G.R. No. 79899. April 24, 1989
D. ANNIE TAN, PETITIONER, VS. COURT OF APPEALS, CHINA BANKING CORPORATION, GEORGE LAUREL TAN, TEODORA TAN ONG, ROSA TAN, ROSITA TAN, AND MAURO UMALI TAN, RESPONDENTS.
GUTIERREZ, JR., J.:
Tan Tiong
Tick, married to Tan Ong Hun, was the
registered owner of a 178 square meters parcel of land and its improvements
located at Lot No. 5, Block. No. 2021 of the Cadastral Survey of Manila, Carvajal Street, Binondo,
Manila.
Mr. and Mrs. Tan had six children — respondents George Laurel
Tan, Teodora Tan Ong, Rosa
Tan, Rosita Tan, Mauro Umali Tan, and the petitioner,
D. Annie Tan.
On February
6, 1963, in order to
secure payment of various obligations with respondent China Banking Corporation
or China Bank for short, Mr. and
Mrs. Tan Tiong Tick mortgaged the disputed property
to the bank. Tan Tiong
Tick died on December 22, 1969 without having paid his obligations.
On June 27,
1972, China Bank
foreclosed the mortgage and purchased the property at public auction as the highest bidder for the sum of P186,100.00.
On August 31, 1972,
the widow and children of Tan Tiong Tick filed a complaint against China Bank with the
Court of First Instance of
Manila praying for the nullity of the real estate mortgage executed by the
spouses Tan and the foreclosure sale conducted by the Sheriff. They also
asked that the redemption period be suspended.
The one year period for redemption expired on July 6, 1973 without the Tan heirs
having exercised the right to redeem the property. The widow Tan Ong
Hun having died, only
the children were left to redeem the lot and building. China Bank consolidated its ownership over
the land and improvements and a new title, Transfer Certificate Title No.
112924 was issued in the name of the bank on August 16, 1973.
About two weeks earlier, however, the heirs of Tan and China Bank
agreed to amicably settle the action for nullity of mortgage before the Court of First Instance of Manila. The parties filed a joint motion to dismiss.
The verbal agreement regarding the disposition of the property
was confirmed in a letter of China Bank signed by four of the children and one
daughter-in-law on August 3, 1973. The heirs were given the right to repurchase
the property for P180,000.00 provided it was done on
or before August 31, 1974. The agreement reads in part:
xxx xxx xxx
“It is understood,
that should you fail to pay to us in full the aforesaid sum of P180,000.00 on or before August
31, 1974, your right to repurchase the property shall terminate
and we shall be free to dispose of the propertv to
any other party.” (p. 81, Folder of Exhibits; Exhibit 2, CEC)
There are allegations that some of the heirs tried to buy the
property in the ensuing one year period but for one reason or another, were
unable to do so.
Finally, on August 30, 1974, or one day before the end of, the
period to buy back, petitioner D. Annie Tan went to the office of Mr. Dee K. Chiong of China Bank and
tendered her China Bank Manager’s Check for P180,000.00 as payment. Upon the insistence of the bank official, the
deed of sale returning the property to the heirs was executed in favor, not of
D. Annie Tan who alone paid for the property but of all the six heirs of Tan Tiong Tick who would, therefore, share and share alike.
This led to the filing of the action by D. Annie Tan against her
brothers and sisters and the China Banking Corporation, now respondents in this
petition. The petitioner prayed the
trial court to order the respondents – (1) to reconvey
the disputed property to her and (2) to pay
actual damages in the amount of P300,000.00,
moral damages in the amount of
P100,000.00, exemplary damages in the amount of P50,000.00, and attorney’s fees in the amount of
P10,000.00.
