Cruz v. Malolos
REITERATIONFacts
The Antecedents: Spouses Delfin I. Cruz and Adoracion Cruz had four children: Thelma, Nerissa, Arnel, and Gerry. Upon Delfin's death, Adoracion and the children executed a Deed of Partial Partition (DPP) on August 22, 1977, adjudicating several parcels of land in Taytay, Rizal. The following day, August 23, 1977, they executed a Memorandum Agreement (MOA), which was registered and annotated on the titles. The MOA stated that while the properties were partitioned, the parties covenanted to share equally in the proceeds from the sale of any lot adjudicated in their individual names. This agreement was to remain valid until the last lot was disposed of and proceeds divided. Nerissa Cruz Tamayo was issued titles to seven parcels of land. Meanwhile, Spouses Eliseo and Virginia Malolos obtained a favorable judgment for a sum of money against Nerissa and Nelson Tamayo. In execution of this judgment, the sheriff levied upon and sold in an execution sale the seven parcels of land belonging to Nerissa. The Malolos spouses were the highest bidders. Nerissa failed to redeem the properties, and a final deed of sale was executed in favor of the Malolos spouses. The Cruzes (Adoracion, Thelma, Gerry, and Arnel) intervened, claiming co-ownership over the lands. An order was issued directing the annotation of the Maloloses' rights on the titles. Subsequently, the Cruzes filed an action for partition against the Malolos spouses. Procedural History: The Regional Trial Court (RTC) of Antipolo, Rizal, rendered a decision ordering the partition of the seven parcels of land among the four Cruzes and the Malolos spouses. On appeal, the Court of Appeals (CA) reversed the RTC decision, dismissing the complaint without prejudice to the Cruzes' claim for their shares in the proceeds of the auction sale against Nerissa Cruz Tamayo. The CA denied the Cruzes' motion for reconsideration. The Petition: The Cruzes filed a petition for review on certiorari seeking to nullify the CA decision and resolution.
Issue(s)
Whether the Memorandum of Agreement (MOA) novated or cancelled the Deed of Partial Partition (DPP). Whether the MOA established a co-ownership between the petitioners and the judgment debtor (Nerissa Cruz Tamayo). Whether the petitioners are barred by estoppel from claiming co-ownership of the disputed parcels of land. Whether res judicata applies to the issue of co-ownership.
Ruling
The petition is bereft of merit. The Supreme Court affirmed the decision of the Court of Appeals, denying the petition and upholding the dismissal of the complaint for partition.
Ratio Decidendi
On the issue of whether the MOA novated or cancelled the DPP: The Court held that the MOA did not novate or cancel the DPP. Novation requires a previous valid obligation, agreement to a new contract, extinguishment of the old contract, and a valid new contract. The MOA did not express a clear intent to extinguish the DPP, nor were the two contracts incompatible on every point. The DPP conferred absolute ownership on Nerissa Cruz Tamayo, while the MOA created an obligation for her to share the proceeds of the sale. These two agreements could coexist and were meant to be interpreted to give life to both. The Court emphasized that the plain language of the contract prevails over post-facto explanations, and the MOA's stipulation to share proceeds did not impair Nerissa's dominion or make the petitioners co-owners. On the issue of whether the MOA established co-ownership: The Court found that the MOA did not establish co-ownership. The MOA retained the partition of properties and vested in the registered owner the power to dispose of the land adjudicated to them. These attributes are antithetical to co-ownership, where an undivided thing or right belongs to two or more persons. The parcels of land were already partitioned and titled under individual names, and the MOA explicitly allowed the registered owner to sell the land without consent from other parties, which is an attribute of ownership (jus disponendi). The annotation of the MOA on the titles did not confer co-ownership, as registration merely confirms, but does not confer, title. On the issue of estoppel by deed: The Court ruled that the petitioners were estopped from claiming co-ownership. Their execution of deeds of sale and real estate mortgages for other parcels adjudicated to them under the DPP, where they declared themselves as absolute owners free from liens and encumbrances, demonstrated their intent to treat all properties covered by the MOA as absolutely owned. These transactions, falling under an exception to the res inter alios acta rule due to rational similarity, showed a common purpose and design to treat the lands as absolutely owned. By their own acts and representations, they denied the existence of co-ownership and are thus barred from asserting it. On the issue of res judicata: The Court found that res judicata did not apply. The elements of res judicata were not met. The prior order from the RTC of Quezon City, which was for the collection of a sum of money, did not have jurisdiction to decide on the merits of the partition case or the existence of co-ownership. Its disquisition on co-ownership was merely incidental to the execution of its judgment. Furthermore, there was a lack of identity between the two actions: one was for collection of money, and the other was for partition.
Main Doctrine
A Memorandum Agreement that merely creates an obligation to share proceeds from the sale of properties, without clearly expressing intent to extinguish a previous Deed of Partial Partition or being incompatible with it, does not novate the earlier agreement. The registered owner retains dominion over the property, and the obligation to share proceeds does not create co-ownership. Furthermore, acts of disposing of other properties under the same agreement as absolute owner can lead to estoppel by deed, barring claims of co-ownership.