Go vs. Go

A trial court possesses inherent authority to order the deposit of rental income with the court as a provisional, preservatory measure during the pendency of a partition action, even prior to a final determination of co-ownership; however, such order must conform to the relief prayed for and must not be tainted by grave abuse of discretion, and where the evidence suggests the property is held in trust for a deceased parent's estate, the deposit must be limited to the movant's presumptive fractional share as one of several heirs.

Wilson A. Go and Harry A. Go are among the five children of Spouses Sio Tong Go and Simeona Lim Ang. The parties are registered co-owners of a 7,151-square-meter parcel of land in Valenzuela City covered by TCT No. V-44555, issued on June 24, 1996, on which seven warehouses were built and leased to various businesses. Their father, Sio Tong Go, was of Chinese descent and allegedly observed Chinese customs and traditions in the management of family property. The dispute arose after Sio Tong Go's death on February 27, 2006, when Wilson demanded his share of the rental collections and sought partition of the property.

Wilson A. Go and Harry A. Go are among the five children of Spouses Sio Tong Go and Simeona Lim Ang. On June 24, 1996, TCT No. V-44555 was issued by the Registry of Deeds of Valenzuela, Metro Manila, covering a 7,151-square-meter parcel of land in Valenzuela City, registered in the names of Wilson and Harry as co-owners in equal shares. Seven warehouses were built on the land and leased to various businesses. According to Harry, the land was actually purchased by their father, Sio Tong Go, together with one Wendell Simsim on November 23, 1995, but the title was placed in the names of Wilson, Harry, and Simsim in observance of Chinese customs and traditions, rather than in Sio Tong Go's name. Simsim's interest was subsequently transferred to Wilson and Harry through a deed of extrajudicial settlement dated June 24, 1996. Harry claimed that Sio Tong Go retained control and stewardship of the warehousing business during his lifetime, that the buildings and improvements were sourced from their parents' funds, and that Sio Tong Go had entrusted the title to Wilson for safekeeping while management was given to Harry.

Sio Tong Go died on February 27, 2006. Thereafter, Wilson began demanding his one-half share of the rental collections from the seven warehouses. According to Wilson, Harry had collected rentals amounting to P1,697,850.00 from March 2006 to September 2006 without giving Wilson his share, despite repeated demands. Harry disputed the amount, claiming the monthly collection was only P228,000.00 or a total of P1,596,000.00 for six months, and asserted that the income must be offset against Wilson's debts paid from the rentals as well as expenses for utilities, administration, and preservation of the property. Harry also maintained that partition was improper because their father had imposed indivision as a condition prior to his death, that partition would render the property unserviceable for its intended purpose, and that it would prejudice the rights of the other surviving siblings and their mother who depended on the rental income for subsistence.

On September 11, 2006, Wilson filed an action for partition with accounting in the RTC of Valenzuela City, Branch 172, docketed as Civil Case No. 179-V-06, praying for partition of the land and improvements in equal shares, an accounting of rentals, joint collection of monthly rentals pending resolution, and attorney's fees. On April 23, 2007, Wilson filed a motion to require Harry to deposit with the trial court Wilson's one-half share of the rental collections from the date of filing of the complaint through April 30, 2007 and every month thereafter, as well as rentals collected from February 2006 to August 2006. On May 4, 2007, the trial court granted the motion but ordered the deposit not merely of Wilson's one-half share but of the entire monthly rental collections. Harry's motion for reconsideration was denied on July 4, 2007. Harry then filed a petition for certiorari with the Court of Appeals, which nullified both RTC orders on the ground that the deposit was premature because the issue of co-ownership had yet to be resolved. Wilson's motion for reconsideration was denied by the Court of Appeals on July 4, 2008, prompting the instant petition.

Before the Supreme Court, Wilson's shifting theories became a significant factual consideration. In his complaint, he had relied solely on the names appearing in the title. Before the Court of Appeals, he never refuted Harry's claim that the property was purchased by their father; instead, he insisted that the title was controlling. Only after the Court of Appeals cited Article 1448 of the Civil Code on implied trust did Wilson, in his motion for reconsideration, advance for the first time the theory that the property was donated to him and Harry by their father. Before the Supreme Court, Wilson further stated that he did not demand his share of rentals during his father's lifetime as a matter of courtesy and respect, since his father was overseeing the business — an admission that lent credence to Harry's claim that Sio Tong Go owned and controlled the property.

• Provisional Character of the Order: Petitioner contended that the subject order is merely provisional and preservatory in character, intended to prevent undue dissipation of rental income until the trial court determines who is lawfully entitled thereto.
• Authority Under Rule 69: Petitioner argued that Rule 69 of the Rules of Court on partition does not preclude the trial court from issuing orders to protect and preserve the rights and interests of the parties while the main action for partition is being litigated.
• Title as Evidence of Co-ownership: Petitioner asserted that there is no dispute that the subject property is registered in the names of both parties, this being admitted by private respondent himself, and that the trial court correctly ordered the deposit of the monthly rentals to safeguard the interests of the parties.

