Heirs of Roger Jarque vs. Jarque

Redemption by a third person of property sold under a pacto de retro does not vest title in the redeemer but merely creates a lien for the amount advanced, where the right of repurchase belongs to the vendor or her successors; moreover, an oral partition of inherited property is enforceable in equity where acts of part performance, such as taking possession in severalty and exercising acts of ownership, are established, notwithstanding the Statute of Frauds.

Laureano Jarque died in 1946 survived by his wife Servanda Hagos and four children: Roger, Lupo, Sergio, and Natalia. Lot No. 2560, an unregistered parcel situated in Boton, Casiguran, Sorsogon, formed part of the conjugal partnership of gains. Following Laureano's death, Roger occupied the property, exercised acts of ownership, and in 1960 mortgaged it to Dominador Grajo, subsequently redeeming it. Upon Servanda's death in 1975, the siblings allegedly executed an oral partition ceding Lot No. 2560 to Roger and other properties to the other heirs. Respondents, heirs of Lupo, claimed that Servanda had sold the property with right of repurchase to Benito Coranes in 1972, and that Dominga (Lupo's daughter) redeemed it in 1974, thereby acquiring ownership that passed to them upon Dominga's death in 1992.

• The Property and Parties: Laureano Jarque died in 1946, survived by his wife Servanda Hagos and their four children: Roger, Lupo, Sergio, and Natalia. Lot No. 2560 was declared under Laureano's name and formed part of the conjugal partnership. Petitioners are the heirs of Roger; respondents are the children of Lupo.

• Alleged Oral Partition and Roger's Possession: Petitioners claimed that following Laureano's death, Roger inherited Lot No. 2560 and exercised all attributes of ownership. In 1960, Roger mortgaged the property to Dominador Grajo, which he redeemed through his nephew Quirino Jarque. He subsequently mortgaged it again to Benito Coranes for P700.00. When Roger was about to redeem the property, Benito informed him that Lupo had already redeemed it. Roger allowed Lupo to retain possession temporarily to support his children's education. Upon Lupo's death in 1980, his widow Asuncion requested to continue possession, to which Roger acquiesced. When Asuncion died in 1981, her daughter Dominga made a similar request, which Roger again granted. Respondents continued possession under similar terms after Dominga's death in 1992.

• Servanda's Alleged Sale and Dominga's Redemption: Respondents claimed that Servanda sold Lot No. 2560 to Benito Coranes on December 21, 1972, with a reservation of the right to repurchase within two years. Allegedly, Servanda requested Dominga to redeem the property, which Dominga did on April 2, 1974, for P950.00. Dominga subsequently executed a Ratification of Ownership of Real Property dated May 24, 1991, claiming acquisition through redemption. Respondents also executed a Waiver and Confirmation of Rights in favor of Lelia, who obtained a tax declaration in her name.

• Discovery and Complaint: In 2004, Roger's sons discovered that respondents were claiming ownership. They found that Dominga had registered the Ratification of Ownership and that respondents had executed the Waiver. Roger then filed the complaint for annulment of deeds and recovery of possession.

• Trial Court Findings: The MCTC found that redemption is not a mode of acquisition of property. It found no evidence supporting the claimed transfer of the right of repurchase from Servanda to Dominga, noting the Ratification document was executed 16 years after Servanda's death and was not in the official language. The MCTC ruled that respondents' possession was merely by tolerance and could not ripen into ownership, and that Dominga and respondents were possessors in bad faith.

• Application of the Old Civil Code: Petitioner maintained that because Laureano died in 1946, the Spanish Civil Code of 1889 governed the property relations and succession. Under this Code, Servanda could not inherit from Laureano since all children were qualified to inherit; she was only entitled to a usufruct over the children's shares, not full ownership of the conjugal property.

• Invalidity of Servanda's Sale: Petitioner argued that Servanda lacked authority to alienate Lot No. 2560 from 1946 onwards because she only held usufructuary rights. Consequently, she could not have authorized Dominga to repurchase the property, and the sale with right of repurchase was void.

• Existence of Oral Partition: Petitioner asserted that an oral partition occurred among Laureano's children after Servanda's death in 1975, ceding Lot No. 2560 to Roger. The MCTC and RTC, as trial courts, were in a better position to assess the credibility of evidence supporting this partition.

• Nature of Redemption: Petitioner averred that redemption is not a mode of conveyance that would vest full ownership in Dominga. At most, Dominga acquired only a lien for the amount advanced.

• Credibility of Evidence: Petitioner contended that the Ratification of Ownership document was insufficient to prove transfer of rights, having been executed long after Servanda's death and not in the official language of the courts.

• Waiver of Old Civil Code Argument: Respondent countered that the issue of the Old Civil Code's application was raised for the first time only on appeal. Moreover, assuming it applied, no evidence was submitted to show that Laureano and Servanda were married or that the property was conjugal.

