De la Cruz vs. Cruz

The Court held that the purchase of a concretely determined and geographically identifiable portion of a registered parcel does not establish co-ownership over the whole, and therefore does not trigger the right of legal redemption among co-owners under Article 1620 of the Civil Code. Furthermore, an adjoining owner cannot invoke the right of pre-emption under Article 1622 absent affirmative proof that the sold urban portion is so small and situated that a major part thereof cannot be used for any practical purpose within a reasonable time.

Spouses Julio Cruz and Zenaida Montes owned a 662-square-meter parcel in Pasay City registered under TCT No. 10680. On December 16, 1965, they sold exactly 331 square meters on the northern portion to Cresenciano de la Cruz, subject to a stipulation that a subdivision plan would be executed to technically describe both the conveyed and remaining portions. On February 28, 1966, the spouses sold the unsegregated southern 331-square-meter portion to Alfonso Miranda, describing it as the southern half bordering specific streets. De la Cruz filed suit on April 25, 1966, seeking to exercise pre-emption and legal redemption over the portion sold to Miranda. The parties agreed to submit the case for decision on the pleadings after pre-trial.

• The spouses Cruz and Montes owned a 662-square-meter parcel in Pasay City covered by TCT No. 10680.
• On December 16, 1965, they sold 331 square meters on the northern portion to plaintiff De la Cruz, with a contractual stipulation that a subdivision plan would be prepared to technically describe the conveyed and remaining portions.
• On February 28, 1966, the spouses sold the remaining southern 331-square-meter portion to Alfonso Miranda, identifying it as the southern half bordering C. Jose and F. Francisco Streets.
• De la Cruz filed a complaint on April 25, 1966, praying to be declared entitled to purchase, by way of pre-emption and legal redemption, the half sold to Miranda.
• The defendants filed a counterclaim alleging that De la Cruz failed to cause the preparation of the subdivision plan as agreed and refused to surrender the owner’s duplicate title to the Register of Deeds for annotation of a released mortgage, causing financial prejudice.
• The parties agreed during pre-trial to submit the case for decision on the pleadings, foregoing the presentation of evidence.

• Petitioner maintained that the sale of the northern half to him and the retention of the southern half by the vendor-spouses made them co-owners of the entire registered parcel, thereby vesting in him the right of legal redemption over the portion subsequently sold to a third party.
• Petitioner argued that, alternatively, he qualified as an adjoining owner entitled to the statutory right of pre-emption under the Civil Code.
• Petitioner contended that the trial court erred in awarding damages without evidentiary proof of the actual amount, despite the submission of the case on the pleadings.
• Petitioner challenged the award of attorney’s fees, asserting that an adverse ruling alone does not justify such an award absent a showing of abuse of discretion.

• Respondents countered that no co-ownership existed because the portions sold and retained were concretely determined, geographically identifiable, and exclusively owned, with the northern half belonging to petitioner and the southern half to the spouses.
• Respondents maintained that petitioner failed to satisfy the mandatory statutory conditions for the right of pre-emption as an adjoining owner.
• Respondents asserted that petitioner’s failure to specifically deny the material allegations of their counterclaim constituted a deemed admission, warranting the award of damages and attorney’s fees for breach of the subdivision agreement and obstruction of the title’s release from encumbrance.

• Procedural Issues:
  • Whether the trial court correctly awarded damages based on allegations in a counterclaim that were not specifically denied, when the case was submitted for decision on the pleadings without presentation of evidence.
• Substantive Issues:
  • Whether the purchase of a physically identifiable half of a registered lot creates co-ownership over the whole, thereby triggering the right of legal redemption among co-owners.
  • Whether an adjoining owner is entitled to the right of pre-emption under Article 1622 of the Civil Code when the sold portion’s size and practical utility are not established.

