G.R. No.

124262 October 12, 1999

TOMAS CLAUDIO MEMORIAL COLLEGE, INC., petitioner,

vs.
COURT OF APPEALS, HON. ALEJANDRO S. MARQUEZ, CRISANTA DE CASTRO, ELPIDIA DE CASTRO, EFRINA
DE CASTRO, IRENEO DE CASTRO and ARTEMIO DE CASTRO ADRIANO, respondents.

QUISUMBING, J.:

This special civil action for certiorari seeks to set aside the Decision of the Court Appeals dated August
14, 1995, in CA-G.R. SP No. 36349, and its Resolution dated March 15, 1996, which denied petitioner's
motion for reconsideration.1wphi1.nt

On December 13, 1993, private respondents filed an action for Partition before the Regional Trial Court
of Morong, Rizal. They alleged that their predecessor-in-interest, Juan De Castro, died intestate in 1993
and they are his only surviving and legitimate heirs. They also alleged that their father owned a parcel of
land designated as Lot No. 3010 located at Barrio San Juan, Morong, Rizal, with an area of two thousand
two hundred sixty nine (2,269) square meters more or less. They further claim that in 1979, without
their knowledge and consent, said lot was sold by their brother Mariano to petitioner. The sale was
made possible when Mariano represented himself as the sole heir to the property. It is the contention of
private respondents that the sale made by Mariano affected only his undivided share to the lot in
question but not the shares of the other co-owners equivalent to four fifths (4/5) of the property.

Petitioner filed a motion to dismiss contending, as its special defense, lack of jurisdiction and
prescription and/or laches. The trial court, after hearing the motion, dismissed the complaint in an
Order dated August 18, 1984. On motion for reconsideration, the trial court, in an Order dated October
4, 1994, reconsidered the dismissal of the complaint and set aside its previous order. Petitioner filed its
own motion for reconsideration but it was denied in an Order dated January 5, 1995.

Aggrieved, petitioner filed with the Court of Appeals a special civil action for certiorari anchored on the
following grounds: a) the RTC has no jurisdiction to try and take cognizance of the case as the causes of
actions have been decided with finality by the Supreme Court, and b) the RTC acted with grave abuse of
discretion and authority in taking cognizance of the case.

After the parties filed their respective pleadings, the Court of Appeals, finding no grave abuse of
discretion committed by the lower court, dismissed the petition in a Decision dated August 14, 1995.
Petitioner filed a timely motion for reconsideration but it was denied in a Resolution dated March 15,
1996. Hence this petition.

Petitioner submits the following grounds to support the granting of the writ of certiorari in the present
case:

FIRST GROUND
THE HON. COURT OF APPEALS AND THE REGIONAL TRIAL COURT (BR. 79) HAD NO JURISDICTION TO TRY
SUBJECT CASE (SP. PROC. NO. 118-M). THE "CAUSES OF ACTION" HEREIN HAVE BEEN FINALLY DECIDED
BY THE HON. COURT OF FIRST INSTANCE OF RIZAL (BR. 31) MAKATI, METRO MANILA, AND SUSTAINED
IN A FINAL DECISION BY THE HON. SUPREME COURT.

SECOND GROUND

THE HON. COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND AUTHORITY WHEN IT SUSTAINED
THE ORDERS OF THE HON. REGIONAL TRIAL COURT (BR. 79) DATED OCTOBER 4, 1994, AND THE ORDER
DATED JANUARY 5, 1995, WHEN SAID RTC (BR. 79) INSISTED IN TRYING THIS CASE AGAINST TCMC WHEN
IT HAS RULED ALREADY IN A FINAL ORDER THAT PETITIONER IS NOT A "REAL PARTY" IN INTEREST BY THE
HON. REGIONAL TRIAL COURT (BR. 79) IN CIVIL CASE NO. 170, ENTITLED ELPIDIA A. DE
CASTRO, ET. AL. vs. TOMAS CLAUDIO MEMORIAL COLLEGE, ET . AL., WHICH CASE INVOLVED THE SAME
RELIEF, SAME SUBJECT MATTER AND THE SAME PARTIES.

THIRD GROUND

THE HON. COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND AUTHORITY WHEN IT
CAPRICIOUSLY AND WHIMSICALLY DISREGARDED THE EXISTENCE OF RES JUDICATA IN THIS CASE.

The pivotal issues to be resolved in this case are: whether or not the Regional Trial Court and/or the
Court of Appeals had jurisdiction over the case, and if so, whether or not the Court of Appeals
committed grave abuse of discretion in affirming the decision of the Regional Trial Court.

In assailing the Orders of the appellate court, petitioner invokes Rule 65 of the Rules of Court as its
mode in obtaining a reversal of the assailed Decision and Resolution. Before we dwell on the merits of
this petition, it is worth noting, that for a petition for certiorari to be granted, it must be shown that the
respondent court committed grave abuse of discretion equivalent to lack or excess of jurisdiction and
not mere errors of judgment, for certiorari is not a remedy for errors of judgment, which are correctible
by appeal. 1 By grave abuse of discretion is meant such capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction, and mere abuse of discretion is not enough it must be grave. 2

In the case at hand, there is no showing of grave abuse of discretion committed by the public
respondent. As correctly pointed out by the trial court, when it took cognizance of the action for
partition filed by the private respondents, it acquired jurisdiction over the subject matter of the
case. 3 Jurisdiction over the subject matter of a case is conferred by law and is determined by the
allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein. 4 Acquiring jurisdiction over the subject matter of a case does not necessarily mean
that the lower court meant to reverse the decision of the Supreme Court in the land registration case
mentioned by the petitioner.

Moreover, settled is the rule that the jurisdiction of the court over the subject matter is determined by
the allegations of the complaint, hence the court's jurisdiction cannot be made to depend upon
defenses set up in the answer or in a motion to dismiss. 5 This has to be so, for were the principle
otherwise, the ends of justice would be frustrated by making the sufficiency of this kind of action
dependent upon the defendant in all cases.

Worth stressing, as long as a court acts within its jurisdiction any alleged errors committed in the
exercise thereof will amount to nothing more than errors of judgment which are revisable by timely
appeal and not by a special civil action of certiorari. 6 Based on the foregoing, even assuming for the
sake of argument that the appellate court erred in affirming the decision of the trial court, which earlier
denied petitioner's motion to dismiss, such actuation on the part of the appellate court cannot be
considered as grave abuse of discretion, hence not correctible by certiorari, because certiorari is not
available to correct errors of procedure or mistakes in the judge's findings and conclusions.

In addition, it is now too late for petitioner to question the jurisdiction of the Court of Appeals. It was
petitioner who elevated the instant controversy to the Court of Appeals via a petition for certiorari. In
effect, petitioner submitted itself to the jurisdiction of the Court of Appeals by seeking affirmative relief
therefrom. If a party invokes the jurisdiction of a court, he cannot thereafter challenge that court's
jurisdiction in the same case. 7 To do otherwise would amount to speculating on the fortune of
litigation, which is against the policy of the Court.

On the issue of prescription, we have ruled that even if a co-owner sells the whole property as his, the
sale will affect only his own share but not those of the other co-owners who did not consent to the
sale. 8 Under Article 493 of the Civil Code, the sale or other disposition affects only the seller's share pro
indiviso, and the transferee gets only what corresponds to his grantor's share in the partition of the
property owned in common. Since a co-owner is entitled to sell his undivided share, a sale of the entire
property by one co-owner without the consent of the other co-owners is not null and void. However,
only the rights of the co-owner/seller are transferred, thereby making the buyer a co-owner of the
property. The proper action in a case like this, is not for the nullification of the sale, or for the recovery
of possession of the property owned in common from the third person, but for division or partition of
the entire property if it continued to remain in the possession of the co-owners who possessed and
administered it. 9Such partition should result in segregating the portion belonging to the seller and its
delivery to the buyer.1wphi1.nt

In the light of the foregoing, petitioner's defense of prescription against an action for partition is a vain
proposition. Pursuant to Article 494 of the Civil Code, "no co-owner shall be obliged to remain in the co-
ownership. Such co-owner may demand at anytime the partition of the thing owned in common, insofar
as his share is concerned." In Budlong vs. Bondoc, 10 this Court has interpreted said provision of law to
mean that the action for partition is imprescriptible. It cannot be barred by prescription. For Article 494
of the Civil Code explicitly declares: "No prescription shall lie in favor of a co-owner or co-heirs as long as
he expressly or impliedly recognizes the co-ownership."

WHEREFORE, the instant petition is DENIED. The assailed decision of the Court of Appeals is hereby
AFFIRMED. Costs against petitioners.

SO ORDERED.
G.R. No. 112260 June 30, 1997

JOVITA YAP ANCOG, and GREGORIO YAP, JR., petitioners,

vs.
COURT OF APPEALS, ROSARIO DIEZ, and CARIDAD YAP, respondents.

MENDOZA, J.:

This is a petition for review of the decision 1 of the Court of Appeals in CA-CR. No. CV-19650, affirming
the dismissal by the Regional Trial Court 2 of Bohol of an action for partition of a parcel of land which
petitioners had filed.

The land, with improvements thereon, was formerly the conjugal property of the spouses Gregorio Yap
and Rosario Diez. In 1946, Gregorio Yap died, leaving his wife, private respondent Rosario Diez, and
children, petitioners Jovita Yap Ancog and Gregorio Yap, Jr., and private respondent Caridad Yap as his
heirs.

In 1954 and again 1958, Rosario Diez obtained loans from the Bank of Calape, secured by a mortgage on
the disputed land, which was annotated on its Original Certificate of Title No. 622. When Rosario Diez
applied again for a loan to the bank, offering the land in question as security, the bank's lawyer, Atty.
Narciso de la Serna, suggested that she submit an extrajudicial settlement covering the disputed land as
a means of facilitating the approval of her application. The suggestion was accepted and on April 4,
1961, Atty. de la Serna prepared an extrajudicial settlement, which the heirs, with the exception of
petitioner Gregorio Yap, Jr., then only 15 years old, signed. The document was notarized by Atty. de la
Serna on April 12, 1961. As a result, OCT No. 622 was cancelled and Transfer Certificate of Title No. 3447
(T-2411) was issued on April 13, 1961. On April 14, 1961, upon the execution of a real estate mortgage
on the land, the loan was approved by the bank.

Rosario Diez exercised rights of ownership over the land. In 1985, she brought an ejectment suit against
petitioner Jovita Yap Ancog's husband and son to evict them from the ground floor of the house built on
the land for failure to pay rent. Shortly thereafter, petitioner Jovita Ancog learned that private
respondent Rosario Diez had offered the land for sale.

Petitioner Ancog immediately informed her younger brother, petitioner Gregorio Yap, Jr., who was living
in Davao, of their mother's plan to sell the land. On June 6, 1985, they filed this action for partition in
the Regional Trial Court of Bohol where it was docketed as Civil Case No. 3094. As private respondent
Caridad Yap was unwilling to join in the action against their mother, Caridad was impleaded as a
defendant.

Petitioners alleged that the extrajudicial instrument was simulated and therefore void. They claimed
that in signing the instrument they did not really intend to convey their interests in the property to their
mother, but only to enable her to obtain a loan on the security of the land to cover expenses for
Caridad's school fees and for household repairs.
At the pre-trial conference, the parties stipulated:

1. That the parcel of land in question originally belonged to the conjugal partnership of spouses Gregorio
Yap and Rosario Diez Yap;

2. That Gregorio Yap, Jr. is the legitimate child of spouses Gregorio Yap and Rosario Diez Yap;

3. That Gregorio Yap is not a party in the execution of the Extra Judicial Settlement of the Estate dated
April 4, 1961;

4. That all the encumbrances found in TCT No. (3447) T-2411 which is now marked as Exh. C for the
plaintiffs and Exh. 2 for the defendants as Entry No. 6719, 6720, 11561 and 11562 are admitted by the
plaintiffs subject to the condition that the Extra Judicial Settlement of Estate dated April 4, 1961, was
made by the parties that the same was only for the purpose of securing a loan with the Philippine
National Bank. 3

The trial court rendered judgment dismissing petitioners' action. It dismissed petitioners' claim that the
extrajudicial settlement was simulated and held it was voluntarily signed by the parties. Observing that
even without the need of having title in her name Rosario Diez was able to obtain a loan using the land
in question as collateral, the court held that the extrajudicial settlement could not have been simulated
for the purpose of enabling her to obtain another loan. Petitioners failed to overcome the presumptive
validity of the extrajudicial settlement as a public instrument.

The court instead found that petitioner Ancog had waived her right to the land, as shown by the fact
that on February 28, 1975, 4 petitioner's husband, Ildefonso Ancog, leased the property from private
respondent Diez. Furthermore, when the spouses Ancog applied for a loan to the Development Bank of
the Philippines using the land in question as collateral, they accepted an appointment from Rosario Diez
as the latter's attorney-in-fact. 5

The court also found that the action for partition had already prescribed. The registration of the land
under private respondent Rosario Diez's name amounted to a repudiation of the co-ownership.
Therefore, petitioners had ten (10) years from April 13, 1961 within which to bring an action to recover
their share in the property. While it is true that petitioner Gregorio Yap, Jr. was a minor at the time the
extrajudicial settlement was executed, his claim, according to the court, was barred by laches.

On appeal, the Court of Appeals upheld the validity of the extrajudicial settlement and sustained the
trial court's dismissal of the case. The appellate court emphasized that the extrajudicial settlement could
not have been simulated in order to obtain a loan, as the new loan was merely "in addition to" a
previous one which private respondent Diez had been able to obtain even without an extrajudicial
settlement. Neither did petitioners adduce evidence to prove that an extrajudicial settlement was
indeed required in order to obtain the additional loan. The appellate court held that considering
petitioner Jovita Yap Ancog's educational attainment (Master of Arts and Bachelor of Laws), it was
improbable that she would sign the settlement if she did not mean it to be such. Hence, this petition.
Petitioners contend that the Court of Appeals erred:
I. IN SUSTAINING THE TRIAL COURT RULING THAT THE CONTESTED EXTRAJUDICIAL SETTLEMENT
(EXHIBIT "B") IS NOT A SIMULATED ONE;

II. IN BLOATING THE EDUCATIONAL BACKGROUND OF PETITIONER JOVITA YAP ANCOG AND USING THE
SAME AS ARGUMENT AGAINST HER CLAIM THAT SAID EXHIBIT "B" WAS INDEED A SIMULATED
DOCUMENT;

III. IN SUSTAINING THE TRIAL COURT'S RULING THAT PETITIONERS' ACTION FOR PARTITION HAS
PRESCRIBED;

IV. IN RULING THAT PETITIONER GREGORIO YAP, JR., ONE OF THE CO-OWNERS OF THE LITIGATED
PROPERTY, HAD LOST HIS RIGHTS TO THE PROPERTY THROUGH PRESCRIPTION OR LACHES.

We hold that both the trial court and the Court of Appeals correctly acted in upholding the extrajudicial
settlement but erred in ruling that petitioner Gregorio Yap, Jr. was barred by laches from recovering his
share in the property in question.

To begin with, it is settled that the findings of facts of the Court of Appeals are conclusive upon the
parties and are not reviewable by this Court when they are an affirmation of the findings of the trial
court. 6 In this case, the trial court and the Court of Appeals found no evidence to show that the
extrajudicial settlement was required to enable private respondent Rosario Diez to obtain a loan from
the Bank of Calape. Petitioners merely claimed that the extrajudicial settlement was demanded by the
bank.

To the contrary, that the heirs (Jovita Yap Ancog and Caridad Yap) meant the extrajudicial settlement to
be fully effective is shown by the fact that Rosario Diez performed acts of dominion over the entire
Land, beginning with its registration, without any objection from them. Instead, petitioner Jovita Ancog
agreed to lease the land from her mother, private respondent Rosario Diez, and accepted from her a
special power of attorney to use the land in question as collateral for a loan she was applying from the
DBP. Indeed it was private respondent Diez who paid the loan of the Ancogs in order to secure the
release of the property from mortgage.

Petitioner Jovita Yap Ancog contends that she could not have waived her share in the land because she
is landless. For that matter, private respondent Caridad Yap is also landless, but she signed the
agreement. 7 She testified that she did so out of filial devotion to her mother.

Thus, what the record of this case reveals is the intention of Jovita Ancog and Caridad Yap to cede their
interest in the land to their mother Rosario Diez. It is immaterial that they had been initially motivated
by a desire to acquire a loan. Under Art. 1082 of the Civil Code, 8 every act which is intended to put an
end to indivision among co-heirs is deemed to be a partition even though it should purport to be a sale,
an exchange, or any other transaction.

We hold, however, that the Court of Appeals erred in ruling that the claim of petitioner Gregorio Yap, Jr.
was barred by laches. In accordance with Rule 74, 1 9 of the Rules of Court, as he did not take part in
the partition, he is not bound by the settlement. 10 It is uncontroverted that, at the time the
extrajudicial settlement was executed, Gregorio Yap, Jr. was a minor. For this reason, he was not
included or even informed of the partition.

Instead, the registration of the land in Rosario Diez's name created an implied trust in his favor by
analogy to Art. 1451 of the Civil Code, which provides:

When land passes by succession to any person and he causes the legal title to be put in the name of
another, a trust is established by implication of law for the benefit of the true owner.

In the case of O'Laco v. Co Cho Chit, 11 Art. 1451 was held as creating a resulting trust, which is founded
on the presumed intention of the parties. As a general rule, it arises where such may be reasonably
presumed to be the intention of the parties, as determined from the facts and circumstances existing at
the time of the transaction out of which it is sought to be established. 12 In this case, the records
disclose that the intention of the parties to the extrajudicial settlement was to establish a trust in favor
of petitioner Yap, Jr. to the extent of his share. Rosario Diez testified that she did not claim the entire
property, 13 while Atty. de la Serna added that the partition only involved the shares of the three
participants. 14

A cestui que trust may make a claim under a resulting trust within 10 years from the time the trust is
repudiated. 15Although the registration of the land in private respondent Diez's name operated as a
constructive notice of her claim of ownership, it cannot be taken as an act of repudiation adverse to
petitioner Gregorio Yap, Jr.'s claim, whose share in the property was precisely not included by the
parties in the partition. Indeed, it has not been shown whether he had been informed of her exclusive
claim over the entire property before 1985 when he was notified by petitioner Jovita Yap Ancog of their
mother's plan to sell the property. 16

This Court has ruled that for prescription to run in favor of the trustee, the trust must be repudiated by
unequivocal acts made known to the cestui que trust and proved by clear and conclusive evidence.
Furthermore, the rule that the prescriptive period should be counted from the date of issuance of the
Torrens certificate of title applies only to the remedy of reconveyance under the Property Registration
Decree. 17 Since the action brought by petitioner Yap to claim his share was brought shortly after he
was informed by Jovita Ancog of their mother's effort to sell the property, Gregorio Yap, Jr.'s claim
cannot be considered barred either by prescription or by laches.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that this case is
REMANDED to the Regional Trial Court for the determination of the claim of petitioner Gregorio Yap, Jr.

SO ORDERED.

G.R. No. 182314 November 13, 2013

VIRGINIA Y. GOCHAN, FELIX Y. GOCHAN III, LOUISE Y. GOCHAN, ESTEBAN Y. ESTEBAN Y. GOCHAN, JR.,
and DOMINIC Y. GOCHAN, Petitioners,
vs.
CHARLES MANCAO, Respondent.
DECISION

PERALTA, J.:

Assailed in this petition for certiorari under Rule 45 of the 1997 Rules of Civil Procedure are the June 28,
2007 Decision1 and March 10 2008 Resolution,2 of the Court of Appeals CA) in CA-G.R. SP No. 71312,
which annulled and set aside the judgment based on compromise3 dated November 27, 1998 of the
Cebu City Regional Trial Court Branch RTC) 17.

The factual antecedents are as follows:

Felix Gochan (Gochan), Amparo Alo (Alo), and Jose A. Cabellon were co-owners of Lot Nos. 1028 and
1030 of Subdivision Plan Psd-21702 located in Cebu City, Cebu.4 Petitioners are successors-in-interest of
Gochan, while respondent bought Lot Nos. 1028-D-1, 1028-D-3, 1028-D-4, and 1028-E covered by
Transfer Certificate of Title (TCT) Nos. 139161-1391645 from the children of Angustias Velez and
Eduardo Palacios,6 who, together with Jose, Jesus, Carmen, and Vicente, all surnamed Velez,7 acquired
Lot Nos. 1028-D and 1028-E from Alo.

Sometime in 1998, petitioners, including Mae Gochan, filed a case for legal redemption of Lot Nos.
1028-DD, 1028-EE, 1028-FF, 1028-GG, 1028-HH, 1028-II, 1028-JJ, 1028-KK, 1028-LL, 1028-MM, 1028-NN,
1028-OO, 1028-PP, 1028-QQ, 1028-RR, 1028-SS, 1028-TT, 1028-UU, 1028-VV, 1030-I of Subdivision Plan
Psd-21702 covered by TCT Nos. 2318 to 2337.8

The TCTs are registered under the names of Gochan (married to Tan Nuy), Alo (married to Patricio
Beltran), and Genoveva S. De Villalon (married to Augusto P. Villalon), who is the successor-in-interest of
Cabellon. The case, which was docketed as Civil Case No. CEB-22825 and raffled before Cebu City RTC
Branch 17, was brought against the spouses Bonifacio Paray, Jr. and Alvira Paray (sister of
respondent),9 who purchased the lots from the heirs of Alo. On November 20, 1998, the parties
executed a Compromise Agreement,10 whereby, for and in consideration of the amount of
Php650,000.00, the Spouses Paray conveyed to petitioners and Mae Gochan all their shares, interests,
and participation over the properties. On November 27, 1998, the court approved the agreement and
rendered judgment in accordance with its terms and conditions.11 The decision was annotated on
December 29, 1999 in the subject TCTs as Entry No. 188688.

Claiming that the legal redemption adversely affected Lot Nos. 1028-D-1, 1028-D-3, 1028-D-4, and 1028-
E, respondent filed a suit before the CA for "Declaration of Nullity of Final Decision and Compromise
Agreement and the Registration of the Same Documents with the Register of Deeds." The petition,
which impleaded as respondents the petitioners, Mae Gochan, and RTC Br. 17, alleged:

4. The subject matter in Civil Case No. CEB-22825 sought to be redeemed by the [petitioners] Gochans
from the x x x Parays were all ROAD LOTS serving Subdivision Psd-21702 located in Lahug, Cebu City.
[Respondents] standing to question the subject compromise agreement, the decision incorporating the
same, and the registration of said decision with the Register of Deeds of Cebu City, arises from the fact
that [respondent] is one of the subdivision lot owners in the same Subdivision Psd-21702, (LRC) Rec. No.
5988, prejudiced by the issuance and consequent registration of the said decision. x x x

xxxx

6. The compromise agreement, the questioned decision and the registration of the same are most
respectfully submitted to be null and void ab initio for the following reasons:

(a) The cause of action raised and settled in said Civil Case No. CEB-22825 is the alleged ownership or co-
ownership by the [petitioners] of 20 lots, 1028: DD, EE, FF, GG, HH, II, JJ, KK, LL, MM, NN, OO, PP, QQ,
RR, SS, TT, UU, VV, and I all of which are ROAD LOTS serving the residents and lot owners of Subdivision
Psd- 21702. x x x;

(b) The face of all the certificates of title covering the lots appropriated by the [petitioners] as owned or
co-owned by them per the questioned compromise agreement and decision, clearly indicate the same
to be road lots. The certification issued by the Department of Environment and Natural Resources Land
Management Services x x x shows that the same lots are road lots;

(c) Although these road lots had been registered in the name of private individuals (who were the
original registrants and who are now all deceased) the same could still not be appropriated or owned by
any individual or entity as the same is beyond the commerce of men. This is provided for and/or
supported among others by the following:

(c.1) Art. 420 of the Civil Code x x x;

(c.2) Sec. 44 of the Land Registration [Act No.] 496 x x x;

(c.3) Section 4, PD No. 957 x x x;

(c.4) Section 17 of PD No. 957 x x x;

(c.5) Section 21 of PD No. 957 x x x;

(c.6) PD 1216 amending Sec. 31 of PD 957 x x x;

(c.7) Established jurisprudence on the matter including the cases of White Plains Association, Inc. vs.
Legaspi, 193 SCRA 765 and in G.R. Case No. 55868 mentioned therein and Claudio M. Anonuevo et al. vs.
Court of Appeals, et al., G.R. No. 113739, May 2, 1995 holding that road and open spaces for public use
are beyond the commerce of men.

xxxx

7. One of the primary considerations why [respondent] himself bought the subdivision lots mentioned
herein is the existence and perpetual passage offered by the subdivision owners respecting the
subdivision road lots. As early as May 23, 1950, Amparo Alo, one of the original lot owners who caused
its subdivision, had this warranty in her Deed of Absolute Sale: "I further bind myself, by these presents,
not to alienate, encumber or otherwise dispose of my rights and interests in all the road lots or the
subdivision roads of subdivision plan Psd-21702 and to allow the herein VENDEES, their heirs, successors
and assigns the perpetual use thereof as part of the consideration of this sale." [Respondent] is a
successor-in-interest of one of the vendees in said sale having bought the same from Eduardo Palacios,
Jr., one of the vendees in the May 23, 1950 sale herein mentioned. x x x.

8. The historical facts of the creation of subdivision Psd-21702 indicated the lots the ownership of which
was made the subject matter of the questioned decision as Road Lots as early as August 5, 1947. x x x.
The predecessors of the [petitioners] themselves indicated on the last paragraph of page 2 of [the three-
page Motion dated August 5, 1947 that they filed] that the subject lots as Road lots;

9. On January 21, 1948, the Hon. Felix Martinez issued an Order respecting the motion of the
predecessors of the [petitioners] for the approval of the subdivision plan 1028 and 1030 Psd-21702
pursuant to Article 44 of Act No. 496. The English translation of the Order by Hon. Judge Antonio
Paraguya is quoted hereunder:

"x x x x

Pursuant to Article 44 of Act No. 496, let the subdivision plan of Lot [Nos.] 1028 and 1030-Psd-21702
and all other documents pertaining to said subdivision be remitted to the General Land Registration
Office."

xxxx

10. The approval of the subdivision plan 21702 on July 12, 1948, the appropriated road lots of which are
part of, was in conformity with the report/recommendation of the Chief Surveyor of the General Land
Registration Office dated February 5, 1948. And the second page of the Chief Surveyors report upon
which the decision was based said:

"It is respectfully recommended further that, in granting what is prayed for by the above-petitioners in
the instant case, they should be required to keep always open all the road lots within the above-said
subdivision so that they will serve as thoroughfare or exit to and from every subdivision lot included
therein."

xxxx

11. On July 12, 1948, the Hon. Judge Felix Martinez rendered a decision on the motion of the
predecessors of [petitioners] to approve the subdivision plan of lot 1028 and 1030 Psd-21702 in Spanish.
Said decision followed the recommendation of the Chief Surveyor quoted above. As translated by the
Hon. Judge Antonio Paraguya, said decision in English, stated:

"In conformity with the report/recommendation of the Chief Surveyor of the General Land Registration
Office dated February 5, 1948, subdivision plan Psd-21702 and the corresponding technical descriptions
are hereby approved."

xxxx
12. [Respondent] most respectfully emphasizes the urgent and grave necessity that the questioned
compromise agreement, the final decision and its registration be declared null and void. As it is now,
[petitioners] are using the same decision and compromise agreement as tools to deny other lot owners,
including the [respondent] herein, from free access to and from the subdivision lots. [Petitioners] are
wantonly erecting and/or placing barriers on these lots, in the guise of owning the same, in the process
effectively denying [respondent] and other lot owners from using said road lots.12

Respondents Reply to Answer with Counterclaim further averred:

7. In fact, the estate and inheritance tax return on the late Felix Gochan (answering [petitioners]
grandfather) from where answering [petitioners] derive their alleged rights over these road lots, filed in
1959, never include these lots now as their private property. Several road lots are indicated in this
return but never the subject road lots. This would prove that even historically, these road lots had
already been separated from the properties of the [petitioners]. The present [petitioners] could not
arrogate unto themselves as their own things which their forefathers no longer owned. x x x

8. In fact too, when the questioned decision was presented to the Register of Deeds for annotation on
the covering certificates of title, [petitioners] failed to present any of their supposed owners duplicate
copies of said certificates. Therefore, from which does [petitioners] supposed ownership of these road
lots emanate? x x x

9. Even the estate tax return on the estate of answering [petitioners] father Esteban Gochan filed in
1997 does not include as part of his supposed estate the road lots made subject matter of the
questioned compromise agreement and the resultant decision. The records of the City Assessor of Cebu
City on the late Esteban Gochans property holdings likewise do not show these road lots to be part
of(sic). For this, and the above mentioned indications, [petitioners] should do well in disclaiming
ownership than appropriating the road lots as their own. x x x13

Petitioners and Mae Gochan countered that the petition states no cause of action on the grounds that:
(1) respondent is not a co-owner of the properties subject matter of the legal redemption case, hence,
not a real party-in-interest required to be impleaded therein; and (2) the reasons relied upon by him
constitute neither extrinsic fraud nor lack of jurisdiction. Petitioners also noted that respondent is
already a defendant-intervenor in Felix Gochan and Sons Realty Corporation v. City of Cebu, an
injunction case docketed as Civil Case No. CEB-22996 and pending before Cebu RTC Branch 10. They
argued that the filing of the petition is in violation of the rule on forum shopping and litis pendentia,
because respondents ultimate objective in CA-G.R. SP No. 71312 and in Civil Case No. CEB-22996 is the
same to use the alleged road lots and bar petitioners from using the same. Petitioners further
contended that respondent is estopped to declare that the subject lots are beyond the commerce of
men, considering that he was the highest bidder when the City of Cebu levied and sold at public auction
Lot Nos. 1028-LL and 1028-NN due to non-payment of real estate taxes.14 Moreover, petitioners
asserted that respondent should have impleaded the "other lot owners" as co-petitioners because he
considered them as indispensable parties based on paragraph 12 of the Petition. Finally, petitioners
claimed that the petition serves no useful purpose, since to declare the nullity of the compromise
agreement and the decision would not change the private character of the subject lots as the owners
thereof would still be the Spouses Parays and the heirs of Beltran, who are private individuals.

Despite petitioners defenses, the CA ruled in favor of respondent. The fallo of the June 28, 2007
Decision reads:

WHEREFORE, judgment is hereby rendered GRANTING the instant petition. The Compromise Agreement
dated November 20, 1998 signed by the parties and counsel in Civil Case No. CEB-22825, which is Annex
"G" to the Petition and the Decision dated November 27, 1998 of the Court a quo in Civil Case No. CEB-
22825, entitled "Virginia Y. Gochan, et al., vs. Bonifacio Paray, Jr., et al." are hereby ANNULLED and SET
ASIDE and the Compulsory Counterclaim is hereby DISMISSED for lack of merit.

Consequently, the registration of the said decision on December 29, 1998 with the Register of Deeds of
Cebu City per Entry No. 188688 is likewise declared null and void. The Register of Deeds of the City of
Cebu is hereby ordered to forthwith cancel the registration of the Decision done on December 29, 1998,
per Entry No. 188688.

No costs.

SO ORDERED.15

The CA, subsequently, denied petitioners motion for reconsideration; hence, this petition raising the
grounds as follows:

I. THE COURT OF APPEALS ERRED IN FINDING THAT EXTRINSIC FRAUD WAS PRESENT WHEN THE
RESPONDENT WAS NOT IMPLEADED IN THE REDEMPTION CASE AND WHEN PETITIONERS ENTERED INTO
A COMPROMISE AGREEMENT WITH BONIFACIO PARAY.

II. THE COURT OF APPEALS ERRED IN ASSUMING THAT THE ROAD LOTS ARE WITHIN A RESIDENTIAL
SUBDIVISION.

III. THE COURT OF APPEALS ERRED IN APPLYING THE RULING IN WHITE PLAINS ASSOCIATION, INC. VS.
LEGASPI, G.R. NO. 95522, FEBRUARY 7, 1991, WHICH [HAD] LONG BEEN MODIFIED BY THE MORE
RECENT CASE OF WHITE PLAINS HOMEOWNERS ASSOCIATION, INC. VS. CA, 297 SCRA 547, OCTOBER 8,
1998.

IV. THE COURT OF APPEALS ERRED IN APPLYING PD 957 AND PD 1216 WHICH ARE INAPPLICABLE IN
DECIDING THE CASE AND WHICH LAWS DO NOT HAVE RETROACTIVE EFFECT.

V. THE OTHER GROUNDS RELIED UPON BY RESPONDENT ARE EQUALLY UNAVAILING.16

The petition is impressed with merit.

The general rule is that, except to correct clerical errors or to make nunc pro tunc entries, a final and
executory judgment can no longer be disturbed, altered, or modified in any respect, and that nothing
further can be done but to execute it.17 A final and executory decision can, however, be invalidated via
a petition to annul the same or a petition for relief under Rules 47 and 38, respectively, of the 1997
Rules of Civil Procedure (Rules).18

Specifically, Sections 1 and 2 of Rule 47 provide for the coverage and grounds for annulment of
judgments or final orders and resolutions of the RTCs in civil actions:

SECTION 1. Coverage. This Rule shall govern the annulment by the Court of Appeals of judgments or
final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of
new trial, appeal petition for relief or other appropriate remedies are no longer available through no
fault of the petitioner.

SEC. 2. Grounds for annulment. The annulment may be based only on the grounds of extrinsic fraud
and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion
for new trial or petition for relief.

Although Section 2 of Rule 47 provides that a petition for annulment may be based only on the grounds
of extrinsic fraud and lack of jurisdiction, jurisprudence has recognized denial of due process as an
additional ground.19 In this case, extrinsic fraud was the basis of the CA in annulling the trial courts
judgment; thus, there is a need to examine the concept, as established by a plethora of jurisprudence
and, thereafter, to determine whether the CA, in the exercise of its original jurisdiction, correctly applied
the same.

We begin by restating that an action to annul a final judgment on the ground of fraud will lie only if the
fraud is extrinsic or collateral in character.20 In Ancheta v. Guersey-Dalaygon,21 the Court elaborated:

Fraud takes on different shapes and faces. In Cosmic Lumber Corporation v. Court of Appeals, the Court
stated that "man in his ingenuity and fertile imagination will always contrive new schemes to fool the
unwary."

There is extrinsic fraud within the meaning of Sec. 9 par. (2), of B.P. Blg. 129, where it is one the effect of
which prevents a party from hearing a trial, or real contest, or from presenting all of his case to the
court, or where it operates upon matters, not pertaining to the judgment itself, but to the manner in
which it was procured so that there is not a fair submission of the controversy. In other words, extrinsic
fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of
the trial of the case, whereby the defeated party has been prevented from exhibiting fully his side of the
case by fraud or deception practiced on him by his opponent. Fraud is extrinsic where the unsuccessful
party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his
opponent, as by keeping him away from court, a false promise of a compromise; or where the
defendant never had any knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or
where an attorney fraudulently or without authority connives at his defeat; these and similar cases
which show that there has never been a real contest in the trial or hearing of the case are reasons for
which a new suit may be sustained to set aside and annul the former judgment and open the case for a
new and fair hearing.22

Similarly, City Government of Tagaytay v. Guerrero23 distinguished:

x x x [F]raud may also be either extrinsic or intrinsic. There is intrinsic fraud where the fraudulent acts
pertain to an issue involved in the original action, or where the acts constituting the fraud were or could
have been litigated therein. Fraud is regarded as extrinsic where the act prevents a party from having a
trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to
the judgment itself but to the manner in which it is procured, so that there is not a fair submission of the
controversy. Extrinsic fraud is also actual fraud, but collateral to the transaction sued upon.

xxxx

Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed
outside of the trial of the case, whereby the unsuccessful party has been prevented from exhibiting fully
his case, by fraud or deception practiced on him by his opponent. The fraud or deceit cannot be of the
losing party's own doing, nor must such party contribute to it. The extrinsic fraud must be employed
against it by the adverse party, who, because of some trick, artifice, or device, naturally prevails in the
suit. It affects not the judgment itself but the manner in which the said judgment is obtained.24

Intrinsic fraud refers to acts of a party at a trial which prevented a fair and just determination of the
case, and which could have been litigated and determined at the trial or adjudication of the case.25 In
contrast, extrinsic or collateral fraud is a trickery practiced by the prevailing party upon the unsuccessful
party, which prevents the latter from fully proving his case; it affects not the judgment itself but the
manner in which said judgment is obtained.26 Fraud is regarded as extrinsic "where it prevents a party
from having a trial or from presenting his entire case to the court, or where it operates upon matters
pertaining not to the judgment itself but to the manner in which it is procured. The overriding
consideration when extrinsic fraud is alleged is that the fraudulent scheme of the prevailing litigant
prevented a party from having his day in court."27

In this case, the CA concluded that petitioners committed extrinsic fraud, since they "employed schemes
which effectively excluded [respondent] and other co-owners from participating in the trial."28 It opined
that while the subject lots may have been registered in the name of petitioners, they could not be the
subject of any contract or compromise because they are road lots which are for public use and,
therefore, beyond the commerce of men. Cited as basis were

White Plains Association, Inc. v. Legaspi,29 the preambulatory clauses of Presidential Decree (P.D.) No.
1216, and Sections 17 and 22 of P.D. No. 957. The CA observed:

x x x [T]he Court finds that the filing of Civil Case No. CEB-22825, and the subsequent compromise
agreement which immediately terminated the same were only ploys to give legality to the occupation by
[petitioners] of the subject road lots which are clearly beyond the commerce of man. They filed a case in
court in order to give legal color to their occupation. Then they conveniently entered into a compromise
agreement in order to shorten the proceedings and foreclose any intervention or opposition from
petitioner and from other lot owners in the subdivision who were purposely excluded therefrom and to
their damage and prejudice. Furthermore, [petitioners] already erected structures on the road lots
which can be considered as alteration that requires the permission of the National Housing Authority
and the conformity or consent of the duly organized homeowners association, or in the absence of the
latter, by the majority of the affected lot buyers in the subdivision under Presidential Decree 957. These
requirements were not complied with by [petitioners] in the instant case.

If only [respondent] and other subdivision lot owners were notified of the filing of the case involving the
subject lots, they could have intervened and protected their rights against the unscrupulous acts of
[petitioners] and the issues raised by [respondent] in the instant petition could have been properly
resolved by the court a quo.30

In denying petitioners motion for reconsideration, the CA additionally held:

To reiterate, this Court finds that extrinsic fraud exists in the instant case based on the following facts:
(a) that the ownership of the subject road lots were conveniently vested to the Gochans when Civil Case
No. CEB-22825 was commenced and terminated without notifying [respondent] and other subdivision
lot owners about the case; and (b) that the November 20, 1998 Compromise Agreement was consciously
and deliberately entered into by [petitioners] to foreclose [respondent] and other subdivision lot owners
from intervening and participating in the trial of the case.

It must be emphasized that the instant case does not involve the entire property of [petitioners] but
only the road lots therein leading to the subdivision where [respondent] resides. It must be emphasized
further that said road lots were the subjects of the warranty given by [respondents] predecessor-in-
interest, Amparo Alo, which reads:

"I further bind myself, by these presents, not to alienate, encumber or otherwise dispose of my rights
and interest in all the road lots or the subdivision roads, of subdivision plan Psd-21702 and to allow said
vendees, their heirs, successors and assigns the perpetual use thereof as part of the consideration of this
sale."

Verily, [petitioners] cannot claim that there is no extrinsic fraud in the instant case because "the case
was only between [petitioners] and Bonifacio Paray and it was not at all necessary to inform, notify or
implead [respondent] in CEB-22825." This claim would have been totally correct if Civil Case No. CEB-
22825 did not include the subject road lot. Hence, [petitioners] clearly violated [respondents] right
when they filed Civil Case No. CEB-22825 and subsequently entered into a Compromise Agreement
which fraudulently and effectively vested upon them absolute ownership of the road lots, totally and
flagrantly disregarding the abovementioned warranty. It is also in this regard that this Court ruled that
[respondent] has the legal personality to file the instant petition, being a real party-in-interest as
defined under Section 7, Rule 3, of the Revised Rules of Court x x x31

Based on the foregoing, are petitioners guilty of committing extrinsic fraud? We think not.
To be clear, the governing law with respect to redemption by co-owners in case the share of a co-owner
is sold to a third person is Article 1620 of the New Civil Code, which provides:

Art. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other
co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive,
the redemptioner shall pay only a reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they may only do so in
proportion to the share they may respectively have in the thing owned in common.