On September
1, 1980, the Court
of First Instance of Manila rendered a decision, the dispositive
portion of which reads:
“ACCORDINGLY, judgment is hereby rendered as follows:
“(1) Dismissing the complaint as well as
defendants’ counterclaim;
“(2) Ordering each of
the defendants, namely George Laurel Tan, Teodora Tan
Ong, Rosa Tan and Rosita Tan to reimburse the
plaintiff the sum of P30,000.00 plus 12% interest from
August 30, 1974 until the
whole amount is fully paid;
“(3) Ordering the
defendant Mauro Umali Tan who had been ordered in
default to execute the deed of sale of his rights and interests over the
property covered in Transfer Certificate of Title No. 64806 in favor of the
plaintiff in accordance with his instrument of waiver dated June 25, 1974, and
“(4) Without
pronouncement as to costs.” (Annex B, Rollo,
pp. 43-44)
On October 17, 1986,
the Court of Appeals affirmed the decision of the trial court. On September
7, 1987, a motion for reconsideration was denied. Hence this petition.
The petitioner gives the following grounds why her petition
should be given due course:
1. RESPONDENT
COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT
ORDERING REIMBURSEMENT TO THE PETITIONER INSPITE OF THE FACT THAT THE LEGAL BASIS
FOR THE REIMBURSEMENT, WHICH WAS NOT
CLEARLY EXPLAINED IN THE DECISION, MAY HAVE BEEN THE ALLEGED EXISTENCE OF (1) A
CO-OWNERSHIP AMONG THE HEIRS, AND (2) CREDITOR-DEBTOR RELATIONSHIP BETWEEN THE
HEIRS AND THE BANK, WHICH HAVE NOT BEEN FULLY ESTABLISHED BY EVIDENCE.
2. ASSUMING, WITHOUT ADMITTING, THE EXISTENCE
AMONG THE HEIRS OF A CO-OWNERSHIP AND/OR A CREDITOR/ DEBTOR RELATIONSHIP
BETWEEN THE RESPONDENT BANK AND THE HEIRS, RESPONDENT COURT GRAVELY ERRED IN
NOT HOLDING THAT THE CO-HEIRS OF PETITIONER, THE PRIVATE RESPONDENTS HEREIN,
HAVE IMPLIEDLY WAIVED THEIR RIGHT TO BUY BACK
THE PROPERTY BY THEIR FAILURE TO RAISE THE MONEY FOR THEIR RESPECTIVE
SHARES UP TO THE LAST DAY GIVEN THEM BY THE RESPONDENT BANK ON AUGUST 31, 1974,
THUS WHEN PETITIONER BOUGHT THE PROPERTY BY HER EXCLUSIVE FUNDS, IT BENEFITED
HER ALONE AND NOT HER CO-HEIRS.
3. RESPONDENT
COURT OF APPEALS, GRAVELY ERRED IN NOT HOLDING THAT THE LETTER-AGREEMENT DATED AUGUST 3, 1973, FOR WHICH THE RIGHTS
OF THE PETITIONER AND HER CO-HEIRS TO BUY BACK THE FORECLOSED PROPERTY AROSE,
IS ACTUALLY NOT A RIGHT TO REPURCHASE BUT IS AN OPTION TO BUY BACK THE PROPERTY WHICH MAY BE
EXERCISED BY THE HEIRS SINGLY OR COLLECTIVELY.
(Rollo, pp. 21-22)
The decision of the trial court, affirmed by the Court of Appeals, is based on the principle that the heirs of Mr. and Mrs. Tan Tiong Tick being
co–owners of the fore-closed property, a repurchase or reconveyance effected by only one of those heirs redounds to the co-ownership.
This explains why the courts below ordered four of the heirs — George Laurel
Tan, Teodora Tan Ong, Rosa
Tan, and Rosita Tan — to reimburse
D. Annie Tan the sum of P30,000.00 each plus 12%
interests while the share of the fifth
heir who was in default and who had waived his interest would go to the
petitioner.
The petitioner contends
that there was no co-ownership and no creditor-debtor relationship between her and the other children.