• Procedural:
  • The Court reversed the award of damages. Although material allegations in a counterclaim not specifically denied are generally deemed admitted, Rule 9 of the Rules of Court expressly excepts allegations regarding the amount of damages. Because the amount must be duly proved and the case was decided solely on the pleadings without presentation of evidence, respondents were deemed to have waived their claim for damages.
• Substantive:
  • The Court affirmed the dismissal of the redemption and pre-emption claims. Co-ownership requires an abstract or spiritual share in an undivided thing; here, the northern and southern portions were concretely determined and exclusively possessed, rendering the petitioner and the vendor-spouses separate owners rather than co-owners. Consequently, the right of redemption among co-owners did not arise. The right of pre-emption under Article 1622 was likewise unavailable because petitioner neither alleged nor proved that the sold portion was so small and situated that a major part could not be used practically, a mandatory condition for urban land pre-emption. The award of attorney’s fees was sustained as a proper exercise of judicial discretion under Article 2208 of the Civil Code, given the clearly unfounded nature of the action.

• Concept of Co-ownership vs. Ownership of Determinate Portions — Co-ownership exists only when parties hold an abstract or spiritual share in a thing that is not physically divided. Where portions are concretely determined, geographically identifiable, and exclusively possessed, the owners hold distinct dominion over specific areas, not co-ownership over the whole. The Court applied this principle to hold that the sale of a specific northern half and retention of the southern half did not create a co-ownership regime over the entire 662-square-meter lot, thereby negating the right of legal redemption among co-owners.
• Right of Pre-emption for Adjoining Urban Landowners (Article 1622) — The statutory right of pre-emption for adjoining owners of urban land is conditional upon proof that the sold portion is so small and so situated that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been acquired merely for speculation. The Court ruled that this right is not automatic upon mere adjacency and requires affirmative proof of the statutory conditions, which petitioner failed to establish.

• "Tested against the concept of co-ownership, as authoritatively expressed by the commentators, appellant is not a co-owner of the registered parcel of land, taken as a unit or subject of co-ownership, since he and the spouses do not 'have a spiritual part of a thing which is not physically divided' ... The portions of appellant-plaintiff and of the defendant spouses are concretely determined and identifiable ... That their respective portions are not technically described, or that said portions are still embraced in one and the same certificate of title, does not make said portions less determinable or identifiable or distinguishable, one from the other, nor that dominion over each portion less exclusive, in their respective owners." — The Court emphasized that physical determinability and exclusive dominion over specific halves negate the existence of a co-ownership regime, thereby precluding the application of legal redemption among co-owners.
• "Under Section 8, Rule 9 [Sec. 1, Rule 9 of the Revised Rules of Court], however, allegations regarding the amount of damages are not deemed admitted even if not specifically denied, and so must be duly proved." — The Court clarified the procedural limitation on deemed admissions regarding damages, necessitating independent evidentiary proof even when substantive allegations remain uncontested in a case submitted on the pleadings.

• Soriente v. CA — Cited to establish that the right of pre-emption under Article 1622 of the Civil Code requires affirmative proof that the sold urban portion is too small for practical use and was bought for speculation.
• Rili v. Chunaco — Cited to support the procedural rule that claims for damages must be proved and cannot rest solely on deemed admissions of uncontested allegations when the case is submitted on the pleadings.
• Heirs of Justiva v. Gustilo and Lopez v. Gonzaga — Cited to affirm that the award of attorney’s fees is discretionary under Article 2208 of the Civil Code and may be properly granted when the initiating action is clearly unfounded.

• Article 1620, Civil Code — Governs the right of legal redemption among co-owners; the Court found it inapplicable because the factual configuration established separate ownership of determinate portions, not co-ownership.
• Article 1622, Civil Code — Provides the right of pre-emption for adjoining owners of urban land; invoked by petitioner but denied due to failure to prove the statutory size, utility, and speculative acquisition conditions.
• Article 2208, Civil Code — Enumerates instances where attorney’s fees may be recovered; relied upon to sustain the trial court’s discretionary award given the clearly unfounded nature of the suit.
• Rule 9, Section 1 (and Section 8) of the Revised Rules of Court — Dictates that failure to specifically deny material allegations results in deemed admission, but expressly exempts the amount of damages from such admission, requiring independent proof.