Article 1620 contemplates of a situation where a co-owner has alienated his pro-indiviso shares to a
third party or stranger to the co-ownership.32 Its purpose is to provide a method for terminating the co-
ownership and consolidating the dominion in one sole owner.33 In Basa v. Aguilar,34 the Court stated:

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 been 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 Decision
12 G.R. No. 182314 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.)35

We already held that only the redeeming co-owner and the buyer are the indispensable parties in an
action for legal redemption, to the exclusion of the seller/co-owner.36 Thus, the mere fact that
respondent was not impleaded as a party in Civil Case No. CEB-22825 is not in itself indicative of
extrinsic fraud. If a seller/co-owner is not treated as an indispensable party, how much more is a third
person who merely alleged that his lots are affected thereby? Truly, the exclusion of respondent (or
other alleged subdivision lot owners who are equally affected) from the legal redemption case does not
entitle him to the right to ask for the annulment of the judgment under Rule 47 of the Rules, because he
does not even have any legal standing to participate or intervene therein.1wphi1

Assuming arguendo that respondent has the personality to be impleaded in Civil Case No. CEB-22825
since it is settled that a person need not be a party to the judgment sought to be annulled,37 still, he
failed to prove with sufficient particularity the allegation that petitioners practiced deceit or employed
subterfuge that precluded him to fully and completely present his case to the trial court. Like in other
civil cases, the allegation of extrinsic fraud must be fully substantiated by a preponderance of evidence
in order to serve as basis for annulling a judgment.38 Extrinsic fraud has to be definitively established by
the claimant as mere allegation does not instantly warrant the annulment of a final judgment.39 Ei
incumbit probotio qui dicit, non qui negat. He who asserts, not he who denies, must
prove.40Unfortunately, respondent failed to discharge the burden.

We reverse the CA findings as it is grounded entirely on speculation, surmises or conjectures.41 Upon

examination of the records, the evidence presented by respondent are plainly wanting to show any
specific trick, artifice, or device employed by petitioners that caused them to prevail over the Spouses
Paray. In fact, when petitioners contended that extrinsic fraud must be present in an action to annul
judgment, respondent erroneously countered that it is "immaterial" and even admitted that "[t]he
present case is based on the illegality of the acts of the [petitioners] arising from the nature of the lots
dealt with and the resultant violation by the [petitioners] of the law declaring the act to be so."42

Of equal importance, aside from respondents failure to prove the presence of extrinsic fraud, a petition
to annul the RTC judgment under Rule 47 of the Rules is not the correct legal remedy, because there are
other options clearly available to him to protect his alleged right over the road lots. Certainly, the issues
raised by respondent on whether the subject lots are road lots by nature; whether the subject lots are
subdivision lots within a subdivision project; whether a right of way had been granted him by his
predecessors-in-interest; whether the laws and jurisprudence he cited are applicable to the case; and
many other incidental matters are not proper subjects of, as these would effectively muddle the
proper issues for determination in, a suit for legal redemption. A full-blown trial either via a
proceeding directly attacking the certificates of title of petitioners, or in an easement case, or even
before Civil Case No. CEB-22996 pending before Cebu RTC Br. 10 is proper where these factual and
legal issues could be completely threshed out.

The Court has repeatedly stressed that an action to annul a final judgment is an extraordinary remedy,
which is not to be granted indiscriminately.43 It is a recourse equitable in character, allowed only in
exceptional cases as where there is no adequate or appropriate remedy available (such as new trial,
appeal, petition for relief) through no fault of petitioner.44 It is an equitable principle as it enables one
to be discharged from the burden of being bound to a judgment that is an absolute nullity to begin
with.45 Yet, more importantly, the relief it affords is equitable in character because it strikes at the core
of a final and executory judgment, order or resolution,46 allowing a party-litigant another opportunity
to reopen a judgment that has long elapsed into finality. The reason for the restriction is to prevent this
extraordinary action from being used by a losing party to make a complete farce of a duly promulgated
decision that has long become final and executory.47

x x x The underlying reason is traceable to the notion that annulling final judgments goes against the
grain of finality of judgment. Litigation must end and terminate sometime and somewhere, and it is
essential to an effective administration of justice that once a judgment has become final, the issue or
cause involved therein should be laid to rest. The basic rule of finality of judgment is grounded on the
fundamental principle of public policy and sound practice that at the risk of occasional error, the
judgment of courts and the award of quasi-judicial agencies must become final at some definite date
fixed by law.48

WHEREFORE premises considered, the instant Petition is GRANTED. The June 28, 2007 Decision and
March 10, 2008 Resolution, of the Court of Appeals in CA-G.R. SP No. 71312, which annulled and set
aside the judgment based on compromise dated November 27, 1998 of the Regional Trial Court, Branch
17 Cebu City, are REVERSED AND SET ASIDE.

SO ORDERED.

G.R. No. 122249 January 29, 2004

REYNALDO, TELESFORO, REMEDIOS, ALFREDO and BELEN, all surnamed AGUIRRE, VICENTA, HORACIO
and FLORENCIO, all surnamed MAGTIBAY and LEONILA, CECILIA, ANTONIO, and VENANCIO, all surnamed
MEDRANO, and ZOSIMA QUIAMBAO, Petitioners,
vs.
COURT OF APPEALS and ELIAS, JOSE, ARSENIA and ROGELIO, all surnamed BALITAAN, and MARIA
ROSALES, Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of
the Decision1 dated July 26, 1995 rendered by the Court of Appeals in CA-G.R. CV No. 42350 which set
aside the Decision2 dated April 28, 1992 of the Regional Trial Court of Batangas City (Branch 2) in Civil
Case No. 202,3 and declared private respondents Heirs of Tiburcio Balitaan, as owners of the parcel of
unregistered land with an approximate area of 1,695 square meters, located at Aplaya, Bauan, Batangas.

The facts of the case are as follows:

In his lifetime, Leocadio Medrano was the owner and possessor of a parcel of residential land, situated
in Aplaya, Bauan, Batangas, containing an area of 2,611 square meters.4 The parcel of land was conjugal
property, having been acquired by Leocadio during his first marriage with one Emiliana Narito. Their
union begot four children, namely: (a) Gertrudes Medrano, now deceased, represented in this case by
her children, herein petitioners Telesforo, Reynaldo, Remedios, Alfredo, and Belen, all surnamed
Aguirre; (b) Isabel Medrano, likewise deceased, represented by her children, herein petitioners Vicenta,
Horacio, and Florencio, all surnamed Magtibay; (c) Placido Medrano, also deceased, represented by his
only child, herein petitioner Zosima Quiambao; and (d) Sixto Medrano.

After the death of his first wife, Leocadio contracted a second marriage with Miguela Cario. Their union
bore four children, herein co-petitioners, namely: Venancio, Leonila, Antonio and Cecilia, all surnamed
Medrano.

Upon the death of Leocadio on March 19, 1945, the surviving heirs agreed that Sixto should manage and
administer the subject property.

Sixto died on May 17, 1974. It was only after his death that petitioners heard rumors that Sixto had, in
fact, sold significant portions of the estate of Leocadio. It appears that on September 7, 1953, Sixto,
without the knowledge and consent of the petitioners, executed an Affidavit of Transfer of Real
Property stating therein that he was the only heir of Leocadio.5 Sixto declared that Leocadio died on
September 16, 1949, instead of the actual date of his death on March 19, 1945. With the use of said
affidavit and a survey plan,6 Tax Declaration No. 40105 in the name of Leocadio was cancelled and Tax
Declaration No. 44984 was issued in the name of Sixto.7 On August 29, 1957, Sixto sold to Maria Bacong
a 160- square meter portion of the subject land.8 On September 28, 1959, Sixto sold to Tiburcio Balitaan
a 1,695 square meter portion of the same land.9 Sometime in November 1967, Maria Bacong sold her
property to Rosendo Bacong.10

Petitioners demanded the reconveyance of the portions sold by Sixto but Tiburcio Balitaan, Maria
Bacong and Rosendo Bacong refused to do so. Hence, petitioners filed against them before the Regional
Trial Court of Batangas (Branch 2), a complaint for Declaration of Nullity of Documents, Partition,
Malicious Prosecution and Damages, docketed as Civil Case No. 202.11

In their Answer, Maria Bacong and Rosendo Bacong contend that petitioners have no cause of action
because they acquired their property thru a valid deed of sale dated August 29, 1957, executed by Sixto
and, alternatively, petitioners' cause of action, if any, was barred by prescription and laches.12

In his Answer, Tiburcio Balitaan contends that petitioners have no cause of action since petitioners were
well-aware of the sale of the property to him by Sixto; and that he was an innocent purchaser for value,
in possession and enjoyment of the land in the concept of absolute owner, peacefully and publicly. He
further echoed the contention of Maria and Rosendo Bacong that any cause of action petitioners may
have was barred by prescription and laches.13

Maria Bacong died during the pendency of the suit in the trial court and she was substituted by her
surviving heirs, namely, Lorenza, Elena, Felipa, Manuel, Marilou, Ricardo, Medel, Monchito and Milag, all
surnamed Medrano.14Tiburcio Balitaan also died and was substituted by his heirs, herein private
respondents, namely: his wife, Maria Rosales and their four children: Elias, Jose, Arsenia and Rogelio, all
surnamed Balitaan.15

On July 28, 1989, petitioners and Rosendo Bacong, for himself and as attorney-in-fact of the heirs of
Maria Bacong, entered into a compromise agreement to settle the case between them.16 The
compromise agreement, as approved by the trial court, provided that Rosendo Bacong and the heirs of
Maria Bacong agreed to pay 30,000.00 to petitioners in recognition of petitioners' ownership of a 269-
square meter portion17 and in consideration of which, petitioners recognized the full ownership, rights,
interest and participation of the former over said land.18 The area of the subject land is thus reduced to
2,342 square meters (2,611 square meters minus 269 square meters).

After trial on the merits, the trial court rendered judgment dated April 28, 1992, ruling that private
respondents did not dispute, by any evidence, the falsity of the Affidavit of Transfer, as well as the fact
that Sixto had co-owners to the property. It found that private respondents' affirmative defense of
laches and/or prescription are unavailing against a property held in co-ownership as long as the state of
co-ownership is recognized. Consequently, the trial court upheld the sale made by Sixto in favor of
private respondents only to the extent that Sixto is entitled to by virtue of his being a co-owner.19

In determining the area that Sixto could have validly sold to private respondents, the trial court, in its
decision, provided for the manner of partition among the parties, based on the memorandum submitted
by petitioners, thus:

For the four (4) children of the first marriage, namely:

(1) Gertrudes, who is already dead represented by her children Tefesforo, Reynaldo, Remedios, Alfredo
and Belen, all surnamed Aguirre - 399.42 square meters;

(2) Isabel Medrano, who is already dead, represented by the plaintiffs, her children Vicenta, Horacio and
Florencio, all surnamed Magtibay - 399.42 square meters;

(3) Placido Medrano (dead), represented by his only child Zosima Medrano - 399.42 square meters; and

(4) Sixto Medrano - 399.42 square meters only which he had the right to dispose of in favor of Tiburcio
Balitaan and Maria Rosales.

The above consist of undivided interest, shares and participations from the inheritance or succession to
the conjugal estate of Leocadio Medrano and Emiliana Narito.

For the children of the second marriage their shares in the inheritance from the property of Leocadio
Medrano are as follows:

(1) To Venancio Medrano - 138.32 square meters

(2) To Leonila Medrano - 138.32 square meters

(3) To Antonio Medrano - 138.32 square meters

(4) To Cecilia Medrano - 138.32 square meters

with all the above consisting of undivided shares, interest and participation in the estate.

For the defendants Maria Rosales, surviving spouse of the deceased Tiburcio Balitaan and their Children,
an area of 399.42 square meters, the only area and extent which Sixto Medrano could have legally
dispensed of in their favor.20

Thus, the dispositive portion of the trial court's decision reads as follows:

WHEREFORE, in view of the foregoing, the Court renders judgment in favor of the plaintiffs and against
the defendants, to wit:

(a) Ordering the partition of the property in question among the plaintiffs and the defendants; and

(b) Ordering the parties, plaintiffs and defendants, to make a partition among themselves by proper
instruments of conveyance and to submit before this Court a project of partition should the parties be
able to agree for the confirmation of the Court within two (2) months upon receipt of this decision,
otherwise this Court will be constrained to appoint commissioners to make the partition in accordance
with law.

All other claims not having been duly proved are ordered dismissed.

SO ORDERED.21
Aggrieved, private respondents appealed to the Court of Appeals.22

On July 26, 1995, the appellate court rendered judgment recognizing the validity of the sale only with
respect to the undivided share of Sixto Medrano as co-owner; but nonetheless, declaring respondents as
absolute owners of 1,695 square meters of the subject property, reasoning that:

. . . Defendants-appellees have been in possession, in the concept of owner, of the entire parcel of land
sold to Tiburcio Balitaan by Sixto Medrano for more than ten years, seventeen years to be exact (1958-
1975). Relying on the affidavit of transfer (Exhibit "B") the tax declaration (Exhibit "C") and the survey
plan (Exhibit "D") shown to him by Sixto Medrano which indicate the latter as owner of the property in
dispute, Tiburcio Balitaan believed transfer to him was effected. (TSN, April 17, 1991, pp. 14-17) and
thus, entered the property as owner (Ibid. at p. 13) Tiburcio Balitaan, believing himself as the lawful
transferee, in addition, caused Tax Declaration No. 51038 to be issued in his name (Exhibits "6", "6-A",
"6-B", and "6-C"). Thus, although the sale of the co-owned property is only valid as to the undivided
share of Sixto Medrano, defendants, by virtue of their open, adverse and uninterrupted possession from
1958 (Exhibit "G") to 1975, obtained title to the entire property and not just Sixto's undivided share. This
is pursuant to Article 1134 (1957a) of the New Civil Code which provides that:

Ownership and other real rights over immovable property are acquired by ordinary prescription through
possession of ten years.

...

Plaintiffs did not at all inquire as to the status of their property all this time and thus have been remiss
of their duties as owners of the property. Plaintiffs waited until Sixto's death to learn more about their
property. Even though the co-ownership is to be preserved in accordance with the wishes of the
deceased, the plaintiffs should have taken it upon themselves to look into the status of the property
once in a while, to assure themselves that it is managed well and that they are receiving what is due
them as co-owners of the parcel of land or to at least manifest their continued interest in the property
as normal owners would do. But the plaintiffs did not show any interest in the way Sixto Medrano was
managing the property which in effect gave the latter carte blanche powers over the same. Such
passivity is aggravated by the fact that one of the plaintiffs resides a mere 600 meters away from the
disputed property (TSN, April 17, 1991, p. 13). By not showing any interest, the plaintiffs have, in fact,
slept on their rights and thus, cannot now exercise a stale right.23

Petitioners sought reconsideration24 but the appellate court denied it in a Resolution dated October 5,
1995.25

In their present recourse, petitioners take exception from the appellate court's findings that
respondents have been in possession, in the concept of owner of the entire parcel of land sold to
Tiburcio Balitaan by Sixto Medrano for seventeen years (1958-1975), relying on the Affidavit of Transfer
and Tax Declaration No. 51038 in the name of Sixto; and that Tiburcio acquired ownership of the whole
property from Sixto through ordinary prescription for ten years.
Petitioners submit that Tiburcio Balitaan was not a purchaser in good faith and for value since there are
enough circumstances which should have put him on guard and prompted him to be more circumspect
and inquire further about the true status of Sixto Medrano's ownership; that during his lifetime, Tiburcio
was a neighbor of petitioners and was well-aware that Sixto had other siblings but Tiburcio chose to rely
on the Affidavit of Transfer executed by Sixto Medrano declaring that he was the only heir of Leocadio;
that the Court of Appeals should not have faulted them for failing to inquire about the status of the
disputed property until after the death of Sixto Medrano; that they are not guilty of laches.

It is settled that in the exercise of the Supreme Court's power of review, the findings of facts of the
Court of Appeals are conclusive and binding on the Supreme Court.26 The exceptions to this rule are: (1)
when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when
the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to
the trial court; (8) when the findings are conclusions without citation of specific evidence on which they
are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs
are not disputed by the respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered,
would justify a different conclusion.27 Exceptions (4), (7), (10) and (11) are present in the instant
case.1wphi1

We find the petition meritorious.28 We agree with the petitioners that the Court of Appeals committed
a reversible error in upholding the claim of petitioners that they acquired ownership of the subject
property through prescription.

Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive prescription
requires possession of things in good faith and with just title for the time fixed by law;29 without good
faith and just title, acquisitive prescription can only be extraordinary in character. Regarding real or
immovable property, ordinary acquisitive prescription requires a period of possession of ten
years,30 while extraordinary acquisitive prescription requires an uninterrupted adverse possession of
thirty years.31

Ordinary acquisitive prescription demands that possession be "in good faith", which consists in the
reasonable belief that the person from whom the thing is received has been the owner thereof and
could thereby transmit that ownership.32 There is "just title" when the adverse claimant comes into
possession of the property through any of the modes recognized by law for the acquisition of ownership
or other real rights, but that the grantor is neither the owner nor in a position to transmit the right.33

Article 1130 of the Civil Code states that the "title for prescription must be true and valid." In Doliendo
vs. Biarnesa,34we elucidated on this provision, thus:
We think that this contention is based on a misconception of the scope and effect of the provisions of
this article of the Code in its application to "ordinary prescription." It is evident that by a "titulo
verdadero y valido" in this connection we are not to understand a "titulo que por si solo tiene fuerza de
transferir el dominio sin necesidad de la prescricion" (a title which of itself is sufficient to transfer the
ownership without the necessity of the lapse of the prescription period); and we accept the opinion of a
learned Spanish law writer who holds that the "titulo verdadero y valido" as used in this article of the
code prescribes a "titulo Colorado" and not merely "putativo;" a "titulo Colorado" being one 'which a
person has when he buys a thing, in good faith, from one whom he believes to be the owner,' and a
"titulo putativo" "being one which is supposed to have preceded the acquisition of a thing, although in
fact it did not, as might happen when one is in possession of a thing in the belief that it had been
bequeathed to him." (Viso Derecho Civil, Parte Segunda, p. 541)35

The requirements for ordinary acquisitive prescription as hereinabove described have not been met in
this case.

It must be remembered that the burden of proving the status of a purchaser in good faith lies upon him
who asserts that status. It is not sufficient to invoke the ordinary presumption of good faith, that is, that
everyone is presumed to have acted in good faith, since the good faith that is here essential is integral
with the very status that must be established.36

After a careful examination of the records, we find that private respondents failed to discharge the
burden of proof that Tiburcio Balitaan was a purchaser in good faith. It is undisputed that Tiburcio
practically lived his entire lifetime in the area where the property in dispute is located and had been a
neighbor of petitioners. He knew that Sixto Medrano had other siblings because his son, Dr. Elias
Balitaan, is the godson by baptism of spouses Jose Aguirre and Gertrudes Medrano, the latter being a
deceased sister of Sixto. Thus, Tiburcio was not a complete stranger to the Medrano clan. Yet, he
deliberately chose to close his eyes to said facts and despite his personal knowledge to the contrary, he
purchased the disputed property from Sixto on the basis of the misrepresentation of the latter in his
Affidavit of Transfer that he is the sole surviving heir of Leocadio. A purchaser cannot close his eyes to
facts which should put a reasonable man upon his guard, and then claim that he acted in good faith
under the belief that there was no defect in the title of the vendor.37

Since the disputed property is an unregistered land, Tiburcio as buyer thereof did so at his peril. Private
respondents' claim that Tiburcio bought the land in good faith, that is, without notice that some other
person has a right to or interest in the property, would not protect them if it turns out, as it actually did
in this case, that the seller, Sixto Medrano, did not own the entire property at the time of the sale, but
only an undivided portion of the land as a co-owner. Private respondents failed to show that the
petitioners were notified of the subject sale or that respondents gave their consent to the sale. Not
being in "good faith", the ten-year period required for ordinary acquisitive prescription does not apply.

Even the thirty-year period under extraordinary acquisitive prescription has not been met in this case.
Private respondents claim to have been in possession, in the concept of owner, of the entire parcel of
land sold to Tiburcio Balitaan by Sixto Medrano for only seventeen years (1958-1975).
In addition, as we have enunciated in Salvador vs. Court of Appeals,38 to wit:

This Court has held that the possession of a co-owner is like that of a trustee and shall not be regarded
as adverse to the other co-owners but in fact as beneficial to all of them. Acts which may be considered
adverse to strangers may not be considered adverse insofar as co-owners are concerned. A mere silent
possession by a co-owner, his receipt of rents, fruits or profits from the property, the erection of
buildings and fences and the planting of trees thereon, and the payment of land taxes, cannot serve as
proof of exclusive ownership,if it is not borne out by clear and convincing evidence that he exercised
acts of possession which unequivocably constituted an ouster or deprivation of the rights of the other
co-owners.

Thus, in order that a co-owner's possession may be deemed adverse to the cestui que trust or the other
co-owners, the following elements must concur: (1) that he has performed unequivocal acts of
repudiation amounting to an ouster of the cestui que trust or the other co-owners; (2) that such positive
acts of repudiation have been made known to the cestui que trust or the other co-owners; and (3) that
the evidence thereon must be clear and convincing.39 (Emphasis supplied)

Tested against these guidelines, respondents failed to present competent evidence that the acts of Sixto
adversely and clearly repudiated the existing co-ownership among the heirs of Leocadio Medrano.

Private respondents' reliance on the tax declaration in the name of Sixto Medrano is unworthy of credit
since we have held on several occasions that tax declarations by themselves do not conclusively prove
title to land.40 Further, private respondents failed to show that the Affidavit executed by Sixto to the
effect that he is the sole owner of the subject property was known or made known to the other co-heirs
of Leocadio Medrano.

Neither can we subscribe to the appellate court's view that petitioners are guilty of laches. Laches is the
negligence or omission to assert a right within a reasonable time, warranting a presumption that the
party entitled to assert it has abandoned it or declined to assert it.41 It does not involve mere lapse or
passage of time, but is principally an impediment to the assertion or enforcement of a right, which has
become under the circumstances inequitable or unfair to permit.42 The rule that each co-owner may
demand at any time the partition of the common property implies that an action to demand partition is
imprescriptible or cannot be barred by laches.43

We have consistently held that if a co-owner sells the whole property as his, the sale will affect only his
own share but not those of the other co-owners who did not consent to the sale.44 Article 493 of the
Civil Code provides:

Art. 493. Each co-owner shall have the full ownership of his part and the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage,
with respect to the co-owners, shall be limited to the portion which may be allotted to him in the
division upon the termination of the co-ownership.
It clearly provides that the sale or other disposition affects only the seller's share pro indiviso, and the
transferee gets only what corresponds to his grantor's share in the partition of the property owned in
common. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-
owner without the consent of the other co-owners is not null and void; only the rights of the co-
owner/seller are transferred, thereby making the buyer a co-owner of the property.45 Accordingly, we
held in Bailon-Casilao vs. Court of Appeals:

From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a
sale of the entire property by one-co-owner without the consent of the other co-owners is not null and
void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-
owner of the property.

The proper action in cases like this is not for the nullification of the sale or for the recovery of possession
of the thing owned in common from the third person who substituted the co-owner or co-owners who
alienated their shares, but the DIVISION of the common property as if it continued to remain in the
possession of the co-owners who possessed and administered it [Mainit v. Bandoy, supra].

Thus, it is now settled that the appropriate recourse of co-owners in cases where their consent were not
secured in a sale of the entire property as well as in a sale merely of the undivided shares of some of the
co-owners is an action for PARTITION under Rule 69 of the Revised Rules of Court. Neither recovery of
possession nor restitution can be granted since the defendant buyers are legitimate proprietors and
possessors in joint ownership of the common property claimed [Ramirez v. Bautista, supra].46

It is clear therefore that the deed of sale executed by Sixto Medrano in favor of Tiburcio Balitaan is a
valid conveyance only insofar as the share of Sixto Medrano in the co-ownership is concerned. Thus, the
respondent court erred in declaring the ownership of the entire 1,695-square meter property sold by
Sixto, in favor of the private respondents.

The next question is what is the area of the pro indiviso share pertaining to Sixto Medrano that was sold
to private respondents? The trial court endeavored to determine the same by ascertaining the
inheritance of each of the heirs of Leocadio. However, the manner of partition as set out by the trial
court in the text of its decision needs to be amended so as to conform to the laws on intestate
succession under the Old Civil Code absent any allegation or showing that Leocadio left any last will and
testament.

It is not disputed that the 2,342-square meter property was a conjugal property of Leocadio and
Emiliana. Upon the death of Emiliana, which occurred many years before the death of Leocadio in 1945,
both deaths occurring before the enactment of the New Civil Code in 1950, all the four children of the
first marriage and the four children of the second marriage shall share equally. The subject property
should have been divided into eight equal parts, pursuant to Articles 921 and 931 of the old Civil
Code,47 or 292.75 square meters each. The respective heirs of the now deceased children of Leocadio
inherit by way of representation the respective shares of their respective parents, pursuant to Articles
933 and 934 of the Old Civil Code.48
At the time of death of Leocadio in 1945, Miguela was entitled only to the usufruct of the land pursuant
to Article 834 of the Old Civil Code,49 which provides that "[i]f only one legitimate child or descendant
survives, the widower or widow shall have the usufruct of the third available for betterment, such child
or descendant to have the naked ownership until, on the death of the surviving spouse, the whole title is
merged in him".

Thus, to recapitulate, each of the heirs of Leocadio should inherit 292.75 square meters, pro-
indiviso (2,342 square meters 8 = 292.75 square meters) after deducting from the original 2,611 square
meters of the subject property the 269 square meters ceded to the heirs of Maria Bacong in a
compromise agreement among the petitioners and the heirs of Maria Bacong. The deceased children of
Leocadio are represented by their respective heirs by right of representation under Articles 933 and 934
of the Old Civil Code.

Accordingly, the undivided shares of Leocadio's eight children or their heirs by right of representation,
upon the death of Leocadio in 1945 are as follows:

(1) Venancio Medrano - 292.75 square meters

(2) Leonila Medrano - 292.75 square meters

(3) Antonio Medrano - 292.75 square meters

(4) Cecilia Medrano - 292.75 square meters

(5) Heirs of Gertrudes M. Aguirre, Telesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed
Aguirre- - 292.75 square meters

(6) Heirs of Isabel M. Magtibay, Vicenta, Horacio and Florencio, all surnamed Magtibay - 292.75 square
meters

(7) Heirs of Placido Medrano, plaintiff Zosima Medrano Quimbao - 292.75 square meters

(8) Sixto Medrano - 292.75 square meters

During the pendency of the case in the trial court but after the death of Sixto, petitioners sold 460
square meters to one Mateo Castillo. Consequently, the 460 square meters should be charged against
the shares of petitioners only and should not affect the 292.75 square meters undivided share of Sixto
Medrano which he had sold in 1959.50Accordingly, 460 square meters divided by 7 equals 65.71 square
meters. Deducting said area from 292.75 square meters, the final undivided share of each of the seven
heirs of Leocadio should be 227.04 square meters (292.75 - 65.71 = 227.04) and that pertaining to Sixto
in 292.75 square meters.

Thus, the manner of partition set forth by the trial court in its decision should be amended, as follows:

(1) Gertrudes M. Aguirre, deceased, represented by her children, herein petitioners Telesforo, Reynaldo,
Remedios, Alfredo and Belen, all surnamed Aguirre - 227.04 square meters
(2) Isabel M. Magtibay, deceased, represented by her children, herein petitioners Vicenta, Horacio and
Florencio, all surnamed Magtibay - 227.04 square meters

(3) Placido Medrano, deceased, represented by his only child, Placido Medrano - 227.04 square meters

(4) Private respondents Maria Rosales and heirs of Tiburcio Balitaan, namely: Elias, Jose, Arsenia and
Rogelio all surnamed Balitaan (in lieu of Sixto Medrano) - 292.75 square meters

(5) Venancio Medrano - 227.04 square meters

(6) Leonila Medrano - 227.04 square meters

(7) Antonio Medrano - 227.04 square meters

(8) Cecilia Medrano - 227.04 square meters

(9) Rosendo Bacong - 269 square meters

(10) Mateo Castillo - 460 square meters

WHEREFORE, we GRANT the petition. The assailed decision of the Court of Appeals in CA-G.R. CV No.
42350, dated July 26, 1995, is REVERSED and SET ASIDE. The decision of the Regional Trial Court is
REINSTATED with the following MODIFICATIONS:

The sale in favor of private respondents is declared VALID but only insofar as the 292.75 square meters
undivided share of Sixto Medrano in the subject property is concerned.

Let the parcel of land, located at Aplaya, Bauan, Batangas, consisting of 2,611 square meters, be
partitioned and distributed as determined by the Court in the text of herein decision. Accordingly, let
the records of the case be remanded to the Regional Trial Court of Batangas City (Branch 2) in Civil Case
No. 202 for further appropriate proceedings under Rule 69 of the Rules of Court.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 182839 June 2, 2014

PHILIPPINE NATIONAL BANK, Petitioner,

vs.
JOSE GARCIA and CHILDREN NORA GARCIA, JOSE GARCIA, JR., BOBBY GARCIA and JIMMY GARCIA and
HEIRS OF ROGELIO GARCIA NAMELY: CELEDONIO GARCIA, DANILO GARCIA, ELSA GARCIA, FERMIN
GARCIA, HEHERSON GARCIA, GREGORIO GARCIA, IMELDA GARCIA and JANE GARCIA,Respondents.

DECISION

BRION, J.:
We resolve this petition for review on certiorari1 assailing the decision2 dated September 26, 2007 and
the resolution3 dated May 6, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 71356.

These challenged CA rulings reversed and set aside the decision of the Regional Trial Court (RTC), Branch
23, Roxas, Isabela, dismissing Civil Case No. Branch 23-500-96 for lack of cause of action.

The Factual Background

The facts of the case, gathered from the records, are briefly summarized below.

The subject of the present case is a parcel of residential land with all its improvements (subject
property) located in Barrio Olango, Mallig, Isabela. The land is covered by Transfer Certificate of Title
(TCT) No. T-44422 under the name of Jose Garcia Sr. (Jose Sr.) who acquired the subject property during
his marriage with Ligaya Garcia. Ligaya died on January 21, 1987.

The marriage of Jose Sr. and Ligaya produced the following children: Nora, Jose Jr., Bobby and Jimmy, all
surnamed Garcia, who are the respondents in the present case.

Sometime in 1989, the spouses Rogelio and Celedonia Garcia (Spouses Garcia) obtained a loan facility
from the petitioner, Philippine National Bank (petitioner bank), initially for 150,000.00. The loan was
secured by a Real Estate Mortgage over their property covered by TCT No. 177585. The spouses Garcia
increased their loan to 220,000.00 and eventually to 600,000.00. As security for the increased loan,
they offered their property covered by TCT No. 75324 and the subject property covered by TCT No. T-
44422.

Jose Sr. agreed to accommodate the spouses Garcia by offering the subject property as additional
collateral security for the latters increased loan. For this purpose, Jose Sr. executed Special Powers of
Attorney (SPAs) dated April 14, 1992 and October 6, 1993, respectively, expressly authorizing the
Spouses Garcia to apply for, borrow, or secure any loan from the petitioner bank, and to convey and
transfer the subject property by way of mortgage. Jose Sr. also executed an Amendment of Real Estate
Mortgage in favor of the petitioner bank. The SPAs and the Amendment of Real Estate Mortgage are
both inscribed on TCT No. T-44422. All of these transactions, however, were without the knowledge and
consent of Jose Sr.s children.

On maturity of the loan on April 20,1994, the spouses Garcia failed to pay their loan to the petitioner
bank despite repeated demands.

On January 12, 1996, the respondents filed before the RTC a Complaint for Nullity of the Amendment of
Real Estate Mortgage, Damages with Preliminary Injunction against the spouses Garcia and the
petitioner bank. They claimed that the Amendment of Real Estate Mortgage was null and void as to
respondents Nora, Jose Jr., Bobby and Jimmy as they were not parties to the contract.

The respondents alleged that the subject property was a conjugal property of Jose Sr. and his deceased
spouse, Ligaya, as they acquired the subject property during their marriage; that upon Ligayas death,
Jose Sr., together with his children Nora, Jose Jr., Bobby and Jimmy, by law, became owners pro indiviso
of the subject property; that the petitioner bank was at fault for not including Jose Sr. as payee to the
check representing the loan despite its knowledge that Jose Sr. was a signatory to the real estate
mortgage; that the real estate mortgage executed by Jose Sr. could not bind his children as they did not
give their consent or approval to the encumbrance; and that the real estate mortgage was also void as
to Jose Sr. since he never benefitted from the loan.

In their answer, the Spouses Garcia alleged that Jose Sr. was indebted to them in the amount of
133,800.00. To settle this indebtedness, Jose Sr. volunteered to give the subject property as additional
security for their (the Garcias) loan to the petitioner bank.

The petitioner bank, on the other hand, claimed that the mortgage was made in good faith and for
value, and maintained that the respondents complaint stated no cause of action against it. It alleged
that the real estate mortgage over the properties was duly registered and inscribed on their titles and
was thus binding on the whole world.

In the course of the proceedings, Nora, Jose Jr., Bobby and Jimmy executed an SPA dated May 31, 1996
authorizing Jose Sr. to act as their attorney-in-fact during the pretrial of the case.

The Ruling of the RTC

The RTC dismissed the complaint for lack of cause of action. The court held that the subject property
was a conjugal property since it was acquired by Jose Sr. during his marriage with his now deceased
wife. As a conjugal property, it is presumed that upon the death of his spouse, one-half of the property
passed on to Jose Sr., while the other half went to Jose and his children as co-owners and as forced heirs
of his deceased spouse. Without the consent of the children, the trial court ruled that the conjugal
property could only be transferred or encumbered to the extent of Jose Sr.s share in the conjugal
partnership, plus his share as an heir in the other half pertaining to the estate of his deceased spouse.

The RTC nevertheless declared that by virtue of the SPA executed by Nora, Jose Jr., Bobby and Jimmy in
this suit, they are already estopped from questioning the mortgage and from alleging lack of consent or
knowledge in the transaction. It held Jose Sr. liable as an accommodation party and upheld the
petitioner banks right to collect the debt.

The respondents disagreed with the RTC ruling and elevated the case to the CA via an ordinary appeal.

The Ruling of the CA

On September 26, 2007, the CA upheld the trial courts finding that the subject property was conjugal,
but reversed and set aside its ruling in so far as it declared valid and binding the Amendment of Real
Estate Mortgage between the petitioner bank, on one hand, and the spouses Garcia and Jose Sr., on the
other hand, with respect to respondents Nora, Jose Jr., Bobby and Jimmy. Relying on the Courts ruling
in Nufable v. Nufable,4 the CA ruled that the encumbrance Jose Sr. made over the entire conjugal
property, without his childrens conformity, was null and void because a mere part owner could not
alienate the shares of the other co-owners.
The CA also declared that the conjugal property could only be liable to the extent of Jose Sr.s shares;
Jose Sr.s acts could not affect his childrens pro-indiviso shares in the subject property. It disagreed with
the trial courts estoppel theory and held that their execution of the SPA should not be construed as
acquiescence to the mortgage transaction. Lastly, it ruled that Jose Sr. could not escape liability from the
mortgage since he voluntarily bound himself as the Spouses Garcias accommodation mortgagor.

The petition

The petitioner bank disputes the CAs finding that the subject property was conjugal in nature. It argues
that, as can be gleaned from TCT No. T-44422, the subject property was registered in the name of Jose
Sr. alone, who was described in the title as "widower" and not "married." The petitioner bank posits that
as a mortgagee in good faith, it had the right to rely on the mortgagors certificate of title; in the
absence of any indication that could arouse suspicion, it had no obligation to undertake further
investigation and verify whether the property was conjugal or was acquired during marriage or
thereafter.

Since the subject property belonged to Jose Sr., insofar as petitioner bank as mortgagee was concerned,
Jose Sr. had the right under Article 428 of the Civil Code to mortgage it without the consent of his
children. Accordingly, the mortgage in its entirety should be declared valid.

The Comment

The respondents state that the issues raised by petitioner bank are essentially factual; hence, they are
beyond the competence of this Court in a petition for review. They submit that in a certiorari petition
under Rule 45 of the Rules of Court, only questions of law may be entertained because the Court is not a
trier of facts.

The Courts Ruling

We deny the petition for lack of merit.

The petition before us raises both questions of fact and of law. Whether petitioner bank is a mortgagee
in good faith and for value and whether the subject property was conjugal, are factual issues that this
Court cannot look into as our examination would entail going into factual matters and records of the
case. In Rule 45 petitions, only questions of law may be put into issue. Questions of fact cannot be
entertained.5

Although there are exceptions to the rule that only questions of law may be raised in a petition for
certiorari, the petitioner bank failed to show that this case falls under any of the established exceptions.
Too, since the CA partially affirmed the findings of the trial court and absent any indication that these
courts committed a serious error in its findings, this Court is bound by these courts findings.6

Moreover, even if we were to review the factual issues raised by the petitioner bank, we still find no
reason to depart from the CAs ruling.
The Subject Property is Conjugal

a. All property acquired during marriage is presumed conjugal

Since Jose Sr. and Ligaya were married prior to the effectivity of the Family Code, their property
relations were governed by the conjugal partnership of gains as provided under Article 119 of the Civil
Code. Under Article 160 of the Civil Code, "all property of the marriage is presumed to belong to the
conjugal partnership, unless it can be proven that it pertains exclusively to the husband or to the wife."

In his testimony, Jose Sr. admitted that at the time he acquired the land through sale, he was already
married. The material portion of his testimony is as follows:

Q: Upon the death of your wife did you and your wife ever own a piece of land?

A: Yes, sir.

Q: Where is that land situated?

A: In Centro, District 2, Mallig[,] Isabela.

Q: Is that land titled in your names?

A:Yes, sir.

xxxx

Q: You and your wife acquired that piece of land?

A: Yes, sir.

xxxx

Q: May we know from you[,] Mr. Witness, how did you acquire this parcel of land presently embraced
and covered by TCT No. T-44422?

A: I purchased that piece of land from the Baniqued Family during my incumbency as Municipal Mayor,
sir.

Q: What was your civil status at the time you purchased that piece of land?

A: I was already married, sir.(Emphasis ours, TSN, July 24, 1997, Jose Garcia Sr.)7

Because of the petitioner banks failure to rebut the allegation that the subject property was acquired
during the formers marriage to Ligaya, the legal presumption of the conjugal nature of the property, in
line with Article 160 of the Civil Code, applies to this property. Proof of the subject propertys acquisition
during the subsistence of marriage suffices to render the statutory presumption operative.8
b. Registration of the subject property in the name of one spouse does not destroy the presumption that
the property is conjugal

The petitioner bank claims that the CA failed to consider that the subject property was registered in the
name of Jose Sr. alone.1a\^/phi1 Likewise, it raises the argument that Jose Sr.s change of status in the
subject propertys title from "married" to "widower" prior to the constitution of the real estate
mortgage showed that the property was no longer conjugal.

We do not consider this argument persuasive.

Registration of a property alone in the name of one spouse does not destroy its conjugal nature. What is
material is the time when the property was acquired.9 The registration of the property is not conclusive
evidence of the exclusive ownership of the husband or the wife. Although the property appears to be
registered in the name of the husband, it has the inherent character of conjugal property if it was
acquired for valuable consideration during marriage.10

It retains its conjugal nature.

In order to rebut the presumptive conjugal nature of the property, the petitioner must present strong,
clear and convincing evidence of exclusive ownership of one of the spouses.11 The burden of proving
that the property belongs exclusively to the wife or to the husband rests upon the party asserting it.

