter of right negated any inference of exclusive dominion based solely on the tax declarations.

• Trust Arising from Redemption by One Co-heir — Where several co-heirs succeed the vendor a retro, a co-heir who alone exercises the right to repurchase the entire property becomes a trustee for the shares of the other co-heirs. The redeeming co-heir acquires no exclusive ownership, and prescription does not run against the other co-owners’ right to demand their respective shares, subject to a lien for the redemption price paid on their behalf. This principle, drawn from Article 1612 (formerly Article 1514) of the Civil Code and applied through the ruling in Ecal v. Ecal, was controlling: the right of repurchase is joint, and any redemption by one inures to all.

• Suspension of Prescription in Co-ownership (Article 494, Civil Code) — No prescription runs in favor of a co-owner against his co-owners “so long as he expressly or impliedly recognizes the co-ownership.” The continued acknowledgment of the co-ownership, whether by permitting a co-owner to occupy the land, share its fruits, or by any other act inconsistent with exclusive dominion, prevents the accrual of adverse possession. A one-month interval between the first hostile assertion and the filing of a partition suit is manifestly insufficient to ripen into title by prescription.

• Tax Declarations as Evidence of Ownership — Tax declarations and receipts are not conclusive evidence of ownership or of the character of possession as adverse. They may be overcome by proof that the declarant did not exercise exclusive dominion, such as when co-owners continue to occupy and benefit from the property as of right.

• “Article 494 of the Civil Code provides that prescription does not run against a co-owner ‘so long as he expressly or impliedly recognizes the co-ownership.’ As the adverse claim in this case was found by the trial court to have been made by the petitioners only in May 1973, no acquisitive prescriptive rights had as yet attached to the petitioners when the complaint for partition was filed against them in June 1973.” — This passage distills the ratio decidendi on prescription and illustrates why the one-month period was legally meaningless.

• “Under Article 1514 of the old Civil Code and Article 1612 of the new Civil Code, ‘if several persons, jointly and in the same contract should sell an undivided immovable with the right to repurchase, none of them may exercise this right for more than his respective share. The same rule applies if the person who sold the immovable alone has left several heirs, in which case each of the latter may only redeem the part which he may have acquired.’ Should one of the co-owners or co-heirs succeed in alone redeeming the whole property, such co-owner or co-heir shall be considered as a mere trustee with respect to the shares of his co-owners or co-heirs; accordingly, no prescription will lie against the right to any co-owner or co-heir to demand from the redemptioner his respective share in the property redeemed, which share is subject of course to a lien in favor of the redemptioner for the amount paid by him corresponding to the value of the share.” — Quoting from Ecal v. Ecal, this excerpt was adopted by the Court as the governing doctrine on the trust relationship and its prescription consequences.

• “We, the plaintiffs (private respondents) in this case are prepared to admit that we slept like Rip Van Winkle … but we slept for forty-three years. But we admit that we slept on the land, not outside the land.” — The private respondents’ own statement, given controlling weight by the Court, encapsulated the concept of continued recognition of co-ownership through presence and reliance on a sibling’s good faith, rather than abandonment.

• Ecal v. Ecal, CA-G.R. No. 25469-R, 29 November 1964 — Followed as the controlling precedent. It established the rule that a co-heir who alone redeems property sold with a right of repurchase becomes a trustee for the other co-heirs’ shares, and prescription does not run against the right to demand partition.

• Director of Lands v. Abantao, 68 SCRA 406 — Distinguished. In Abantao, the purchaser acquired the property from the government in her personal capacity twelve years after the tax-sale redemption period had expired, not as a co-owner under a subsisting pacto de retro. No fiduciary relationship arose.

• Austria v. Laurel, 82 Phil. 780 — Distinguished. In that case, the plaintiff allowed seventeen years to elapse after a categorical rejection of his claim before instituting an action; here, the partition suit was filed only a month after the first adverse assertion.

• Camo v. Riosa Boyco, 29 Phil. 437 (and other cited cases) — Cited for the established doctrine that tax declarations and tax payments are not conclusive proof of ownership or adverse possession.

• Article 1612, Civil Code of the Philippines (formerly Article 1514, Spanish Civil Code of 1889) — Provides that where a person who sold an immovable alone has left several heirs, each heir may only redeem the part he may have acquired. This provision was applied to hold that Mercedes De Guzman, as one of several co-heirs, could not by herself acquire exclusive title by redeeming the whole property; her redemption inured to all co-heirs and gave rise to a trust as to the others’ shares.

• Article 494, Civil Code of the Philippines — Prescribes that “no prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership.” The Court invoked this provision to defeat the petitioners’ claim of acquisitive prescription because the co-ownership was continuously recognized until May 1973.

Yap (Chairman), Narvasa, Melencio-Herrera, Feliciano, Gancayco, and Sarmiento, JJ., concurred without separate opinions.

N/A — The decision was unanimous.