The petitioner states:
“This controversy addresses itself to the question of whether
or not the co-ownership among the heirs over a parcel of land formerly
belonging to their parents had been dissolved by the foreclosure and
consolidation of title by a bank after the redemption period of one (1) year
had expired, such that a unilateral obligation given by the bank to the heirs
to buy back the foreclosed property out of liberality is actually an option to
buy given to the heirs as group of persons singly or collectively, and not
strictly a right of re-purchase to be exercised by the heirs as co-owners. If it is admitted that the co-ownership of
the heirs over the foreclosed property of their parents had been dissolved by
the consolidation of the title in the mortgagee’s name, which in this case is
respondent Bank, and that there exists no creditor-debtor relationship between
respondent Bank and the heirs, then the bank may not impose an obligation to
the heirs that they should purchase back the property only as former co-owners
or as solidary debtors, but as groups of persons,
singly or collectively. The bank would
then be imposing an onerous condition upon the heirs of going back to the
dissolved co-ownership which the law frowns upon. To settle this case once and for all, herein
petitioner anchors her claim on the
theory that when the respondent Bank foreclosed the property and consolidated
its title on August 16, 1973 and T.C.T. No. 112924 was issued in its name, the
co-ownership of the heirs of the deceased parents of petitioner and private
respondents over the property in question have been dissolved. In this wise, the decision of the respondent
court premised on the existence of a co-ownership or in a creditor-debtor
relationship, and ordering the reimbursement to petitioner of the money for the
purchase of the property in question which allegedly redounded to the benefits
of her co-heirs as co-owners or solidary debtors has
no leg to stand on. It is this erroneous
decision of respondent court based on a misapprehension of facts and contrary
to settled jurisprudence that petitioner comes to this Honorable Court, for
relief. (Sese
v. Intermediate Appellate Court, G.R. No. 66186, July 31, 1987; Moran, Jr. v.
Court of Appeals, 133 SCRA 88; Manero v. Court of
Appeals, 102 SCRA 817; Carolina Industries v. CMS Brokerage, 97 SCRA 734; Sacay v. Sandiganbayan, 142 SCRA
593).” Rollo, pp. 7-9)
The first question which arises is the correctness of the
assumption that there was a co-ownership among the children of Tan Tiong Tick and Tan Ong Hun when
the petitioner purchased the property.
Since the lot and its improvement were mortgaged by the deceased
parents, there can be no question that a co-ownership existed among the heirs
during the period given by law to redeem the foreclosed property. Redemption by one during this period would
have inured to the benefit of all. (Adille v. Court of Appeals, G.R. No.
44546, 157 SCRA 455 [1988]; and De Guzman v. Court of Appeals, G.R. No. 47378,
148 SCRA 75 [1987]).
The records show, however, that when the petitioner purchased the
disputed property on August 30, 1974,
any co-ownership among the brothers and sisters no longer existed. The period to redeem had expired more than
one year earlier, on July 6, 1973. The respondent China Bank consolidated its
ownership and a new title was issued in
the bank’s name. When the heirs
allowed the one year redemption period to expire without redeeming their
parents’ former property and permitted the consolidation of ownership and the
issuance of a new title, the co-ownership was extinguished. The challenged ruling of the respondent court
is, therefore, based on erroneous premises.
Under Section 63-B of Presidential Decree No. 1529, the Property
Registration Decree, in case of non-redemption, the purchaser at the
foreclosure sale, meaning the respondent Bank in this case, is entitled to a
new certificate of title in its name after filing the necessary papers with the Register of Deeds, (Spouses Teofisto and Eulalia Verceles v. Court of First Instance of Rizal,
et al, G.R. No. 62219, February 28, 1989) It becomes a ministerial duty to place
the buyer in possession of the property he now owns. (Banco
Filipino v. Intermediate Appellate Court, G.R. No. 68878, 142 SCRA 44 (1986]). Ownership, therefore, passed to China Bank and there was no more co-ownership
among the heirs.
The non-existence of a common
inheritance of the Tan children at the
time the disputed property was purchased from China Bank is moreover supported
by the evidence showing that there was no more inheritance to divide. It had already been divided. Tan Tiong Tick left
other properties in addition to the property disputed in this petition. The eldest son, George Laurel Tan, inherited practically all the
properties consisting of several hectares of real estate in Novaliches,
Metro Manila; a furnished house in Greenhills, Mandaluyong; and
a cigar factory. (t.s.n.,
November 18, 1976, p. 24) The petitioner also claims that stock certificates went to
another sister, Teodora Tan Ong
because she “forced” the other heirs to sign a deed of sale in her favor.