• Authority to Dispose: Respondent argued that Servanda had the right to dispose of Lot No. 2560 as her share in the conjugal property, and that Dominga validly exercised the right of redemption, thereby acquiring ownership.

• Proof of Ownership: Respondent maintained that they had proven ownership by preponderance of evidence, including tax declarations and testimonies of long possession.

• Acquisitive Prescription: Respondent claimed acquisition of Lot No. 2560 through extraordinary prescription of 30 years, counting from 1974 when Dominga took possession.

• Governing Law and Servanda's Authority: Whether the Spanish Civil Code of 1889 applied to determine the extent of Servanda's rights over the conjugal property, and whether she had authority to sell Lot No. 2560.

• Validity of Oral Partition: Whether an oral partition occurred among the heirs of Laureano Jarque, effectively terminating the co-ownership as to Lot No. 2560.

• Effect of Redemption: Whether Dominga Jarque acquired ownership of Lot No. 2560 by redeeming it from Benito Coranes.

• Acquisitive Prescription: Whether respondents acquired ownership through acquisitive prescription, either ordinary or extraordinary.

• Governing Law and Servanda's Authority: The Spanish Civil Code of 1889 applied because Laureano died in 1946, prior to the effectivity of the New Civil Code on August 30, 1950. Under the Old Civil Code, the default property regime was conjugal partnership of gains. Upon Laureano's death, Servanda acquired her one-half share in the conjugal partnership, while the other half devolved to Laureano's estate to be inherited by his forced heirs (the four children). Servanda's successional rights were limited to the usufruct of the portion corresponding to each child's legitime. As only a usufructuary, Servanda retained no power to alienate the property; she could only sell her right of usufruct, not the title to the property itself.

• Validity of Oral Partition: An oral partition was established through Roger's exercise of ownership over Lot No. 2560 after Laureano's death. Roger mortgaged the property in 1960 and redeemed it, acts that constituted possession in the concept of an owner to the exclusion of other heirs. Quirino Jarque testified that Lot No. 2560 was Roger's share from the parents' estate. These acts of part performance, occurring prior to the 1972 sale to Benito, terminated the co-ownership as to this specific property. Equity recognizes and enforces oral partitions where parties have taken possession in severalty and exercised acts of ownership.

• Effect of Redemption: Dominga did not acquire ownership over Lot No. 2560. In a sale with right of repurchase (pacto de retro), title vests immediately in the vendee subject to a resolutory condition. The right of repurchase is separate from title and may be exercised only by the vendor or successors. Where a third person redeems on behalf of the vendor, the redeemer does not become owner but merely acquires a lien over the property for the amount advanced. No evidence showed Servanda transferred her right of repurchase to Dominga; at most, Dominga acted as agent or paid on behalf of Servanda. Thus, the title devolved back to the co-ownership (or to Roger pursuant to the oral partition), subject only to Dominga's lien for P950.00.

• Acquisitive Prescription: Respondents did not acquire the property by prescription. Acquisitive prescription requires possession in the concept of an owner, public, peaceful, and uninterrupted. Mere possession by tolerance, as found by the trial courts, cannot ripen into ownership. Respondents' possession was initially by Roger's tolerance (starting in 1974) and only became adverse in 1991 when Dominga executed the Ratification. However, Roger repeatedly asserted his ownership and offered to redeem the property from 1992 until the filing of the complaint in 2004, interrupting any adverse possession. Thus, neither ordinary prescription (10 years with just title and good faith) nor extraordinary prescription (30 years) was established.

• Application of the Spanish Civil Code of 1889 — The Old Civil Code governs property relations and succession where the decedent died prior to August 30, 1950. Under this Code, the surviving spouse in a conjugal partnership of gains is entitled to one-half of the conjugal property upon dissolution by death, plus a usufruct over the portion constituting the legitime of the legitimate children. The surviving spouse does not inherit a share of the deceased spouse's estate if there are qualified forced heirs.

• Oral Partition by Part Performance — Courts of equity enforce oral partitions notwithstanding the Statute of Frauds where the partition has been consummated by the taking of possession in severalty and the exercise of ownership by the parties over their respective portions. Acts of part performance, such as mortgaging the property or taking exclusive possession, estop the parties from denying the partition.

• Rights of a Surviving Spouse as Usufructuary — A usufructuary enjoys the right to use and gather fruits (jus utendi and jus fruendi) but does not possess the right to dispose (jus disponendi). The owner retains the power to alienate the property. Thus, a surviving spouse with only usufructuary rights cannot validly sell the property itself, but may only transfer the usufruct.

