Hernandez vs. Andal

A completed or partly performed oral partition among co-heirs is valid and enforceable between the parties notwithstanding the requirement in section 1, Rule 74 of the Rules of Court that partition be made by public instrument and registered; the writing and registration requirement is not constitutive of the partition’s intrinsic validity but is intended to protect creditors and third parties.

Cresencia Hernandez, Maria and Aquilina Hernandez, and Pedro and Basilia Hernandez were siblings and co-heirs of a parcel of land inherited from their father, known as lot No. 120073 of the Batangas cadastral survey. The dispute implicated the Statute of Frauds under section 21, Rule 123 of the Rules of Court and the requirement in section 1, Rule 74 that heirs divide the estate by public instrument filed with the register of deeds. The Rules of Court were promulgated by the Judicial Department under its procedural rule-making authority, and the former section 596 of Act No. 190 had contained the phrase “and not otherwise” in the predecessor provision. The case also touched on the Civil Code provisions on public instruments and the right of co-heirs to repurchase shares sold to strangers.

Cresencia Hernandez, Maria and Aquilina Hernandez, and Pedro and Basilia Hernandez were brothers and sisters who acquired in common by descent from their father a parcel of land known as lot No. 120073 of the Batangas cadastral survey. Maria and Aquilina later intervened in the case; Pedro and Basilia were not parties.

On January 23, 1944, Maria and Aquilina sold 1,800 square meters of the parcel, particularly described in Exhibit A, to Zacarias Andal and his wife for P860. The portion purportedly represented the combined shares of Maria and Aquilina in the larger parcel, which they claimed had been allotted to them in a verbal partition among the five siblings, although the time of the alleged partition was not stated.

After the sale, Cresencia attempted to repurchase the land. Her original complaint, dated February 3, 1944, alleged that she offered the purchasers P150, the amount Andal had paid for Maria’s and Aquilina’s shares, but Andal refused. On April 8, 1944, she filed a supplemental complaint alleging that when the case was called for trial on March 8, she announced in open court that she was willing to repurchase her sisters’ share from Andal for P860 and to reimburse his expenses; that Andal asked for a continuance until March 29 on the ground that he had incurred other expenses; that on March 29 she brought P860 to repurchase the land but the case was postponed because her sisters had intervened; and that meanwhile, on March 26, Andal had fictitiously resold the land to the vendors for P970. The deed of resale stated that it had been agreed that if trouble should arise, the sellers would return to the buyer what they had received and pay his expenses.

On February 14, 1944, Andal answered that Maria and Aquilina had sold him their portions for P860 and that he had no objection to disposing of them to Cresencia for P860 plus P50 in expenses, but that he was unwilling to accept P150, which was all Cresencia offered besides expenses. On April 4, 1944, Maria and Aquilina filed their answer in intervention, alleging that there had been a partition among the siblings with each share delineated and marked, and that after partition each took exclusive, separate, and independent possession of his or her portion. They charged Cresencia with bad faith, alleging that the sale to Andal was delayed at her request and that she later told them they could sell to Andal or that she could pay only P150 and could not raise the P860 offered by Andal.

At trial, Cresencia was the only witness for herself and substantially reiterated her complaints. Andal testified that he possessed the land until he returned it to the intervenors; that Cresencia offered to repurchase only long after he bought it, when she was about to file her action; and that after returning from Candelaria, Tayabas, with the deed of sale, he showed it to Cresencia on January 23, and she merely exclaimed, “Oh, so you already have a document.” When Andal was asked whether the land had been the object of partition among the co-owners, Cresencia’s counsel objected on best-evidence grounds, and the objection was sustained; the same objection and ruling were made when he was asked how the land he bought from Maria and Aquilina had been specified in Exhibit A. Consequently, counsel for Andal and the intervenors did not call further witnesses but announced that he had six witnesses ready to prove a parol partition. Cresencia’s counsel objected that an agreement affecting real estate could not be proved except by a writing subscribed by the person against whom the proof was offered. The trial court ruled that under Rules 74 and 123 (Statute of Frauds) and article 1248 of the Civil Code, parol evidence of partition was inadmissible, adding that it had enough with the evidence offered.

The trial court declared the resale illegal and in bad faith, although it did not appear to have found as a fact that the resale was simulated.