In the present case, aside from its allegation that the subject property is no longer conjugal and its
assertion that it is a mortgagee in good faith, the petitioner bank offered no evidence, convincing to this
Court, that the subject property exclusively belonged to Jose Sr. As stated earlier, the petitioner bank
failed to overcome the legal presumption that the disputed property was conjugal.1wphi1 Thus, the
conclusion of both lower courts that the subject property was conjugal property holds. Factual findings
of the CA affirming those of the trial court are binding on this Court unless there is a clear showing that
such findings are tainted with arbitrariness, capriciousness or palpable error.12

The conjugal partnership was converted into an implied ordinary co-ownership upon the death of Ligaya

Upon the death of Ligaya on January 21, 1987, the conjugal partnership was automatically dissolved and
terminated pursuant to Article 175(1) of the Civil Code,13 and the successional rights of her heirs vest,
as provided under Article 777 of the Civil Code, which states that"[t]he rights to the succession are
transmitted from the moment of the death of the decedent."

Consequently, the conjugal partnership was converted into an implied ordinary co-ownership between
the surviving spouse, on the one hand, and the heirs of the deceased, on the other.14 This resulting
ordinary co-ownership among the heirs is governed by Article 493 of the Civil Code which reads:

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation of the mortgage,
with respect to the co-owners shall be limited to the portion which may be allotted to him in the division
upon the termination of the co-ownership." (Emphasis supplied)

Under this provision, each co-owner has the full ownership of his part or share in the co-ownership and
may, therefore, alienate, assign or mortgage it except when personal rights are involved. Should a co-
owner alienate or mortgage the co-owned property itself, the alienation or mortgage shall remain valid
but only to the extent of the portion which may be allotted to him in the division upon the termination
of the co-ownership.15 In Carvajal v. Court of Appeals,16 the Court said:

While under Article 493 of the New Civil Code, each co-owner shall have the full ownership of his part
and of the fruits and benefits pertaining thereto and he may alienate, assign or mortgage it, and even
substitute another person in its enjoyment, the effect of the alienation or the mortgage with respect to
the co-owners, shall be limited, by mandate of the same article, to the portion which may be allotted to
him in the division upon the termination of the co-ownership. He has no right to sell or alienate a
concrete, specific, or determinate part of the thing in common to the exclusion of the other co-owners
because his right over the thing is represented by an abstract or Ideal portion without any physical
adjudication.3 An individual co- owner cannot adjudicate to himself or claim title to any definite portion
of the land or thing owned in common until its actual partition by agreement or judicial decree. Prior to
that time all that the co-owner has is an Ideal or abstract quota or proportionate share in the entire
thing owned in common by all the co-owners.4 What a co owner may dispose of is only his undivided
aliquot share, which shall be limited to the portion that may be allotted to him upon partition.
[emphasis supplied].

In the present case, Jose Sr. constituted the mortgage over the entire subject property after the death of
Ligaya, but before the liquidation of the conjugal partnership. While under Article 493 of the Civil Code,
even if he had the right to freely mortgage or even sell his undivided interest in the disputed property,
he could not dispose of or mortgage the entire property without his childrens consent. As correctly
emphasized by the trial court, Jose Sr.s right in the subject property is limited only to his share in the
conjugal partnership as well as his share as an heir on the other half of the estate which is his deceased
spouses share. Accordingly, the mortgage contract is void insofar as it extends to the undivided shares
of his children (Nora, Jose Jr., Bobby and Jimmy) because they did not give their consent to the
transaction.17

Accordingly, the Amendment of Real Estate Mortgage constituted by Jose Sr. over the entire property
without his co-owners' consent is not necessarily void in its entirety. The right of the petitioner bank as
mortgagee is limited though only to the portion which may be allotted to Jose Sr. in the event of a
division and liquidation of the subject property.

WHEREFORE, in view of the foregoing, we hereby AFFIRM the Decision dated September 26, 2007of the
Court of Appeals in CA-G.R. CV No. 71356. Costs against petitioner Philippine National Bank.

SO ORDERED.
HEIRS OF THE LATE SPOUSES AURELIO AND ESPERANZA BALITE; Namely, ANTONIO T. BALITE, FLOR T.
BALITE-ZAMAR, VISITACION T. BALITE-DIFUNTORUM, PEDRO T. BALITE, PABLO T. BALITE, GASPAR T.
BALITE, CRISTETA T. BALITE and AURELIO T. BALITE JR. vs. RODRIGO N. LIM

G.R. No. 152168 December 10, 2004

Facts:

The spouses Aurelio and Esperanza Balite were the owners of a parcel of land. When the spuoses
died intestate, and their children, the petitioners, inherited the subject property and became co-owners
thereof, with Esperanza inheriting an undivided share of 9,751 square meters. Esperanza became ill and
in need of money for her hospital expenses. She, through her daughter, Cristeta, offered to sell to
Rodrigo Lim, her undivided share for the price of P1M. Esperanza and Rodrigo agreed that, under the
"Deed of Absolute Sale", to be executed by Esperanza over the property, it will be made to appear that
the purchase price of the property would beP150K, although the actual price was P1,000,000.00.
Esperanza executed a "Deed of Absolute Sale" in favor of Lim over a portion of the property, with an
area of 10,000 square meters, for the price of P150K. They also executed a "Joint Affidavit" under which
they declared that the real price of the property was P1,000,000.00, payable to Esperanza, by
installments.

The other children learned of the sale, and, they wrote a letter to the Register of Deeds, saying that they
were not informed of the sale nor did they give their consent thereto.

Issue:

Whether or not there is undervaluation of consideration or the contract is valid

Ruling:

The Supreme Court held that Article 1345 of the Civil Code provides that the simulation of a
contract may either be absolute or relative. In absolute simulation, there is a colorable contract but
without any substance, because the parties have no intention to be bound by it. An absolutely simulated
contract is void, and the parties may recover from each other what they may have given under the
"contract." On the other hand, if the parties state a false cause in the contract to conceal their real
agreement, such a contract is relatively simulated. Here, the parties real agreement binds them.

In the present case, the parties intended to be bound by the Contract, even if it did not reflect the actual
purchase price of the property. That the parties intended the agreement to produce legal effect is
revealed by the letter of Esperanza Balite to respondent dated October 23, 199610 and petitioners
admission that there was a partial payment of P320,000 made on the basis of the Deed of Absolute Sale.
There was an intention to transfer the ownership of over 10,000 square meters of the property. Clear
from the letter is the fact that the objections of her children prompted Esperanza to unilaterally
withdraw from the transaction.

G.R. No. 152168 December 10, 2004

HEIRS OF THE LATE SPOUSES AURELIO AND ESPERANZA BALITE; Namely, ANTONIO T. BALITE, FLOR T.
BALITE-ZAMAR, VISITACION T. BALITE-DIFUNTORUM, PEDRO T. BALITE, PABLO T. BALITE, GASPAR T.
BALITE, CRISTETA T. BALITE and AURELIO T. BALITE JR., All Represented by GASPAR T.
BALITE,petitioners,
vs.
RODRIGO N. LIM, respondent.

DECISION

PANGANIBAN, J.:

A deed of sale that allegedly states a price lower than the true consideration is nonetheless binding
between the parties and their successors in interest. Furthermore, a deed of sale in which the parties
clearly intended to transfer ownership of the property cannot be presumed to be an equitable mortgage
under Article 1602 of the Civil Code. Finally, an agreement that purports to sell in metes and bounds a
specific portion of an unpartitioned co-owned property is not void; it shall effectively transfer the
sellers ideal share in the co-ownership.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the February 11, 2002
Decision2 of the Court of Appeals (CA) in CA-GR CV No. 65395. The decretal portion of the Decision
reads as follows:

"IN THE LIGHT OF ALL THE FOREGOING, the Decision of the Court a quo subject of the appeal is
hereby SET ASIDE AND REVERSED and another Decision is hereby rendered as follows:

1. The "Deed of Absolute Sale" (Exhibit "A") is valid only insofar as the pro indiviso share of Esperanza
Balite over the property covered by Original Certificate of Title No. 10824 is concerned;

2. The Register of Deeds is hereby ordered to cancel Transfer Certificate of Title No. 6683 and to issue
another over the entirety of the property covered by Original Certificate of Title No. 10824, upon the
payment of the capital gains tax due, as provided for by law, (based on the purchase price of the
property in the amount of P1,000,000.00), with the following as co-owners, over the property described
therein:

a) Each of the [petitioners] over an undivided portion of 975 square meters;

b) The [respondent], with an undivided portion of 9,751 square meters.

3. The [respondent] is hereby ordered to pay to the [petitioners] the amount of P120,000.00, within a
period of five (5) months from the finality of the Decision of this Court;

4. In the event that the [respondent] refuses or fails to remit the said amount to the [petitioner] within
the period therefor, the rights and obligations of the parties shall be governed by Republic 6552
(Maceda Law)."3

The Facts

The CA summarized the facts in this manner:

"The spouses Aurelio x x x and Esperanza Balite were the owners of a parcel of land, located [at]
Poblacion (Barangay Molave), Catarman, Northern Samar, with an area of seventeen thousand five
hundred fifty-one (17,551) square meters, [and] covered by Original Certificate of Title [OCT] No. 10824.
When Aurelio died intestate [in 1985, his wife], Esperanza Balite, and their children, x x x [petitioners]
Antonio Balite, Flor Balite-Zamar, Visitacion Balite-Difuntorum, Pedro Balite, Pablo Balite, Gaspar Balite,
Cristeta (Tita) Balite and Aurelio Balite, Jr., inherited the [subject] property and became co-owners
thereof, with Esperanza x x x inheriting an undivided [share] of [9,751] square meters.

"In the meantime, Esperanza x x x [became] ill and was in dire need of money for her hospital expenses
x x x. She, through her daughter, Cristeta, offered to sell to Rodrigo Lim, [her] undivided share x x x for
the price of P1,000,000.00. x x x Esperanza x x x and Rodrigo x x x agreed that, under the "Deed of
Absolute Sale", to be executed by Esperanza x x x over the property, it will be made to appear that the
purchase price of the property would be P150,000.00, although the actual price agreed upon by them
for the property was P1,000,000.00.

"On April 16, 1996, Esperanza x x x executed a "Deed of Absolute Sale" in favor of Rodrigo N. Lim over a
portion of the property, covered by [OCT] No. 10824, with an area of 10,000 square meters, for the price
of P150,000.00 x x x.

[They] also executed, on the same day, a "Joint Affidavit" under which they declared that the real price
of the property was P1,000,000.00, payable to Esperanza x x x, by installments, as follows:

1. P30,000.00 upon signing today of the document of sale.

2. P170,000.00 payable upon completion of the actual relocation survey of the land sold by a Geodetic
Engineer.
3. P200,000.00 payable on or before May 15, 1996.

4. P200,000.00 payable on or before July 15, 1996.

5. P200,000.00 payable on or before September 15, 1996.

6. P200,000.00 payable on or before December 15, 1996.

"Only Esperanza and two of her children, namely, Antonio x x x and Cristeta x x x, knew about the said
transaction. x x x Geodetic Engineer Bonifacio G. Tasic conducted a subdivision survey of the property
and prepared a "Sketch Plan" showing a portion of the property, identified as Lot 243 with an area of
10,000 square meters, under the name Rodrigo N. Lim.

"The "Sketch Plan" was signed by Rodrigo x x x and Esperanza. Thereafter, Rodrigo x x x took actual
possession of the property and introduced improvements thereon. He remitted to Esperanza x x x and
Cristeta x x x sums of money in partial payments of the x x x property for which he signed "Receipts".

"Gaspar, Visitacion, Flor, Pedro and Aurelio, Jr. x x x learned of the sale, and on August 21, 1996, they
wrote a letter to the Register of Deeds [RD] of Northern Samar, [saying] that they [were] not x x x
informed of the sale of a portion of the said property by their mother x x x nor did they give their
consent thereto, and requested the [RD] to:

"x x x hold in abeyance any processal or approval of any application for registration of title of ownership
in the name of the buyer of said lot, which has not yet been partitioned judicially or extrajudicially, until
the issue of the legality/validity of the above sale has been cleared."

"On August 24, 1996, Antonio x x x received from Rodrigo x x x, the amount of P30,000.00 in partial
payment of [the] property and signed a "Receipt" for the said amount, declaring therein that "the
remaining balance of P350,000.00 shall personally and directly be released to my mother, Esperanza
Balite, only." However, Rodrigo x x x drew and issued RCBC Check No. 309171, dated August 26, 1996,
[payable] to the order of Antonio Balite in the amount of P30,000.00 in partial payment of the property.

"On October 1, 1996, Esperanza x x x executed a "Special Power of Attorney" appointing her son,
Antonio, to collect and receive, from Rodrigo, the balance of the purchase price of the x x x property and
to sign the appropriate documents therefor.

"On October 23, 1996, Esperanza signed a letter addressed to Rodrigo informing the latter that her
children did not agree to the sale of the property to him and that she was withdrawing all her
commitments until the validity of the sale is finally resolved:

xxx xxx xxx

"On October 31, 1996, Esperanza died intestate and was survived by her aforenamed children.
"[Meanwhile], Rodrigo caused to be published, in the Samar Reporter, on November 14, 21 and 28,
1996, the aforesaid "Deed of Absolute Sale". Earlier, on November 21, 1996, Antonio received the
amount of P10,000.00 from Rodrigo for the payment of the estate tax due from the estate of Esperanza.

"Also, the capital gains tax, in the amount of P14,506.25, based on the purchase price of P150,000.00
appearing on the "Deed of Absolute Sale", was paid to the Bureau of Internal Revenue which issued a
"Certification" of said payments, on March 5, 1997, authorizing the registration of the "Deed of Absolute
Sale" x x x. However, the [RD] refused to issue a title over the property to and under the name of
Rodrigo unless and until the owners duplicate of OCT No. 10824 was presented to [it]. Rodrigo filed a
"Petition for Mandamus" against the RD with the Regional Trial Court of Northern Samar (Rodrigo Lim
versus Fernando Abella, Special Civil Case No. 48). x x x. On June 13, 1997, the court issued an Order to
the RD to cancel OCT No. 10824 and to issue a certificate of title over Lot 243 under the name of
Rodrigo.

"On June 27, 1997, [petitioners] filed a complaint against Rodrigo with the Regional Trial Court of
Northern Samar, entitled and docketed as "Heirs of the Spouses Aurelio Balite, et al. versus Rodrigo
Lim, Civil Case No. 920, for "Annulment of Sale, Quieting of Title, Injunction and Damages x x x, [the
origin of the instant case.]

xxx xxx xxx

"The [petitioners] had a "Notice of Lis Pendens", dated June 23, 1997, annotated, on June 27, 1997, at
the dorsal portion of OCT No. 10824.

"In the meantime, the RD cancelled, on July 10, 1997, OCT No. 10824 and issued Transfer Certificate of
Title [TCT] No. 6683 to and under the name of Rodrigo over Lot 243. The "Notice of Lis Pendens" x x x
was carried over in TCT No. 6683.

"Subsequently, Rodrigo secured a loan from the Rizal Commercial Banking Corporation in the amount
of P2,000,000.00 and executed a "Real Estate Mortgage" over the [subject] property as security
therefor.

"On motion of the [petitioners], they were granted x x x leave to file an "Amended Complaint"
impleading the bank as [additional] party-defendant. On November 26, 1997, [petitioners] filed their
"Amended Complaint".

The [respondent] opposed the "Amended Complaint" x x x contending that it was improper for
[petitioners] to join, in their complaint, an ordinary civil action for the nullification of the "Real Estate
Mortgage" executed by the respondent in favor of the Bank as the action of the petitioners before the
court was a special civil action.

"On March 30, 1998, the court issued an Order rejecting the "Amended Complaint" of the petitioners on
the grounds that: (a) the Bank cannot be impleaded as party-defendant under Rule 63, Section 1 of the
1997 Rules of Civil Procedure; (b) the "Amended Complaint" constituted a collateral attack on TCT No.
6683. The [petitioners] did not file any motion for the reconsideration of the order of the court."4
The trial court dismissed the Complaint and ordered the cancellation of the lis pendens annotated at the
back of TCT No. 6683. It held that, pursuant to Article 493 of the Civil Code, a co-owner has the right to
sell his/her undivided share. The sale made by a co-owner is not invalidated by the absence of the
consent of the other co-owners. Hence, the sale by Esperanza of the 10,000-square-meter portion of the
property was valid; the excess from her undivided share should be taken from the undivided shares of
Cristeta and Antonio, who expressly agreed to and benefited from the sale.

Ruling of the Court of Appeals

The CA held that the sale was valid and binding insofar as Esperanza Balites undivided share of the
property was concerned. It affirmed the trial courts ruling that the lack of consent of the co-owners did
not nullify the sale. The buyer, respondent herein, became a co-owner of the property to the extent of
the pro indiviso share of the vendor, subject to the portion that may be allotted to him upon the
termination of the co-ownership. The appellate court disagreed with the averment of petitioners that
the registration of the sale and the issuance of TCT No. 6683 was ineffective and that they became the
owners of the share of Esperanza upon the latters death.

The CA likewise rejected petitioners claim that the sale was void allegedly because the actual purchase
price of the property was not stated in the Deed of Absolute Sale. It found that the true and correct
consideration for the sale was P1,000,000 as declared by Esperanza and respondent in their Joint
Affidavit. Applying Article 13535 of the Civil Code, it held that the falsity of the price or consideration
stated in the Deed did not render it void. The CA pointed out, however, that the State retained the right
to recover the capital gains tax based on the true price of P1,000,000.

The appellate court rejected petitioners contention that, because of the allegedly unconscionably low
and inadequate consideration involved, the transaction covered by the Deed was an equitable mortgage
under Article 1602 of the Civil Code. Observing that the argument had never been raised in the court a
quo, it ruled that petitioners were proscribed from making this claim, for the first time, on appeal.

The CA further held that the remaining liability of respondent was P120,000. It relied on the Receipt
dated August 24, 1996, which stated that his outstanding balance for the consideration was P350,000. It
deducted therefrom the amounts of P30,000 received by Antonio on August 27, 1996; and P200,000,
which was the amount of the check dated September 15, 1996, issued by respondent payable to
Esperanza.

Finally, the appellate court noted that the mortgage over the property had been executed after the filing
of the Complaint. What petitioners should have filed was a supplemental complaint instead of an
amended complaint. Contrary to respondents argument, it also held that the bank was not
an indispensable party to the case; but was merely a proper party. Thus, there is no necessity to implead
it as party-defendant, although the court a quo had the option to do so. And even if it were not
impleaded, the appellate court ruled that the bank would still have been bound by the outcome of the
case, as the latter was a mortgagee pendente lite over real estate that was covered by a certificate of
title with an annotated lis pendens.
Hence, this Petition.6

Issues

In their Memorandum, petitioners present the following issues:

"A

"Whether or not the [CA] seriously erred in not deciding that the Deed of Absolute Sale dated April 16,
1996 is null and void on the grounds that it is falsified; it has an unlawful cause; and it is contrary to law
and/or public policy.

"B

"Whether or not the [CA] gravely erred in not finding that the amount paid by [respondent] is only three
hundred twenty thousand (P320,000.00) pesos and that respondents claim that he has paid one million
pesos except P44,000.00 as balance, is fraudulent and false.

"C

"Whether or not the [CA] seriously erred in not deciding that at the time the Deed of Sale was registered
x x x on May 30, 1997, said Deed of Sale can no longer bind the property covered by OCT No. 10824
because said land had already become the property of all the petitioners upon the death of their mother
on October 31, 1996 and therefore such registration is functus of[f]icio involving a null and void
document.

"D

"Whether or not the [CA] seriously erred in not ruling that petitioners amended complaint dated
November 27, 1997 was proper and admissible and deemed admitted to conform to evidence
presented.

"E

"Whether or not the [CA] seriously erred in not declaring that TCT No. T-6683 in the name of
Respondent Rodrigo N. Lim is null and void and all dealings involving the same are likewise null and void
and/or subject to the decision of the case at bar in view of the notice of lis pendens annotated therein.

"F

"Even assuming but without admitting that the Deed of Sale is enforceable, the respondent court
seriously erred in not deciding that the consideration is unconscionably low and inadequate and
therefore the transaction between the executing parties constitutes an equitable mortgage.

"G
"The [CA] greatly erred in not rendering judgment awarding damages and attorneys fee[s] in favor of
petitioners among others."7

In sum, the issues raised by petitioners center on the following: 1) whether the Deed of Absolute Sale is
valid, and 2) whether there is still any sum for which respondent is liable.

The Courts Ruling

The Petition has no merit.

First Issue:

Validity of the Sale

Petitioners contend that the Deed of Absolute Sale is null and void, because the undervalued
consideration indicated therein was intended for an unlawful purpose -- to avoid the payment of higher
capital gains taxes on the transaction. According to them, the appellate courts reliance on Article 1353
of the Civil Code was erroneous. They further contend that the Joint Affidavit is not proof of a true and
lawful cause, but an integral part of a scheme to evade paying lawful taxes and registration fees to the
government.

We have before us an example of a simulated contract. Article 1345 of the Civil Code provides that the
simulation of a contract may either be absolute or relative. In absolute simulation, there is a colorable
contract but without any substance, because the parties have no intention to be bound by it. An
absolutely simulated contract is void, and the parties may recover from each other what they may have
given under the "contract."8 On the other hand, if the parties state a false cause in the contract to
conceal their real agreement, such a contract is relatively simulated. Here, the parties real agreement
binds them.9

In the present case, the parties intended to be bound by the Contract, even if it did not reflect the actual
purchase price of the property. That the parties intended the agreement to produce legal effect is
revealed by the letter of Esperanza Balite to respondent dated October 23, 199610 and petitioners
admission that there was a partial payment of P320,000 made on the basis of the Deed of Absolute Sale.
There was an intention to transfer the ownership of over 10,000 square meters of the property . Clear
from the letter is the fact that the objections of her children prompted Esperanza to unilaterally
withdraw from the transaction.

Since the Deed of Absolute Sale was merely relatively simulated, it remains valid and enforceable. All
the essential requisites prescribed by law for the validity and perfection of contracts are present.
However, the parties shall be bound by their real agreement for a consideration of P1,000,000 as
reflected in their Joint Affidavit.11

The juridical nature of the Contract remained the same. What was concealed was merely the actual
price. Where the essential requisites are present and the simulation refers only to the content or terms
of the contract, the agreement is absolutely binding and enforceable12 between the parties and their
successors in interest.

Petitioners cannot be permitted to unmake the Contract voluntarily entered into by their predecessor,
even if the stated consideration was included therein for an unlawful purpose. "The binding force of a
contract must be recognized as far as it is legally possible to do so."13 However, as properly held by the
appellate court, the government has the right to collect the proper taxes based on the correct purchase
price.

Being onerous, the Contract had for its cause or consideration the price of P1,000,000. Both this
consideration as well as the subject matter of the contract -- Esperanzas share in the property covered
by OCT No. 10824 -- are lawful. The motives of the contracting parties for lowering the price of the sale -
- in the present case, the reduction of capital gains tax liability -- should not be confused with the
consideration.14 Although illegal, the motives neither determine nor take the place of the
consideration. 15

Deed of Sale not an

Equitable Mortgage

Petitioner further posits that even assuming that the deed of sale is valid it should only be deemed an
equitable mortgage pursuant to Articles 1602 and 1604 of the Civil Code, because the price was clearly
inadequate. They add that the presence of only one of the circumstances enumerated under Article
1602 would be sufficient to consider the Contract an equitable mortgage. We disagree.

For Articles 1602 and 1604 to apply, two requisites must concur: one, the parties entered into a contract
denominated as a contract of sale; and, two, their intention was to secure an existing debt by way of
mortgage.16

Indeed, the existence of any of the circumstances enumerated in Article 1602, not a concurrence or an
overwhelming number thereof, suffices to give rise to the presumption that a contract purporting to be
an absolute sale is actually an equitable mortgage.17 In the present case, however, the Contract does
not merely purport to be an absolute sale. The records and the documentary evidence introduced by
the parties indubitably show that the Contract is, indeed, one of absolute sale. There is no clear and
convincing evidence that the parties agreed upon a mortgage of the subject property.

Furthermore, the voluntary, written and unconditional acceptance of contractual commitments negates
the theory of equitable mortgage. There is nothing doubtful about the terms of, or the circumstances
surrounding, the Deed of Sale that would call for the application of Article 1602. The Joint Affidavit
indisputably confirmed that the transaction between the parties was a sale.

When the words of a contract are clear and readily understandable, there is no room for construction.
Contracts are to be interpreted according to their literal meaning and should not be interpreted beyond
their obvious intendment.18The contract is the law between the parties.
Notably, petitioners never raised as an issue before the trial court the fact that the document did not
express the true intent and agreement of the contracting parties. They raised mere suppositions on the
inadequacy of the price, in support of their argument that the Contract should be considered as an
equitable mortgage.

We find no basis to conclude that the purchase price of the property was grossly inadequate. Petitioners
did not present any witness to testify as to the market values of real estate in the subjects locale. They
made their claim on the basis alone of the P2,000,000 loan that respondent had been able to obtain
from the Rizal Commercial Banking Corporation. This move did not sufficiently show the alleged
inadequacy of the purchase price. A mortgage is a mere security for a loan. There was no showing that
the property was the only security relied upon by the bank; or that the borrowers had no credit
worthiness, other than the property offered as collateral.

Co-Ownership

The appellate court was correct in affirming the validity of the sale of the property insofar as the pro
indiviso share of Esperanza Balite was concerned.

Article 493 of the Civil Code19 gives the owner of an undivided interest in the property the right to
freely sell and dispose of such interest. The co-owner, however, has no right to sell or alienate a specific
or determinate part of the thing owned in common, because such right over the thing is represented by
an aliquot or ideal portion without any physical division. Nonetheless, the mere fact that the deed
purports to transfer a concrete portion does not per se render the sale void.20 The sale is valid, but only
with respect to the aliquot share of the selling co-owner. Furthermore, the sale is subject to the results
of the partition upon the termination of the co-ownership.

Hence, the transaction between Esperanza Balite and respondent could be legally recognized only in
respect to the formers pro indiviso share in the co-ownership. As a matter of fact, the Deed of Absolute
Sale executed between the parties expressly referred to the 10,000-square-meter portion of the land
sold to respondent as the share of Esperanza in the conjugal property. Her clear intention was to sell
merely her ideal or undivided share in it. No valid objection can be made against that intent. Clearly
then, the sale can be given effect to the extent of 9,751 square meters, her ideal share in the property
as found by both the trial and the appellate courts.

Transfer of Property

During her lifetime, Esperanza had already sold to respondent her share in the subject parcel; hence her
heirs could no longer inherit it. The property she had transferred or conveyed no longer formed part of
her estate to which her heirs may lay claim at the time of her death. The transfer took effect on April 16,
1996 (the date the Deed of Absolute Sale was executed), and not on May 30, 1997, when the Deed of
Absolute Sale was registered. Thus, petitioners claim that the property became theirs upon the death of
their mother is untenable.

Second Issue:
Respondents Liability

Petitioners insist that the appellate court erred in holding that respondents outstanding liability on the
Deed of Sale was P120,000, when the Receipts on record show payments in the total amount
of P320,000 only. They argue that the August 24, 1996 Receipt, on which the appellate court based its
conclusion, was unreliable.

To begin with, this Court is not a trier of facts. 21 It is not its function to examine and determine the
weight of the evidence. Well-entrenched is the doctrine that only errors of law,22 and not of facts, are
reviewable by this Court in a petition for review on certiorari under Rule 45 of the Revised Rules of
Court. Philippine Airlines, Inc. v. Court of Appeals23 has held that factual findings of the Court of Appeals
are binding and conclusive upon the Supreme Court. These findings may be reviewed24 only under
exceptional circumstances such as, among others, when the inference is manifestly mistaken;25 the
judgment is based on a misapprehension of facts;26 findings of the trial court contradict those of the
CA;27 or the CA manifestly overlooked certain relevant and undisputed facts that, if properly
considered, would justify a different conclusion.28

Although the factual findings of the two lower courts were not identical, we hold that in the present
case, the findings of the CA are in accord with the documents on record. The trial court admitted in
evidence the August 24, 1996 Receipt signed by Antonio Balite. Interestingly, he was never presented in
the lower court to dispute the veracity of the contents of that Receipt, particularly the second paragraph
that had categorically stated the outstanding balance of respondent as of August 24, 1996, to
be P350,000. Furthermore, the evidence shows that subsequent payments of P30,000 and P200,000
were made by the latter. Thus, we affirm the CAs Decision holding that the remaining unpaid balance of
the price was P120,000.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against the petitioners.

SO ORDERED.

LILIA SANCHEZ, petitioner, vs. COURT OF APPEALS, HON. VICTORINO S. ALVARO as Presiding Judge, RTC-
Br. 120, Caloocan City, and VIRGINIA TERIA, respondents.

Jul23

FACTS: Special Civil Action for Certiorari under Rule 65.

Lilia Sanchez, constructed a house on a 76-square meter lot owned by her parents-in-law. The lot was
registered under TCT No. 263624 with the following co-owners: Eliseo Sanchez married to Celia Sanchez,
Marilyn Sanchez married to Nicanor Montalban, Lilian Sanchez, widow, Nenita Sanchez, single, Susana
Sanchez married to Fernando Ramos, and Felipe Sanchez.
On 20 February 1995, the lot was registered under TCT No. 289216 in the name of private respondent
Virginia Teria by virtue of a Deed of Absolute Sale supposed to have been executed on 23 June 1995 by
all six (6) co-owners in her favor.

Lilia Sanchez claimed that she did not affix her signature on the document and subsequently refused to
vacate the lot, thus prompting Virginia Teria to file an action for recovery of possession of the aforesaid
lot with the MeTC.

MeTC decision: in favor of Teria, declaring that the sale was valid only to the extent of 5/6 of the lot and
the other 1/6 remaining as the property of petitioner, on account of her signature in the Deed of
Absolute Sale having been established as a forgery.

RTC decision: affirmed the RTC, because they failed to submit their pleadings.

On 4 November 1998, the MeTC issued an order for the issuance of a writ of execution in favor of
private Virginia Teria, buyer of the property. On 4 November 1999 or a year later, a Notice to Vacate was
served by the sheriff upon petitioner who however refused to heed the Notice.

On 28 April 1999 private respondent started demolishing petitioners house without any special permit
of demolition from the court.

Due to the demolition of her house which continued until 24 May 1999 petitioner was forced to inhabit
the portion of the premises that used to serve as the houses toilet and laundry area.

On 29 October 1999 petitioner filed her Petition for Relief from Judgment with the RTC on the ground
that she was not bound by the inaction of her counsel who failed to submit petitioners appeal
memorandum.

RTC decision: denied the Petition and the subsequent Motion for Reconsideration.

CA (Petition for Certiorari): dismissed the petition for lack of merit.

Held:

Co-ownership; nature

Sanchez Roman defines co-ownership as the right of common dominion which two or more persons
have in a spiritual part of a thing, not materially or physically divided. Manresa defines it as the
manifestation of the private right of ownership, which instead of being exercised by the owner in an
exclusive manner over the things subject to it, is exercised by two or more owners and the undivided
thing or right to which it refers is one and the same.

Co-ownership; characteristics

The characteristics of co-ownership are: (a) plurality of subjects, who are the co-owners, (b) unity of or
material indivision, which means that there is a single object which is not materially divided, and which
is the element which binds the subjects, and, (c) the recognition of ideal shares, which determines the
rights and obligations of the co-owners.

Co-ownership; relationship

In co-ownership, the relationship of such co-owner to the other co-owners is fiduciary in character and
attribute. Whether established by law or by agreement of the co-owners, the property or thing held pro-
indiviso is impressed with a fiducial nature so that each co-owner becomes a trustee for the benefit of
his co-owners and he may not do any act prejudicial to the interest of his co-owners.

Thus, the legal effect of an agreement to preserve the properties in co-ownership is to create an express
trust among the heirs as co-owners of the properties. Co-ownership is a form of trust and every co-
owner is a trustee for the others.

Article 493 of the Civil Code gives the owner of an undivided interest in the property the right to freely
sell and dispose of it, i.e., his undivided interest. He may validly lease his undivided interest to a third
party independently of the other co-owners.

But he has no right to sell or alienate a concrete, specific or determinate part of the thing owned in
common because his right over the thing is represented by a quota or ideal portion without any physical
adjudication.

Although assigned an aliquot but abstract part of the property, the metes and bounds of petitioners lot
has not been designated. As she was not a party to the Deed of Absolute Sale voluntarily entered into
by the other co-owners, her right to 1/6 of the property must be respected. Partition needs to be
effected to protect her right to her definite share and determine the boundaries of her property. Such
partition must be done without prejudice to the rights of private respondent Virginia Teria as buyer of
the 5/6 portion of the lot under dispute

G.R. No. 152766 June 20, 2003

LILIA SANCHEZ, Petitioner,

vs.
COURT OF APPEALS, HON. VICTORINO S. ALVARO as Presiding Judge, RTC-Br. 120, Caloocan City, and
VIRGINIA TERIA, Respondents.

DECISION

BELLOSILLO, J.:

This is a Special Civil Action for Certiorari under Rule 65 of the Rules of Court to annul and set aside the
Decision of the Court of Appeals dated 23 May 2001 as well as its Resolution dated 8 January 2002 in
CA-G.R. SP No. 59182.
Lilia Sanchez, petitioner, constructed a house on a 76-square meter lot owned by her parents-in-law.
The lot was registered under TCT No. 263624 with the following co-owners: Eliseo Sanchez married to
Celia Sanchez, Marilyn Sanchez married to Nicanor Montalban, Lilian Sanchez, widow, Nenita Sanchez,
single, Susana Sanchez married to Fernando Ramos, and Felipe Sanchez.1 On 20 February 1995, the lot
was registered under TCT No. 289216 in the name of private respondent Virginia Teria by virtue of a
Deed of Absolute Sale supposed to have been executed on 23 June 19952 by all six (6) co-owners in her
favor.3 Petitioner claimed that she did not affix her signature on the document and subsequently
refused to vacate the lot, thus prompting private respondent Virginia Teria to file an action for recovery
of possession of the aforesaid lot with the Metropolitan Trial Court (MeTC) of Caloocan City sometime in
September 1995, subsequently raffled to Br. 49 of that court.

On 12 February 1998, the MeTC-Br. 49 of Caloocan City ruled in favor of private respondent declaring
that the sale was valid only to the extent of 5/6 of the lot and the other 1/6 remaining as the property of
petitioner, on account of her signature in the Deed of Absolute Sale having been established as a
forgery.

Petitioner then elevated her appeal to the Regional Trial Court of Caloocan City, subsequently assigned
to Br. 120, which ordered the parties to file their respective memoranda of appeal. Counsel for
petitioner did not comply with this order, nor even inform her of the developments in her case.
Petitioner not having filed any pleading with the RTC of Caloocan City, the trial court affirmed the 27 July
1998 decision of the MeTC.

On 4 November 1998, the MeTC issued an order for the issuance of a writ of execution in favor of
private respondent Virginia Teria, buyer of the property. On 4 November 1999 or a year later, a Notice
to Vacate was served by the sheriff upon petitioner who however refused to heed the Notice.

On 28 April 1999 private respondent started demolishing petitioners house without any special permit
of demolition from the court.

Due to the demolition of her house which continued until 24 May 1999 petitioner was forced to inhabit
the portion of the premises that used to serve as the houses toilet and laundry area.

On 29 October 1999 petitioner filed her Petition for Relief from Judgment with the RTC on the ground
that she was not bound by the inaction of her counsel who failed to submit petitioners appeal
memorandum. However the RTC denied the Petition and the subsequent Motion for Reconsideration.

On 14 June 2000 petitioner filed her Petition for Certiorari with the Court of Appeals alleging grave
abuse of discretion on the part of the court a quo.

On 23 May 2001 the appellate court dismissed the petition for lack of merit.1wphi1 On 18 June 2001
petitioner filed a Motion for Reconsideration but the Court of Appeals denied the motion in its
Resolution of 8 January 2002.

The only issue in this case is whether the Court of Appeals committed grave abuse of discretion in
dismissing the challenged case before it.
As a matter of policy, the original jurisdiction of this Court to issue the so-called extraordinary writs
should generally be exercised relative to actions or proceedings before the Court of Appeals or before
constitutional or other tribunals or agencies the acts of which for some reason or other are not
controllable by the Court of Appeals. Where the issuance of the extraordinary writ is also within the
competence of the Court of Appeals or the Regional Trial Court, it is either of these courts that the
specific action for the procurement of the writ must be presented. However, this Court must be
convinced thoroughly that two (2) grounds exist before it gives due course to a certiorari petition under
Rule 65: (a) The tribunal, board or officer exercising judicial or quasi-judicial functions has acted without
or in excess of its or his jurisdiction; and (b) There is no appeal nor any plain, speedy and adequate
remedy in the ordinary course of law.

Despite the procedural lapses present in this case, we are giving due course to this petition as there are
matters that require immediate resolution on the merits to effect substantial justice.

The Rules of Court should be liberally construed in order to promote their object of securing a just,
speedy and inexpensive disposition of every action or proceeding.4

The rules of procedure should be viewed as mere tools designed to aid the courts in the speedy, just and
inexpensive determination of the cases before them. Liberal construction of the rules and the pleadings
is the controlling principle to effect substantial justice.5 Litigations should, as much as possible, be
decided on their merits and not on mere technicalities.6

Verily, the negligence of petitioners counsel cannot be deemed as negligence of petitioner herself in the
case at bar. A notice to a lawyer who appears to have been unconscionably irresponsible cannot be
considered as notice to his client.7 Under the peculiar circumstances of this case, it appears from the
records that counsel was negligent in not adequately protecting his clients interest, which necessarily
calls for a liberal construction of the Rules.

The rationale for this approach is explained in Ginete v. Court of Appeals - 8

This Court may suspend its own rules or exempt a particular case from its operation where the appellate
court failed to obtain jurisdiction over the case owing to appellants failure to perfect an appeal. Hence,
with more reason would this Court suspend its own rules in cases where the appellate court has already
obtained jurisdiction over the appealed case. This prerogative to relax procedural rules of the most
mandatory character in terms of compliance, such as the period to appeal has been invoked and granted
in a considerable number of cases x x x x

Let it be emphasized that the rules of procedure should be viewed as mere tools designed to facilitate
the attainment of justice. Their strict and rigid application, which would result in technicalities that tend
to frustrate rather than promote substantial justice, must always be eschewed. Even the Rules of Court
reflect this principle. The power to suspend or even disregard rules can be so pervasive and compelling
as to alter even that which this Court itself has already declared to be final, as we are now constrained
to do in the instant case x x x x
The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity
for the proper and just determination of his cause, free from the constraints of technicalities. Time and
again, this Court has consistently held that rules must not be applied rigidly so as not to override
substantial justice.

Aside from matters of life, liberty, honor or property which would warrant the suspension of the Rules
of the most mandatory character and an examination and review by the appellate court of the lower
courts findings of fact, the other elements that should be considered are the following: (a) the existence
of special or compelling circumstances, (b) the merits of the case, (c) a cause not entirely attributable to
the fault or negligence of the party favored by the suspension of the rules, (d) a lack of any showing that
the review sought is merely frivolous and dilatory, and (e) the other party will not be unjustly prejudiced
thereby.9

The suspension of the Rules is warranted in this case since the procedural infirmity was not entirely
attributable to the fault or negligence of petitioner. Besides, substantial justice requires that we go into
the merits of the case to resolve the present controversy that was brought about by the absence of any
partition agreement among the parties who were co-owners of the subject lot in question. Hence, giving
due course to the instant petition shall put an end to the dispute on the property held in common.

In Peoples Homesite and Housing Corporation v. Tiongco10 we held:

There should be no dispute regarding the doctrine that normally notice to counsel is notice to parties,
and that such doctrine has beneficent effects upon the prompt dispensation of justice. Its application to
a given case, however, should be looked into and adopted, according to the surrounding circumstances;
otherwise, in the courts desire to make a short-cut of the proceedings, it might foster, wittingly or
unwittingly, dangerous collusions to the detriment of justice. It would then be easy for one lawyer to sell
ones rights down the river, by just alleging that he just forgot every process of the court affecting his
clients, because he was so busy. Under this circumstance, one should not insist that a notice to such
irresponsible lawyer is also a notice to his clients.