• Need for Concrete Ground: Private respondent countered that even assuming the order is merely provisional, such an order needs a concrete ground to justify it, and the fact that title is in the names of both parties does not automatically mean co-ownership exists.
• Chinese Custom and Implied Trust: Private respondent emphasized that the surrounding circumstances support the contention that the subject land was bought by Sio Tong Go and the title was placed in the names of his two sons in observance of Chinese customs and traditions, creating an implied trust.
• Acquiescence for Ten Years: Private respondent pointed out that petitioner began claiming his alleged one-half share only after their father's death in 2006, despite the land having been purchased in 1996, showing acquiescence for ten years that the property was owned by their father.
• Prejudice to the Family: Private respondent argued that the grant of the motion to deposit would unduly prejudice the whole family, which depends on the rental income for living expenses and the costs of administration and preservation of the subject land.
• No Proof of Dissipation: Private respondent asserted that petitioner failed to prove any undue dissipation of rental income that would warrant the issuance of the order.
• Excess of Prayer: Private respondent maintained that the order to deposit the entire monthly rental income is erroneous because petitioner only prayed for the deposit of his alleged one-half share and not the entirety thereof.

• Propriety of Provisional Deposit Order: Whether the Court of Appeals erred when it nullified the order requiring private respondent to deposit the monthly rentals over the subject land with the trial court during the pendency of the action for partition and accounting.

• Propriety of Provisional Deposit Order: Partly yes. The Court of Appeals erred in holding that a deposit order is premature before resolution of co-ownership, as such an order is a permissible provisional relief; however, the trial court gravely abused its discretion in ordering the deposit of the entire rentals rather than only the amount prayed for, and in light of serious questions about the true ownership of the property, the deposit was reduced to 1/12 of the monthly rentals.

• Propriety of Provisional Deposit Order: The Court first addressed the procedural posture: petitioner pursued the wrong remedy by filing a petition for certiorari under Rule 65 instead of a petition for review under Rule 45, but the Court, in the liberal spirit of the Rules and given the substantial issue raised, treated the petition as one under Rule 45 since it was filed within the reglementary period. On the merits, the Court rejected the Court of Appeals' conclusion that the deposit order was premature. The order was merely preservatory or provisional in nature and did not amount to an adjudication on the merits, as the rentals were merely kept by the trial court until it was finally determined who was lawfully entitled thereto. Although the Rules of Court do not expressly provide for this kind of provisional relief, the Court has sanctioned such practice pursuant to the court's inherent powers under Rule 135, Sections 5 and 6 — specifically the power to amend and control its process and orders so as to make them conformable to law and justice, and to employ all auxiliary writs, processes, and other means necessary to carry jurisdiction into effect. The Court relied on The Province of Bataan vs. Hon. Villafuerte, Jr., where it sustained an escrow order over lease rentals pending resolution of the main action for annulment of sale and reconveyance, and on Bustamante vs. Court of Appeals, where it ordered the deposit of all rentals with the trial court pending determination of lawful possession. However, the Court found that the trial court gravely abused its discretion in two respects. First, the RTC ordered the deposit of the entire monthly rentals when petitioner had prayed only for his alleged one-half share, violating the cardinal principle that relief cannot exceed what is prayed for. Second, petitioner's lack of forthrightness — his shifting theories of the case, his failure to refute before the Court of Appeals the claim that their father purchased the property, and his admission before the Supreme Court that his father had control and ownership of the property during his lifetime — created serious doubts as to the real extent of his lawful interest. The Court noted that the evidence suggested the property was bought by Sio Tong Go during his marriage to Simeona Lim Ang, making it presumptively conjugal property. Upon Sio Tong Go's death, one-half of the property went to the estate and the other half to the surviving spouse; the estate's half was then divided among the surviving spouse and five children, yielding a 1/12 share for each child. The Court therefore reduced the deposit to 1/12 of the monthly rentals, reckoned from the finality of the decision and every month thereafter until the trial court finally determines who is lawfully entitled thereto. The Court emphasized that these were preliminary findings solely for resolving the propriety of the deposit order, and that the precise extent of the parties' interests would await the trial court's final determination after trial on the merits. The Court also declined to rule on the issue of indispensable parties, noting that Simeona Lim Ang had filed a motion to intervene on August 16, 2007, and that the proper forum to thresh out that issue was the trial court where the main action was pending.