• Admissibility of Parol Partition: Defendant-appellant Zacarias Andal and intervenors-appellants Maria and Aquilina Hernandez argued that the lower court erred in refusing to admit oral evidence to prove a contract of partition among the heirs on the ground that it was not admissible.
• Validity of Completed Oral Partition: They contended that a completed oral partition may be enforced, so their evidence should be allowed; if allowed and it established their allegation, the plaintiff’s cause of action would vanish.
• Rule 74 Not Constitutive: They maintained that a verbal partition is not entirely void under Rule 74 and may be validated by the acts of the parties, contrary to the trial court’s ruling.
• Scope of Appeal: They argued that the assignment of error squarely attacked the opinion and judgment of the trial court because the validity of the alleged partition determined the result of the litigation and the competence of the excluded evidence.

• Admissibility of Oral Partition: Plaintiff-appellee Cresencia Hernandez maintained that an agreement affecting real estate may not be proved except by a writing subscribed by the person against whom the proof is offered.
• Scope of Appeal: She argued that the findings, conclusions, and judgment of the lower court were not assigned as errors and that the appeal should therefore be dismissed.
• Estoppel and Right to Judgment (on reconsideration): She maintained that she was entitled to judgment because Andal had no objection to reselling the land and she was ready to reimburse the purchase price; she argued that the buyer, having led her to believe that he would make the resale in her favor, was estopped from going against his own acts.
• No Need for New Trial (on reconsideration): She suggested that there was no need for a new trial and that the appealed decision should be affirmed.

• Admissibility of Parol Partition: Whether the lower court erred in refusing to admit oral evidence to prove a contract of partition among the heirs on the ground that it was not admissible.
• Validity and Enforceability of Oral Partition: Whether a completed or partly performed oral partition among co-heirs is valid and enforceable despite the Statute of Frauds and section 1, Rule 74.
• Constitutive Effect of Rule 74: Whether section 1, Rule 74 requires a public instrument and registration as constitutive of the validity of a partition between the parties.
• Scope of Assignment of Error: Whether the appellants’ sole assignment of error properly challenges the lower court’s decision and related matters, including the exclusion of parol evidence.
• Remand: Whether the case should be remanded for further proceedings and a new decision.
• Motion for Reconsideration/Estoppel: Whether the plaintiff is entitled to judgment on the supplemental complaint on the ground that Andal’s willingness to sell estopped him from alienating the land, without a new trial.

• Admissibility of Parol Partition: Yes. The trial court erred in excluding oral evidence of partition; a completed or partly performed oral partition may be proven and enforced between co-heirs.
• Validity and Enforceability of Oral Partition: Yes. Oral partition is valid and enforceable between the parties when completed or partly performed, notwithstanding the Statute of Frauds and section 1, Rule 74.
• Constitutive Effect of Rule 74: No. Section 1, Rule 74 is not constitutive of validity; it is procedural and evidentiary and protects creditors and third parties.
• Scope of Assignment of Error: Yes. The assignment of error sufficiently challenges the exclusion and related matters; even if not, liberal construction allows review.
• Remand: Yes. The judgment was reversed and the case remanded for further proceedings and a new decision.
• Motion for Reconsideration/Estoppel: No. The motion was denied; plaintiff cannot obtain judgment on the supplemental complaint on the estoppel theory without a new trial.

• Admissibility of Parol Partition: The Court framed the case as governed mainly by section 21, Rule 123 and section 1, Rule 74, with article 1248 of the Civil Code having no bearing. The trial court excluded the evidence on the theory that partition affecting real estate must be in writing. The Court held this was error because the Statute of Frauds, as enacted in section 21, Rule 123, applies only to executory and not to completed or executed contracts; performance takes a contract out of its operation. The statute does not declare the enumerated contracts void but only makes ineffective an action for specific performance. Equity enforces oral partitions when they have been completely or partly performed, where the parties have taken possession in severalty and exercised acts of ownership, or where there has been estoppel, acquiescence, or ratification. Since the defendant and intervenors offered to prove a parol partition and acts of possession, the evidence should have been admitted.

• Validity and Enforceability of Oral Partition: The Court noted a conflict of authority on whether partition is within the Statute of Frauds, but explained that in the Philippines the law has been uniformly interpreted to apply only to executory contracts. Partition is not a conveyance but a separation and designation of the part belonging to each tenant in common. The Court relied on the doctrine that an oral partition is effective when several possession is taken under it, and that courts of equity will confirm such partition and decree title in accordance with possession in severalty. Thus, if the alleged oral partition was completed or partly performed, it could be enforced between the parties.