Thus, we now look into the merits of the petition.

This case overlooks a basic yet significant principle of civil law: co-ownership. Throughout the
proceedings from the MeTC to the Court of Appeals, the notion of co-ownership11 was not sufficiently
dealt with. We attempt to address this controversy in the interest of substantial justice. Certiorari
should therefore be granted to cure this grave abuse of discretion.

Sanchez Roman defines co-ownership as "the right of common dominion which two or more persons
have in a spiritual part of a thing, not materially or physically divided.12 Manresa defines it as the
"manifestation of the private right of ownership, which instead of being exercised by the owner in an
exclusive manner over the things subject to it, is exercised by two or more owners and the undivided
thing or right to which it refers is one and the same."13
The characteristics of co-ownership are: (a) plurality of subjects, who are the co-owners, (b) unity of or
material indivision, which means that there is a single object which is not materially divided, and which
is the element which binds the subjects, and, (c) the recognition of ideal shares, which determines the
rights and obligations of the co-owners.14

In co-ownership, the relationship of such co-owner to the other co-owners is fiduciary in character and
attribute. Whether established by law or by agreement of the co-owners, the property or thing held pro-
indiviso is impressed with a fiducial nature so that each co-owner becomes a trustee for the benefit of
his co-owners and he may not do any act prejudicial to the interest of his co-owners.15

Thus, the legal effect of an agreement to preserve the properties in co-ownership is to create an express
trust among the heirs as co-owners of the properties. Co-ownership is a form of trust and every co-
owner is a trustee for the others.16

Before the partition of a land or thing held in common, no individual or co-owner can claim title to any
definite portion thereof. All that the co-owner has is an ideal or abstract quota or proportionate share in
the entire land or thing.17

Article 493 of the Civil Code gives the owner of an undivided interest in the property the right to freely
sell and dispose of it, i.e., his undivided interest. He may validly lease his undivided interest to a third
party independently of the other co-owners.18 But he has no right to sell or alienate a concrete, specific
or determinate part of the thing owned in common because his right over the thing is represented by a
quota or ideal portion without any physical adjudication.19

Although assigned an aliquot but abstract part of the property, the metes and bounds of petitioners lot
has not been designated. As she was not a party to the Deed of Absolute Sale voluntarily entered into by
the other co-owners, her right to 1/6 of the property must be respected. Partition needs to be effected
to protect her right to her definite share and determine the boundaries of her property. Such partition
must be done without prejudice to the rights of private respondent Virginia Teria as buyer of the 5/6
portion of the lot under dispute.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated 23 May 2001 as well
as its Resolution dated 8 January 2002 in CA-G.R. SP No. 59182 is ANNULLED and SET ASIDE. A survey of
the questioned lot with TCT No. 289216 (formerly TCT No. 263624) by a duly licensed geodetic engineer
and the PARTITION of the aforesaid lot are ORDERED.

Let the records of this case be REMANDED to MeTC-Br. 49, Caloocan City to effect the aforementioned
survey and partition, as well as segregate the 1/6 portion appertaining to petitioner Lilia Sanchez.

The Deed of Absolute Sale by the other co-owners to Virginia Teria shall be RESPECTED insofar as the
other undivided 5/6 portion of the property is concerned.

SO ORDERED.

G.R. No. 129704 September 30, 2005

ULPIANO BALO, LYDIA BALO-LUMPAS, EUGENIO BALO, ULPIANO BALO, JR., NIDA BALO-MORALETA,
NORA BALO-CATANO, ZAIDA BALO, JUDITH BALO-MANDREZA, DANILO BALO and RONILO
BALO,Petitioners,
vs.

vs.
THE HON. COURT OF APPEALS, HON. JUDGE ENRIQUE ASIS and JOSEFINA GARRIDO, Respondent.

DECISION

CHICO-NAZARIO, J.:

A complaint for Judicial Partition of Real Properties and Accounting with Damages, docketed as Civil
Case No. 279, was filed by private respondent Josefina Garrido against petitioners Ulpiano Balo, Lydia
Balo-Lumpas, Eugenio Balo, Ulpiano Balo, Jr., Nida Balo-Moraleta, Nora Balo-Catano, Zaida Balo, Judith
Balo-Mandreza, Danilo Balo and Ronilo Balo, before the Regional Trial Court (RTC) of Abuyog, Leyte,
Branch 10, alleging that she (private respondent) and petitioners are the co-owners of undivided parcels
of land located at Mayorga, Leyte. According to her, these lands were originally owned by the spouses
Eugenio Balo, Sr. and Ma. Pasagui-Balo, who, at the time of the filing of the complaint, were already
deceased. The Balo spouses were survived by their two (2) children, Ulpiano, Sr. and Maximino, the
latter likewise deceased. Private respondent is the daughter of Maximino Balo and Salvacion Sabulao.
Petitioner Ulpiano Balo is the son of Eugenio Balo, Sr., while the other petitioners, the children of
Ulpiano, are Eugenios grandchildren.

Private respondent further alleged in her complaint that immediately upon the death of her
grandfather, Eugenio Sr., the petitioners took possession of the said real properties without her
knowledge and consent. The petitioners being her uncle and cousins, private respondent earnestly
requested them that they come up with a fair and equal partition of the properties left by her
grandparents. The petitioners having outrightly refused her proposal, private respondent filed the
complaint.1

In lieu of an Answer, petitioners filed a Motion to Dismiss2 on the following grounds:

1. Failure to state a cause of action - plaintiff, though she claims to be a daughter of Maximino who died
sometime in 1946, failed to allege whether or not she is a legitimate child. Plaintiffs failure to allege
legitimacy is fatal considering the provision of Article 992 of the Civil Code.3 To allow Plaintiff to inherit
from the estate of the spouses Eugenio and Maria Balo in representation of her father Maximino Balo
would be to permit intestate succession by an illegitimate child from the legitimate parent of his father,
assuming that she is the child of Maximino Balo.

2. The complaint does not show that the estate of the spouses Eugenio and Maria Balo have been
settled and its obligations have been paid.
3. The properties enumerated in the Complaint were proceeded against by way of execution to satisfy a
judgment against Eugenio and Maria Balo. Subsequently, defendant Ulpiano repurchased the said
properties and has been, together with his children, openly, exclusively and adversely in possession of
the real estate properties in question.

Private respondent filed her comment/opposition to the motion to dismiss.4

In an Order dated 12 September 1996, the RTC denied the motion to dismiss for lack of merit.5 The trial
court held:

The complaint clearly states that the late Eugenio Balo, Sr., and Maria Pasagui Balo had two (2) children,
namely: Ulpiano, Sr. and Maximino. The plaintiff is the daughter of the late Maximino Balo and Salvacion
Sabulao; while the defendants are children of the late Ulpiano Balo, Sr. and Felicidad Superio.

The complaint enumerates/annexes 13 tax declarations in the name of Eugenio Balo, Sr. marked as
Annexes "A" to "M." The plaintiff as an heir prays that these parcels of land be partitioned in accordance
with Article 982 of the Civil Code which states:

"The grandchildren and other descendants shall inherit by right of representation, and if any one of
them should have died, leaving several heirs, the portion pertaining to him shall be divided among the
latter in equal portions."

No evidence may be alleged or considered to test the sufficiency of the complaint except the very facts
pleaded therein. It would be improper to inject into the allegation, facts not alleged and use them as
basis for the decision on the motion.

The Court is not permitted to go beyond and outside of the allegations in the complaint for data or facts.

Therefore, the allegation of illegitimacy and claim of absolute ownership are modifications and
unreasonable inferences. If there is doubt to the truth of the facts averred in the complaint, the Court
does not dismiss the complaint but requires an answer and proceeds to hear the case on the merit.6

Petitioners filed a Motion for Reconsideration7 which the RTC denied in its Order8 dated 07 November
1996.

Petitioners filed a Petition for Certiorari9 before the Court of Appeals. After the filing of Comment and
other pleadings, the case was deemed submitted for decision. In a resolution dated 16 April 1997, the
Court of Appeals denied due course to the petition and accordingly dismissed the same. The Court of
Appeals justified the dismissal in the following manner:

It is an established rule that an order denying a motion to dismiss is basically interlocutory in character
and cannot be the proper subject of a petition for certiorari. When a motion to dismiss is denied, the
proper procedure is to proceed with the trial and if the decision be adverse to the movant, the remedy
is to take an appeal from said decision, assigning as one of the errors therefore the denial of the motion
to dismiss.10
Petitioners filed a Motion for Reconsideration11 which the Court of Appeals denied in a resolution dated
30 June 1997.12 Hence this petition for review13 under Rule 45 of the Rules of Court.

Petitioners cite the following grounds for the allowance of their petition, to wit:

WHETHER OR NOT THE FAILURE TO ALLEGE THE NATURE AND EXTENT OF PLAINTIFFS TITLE IN A
PETITION FOR PARTITION IS FATAL TO ITS CAUSE OF ACTION.

II

WHETHER OR NOT THE ACTION FOR JUDICIAL PARTITION AND ACCOUNTING HAS PRESCRIBED, WAS
WAIVED, OR WAS OTHERWISE ABANDONED.14

At the threshold of the instant petition for review is the correctness of the appellate courts dismissal of
the petition for certiorari filed by the petitioners.

In resolving to deny the petition, the Court of Appeals relied on the long established jurisprudence that
an order denying a motion to dismiss is interlocutory and cannot be the proper subject of a petition
for certiorari.

The general rule regarding denial of a motion to dismiss as a basis of a resort to the extraordinary writ
of certiorari is that:

. . . [A]n order denying a motion to dismiss is an interlocutory order which neither terminates nor finally
disposes of a case as it leaves something to be done by the court before the case is finally decided on
the merits. As such, the general rule is that the denial of a motion to dismiss cannot be questioned in a
special civil action for certiorari which is a remedy designed to correct errors of jurisdiction and not
errors of judgment.

To justify the grant of the extraordinary remedy of certiorari, therefore, the denial of the motion to
dismiss must have been tainted with grave abuse of discretion. By "grave abuse of discretion" is meant,
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of
discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason
of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive
duty or to a virtual refusal to perform the duty enjoined by or to act all in contemplation of law.15

Specific instances whereby the rule admits certain exceptions are provided as follows:

. . . Under certain situations, recourse to certiorari or mandamus is considered appropriate, i.e., (a)
when the trial court issued the order without or in excess of jurisdiction; (b) where there is patent grave
abuse of discretion by the trial court; or (c) appeal would not prove to be a speedy and adequate
remedy as when an appeal would not promptly relieve a defendant from the injurious effects of the
patently mistaken order maintaining the plaintiffs baseless action and compelling the defendant
needlessly to go through a protracted trial and clogging the court dockets by another futile case.16
Applying the foregoing, the Court of Appeals should not have dismissed the petition outright as the
same alleges grave abuse of discretion. Instead, it should have proceeded to determine whether or not
the trial court did commit grave abuse of discretion as alleged by the petitioners. The Court of Appeals
having failed in this regard, it behooves upon this Court to discuss the merits of the petition to put to
rest the issues raised by the petitioners.

Contrary to petitioners contention, allegations sufficient to support a cause of action for partition may
be found in private respondents complaint.17

Nothing is more settled than the rule that in a motion to dismiss for failure to state a cause of action,
the inquiry is into the sufficiency, not the veracity, of the material allegations.18 Moreover, the inquiry is
confined to the four corners of the complaint, and no other.19

In a motion to dismiss a complaint based on lack of cause of action, the question submitted to the court
for determination is the sufficiency of the allegations made in the complaint to constitute a cause of
action and not whether those allegations of fact are true, for said motion must hypothetically admit the
truth of the facts alleged in the complaint.

The test of the sufficiency of the facts alleged in the complaint is whether or not, admitting the facts
alleged, the court could render a valid judgment upon the same in accordance with the prayer of the
complaint. (Garcon vs. Redemptorist Fathers, 17 SCRA 341)

If the allegations of the complaint are sufficient in form and substance but their veracity and correctness
are assailed, it is incumbent upon the court to deny the motion to dismiss and require the defendant to
answer and go to trial to prove his defense. The veracity of the assertions of the parties can be
ascertained at the trial of the case on the merits. (Galeon vs. Galeon, 49 SCRA 516-521)20

Section 1, Rule 8 of the 1997 Rules of Civil Procedure provides that the complaint needs only to allege
the ultimate facts upon which private respondent bases her claim.

The rules of procedure require that the complaint must make a concise statement of the ultimate facts
or the essential facts constituting the plaintiffs cause of action. A fact is essential if it cannot be stricken
out without leaving the statement of the cause of action inadequate. A complaint states a cause of
action only when it has its three indispensable elements, namely: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the
named defendant to respect or not to violate such right; and (3) an act or omission on the part of such
defendant violate of the right of plaintiff or constituting a breach of the obligation of defendant to the
plaintiff for which the latter may maintain an action for recovery of damages.21

In her Complaint, the private respondent made the following assertions:

. . . That the afore-described parcels of lands were originally owned by Eugenio Balo, Sr. and Ma.
Pasagui-Balo, who are now both deceased and after their death, were inherited into two (2) equal
shares by their two (2) children, namely: Ulpiano, Sr. and Maximino, both surnamed Balo, the later (sic)
being already dead.
That plaintiff is the daughter of the late Maximino Balo and Salvacion Sabulao, who after her fathers
death, had inherited her fathers share of the inheritance.

That defendant Ulpiano Balo, Sr. aside from being the son of Eugenio Balo, Sr., is married to Felicidad
Superio, and is the father of all the other defendants in this case.

The defendants took possession of the above-described real properties immediately after the death of
plaintiffs grandfather Eugenio Balo, Sr. without her knowledge and consent.

That plaintiff is desirous that the above-described real properties be partitioned between her and
defendants.

That plaintiff has proposed to the defendants that the above-described real properties be amicably
partitioned between them by mutual agreement in a very fair and practical division of the same, but
said defendants refused and continue to do so without any justifiable cause or reason to accede to the
partition of the said properties.22

The foregoing allegations show substantial compliance with the formal and substantial requirements of
a Complaint for Partition as required under Section 1, Rule 69 of the 1997 Rules of Civil Procedure.23

On the insistence of petitioners that private respondent first prove her legitimacy before an action for
partition may be maintained, this Court, in the case of Briz v. Briz,24 pronounced that proof of legal
acknowledgment is not a prerequisite before an action for partition may be filed. We said:25

. . . In other words, there is no absolute necessity requiring that the action to compel acknowledgment
should have been instituted and prosecuted to a successful conclusion prior to the action in which that
same plaintiff seeks additional relief in the character of heir. Certainly, there is nothing so peculiar to the
action to compel acknowledgment as to require that a rule should be here applied different from that
generally applicable in other cases. For instance, if the plaintiff had in this action impleaded all of the
persons who would be necessary parties defendant to an action to compel acknowledgement, and had
asked for relief of that character, it would have been permissible for the court to make the judicial
pronouncement declaring that the plaintiff is entitled to be recognized as the natural child of Maximo
Briz, and at the same time to grant the additional relief sought in this case against the present
defendants; that is, a decree compelling them to surrender to the plaintiff the parcel of land sued for
and to pay her the damages awarded in the appealed decision.

The conclusion above stated, though not heretofore explicitly formulated by this court, is undoubtedly
to some extent supported by our prior decisions. Thus, we have held in numerous cases, and the
doctrine must be considered well settled, that a natural child having a right to compel acknowledgment,
but who has not been in fact legally acknowledged, may maintain partition (proceedings for the division
of the inheritance against his coheirs (Siguiong vs. Siguiong, 8 Phil. 5; Tiamson vs. Tiamson, 32 Phil 62);
and the same person may intervene in proceedings for the distribution of the estate of his deceased
natural father, or mother (Capistrano vs. Fabella, 8 Phil. 135; Conde vs. Abaya, 13 Phil. 249; Ramirez vs.
Gmur, 42 Phil 855). In neither of these situations has it been thought necessary for the plaintiff to show
a prior decree compelling acknowledgment. The obvious reason is that in partition suits and distribution
proceedings the other persons who might take by inheritance are before the court; and the declaration
of heirship is appropriate to such proceedings.

To further reiterate that in partition proceedings, dismissal prior to answer is premature, this Court has
held:

In a complaint for partition, the plaintiff seeks, first, a declaration that he is a co-owner of the subject
properties; and second, the conveyance of his lawful shares. As the Court of Appeals correctly held, an
action for partition is at once an action for declaration of co-ownership and for segregation and
conveyance of a determine portion of the properties involved. If the defendant asserts exclusive title
over the property, the action for partition should not be dismissed. Rather, the court should resolve the
case and if the plaintiff is unable to sustain his claimed status as a co-owner, the court should dismiss
the action, not because the wrong remedy was availed of, but because no basis exists for requiring the
defendant to submit to partition. If, on the other hand, the court after trial should find the existence of
co-ownership among the parties, the court may and should order the partition of the properties in the
same action.26

The case of Vda. De Daffon v. Court of Appeals27 is almost most appropriate. In said case, the action for
partition filed by the plaintiffs was met by a motion to dismiss filed by the defendants based on the
grounds of failure of the complaint to state a cause of action, waiver, abandonment and extinguishment
of the obligation. The trial court denied the motion to dismiss and the denial was affirmed by the
appellate court and by this Court. We held there that the trial court and the Court of Appeals were
correct in dismissing the petition for certiorari absent a clear showing of grave abuse of discretion
amounting to lack or excess of jurisdiction. We further expressed our dismay over the delay in the
resolution of the said case due to the fact that the issue of the denial of the Motion to Dismiss was
elevated to this Court by petitioner and counsel instead of just filing an Answer and meeting the issues
head-on.

On the matter of prescription cited by the petitioners as a ground for the dismissal of the complaint, it is
noteworthy that the motion to dismiss filed by the petitioners did not ipso facto establish prescription.
An allegation of prescription can effectively be used in a motion to dismiss only when the complaint on
its face shows that indeed the action has already prescribed;28 otherwise, the issue of prescription is
one involving evidentiary matters requiring a full-blown trial on the merits and cannot be determined in
a mere motion to dismiss.29

Wherefore, premises considered, the instant Petition is DENIED and the decision of the Court of Appeals
in CA-G.R. SP No. 42803, affirming the Order of the Regional Trial Court dated 12 September 1996, is
AffIRmed. This case is ordered remanded to the court of origin which is directed to resolve the case with
dispatch. Costs against petitioners.

SO ORDERED.

G.R. No. L-27702 September 9, 1977

ANDREA BUDLONG, plaintiff-appellant, vs. JUAN PONDOC ET.AL defendants-appellees. 79 SCRA 24

FACTS:

On October 27, 1934 the sisters Isabela Pondoc and Crispina Pondoc donated to Andrea Budlong in a
notarial instrument their two-thirds share in the said lot in consideration of the donee's personal
services to the donors. Andrea accepted the donation in the same instrument.

Two years after the execution of the donation, or on October 27, 1936, Original Certificate of Title No.
4718 was issued for the said lot. The title shows that the lot is owned by the following co-owners:
Crispina Pondoc 113; Isabela Pondoc 1/3; Francisco Garrote 1/6, and Isabela Garrote-Pondoc 1/6.the
donee, Andrea Budlong did not intervene in the cadastral proceeding. She was not substituted for the
donors in that proceeding.

Isabela Pondoc and Crispina Pondoc died without any descendants in 1935 and 1937. Francisco Garrote
left Bohol thirty years before 1966 and had never returned to that province. Isabel Garrote-Pondoc died
and was survived by her five children named Juan, Fabio, Apolinaria Benedicta and Felicidad all
surnamed Pondoc y Garrote

Andrea Budlong has been in possession of the lot. She declared it for tax purposes in her name. She
planted the lot to coconuts, bamboos, bananas and a mango tree. Early in 1965 Andrea wanted to
register the deed of donation. The register of deeds in a letter dated April 1, 1965 asked Juan Pondoc to
surrender the owner's duplicate of OCT No. 4718.

Andrea Budlong filed in the Court of First instance of Bohol an action for the partition of the said lot. She
was allowed to sue as a pauper. The trial court dismissed the complaint on the grounds that Andrea
Budlong was guilty of laches and that the registration of the lot extinguished her rights under the deed
of donation.

ISSUE: Whether or not the done ceased to be a co-owner because her name does not appear in the
certificate of title

RULING:

Section 70 of Act No. 496 that registered land, and ownership therein, shall in all respects be subject to
the same burdens and incidents attached by law to unregistered land", and that nothing in Act No. 496
"shall in any way be construed "to change the laws of descent, or the rights of partition between
coparceners joint tenants and other cotenants " "or to change or affect in any other way any other
rights or liabilities created by law and applicable to unregistered land, except as otherwise expressly
provided in this Act or in the amendments hereof".

LEGAL INCIDENTS OF REGISTRATION LAND

1 Registered land is subject to the same legal burdens and incidents as unregistered land and, therefore,
fake unregistered land, it is subject to attachment and execution for the payment of debts. The rights
and liabilities which are created by law and are made applicable to unregistered land, are applicable to
registered land, except as otherwise provided in Act No. 496.

2. The rights arising from the relation of husband and wife are applicable to registered lands.

3. Registered land is subject (a) to any alien of any description established by law on land and the b
thereon, or the interest of the owner in such land or buildings, (b) to the laws of descent, and (c) to the
rights of partition between coparceners joint tenants, will other cotenants except as otherwise expressly
provoked in Act No. 496.

The deed of donation made Andrea Budlong a co-owner of Lot No. 5447. She became the successor-in-
interest of the donors, Isabela Pondoc and Crispina Pondoc. The fact that in OCT No. 4718, which was
issued subsequent to the donation, the donors appear to be the co-owners and not Andrea Budlong did
not extinguish at all the rights of Andrea as a co-owner.

Section 70 of Act No. 496 is crystal clear. It unmistakably provides that the conversion of unregistered
land into registered land does not affect the rights of the CO-owners nor the legal rights and liabilities
applicable to unregistered land.

G.R. No. L-27702 September 9, 1977

ANDREA BUDLONG, plaintiff-appellant,

vs.
JUAN PONDOC, FABIO PONDOC, APOLINARIA PONDOC, BENEDICTA PONDOC, FELICIDAD PONDOC and
FRANCISCO GARROTE defendants-appellees.

Eleuterio Ramo and Salvador Budlong for plaintiff-appellant.

Maximo C. Nuez for defendants-appellees.

AQUINO, J.:

This is an action for the partition of Lot No. 5447, with an area of 12,524 square meters, situated at
Barrio Ubujan Tagbilaran City, Bohol, at six hundred pesos in 1965.

On October 27, 1934 the sisters Isabela Pondoc and Crispina Pondoc donated to Andrea Budlong in a
notarial instrument their two-thirds share in the said lot in consideration of the donee's personal
services to the donors. Andrea accepted the donation in the same instrument. It was noted in the deed
that the Court of First Instance of Bohol had rendered a decision dated November 28, 1933 regarding
the said lot.

The deed contains the statement "that by virtue hereof, the said Andrea Budlong is hereby vested with
full ownership and property of the lot in question." It was acknowledged before Genaro Visarra the
mayor of Tagbilaran, an ex oficio notary.
Two years after the execution of the donation, or on October 27, 1936, Original Certificate of Title No.
4718 was issued for the said lot. The title shows that the lot is owned by the following co-owners:
Crispina Pondoc 113; Isabela Pondoc 1/3; Francisco Garrote 1/6, and Isabela Garrote-Pondoc 1/6.

Apparently, the donee, Andrea Budlong did not intervene in the cadastral proceeding. She was not
substituted for the donors in that proceeding maybe because the hearing had already been terminated
when the donation was made to her. However, the owner's duplicate of OCT No. 4718 was in the ion of
Andrea. Sometime in January, 1965, Juan Pondoc talked with Andrea about the sale of the lot. He got
the said title from Andrea. When the projected sale did not go through, Juan did not return the title to
her.

Isabela Pondoc and Crispina Pondoc died without any descendants in 1935 and 1937, respectively (p. 14,
Appellees Brie) Francisco Garrote an alleged brother of Isabela Pondoc and Crispina Pondoc left Bohol
thirty years before 1966 and had never returned to that province. Isabel Garrote-Pondoc died and was
survived by her five children named Juan, Fabio, Apolinaria Benedicta and Felicidad all surnamed Pondoc
y Garrote

Presumably, Andrea Budlong has been in possession of the lot. She declared it for tax purposes in her
name. She paid the realty taxes thereon from 1936 to 1966. She planted the lot to coconuts, bamboos,
bananas and a mango tree.

Early in 1965 Andrea wanted to register the deed of donation. The register of deeds in a letter dated
April 1, 1965 asked Juan Pondoc to surrender the owner's duplicate of OCT No. 4718. He did not comply
with that request.

On May 11, 1965 Andrea Budlong filed in the Court of First instance of Bohol an action for the partition
of the said lot. She was allowed to sue as a pauper She retarded the action against Francisco Garrote
and the five children of Isabel Garrote-Pondoc Francisco was summoned by publication. He was
declared in default.

Juan, Fabio, Apolinaria Benedicta and Felicidad all surnamed Pondoc alleged in their answer that the
donation was "fraudulently executed". They relied on OCT No. 4718.

Visarra the notary, declared in his deposition that the deed of donation was voluntarily executed by the
donors.

The trial court dismissed the complaint on the grounds that Andrea Budlong was guilty of laches and
that the registration of the lot extinguished her rights under the deed of donation. It opined that she
could not ask for the partition of the lot because she does not appear as a co-owner in the title thereof.
The court intimated that she could ask for an indemnity from the assurance fund.

From that adverse decision, Andrea appealed to this Court. She stated in her notice of appeal that the
lower court's decision is contrary to law. She assailed the trial court's rulings that she is guilty of laches;
that the one-year period provided in section 38 of Act No. 496 applies to this case; that it has no
jurisdiction to protect her right under the deed of donation, and that she could not demand partition
because she was no longer a co-owner of the lot.

The trial court correctly held that the donation is valid. Defendants-appellees' belated contention on
appeal that the donation is mortis causa (they did not raise that issue in their answer or in the lower
court) is wrong. There is not the slightest indication in the deed that the donation would take effect
upon the donors' death. It is indisputably an inter vivos donation.

In the deed it is expressly stipulated that the ownership over the two-thirds proindiviso share of the
donors in Lot No. 5447 was transferred to the donee. That notarial deed amounted to a transfer of the
ownership and ion of the lot because the execution of a public instrument of conveyance is one of the
recognized ways by which delivery of lands may be made (Art. 1463, old Civil Code, now art. 1498; Ortiz
vs. Court of Appeals, 97 Phil. 46).

We rind the appeal to be meritorious. The trill court erred in assuming that the donee ceased to be a co-
owner bemuse her mm does not appear in OCT No. 4718 which was issued two years after the
execution of the deed of donation.

Overlooked by the trial court is the provision of section 70 of Act No. 496 that registered land, and
ownership therein, shall in all respects be subject to the same burdens and incidents attached by law to
unregistered land", and that nothing in Act No. 496 "shall in any way be construed "to change the laws
of descent, or the rights of partition between coparceners joint tenants and other cotenants " "or to
change or affect in any other way any other rights or liabilities created by law and applicable to
unregistered land, except as otherwise expressly provided in this Act or in the amendments hereof".
Section 70 is quoted below:

LEGAL INCIDENTS OF REGISTRATION LAND

SEC. 70. Registered land, and ownership therein, shall in all respects be subject to the same burdens and
incidents attached by law to unregistered land. Nothing contained in this Act shall in any way be
construed to relieve registered land or the owners thereof from and rights incident to the relation of
husband and wife, or from liability to attachment on mesne process or levy on execution, or from
liability to any lien of any description established by law on land and the buildings thereon, or the
interest of the owner in such land or buildings, or to change the laws of descent, or the rights of
partition between coparcener joint tenants and other cotenants or the right to take the same by
eminent domain, or to relieve such land from liability to be appropriated in any lawful manner for the
payment of debts, or to change or affect in any other way any other rights or liabilities created by law
and applicable to unregistered land, except as otherwise expressly provided in this Act or in the
amendments hereof.

For clarity the rules in section 70 may be restated as follows:

1 Registered land is subject to the same legal burdens and incidents as unregistered land and, therefore,
fake unregistered land, it is subject to attachment and execution for the payment of debts. The rights
and liabilities which are created by law and are made applicable to unregistered land, are applicable to
registered land, except as otherwise provided in Act No. 496.

2. The rights arising from the relation of husband and wife are applicable to registered lands.

3. Registered land is subject (a) to any alien of any description established by law on land and the b
thereon, or the interest of the owner in such land or buildings, (b) to the laws of descent, and (c) to the
rights of partition between coparceners joint tenants, will other cotenants except as otherwise expressly
provoked in Act No. 496. (As impossible between sections 39 and 70 of Act No. 496, see De Jesus vs. City
of Manila, 29 Phd. 73).

The situation of Andrea Budlong is analogous to that of a spouse whose name was not included in the
Torrens title when conjugal land was metered in the name of the other spouse. (The spouses are of the
conjugal assets as provided in article 143 of the Civil Code.)

Thus, by reason of section 70, it was held that a parcel of land, which was acquired during the marriage
and which was registered under the Torrens system in the name of one spouse, is presumed to be
conjugal unless proven otherwise. The registration in the name of one spouse does not preclude the
application of the rule that "all property the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband or to the wife" (Art. 160, Civil Code,
formerly article 1407; Flores vs. Flores 48 Phil. 288; Romero de Pratts vs. Menzi & Co. and Sheriff of
Rizal, 53 Phil. 51; Paterno Vda. de Padilla vs. Bibby Vda. de Padilla, 74 Phil. 377; Seva vs. Nolan, 64 Phil.
374).

Section 70 was also applied to a case where the deceased was survived by her legitimate daughter and
an acknowledged natural son. Although the eight parcels of land left by the deceased were registered in
the same of her natural son, the daughter or her heirs could sue the natural son or his heirs for the
reconveyance of two-thirds of the eight parcels, that being the daughter's share in her mother's estate
as a legal heir under the old Civil Code. The one-year period in 38 of Act No. 496 does not apply to that
case. (Dayao vs. Robles, 74 Phil. 114).

In Sideco vs. Aznar, 92 Phil. 952, 961-2, it was held that, by reason section 70, an application by the
widower in a cadastral long after the title to a parcel of land was registered in his name in an ordinary
land registration proceeding, to have the names of his children included in the title as co-owners, could
be granted. The registration did not affect the children's hereditary rights. The children were not held
guilty of laches for having failed to secure the issuance of the title in their names jointly with their
father. (See Guevara vs. Guevara, 74 Phd. 479, 494; Robles and Martin vs. Lizarraga Hermanos 42 Phil.
584; Gonzalez vs. Banzon, 51 Phil. 15, 20) Article 403 of the old Civil Code, now article 497, provides that
the assignees of the co-owners may take part in the partition of the n property.

And article 400 of the old Code, now article 494, provides that each co- owner may demand at any time
the partition of the common property, a provision which implies that the action to demand partition is
imprescriptible or cannot be barred by laches. @ art. 1965, old Civil Code).
The deed of donation made Andrea Budlong a co-owner of Lot No. 5447. She became the successor-in-
interest of the donors, Isabela Pondoc and Crispina Pondoc The fact that in OCT No. 4718, which was
issued subsequent to the donation, the donors appear to be the co-owners and not Andrea Budlong did
not extinguish at all the rights of Andrea as a co-owner.

Section 70 of Act No. 496 is crystal clear. It unmistakably provides that the conversion of unregistered
land into registered land does not affect the rights of the CO-owners nor the legal rights and liabilities
applicable to unregistered land.

That the registration did not wipe out the rights of Andrea, as the successor- in-interest of the donors, is
shown by the fact that she remained in ion of the donated lot and that the owner's duplicate of OCT No.
4718 was given to her and was in her custody from 1936 to January, 1965, when she entrusted it to
defendant Juan Pondoc because of the plan to self the lot and dissolve the co-ownership.

The trial court erred in applying to this case section 38 of Act No. 496 regarding review of the decree of
registration on the ground of fraud. This is not a case of fraudulent registration. Nor is this a case where
the rule on laches is applicable Moreover, the defendants waived that defense because they did not
invoke it in their answer (Sec. 2, Rule 9, Rules of Court; 1 Moran's Comments on the Rules of Court, 1970
Edition, p. 263 citing Bergeon vs. Mansour, 9 Fed. Rules Service, P. 61).

In conclusion, we hold that the 1934 donation should be given effect. It was confirmed by plaintiff-
appellant's ion of the donated lot, her improvements thereon, her enjoyment of the fruits thereof, and
her payment of the realty taxes dues thereon for the years 1936 to 1966.

WHEREFORE, the trial court's decision is reversed and set aside. If the parties cannot agree on the
partition of the disputed lot, then the trill court should conduct proceedings for the partition thereof in
conformity with Rule 69 of the Rules of Court.

Defendant Juan Pondoc is ordered to surrender the owner's duplicate of OCT No. 4718 to the register of
deeds of Tagbilaran City within five days from his counsel's receipt of the notice from the clerk of the
lower court of the. remand of the records of this case from this Court. The register of deeds is directed
to register the deed of donation, to cancel OCT No. 4718, and to issue a new transfer certificate of title
showing the two-thirds interest of Andrea Budlong in Lot No. 5447. No costs.

SO ORDERED.

DELIMA V. CA- Repudiation of Co-ownership

Cancellation of old title and issuance of new one constituted an open and clear repudiation of the trust
or co-ownership which would start the running of prescription.

FACTS:
This case is another story of sibling war over a Friar Land Estate inherited from their parent who had
acquired said land from the Government. When the parents died, Respondent Galileo allegedly paid the
remaining balance of the purchase price, and the estate tax. Later on, he executed an affidavit declaring
himself as sole owner and acquired TCT over it. 10 years after the TCT was issued, the other heirs
instituted this action for reconveyance claiming their part as co-owners.

ISSUE: Whether or not the other heirs are still entitled to the land or are they barred by prescription.

RULING: The other heirs are barred by prescription. How did this happen? Galileo was able to prove the
4 requirements: (1) clear and convincing evidence of repudiation (2) made known to the other owners
(3) adverse possession and open repudiation (4) for over 10 years.

What is important in this case is that the Court ruled that registration of the land would be sufficient
compliance with the notice requirement above.

G.R. No. L-46296 September 24, 1991

EPITACIO DELIMA, PACLANO DELIMA, FIDEL DELIMA, VIRGILIO DELIMA, GALILEO DELIMA, JR., BIBIANO
BACUS, OLIMPIO BACUS and PURIFICACION BACUS, petitioners,
vs.
HON. COURT OF APPEALS, GALILEO DELIMA (deceased), substituted by his legal heirs, namely: FLAVIANA
VDA. DE DELIMA, LILY D. ARIAS, HELEN NIADAS, ANTONIO DELIMA, DIONISIO DELIMA, IRENEA DELIMA,
ESTER DELIMA AND FELY DELIMA, respondents.

Gabriel J. Canete for petitioners.

Emilio Lumontad, Jr. for private respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals reversing the trial court's
judgment which declared as null and void the certificate of title in the name of respondents'
predecessor and which ordered the partition of the disputed lot among the parties as co-owners.

The antecedent facts of the case as found both by the respondent appellate court and by the trial court
are as follows:

During his lifetime, Lino Delima acquired Lot No. 7758 of the Talisay-Minglanilla Friar Lands Estate in
Cebu by sale on installments from the government. Lino Delima later died in 1921 leaving as his only
heirs three brothers and a sister namely: Eulalio Delima, Juanita Delima, Galileo Delima and Vicente
Delima. After his death, TCT No. 2744 of the property in question was issued on August 3, 1953 in the
name of the Legal Heirs of Lino Delima, deceased, represented by Galileo Delima.
On September 22, 1953, Galileo Delima, now substituted by respondents, executed an affidavit of
"Extra-judicial Declaration of Heirs." Based on this affidavit, TCT No. 2744 was cancelled and TCT No.
3009 was issued on February 4,1954 in the name of Galileo Delima alone to the exclusion of the other
heirs.

Galileo Delima declared the lot in his name for taxation purposes and paid the taxes thereon from 1954
to 1965.

On February 29, 1968, petitioners, who are the surviving heirs of Eulalio and Juanita Delima, filed with
the Court of First Instance of Cebu (now Regional Trial Court) an action for reconveyance and/or
partition of property and for the annulment of TCT No. 3009 with damages against their uncles Galileo
Delima and Vicente Delima,. Vicente Delima was joined as party defendant by the petitioners for his
refusal to join the latter in their action.

On January 16, 1970, the trial court rendered a decision in favor of petitioners, the dispositive portion of
which states:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the following are the declared owners of Lot No. 7758
of the Talisay-Minglanilla Friar Lands Estate presently covered by transfer Certificate of Title No. 3009,
each sharing a pro-indiviso share of one-fourth;

1) Vicente Delima (one-fourth)

2) Heirs of Juanita Delima, namely: Bibiano Bacus, Olimpio Bacus and Purificacion Bacus (on-fourth);

3) Heirs of Eulalio Delima, namely Epitacio, Pagano, Fidel, Virgilio and Galileo Jr., all surnamed Delima
(one-fourth); and

4) The Heirs of Galileo Delima, namely Flaviana Vda. de Delima, Lily D. Arias, Helen Niadas and Dionisio,
Antonio, Eotu Irenea, and Fely, all surnamed Delima (one-fourth).

Transfer Certificate of Title No. 3009 is declared null and void and the Register of Deeds of Cebu is
ordered to cancel the same and issue in lieu thereof another title with the above heirs as pro-indiviso
owners.

After the payment of taxes paid by Galileo Delima since 1958, the heirs of Galileo Delima are ordered to
turn a over to the other heirs their respective shares of the fruits of the lot in question computed at
P170.00 per year up to the present time with legal (interest).

Within sixty (60) days from receipt of this decision the parties are ordered to petition the lot in question
and the defendants are directed to immediately turn over possession of the shares here awarded to the
respective heirs.

Defendants are condemned to pay the costs of the suit.

The counterclaim is dismissed.

SO ORDERED. (pp. 54-55, Rollo)

Not satisfied with the decision, respondents appealed to the Court of Appeals. On May 19, 1977,
respondent appellate court reversed the trial court's decision and upheld the claim of Galileo Delima
that all the other brothers and sister of Lino Delima, namely Eulalio, Juanita and Vicente, had already
relinquished and waived their rights to the property in his favor, considering that he (Galileo Delima)
alone paid the remaining balance of the purchase price of the lot and the realty taxes thereon (p.
26, Rollo).

Hence, this petition was filed with the petitioners alleging that the Court of Appeals erred:

1) In not holding that the right of a co-heir to demand partition of inheritance is imprescriptible. If it
does, the defenses of prescription and laches have already been waived.

2) In disregarding the evidence of the petitioners.(p.13, Rollo)

The issue to be resolved in the instant case is whether or not petitioners' action for partition is already
barred by the statutory period provided by law which shall enable Galileo Delima to perfect his claim of
ownership by acquisitive prescription to the exclusion of petitioners from their shares in the disputed
property. Article 494 of the Civil Code expressly provides:

Art. 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at
any time the partition of the thing owned in common, insofar as his share is concerned.

Nevertheless, an agreement to keep the thing undivided for a certain period of time, not exceeding ten
years, shall be valid. This term may be extended by a new agreement.

A donor or testator may prohibit partition for a period which shall not exceed twenty years.

Neither shall there be any partition when it is prohibited by law.

No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he
expressly or impliedly recognizes the co-ownership.