• Redemption by Third Persons in Pacto de Retro Sales — In a sale with right of repurchase, the right to redeem is distinct from the title to the property. If a third person redeems the property on behalf of the vendor, the redeemer does not acquire title but merely a lien over the property for the amount advanced. Title reverts to the vendor or successors, not to the redeemer.

• Co-ownership Rights under Article 493 — Each co-owner has full ownership of his aliquot share and may alienate, assign, or mortgage it, but the effect is limited to the portion allotted upon termination of the co-ownership. A co-owner cannot adjudicate to himself a specific portion of the common property until actual partition; prior to partition, only undivided aliquot shares may be transferred.

• Acquisitive Prescription Requirements — Possession must be in the concept of an owner (en concepto de dueno), public, peaceful, and uninterrupted. Possession by mere tolerance of the owner, or with a juridical title such as that of an agent or usufructuary, cannot ripen into ownership unless the juridical relation is expressly repudiated and communicated to the other party.

• "On general principle, independent and in spite of the statute of frauds, courts of equity have enforced oral partition when it has been completely or partly performed." — Citing Hernandez v. Andal, on the enforceability of oral partitions through acts of part performance.

• "Usufruct, in essence, is nothing else but the right to enjoy another's property. While this right to enjoy the property of another temporarily includes both the jus utendi and the jus fruendi, the owner retains the jus disponendi or the power to alienate the same." — Defining the limited rights of a usufructuary.

• "As a rule, the right to repurchase under Article 1601 may only be exercised by the vendor, or his successors. If so exercised, the ownership of the property reverts back to the vendor or his successor. On the other hand, if a third person redeems the property on behalf of the vendor, he or she does not become owner of the property redeemed, but only acquires a lien over the property for the amount advanced for its repurchase." — Distinguishing the effects of redemption by the vendor versus redemption by a third party.

• "Acquisitive prescription is a mode of acquiring ownership by a possessor through the requisite lapse of time. In order to ripen into ownership, possession must be in the concept of an owner, public, peaceful and uninterrupted. Thus, mere possession with a juridical title, such as, to exemplify, by a usufructuary, a trustee, a lessee, an agent or a pledgee, not being in the concept of an owner, cannot ripen into ownership by acquisitive prescription, unless the juridical relation is first expressly repudiated and such repudiation has been communicated to the other party." — Stating the requirements for acquisitive prescription.

• Hernandez v. Andal, 78 Phil. 196 (1947) — Controlling precedent on the enforcement of oral partitions in equity when consummated by possession in severalty and acts of ownership.

• Carvajal v. Court of Appeals, G.R. No. L-44426, February 25, 1982, 112 SCRA 237 — Applied for the principle that a co-owner may dispose only of his undivided aliquot share, not a specific portion of the co-owned property prior to partition.

• Marcelo v. Court of Appeals, G.R. No. 131803, April 14, 1999, 305 SCRA 800 — Cited for the definition of acquisitive prescription requiring possession in the concept of an owner.

• Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439 — Followed for the computation of interest rates on monetary awards, modifying the rate from 12% to 6% per annum in certain periods.

• Noel v. Court of Appeals, G.R. No. 59550, January 11, 1995, 240 SCRA 78 — Cited for the rule that the Spanish Civil Code applies to decedents who died prior to the effectivity of the New Civil Code.

• Taningco v. Register of Deeds of Laguna, G.R. No. L-15242, June 29, 1962, 5 SCRA 381 — Applied for the principle that co-ownership continues until partition, and rights are governed by the New Civil Code provisions on co-ownership after its effectivity.

• Article 1315, Spanish Civil Code (1889) — Establishes the conjugal partnership of gains as the default property regime in the absence of a marriage settlement.

• Articles 1392 and 1426, Spanish Civil Code (1889) — Govern the division of conjugal property upon dissolution, entitling each spouse to one-half share.

• Article 1407, Spanish Civil Code (1889) — Presumes all property of spouses to be partnership property unless proved otherwise.

• Article 808, Spanish Civil Code (1889) — Defines the legitime of legitimate children as two-thirds of the hereditary estate.

• Article 834, Spanish Civil Code (1889) — Grants the surviving spouse a usufruct equal to the legitime of each legitimate child.

• Article 493, New Civil Code — Re-enactment of Article 399 of the Old Civil Code; defines a co-owner's right to alienate only his undivided share, with effects limited to the portion allotted upon partition.

• Articles 1079 and 1082, New Civil Code — Define partition as the separation of common property and deem every act intended to end indivision as a partition.

• Articles 1601 and 1616, New Civil Code — Govern conventional redemption (pacto de retro), reserving the vendor's right to repurchase within the stipulated period upon returning the price and expenses.

• Article 1620, New Civil Code — Grants co-owners the right of legal redemption when shares are sold to a third person.

Bersamin (Acting Chairperson), Del Castillo, Tijam, and Gesmundo, JJ.