• Constitutive Effect of Rule 74: The Court examined whether section 1, Rule 74 makes a public instrument and registration constitutive of partition. It found no express or clear declaration to that effect. Where the law intends a writing to be essential to validity, it says so clearly, as in the Statute of Frauds’ use of “utterly void,” article 633 of the Civil Code on donations, article 146 of the Mortgage Law, article 1765 of the Civil Code, and section 618 of Act No. 190 on wills. Section 1, Rule 74 contains no such language. The Court also reasoned that the Rules of Court were promulgated by the Judicial Department under authority to deal with procedure exclusively; to make a public instrument and registration essential to the validity of a partition between co-heirs in private affairs not affecting third parties would transcend the rule-making power. The requirement is legitimate to protect innocent third parties, but when creditors and third parties are not affected, it is procedural and evidentiary only. The Court contrasted section 596 of Act No. 190, which contained “and not otherwise” and thus made the written formality an inherent element of validity; the elimination of those words from the new rule removed the jural character of the public document. The requirement of public instrument and registration is intended to protect creditors and heirs against tardy claims, and registration serves as constructive notice to others. Absent creditors, the intrinsic validity of a partition not executed with the prescribed formalities is not affected, and the heirs may agree to distribute the estate differently from the law.

• Scope of Assignment of Error: The Court rejected the argument that the appeal should be dismissed because the lower court’s findings, conclusions, and judgment were not assigned as errors. The evidence on parol partition was ruled out, and the appellants specifically complained of that exclusion; the assignment of error therefore squarely met and attacked the opinion and judgment. The validity of the alleged partition determined the result of the entire litigation, and the competence of the excluded evidence depended on that validity. If a completed oral partition could be enforced, the evidence should be allowed, and if it established the allegation, the plaintiff’s cause of action would vanish. Even if the assignment were not a direct challenge, the objection took too narrow a view of procedure, contrary to the liberal spirit of the Rules. Rule 1, section 2 requires liberal construction to promote just, speedy, and inexpensive determination. Modern trends allow appellate courts broad discretionary power to waive lack of proper assignment and consider errors not assigned, especially unassigned errors closely related to an assigned error or upon which the determination of the assigned question depends. At the least, the assignment authorized the Court to examine and pass upon the lower court’s decision.

• Remand: The Court noted incongruities in the lower court’s judgment: Andal was no longer interested in the land, the intervenors had become absolute owners and were in possession, and Andal had already recovered his money, yet the judgment would have Andal execute a deed of resale in favor of the plaintiff and receive the price; the judgment was silent as to the intervenors with respect to execution of the deed or receipt of the price. The lower court also made no finding on whether the offer of P150 instead of P860 plus expenses was sufficient compliance with article 1067 of the Civil Code, on which it rested the plaintiff’s cause of action. Because the exclusion of the parol-partition evidence was erroneous and the validity of the partition was central, the judgment was reversed and the case remanded for further proceedings and a new decision not incompatible with the Court’s ruling. Costs of the appeal were taxed against the appellee.

• Motion for Reconsideration/Estoppel: On reconsideration, the plaintiff maintained that she was entitled to judgment because Andal had no objection to reselling and she was ready to reimburse him, and that Andal was estopped from going against his own acts. The Court explained that the lower court’s decision was anchored on articles 1067 and 1522 of the Civil Code and that Andal’s expression of willingness to sell was not an affirmative, separate basis of judgment but an equitable aid or estoppel to prevent the defendant and intervenors from nullifying the plaintiff’s right. The lower court cited section 68(a), Rule 123, and found that the transaction between Andal and the intervenors was entered into “con el proposito de desorientar al Juzgado y frustrar en cierto modo la administracion de justicia.” The Court characterized this estoppel as partaking of the nature of a rule of evidence, belonging to the adjective branch of law, and subordinate to the asserted right under the Civil Code. The sole assignment of error comprehended the part of the appealed decision relating to Andal’s willingness to sell because, if there was a lawful partition barring the plaintiff’s right to repurchase, the estoppel would lose its raison d’etre. The Court clarified that it was construing the lower court’s decision, not the theory of the parties. If the supplemental complaint intended to present Andal’s offer as a new and separate cause of action, that was all the more reason to remand, because the new trial would leave the door open for evidence on the supplemental complaint and the alleged parol partition. As matters stood, the plaintiff could not obtain judgment on the supplemental complaint on the untenable hypothesis that no assignment of error related to that feature; without that technicality, she had not made out a case on the supplemental complaint. The evidence was very meager to the point of nullity, many allegations were untouched, and essential points needed amplification or clarification. The motion for reconsideration was denied.