May the heirs be
considered as debtors in common, substituting for their parents in liquidating
the latter’s obligations?
The answer is again, No.
Upon the foreclosure of
the mortgaged property and its purchase by China Bank as the highest bidder,
the proceeds of the auction sale were applied to the various debts of
the Tan spouses. The parents’ debts were
paid. The obligation having been
extinguished, there was no more common debt and no legal subrogation arising
when one pays the debts properly accruing to several others.
Respondent China Bank
contends that the letter agreement dated August 3, 1973 called for the reconveyance
of the land and improvements to all the heirs “in equal undivided
shares.”
There is no such stipulation in the letter. There is
reference to a verbal agreement to reconvey to the “heirs of your late
father” but no requirement that everybody must share in the purchase or
the offer would be withdrawn.
What is clear is that the bank’s general manager, Mr. Dee K. Chiong tried to impose the above requirement when the one
year period to buy back was about to expire.
Mr. Dee rejected the offer of D. Annie, Tan to buy the property for
herself alone. He insisted that the
money brought by the petitioner would be considered a joint fund of all the heirs
and ordered the same annotated on the back of the check given as payment for
the property.
This attitude of Mr. Dee K. Chiong is
in sharp contrast to the bank’s official stand embodied in a letter to the Central Bank.
Asked to comment on a
letter-complaint filed by D. Annie Tan with Malacanang
and forwarded to the Central Bank, the respondent bank through its Legal
Officer wrote the Director, Department of Commercial and Savings Bank, Central
Bank an explanation, part of which states:
“To our mind, the dispute is not
between the Bank and the heirs or any one of them, but among the heirs
themselves, for as far as the Bank is concerned, it makes no difference whether
the property is reconveyed to all the heirs or to any
one of them alone as they may agree. As
a matter of fact the complainant has already filed a Petition under the
Cadastral Case now pending in the CFI, Manila,
involving the property and all the heirs, (Copy of the Petition is hereto
attached as Annex “10”).
“At any rate, it is our honest
conviction that the charges filed by the complainant and the interpretation
Articles 1302 and 1303 of the New Civil Code properly belong to the Courts
where the complainant can always have her right, if any, vindicated, and if
only to re-solve the issue, we shall welcome any court action to clear the
matter.” (Folder of Exhibits, pp. 97-98)
The petitioner questions the unusual interest shown by China Bank
in the case when its stand should be one of neutrality. She claims that there is an orchestrated alliance
between the bank and the other private respondents as shown by the fact that
the bank seems to be mote eager and vigorous than the other heirs to win, the
case. (Rollo, p. 310).
As earlier stated, there is nothing in the August 3, 1973 letter-agreement which called for
either a purchase by all the heirs or no purchase at all. But could not Mr. Dee K. Chiong
validly impose such a requirement at the time the tender of money to buy the
property was made?
Again, the answer is in the negative.
We agree with the petitioner that her agreeing to sign an
annotation at the back of the check was a case of vitiated consent. She states that her conformity was null and
void because it was made under duress.
The records show that up to the last hour the petitioner was pleading
with Mr. Dee K. Chiong to buy the property for
herself alone as the money she had raised was not in any way owned by the other
heirs. Since the period was expiring,
the petitioner had no choice. It was a
case of either agreeing to the bank executive’s requirement or losing the
family property forever to strangers.
Mr. Dee could not impose a new co-ownership upon the petitioner,
her brothers and sisters. Co-ownership
is discouraged by law.
As held in the case of Basa v.