• Inherent Powers of Courts to Issue Provisional Orders — Under Rule 135, Sections 5 and 6 of the Rules of Court, every court has the power to amend and control its process and orders so as to make them conformable to law and justice, and to employ all auxiliary writs, processes, and other means necessary to carry its jurisdiction into effect. This includes the authority to order the deposit of rental income with the court as a provisional, preservatory measure during the pendency of the main action, even before the issue of co-ownership is definitively resolved. The Court applied this doctrine by holding that the trial court was empowered to issue the deposit order as an incident of its jurisdiction over the partition case, but that the order must not be tainted by grave abuse of discretion.
• Relief Cannot Exceed the Prayer — A court's power to grant relief is delimited by the cardinal principle that it cannot grant anything more than what is prayed for, because the relief dispensed cannot rise above its source. The Court applied this principle in finding that the RTC gravely abused its discretion when it ordered the deposit of the entire monthly rentals whereas petitioner had prayed only for his alleged one-half share.
• Two-Phase Nature of Partition Actions — An action for partition involves two phases: the first phase determines whether a co-ownership in fact exists, and the second phase resolves the propriety of partition. The Court of Appeals relied on this doctrine (citing Maglucot-aw vs. Maglucot) to conclude that the deposit was premature, but the Supreme Court held that a provisional deposit order may be issued even during the first phase, as it is precisely meant to preserve the rights of the parties until final adjudication.
• Implied Trust Under Article 1448 — When property is sold and the legal estate is granted to one party but the price is paid by another, an implied trust arises. However, if the person to whom title is conveyed is a child of the one paying the price, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child. The Court of Appeals relied on this provision to conclude that an implied trust was created in favor of Sio Tong Go and his heirs; petitioner later invoked the same provision's gift presumption, but the Court found his shifting theories undermined his credibility.

• "Although the Rules of Court do not expressly provide for this kind of provisional relief, the Court has, in the past, sanctioned such practice pursuant to the court's general power to issue such orders conformable to law and justice and to adopt means necessary to carry its jurisdiction into effect." — This passage articulates the doctrinal basis for the Court's ruling that trial courts possess inherent authority to order the deposit of rental income as a provisional measure during the pendency of a partition action.
• "Contrary to the findings of the Court of Appeals, such an order may be issued even prior to the determination of the issue of co-ownership because it is precisely meant to preserve the rights of the parties until such time that the court finally determines who is lawfully entitled thereto." — This is the core ratio decidendi, directly reversing the Court of Appeals' holding that the deposit was premature and establishing that provisional deposit orders are proper even before co-ownership is resolved.
• "The Court cannot lightly brush aside petitioner's lack of forthrightness and candor reflected, as it were, in the shifting sands of his theory of the case." — This passage explains the Court's willingness to look beyond the face of the title and reduce the deposit to 1/12, grounded in petitioner's inconsistent and evolving theories of ownership that undermined his claim to a one-half share.
• "While ordinarily this Court does not interfere with the sound discretion of the trial court to determine the propriety and extent of the provisional relief necessitated by a given case, the afore-discussed special and compelling circumstances warrant a correction of the trial court's exercise of discretion based on the grave abuse of discretion standard." — This passage defines the scope of the Supreme Court's intervention: it will modify a trial court's interlocutory order when special and compelling circumstances demonstrate grave abuse of discretion, even though such interference is ordinarily disfavored.

• Maglucot-aw vs. Maglucot, 385 Phil. 720 (2000) — Cited by the Court of Appeals for the two-phase doctrine in partition actions; the Supreme Court acknowledged the doctrine but distinguished its application, holding that a provisional deposit order may issue even during the first phase.
• The Province of Bataan vs. Hon. Villafuerte, Jr., 419 Phil. 907 (2001) — Controlling precedent followed by the Supreme Court in sustaining the trial court's inherent authority to issue escrow orders over lease rentals pending resolution of the main action, grounded in Rule 135, Sections 5 and 6.
• Bustamante vs. Court of Appeals, 430 Phil. 797 (2002) — Followed as precedent supporting the deposit of all rentals with the trial court as the most prudent way to preserve the rights of contending parties pending final determination of lawful possession.
• Potenciano vs. Court of Appeals, 104 Phil. 156 (1958) — Cited for the principle that a court cannot grant more than what is prayed for, which the Court applied in finding that the RTC gravely abused its discretion by ordering the deposit of the entire rentals rather than only petitioner's alleged one-half share.
• Valarao vs. Court of Appeals, 363 Phil. 495 (1999) — Cited for the principle that the Supreme Court is both a court of law and a court of justice, justifying its modification of the trial court's order to ensure conformity with justice.

• Rule 69, Rules of Court — Governs actions for partition. The Court noted that Rule 69 does not preclude the trial court from issuing orders to protect and preserve the rights and interests of the parties while the main action is being litigated. Section 1 of Rule 69 was cited by the Court of Appeals regarding the inclusion of all co-owners as indispensable parties in a partition suit.
• Rule 135, Sections 5 and 6, Rules of Court — Section 5 enumerates the inherent powers of courts, including the power to amend and control process and orders so as to make them conformable to law and justice. Section 6 authorizes courts to employ all auxiliary writs, processes, and other means necessary to carry jurisdiction into effect. These provisions were the primary textual basis for sustaining the trial court's authority to issue the provisional deposit order.
• Article 1448, Civil Code — Provides that an implied trust arises when property is sold and the legal estate is granted to one party but the price is paid by another; however, if the person to whom title is conveyed is a child of the one paying the price, no trust is implied, it being disputably presumed that there is a gift in favor of the child. The Court of Appeals relied on this article to conclude that an implied trust was created in favor of Sio Tong Go and his heirs; petitioner later invoked the gift presumption in the same provision, but the Court found his shifting theories unpersuasive.

The following justices concurred: Minita V. Chico-Nazario, Presbitero J. Velasco, Jr., Antonio Eduardo B. Nachura, and Diosdado M. Peralta.