• Statute of Frauds — Executory vs. Executed Contracts — The Statute of Frauds under section 21, Rule 123 applies to executory and not to completed or executed contracts; performance takes the contract out of its operation. The statute does not declare the enumerated contracts void but only makes ineffective an action for specific performance. Applied to allow proof of a completed or partly performed oral partition.
• Parol Partition Among Co-Heirs — Partition is not a conveyance but a separation and designation of the part belonging to each tenant in common. Equity will enforce an oral partition when it has been completely or partly performed, where the parties have taken possession in severalty and exercised ownership, or where there has been estoppel, acquiescence, or ratification. Applied to hold that the trial court erred in excluding oral evidence of partition.
• Rule 74, Section 1 — Not Constitutive of Validity — The requirement that a partition be made by public instrument and registered is not constitutive of the partition’s intrinsic validity between the parties; it is intended to protect creditors and third parties and to provide constructive notice. Absent creditors or third parties affected, an oral partition may be valid and enforceable between the co-heirs. Applied to interpret the rule as procedural and evidentiary.
• Limits of the Supreme Court’s Rule-Making Power — The Rules of Court are promulgated by the Judicial Department under authority to deal with matters of procedure exclusively. The Court may not prescribe what constitutes a binding agreement between co-heirs in private affairs not affecting third parties, as that would invade substantive law. Applied to construe section 1, Rule 74 as remedial and not as a substantive requirement of validity.
• Civil Law Liberality on Public Instruments — Under the Civil Code, public instruments are generally required not to validate acts or contracts but to insure their efficacy; verbal contracts may be effective between the parties, and article 1279 allows an action to compel execution of a written instrument. This liberality applies even to verbal contracts involving land registered under the Torrens Act. Applied to support the validity of oral partition between co-heirs.
• Liberal Construction of Rules and Assignment of Errors — Rule 1, section 2 requires liberal construction of the Rules to promote just, speedy, and inexpensive determination. Appellate courts may waive lack of proper assignment of errors and consider unassigned errors closely related to an assigned error or upon which the determination of the assigned question depends. Applied to review the lower court’s decision despite the objection that its findings were not assigned as errors.
• Estoppel as an Adjective/Evidentiary Rule — In the resolution, the Court treated Andal’s willingness to sell as an estoppel that partakes of the nature of a rule of evidence, belonging to the adjective branch of law, and not as an independent cause of action. It was subordinate to the plaintiff’s asserted right under the Civil Code and was intended to prevent the defendant and intervenors from nullifying that right. Applied to deny the motion for reconsideration and require a new trial.

• “The statute of frauds does not declare the contracts therein enumerated void and of no legal effect, but only makes ineffective the action for specific performance.” — This states the Court’s core rationale for treating the Statute of Frauds as evidentiary rather than as invalidating completed or performed contracts, allowing the oral partition to be proven.
• “Section 1 of Rule 74 contains no such express or clear declaration that the required public instruments is to be constitutive of a contract of partition or an inherent element of its effectiveness as between the parties.” — This is the pivotal holding that section 1, Rule 74 does not make a public instrument and registration essential to the validity of a partition between co-heirs.
• “The requirement that a partition be put in a public document and registered has, in our opinion, for its purpose the protection of creditors and at the same time the protection of the heirs themselves against tardy claims.” — This defines the purpose of the writing and registration requirement and supports the holding that it does not affect intrinsic validity when creditors and third parties are not involved.
• “If a completed oral partition may be enforced, as the defendant and the intervenors contend and as we opine, their evidence should be allowed, and if allowed and it establishes their allegation, the plaintiff’s cause of action vanishes.” — This summarizes the connection between the admissibility of parol evidence, the validity of the oral partition, and the outcome of the litigation.

• Gomez vs. Salcedo, 26 Phil. 485 — Cited for the rule that performance of a contract takes it out of the operation of the Statute of Frauds.
• Almirol and Cariño vs. Monserrat, 48 Phil. 67 — Cited for the rule that the Statute of Frauds does not declare the enumerated contracts void and of no legal effect but only makes ineffective an action for specific performance.
• Thunga Chui vs. Que Bentec, 2 Phil. 561 — Cited for the doctrine that when the essential requisites of a contract are present, the contract is binding upon the parties even if required to be in writing by article 1280 of the Civil Code; the plaintiff may maintain an action under article 1279 to compel execution of a written instrument. The doctrine was extended to verbal contracts involving land registered under the Torrens Act.
• Domalagan vs. Bolifer, 33 Phil. 471 — Cited for the principle that written form exacted by the Statute of Frauds is for evidential purposes only.
• Hawaiian Philippine Co. vs. Hernaez, 45 Phil. 746 — Cited for the principle that the Civil Code requires a public instrument not to validate the act or contract but only to insure its efficacy, so that after the existence of the act or contract has been admitted, the party bound may be compelled to execute the document.