Aguilar (G.R. No. L-30994, 117 SCRA 128, 130-131 [1982]):
“Legal redemption is in the nature of a privilege created by
law partly for reasons of public policy and partly for the benefit and
convenience of the redemptioner, to afford him a way
out of what might be a disagreeable or inconvenient association into which he
has thrust. (10 Manresa, 4th Ed., 317.) It is
intended to minimize co-ownership. The law grants a co-owner the exercise of the
said right of redemption when the shares of the other owners are sold to a third
person. A third person, within the
meaning of this Article, is anyone who is not a co-owner. (Sentencia of
February 7, 1944 as cited in Tolentino, Comments on
the Civil Code, Vol. V, p. 160.)” (Emphasis supplied)
The records show that the annotation at the back of the P180,000.00 manager’s check that the funds were contributed by
all the heirs was made by a China Bank representative and that D. Annie Tan was
told by Dee K. Chiong that if she would not sign it, he would tot accept
the manager’s check and she would loge
her right to buy the lot within the period offered by the bank. The petitioner, at first, refused but being
placed between the difficulty of agreeing to the
condition or losing the property, she decided to agree. (t.s.n., September 27, 1976, pp. 24-25; t.s.n., November 18, 1976,
p. 36) The petitioner was als
aware that a certain Mr. Ang who operated a travel
agency in the next door building was eager to buy the property a double the
price stated in the letter-agreement executed more than a year earlier. (Court of Appeals Rollo,
Brief for Plaintiff-Appellant, p. 77)
The petitioner further
argues:
“The insistence by respondent Bank that the said letter-agreement
is a right to re-purchase given to all the heirs of the late Tan Tiong Tick to be exercised only collectively cannot legally
stand considering the following circumstances:
” ‘a) What will
happen if one of the heirs of the late Tan Tiong Tick
refuses or fails to exercise his right to purchase for whatever reason? Cannot
any of the other heirs, but all, raise sufficient funds for the full amount of
the purchase price because the other heirs could not let him or her borrow
money to cover his or her share? Would such refusal then prejudice the other
heirs?
” ‘b) Cannot
two or more heirs, but not all, who have sufficient funds exercise the right of
purchase?
” ‘c) Would
all the heirs then who signed the letter-agreement as in the case at bar lose
their right to purchase the property because of the refusal of one heir?
” ‘d) If
only ore of the heirs has sufficient funds to purchase the property and the
others do not have, and this particular heir does not want to lend her or his
money to the other heirs who have none, can the offer of the other heir to
exercise the option to buy in her or his own name alone be legally refused?
” ‘e) Finally,
can the buying back of the property by one heir alone be disallowed considering
that she is the one who has enough or sufficient funds and that her action will prevent the property from going
to third persons; like respondent Bank, for failure to pay the purchase price
on the last day of the period given by respondent Bank?
“It is petitioner’s submission that to follow the arguments of
respondent Bank that the letter-agreement can only be exercised collectively
and not singly would render the said agreement a useless piece of paper, and
gravely prejudicial to the property itself.
“What is more, even the respondent bank’s legal officer, Atty.
Arsenio Sy Santos, when
asked to comment on the case of the petitioner, admitted that indeed the
letter-agreement of August 3, 1973
is actually an option to buy. Said legal
officer gave the following observations and
comments, to wit:
“‘x x x
Observations and comments –
It may be interesting to
note that the provisions of Articles 1302 and 1303 which reads as follows:
Art. 1302. It is presumed
that there is legal subrogation:
(1) When a creditor pays another creditor who
is preferred, even without the debtor’s knowledge;
(2) When a third person, not interested in the obligation, pays with the
express or tacit approval of the debtor;
(3) When
even without the knowledge of the debtor, a person interested in the fulfillment of the
obligation pays, without prejudice to the effects of confusion as to the latter’s share.
Art. 1303. Subrogation
transfers to the person subrogated the credit with all the rights thereto
appertaining, either against the debtor or against third person, be they
guarantors or possessors of
mortgages, subject to stipulated in a conventional subrogations
(sic).’ refer to cases where the creditor-debtor relationship exists among the
parties.) (Rollo, pp. 243-246)
xxx xxx xxx
There was no creditor-debtor relationship existing among the
heirs and Mr. Dee had no legal authority to create one.
China Bank contends that when it told the petitioner that the
property could not be reconveyed to her alone, she
was likewise informed that a similar offer from some of the other co-heirs had
also been politely turned down. (Exhibit
7, China Bank, Folder of Exhibits, p. 87)
The petitioner disputes this claim. She states that there was no such offer by
her co-heirs because she was the only one willing to buy back the lot and the
only one with the means to do so
at that time. It was only on September 12, 1974 that the
individual respondents offered to repurchase.