As a rule, possession by a co-owner will not be presumed to be adverse to the others, but will be held to
benefit all. It is understood that the co-owner or co-heir who is in possession of an inheritance pro-
indiviso for himself and in representation of his co-owners or co-heirs, if, as such owner, he administers
or takes care of the rest thereof with the obligation of delivering it to his co-owners or co-heirs, is under
the same situation as a depository, a lessee or a trustee (Bargayo v. Camumot, 40 Phil, 857; Segura v.
Segura, No. L-29320, September 19, 1988, 165 SCRA 368). Thus, an action to compel partition may be
filed at any time by any of the co-owners against the actual possessor. In other words, no prescription
shall run in favor of a co-owner against his co-owners or co-heirs so long as he expressly or impliedly
recognizes the co-ownership (Del Blanco v. Intermediate Appellate Court, No. 72694, December 1, 1987,
156 SCRA 55).
However, from the moment one of the co-owners claims that he is the absolute and exclusive owner of
the properties and denies the others any share therein, the question involved is no longer one of
partition but of ownership (De Castro v. Echarri, 20 Phil. 23; Bargayo v. Camumot, supra; De los Santos v.
Santa Teresa, 44 Phil. 811). In such case, the imprescriptibility of the action for partition can no longer
be invoked or applied when one of the co-owners has adversely possessed the property as exclusive
owner for a period sufficient to vest ownership by prescription.

It is settled that possession by a co-owner or co-heir is that of a trustee. In order that such possession is
considered adverse to the cestui que trust amounting to a repudiation of the co-ownership, the
following elements must concur: 1) that the trustee has performed unequivocal acts amounting to an
ouster of the cestui que trust; 2) that such positive acts of repudiation had been made known to the
cestui que trust; and 3) that the evidence thereon should be clear and conclusive (Valdez v. Olorga, No.
L-22571, May 25, 1973, 51 SCRA 71; Pangan v. Court of Appeals, No. L-39299, October 18, 1988, 166
SCRA 375).

We have held that when a co-owner of the property in question executed a deed of partition and on the
strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance
of a new one wherein he appears as the new owner of the property, thereby in effect denying or
repudiating the ownership of the other co-owners over their shares, the statute of limitations started to
run for the purposes of the action instituted by the latter seeking a declaration of the existence of the
co-ownership and of their rights thereunder (Castillo v. Court of Appeals, No. L-18046, March 31, 1964,
10 SCRA 549). Since an action for reconveyance of land based on implied or constructive trust prescribes
after ten (10) years, it is from the date of the issuance of such title that the effective assertion of adverse
title for purposes of the statute of limitations is counted (Jaramil v. Court of Appeals, No. L-31858,
August 31, 1977, 78 SCRA 420).

Evidence shows that TCT No. 2744 in the name of the legal heirs of Lino Delima, represented by Galileo
Delima, was cancelled by virtue of an affidavit executed by Galileo Delima and that on February 4, 1954,
Galileo Delima obtained the issuance of a new title in Ms name numbered TCT No. 3009 to the exclusion
of his co-heirs. The issuance of this new title constituted an open and clear repudiation of the trust or
co-ownership, and the lapse of ten (10) years of adverse possession by Galileo Delima from February 4,
1954 was sufficient to vest title in him by prescription. As the certificate of title was notice to the whole
world of his exclusive title to the land, such rejection was binding on the other heirs and started as
against them the period of prescription. Hence, when petitioners filed their action for reconveyance
and/or to compel partition on February 29, 1968, such action was already barred by prescription.
Whatever claims the other co-heirs could have validly asserted before can no longer be invoked by them
at this time.

ACCORDINGLY, the petition is hereby DENIED and the assailed decision of the Court of Appeals dated
May 19, 1977 is AFFIRMED.

SO ORDERED.
ARTURIO TRINIDAD, petitioner, vs. COURT OF APPEALS, respondent.
G.R. No. 118904 April 20, 1998

Facts:

Patricio Trinidad and Anastacia Briones were the parents of three (3) children, namely, Inocentes,
Lourdes and Felix. When Patricio died in 1940, survived by the above named children, he left four (4)
parcels of land, all situated at Barrio Tigayon, Kalibo Aklan.

Arturio Trinidad, born on July 21, 1943, claimed to be the legitimate son of the late Inocentes Trinidad.
Sometime after the marriage, he demanded from the defendants to partition the land into three equal
shares and to give him the (1/3) individual share of his late father, but the defendants refused.

Arturio Trinidad filed, an action for partition of four parcels of land. Defendants denied that plaintiff was
the son of the late Inocentes Trinidad. Defendants contended that Inocentes was single when he died in
1941, before plaintiffs birth. Defendants also denied that plaintiff had lived with them, and claimed that
the parcels of land described in the complaint had been in their possession since the death of their
father in 1940 and that they had not given plaintiff a share in the produce of the land.

Arturio presented witnesses to prove his position. Jovita Gerardo testified that Inocentes Trinidad and
Felicidad Molato are the parents of Arturio; that Felix and Lourdes as the uncle and aunt of Arturio; and
also identified pictures where the respondents were with Arturio and his family.(At this stage of the
trial, Felix Trinidad [died] without issue and he was survived by his only sister, Lourdes Trinidad.)
Another witness, ISABEL MEREN, 72 years old and a widow testified that she knows Inocentes Trinidad
as the father of Arturio Trinidad; that she knew Inocentes Trinidad and Felicidad Molato as the parents
of Arturio and that she was present when they were married in New Washington, Aklan, by a protestant
pastor by the name of Lauriano Lajaylajay. She further testified that upon the death of Inocentes,
Lourdes took Arturio and cared for him. ARTURIO TRINIDAD, himself, was presented as witness. As proof
that he is the son of Inocentes Trinidad and Felicidad Molato, he showed a certificate of baptism, and a
certificate of loss issued by the LCR that his birth certificate was burned during World War 2. He also
testified that he lived with Felix and Lourdes and provided for his needs.

On the other hand, defendants presented Pedro Briones who testified that Inocentes was not married
when he died in 1940s. Lourdes Trinidad also testified that she was not aware that his brother married
anybody and denied that Arturio lived with them. Beatriz Sayon also testified that Inocentes died in
1941, and that Felicidad Molato had never been married to Inocentes. The trial court rendered a
twenty-page decision in favor of Arturio. The CA reversed the decision.

Issue:

Whether or not the petitioner presented sufficient evidence of his parents marriage and his filation.

Ruling:
The partition of the late Patricios real properties requires preponderant proof that petitioner is a co-
owner or co-heir of the decedents estate. His right as a co-owner would, in turn, depend on whether he
was born during the existence of a valid and subsisting marriage between his mother (Felicidad) and his
putative father (Inocentes).

When the question of whether a marriage has been contracted arises in litigation, said marriage may be
proven by relevant evidence. To prove the fact of marriage, the following would constitute competent
evidence: the testimony of a witness to the matrimony, the couples public and open cohabitation as
husband and wife after the alleged wedlock, the birth and the baptismal certificates of children born
during such union, and the mention of such nuptial in subsequent documents.

In the case at bar, petitioner secured a certification from the Office of the Civil Registrar of Aklan that all
records of births, deaths and marriages were lost, burned or destroyed during the Japanese occupation
of said municipality. Although the marriage contract is considered the primary evidence of the marital
union, petitioners failure to present it is not proof that no marriage took place, as other forms of
relevant evidence may take its place. In place of a marriage contract, two witnesses were presented by
petitioner: Isabel Meren and Jovita Gerardo. It further gives rise to the disputable presumption that a
man and a woman deporting themselves as husband and wife have entered into a lawful contract of
marriage. Petitioner also presented his baptismal certificate in which Inocentes and Felicidad were
named as the childs father and mother, and family pictures.

The totality of petitioners positive evidence clearly preponderates over private respondents self-
serving negations.

WHEREFORE, the petition is GRANTED and the assailed Decision and Resolution are REVERSED and SET
ASIDE. The trial courts decision is REINSTATED.

G.R. No. 118904 April 20, 1998

ARTURIO TRINIDAD, petitioner,

vs.
COURT OF APPEALS, FELIX TRINIDAD (deceased) and LOURDES TRINIDAD, respondents.

PANGANIBAN, J.:

In the absence of a marriage contract and a birth certificate, how may marriage and filiation be proven?

The Case

This is the main question raised in this petition for review on certiorari challenging the Court of
Appeals 1 Decision promulgated December 1, 19942 and Resolution promulgated on February 8,
19953 in CA-GR CV No. 23275, which reversed the decision of the trial court and dismissed petitioner's
action for partition and damages.

On August 10, 1975, Petitioner Arturio Trinidad filed a complaint 4 for partition and damages against
Private Respondents Felix and Lourdes, both surnamed Trinidad, before the Court of First Instance of
Aklan, Branch I. 5 On October 25, 1982, Felix died without issue, so he was not substituted as a party.6

On July 4, 1989, the trial court rendered a twenty-page decision 7 in favor of the petitioner, in which it
ruled:8

Considering therefore that this court is of the opinion that plaintiff is the legitimate son of Inocentes
Trinidad, plaintiff is entitled to inherit the property left by his deceased father which is 1/3 of the 4
parcels of land subject matter of this case. Although the plaintiff had testified that he had been receiving
[his] share from said land before and the same was stopped, there was no evidence introduced as to
what year he stopped receiving his share and for how much. This court therefore cannot rule on that.

In its four-page Decision, Respondent Court reversed the trial court on the ground that petitioner failed
to adduce sufficient evidence to prove that his parents were legally married to each other and that
acquisitive prescription against him had set in. The assailed Decision disposed:9

WHEREFORE, the Court REVERSES the appealed decision.

In lieu thereof, the Court hereby DISMISSES the [petitioner's] complaint and the counterclaim thereto.

Without costs.

Respondent Court denied reconsideration in its impugned Resolution which reads: 10

The Court DENIES defendants-appellants' motion for reconsideration, dated December 15, 1994, for lack
of merit. There are no new or substantial matters raised in the motion that merit the modification of the
decision.

Hence, this petition. 11

The Facts

The assailed Decision recites the factual background of this case, as follows: 12

On August 10, 1978, plaintiff [herein petitioner] filed with the Court of First Instance of Aklan, Kalibo,
Aklan, an action for partition of four (4) parcels of land, described therein, claiming that he was the son
of the late Inocentes Trinidad, one of three (3) children of Patricio Trinidad, who was the original owner
of the parcels of land. Patricio Trinidad died in 1940, leaving the four (4) parcels of land to his three (3)
children, Inocentes, Lourdes and Felix. In 1970, plaintiff demanded from the defendants to partition the
land into three (3) equal shares and to give him the one-third (1/3) individual share of his late father, but
the defendants refused.
In their answer, filed on September 07, 1978, defendants denied that plaintiff was the son of the late
Inocentes Trinidad. Defendants contended that Inocentes was single when he died in 1941 , before
plaintiff's birth. Defendants also denied that plaintiff had lived with them, and claimed that the parcels
of land described in the complaint had been in their possession since the death of their father in 1940
and that they had not given plaintiff a share in the produce of the land.

Patricio Trinidad and Anastacia Briones were the parents of three (3) children, namely, Inocentes,
Lourdes and Felix. When Patricio died in 1940, survived by the above named children, he left four (4)
parcels of land, all situated at Barrio Tigayon, Kalibo Aklan.

Arturio Trinidad, born on July 21, 1943, claimed to be the legitimate son of the late Inocentes Trinidad.

Arturio got married in 1966 to Candelaria Gaspar, at the age of twenty three (23). Sometime after the
marriage, Arturio demanded from the defendants that the above-mentioned parcels of land be
partitioned into three (3) equal shares and that he be given the one-third (1/3) individual shares of his
late father, but defendants refused.

In order to appreciate more clearly the evidence adduced by both parties, this Court hereby reproduces
pertinent portions of the trial court's decision: 13

EVIDENCE FOR THE PLAINTIFF:

Plaintiff presented as his first witness, Jovita Gerardo, 77 years old, (at the time she testified in 1981)
who is the barangay captain of barrio Tigayon, Kalibo, Aklan, since 1972. She testified that before being
elected as barrio captain she held the position of barrio council-woman for 4 years. Also she was [a
member of the] board of director[s] of the Parent-Teachers Association of Tigayon, Kalibo, Aklan. That
she knows the plaintiff because they are neighbors and she knows him from the time of his birth. She
knows the father of the plaintiff as Inocentes Trinidad and his mother Felicidad Molato; both were
already dead, Inocentes having died in 1944 and his wife died very much later. Witness recalls plaintiff
was born in 1943 in Barrio Tigayon, Kalibo, Aklan, on July 21, 1943. At the time of the birth of the
plaintiff, the house of the witness was about 30 meters away from plaintiff's parents['] house and she
used to go there 2 or 3 times a week. That she knows both the defendants as they are also neighbors.
That both Felix and Lourdes Trinidad are the uncle and aunt of Arturio because Inocentes Trinidad who
is the father of the plaintiff is the brother of the defendants, Felix and Lourdes Trinidad. She testified she
also knows that the father of Inocentes, Felix and Lourdes[,] all surnamed Trinidad[,] was Patricio
Trinidad who is already dead but left several parcels of land which are the 4 parcels subject of this
litigation. That she knows all these [parcels of] land because they are located in Barrio Tigayon.

When asked about the adjoining owners or boundaries of the 4 parcels of land, witness answered and
mentioned the respective adjoining owners. That she knew these 4 parcels belonged to Patricio Trinidad
because said Patricio Trinidad was a native also of Barrio Tigayon. Said Patricio died before the [war] and
after his death the land went to his 3 children, namely: Inocentes, Felix and Lourdes. Since then the land
was never partitioned or divided among the 3 children of Patricio.
A picture, Exhibit A, was shown to the witness for identification and she identified a woman in the
picture as the defendant, Lourdes Trinidad. A man with a hat holding a baby was identified by her as
Felix Trinidad, the defendant. The other woman in the picture was pointed by the witness as the wife of
the plaintiff, Arturio Trinidad. When asked if Arturio Trinidad and Lourdes Trinidad and Felix Trinidad
pointed to by her in the picture are the same Arturio, Felix and Lourdes, who are the plaintiff and the
defendants in this case, witness answered yes.

Another picture marked as Exhibit B was presented to the witness for identification. She testified the
woman in this picture as Lourdes Trinidad. In said picture, Lourdes Trinidad was holding a child which
witness identified as the child Arturio Trinidad. When asked by the court when . . . the picture [was]
taken, counsel for the plaintiff answered, in 1966. When asked if Arturio Trinidad was baptized, witness
answered yes, as she had gone to the house of his parents. Witness then identified the certificate of
baptism marked as Exhibit C. The name Arturio Trinidad was marked as Exhibit C-1 and the name of
Inocentes Trinidad and Felicidad Molato as father and mother respectively, were marked as Exhibit C-2.
The date of birth being July 21, 1943 was also marked. The signature of Monsignor Iturralde was also
identified.

On cross-examination, witness testified that she [knew] the land in question very well as she used to
pass by it always. It was located just near her house but she cannot exactly tell the area as she merely
passes by it. When asked if she [knew] the photographer who took the pictures presented as Exhibit A
and B, witness answered she does not know as she was not present during the picture taking. However,
she can identify everybody in the picture as she knows all of them.

At this stage of the trial, Felix Trinidad [died] without issue and he was survived by his only sister,
Lourdes Trinidad, who is his co-defendant in this case.

Next witness for the plaintiff was ISABEL MEREN who was 72 years old and a widow. She testified having
known Inocentes Trinidad as the father of Arturio Trinidad and that Inocentes, Felix and Lourdes are
brothers and sister and that their father was Patricio Trinidad who left them 4 parcels of land. That she
knew Inocentes Trinidad and Felicidad Molato who are the parents of Arturio, the plaintiff, were
married in New Washington, Aklan, by a protestant pastor by the name of Lauriano Lajaylajay. That she
knows Felicidad Molato and Lourdes Trinidad very well because as a farmer she also owns a parcel of
land [and] she used to invite Felicidad and Lourdes to help her during planting and harvesting season.
That she knows that during the lifetime of Inocentes the three of them, Inocentes, Felix and Lourdes
possessed and usufructed the 4 parcels they inherited from their father, Patricio. That upon the death of
Inocentes, Lourdes Trinidad was in possession of the property without giving the widow of Inocentes
any share of the produce. As Lourdes outlived her two brothers, namely: Felix and Inocentes, she was
the one possessing and usufructing the 4 parcels of land up to the present. The witness testified that
upon the death of Inocentes, Lourdes took Arturio and cared for him when he was still small, about 3
years old, until Arturio grew up and got married. That while Arturio was growing up, he had also enjoyed
the produce of the land while he was being taken care of by Lourdes Trinidad. That a misunderstanding
later on arose when Arturio Trinidad wanted to get his father's share but Lourdes Trinidad will not give it
to him.
Plaintiff, ARTURIO TRINIDAD, himself, was presented as witness. He testified that defendants, Lourdes
and Felix Trinidad, are his aunt and uncle, they being the brother and sister of his father. That the
parents of his father and the defendants were Patricio Trinidad and Anastacia Briones. That both his
father, Inocentes Trinidad, and mother, Felicidad Molato, were already dead having died in Tigayon, his
father having died in 1944 and his mother about 25 years ago.

As proof that he is the son of Inocentes Trinidad and Felicidad Molato, he showed a certificate of
baptism which had been previously marked as Exhibit C. That his birth certificate was burned during
World War 2 hut he has a certificate of loss issued by the Civil Registrar of Kalibo, Aklan.

When he was 14 years old, the defendants invited him to live with them being their nephew as his
mother was already dead. Plaintiff's mother died when he was 13 years old. They treated him well and
provided for all his needs. He lived with defendants for 5 years. At the age of 19, he left the house of the
defendants and lived on his own. He got married at 23 to Candelaria Gaspar and then they were invited
by the defendants to live with them. So he and his wife and children lived with the defendants. As proof
that he and his family lived with the defendants when the latter invited him to live with them, he
presented a picture previously marked as Exhibit B where there appears his aunt, Lourdes Trinidad,
carrying plaintiff's daughter, his uncle and his wife. In short, it is a family picture according to him.
Another family picture previously marked Exhibit A shows his uncle, defendant Felix Trinidad, carrying
plaintiff's son. According to him, these 2 pictures were taken when he and his wife and children were
living with the defendants. That a few years after having lived with them, the defendants made them
vacate the house for he requested for partition of the land to get his share. He moved out and looked
for [a] lawyer to handle his case. He testified there are 4 parcels of land in controversy of which parcel 1
is an upland.

Parcel 1 is 1,000 square meters, [has] 10 coconut trees and fruit bearing. The harvest is 100 coconuts
every 4 months and the cost of coconuts is P2.00 each. The boundaries are: East-Federico Inocencio;
West-Teodulo Dionesio; North-Teodulo Dionesio; and South-Bulalio Briones; located at Tigayon.

Parcel 2 is an upland with an area of 500 square meters; it has only 1 coconut tree and 1 bamboo
groove; also located in Tigayon, Kalibo, Aklan. Adjoining owners are: East-Ambrosio Trinidad; North-
Federico Inocencio, West-Patricio Trinidad and South-Gregorio Briones.

Parcel 3 is about 12,000 square meters and 1/4 of that belongs to Patricio Trinidad, the deceased father
of the defendants and Inocentes, the father of the plaintiff.

Parcel 4 is a riceland with an area of 5,000 square meters. The harvest is 40 cavans two times a years
[sic]. Adjoining owners are: East-Gregorio Briones; West-Bulalio Briones; South-Federico Inocencio and
North-Digna Carpio.

Parcel 1 is Lot No. 903.

Parcel 2 is Lot No. 864 of the cadastral survey of Kalibo and only Lot 864-A with an area of 540 square
meters is the subject of litigation.
Parcel 3 is Lot No. 979 of the cadastral survey of Kalibo covered by Tax Decl. No. 703310 with reference
to one of the owners of the land, Patricio Trinidad married to Anastacia Briones, one-half share.

Parcel 4 is covered by Original Certificate of Title No. 22502 RO-174 covering Lot No. 863 of the cadastral
survey of Kalibo. The title is in the name of Patricio Trinidad married to Anastacia Briones.

Parcel 1 is covered by Tax Decl. No. 11609 in the name of Patricio Trinidad while parcel 2 is covered by
Tax Decl. No. 10626 in the name of Anastacia Briones and another Tax Declaration No. 11637 for Parcel
3 in the name of Ambrosio Trinidad while Parcel 4 is covered by Tax Decl. No. 16378 in the name of
Patricio Trinidad.

On cross-examination, plaintiff testified that during the lifetime of his mother they were getting the
share in the produce of the land like coconuts, palay and corn. Plaintiff further testified that his father is
Inocentes Trinidad and his mother was Felicidad Molato. They were married in New Washington, Aklan,
by a certain Atty. Lajaylajay. When asked if this Atty. Lajaylajay is a municipal judge of New Washington,
Aklan, plaintiff answered he does not know because he was not yet born at that time. That he does not
have the death certificate of his father who died in 1944 because it was wartime. That after the death of
his father, he lived with his mother and when his mother died[,] he lived with his aunt and uncle, the
defendants in this case. That during the lifetime of his mother, it was his mother receiving the share of
the produce of the land. That both defendants, namely Lourdes and Felix Trinidad, are single and they
have no other nephews and nieces. That [petitioner's] highest educational attainment is Grade 3.

EVIDENCE FOR THE DEFENDANTS:

First witness for the defendants was PEDRO BRIONES, 68 years old, unemployed and a resident of
Nalook, Kalibo, Aklan. He testified having known the defendants, Felix and Lourdes Trinidad. They being
his first cousins because the mother of Lourdes and Felix by the name of Anastacia Briones and his
father are sister and brother. That he also knew Inocentes Trinidad being the brother of Felix and
Lourdes and he is already dead. According to the witness, Inocentes Trinidad [died] in 1940 and at the
time of his death Inocentes Trinidad was not married. That he knew this fact because at the time of the
death of Inocentes Trinidad he was then residing with his aunt, "Nanay Taya", referring to Anastacia
Briones who is mother of the defendants, Felix and Lourdes Trinidad, as well as Inocentes Trinidad. That
at the time of the death of Inocentes Trinidad, according to this witness he stayed with his aunt,
Anastacia Trinidad, and with his children before 1940 for only 3 months. When asked if he knew
Inocentes Trinidad cohabited with anybody before his death, he answered, "That I do not know", neither
does he kn[o]w a person by the name of Felicidad Molato. Furthermore, when asked if he can recall if
during the lifetime of Inocentes Trinidad witness knew of anybody with whom said Inocentes Trinidad
had lived as husband and wife, witness, Pedro Briones, answered that he could not recall because he
was then in Manila working. That after the war, he had gone back to the house of his aunt, Anastacia, at
Tigayon, Kalibo, as he always visit[s] her every Sunday, however, he does not know the plaintiff, Arturio
Trinidad. When asked if after the death of Inocentes Trinidad, he knew anybody who has stayed with
the defendants who claimed to be a son of Inocentes Trinidad, witness, Pedro Briones, answered: "I do
not know about that."
On cross examination, witness testified that although he was born in Tigayon, Kalibo, Aklan, he stated to
reside in Nalook, Kalibo, as the hereditary property of their father was located there. When asked if he
was aware of the 4 parcels of land which is the subject matter of this case before the court, witness
answered that he does not know. What he knew is that among the 3 children of Patricio Trinidad,
Inocentes is the eldest. And that at the time of the death of Inocentes in 1940, according to the witness
when cross examined, Inocentes Trinidad was around 65 years old. That according to him, his aunt,
Anastacia Briones, was already dead before the war. When asked on cross examination if he knew
where Inocentes Trinidad was buried when he died in 1940, witness answered that he was buried in
their own land because the Japanese forces were roaming around the place. When confronted with
Exhibit A which is the alleged family picture of the plaintiff and the defendants, witness was able to
identify the lady in the picture, which had been marked as Exhibit A-1, as Lourdes Trinidad, and the man
wearing a hat on the said picture marked as Exhibit 2-A is Felix Trinidad. However, when asked if he
knew the plaintiff, Arturio Trinidad, he said he does not know him.

Next witness for the defendants was the defendant herself, LOURDES TRINIDAD. She stated that she is
75 years old, single and jobless. She testified that Inocentes Trinidad was her brother and he is already
dead and he died in 1941 in Tigayon, Kalibo, Aklan. That before the death of her brother, Inocentes
Trinidad, he had gone to Manila where he stayed for a long time and returned to Tigayon in 1941.
According to her, upon arrival from Manila in 1941 his brother, Inocentes Trinidad, lived only for 15 days
before he died. While his brother was in Manila, witness testified she was not aware that he had
married anybody. Likewise, when he arrived in Tigayon in 1941, he also did [not] get married. When
asked if she knew one by the name of Felicidad Molato, witness answered she knew her because
Felicidad Molato was staying in Tigayon. However, according to her[,] she does not kn[o]w if her
brother, Inocentes Trinidad, had lived with Felicidad Molato as husband and wife. When asked if she
knew the plaintiff, Arturio Trinidad, she said, "Yes," but she denied that Arturio Trinidad had lived with
them. According to the witness, Arturio Trinidad did not live with the defendants but he stayed with his
grandmother by the name of Maria Concepcion, his mother, Felicidad Molato, having died already.
When asked by the court if there had been an instance when the plaintiff had lived with her even for
days, witness answered, he did not. When further asked if Arturio Trinidad went to visit her in her
house, witness also said, "He did not."

Upon cross examination by counsel for the plaintiff, Lourdes Trinidad testified that her parents,
Anastacia Briones and Patricio Trinidad, had 3 children, namely: Inocentes Trinidad, Felix Trinidad and
herself. But inasmuch as Felix and Inocentes are already dead, she is the only remaining daughter of the
spouses Patricio Trinidad and Anastacia Briones. Defendant, Lourdes Trinidad, testified that her brother,
Felix Trinidad, died without a wife and children, in the same manner that her brother, Inocentes
Trinidad, died without a wife and children. She herself testified that she does not have any family of her
own for she has [no] husband or children. According to her[,] when Inocentes Trinidad [died] in 1941,
they buried him in their private lot in Tigayon because nobody will carry his coffin as it was wartime and
the municipality of Kalibo was occupied by the Japanese forces. When further cross-examined that I[t]
could not be true that Inocentes Trinidad died in March 1941 because the war broke out in December
1941 and March 1941 was still peace time, the witness could not answer the question. When she was
presented with Exhibit A which is the alleged family picture wherein she was holding was [sic] the child
of Arturio Trinidad, she answered; "Yes." and the child that she is holding is Clarita Trinidad, child of
Arturio Trinidad. According to her, she was only requested to hold this child to be brought to the church
because she will be baptized and that the baptism took place in the parish church of Kalibo. When asked
if there was a party, she answered; "Maybe there was." When confronted with Exhibit A-1 which is
herself in the picture carrying the child, witness identified herself and explained that she was requested
to bring the child to the church and that the picture taken together with her brother and Arturio
Trinidad and the latter's child was taken during the time when she and Arturio Trinidad did not have a
case in court yet. She likewise identified the man with a hat holding a child marked as Exhibit A-2 as her
brother, Felix. When asked if the child being carried by her brother, Felix Trinidad, is another child of the
plaintiff, witness answered she does not know because her eyes are already blurred. Furthermore, when
asked to identify the woman in the picture who was at the right of the child held by her brother, Felix,
and who was previously identified by plaintiff, Arturio Trinidad, as his wife, witness answered that she
cannot identify because she had a poor eyesight neither can she identify plaintiff, Arturio Trinidad,
holding another child in the picture for the same reason. When asked by counsel for the plaintiff if she
knows that the one who took this picture was the son of Ambrosio Trinidad by the name of Julito
Trinidad who was also their cousin, witness testified that she does not know.

Third witness for the defendants was BEATRIZ TRINIDAD SAYON who testified that she knew Arturio
Trinidad because he was her neighbor in Tigayon. In the same manner that she also knew the
defendants, Felix and Lourdes, and Inocentes all surnamed Trinidad because they were her cousins. She
testified that a few months after the war broke out Inocentes Trinidad died in their lola's house whose
names was Eugenia Rufo Trinidad. She further testified that Inocentes Trinidad had lived almost in his
lifetime in Manila and he went home only when his father fetched him in Manila because he was already
sick. That according to her, about 1 1/2 months after his arrival from Manila, Inocentes Trinidad died.
She also testified that she knew Felicidad Molato and that Felicidad Molato had never been married to
Inocentes Trinidad. According to her, it was in 1941 when Inocentes Trinidad died. According to her she
was horn in 1928, therefore, she was 13 or 14 years old when the war broke out. When asked if she can
remember that it was only in the early months of the year 1943 when the Japanese occupied Kalibo, she
said she [was] not sure. She further testified that Inocentes Trinidad was buried in their private lot
because Kalibo was then occupied by the Japanese forces and nobody would carry his body to be buried
in the Poblacion.

For rebuttal evidence, [petitioner] presented ISABEL MEREN, who was 76 years old and a resident of
Tigayon. Rebuttal witness testified that . . . she knew both the [petitioner] and the [private respondents]
in this case very well as her house is only around 200 meters from them. When asked if it is true that
according to Lourdes Trinidad, [Inocentes Trinidad] arrived from Manila in 1941 and he lived only for 15
days and died, witness testified that he did not die in that year because he died in the year 1944, and
that Inocentes Trinidad lived with his sister, Lourdes Trinidad, in a house which is only across the street
from her house. According to the said rebuttal witness, it is not true that Inocentes Trinidad died single
because he had a wife by the name of Felicidad Molato whom he married on May 5, 1942 in New
Washington, Aklan. That she knew this fact because she was personally present when couple was
married by Lauriano Lajaylajay, a protestant pastor.

On cross examination, rebuttal witness testified that when Inocentes Trinidad arrived from Manila he
was in good physical condition. That she knew both Inocentes Trinidad and Felicidad Molato to be
Catholics but that according to her, their marriage was solemnized by a Protestant minister and she was
one of the sponsors. That during the marriage of Inocentes Trinidad and Felicidad Molato, Lourdes
Trinidad and Felix Trinidad were also present.

When plaintiff, ARTURIO TRINIDAD, was presented as rebuttal witness, he was not able to present a
marriage contract of his parents but instead a certification dated September 5, 1978 issued by one
Remedios Eleserio of the Local Civil Registrar of the Municipality of New Washington, Aklan, attesting to
the fact that records of births, deaths, and marriages in the municipality of New Washington were
destroyed during the Japanese time.

Respondent Court's Ruling

In finding that petitioner was not a child, legitimate or otherwise, of the late Inocentes Trinidad,
Respondent Court ruled: 14

We sustain the appeal on the ground that plaintiff has not adduced sufficient evidence to prove that he
is the son of the late Inocentes Trinidad. But the action to claim legitimacy has not prescribed.

Plaintiff has not established that he was recognized, as a legitimate son of the late Inocentes Trinidad, in
the record of birth or a final judgment, in a public document or a private handwritten instrument, or
that he was in continuous possession of the status of a legitimate child.

Two witnesses, Pedro Briones and Beatriz Trinidad Sayon, testified for the defendants that Inocentes
Trinidad never married. He died single in 1941. One witness, Isabel Maren, testified in rebuttal for the
plaintiff, that Inocentes Trinidad married Felicidad Molato in New Washington, Aklan, on May 5, 1942,
solemnized by a pastor of the protestant church and that she attended the wedding ceremony (t.s.n.
Sept. 6, 1988, p. 4). Hence, there was no preponderant evidence of the marriage, nor of Inocentes'
acknowledgment of plaintiff as his son, who was born on July 21, 1943.

The right to demand partition does not prescribe (de Castro vs. Echarri, 20 Phil. 23). Where one of the
interested parties openly and adversely occupies the property without recognizing the co-ownership
(Cordova vs. Cordova, L-9936, January 14, 1958) acquisitive prescription may set in (Florenz D. Regalado,
Remedial Law Compendium, Vol. I, Fifth Revised Edition, 1988, p. 497). Admittedly, the defendants have
been in possession of the parcels of land involved in the concept of owners since their father died in
1940. Even if possession be counted from 1964, when plaintiff attained the age of majority, still,
defendants possessed the land for more than ten (10) years, thus acquiring ownership of the same by
acquisitive prescription (Article 1134, Civil Code of the Philippines).

The Issues
Petitioner submits the following issues for resolution: 15

1. Whether or not petitioner (plaintiff-appellee) has proven by preponderant evidence the marriage of
his parents.

2. Whether or not petitioner (plaintiff-appellee) has adduced sufficient evidence to prove that he is the
son of the late Inocentes Trinidad, brother of private respondents (defendants-appellants) Felix and
Lourdes Trinidad.

3. Whether or not the Family Code is applicable to the case at bar[,] the decision of the Regional Trial
Court having been promulgated on July 4, 1989, after the Family Code became effective on August 3,
1988.

4. Whether or not petitioner's status as a legitimate child can be attached collaterally by the private
respondents.

5. Whether or not of private respondent (defendants-appellants) have acquired ownership of the

properties in question by acquisitive prescription.

Simply stated, the main issues raised in this petition are:

1. Did petitioner present sufficient evidence of his parents' marriage and of his filiation?

2. Was petitioner's status as a legitimate child subject to collateral attack in the action for partition?

3. Was his claim time-barred under the rules on acquisitive prescription?

The Court's Ruling

The merits of this petition are patent. The partition of the late Patricio's real properties requires
preponderant proof that petitioner is a co-owner or co-heir of the decedent's estate. 16 His right as a
co-owner would, in turn, depend on whether he was born during the existence of a valid and subsisting
marriage between his mother (Felicidad) and his putative father (Inocentes). This Court holds that such
burden was successfully discharged by petitioner and, thus, the reversal of the assailed Decision and
Resolution is inevitable.

First and Second Issues: Evidence of and Collateral Attack on Filiation

At the outset, we stress that an appellate court's assessment of the evidence presented by the parties
will not, as a rule, be disturbed because the Supreme Court is not a trier of facts. But in the face of the
contradictory conclusions of the appellate and the trial courts, such rule does not apply here. So, we had
to meticulously pore over the records and the evidence adduced in this case. 17

Petitioner's first burden is to prove that Inocentes and his mother (Felicidad) were validly married, and
that he was born during the subsistence of their marriage. This, according to Respondent Court, he
failed to accomplish.
This Court disagrees. Pugeda vs. Trias 18 ruled that when the question of whether a marriage has been
contracted arises in litigation, said marriage may be proven by relevant evidence. To prove the fact of
marriage, the following would constitute competent evidence: the testimony of a witness to the
matrimony, the couple's public and open cohabitation as husband and wife after the alleged wedlock,
the birth and the baptismal certificates of children born during such union, and the mention of such
nuptial in subsequent documents. 19

In the case at bar, petitioner secured a certification 20 from the Office of the Civil Registrar of Aklan that
all records of births, deaths and marriages were either lost, burned or destroyed during the Japanese
occupation of said municipality. This fact, however, is not fatal to petitioner's case. Although the
marriage contract is considered the primary evidence of the marital union, petitioner's failure to present
it is not proof that no marriage took place, as other forms of relevant evidence may take its place. 21

In place of a marriage contract, two witnesses were presented by petitioner: Isabel Meren, who testified
that she was present during the nuptial of Felicidad and Inocentes on May 5, 1942 in New Washington,
Aklan; and Jovita Gerardo, who testified that the couple deported themselves as husband and wife after
the marriage. Gerardo, the 77-year old barangay captain of Tigayon and former board member of the
local parent-teachers' association, used to visit Inocentes and Felicidad's house twice or thrice a week,
as she lived only thirty meters away.22 On July 21, 1943, Gerardo dropped by Inocentes' house when
Felicidad gave birth to petitioner. She also attended petitioner's baptismal party held at the same
house. 23 Her testimony constitutes evidence of common reputation respecting marriage. 24 It further
gives rise to the disputable presumption that a man and a woman deporting themselves as husband and
wife have entered into a lawful contract of marriage. 25 Petitioner also presented his baptismal
certificate (Exhibit C) in which Inocentes and Felicidad were named as the child's father and mother. 26

On the other hand, filiation may be proven by the following:

Art. 265. The filiation of legitimate children is proved by the record of birth appearing in the Civil
Register, or by an authentic document or a final judgment.

Art. 266. In the absence of the titles indicated in the preceding article, the filiation shall be proved by the
continuous possession of status of a legitimate child.

Art. 267. In the absence of a record of birth, authentic document, final judgment or possession of status,
legitimate filiation may be proved by any other means allowed by the Rules of Court and special laws. 27

Petitioner submitted in evidence a certification 28 that records relative to his birth were either
destroyed during the last world war or burned when the old town hall was razed to the ground on June
17, 1956. To prove his filiation, he presented in evidence two family pictures, his baptismal certificate
and Gerardo's testimony.

The first family picture (Exhibit A) shows petitioner (Exhibit A-5) carrying his second daughter and his
wife (Exhibit A-4) together with the late Felix Trinidad (Exhibit A-2) carrying petitioner's first daughter,
and Lourdes Trinidad (Exhibit A-1). Exhibit B is another picture showing Lourdes Trinidad (Exhibit B-1)
carrying petitioner's first child (Exhibit B-2). These pictures were taken before the case was instituted.
Although they do not directly prove petitioner's filiation to Inocentes, they show that petitioner was
accepted by the private respondents as Inocentes' legitimate son ante litem motam.

Lourdes' denials of these pictures are hollow and evasive. While she admitted that Exhibit B shows her
holding Clarita Trinidad, the petitioner's daughter, she demurred that she did so only because she was
requested to carry the child before she was baptized. 29 When shown Exhibit A, she recognized her late
brother but not petitioner, his wife and the couple's children slyly explaining that she could not
clearly see because of an alleged eye defect. 30

Although a baptismal certificate is indeed not a conclusive proof of filiation, it is one of "the other means
allowed under the Rules of Court and special laws" to show pedigree, as this Court ruled in Mendoza
vs. Court of Appeals: 31

What both the trial court and the respondent court did not take into account is that an illegitimate child
is allowed to establish his claimed filiation by "any other means allowed by the Rules of Court and
special laws," according to the Civil Code, or "by evidence of proof in his favor that the defendant is her
father," according to the Family Code. Such evidence may consist of his baptismal certificate, a judicial
admission, a family Bible in which his name has been entered, common reputation respecting his
pedigree, admission by silence, the testimony of witnesses, and other kinds of proof admissible under
Rule 130 of the Rules of Court. [Justice Alicia Sempio-Diy, Handbook on the Family Code of the Phil. 1988
ed., p. 246]

Concededly, because Gerardo was not shown to be a member of the Trinidad family by either
consanguinity or affinity, 32 her testimony does not constitute family reputation regarding pedigree.
Hence, it cannot, by itself, be used to establish petitioner's legitimacy.

Be that as it may, the totality of petitioner's positive evidence clearly preponderates over private
respondents' self-serving negations. In sum, private respondents' thesis is that Inocentes died unwed
and without issue in March 1941. Private respondents' witness, Pedro Briones, testified that Inocentes
died in 1940 and was buried in the estate of the Trinidads, because nobody was willing to carry the
coffin to the cemetery in Kalibo, which was then occupied by the Japanese forces. His testimony,
however, is far from credible because he stayed with the Trinidads for only three months, and his
answers on direct examination were noncommittal and evasive: 33

Q: At the time of his death, can you tell the Court if this Inocentes Trinidad was married or not?

A: Not married.

Q: In 1940 at the time of death of Inocentes Trinidad, where were you residing?

A: I was staying with them.

Q: When you said "them", to whom are you referring to [sic]?

A: My aunt Nanay Taya, Anastacia.

xxx xxx xxx

Q: Will you please tell the Court for how long did you stay with your aunt Anastacia Trinidad and his
children before 1940?

A: For only three months.

Q: Now, you said at the time of his death, Inocentes Trinidad was single. Do you know if he had
cohabited with anybody before his death?

A: [T]hat I do not know.

Q: You know a person by the name of Felicidad Molato?

A: No, sir.

Q: Can you recall if during the lifetime of Inocentes Trinidad if you have known of anybody with whom
he has lived as husband and wife?

A: I could not recall because I was then in Manila working.

Q: After the war, do you remember having gone back to the house of your aunt Anastacia at Tigayon,
Kalibo, Aklan?

A: Yes, sir.

Q: How often did you go to the house of your aunt?

A: Every Sunday.

xxx xxx xxx

Q: You know the plaintiff Arturio Trinidad?

A: I do not know him.

Q: After the death of Inocentes Trinidad, do you know if there was anybody who has stayed with the
defendants who claimed to be a son of Inocentes Trinidad?