• Section 21, Rule 123, Rules of Court — The Statute of Frauds provision requiring certain agreements, including those affecting real estate, to be in writing. The Court held it applies only to executory contracts, not to completed or executed contracts; performance removes the contract from its operation.
• Section 1, Rule 74, Rules of Court — Allows heirs, when the decedent left no debts and all are of age or minors represented by guardians, to divide the estate by public instrument filed with the register of deeds. The Court held it is not constitutive of the validity of a partition between the parties; it is intended to protect creditors and third parties and to provide constructive notice.
• Section 596, Act No. 190 — The precursor of section 1, Rule 74. It contained the phrase “and not otherwise,” which the Court said expressed an intention to make the written formality an inherent element of the validity of a parol partition; the elimination of those words from the new rule removed the jural character of the prescribed public document.
• Section 335, Code of Civil Procedure — The former Statute of Frauds provision, later replaced by section 21, Rule 123. The Court noted that the law has been uniformly interpreted to apply to executory and not completed or executed contracts.
• Articles 1278, 1279, and 1280, Civil Code — Provisions on public instruments for transactions creating, modifying, or extinguishing real rights. The Court cited them to show that verbal contracts may be effective between the parties and that article 1279 allows an action to compel execution of a written instrument.
• Article 1248, Civil Code — Cited by the trial court in excluding parol evidence. The Supreme Court held it had no bearing on the case.
• Articles 1067 and 1522, Civil Code — Identified in the resolution as the provisions on which the lower court anchored the plaintiff’s right to repurchase. The Supreme Court did not affirm the merits of that right but remanded the case for further proceedings.
• Section 68(a), Rule 123, Rules of Court — Cited in the resolution as the basis for the lower court’s invocation of estoppel from Andal’s expression of willingness to sell the land to the plaintiff.
• Rule 1, Section 2, Rules of Court — Requires the Rules to be liberally construed to promote their object and to assist the parties in obtaining just, speedy, and inexpensive determination of every action. The Court applied it to allow review despite the objection on assignment of errors.
• Article 633, Civil Code; Article 146, Mortgage Law; Article 1765, Civil Code; Section 618, Act No. 190 — Cited as examples where the law expressly makes a public instrument or writing constitutive of validity. The Court contrasted these with section 1, Rule 74, which contains no such clear declaration.
• Article 1523, Civil Code — Cited in the dissenting opinion of Justice Paras as a possible basis for the plaintiff’s right to redeem as an adjoining owner in the sale of a rural estate not exceeding one hectare. The majority did not rely on this provision.

Moran, C.J., Pablo, Hilado, Bengzon, Briones, Hontiveros, and Padilla, JJ., concurred in the main decision. The same Justices concurred in the resolution denying the motion for reconsideration. Justice Feria reserved his right to express his view and write a dissenting opinion in the main decision and reserved his vote in the resolution; no separate opinion by him appears in the text.

• Justice Paras, with whom Justice Perfecto concurred (main decision) — The dissent argued that since the only assignment of error concerned the admissibility of oral evidence and the lower court’s findings of fact were not assailed, the question of law had become academic. The point whether the sale to Andal took place after a partition was immaterial because Andal was willing to resell to the plaintiff, and the plaintiff’s right to redeem as an adjoining owner could be based on article 1523 of the Civil Code, which gives owners of adjacent lands a right of redemption in the sale of a rural estate not exceeding one hectare. The judgment appealed from should be affirmed.
• Justice Perfecto, with whom Justice Paras concurred (resolution on motion for reconsideration) — The dissent argued that there was no need for a new trial and that the appealed decision should be affirmed. The litigation involved a parcel of land less than two hectares, assessed at P290, with a redemption amount much less than P1,000 of Japanese paper money; it had started on February 3, 1944, more than three years earlier. The plaintiff was willing to pay more than the amount Andal demanded in his answer, and technicalities should not block the termination of a litigation that had in substance ceased to exist. The motion for reconsideration should be granted.