By that time, D. Annie Tan had already paid for the lot and was already
insisting on a conveyance of the property in her name alone.
The petitioner states:
“There is, therefore, no doubt that the money used in buying
back the property belongs exclusively to the petitioner. Private respondents’ inaction in not
contributing the necessary money up to the last day of the buy back period is
fatal to their cause. To paraphrase one
case decided by this Honorable Court, courts cannot look with favor at parties
who, by their silence, delay and inaction, knowingly induce another to spend
time, effort and expense in protecting their interests over the property by
paying the buy back money only to spring from ambush and claim title or
interest over the property when the land and building value have become
higher. (See Lola v.
Court of Appeals, G.R. No. 46575, November 13, 1986). Moreover, the laws aid the vigilant, not
those who slumber on their rights. (Miraflor
v. Court of Appeals, G. R. Nos. 40151-52,
April 8, 1986).
“Definitely, the effects of a waiver
militates against the private respondents. Having forfeited, abandoned and/or waived
their rights, private respondents are now estopped
from taking an inconsistent position.
They cannot now assert that they are still co-owners of the property
with the petitioner. (Sec. 65, Rule 123,
Rules of Court; Hernaez v. Hernaez,
32 Phil. 214) (See also Banco de Oro Savings &
Mortgage Bank v. Equitable Banking Corporation, G.R. No. 74917, January 20,
1988, citing Saura Import and Export Co. v. Court of
Appeals, 24 SCRA 974). All the elements
of a valid waiver (1) the
existence of a right; (2) the knowledge of the existence thereof; and (3) the
intention to relinquish such right, either expressly or impliedly are
present. (Director of Lands v. Abiertas, 44 O.G. 928). x x
x.” (Rollo, pp.
238-239)
The claim of the respondents Tan in their memorandum that they
gave their individual contributions to the petitioner to raise the P180,000.00 is not worthy of credence. At the time of the repurchase, the petitioner
was already estranged from the respondents Tan and they would not have given
her any money without corresponding receipts or given her money under any
circumstance, for that matter. In fact,
there is no reason why the petitioner should be the one to collect the money of
the heirs and bring it to China Bank.
She was neither a son nor the eldest.
Neither did the others feel kindly towards her. The petitioner had called for a conference on
July 23, 1974 at 619
Carvajal Street, Binondo, Manila
to discuss compliance with the letter-agreement considering the fast
approaching deadline. Not one showed
up. (Rollo,
pp. 44-45), The money was raised by D. Annie Tan
through her connections with Jardine Davies because
of her construction business.
The decision of the respondent court confirmed the factual
findings of the trial court. It declared
that the respondents Tan became debtors of petitioner Tan and ordered them to
reimburse the P30,000.00 each which were advanced by
the petitioner. There was no pooling of
resources up to August 30, 1974 when at 4:00 in the afternoon, D. Annie Tan went to Mr. Dee K. Chiong with the China Bank manager’s check for P180,000.00.
The equities of this case also favor the grant of the
petition. D. Annie Tan went to plenty of
trouble in her effort to buy back the property formerly owned by her
parents. There is nothing in the records
to show that, beyond making some perfunctory allegations, the respondents Tan
did anything to save the property from falling into the hands of other
persons. The petitioner states that she
has now spent substantial sums to pay for real estate taxes and to renovate,
and improve the premises. According to
her she has “spent her little fortunes to preserve the patrimony left by
her parents. She alone deserves to be
entitled to the property, in law and equity.” (Rollo,
p. 317)
WHEREFORE, the petition is hereby GRANTED. The questioned decision of the Court of
Appeals is REVERSED and SET ASIDE. The
respondent China Banking Corporation is ordered to execute the deed of sale
over the disputed property in favor of the petitioner alone.
SO ORDERED.
Fernan, C.J., (Chairman), Feliciano, Bidin, and Cortes, JJ., concur.