A: I do not know about that.

Beatriz Sayon, the other witness of private respondent, testified, that when the Japanese occupied
Kalibo in 1941, her father brought Inocentes from Manila to Tigayon because he was sick. Inocentes
stayed with their grandmother, Eugenia Roco Trinidad, and died single and without issue in March 1941,
one and a half months after his return to Tigayon. She knew Felicidad Molato, who was also a resident
of Tigayon, but denied that Felicidad was ever married to Inocentes. 34
Taking judicial notice that World War II did not start until December 7, 1941 with the bombing of Pearl
Harbor in Hawaii, the trial court was not convinced that Inocentes dies in March 1941. 35 The Japanese
forces occupied Manila only on January 2, 1942; 36 thus, it stands to reason that Aklan was not occupied
until then. It was only then that local residents were unwilling to bury their dead in the cemetery In
Kalibo, because of the Japanese soldiers who were roaming around the area. 37

Furthermore, petitioner consistently used Inocentes' surname (Trinidad) without objection from private
respondents a presumptive proof of his status as Inocentes' legitimate child. 38

Preponderant evidence means that, as a whole, the evidence adduced by one side outweighs that of the
adverse party. 39 Compared to the detailed (even if awkwardly written) ruling of the trial court,
Respondent Court's holding that petitioner failed to prove his legitimate filiation to Inocentes is
unconvincing. In determining where the preponderance of evidence lies, a trial court may consider all
the facts and circumstances of the case, including the witnesses' manner of testifying, their intelligence,
their means and opportunity of knowing the facts to which they are testifying, the nature of the facts,
the probability or improbability of their testimony, their interest or want thereof, and their personal
credibility. 40 Applying this rule, the trial court significantly and convincingly held that the weight of
evidence was in petitioner's favor. It declared:

. . . [O]ne thing sure is the fact that plaintiff had lived with defendants enjoying the status of being their
nephew . . . before plaintiff [had] gotten married and had a family of his own where later on he started
demanding for the partition of the share of his father, Inocentes. The fact that plaintiff had so lived with
the defendants . . . is shown by the alleged family pictures, Exhibits A & B. These family pictures were
taken at a time when plaintiff had not broached the idea of getting his father's share. . . . His demand for
the partition of the share of his father provoked the ire of the defendants, thus, they disowned him as
their nephew. . . . In this case, the plaintiff enjoyed the continuous possession of a status of the child of
the alleged father by the direct acts of the defendants themselves, which status was only broken when
plaintiff demanded for the partition . . . as he was already having a family of his own. . . . .

However, the disowning by the defendant [private respondent herein], Lourdes Trinidad, of the plaintiff
[petitioner herein] being her nephew is offset by the preponderance of evidence, among them the
testimony of witness, Jovita Gerardo, who is the barrio captain. This witness was already 77 years old at
the time she testified. Said witness had no reason to favor the plaintiff. She had been a PTA officer and
the court sized her up as a civic minded person. She has nothing to gain in this case as compared to the
witness for the defendants who are either cousin or nephew of Lourdes Trinidad who stands to gain in
the case for defendant, Lourdes Trinidad, being already 75 years old, has no husband nor children. 41

Doctrinally, a collateral attack on filiation is not permitted. 42 Rather than rely on this axiom, petitioner
chose to present evidence of his filiation and of his parents' marriage. Hence, there is no more need to
rule on the application of this doctrine to petitioner's cause.

Third Issue: No Acquisitive Prescription

Respondent Court ruled that, because acquisitive prescription sets in when one of the interested parties
openly and adversely occupies the property without recognizing the co-ownership, and because private
respondents had been in possession in the concept of owners of the parcels of land in issue since
Patricio died in 1940, they acquired ownership of these parcels.

The Court disagrees. Private respondents have not acquired ownership of the property in question by
acquisitive prescription. In a co-ownership, the act of one benefits all the other co-owners, unless the
former repudiates the co-ownership.43 Thus, no prescription runs in favor of a co-owner or co-heir
against his or her co-owners or co-heirs, so long as he or she expressly or impliedly recognizes the co-
ownership.

In this particular case, it is undisputed that, prior to the action for partition, petitioner, in the concept of
a co-owner, was receiving from private respondents his share of the produce of the land in dispute. Until
such time, recognition of the co-ownership by private respondents was beyond question. There is no
evidence, either, of their repudiation, if any, of the co-ownership of petitioner's father Inocentes over
the land. Further, the titles of these pieces of land were still in their father's name. Although private
respondents had possessed these parcels openly since 1940 and had not shared with petitioner the
produce of the land during the pendency of this case, still, they manifested no repudiation of the co-
ownership. In Mariategui vs. Court of Appeals, the Court held: 44

. . . Corollarily, prescription does not run again private respondents with respect to the filing of the
action for partition so long as the heirs for whose benefit prescription is invoked, have not expressly or
impliedly repudiated the co-ownership. In the other words, prescription of an action for partition does
not lie except when the co-ownership is properly repudiated by the co-owner (Del Banco vs.
Intermediate Appellate Court, 156 SCRA 55 [1987] citing Jardin vs. Hollasco, 117 SCRA 532 [1982]).

Otherwise stated, a co-owner cannot acquire by prescription the share of the other co-owners absent a
clear repudiation of co-ownership duly communicated to the other co-owners (Mariano vs. De Vega, 148
SCRA 342 [1987]). Furthermore, an action to demand partition is imprescriptible and cannot be barred
by laches (Del Banco vs. IAC, 156 SCRA 55 (1987). On the other hand, an action for partition may be seen
to be at once an action for declaration of co-ownership and for segregation and conveyance of a
determinate portion of the property involved (Rogue vs. IAC, 165 SCRA 118 [1988]).

Considering the foregoing, Respondent Court committed reversible error in holding that petitioner's
claim over the land in dispute was time-barred.

WHEREFORE, the petition is GRANTED and the assailed Decision and Resolution are REVERSED and SET
ASIDE. The trial court's decision dated July 4, 1989 is REINSTATED. No costs.

SO ORDERED.

G.R. No. 170080 April 4, 2007

CONSOLACION Q. AUSTRIA, Petitioner,

vs.
CONSTANCIA Q. LICHAUCO, CONSUELO Q. JALANDONI, JOSE ALBERTO L. QUINTOS, RICARDO M.
QUINTOS, JR., AILEEN M. QUINTOS and TYRONE M. QUINTOS, Respondents.

DECISION

TINGA, J.:

Petitioner Consolacion Q. Austria assails the Decision1 of the Court of Appeals in C.A. G.R. CV No. 68591
dated June 21, 2005 and its Resolution2 dated October 7, 2005, which respectively affirmed the
decision3 of the Regional Trial Court of Makati City, Branch 142, dated February 14, 2000 and its
order4 dated August 7, 2000, and denied petitioners motion for reconsideration.

The facts as narrated by the Court of Appeals are as follows:

Plaintiffs-appellees Constancia Lichauco, Consuelo Jalandoni, defendants Benedicto Quintos and

Antonio Quintos, and defendant-appellant Consolacion Austria are siblings of full blood. Jose Alberto,
Ricardo, Jr., Aileen and Tyrone, all surnamed Quintos, are the nephews and niece of the defendant-
appellant.

The above-named persons are co-owners of two (2) parcels of land with an aggregate area of six
hundred sixty one (661) square meters located in Palanan, Makati City. The aforesaid parcels of land
have permanent improvements thereon which straddle both lots, namely, a residential bungalow and
two (2) units, two-storey apartments, the titles of which are registered jointly in the names of the
parties as co-owners thereof.

The plaintiffs-appellees allege that sometime in the early part of 1996, they informed defendant-
appellant of their desire to have the subject properties partitioned based on the percentage of each co-
owners respective share.

A realtor was even engaged to prepare the schemes by which the subject properties could be physically
partitioned among the co-owners. However, the defendant-appellant Austria refused to accede to any
of the schemes presented by the realtor for the physical apportionment of the subject properties
between the co-owners thereof.

Because of the refusal of the defendant-appellant Austria to partition the property, and the inability of
the co-owners to mutually agree on an arrangement acceptable to all of them, on July 1, 1997, the
plaintiffs-appellees filed a complaint with the Regional Trial Court of Makati City, Branch 142, which was
docketed as Civil Case No. 97-1485, against the defendant-appellant Austria and two other defendants
namely Benedicto Quintos and Antonio Quintos (as unwilling co-plaintiffs) for partition of the subject
property.

Within the period for filing an answer, the defendant-appellant Austria filed an Omnibus Motion to
Dismiss.
In its order dated November 10, 1997, the lower court denied the omnibus motion to dismiss of the
defendant-appellant Austria, and directed the defendants to file their answer within the remaining
period provided by the Rules.

Within the prescriptive period, the defendant-appellant Austria filed a Motion for Reconsideration of
the November 10, 1997 order, which the lower court denied in an order dated February 2, 1998.

Not satisfied, the defendant-appellant Austria filed before the Court of Appeals a Petition for certiorari
and prohibition under Rule 65 of the Revised Rules of Court which was docketed as CA-GR SP No.
46907, seeking to annul the orders of November 10, 1997 and February 2, 1998.

In a Resolution dated July 9, 1998, the Court of Appeals required the plaintiffs-appellees to comment,
and temporarily restrained the respondent judge, his agents, representatives, and other persons acting
in his behalf from proceeding with Civil Case No. 97-1485 in order that the petition may not become
moot and academic.

On November 9, 1998, the defendant-appellant Austria received a copy of the Decision dated October
30, 1998 dismissing her petition for certiorari and prohibition. The defendant-appellant Austria moved
for the reconsideration thereof.

Subsequently, on July 19, 2001, defendant-appellant Austria received a copy of the Resolution of the
Court of Appeals dated July 9, 2001, denying her motion for reconsideration of the decision denying her
petition for certiorari and prohibition.

Undaunted, the defendant-appellant Austria then filed a petition for review under Rule 45 of the
Revised Rules of Court with the Supreme Court.

In a resolution dated October 15, 2001, the Supreme Court denied the said petition for review for non-
compliance with the 1997 Rules of Civil Procedure for failure to pay on time docket and other fees and
deposit costs in violation of Sec. 3, Rule 45 in relation to Sec. 5(c), Rule 56.

Still not satisfied, on November 9, 2001, the defendant-appellant Austria filed a motion for
reconsideration of the resolution dated October 15, 2001 denying her petition for review.

In its resolution dated January 24, 2002, the Supreme Court denied with finality the petitioners motion
for reconsideration.

During the pendency of the defendant-appellants petition for certiorari and prohibition before the
Court, the plaintiffs-appellees filed with the Regional Trial Court of Makati City, Branch 142 where the
main case is pending, a motion dated April 6, 1998 praying that a declaration of default be issued
against all defendants and for plaintiffs to be allowed to present evidence ex-parte.

In an order dated July 13, 1998, the Presiding Judge of the Regional Trial Court of Makati City held in
abeyance the proceedings before it while awaiting the resolution of the motion for reconsideration
pending before the Court of Appeals.
Notwithstanding the order holding in abeyance the proceedings in the lower court, plaintiffs-appellees
filed a Manifestation and Motion dated September 14, 1998 praying for the resolution of their Motion
dated April 6, 1998. In its order dated September 25, 1998, the lower court deemed the incident
submitted for resolution.

While the motion for reconsideration filed by the appellant is still pending before the Court of Appeals,
the lower court in its order dated July 6, 1999 declared the defendants in default, set the reception
of ex-parte evidence, and commissioned the Branch Clerk of Court to receive the ex-parte evidence and
to submit her corresponding report thereon as soon as the same is concluded.

On On August 4, 1999, the defendant-appellant Austria filed a Motion for Reconsideration of the Order
dated July 6, 1999 with an urgent prayer to cancel plaintiffs ex parte presentation of evidence on
August 9, 1999, which was however denied by the lower court, for lack of merit, in an order dated
January 14, 2000.

The plaintiffs-appellees then presented their evidence ex-parte on January 28, 2000.

The assailed decision was subsequently rendered by the lower court on February 14, 2000, finding in
favor of the plaintiffs-appellees.

A motion for new trial was thereafter filed by the defendant-appellant Austria, which was, in an order
dated August 7, 2000, denied for lack of merit.5

Petitioner elevated the case to the Court of Appeals which dismissed her petition and affirmed the trial
courts decision but deleted the order that petitioner pay reasonable rental for her use of a portion of
the disputed properties. The appellate court denied reconsideration.

In assailing the Decision of the Court of Appeals, petitioner avers that her motion for new trial and
appeal of the judgment by default are valid remedies under the Rules of Court. She insists that the
appellate court erred in not reversing the declaration of default despite the fact that she questioned the
default order in the petition for review which she seasonably filed with the Court of Appeals. Petitioner
also contends that it was error for the trial court to allow the sale of the entire property in dispute.

Respondents filed a Comment6 dated March 30, 2006, arguing that petitioner was correctly declared in
default because of her obstinate refusal to file an answer to the complaint despite being ordered to do
so by the trial court. They also allege that they cannot be compelled to remain in co-ownership only
because of petitioners unjustified refusal to consent to a partition.

A Reply to Comment7 dated July 25, 2006 was filed by petitioner who insisted that she was denied the
right to fully ventilate her case.

Only two issues are raised in this petition. The first issue pertains to petitioners insistence that the
judgment by default rendered by the trial court, which was subsequently affirmed by the Court of
Appeals, is a denial of her day in court. The second issue concerns the validity of the trial courts decision
alternatively ordering the partition of the subject property or authorizing its sale.
A defendant declared in default has the following remedies: (a) a motion to set aside the order of
default under Sec. 3(b), Rule 9 of the Rules of Court; (b) a motion for new trial under Sec. 1(a), Rule 37 if
the default was discovered after judgment but while appeal is still available; (c) a petition for relief
under Rule 38 if judgment has become final and executory; and (d) an appeal from the judgment under
Sec. 1, Rule 41 even if no petition to set aside the order of default has been resorted to.8

In this case, petitioner did not move to set aside the order of default rendered by the trial court but filed
a motion for new trial after a decision had already been rendered in the case. The motion for new trial,
however, was denied by the trial court for lack of merit. She then appealed to the Court of Appeals,
assailing both the denial of her motion for new trial and the adverse decision of the trial court.

Evidently, petitioner utilized the appropriate remedies available to her. The fact, however, that she
availed of the proper remedies does not by itself result in a judgment in her favor or the reversal of the
assailed order and decision of the trial court. As correctly ruled by the Court of Appeals, petitioner was
declared in default because of her adamant refusal to file an answer despite being required to do so.

The factual circumstances in the cases of Heirs of Akut v. Court of Appeals9 and Ampeloquio v. Court of
Appeals,10cited by petitioner in pleading liberality, are markedly different from this case. In Heirs of
Akut, petitioners were not able to file an answer within the reglementary period because they failed to
obtain the services of counsel on time and two of the petitioners were then sick. In Ampeloquio, the
trial courts order denying defendants motion to dismiss was mistakenly served upon one of its
counsels on record and not upon the lawyer in charge of the case. Consequently, the answer was not
filed on time. In both cases, there was no indication that the failure to answer was intended to delay the
case.

In contrast, the facts of this case suggest an intention on the part of petitioner to delay the proceedings.
The complaint was first filed in 1997 but is only now being finally laid to rest because of several
procedural stumbling blocks, including the elevation of the case to this Court on the issue of the
propriety of the trial courts denial of petitioners motion to dismiss, hurled by petitioner one after the
other.

Parenthetically, the appellate court initially issued a temporary restraining order as an incident to the
petition for certiorari filed by petitioner questioning the trial courts order denying her motion to dismiss
but the restraining order was lifted after its 60-day validity.11 The expiration of the temporary
restraining order resulted in the running of the prescribed period to file an answer and the continuation
of the proceedings before the trial court. Petitioners obstinate refusal to file an answer to the complaint
despite these circumstances clearly justifies the declaration of default by the trial court and its
affirmation by the Court of Appeals.

This case has crept, ever so slowly, up the ladder of judicial process. While we are not dissuading parties
from availing of the judicial remedies outlined in the Rules of Court, they should be cautioned to be
judicious in availing of these remedies. After all, rules of procedure are intended to be, not tools of
delay, but of prompt and just disposition of every partys cause. Having fully availed of, even exploited,
these remedies, petitioner cannot feign denial of her day in court. She has been given every opportunity
to fully ventilate her side.

Now, we turn to the second issue raised by petitioner, i.e., the validity of the trial courts decision
alternatively directing the partition of the subject properties or authorizing their sale to a third party.

There are two stages in every action for partition. The first phase is the determination of whether a co-
ownership in fact exists and a partition is proper, i.e., not otherwise legally proscribed, and may be
made by voluntary agreement of all the parties interested in the property. This phase may end either:
(a) with a declaration that plaintiff is not entitled to have a partition either because a co-ownership does
not exist, or partition is legally prohibited; or (b) with a determination that a co-ownership does in truth
exist, partition is proper in the premises, and an accounting of rents and profits received by the
defendant from the real estate in question is in order. In the latter case, the parties may, if they are able
to agree, make partition among themselves by proper instruments of conveyance, and the court shall
confirm the partition so agreed upon.12

The second phase commences when it appears that the parties are unable to agree upon the partition
directed by the court. In that event, partition shall be done for the parties by the court with the
assistance of not more than three (3) commissioners. This second stage may well also deal with the
rendition of the accounting itself and its approval by the court after the parties have been accorded
opportunity to be heard thereon, and an award for the recovery by the party or parties thereto entitled
of their just share in the rents and profits of the real estate in question.13

The proceedings in this case have only reached the first phase. It must be mentioned as an aside that
even if the order decreeing partition leaves something more to be done by the trial court for the
complete disposition of the case, i.e., the appointment of commissioners, the proceedings for the
determination of just compensation by the appointed commissioners, the submission of their reports
and hearing thereon, and the approval of the partition, it is considered a final order and may be
appealed by the party aggrieved thereby.14

There is no question that a co-ownership exists between petitioner and respondents. To this extent, the
trial court was correct in decreeing partition in line with the Civil Code provision that no co-owner shall
be obliged to remain in the co-ownership.15

However, the trial court went astray when it also authorized the sale of the subject properties to a third
party and the division of the proceeds thereof. What makes this portion of the decision all the more
objectionable is the fact that the trial court conditioned the sale upon the price and terms acceptable to
plaintiffs (respondents herein) only, and adjudicated the proceeds of the sale again only to plaintiffs. The
pertinent portion of the trial courts disposition states:

WHEREFORE, on the basis of the foregoing considerations, judgment is hereby rendered in favor of
plaintiff:
1) Directing the partition (physical division) of the subject properties and all improvements thereon
among the co-owners in accordance with their respective shares; or

2) Authorizing the sale, conveyance or transfer of the above-described properties to a third-party at

such price and under such terms acceptable to plaintiffs and thereafter, dividing the proceeds of said
sale among them in accordance with their proportionate interests.16 [Emphasis supplied.]

It is true that petitioner did not assign this error on appeal resulting in the appellate courts failure to
rule on the matter. Nonetheless, we cannot simply brush this issue aside considering that its resolution
is necessary in arriving at a just disposition of the case.17 The rectification of the trial courts decision is
accordingly in order.

WHEREFORE, the petition is GRANTED IN PART. The Decision of the Court of Appeals dated June 21,
2005 is REVERSED in so far as it affirms the portion of the decision dated February 14, 2000 of the
Regional Trial Court of Makati City, Branch 142, which authorizes the sale, conveyance or transfer of the
properties subject of this case and the division of the proceeds of said sale to respondents herein. The
Decision dated June 21, 2005 and Resolution dated October 7, 2005 are AFFIRMED in all other respects.
No pronouncement as to costs.

SO ORDERED.

G.R. No. 166790 November 19, 2014

JUAN P. CABRERA, Petitioner,

vs.
HENRY YSAAC, Respondent.

DECISION

LEONEN, J.:

Unless all the co-owners have agreed to partition their property, none of them may sell a definite
portion of the land. The co-owner may only sell his or her proportionate interest in the co-ownership. A
contract of sale which purports to sell a specific or definite portion of unpartitioned land is null and void
ab initio.

In this petition for review on certiorari,1 Juan P. Cabrera assails the Court of Appeals' decision dated
June 19, 20032and resolution dated January 3, 2005.3 These decisions ruled that a specific performance
to execute a deed of sale over a parcel of land is not available as a relief for Juan Cabrera.

It appears that the heirs of Luis and Matilde Ysaac co-owned a 5,517-square-meter parcel of land
located in Sabang, Naga City, covered by Original Certificate of Title (OCT) No. 506.4 One of the co-
owners is respondent, Henry Ysaac.

Henry Ysaac leased out portions of the property to several lessees. Juan Cabrera, one of the lessees,
leased a 95-square-meter portion of the land beginning in 1986.5
On May 6, 1990, Henry Ysaac needed money and offered to sell the 95-square-meter piece of land to
Juan Cabrera.6 He told Henry Ysaac that the land was too small for his needs because there was no
parking space for his vehicle.7

In order to address Juan Cabreras concerns, Henry Ysaac expanded his offer to include the two
adjoining lands that Henry Ysaac was then leasing to the Borbe family and the Espiritu family. Those
three parcels of land have a combined area of 439-square-meters. However, Henry Ysaac warned Juan
Cabrera that the sale for those two parcels could only proceed if the two families agree to it.

Juan Cabrera accepted the new offer. Henry Ysaac and Juan Cabrera settled on the price of 250.00 per
square meter, but Juan Cabrera stated that he could only pay in full after his retirement on June 15,
1992.8 Henry Ysaac agreed but demanded for an initial payment of 1,500.00, which Juan Cabrera
paid.9

According to Juan Cabrera, Henry Ysaac informed him that the Borbe family and the Espiritu family were
no longer interested in purchasing the properties they were leasing. Since Mamerta Espiritu of the
Espiritu family initially considered purchasing the property and had made an initial deposit for it, Juan
Cabrera agreed to reimbursethis earlier payment. On June 9, 1990, Juan Cabrera paid the amount of
6,100.00.10 Henry Ysaac issued a receipt for this amount. 3,100.00 of the amount paid was
reimbursed to Mamerta Espiritu and, in turn, she gaveJuan Cabrera the receipts issued to her by Henry
Ysaac.11

On June 15, 1992, Juan Cabrera tried to pay the balance of the purchase price to Henry Ysaac.
However,at that time, Henry Ysaac was in the United States. The only person in Henry Ysaacs residence
was his wife. The wife refused to accept Juan Cabreras payment.12

Sometime in September 1993, JuanCabrera alleged that Henry Ysaac approached him, requesting to
reduce the area of the land subject of their transaction. Part of the 439-square-meter land was going to
be made into a barangay walkway, and another part was being occupied by a family that was difficult to
eject.13 Juan Cabrera agreed to the proposal. The land was surveyed again. According to Juan Cabrera,
Henry Ysaac agreed to shoulder the costs of the resurvey, which Juan Cabrera advanced in the amount
of 3,000.00.

The resurvey shows that the area now covered by the transaction was 321 square meters.14 Juan
Cabrera intended to show the sketch plan and pay the amount due for the payment of the lot. However,
on that day, Henry Ysaac was in Manila. Once more, Henry Ysaacs wife refused to receive the payment
because of lack of authority from her husband.15

On September 21, 1994, Henry Ysaacs counsel, Atty. Luis Ruben General, wrote a letter addressed to
Atty. Leoncio Clemente, Juan Cabreras counsel.16 Atty. General informed Atty. Clemente that his client
is formally rescinding the contract of sale because Juan Cabrera failed to pay the balance of the
purchase price of the land between May 1990 and May 1992. The letter also stated that Juan Cabreras
initial payment of 1,500.00 and the subsequent payment of 6,100.00 were going to be applied as
payment for overdue rent of the parcel of land Juan Cabrera was leasing from Henry Ysaac.17 The letter
also denied the allegation of Juan Cabrera that Henry Ysaac agreed to shoulder the costs of the
resurveying of the property.18 Juan Cabrera, together with his uncle, Delfin Cabrera, went to Henry
Ysaacs house on September 16, 1995 to settle the matter.19 Henry Ysaac told Juan Cabrera that he
could no longer sell the property because the new administrator of the property was his brother,
Franklin Ysaac.20

Due to Juan Cabreras inability to enforce the contract of sale between him and Henry Ysaac, he decided
to file a civil case for specific performance on September 20, 1995.21 Juan Cabrera prayed for the
execution of a formal deed of sale and for the transfer of the title of the property in his name.22 He
tendered the sum of 69,650.00 to the clerk of court as payment of the remaining balance of the
original sale price.23 On September 22, 1995, a notice of lis pendenswas annotated on OCT No. 560.24

In his answer with counterclaim,25 Henry Ysaac prayed for the dismissal of Juan Cabreras
complaint.26 He also prayed for compensation in the form of moral damages, attorneys fees, and
incidental litigation expenses.27

Before the Regional Trial Court decided the case, the heirs of Luis and Matilde Ysaac, under the
administration of Franklin Ysaac, sold their property to the local government ofNaga City on February
12, 1997.28 The property was turned into a projectfor the urban poor of the city.29 During the trial,
Corazon Borbe Combe of the Borbe family testified that contrary to what Juan Cabrera claimed, her
family never agreed to sell the land they were formerly leasing from Henry Ysaac in favor of Juan
Cabrera.30 The Borbe family bought the property from NagaCitys urban poor program after the
salebetween the Ysaacs and the local government of Naga City.31

On September 22, 1999, the Regional Trial Court of Naga City ruled that the contract of sale between
Juan Cabrera and Henry Ysaac was duly rescinded when the former failed to pay the balance of the
purchase price in the period agreed upon.32 The Regional Trial Court found that there was an
agreement between Juan Cabrera and Henry Ysaac as to the sale of land and the corresponding unit
price.33 However, aside from the receipts turned over by Mamerta Espiritu of the Espiritu family to Juan
Cabrera, there was no "evidence that the other adjoining lot occupants agreed to sell their respective
landholdings" to Juan Cabrera.34 The Regional Trial Court also doubted that Juan Cabrera was willing
and able to pay Henry Ysaac on June 15, 1992. According to the trial court:

[A]fter the said refusal of Henry Ysaacs wife, plaintiff [Juan Cabrera] did not bother to write tothe
defendant [Henry Ysaac] or to any of the co-owners his intention to pay for the land or he could have
consigned the amount in court at the same time notifying [Henry Ysaac] of the consignation in
accordance with Article 1256 of the Civil Code. Furthermore, in September, 1993 [Juan Cabrera] was
able to meet [Henry Ysaac] whenthe latter allegedly talked to him about the reduction of the areahe
was going to buy. There is no showing that [Juan Cabrera] again tendered his payment to Henry Ysaac.
Instead, he allegedly made his offer after he had the land resurveyed but defendant was then in Manila.
There is no evidence as to what date this offer was made. . . . . .

[T]he court does not see any serious demand made for performance of the contract on the part of [Juan
Cabrera] in 1992 when he allegedly promised to pay the balance of the purchase price. Neither could he
demand for the sale of the adjoining lots because the occupants thereof did not manifest their consent
thereto. At the most, he could have demanded the sale of the lot which he was occupying. If his
payment was refused in 1995, he cannot demand for damages because the rescission of the contract
was relayed to him in writing in Exhibit "4".35

The Regional Trial Court dismissed Juan Cabreras complaint and Henry Ysaacs counterclaim.36 Juan
Cabrera appealed the Regional Trial Courts decision.37

The Court of Appeals agreed with the Regional Trial Court that there was a perfected contract of sale
between Juan Cabrera and Henry Ysaac.38 According to the Court of Appeals, even if the subject of the
sale is part of Henry Ysaacs undivided property, a co-owner may sell a definite portion of the
property.39

The Court of Appeals also ruled that the contract of sale between Juan Cabrera and Henry Ysaac was not
validly rescinded.40 For the rescission to be valid under Article 1592 of the Civil Code, it should have
been done through a judicial or notarial act and not merely through a letter.41

However, due to the sale of the entire property of the Ysaac family in favor of the local government of
Naga City, the Court of Appeals ruled that the verbal contract between Juan Cabrera and Henry Ysaac
cannot be subject to the remedy of specific performance.42 The local government of Naga City was an
innocent purchaser for value, and following the rules on double sales, it had a preferential right since
the sale it entered into was in a public instrument, while the one with Juan Cabrera was only made
orally.43 The only recourse the Court of Appeals could do is to order Henry Ysaac to return the initial
payment of the purchase price of 10,600.00 (1,500.00 and 6,100.00 as evidenced by the receipts
issued by Henry Ysaac to Juan Cabrera, and 3,000.00 for the surveying expenses) as payment of actual
damages. The Court of Appeals likewise awarded attorneys fees and litigation costs. To wit:

WHEREFORE, premises considered, the assailed decision of the lower court is hereby SET ASIDE and a
new one is entered as follows:

1. Declaring that there is no valid rescission of the contract of sale of the subject lot between plaintiff-
appellant [Juan P. Cabrera] and defendant-appellee [Henry Ysaac]; however, specific performance is not
an available relief to plaintiff because of the supervening sale of the property to the City of Naga, an
innocent purchaser and for value;

2. Ordering [Henry Ysaac] to pay [Juan P. Cabrera] actual damages in the amount of 10,600.00, with
legal interest of 12% per annum from September 20, 1995 until paid;

3. Ordering [Henry Ysaac] to pay [Juan P. Cabrera], the amount of thirty thousand pesos (30,000.00) by
way of attorneys fees and litigation expenses.

Henry Ysaac filed his motion for reconsideration dated July 14, 2003 of the decision of the Court of
Appeals.44 On the other hand, Juan Cabrera immediately filed a petition for reviewon certiorari with
this court.45 In the resolution dated October 15, 2003, this court denied the petition "for being
premature since respondents motion for reconsideration of the questioned decision of the Court of
Appeals is still pending resolution."46

In the resolution dated January 3,2005, the Court of Appeals denied Henry Ysaacs motion for
reconsideration. On February24, 2005, Juan Cabrera filed another petition with this court, questioning
the propriety of the Court of Appeals decision and resolution.

This court initially noted that the petition was filed out of time. The stamp on the petition states that it
was received by this court on March 24, 2005,47 while the reglementary period to file the petition
expired on February 28, 2005. Thus, the petition was dismissed in this courts resolution dated April 27,
2005.48 Petitioner filed a motion for reconsideration.49 However, the same was denied with finality in
this courts resolution dated August 17, 2005.50

In a letter addressed to the Chief Justice, petitioner argued that it would be unfair to him if a clerical
error would deprive his petition from being judged on the merits. Petitioner emphasized that the
registry receipts show that he filed the petition on February 24, 2005, not March 24, 2005, as noted by
this court in his pleading.51 This court treated the letter as a second motion for reconsideration. In the
resolution dated March 31, 2006, this court found merit in petitioners letter.52 The petition was
reinstated, and respondent was ordered to file his comment.53Respondent filed his comment on
September 18, 2006.54 This court required petitioner to file a reply,55 which petitioner complied with
on January 15, 2007.56

The issues raised by petitioner and respondent are summarized as follows:

1. Whether this court could take cognizance of issues not raised by petitioner but by respondent in his
comment to the petition for review;

2. Whether there was a valid contractof sale between petitioner and respondent;

3. Whether the contract ofsale still subsisted;

a. Whether the contract was terminated through rescission;

b. Whether the contract was no longer enforceable due to the supervening sale of the property to the
local government of Naga City;

4. Whether petitioner is entitled to the execution of a deed of sale in his favor; and

5. Whether petitioner is entitled to actual damages, attorneys fees, and costs of litigation.

The petition should be denied.

This court can resolve issues raised by both parties

Petitioner stated that the errors inthis case are: (1) "the [Court of Appeals] erred in holding that the
relief of specific performance is not available to [petitioner] supposedly because of the supervening sale
of [the] property to the City Government of Naga";57 and (2) "consequently, the [Court of Appeals]
erred in not ordering the execution of the necessary deed of sale in favor of [petitioner]."58 Petitioner
argues that this court should limit its adjudication to these two errors.59

On the other hand, respondent raised issues on the validity of the contract of sale in favor of petitioner,
and the propriety of the award of actual damages with interest, attorneys fees, and litigation
expenses.60

For petitioner, if respondent wanted to raise issues regarding the Court of Appeals decision, respondent
should have interposed a separate appeal.61

Petitioners position is erroneous. This court can resolve issues and assignments of error argued by
petitioner and respondent.

This court "is clothed with ample authority to review matters, even if they are not assigned as errors in
their appeal,if it finds that their consideration is necessary to arriveat a just decision of the case."62 We
can consider errors not raised by the parties,more so if these errors were raised by respondent.

Respondent raised different issues compared with those raised by petitioner. However, the assignment
of error of respondent was still responsive to the main argument of petitioner. Petitioners argument
works on the premise that there was a valid contract. By attacking the validity of the contract,
respondent was merely responding to the premise of petitioners main argument. The issue is relevant
to the final disposition of this case; hence, it should be considered by this court in arriving at a decision.

II

There was no valid contract of sale between petitioner and respondent

Petitioner agrees with the decision of the Court of Appeals that there was a perfected contract of sale
between him and respondent.63

Respondent, however, argues that there was no contract between him and petitioner because under
Article 1475 of the Civil Code, there has to be a meeting of the minds as to the price and the object of
the contract.64 Respondent argues that there was no meeting of the minds as to the final price65 and
size66 of the property subject of the sale.

In addition, while respondent admits that he was willing to sell the property being leased from him by
the Borbe family and the Espiritu family, petitioner presented no evidence to show that these families
agreed to the sale in favor of petitioner. During trial, Corazon Borbe Combe of the Borbe family testified
that her family never agreed to allow the sale of the property in favor of petitioner.67 Respondent
likewise alleged that Mamerta Espiritu of the Espiritu family eventually bought the property occupied by
her family, which is contrary to the claim that petitioner obtained the consent of Mamerta Espiritu to
have the land sold in his favor.68 Petitioner replied that respondent sold 113 square meters of the 321-
square-meter property to the Espiritu family on January 17, 1996.69 Petitioner argued that Mamerta
Espiritu was not a buyer in good faith because in 1990, she voluntarily agreed to surrender the lot for
sale in favor of petitioner because she did not have the money to pay for the lot. Hence, the sale in favor
of Mamerta Espiritu should not supersede the sale in favor of petitioner.70

The Regional Trial Court ruled that there was a valid contract of sale, although it found that there was no
evidence to support petitioners claim that he was able to secure the consent of the Espiritu family and
the Borbe family to the sale of the land.71 There was a valid contract of sale subject to a suspensive
condition, but the suspensive condition was not complied with.

For the Court of Appeals, there was a valid contract of sale.72 The Court of Appeals ruling was based on
the idea that a co-owner could sell a definite portion of the land owned in common, and not because
the suspensive conditions of the contract were complied with. In ruling this way, the Court of Appeals
relied on Pamplona v. Morato,73 which stated that:

. . . [A] "co-owner may validly sell his undivided share of the property owned in common. (If the part
sold happens to be his allotted share after partition, the transaction is entirely valid). Now then if there
has been no express partition as yet, but the co-owner who sells points out to his buyers the boundaries
of the parthe was selling, and the other coowners make no objection, there is in effect already a partial
partition, and the sale of the definite portioncan no longer be assailed."74

We find that there was no contract of sale. It was null ab initio.

As defined by the Civil Code, "[a] contract is a meeting of minds between two persons whereby one
binds himself, with respect to the other, to give something or to render some service."75 For there to be
a valid contract, there must be consent of the contracting parties, an object certain which is the subject
matter of the contract, and cause of the obligation which is established.76 Sale is a special contract. The
seller obligates himself to deliver a determinate thing and to transfer its ownership to the buyer. In turn,
the buyer pays for a price certain in money or its equivalent.77 A "contract of sale is perfected at the
moment there is a meeting of minds upon the thing which is the object of the contract and upon the
price."78 The seller and buyer must agree as to the certain thing that will be subject of the sale as well
as the price in which the thing will be sold. The thing to be sold is the object of the contract, while the
price is the cause or consideration.

The object of a valid sales contract must be owned by the seller. If the seller is not the owner, the seller
must be authorized by the owner to sell the object.79

Specific rules attach when the seller co-ownsthe object of the contract. Sale of a portion of the property
is considered an alteration of the thing owned in common. Under the Civil Code, such disposition
requires the unanimous consent of the other co-owners.80 However, the rules also allow a co-owner to
alienate his or her part in the co-ownership.81

These two rules are reconciled through jurisprudence.

If the alienation precedes the partition, the co-owner cannot sell a definite portion of the land without
consent from his or her co-owners. He or she could only sell the undivided interest of the co-owned
property.82 As summarized in Lopez v. Ilustre,83 "[i]f he is the owner of an undivided half of a tract of
land, he has a right to sell and convey an undivided half, but he has no right to divide the lot into two
parts, and convey the whole of one part by metes and bounds."84

The undivided interestof a co-owner is also referred to as the "ideal or abstract quota" or
"proportionate share." On the other hand, the definite portion of the land refers to specific metes and
bounds of a co-owned property.

To illustrate, if a ten-hectare property is owned equally by ten coowners, the undivided interest of a co-
owner is one hectare. The definite portion of that interest is usually determined during judicial or
extrajudicial partition. After partition, a definite portion of the property held in common is allocated to a
specific co-owner. The co-ownership is dissolved and, in effect, each of the former co-owners is free to
exercise autonomously the rights attached to his or her ownership over the definite portion of the land.
It is crucial that the co-owners agree to which portion of the land goes to whom.

Hence, prior to partition, a sale of a definite portion of common property requires the consent of all co-
owners because it operates to partition the land with respect to the co-owner selling his or her share.
The co-owner or seller is already marking which portion should redound to his or her autonomous
ownership upon future partition.

The object of the sales contract between petitioner and respondent was a definite portion of a co-
owned parcel of land. At the time of the alleged sale between petitioner and respondent, the entire
property was still held in common. This is evidenced by the original certificate of title, which was under
the names of Matilde Ysaac, Priscilla Ysaac, Walter Ysaac, respondent Henry Ysaac, Elizabeth Ysaac,
Norma Ysaac, Luis Ysaac, Jr., George Ysaac, Franklin Ysaac, Marison Ysaac, Helen Ysaac, Erlinda Ysaac,
and Maridel Ysaac.85

The rules allow respondent to sell his undivided interestin the coownership. However, this was not the
object of the sale between him and petitioner. The object of the sale was a definite portion. Even if it
was respondent who was benefiting from the fruits of the lease contract to petitioner, respondent has
"no right to sell or alienate a concrete, specific or determinate part of the thing owned in common,
because his right over the thing is represented by quota or ideal portion without any physical
adjudication."86

There was no showing that respondent was authorized by his coowners to sell the portion of land
occupied by Juan Cabrera, the Espiritu family, or the Borbe family. Without the consent of his co-
owners, respondent could not sell a definite portion of the co-owned property.

Respondent had no right to define a 95-square-meter parcel of land, a 439-square-meter parcel of land,
or a 321-square-meter parcel of land for purposes of selling to petitioner. The determination of those
metes and bounds are not binding to the co-ownership and, hence, cannot be subject to sale, unless
consented to by all the co-owners.
In finding that there was a valid contract of sale between petitioner and respondent, the Court of
Appeals erred in the application of Pamplona v. Moreto.87 The ruling in Pamplona should be read and
applied only in situations similar to the context of that case.

Pamplona involved the Spouses Moreto who owned three (3) parcels of land with a total area of 2,346
square meters. The spouses had six (6) children. After the wife had died, the husband sold one of the
parcels to the Pamplona family, even if the conjugal partnership had not yet been liquidated. The parcel
sold measured 781 square meters, which was less than the ideal share of the husband in the estate. This
court allowed the sale to prosper because of the tolerance from the husbands co-heirs. This court ruled:

The title may be pro-indiviso or inchoate but the moment the coowner as vendor pointed out its
location and even indicated the boundaries over which the fences were to be erected without objection,
protest or complaint bythe other co-owners, on the contrary they acquiesced and tolerated such
alienation, occupation and possession, We rule that a factual partition or termination of the co-
ownership, although partial, was created, and barred not only the vendor, Flaviano Moreto, butalso his
heirs, the private respondents herein from asserting as against the vendees petitioners any right or title
in derogation of the deed of sale executed by said vendor Flaviano Moreto.88 (Emphasis supplied)

In Pamplona, the co-heirs of Flaviano Moreto only questioned the sale to the Pamplona family nine (9)
years after the sale. By then, the Pamplona family had exercised several acts of ownership over the land.
That is why this court considered it acquiescence or tolerance on the part of the co-heirs when they
allowed the Pamplonas to take possession and build upon the land sold, and only questioned these acts
several years later.

The ruling in Pamplonadoes not apply to petitioner. There was no evidence adduced during the trial that
respondents co-owners acquiesced or tolerated the sale to petitioner. The co-owners tolerated
petitioners possession of a portion of their land because petitioner was a lessee over a 95-square-meter
portion of the property, not the buyer of the 321-squaremeter portion.

There was also no evidence of consent to sell from the co-owners. When petitioner approached
respondent in 1995 to enforce the contract of sale, respondent referred him to Franklin Ysaac, the
administrator over the entire property. Respondents act suggests the absence of consent from the co-
owners. Petitioner did not show that he sought Franklin Ysaacs consent as administrator and the
consent of the other co-owners. Without the consent of the co-owners, no partial partition operated in
favor of the sale to petitioner.

At best, the agreement between petitioner and respondent is a contract to sell, not a contract of sale. A
contract to sell is a promise to sell an object, subject to suspensive conditions.89 Without the fulfillment
of these suspensive conditions, the sale does not operate to determine the obligation of the seller to
deliver the object.

A co-owner could enter into a contract to sell a definite portion of the property. However, such contract
is still subject to the suspensive condition of the partition of the property, and that the other co-owners
agree that the part subject of the contract to sell vests in favor of the co-owners buyer. Hence, the co-
owners consent is an important factor for the sale to ripen.

A non-existent contract cannot be a

source of obligations, and it cannot
be enforced by the courts

Since petitioner believes that there was a perfected contract of sale between him and respondent, he
argues that a deed of sale should be formally executed. Petitioner agrees with the Court of Appeals
finding that there was no valid rescission of the contract in accordance with Article 1592 of the Civil
Code.90 However, petitioner disagrees with the Court of Appeals when it ruled that the contract was no
longer enforceable due to the supervening sale with the local government of Naga City. Petitioner
argues that the sale in favor of the local government of Naga City was not made in good faith. Before the
sale was finalized between the local government and the heirs of Luis and Matilde Ysaac, petitioner had
a notice of lis pendens annotated to OCT No. 506.91 It was presumed that the local government had due
notice of petitioners adverse claim, thus, it cannot be considered an innocent purchaser.

For respondent, due to the inexistence of a valid contract of sale, petitioner cannot demand specific
performance from respondent.92 Respondent disagrees with the Court of Appeals when it stated that
Article 1592 of the rescission of contract of sale applies. There is no need to apply Article 1592 because
there was no contract to begin with.93 The contract between respondent and petitioner was terminated
by virtue of the letter dated September 21, 1994.94

We rule in favor of respondent.

The absence of a contract of sale means that there is no source of obligations for respondent, as seller,
orpetitioner, as buyer. Rescission is impossible because there is no contract to rescind. The rule in
Article 1592 that requires a judicial or notarial act to formalize rescission of a contract of sale of an
immovable property does not apply. This court does not need to rule whether a letter is a valid method
of rescinding a sales contract over an immovable property because the question is moot and academic.

Even if we assume that respondent had full ownership of the property and that he agreed to sell a
portion of the property to petitioner, the letter was enough to cancel the contract to sell. Generally,
"[t]he power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent on him."95

For the sale of immovable property, the following provision governs its rescission:

Article 1592. In the sale of immovable property, even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of right take place,
the vendee may pay, even after the expiration of the period, as long as no demand for rescissionof the
contract has been made upon him either judicially or by notarial act. After the demand, the court may
not grant him a new term.
This provision contemplates (1) a contract of sale of an immovable property and (2) a stipulation in the
contract that failure to pay the price at the time agreed upon will cause the rescission of the contract.
The vendee or the buyer can still pay even after the time agreed upon, if the agreement between the
parties has these requisites. This right of the vendee to pay ceases when the vendor or the seller
demands the rescission of the contract judicially or extra judicially. In case of an extra judicial demand to
rescind the contract, it should be notarized.

Hence, this provision does not apply if it is not a contract of sale of an immovable property and merely a
contract to sellan immovable property. A contract to sell is "where the ownership or title is retained by
the seller and is not to pass until the full payment of the price, such payment being a positive suspensive
condition and failure of which is not a breach, casual or serious, but simply an event that prevented the
obligation of the vendor to convey title from acquiring binding force."96

In a similar case entitled Manuel v. Rodriguez,97 Eusebio Manuel offered to buy the land owned by
Payatas Subdivision, Inc. The Secretary Treasurer of Payatas Subdivision, Eulogio Rodriguez, Sr., agreed
to sell the land to Eusebio Manuel after negotiations. Similar to this case, the agreement was only made
orally and not in writing. An initial payment was made, and a final payment was to be madenine (9) to
ten (10) months later. Manuel never paid for the latter installment; hence, Eulogio Rodriguez cancelled
their agreement and sold the land to someone else.

In Manuel, this court categorically stated that Article 1592 "does not apply to a contract to sell or
promise to sell, where title remains with the vendor until fulfillment to a positive suspensive condition,
such as full payment of the price."98 This court upheld that the contract to sell was validly cancelled
through the non-payment of Eusebio Manuel. The same conclusion applies in this case.

The law does not prescribe a form to rescind a contract to sell immovable property. In Manuel, the non-
payment operated to cancel the contract. If mere non-payment is enough to cancel a contract to sell,
the letter given to petitioners lawyer is also an acceptable form of rescinding the contract. The law does
not require notarization for a letter to rescind a contract to sell immovable property. Notarization is only
required if a contract of sale is being rescinded.

Petitioner argued that he was willing to comply with the suspensive condition on the contract to sell
because he was ready to pay the balance of the purchase price on June 15, 1992.99 However, his
argument is unmeritorious. As ruled by the Regional Trial Court, petitioner should have resorted to the
various modes of consignment when respondents wife refused to accept the payment on respondents
behalf.100

Therefore, even if we assumed that the contract between petitioner and respondents were perfected,
the strict requisites in Article 1592 did not apply because the only perfected contract was a contract to
sell, not a contract of sale. The courts cannot enforce the right of petitioner to buy respondents
property. We cannot order the execution of a deed of sale between petitioner and respondent.

The question of double sale also becomes moot and academic. There was no valid sale between
petitioner and respondent, while there was a valid sale between the local government of Naga City and
respondent and his coowners. Since there is only one valid sale, the ruleon double sales under Article
1544 of the Civil Code does not apply.101

Compensatory damages, attorneys

fees, and costs of litigation

Respondent argued that petitioner is not entitled to the compensatory damages that the Court of
Appeals awarded. According to respondent, petitioner continues to occupy the 95-square-meter
property that he has been leasing since 1986 because the parcel was not included in the sale to the local
government of Naga City.102 Since April 30, 1990, petitioner has not been paying rent to respondent
despite his continued occupation of the property.103Therefore, there was no unjust enrichment on the
part of respondent when he applied petitioners initial payment over the sale of the property as
payment for rent.

Respondent argued further that the award of attorneys fees and litigation expenses in favor of
petitioner was also erroneous because prior to this litigation, respondent already informed petitioner
that his claim has no basis in law and fact.104 Yet, petitioner persisted on filing this case.105

We rule that petitioner is entitled to the return of the amount of money because he paid it as
consideration for ownership of the land. Since the ownership of the land could not be transferred to
him, the money he paid for that purpose must be returned to him. Otherwise, respondent will be
unjustly enriched.

Respondents claim for rent in arrears is a separate cause of action from this case.1wphi1 For
petitioners earnestmoney payment to be considered payment for his rent liabilities, the rules of
compensation under Article 1279 of the Civil Code must be followed.106

It was not proven during trial if petitioner's rental liability to respondent is due, or if it is already
liquidated and demandable. Hence, this court is limited to uphold the ruling of the Court of Appeals, but
such payment could be subject to the rule on compensation.

However, petitioner is not entitled to attorney's fees and the costs of litigation. The Court of Appeals
awarded attorney's fees to petitioner "just to protect his right [because petitioner] reached this court to
seek justice for himself."107

Contrary to the Court of Appeals' ruling, we find that petitioner did not have a clear right over the
property in question. The Court of Appeals awarded attorney's fees and litigation costs on the premise
that the contract between petitioner and respondent was perfected. Without a valid contract that
stipulates his rights, petitioner risked litigation in order to determine if he has rights, and not to protect
rights that he currently has. Hence, the award of attorney's fees and litigation costs was not properly
justified.

WHEREFORE, the petition is DENIED. The Court of Appeals' decision dated June 19, 2003 in CA-G.R. CV
No. 65869 is SET ASIDE. The contract between petitioner and respondent is DECLARED invalid and,
therefore, cannot be subject to specific performance. Respondent is ORDERED to return 10,600.00 to
petitioner, with legal interest of 12% per annum from September 20, 1995 until June 30, 2013 and 6%
per annum from July 1, 2013 until fully paid. The award of attorney's fees and litigation expenses is
DELETED.

SO ORDERED.

Padilla v Magdua Case Digest (OBLIGATIONS & CONTRACTS)

Padilla v Magdua

GR No. 176858

September 15, 2010

PRESCRIPTION

FACTS:

(1) Petitioners alleged that Ricardo, through misrepresentation, had the land transferred in his name
without the consent and knowledge of his co-heirs. Juanita, the mother of the heirs had allegedly
executed a notarized Affidavit of Transfer of Real Property (Affidavit) in favor of Ricardo on 4 June 1966
making him the sole owner of the land.

(2) The land was subsequently sold by Ricardo's daughters, Josephine Bahia and Virginia Bahia-Abas, to
respondent Dominador Magdua (Dominador).

RTC: The case was filed only in 2001 or more than 30 years since the Affidavit was executed in 1966.
The RTC explained that while the right of an heir to his inheritance is imprescriptible, yet when one of
the co-heirs appropriates the property as his own to the exclusion of all other heirs, then prescription
can set in. The RTC added that since prescription had set in to question the transfer of the land under
the Affidavit, it would seem logical that no action could also be taken against the deed of sale executed
by Ricardo's daughters in favor of Dominador.

ISSUE: The main issue is whether the present action is already barred by prescription.

---------------------------------------------------------------------------------------------------------------
APPLICABLE LAW/S: Art. 494. No co-owner shall be obliged to remain in the co-ownership. Each co-
owner may demand at any time the partition of the thing owned in common, insofar as his share is
concerned.

Nevertheless, an agreement to keep the thing undivided for a certain period of time, not exceeding ten
years, shall be valid. This term may be extended by a new agreement.

A donor or testator may prohibit partition for a period which shall not exceed twenty years.

Neither shall there be any partition when it is prohibited by law.

No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he
expressly or impliedly recognizes the co-ownership. (400a)

Section 1, Rule 9 of the rules of Court. Defenses and objections not pleaded. Defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it
appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject
matter, that there is another action pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the court shall dismiss the case.

---------------------------------------------------------------------------------------------------------------

HELD: No, it has not prescribed.

Since possession of co-owners is like that of a trustee, in order that a co-owner's possession may be
deemed adverse to the cestui que trust or other co-owners, the following requisites must concur: (1)
that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or
other co-owners, (2) that such positive acts of repudiation have been made known to the cestui que
trust or other co-owners, and (3) that the evidence thereon must be clear and convincing. In the
present case, all three requisites have been met.
After Juanita's death in 1989, petitioners sought for the partition of their mother's land. The heirs,
including Ricardo, were notified about the plan. Ricardo, through a letter dated 5 June 1998, notified
petitioners, as his co-heirs, that he adjudicated the land solely for himself. Accordingly, Ricardo's
interest in the land had now become adverse to the claim of his co-heirs after repudiating their claim of
entitlement to the land. In Generosa v. Prangan-Valera, we held that in order that title may prescribe in
favor of one of the co-owners, it must be clearly shown that he had repudiated the claims of the others,
and that they were apprised of his claim of adverse and exclusive ownership, before the prescriptive
period begins to run.

However, in the present case, the prescriptive period began to run only from 5 June 1998, the date
petitioners received notice of Ricardo's repudiation of their claims to the land. Since petitioners filed an
action for recovery of ownership and possession, partition and damages with the RTC on 26 October
2001, only a mere three years had lapsed. This three-year period falls short of the 10-year or 30-year
acquisitive prescription period required by law in order to be entitled to claim legal ownership over the
land. Thus, Dominador cannot invoke acquisitive prescription.

In sum, we find that the Affidavit, as the principal evidence relied upon by the RTC to dismiss the case on
the ground of prescription, insufficiently established Dominador's rightful claim of ownership to the
land. Thus, we direct the RTC to try the case on the merits to determine who among the parties are
legally entitled to the land.

G.R. No. 176858 September 15, 2010

HEIRS OF JUANITA PADILLA, represented by CLAUDIO PADILLA, Petitioners,

vs.
DOMINADOR MAGDUA, Respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the Orders dated 8 September
20062 and 13 February 20073 of the Regional Trial Court (RTC) of Tacloban City, Branch 34, in Civil Case
No. 2001-10-161.

The Facts

Juanita Padilla (Juanita), the mother of petitioners, owned a piece of land located in San Roque,
Tanauan, Leyte. After Juanitas death on 23 March 1989, petitioners, as legal heirs of Juanita, sought to
have the land partitioned. Petitioners sent word to their eldest brother Ricardo Bahia (Ricardo)
regarding their plans for the partition of the land. In a letter dated 5 June 1998 written by Ricardo
addressed to them, petitioners were surprised to find out that Ricardo had declared the land for himself,
prejudicing their rights as co-heirs. It was then discovered that Juanita had allegedly executed a
notarized Affidavit of Transfer of Real Property4 (Affidavit) in favor of Ricardo on 4 June 1966 making
him the sole owner of the land. The records do not show that the land was registered under the Torrens
system.

On 26 October 2001, petitioners filed an action with the RTC of Tacloban City, Branch 34, for recovery of
ownership, possession, partition and damages. Petitioners sought to declare void the sale of the land by
Ricardos daughters, Josephine Bahia and Virginia Bahia-Abas, to respondent Dominador Magdua
(Dominador). The sale was made during the lifetime of Ricardo.

Petitioners alleged that Ricardo, through misrepresentation, had the land transferred in his name
without the consent and knowledge of his co-heirs. Petitioners also stated that prior to 1966, Ricardo
had a house constructed on the land. However, when Ricardo and his wife Zosima separated, Ricardo
left for Inasuyan, Kawayan, Biliran and the house was leased to third parties.

Petitioners further alleged that the signature of Juanita in the Affidavit is highly questionable because on
15 May 1978 Juanita executed a written instrument stating that she would be leaving behind to her
children the land which she had inherited from her parents.

Dominador filed a motion to dismiss on the ground of lack of jurisdiction since the assessed value of the
land was within the jurisdiction of the Municipal Trial Court of Tanauan, Leyte.

In an Order dated 20 February 2006,5 the RTC dismissed the case for lack of jurisdiction. The RTC
explained that the assessed value of the land in the amount of 590.00 was less than the amount
cognizable by the RTC to acquire jurisdiction over the case.6

Petitioners filed a motion for reconsideration. Petitioners argued that the action was not merely for
recovery of ownership and possession, partition and damages but also for annulment of deed of sale.
Since actions to annul contracts are actions beyond pecuniary estimation, the case was well within the
jurisdiction of the RTC.

Dominador filed another motion to dismiss on the ground of prescription.

In an Order dated 8 September 2006, the RTC reconsidered its previous stand and took cognizance of
the case. Nonetheless, the RTC denied the motion for reconsideration and dismissed the case on the
ground of prescription pursuant to Section 1, Rule 9 of the Rules of Court. The RTC ruled that the case
was filed only in 2001 or more than 30 years since the Affidavit was executed in 1966. The RTC explained
that while the right of an heir to his inheritance is imprescriptible, yet when one of the co-heirs
appropriates the property as his own to the exclusion of all other heirs, then prescription can set in. The
RTC added that since prescription had set in to question the transfer of the land under the Affidavit, it
would seem logical that no action could also be taken against the deed of sale executed by Ricardos
daughters in favor of Dominador. The dispositive portion of the order states:
WHEREFORE, premises considered, the order of the Court is reconsidered in so far as the
pronouncement of the Court that it has no jurisdiction over the nature of the action. The dismissal of
the action, however, is maintained not by reason of lack of jurisdiction but by reason of prescription.

SO ORDERED.7

Petitioners filed another motion for reconsideration which the RTC denied in an Order dated 13
February 2007 since petitioners raised no new issue.

Hence, this petition.

The Issue

The main issue is whether the present action is already barred by prescription.

The Courts Ruling

Petitioners submit that the RTC erred in dismissing the complaint on the ground of prescription.
Petitioners insist that the Affidavit executed in 1966 does not conform with the requirement of
sufficient repudiation of co-ownership by Ricardo against his co-heirs in accordance with Article 494 of
the Civil Code. Petitioners assert that the Affidavit became part of public records only because it was
kept by the Provincial Assessors office for real property tax declaration purposes. However, such cannot
be contemplated by law as a record or registration affecting real properties. Petitioners insist that the
Affidavit is not an act of appropriation sufficient to be deemed as constructive notice to an adverse
claim of ownership absent a clear showing that petitioners, as co-heirs, were notified or had knowledge
of the Affidavit issued by their mother in Ricardos favor.

Respondent Dominador, on the other hand, maintains that Juanita, during her lifetime, never renounced
her signature on the Affidavit or interposed objections to Ricardos possession of the land, which was
open, absolute and in the concept of an owner. Dominador contends that the alleged written
instrument dated 15 May 1978 executed by Juanita years before she died was only made known lately
and conveys the possibility of being fabricated. Dominador adds that the alleged highly questionable
signature of Juanita on the Affidavit was only made an issue after 35 years from the date of the transfer
in 1966 until the filing of the case in 2001. As a buyer in good faith, Dominador invokes the defense of
acquisitive prescription against petitioners.

At the outset, only questions of law may be raised in a petition for review on certiorari under Rule 45 of
the Rules of Court. The factual findings of the lower courts are final and conclusive and may not be
reviewed on appeal except under any of the following circumstances: (1) the conclusion is grounded on
speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3)
there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the
findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings
are based; (7) the finding of absence of facts is contradicted by the presence of evidence on record; (8)
the findings of the Court of Appeals are contrary to those of the trial court; (9) the Court of Appeals
manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a
different conclusion; (10) the findings of the Court of Appeals are beyond the issues of the case; and (11)
such findings are contrary to the admissions of both parties.8

We find that the conclusion of the RTC in dismissing the case on the ground of prescription based solely
on the Affidavit executed by Juanita in favor of Ricardo, the alleged seller of the property from whom
Dominador asserts his ownership, is speculative. Thus, a review of the case is necessary.

Here, the RTC granted the motion to dismiss filed by Dominador based on Section 1, Rule 9 of the Rules
of Court which states:

Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or
the evidence on record that the court has no jurisdiction over the subject matter, that there is another
action pending between the same parties for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall dismiss the case. (Emphasis supplied)

The RTC explained that prescription had already set in since the Affidavit was executed on 31 May 1966
and petitioners filed the present case only on 26 October 2001, a lapse of more than 30 years. No action
could be taken against the deed of sale made in favor of Dominador without assailing the Affidavit, and
the action to question the Affidavit had already prescribed.

After a perusal of the records, we find that the RTC incorrectly relied on the Affidavit alone in order to
dismiss the case without considering petitioners evidence. The facts show that the land was sold to
Dominador by Ricardos daughters, namely Josephine Bahia and Virginia Bahia-Abas, during the lifetime
of Ricardo. However, the alleged deed of sale was not presented as evidence and neither was it shown
that Ricardos daughters had any authority from Ricardo to dispose of the land. No cogent evidence was
ever presented that Ricardo gave his consent to, acquiesced in, or ratified the sale made by his
daughters to Dominador. In its 8 September 2006 Order, the RTC hastily concluded that Ricardos
daughters had legal personality to sell the property:

On the allegation of the plaintiffs (petitioners) that Josephine Bahia and Virginia Bahia-Abas had no legal
personality or right to [sell] the subject property is of no moment in this case. It should be Ricardo Bahia
who has a cause of action against [his] daughters and not the herein plaintiffs. After all, Ricardo Bahia
might have already consented to or ratified the alleged deed of sale.9

Also, aside from the Affidavit, Dominador did not present any proof to show that Ricardos possession of
the land had been open, continuous and exclusive for more than 30 years in order to establish
extraordinary acquisitive prescription.10 Dominador merely assumed that Ricardo had been in
possession of the land for 30 years based on the Affidavit submitted to the RTC. The petitioners, on the
other hand, in their pleading filed with the RTC for recovery of ownership, possession, partition and
damages, alleged that Ricardo left the land after he separated from his wife sometime after 1966 and
moved to another place. The records do not mention, however, whether Ricardo had any intention to go
back to the land or whether Ricardos family ever lived there.
Further, Dominador failed to show that Ricardo had the land declared in his name for taxation purposes
from 1966 after the Affidavit was executed until 2001 when the case was filed. Although a tax
declaration does not prove ownership, it is evidence of claim to possession of the land.

Moreover, Ricardo and petitioners are co-heirs or co-owners of the land. Co-heirs or co-owners cannot
acquire by acquisitive prescription the share of the other co-heirs or co-owners absent a clear
repudiation of the co-ownership, as expressed in Article 494 of the Civil Code which states:

Art. 494. x x x No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-
heirs as long as he expressly or impliedly recognizes the co-ownership.

Since possession of co-owners is like that of a trustee, in order that a co-owners possession may be
deemed adverse to the cestui que trust or other co-owners, the following requisites must concur: (1)
that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or
other co-owners, (2) that such positive acts of repudiation have been made known to the cestui que
trust or other co-owners, and (3) that the evidence thereon must be clear and convincing.11

In the present case, all three requisites have been met. After Juanitas death in 1989, petitioners sought
for the partition of their mothers land. The heirs, including Ricardo, were notified about the plan.
Ricardo, through a letter dated 5 June 1998, notified petitioners, as his co-heirs, that he adjudicated the
land solely for himself. Accordingly, Ricardos interest in the land had now become adverse to the claim
of his co-heirs after repudiating their claim of entitlement to the land. In Generosa v. Prangan-
Valera,12 we held that in order that title may prescribe in favor of one of the co-owners, it must be
clearly shown that he had repudiated the claims of the others, and that they were apprised of his claim
of adverse and exclusive ownership, before the prescriptive period begins to run.

However, in the present case, the prescriptive period began to run only from 5 June 1998, the date
petitioners received notice of Ricardos repudiation of their claims to the land. Since petitioners filed an
action for recovery of ownership and possession, partition and damages with the RTC on 26 October
2001, only a mere three years had lapsed. This three-year period falls short of the 10-year or 30-year
acquisitive prescription period required by law in order to be entitled to claim legal ownership over the
land. Thus, Dominador cannot invoke acquisitive prescription.

Further, Dominadors argument that prescription began to commence in 1966, after the Affidavit was
executed, is erroneous. Dominador merely relied on the Affidavit submitted to the RTC that Ricardo had
been in possession of the land for more than 30 years. Dominador did not submit any other
corroborative evidence to establish Ricardos alleged possession since 1966. In Heirs of Maningding v.
Court of Appeals,13 we held that the evidence relative to the possession, as a fact, upon which the
alleged prescription is based, must be clear, complete and conclusive in order to establish the
prescription. Here, Dominador failed to present any other competent evidence to prove the alleged
extraordinary acquisitive prescription of Ricardo over the land. Since the property is an unregistered
land, Dominador bought the land at his own risk, being aware as buyer that no title had been issued
over the land. As a consequence, Dominador is not afforded protection unless he can manifestly prove
his legal entitlement to his claim.
With regard to the issue of the jurisdiction of the RTC, we hold that the RTC did not err in taking
cognizance of the case.

Under Section 1 of Republic Act No. 7691 (RA 7691),14 amending Batas Pambansa Blg. 129, the RTC shall
exercise exclusive jurisdiction on the following actions:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act
of 1980", is hereby amended to read as follows:

"Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction.

"(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

"(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty Thousand Pesos (20,000.00) or, for
civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (50,000.00) except
actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which
is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts; x x x

On the other hand, Section 3 of RA 7691 expanded the jurisdiction of the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts over all civil actions which involve title to or
possession of real property, or any interest, outside Metro Manila where the assessed value does not
exceed Twenty thousand pesos (20,000.00). The provision states:

Section 3. Section 33 of the same law is hereby amended to read as follows:

"Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Trial Circuit Trial
Courts shall exercise:

xxx

"(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property,
or any interest therein where the assessed value of the property or interest therein does not exceed
Twenty thousand pesos (20,000.00) or, in civil actions in Metro Manila, where such assessed value
does not exceed Fifty thousand pesos (50,000.00) exclusive of interest, damages of whatever kind,
attorneys fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation
purposes, the value of such property shall be determined by the assessed value of the adjacent lots."

In the present case, the records show that the assessed value of the land was 590.00 according to the
Declaration of Property as of 23 March 2000 filed with the RTC. Based on the value alone, being way
below 20,000.00, the MTC has jurisdiction over the case. However, petitioners argued that the action
was not merely for recovery of ownership and possession, partition and damages but also for
annulment of deed of sale. Since annulment of contracts are actions incapable of pecuniary estimation,
the RTC has jurisdiction over the case.151avvphi1

Petitioners are correct. In Singson v. Isabela Sawmill,16 we held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance
would depend on the amount of the claim. However, where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a consequence of,
the principal relief sought, this Court has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are cognizable by courts of first instance (now
Regional Trial Courts).

When petitioners filed the action with the RTC they sought to recover ownership and possession of the
land by questioning (1) the due execution and authenticity of the Affidavit executed by Juanita in favor
of Ricardo which caused Ricardo to be the sole owner of the land to the exclusion of petitioners who
also claim to be legal heirs and entitled to the land, and (2) the validity of the deed of sale executed
between Ricardos daughters and Dominador. Since the principal action sought here is something other
than the recovery of a sum of money, the action is incapable of pecuniary estimation and thus
cognizable by the RTC. Well-entrenched is the rule that jurisdiction over the subject matter of a case is
conferred by law and is determined by the allegations in the complaint and the character of the relief
sought, irrespective of whether the party is entitled to all or some of the claims asserted.17

In sum, we find that the Affidavit, as the principal evidence relied upon by the RTC to dismiss the case on
the ground of prescription, insufficiently established Dominadors rightful claim of ownership to the
land. Thus, we direct the RTC to try the case on the merits to determine who among the parties are
legally entitled to the land.

WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE the Orders dated 8 September 2006
and 13 February 2007 of the Regional Trial Court of Tacloban City, Branch 34 in Civil Case No. 2001-10-
161.

SO ORDERED.

AGUILAR v. CA- Co-ownership

Any of the Co-owners may demand the sale of the house and lot at any time and the other cannot
object to such demand; thereafter the proceeds of the sale shall be divided equally according to their
respective interests.
FACTS:

Petitioner Vergilio and respondent Senen bought a house and lot in Paraaque where their father could
spend and enjoy his remaining years in a peaceful neighborhood. They initially agreed that Vergilio will
get 2/3 and Senen will get 1/3; but later they agreed on equal shares. Senen was left in the said lot to
take care of their father since Vergilios family was in Cebu. After their fathers death petitioner
demanded from private respondent that the latter vacate the house and that the property be sold and
proceeds thereof divided among them but the latter refused. Petitioner then filed to compel the sale of
the property. The chunk of the issue tackled by the courts was regarding the pre-trial. Respondent filed
a motion to cancel Pre-trial since the counsel had to accompany his wife in Dumaguete City where she
would be a principal sponsor in a wedding. CFI denied the motion; and the pre-trial proceeded on the
scheduled date. The respondents did not appear thus they were declared in default. The trial went on ex
parte without the respondent and held that the property should be sold to a third party and that the
proceeds be distributed to the parties; in addition respondent was made to pay rent from the time the
action was filed. Respondents appealed this and the decision was reversed by the CA saying that the TC
erred in declaring respondents in default; the case was then remanded to the trial court. Hence this
appeal.

ISSUE:

A) W/N CA erred (1) in holding that the motion of respondent through counsel to cancel the pre-trial
was dilatory in character and (2) in remanding the case to the trial court for pre-trial and trial?

ISSUE RELEVANT TO PROPERTY:

B) W/N trial court was correct with regards to the sale and rent?

RULING:

A) YES, CA erred in granting the respondents motion and remanding the case. The law is clear that the
appearance of parties at the pretrial is mandatory. A party who fails to appear at a pre-trial conference
may be non-suited or considered as in default. It is the discretion of the court to grant the motion if it
sees that the reason for the cancelation of the same would be reasonable. SC found that the reason for
the cancelation of the pre-trial was insufficient and that the trial court was not in grave abuse of
discretion when they denied it.

B) YES, with a few modification. Petitioner and respondents are co-owners of subject house and lot in
equal shares; either one of them may demand the sale of the house and lot at any time and the other
cannot object to such demand; thereafter the proceeds of the sale shall be divided equally according to
their respective interests.

BASIS: Article 494 of the Civil Code provides that no co-owner shall be obliged to remain in the co-
ownership, and that each co-owner may demand at any time partition of the thing owned in common
insofar as his share is concerned. Corollary to this rule, Art. 498 of the Code states that whenever the
thing is essentially indivisible and the co-owners cannot agree that it be allotted to one of them who
shall indemnify the others, it shall be sold and its proceeds accordingly distributed.

SC held that of the proceeds should go to the petitioner and the remainder to the respondent (1,200
each.) Also rent was awarded 1,200 pesos per month with legal interest from the time the trial court
ordered the respondent to vacate, for the use and enjoyment of the other half of the property.
BASIS: When petitioner filed an action to compel the sale of the property and the trial court granted the
petition and ordered the ejectment of respondent, the co-ownership was deemed terminated and the
right to enjoy the possession jointly also ceased.

G.R. No. 76351 October 29, 1993

VIRGILIO B. AGUILAR, petitioner,

vs.
COURT OF APPEALS and SENEN B. AGUILAR, respondents.

Jose F. Manacop for petitioner.

Siruello, Muyco & Associates Law Office for private respondent.

BELLOSILLO, J.:

This is a petition for review on certiorari seeking to reverse and set aside the Decision of the Court of
Appeals in CA-GR CV No. 03933 declaring null and void the orders of 23 and 26 April, 1979, the judgment
by default of 26 July 1979, and the order of 22 October 1979 of the then Court of First Instance of Rizal,
Pasay City, Branch 30, and directing the trial court to set the case for pre-trial conference.

Petitioner Virgilio and respondent Senen are brothers; Virgilio is the youngest of seven (7) children of
the late Maximiano Aguilar, while Senen is the fifth. On 28 October 1969, the two brothers purchased a
house and lot in Paraaque where their father could spend and enjoy his remaining years in a peaceful
neighborhood. Initially, the brothers agreed that Virgilio's share in the co-ownership was two-thirds
while that of Senen was one-third. By virtue of a written memorandum dated 23 February 1970, Virgilio
and Senen agreed that henceforth their interests in the house and lot should be equal, with Senen
assuming the remaining mortgage obligation of the original owners with the Social Security System (SSS)
in exchange for his possession and enjoyment of the house together with their father.

Since Virgilio was then disqualified from obtaining a loan from SSS, the brothers agreed that the deed of
sale would be executed and the title registered in the meantime in the name of Senen. It was further
agreed that Senen would take care of their father and his needs since Virgilio and his family were staying
in Cebu.
After Maximiano Aguilar died in 1974, petitioner demanded from private respondent that the latter
vacate the house and that the property be sold and proceeds thereof divided among them.

Because of the refusal of respondent to give in to petitioner's demands, the latter filed on 12 January
1979 an action to compel the sale of the house and lot so that the they could divide the proceeds
between them.

In his complaint, petitioner prayed that the proceeds of the sale, be divided on the basis of two-thirds
(2/3) in his favor and one-third (1/3) to respondent. Petitioner also prayed for monthly rentals for the
use of the house by respondent after their father died.

In his answer with counterclaim, respondent alleged that he had no objection to the sale as long as the
best selling price could be obtained; that if the sale would be effected, the proceeds thereof should be
divided equally; and, that being a co-owner, he was entitled to the use and enjoyment of the property.

Upon issues being joined, the case was set for pre-trial on 26 April 1979 with the lawyers of both parties
notified of the pre-trial, and served with the pre-trial order, with private respondent executing a special
power of attorney to his lawyer to appear at the pre-trial and enter into any amicable settlement in his
behalf.1

On 20 April 1979, Atty. Manuel S. Tonogbanua, counsel for respondent, filed a motion to cancel pre-trial
on the ground that he would be accompanying his wife to Dumaguete City where she would be a
principal sponsor in a wedding.

On 23 April 1979, finding the reasons of counsel to be without merit, the trial court denied the motion
and directed that the pre-trial should continue as scheduled.

When the case was called for pre-trial as scheduled on 26 April 1979, plaintiff and his counsel appeared.
Defendant did not appear; neither his counsel in whose favor he executed a special power of attorney to
represent him at the pre-trial. Consequently, the trial court, on motion of plaintiff, declared defendant
as in default and ordered reception of plaintiff's evidence ex parte.

On 7 May 1979, defendant through counsel filed an omnibus motion to reconsider the order of default
and to defer reception of evidence. The trial court denied the motion and plaintiff presented his
evidence.

On 26 July 1979, rendering judgment by default against defendant, the trial court found him and
plaintiff to be co-owners of the house and lot, in equal shares on the basis of their written agreement.
However, it ruled that plaintiff has been deprived of his participation in the property by defendant's
continued enjoyment of the house and lot, free of rent, despite demands for rentals and continued
maneuvers of defendants, to delay partition. The trial court also upheld the right of plaintiff as co-owner
to demand partition. Since plaintiff could not agree to the amount offered by defendant for the former's
share, the trial court held that this property should be sold to a third person and the proceeds divided
equally between the parties.
The trial court likewise ordered defendant to vacate the property and pay plaintiff P1,200.00 as
rentals2 from January 1975 up to the date of decision plus interest from the time the action was filed.

On 17 September 1979, defendant filed an omnibus motion for new trial but on 22 October 1979 the
trial court denied the motion.

Defendant sought relief from the Court of Appeals praying that the following orders and decision of the
trial court be set aside: (a) the order of 23 April 1970 denying defendants motion for postponement of
the pre-trial set on 26 April 1979; (b) the order of 26 April 1979 declaring him in default and authorizing
plaintiff to present his evidence ex-parte; (e) the default judgment of 26 July 1979; and, (d) the order
dated 22 October 1979 denying his omnibus motion for new trial.

On 16 October 1986, the Court of Appeals set aside the order of the trial court of 26 April 1979 as well
as the assailed judgment rendered by default., The appellate court found the explanation of counsel for
defendant in his motion to cancel pre-trial as satisfactory and devoid of a manifest intention to delay the
disposition of the case. It also ruled that the trial court should have granted the motion for
postponement filed by counsel for defendant who should not have been declared as in default for the
absence of his counsel.

Petitioner now comes to us alleging that the Court of Appeals erred (1) in not holding that the motion of
defendant through counsel to cancel the pre-trial was dilatory in character and (2) in remanding the
case to the trial court for pre-trial and trial.

The issues to be resolved are whether the trial court correctly declared respondent as in default for his
failure to appear at the pre-trial and in allowing petitioner to present his evidence ex-parte, and
whether the trial court correctly rendered the default judgment against respondent.

We find merit in the petition.

As regards the first issue, the law is clear that the appearance of parties at the pre-trial is mandatory.3 A
party who fails to appear at a pre-trial conference may be non-suited or considered as in default.4 In the
case at bar, where private respondent and counsel failed to appear at the scheduled pre-trial, the trial,
court has authority to declare respondent in default.5

Although respondent's counsel filed a motion to postpone pre-trial hearing, the grant or denial thereof
is within the sound discretion of the trial court, which should take into account two factors in the grant
or denial of motions for postponement, namely: (a) the reason for the postponement and (b) the merits
of the case of movant.6

In the instant case, the trial court found the reason stated in the motion of counsel for respondent to
cancel the pre-trial to be without merit. Counsel's explanation that he had to go to by boat as early as 25
March 1979 to fetch his wife and accompany her to a wedding in Dumaguete City on 27 April 1979
where she was one of the principal sponsors, cannot be accepted. We find it insufficient to justify
postponement of the pre-trial, and the Court of Appeals did not act wisely in overruling the denial. We
sustain the trial court and rule that it did not abuse its discretion in denying the postponement for lack
of merit. Certainly, to warrant a postponement of a mandatory process as pre-trial would require much
more than mere attendance in a social function. It is time indeed we emphasize that there should be
much more than mere perfunctory treatment of the pre-trial procedure. Its observance must be taken
seriously if it is to attain its objective, i.e., the speedy and inexpensive disposition of cases.

Moreover, the trial court denied the motion for postponement three (3) days before the scheduled pre-
trial. If indeed, counsel for respondent could not attend the pre-trial on the scheduled date, respondent
at least should have personally appeared in order not to be declared as in default. But, since nobody
appeared for him, the order of the trial court declaring him as in default and directing the presentation
of petitioner's evidence ex parte was proper.7

With regard to the merits of the judgment of the trial court by default, which respondent appellate
court did not touch upon in resolving the appeal, the Court holds that on the basis of the pleadings of
the parties and the evidence presented ex parte, petitioner and respondents are co-owners of subject
house and lot in equal shares; either one of them may demand the sale of the house and lot at any time
and the other cannot object to such demand; thereafter the proceeds of the sale shall be divided equally
according to their respective interests.

Private respondent and his family refuse to pay monthly rentals to petitioner from the time their father
died in 1975 and to vacate the house so that it can be sold to third persons. Petitioner alleges that
respondent's continued stay in the property hinders its disposal to the prejudice of petitioner. On the
part of petitioner, he claims that he should be paid two-thirds (2/3) of a monthly rental of P2,400.00 or
the sum of P1,600.00.

In resolving the dispute, the trial court ordered respondent to vacate the property so that it could be
sold to third persons and the proceeds divided between them equally, and for respondent to pay
petitioner one-half (1/2) of P2,400.00 or the sum of P1,200.00 as monthly rental, conformably with their
stipulated sharing reflected in their written agreement.

We uphold the trial court in ruling in favor of petitioner, except as to the effectivity of the payment of
monthly rentals by respondent as co-owner which we here declare to commence only after the trial
court ordered respondent to vacate in accordance with its order of 26 July 1979.

Article 494 of the Civil Code provides that no co-owner shall be obliged to remain in the co-ownership,
and that each co-owner may demand at any time partition of the thing owned in common insofar as his
share is concerned. Corollary to this rule, Art. 498 of the Code states that whenever the thing is
essentially, indivisible and the co-owners cannot agree that it be, allotted to one of them who shall
indemnify the others, it shall be sold and its proceeds accordingly distributed. This is resorted to (1)
when the right to partition the property is invoked by any of the co-owners but because of the nature of
the property it cannot be subdivided or its subdivision would prejudice the interests of the co-owners,
and (b) the co-owners are not in agreement as to who among them shall be allotted or assigned the
entire property upon proper reimbursement of the co-owners. In one case,8 this Court upheld the order
of the trial court directing the holding of a public sale of the properties owned in common pursuant to
Art. 498 of the Civil Code.
However, being a co-owner respondent has the right to use the house and lot without paying any
compensation to petitioner, as he may use the property owned in common long as it is in accordance
with the purpose for which it is intended and in a manner not injurious to the interest of the other co-
owners.9 Each co-owner of property held pro indiviso exercises his rights over the whole property and
may use and enjoy the same with no other limitation than that he shall not injure the interests of his co-
owners, the reason being that until a division is made, the respective share of each cannot be
determined and every co-owner exercises, together with his co-participants joint ownership over
the pro indiviso property, in addition to his use and enjoyment of the
same. 10

Since petitioner has decided to enforce his right in court to end the co-ownership of the house and lot
and respondent has not refuted the allegation that he has been preventing the sale of the property by
his continued occupancy of the premises, justice and equity demand that respondent and his family
vacate the property so that the sale can be effected immediately. In fairness to petitioner, respondent
should pay a rental of P1,200.00 per month, with legal interest; from the time the trial court ordered
him to vacate, for the use and enjoyment of the other half of the property appertaining to petitioner.

When petitioner filed an action to compel the sale of the property and the trial court granted the
petition and ordered the ejectment of respondent, the co-ownership was deemed terminated and the
right to enjoy the possession jointly also ceased. Thereafter, the continued stay of respondent and his
family in the house prejudiced the interest of petitioner as the property should have been sold and the
proceeds divided equally between them. To this extent and from then on, respondent should be held
liable for monthly rentals until he and his family vacate.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated 16 October
1986 is REVERSED and SET ASIDE. The decision of the trial court in Civil Case No. 69.12-P dated 16 July
1979 is REINSTATED, with the modification that respondent Senen B. Aguilar is ordered to vacate the
premises in question within ninety (90) days from receipt of this and to pay petitioner Virgilio B. Aguilar
a monthly rental of P1,200.00 with interest at the legal rate from the time he received the decision of
the trial court directing him to vacate until he effectively leaves the premises.

The trial court is further directed to take immediate steps to implement this decision conformably with
Art. 498 of the Civil Code and the Rules of Court. This decision is final and executory.

SO ORDERED.

G.R. No. 171914 July 23, 2014

SOLEDAD L. LAVADIA, Petitioner,

vs.
HEIRS OF JUAN LUCES LUNA, represented by GREGORIO Z. LUNA and EUGENIA ZABALLERO-
LUNA,Respondents.

DECISION
BERSAMIN, J.:

Divorce between Filipinos is void and ineffectual under the nationality rule adopted by Philippine law.
Hence, any settlement of property between the parties of the first marriage involving Filipinos
submitted as an incident of a divorce obtained in a foreign country lacks competent judicial approval,
and cannot be enforceable against the assets of the husband who contracts a subsequent marriage.

The Case

The petitioner, the second wife of the late Atty. Juan Luces Luna, appeals the adverse decision
promulgated on November 11, 2005,1 whereby the Court of Appeals (CA) affirmed with modification
the decision rendered on August 27, 2001 by the Regional Trial Court (RTC), Branch 138, in Makati
City.2 The CA thereby denied her right in the 25/100 pro indiviso share of the husband in a
condominium unit, and in the law books of the husband acquired during the second marriage.

Antecedents

The antecedent facts were summarized by the CA as follows:

ATTY. LUNA, a practicing lawyer, was at first a name partner in the prestigious law firm Sycip, Salazar,
Luna, Manalo, Hernandez & Feliciano Law Offices at that time when he was living with his first wife,
herein intervenor-appellant Eugenia Zaballero-Luna (EUGENIA), whom he initially married ina civil
ceremony conducted by the Justice of the Peace of Paraaque, Rizal on September 10, 1947 and later
solemnized in a church ceremony at the Pro-Cathedral in San Miguel, Bulacan on September 12, 1948. In
ATTY. LUNAs marriage to EUGENIA, they begot seven (7) children, namely: Regina Maria L. Nadal, Juan
Luis Luna, Araceli Victoria L. Arellano, Ana Maria L. Tabunda, Gregorio Macario Luna, Carolina Linda L.
Tapia, and Cesar Antonio Luna. After almost two (2) decades of marriage, ATTY. LUNA and EUGENIA
eventually agreed to live apart from each other in February 1966 and agreed to separation of property,
to which end, they entered into a written agreement entitled "AGREEMENT FOR SEPARATION AND
PROPERTY SETTLEMENT" dated November 12, 1975, whereby they agreed to live separately and to
dissolve and liquidate their conjugal partnership of property.

On January 12, 1976, ATTY. LUNA obtained a divorce decree of his marriage with EUGENIA from the Civil
and Commercial Chamber of the First Circumscription of the Court of First Instance of Sto. Domingo,
Dominican Republic. Also in Sto.Domingo, Dominican Republic, on the same date, ATTY. LUNA
contracted another marriage, this time with SOLEDAD. Thereafter, ATTY. LUNA and SOLEDAD returned
to the Philippines and lived together as husband and wife until 1987.

Sometime in 1977, ATTY. LUNA organized a new law firm named: Luna, Puruganan, Sison and Ongkiko
(LUPSICON) where ATTY. LUNA was the managing partner.

On February 14, 1978, LUPSICON through ATTY. LUNA purchased from Tandang Sora Development
Corporation the 6th Floor of Kalaw-Ledesma Condominium Project(condominium unit) at Gamboa St.,
Makati City, consisting of 517.52 square meters, for 1,449,056.00, to be paid on installment basis for
36months starting on April 15, 1978. Said condominium unit was to be usedas law office of LUPSICON.
After full payment, the Deed of Absolute Sale over the condominium unit was executed on July 15, 1983,
and CCT No. 4779 was issued on August 10, 1983, which was registered bearing the following names:

"JUAN LUCES LUNA, married to Soledad L. Luna (46/100); MARIO E. ONGKIKO, married to Sonia P.G.
Ongkiko (25/100); GREGORIO R. PURUGANAN, married to Paz A. Puruganan (17/100); and TERESITA
CRUZ SISON, married to Antonio J.M. Sison (12/100) x x x" Subsequently, 8/100 share of ATTY. LUNA and
17/100 share of Atty. Gregorio R. Puruganan in the condominium unit was sold to Atty. Mario E.
Ongkiko, for which a new CCT No. 21761 was issued on February 7, 1992 in the following names:

"JUAN LUCES LUNA, married to Soledad L. Luna (38/100); MARIO E. ONGKIKO, married to Sonia P.G.
Ongkiko (50/100); TERESITA CRUZ SISON, married to Antonio J.M. Sison (12/100) x x x"

Sometime in 1992, LUPSICON was dissolved and the condominium unit was partitioned by the partners
but the same was still registered in common under CCT No. 21716. The parties stipulated that the
interest of ATTY. LUNA over the condominium unit would be 25/100 share. ATTY. LUNA thereafter
established and headed another law firm with Atty. Renato G. Dela Cruzand used a portion of the office
condominium unit as their office. The said law firm lasted until the death of ATTY. JUAN on July 12,
1997.

After the death of ATTY. JUAN, his share in the condominium unit including the lawbooks, office
furniture and equipment found therein were taken over by Gregorio Z. Luna, ATTY. LUNAs son of the
first marriage. Gregorio Z. Luna thenleased out the 25/100 portion of the condominium unit belonging
to his father to Atty. Renato G. De la Cruz who established his own law firm named Renato G. De la Cruz
& Associates.

The 25/100 pro-indiviso share of ATTY. Luna in the condominium unit as well as the law books, office
furniture and equipment became the subject of the complaint filed by SOLEDAD against the heirs of
ATTY. JUAN with the RTC of Makati City, Branch 138, on September 10, 1999, docketed as Civil Case No.
99-1644. The complaint alleged that the subject properties were acquired during the existence of the
marriage between ATTY. LUNA and SOLEDAD through their joint efforts that since they had no children,
SOLEDAD became co-owner of the said properties upon the death of ATTY. LUNA to the extent of pro-
indiviso share consisting of her share in the said properties plus her share in the net estate of ATTY.
LUNA which was bequeathed to her in the latters last will and testament; and thatthe heirs of ATTY.
LUNA through Gregorio Z. Luna excluded SOLEDAD from her share in the subject properties. The
complaint prayed that SOLEDAD be declared the owner of the portion of the subject properties;that
the same be partitioned; that an accounting of the rentals on the condominium unit pertaining to the
share of SOLEDAD be conducted; that a receiver be appointed to preserve ad administer the subject
properties;and that the heirs of ATTY. LUNA be ordered to pay attorneys feesand costs of the suit to
SOLEDAD.3

Ruling of the RTC

On August 27, 2001, the RTC rendered its decision after trial upon the aforementioned facts,4 disposing
thusly:
WHEREFORE, judgment is rendered as follows:

(a) The 24/100 pro-indiviso share in the condominium unit located at the SIXTH FLOOR of the KALAW
LEDESMA CONDOMINIUM PROJECT covered by Condominium Certificate of Title No. 21761 consisting of
FIVE HUNDRED SEVENTEEN (517/100) SQUARE METERS is adjudged to have been acquired by Juan Lucas
Luna through his sole industry;

(b) Plaintiff has no right as owner or under any other concept over the condominium unit, hence the
entry in Condominium Certificate of Title No. 21761 of the Registry of Deeds of Makati with respect to
the civil status of Juan Luces Luna should be changed from "JUAN LUCES LUNA married to Soledad L.
Luna" to "JUAN LUCES LUNA married to Eugenia Zaballero Luna";

(c) Plaintiff is declared to be the owner of the books Corpus Juris, Fletcher on Corporation, American
Jurisprudence and Federal Supreme Court Reports found in the condominium unit and defendants are
ordered to deliver them to the plaintiff as soon as appropriate arrangements have been madefor
transport and storage.

No pronouncement as to costs.

SO ORDERED.5

Decision of the CA

Both parties appealed to the CA.6

On her part, the petitioner assigned the following errors to the RTC, namely:

I. THE LOWER COURT ERRED IN RULING THAT THE CONDOMINIUM UNIT WAS ACQUIRED THRU THE
SOLE INDUSTRY OF ATTY. JUAN LUCES LUNA;

II. THE LOWER COURT ERRED IN RULING THAT PLAINTIFFAPPELLANT DID NOT CONTRIBUTE MONEY FOR
THE ACQUISITION OF THE CONDOMINIUM UNIT;

III. THE LOWER COURT ERRED IN GIVING CREDENCE TO PORTIONS OF THE TESTIMONY OF GREGORIO
LUNA, WHO HAS NO ACTUAL KNOWLEDGE OF THE ACQUISITION OF THE UNIT, BUT IGNORED OTHER
PORTIONS OF HIS TESTIMONY FAVORABLE TO THE PLAINTIFF-APPELLANT;

IV. THE LOWER COURT ERRED IN NOT GIVING SIGNIFICANCE TO THE FACT THAT THE CONJUGAL
PARTNERSHIP BETWEEN LUNA AND INTERVENOR-APPELLANT WAS ALREADY DISSOLVED AND
LIQUIDATED PRIOR TO THE UNION OF PLAINTIFF-APPELLANT AND LUNA;

V. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE ABSENCE OF THE DISPOSITION
OF THE CONDOMINIUM UNIT IN THE HOLOGRAPHIC WILL OF THE PLAINTIFF-APPELLANT;

VI. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE FACTTHAT THE NAME OF
PLAINTIFF-APPELLANT DID NOT APPEAR IN THE DEED OF ABSOLUTE SALE EXECUTED BY TANDANG SORA
DEVELOPMENT CORPORATION OVER THE CONDOMINIUM UNIT;
VII. THE LOWER COURT ERRED IN RULING THAT NEITHER ARTICLE 148 OF THE FAMILYCODE NOR
ARTICLE 144 OF THE CIVIL CODE OF THE PHILIPPINES ARE APPLICABLE;

VIII. THE LOWER COURT ERRED IN NOT RULING THAT THE CAUSE OF ACTION OF THE INTERVENOR-
APPELLANT HAS BEEN BARRED BY PESCRIPTION AND LACHES; and

IX. THE LOWER COURT ERRED IN NOT EXPUNGING/DISMISSING THE INTERVENTION FOR FAILURE OF
INTERVENOR-APPELLANT TO PAY FILING FEE.7

In contrast, the respondents attributedthe following errors to the trial court, to wit:

I. THE LOWER COURT ERRED IN HOLDING THAT CERTAIN FOREIGN LAW BOOKS IN THE LAW OFFICE OF
ATTY. LUNA WERE BOUGHT WITH THE USE OF PLAINTIFFS MONEY;

II. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF PROVED BY PREPONDERANCE OF EVIDENCE
(HER CLAIM OVER) THE SPECIFIED FOREIGN LAW BOOKS FOUND IN ATTY. LUNAS LAW OFFICE; and

III. THE LOWER COURT ERRED IN NOT HOLDING THAT, ASSUMING PLAINTIFF PAID FOR THE SAID
FOREIGN LAW BOOKS, THE RIGHT TO RECOVER THEM HAD PRESCRIBED AND BARRED BY LACHES AND
ESTOPPEL.8

On November 11, 2005, the CA promulgated its assailed modified decision,9 holding and ruling:

EUGENIA, the first wife, was the legitimate wife of ATTY. LUNA until the latters death on July 12, 1997.
The absolute divorce decree obtained by ATTY. LUNA inthe Dominican Republic did not terminate his
prior marriage with EUGENIA because foreign divorce between Filipino citizens is not recognized in our
jurisdiction. x x x10

xxxx

WHEREFORE, premises considered, the assailed August 27, 2001 Decision of the RTC of MakatiCity,
Branch 138, is hereby MODIFIEDas follows:

(a) The 25/100 pro-indiviso share in the condominium unit at the SIXTH FLOOR of the KALAW LEDESMA
CONDOMINIUM PROJECT covered by Condominium Certificate of Title No. 21761 consisting of FIVE
HUNDRED SEVENTEEN (517/100) (sic) SQUARE METERS is hereby adjudged to defendants-appellants,
the heirs of Juan Luces Luna and Eugenia Zaballero-Luna (first marriage), having been acquired from the
sole funds and sole industry of Juan Luces Luna while marriage of Juan Luces Luna and Eugenia
Zaballero-Luna (first marriage) was still subsisting and valid;

(b) Plaintiff-appellant Soledad Lavadia has no right as owner or under any other concept over the
condominium unit, hence the entry in Condominium Certificate of Title No. 21761 of the Registry of
Deeds ofMakati with respect to the civil status of Juan Luces Luna should be changed from "JUAN LUCES
LUNA married to Soledad L. Luna" to "JUAN LUCES LUNA married to Eugenia Zaballero Luna";
(c) Defendants-appellants, the heirs of Juan Luces Luna and Eugenia Zaballero-Luna(first marriage) are
hereby declared to be the owner of the books Corpus Juris, Fletcher on Corporation, American
Jurisprudence and Federal Supreme Court Reports found in the condominium unit.

No pronouncement as to costs.

SO ORDERED.11

On March 13, 2006,12 the CA denied the petitioners motion for reconsideration.13

Issues

In this appeal, the petitioner avers in her petition for review on certiorarithat:

A. The Honorable Court of Appeals erred in ruling that the Agreement for Separation and Property
Settlement executed by Luna and Respondent Eugenia was unenforceable; hence, their conjugal
partnership was not dissolved and liquidated;

B. The Honorable Court of Appeals erred in not recognizing the Dominican Republic courts approval of
the Agreement;

C. The Honorable Court of Appeals erred in ruling that Petitioner failed to adduce sufficient proof of
actual contribution to the acquisition of purchase of the subjectcondominium unit; and

D. The Honorable Court of Appeals erred in ruling that Petitioner was not entitled to the subject law
books.14

The decisive question to be resolved is who among the contending parties should be entitled to the
25/100 pro indivisoshare in the condominium unit; and to the law books (i.e., Corpus Juris, Fletcher on
Corporation, American Jurisprudence and Federal Supreme Court Reports).

The resolution of the decisive question requires the Court to ascertain the law that should determine,
firstly, whether the divorce between Atty. Luna and Eugenia Zaballero-Luna (Eugenia) had validly
dissolved the first marriage; and, secondly, whether the second marriage entered into by the late Atty.
Luna and the petitioner entitled the latter to any rights in property. Ruling of the Court

We affirm the modified decision of the CA.

1. Atty. Lunas first marriage with Eugenia

subsisted up to the time of his death

The first marriage between Atty. Luna and Eugenia, both Filipinos, was solemnized in the Philippines on
September 10, 1947. The law in force at the time of the solemnization was the Spanish Civil Code, which
adopted the nationality rule. The Civil Codecontinued to follow the nationality rule, to the effect that
Philippine laws relating to family rights and duties, or to the status, condition and legal capacity of
persons were binding upon citizens of the Philippines, although living abroad.15 Pursuant to the
nationality rule, Philippine laws governed thiscase by virtue of bothAtty. Luna and Eugenio having
remained Filipinos until the death of Atty. Luna on July 12, 1997 terminated their marriage.

From the time of the celebration ofthe first marriage on September 10, 1947 until the present, absolute
divorce between Filipino spouses has not been recognized in the Philippines. The non-recognition of
absolute divorce between Filipinos has remained even under the Family Code,16 even if either or both
of the spouses are residing abroad.17 Indeed, the only two types of defective marital unions under our
laws have beenthe void and the voidable marriages. As such, the remedies against such defective
marriages have been limited to the declaration of nullity ofthe marriage and the annulment of the
marriage.

It is true that on January 12, 1976, the Court of First Instance (CFI) of Sto. Domingo in the Dominican
Republic issued the Divorce Decree dissolving the first marriage of Atty. Luna and
Eugenia.18 Conformably with the nationality rule, however, the divorce, even if voluntarily obtained
abroad, did not dissolve the marriage between Atty. Luna and Eugenia, which subsisted up to the time
of his death on July 12, 1997. This finding conforms to the Constitution, which characterizes marriage as
an inviolable social institution,19 and regards it as a special contract of permanent union between a man
and a woman for the establishment of a conjugal and family life.20 The non-recognition of absolute
divorce in the Philippines is a manifestation of the respect for the sanctity of the marital union especially
among Filipino citizens. It affirms that the extinguishment of a valid marriage must be grounded only
upon the death of either spouse, or upon a ground expressly provided bylaw. For as long as this public
policy on marriage between Filipinos exists, no divorce decree dissolving the marriage between them
can ever be given legal or judicial recognition and enforcement in this jurisdiction.

2. The Agreement for Separation and Property Settlement

was void for lack of court approval

The petitioner insists that the Agreement for Separation and Property Settlement (Agreement) that the
late Atty. Luna and Eugenia had entered into and executed in connection with the divorce proceedings
before the CFI of Sto. Domingo in the Dominican Republic to dissolve and liquidate their conjugal
partnership was enforceable against Eugenia. Hence, the CA committed reversible error in decreeing
otherwise.

The insistence of the petitioner was unwarranted.

Considering that Atty. Luna and Eugenia had not entered into any marriage settlement prior to their
marriage on September 10, 1947, the system of relative community or conjugal partnership of gains
governed their property relations. This is because the Spanish Civil Code, the law then in force at the
time of their marriage, did not specify the property regime of the spouses in the event that they had not
entered into any marriage settlement before or at the time of the marriage. Article 119 of the Civil
Codeclearly so provides, to wit:

Article 119. The future spouses may in the marriage settlements agree upon absolute or relative
community of property, or upon complete separation of property, or upon any other regime. In the
absence of marriage settlements, or when the same are void, the system of relative community or
conjugal partnership of gains as established in this Code, shall govern the property relations between
husband and wife.

Article 142 of the Civil Codehas defined a conjugal partnership of gains thusly:

Article 142. By means of the conjugal partnership of gains the husband and wife place in a common fund
the fruits of their separate property and the income from their work or industry, and divide equally,
upon the dissolution of the marriage or of the partnership, the net gains or benefits obtained
indiscriminately by either spouse during the marriage.

The conjugal partnership of gains subsists until terminated for any of various causes of termination
enumerated in Article 175 of the Civil Code, viz:

Article 175. The conjugal partnership of gains terminates:

(1) Upon the death of either spouse;

(2) When there is a decree of legal separation;

(3) When the marriage is annulled;

(4) In case of judicial separation of property under Article 191.

The mere execution of the Agreement by Atty. Luna and Eugenia did not per sedissolve and liquidate
their conjugal partnership of gains. The approval of the Agreement by a competent court was still
required under Article 190 and Article 191 of the Civil Code, as follows:

Article 190. In the absence of an express declaration in the marriage settlements, the separation of
property between spouses during the marriage shall not take place save in virtue of a judicial order.
(1432a)

Article 191. The husband or the wife may ask for the separation of property, and it shall be decreed
when the spouse of the petitioner has been sentenced to a penalty which carries with it civil
interdiction, or has been declared absent, or when legal separation has been granted.

xxxx

The husband and the wife may agree upon the dissolution of the conjugal partnership during the
marriage, subject to judicial approval. All the creditors of the husband and of the wife, as well as of the
conjugal partnership shall be notified of any petition for judicialapproval or the voluntary dissolution of
the conjugal partnership, so that any such creditors may appear atthe hearing to safeguard his interests.
Upon approval of the petition for dissolution of the conjugal partnership, the court shall take such
measures as may protect the creditors and other third persons.
After dissolution of the conjugal partnership, the provisions of articles 214 and 215 shall apply. The
provisions of this Code concerning the effect of partition stated in articles 498 to 501 shall be applicable.
(1433a)

But was not the approval of the Agreement by the CFI of Sto. Domingo in the Dominican Republic
sufficient in dissolving and liquidating the conjugal partnership of gains between the late Atty. Luna and
Eugenia?

The query is answered in the negative. There is no question that the approval took place only as an
incident ofthe action for divorce instituted by Atty. Luna and Eugenia, for, indeed, the justifications for
their execution of the Agreement were identical to the grounds raised in the action for divorce.21 With
the divorce not being itself valid and enforceable under Philippine law for being contrary to Philippine
public policy and public law, the approval of the Agreement was not also legally valid and enforceable
under Philippine law. Consequently, the conjugal partnership of gains of Atty. Luna and Eugenia
subsisted in the lifetime of their marriage.

3. Atty. Lunas marriage with Soledad, being bigamous,

was void; properties acquired during their marriage
were governed by the rules on co-ownership

What law governed the property relations of the second marriage between Atty. Luna and Soledad?

The CA expressly declared that Atty. Lunas subsequent marriage to Soledad on January 12, 1976 was
void for being bigamous,22 on the ground that the marriage between Atty. Luna and Eugenia had not
been dissolved by the Divorce Decree rendered by the CFI of Sto. Domingo in the Dominican Republic
but had subsisted until the death of Atty. Luna on July 12, 1997.

The Court concurs with the CA.

In the Philippines, marriages that are bigamous, polygamous, or incestuous are void. Article 71 of the
Civil Codeclearly states:

Article 71. All marriages performed outside the Philippines in accordance with the laws in force in the
country where they were performed, and valid there as such, shall also be valid in this country, except
bigamous, polygamous, or incestuous marriages as determined by Philippine law.

Bigamy is an illegal marriage committed by contracting a second or subsequent marriage before the first
marriage has been legally dissolved, or before the absent spouse has been declared presumptively dead
by means of a judgment rendered in the proper proceedings.23 A bigamous marriage is considered void
ab initio.24

Due to the second marriage between Atty. Luna and the petitioner being void ab initioby virtue of its
being bigamous, the properties acquired during the bigamous marriage were governed by the rules on
co-ownership, conformably with Article 144 of the Civil Code, viz:
Article 144. When a man and a woman live together as husband and wife, but they are not married,
ortheir marriage is void from the beginning, the property acquired by eitheror both of them through
their work or industry or their wages and salaries shall be governed by the rules on co-ownership.(n)

In such a situation, whoever alleges co-ownership carried the burden of proof to confirm such
fact.1wphi1 To establish co-ownership, therefore, it became imperative for the petitioner to offer
proof of her actual contributions in the acquisition of property. Her mere allegation of co-ownership,
without sufficient and competent evidence, would warrant no relief in her favor. As the Court explained
in Saguid v. Court of Appeals:25

In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of co-ownership
ofproperties acquired by the parties to a bigamous marriage and an adulterous relationship,
respectively, we ruled that proof of actual contribution in the acquisition of the property is essential.
The claim of co-ownership of the petitioners therein who were parties to the bigamous and
adulterousunion is without basis because they failed to substantiate their allegation that they
contributed money in the purchase of the disputed properties. Also in Adriano v. Court of Appeals, we
ruled that the fact that the controverted property was titled in the name of the parties to an adulterous
relationship is not sufficient proof of coownership absent evidence of actual contribution in the
acquisition of the property.

As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings or
the nature of the case, asserts an affirmative issue. Contentions must be proved by competent evidence
and reliance must be had on the strength of the partys own evidence and not upon the weakness of the
opponents defense. This applies with more vigor where, as in the instant case, the plaintiff was allowed
to present evidence ex parte.1wphi1 The plaintiff is not automatically entitled to the relief prayed for.
The law gives the defendantsome measure of protection as the plaintiff must still prove the allegations
in the complaint. Favorable relief can be granted only after the court isconvinced that the facts proven
by the plaintiff warrant such relief. Indeed, the party alleging a fact has the burden of proving it and a
mereallegation is not evidence.26

The petitioner asserts herein that she sufficiently proved her actual contributions in the purchase of the
condominium unit in the aggregate amount of at least 306,572.00, consisting in direct contributions of
159,072.00, and in repaying the loans Atty. Luna had obtained from Premex Financing and Banco
Filipino totaling 146,825.30;27 and that such aggregate contributions of 306,572.00 corresponded to
almost the entire share of Atty. Luna in the purchase of the condominium unit amounting to
362,264.00 of the units purchase price of 1,449,056.00.28 The petitioner further asserts that the
lawbooks were paid for solely out of her personal funds, proof of which Atty. Luna had even sent her a
"thank you" note;29 that she had the financial capacity to make the contributions and purchases; and
that Atty. Luna could not acquire the properties on his own due to the meagerness of the income
derived from his law practice.

Did the petitioner discharge her burden of proof on the co-ownership?

In resolving the question, the CA entirely debunked the petitioners assertions on her actual
contributions through the following findings and conclusions, namely:

SOLEDAD was not able to prove by preponderance of evidence that her own independent funds were
used to buy the law office condominium and the law books subject matter in contentionin this case
proof that was required for Article 144 of the New Civil Code and Article 148 of the Family Code to apply
as to cases where properties were acquired by a man and a woman living together as husband and
wife but not married, or under a marriage which was void ab initio. Under Article 144 of the New Civil
Code, the rules on co-ownership would govern. But this was not readily applicable to many situations
and thus it created a void at first because it applied only if the parties were not in any way incapacitated
or were without impediment to marry each other (for it would be absurd to create a co-ownership
where there still exists a prior conjugal partnership or absolute community between the man and his
lawful wife). This void was filled upon adoption of the Family Code. Article 148 provided that: only the
property acquired by both of the parties through their actual joint contribution of money, property or
industry shall be owned in common and in proportion to their respective contributions. Such
contributions and corresponding shares were prima faciepresumed to be equal. However, for this
presumption to arise, proof of actual contribution was required. The same rule and presumption was to
apply to joint deposits of money and evidence of credit. If one of the parties was validly married to
another, his or her share in the co-ownership accrued to the absolute community or conjugal
partnership existing in such valid marriage. If the party who acted in bad faith was not validly married to
another, his or her share shall be forfeited in the manner provided in the last paragraph of the Article
147. The rules on forfeiture applied even if both parties were in bad faith. Co-ownership was the
exception while conjugal partnership of gains was the strict rule whereby marriage was an inviolable
social institution and divorce decrees are not recognized in the Philippines, as was held by the Supreme
Court in the case of Tenchavez vs. Escao, G.R. No. L-19671, November 29, 1965, 15 SCRA 355, thus:

xxxx

As to the 25/100pro-indivisoshare of ATTY. LUNA in the condominium unit, SOLEDAD failed to prove
that she made an actual contribution to purchase the said property. She failed to establish that the four
(4) checks that she presented were indeed used for the acquisition of the share of ATTY. LUNA in the
condominium unit. This was aptly explained in the Decision of the trial court, viz.:

"x x x The first check, Exhibit "M" for 55,000.00 payable to Atty. Teresita Cruz Sison was issued on
January 27, 1977, which was thirteen (13) months before the Memorandum of Agreement, Exhibit "7"
was signed. Another check issued on April 29, 1978 in the amount of 97,588.89, Exhibit "P" was
payable to Banco Filipino. According to the plaintiff, thiswas in payment of the loan of Atty. Luna. The
third check which was for 49,236.00 payable to PREMEX was dated May 19, 1979, also for payment of
the loan of Atty. Luna. The fourth check, Exhibit "M", for 4,072.00 was dated December 17, 1980. None
of the foregoing prove that the amounts delivered by plaintiff to the payees were for the acquisition of
the subject condominium unit. The connection was simply not established. x x x"
SOLEDADs claim that she made a cash contribution of 100,000.00 is unsubstantiated. Clearly, there is
no basis for SOLEDADs claim of co-ownership over the 25/100 portion of the condominium unit and the
trial court correctly found that the same was acquired through the sole industry of ATTY. LUNA, thus:

"The Deed of Absolute Sale, Exhibit "9", covering the condominium unit was in the name of Atty. Luna,
together with his partners in the law firm. The name of the plaintiff does not appear as vendee or as the
spouse of Atty. Luna. The same was acquired for the use of the Law firm of Atty. Luna. The loans from
Allied Banking Corporation and Far East Bank and Trust Company were loans of Atty. Luna and his
partners and plaintiff does not have evidence to show that she paid for them fully or partially. x x x"

The fact that CCT No. 4779 and subsequently, CCT No. 21761 were in the name of "JUAN LUCES LUNA,
married to Soledad L. Luna" was no proof that SOLEDAD was a co-owner of the condominium unit.
Acquisition of title and registration thereof are two different acts. It is well settled that registration does
not confer title but merely confirms one already existing. The phrase "married to" preceding "Soledad L.
Luna" is merely descriptive of the civil status of ATTY. LUNA.

SOLEDAD, the second wife, was not even a lawyer. So it is but logical that SOLEDAD had no participation
in the law firm or in the purchase of books for the law firm. SOLEDAD failed to prove that she had
anything to contribute and that she actually purchased or paid for the law office amortization and for
the law books. It is more logical to presume that it was ATTY. LUNA who bought the law office space and
the law books from his earnings from his practice of law rather than embarrassingly beg or ask from
SOLEDAD money for use of the law firm that he headed.30

The Court upholds the foregoing findings and conclusions by the CA both because they were
substantiated by the records and because we have not been shown any reason to revisit and undo
them. Indeed, the petitioner, as the party claiming the co-ownership, did not discharge her burden of
proof. Her mere allegations on her contributions, not being evidence,31 did not serve the purpose. In
contrast, given the subsistence of the first marriage between Atty. Luna and Eugenia, the presumption
that Atty. Luna acquired the properties out of his own personal funds and effort remained. It should
then be justly concluded that the properties in litislegally pertained to their conjugal partnership of gains
as of the time of his death. Consequently, the sole ownership of the 25/100 pro indivisoshare of Atty.
Luna in the condominium unit, and of the lawbooks pertained to the respondents as the lawful heirs of
Atty. Luna.

WHEREFORE, the Court AFFIRMS the decision promulgated on November 11, 2005; and ORDERS the
petitioner to pay the costs of suit.

SO ORDERED.

Camilo Borromeo v. Antonietta Descallar

G.R. No. 159310, February 24, 2009
Puno, C.J..:

FACTS:
Petitioner appealed the reversal by the CA of the trial courts ruling in his favor which declared the titles
of respondent as null and void.

Wilhelm Jambrich, an Austrian, and respondent fell in love and decided to live together. Eventually,
however, they went their separate ways as respondent found a new boyfriend while Jambrich began to
live with another woman. Jambrich met petitioner who was engaged in the real estate business and
built and repaired speedboats as a hobby. Jambrich purchased an engine and some accessories for his
boat from petitioner, for which he became indebted to the latter. To pay for his debt, he sold his rights
and interests in the Agro-Macro properties to petitioner as evidenced by a "Deed of Absolute
Sale/Assignment." When petitioner sought to register the deed of assignment, he discovered that titles
to the three lots have been transferred in the name of respondent, and that the subject property has
already been mortgaged.

Petitioner imputes error on the judgment of the CA for holding that Jambrich has no title to the titles in
question and may not therefore transfer and assign any rights or interests in favor of the petitioner.

ISSUE:
Having found that the true buyer of the disputed house and lots was the Austrian Wilhelm Jambrich,
what now is the effect of registration of the properties in the name of respondent?

HELD:
In the instant case, the transfer of land from Agro-Macro Development Corporation to Jambrich, who is
an Austrian, would have been declared invalid if challenged, had not Jambrich conveyed the properties
to petitioner who is a Filipino citizen. While the acquisition and the purchase by Wilhelm Jambrich of the
properties under litigation were void ab initio since they were contrary to the Constitution of the
Philippines, the acquisition of these properties by plaintiff who is a Filipino citizen from him, has cured
the flaw in the original transaction and the title of the transferee is valid. As the property in dispute is
already in the hands of a qualified person, a Filipino citizen, there would be no more public policy to be
protected. The objective of the constitutional provision to keep our lands in Filipino hands has been
achieved.

G.R. No. 159310 February 24, 2009

CAMILO F. BORROMEO, Petitioner,

vs.
ANTONIETTA O. DESCALLAR, Respondent.

DECISION

PUNO, C.J.:

What are the rights of an alien (and his successor-in-interest) who acquired real properties in the
country as against his former Filipina girlfriend in whose sole name the properties were registered
under the Torrens system?
The facts are as follows:

Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983 after he was assigned by his
employer, Simmering-Graz Panker A.G., an Austrian company, to work at a project in Mindoro. In
1984, he transferred to Cebu and worked at the Naga II Project of the National Power Corporation.
There, he met respondent Antonietta Opalla-Descallar, a separated mother of two boys who was
working as a waitress at St. Moritz Hotel. Jambrich befriended respondent and asked her to tutor
him in English. In dire need of additional income to support her children, respondent agreed. The
tutorials were held in Antoniettas residence at a squatters area in Gorordo Avenue.

Jambrich and respondent fell in love and decided to live together in a rented house in Hernan
Cortes, Mandaue City. Later, they transferred to their own house and lots at Agro-Macro
Subdivision, Cabancalan, Mandaue City. In the Contracts to Sell dated November 18, 19851 and
March 10, 19862 covering the properties, Jambrich and respondent were referred to as the buyers. A
Deed of Absolute Sale dated November 16, 19873 was likewise issued in their favor. However, when
the Deed of Absolute Sale was presented for registration before the Register of Deeds, registration
was refused on the ground that Jambrich was an alien and could not acquire alienable lands of the
public domain. Consequently, Jambrichs name was erased from the document. But it could be
noted that his signature remained on the left hand margin of page 1, beside respondents signature
as buyer on page 3, and at the bottom of page 4 which is the last page. Transfer Certificate of Title
(TCT) Nos. 24790, 24791 and 24792 over the properties were issued in respondents name alone.

Jambrich also formally adopted respondents two sons in Sp. Proc. No. 39-MAN,4 and per Decision
of the Regional Trial Court of Mandaue City dated May 5, 1988.5

However, the idyll lasted only until April 1991. By then, respondent found a new boyfriend while
Jambrich began to live with another woman in Danao City. Jambrich supported respondents sons
for only two months after the break up.

Jambrich met petitioner Camilo F. Borromeo sometime in 1986. Petitioner was engaged in the real
estate business. He also built and repaired speedboats as a hobby. In 1989, Jambrich purchased an
engine and some accessories for his boat from petitioner, for which he became indebted to the latter
for about 150,000.00. To pay for his debt, he sold his rights and interests in the Agro-Macro
properties to petitioner for 250,000, as evidenced by a "Deed of Absolute Sale/Assignment."6 On
July 26, 1991, when petitioner sought to register the deed of assignment, he discovered that titles to
the three lots have been transferred in the name of respondent, and that the subject property has
already been mortgaged.

On August 2, 1991, petitioner filed a complaint against respondent for recovery of real property
before the Regional Trial Court of Mandaue City. Petitioner alleged that the Contracts to Sell dated
November 18, 1985 and March 10, 1986 and the Deed of Absolute Sale dated November 16, 1987
over the properties which identified both Jambrich and respondent as buyers do not reflect the true
agreement of the parties since respondent did not pay a single centavo of the purchase price and
was not in fact a buyer; that it was Jambrich alone who paid for the properties using his exclusive
funds; that Jambrich was the real and absolute owner of the properties; and, that petitioner acquired
absolute ownership by virtue of the Deed of Absolute Sale/Assignment dated July 11, 1991 which
Jambrich executed in his favor.

In her Answer, respondent belied the allegation that she did not pay a single centavo of the
purchase price. On the contrary, she claimed that she "solely and exclusively used her own personal
funds to defray and pay for the purchase price of the subject lots in question," and that Jambrich,
being an alien, was prohibited to acquire or own real property in the Philippines.
At the trial, respondent presented evidence showing her alleged financial capacity to buy the
disputed property with money from a supposed copra business. Petitioner, in turn, presented
Jambrich as his witness and documentary evidence showing the substantial salaries which Jambrich
received while still employed by the Austrian company, Simmering-Graz Panker A.G.

In its decision, the court a quo found

Evidence on hand clearly show that at the time of the purchase and acquisition of [the] properties
under litigation that Wilhelm Jambrich was still working and earning much. This fact of Jambrich
earning much is not only supported by documentary evidence but also by the admission made by
the defendant Antoniet[t]a Opalla. So that, Jambrichs financial capacity to acquire and purchase the
properties . . . is not disputed.7

xxx

On the other hand, evidence . . . clearly show that before defendant met Jambrich sometime in the
latter part of 1984, she was only working as a waitress at the St. Moritz Hotel with an income of
1,000.00 a month and was . . . renting and living only in . . . [a] room at . . . [a] squatter area at
Gorordo Ave., Cebu City; that Jambrich took pity of her and the situation of her children that he
offered her a better life which she readily accepted. In fact, this miserable financial situation of hers
and her two children . . . are all stated and reflected in the Child Study Report dated April 20, 1983
(Exhs. "G" and "G-1") which facts she supplied to the Social Worker who prepared the same when
she was personally interviewed by her in connection with the adoption of her two children by Wilhelm
Jambrich. So that, if such facts were not true because these are now denied by her . . . and if it was
also true that during this time she was already earning as much as 8,000.00 to 9,000.00 as profit
per month from her copra business, it would be highly unbelievable and impossible for her to be
living only in such a miserable condition since it is the observation of this Court that she is not only
an extravagant but also an expensive person and not thrifty as she wanted to impress this Court in
order to have a big saving as clearly shown by her actuation when she was already cohabiting and
living with Jambrich that according to her . . . the allowance given . . . by him in the amount of
$500.00 a month is not enough to maintain the education and maintenance of her children.8

This being the case, it is highly improbable and impossible that she could acquire the properties
under litigation or could contribute any amount for their acquisition which according to her is worth
more than 700,000.00 when while she was working as [a] waitress at St. Moritz Hotel earning
1,000.00 a month as salary and tips of more or less 2,000.00 she could not even provide [for] the
daily needs of her family so much so that it is safe to conclude that she was really in financial
distress when she met and accepted the offer of Jambrich to come and live with him because that
was a big financial opportunity for her and her children who were already abandoned by her
husband.9

xxx

The only probable and possible reason why her name appeared and was included in [the contracts
to sell dated November 18, 1985 and March 10, 1986 and finally, the deed of absolute sale dated
November 16, 1987] as buyer is because as observed by the Court, she being a scheming and
exploitive woman, she has taken advantage of the goodness of Jambrich who at that time was still
bewitched by her beauty, sweetness, and good attitude shown by her to him since he could still very
well provide for everything she needs, he being earning (sic) much yet at that time. In fact, as
observed by this Court, the acquisition of these properties under litigation was at the time when their
relationship was still going smoothly and harmoniously.10 [Emphasis supplied.]
The dispositive portion of the Decision states:

WHEREFORE, . . . Decision is hereby rendered in favor of the plaintiff and against the defendant
Antoniet[t]a Opalla by:

1) Declaring plaintiff as the owner in fee simple over the residential house of strong materials
and three parcels of land designated as Lot Nos. 1, 3 and 5 which are covered by TCT Nos.
24790, 24791 and 24792 issued by the Register of Deeds of Mandaue City;

2) Declaring as null and void TCT Nos. 24790, 24791 and 24792 issued in the name of
defendant Antoniet[t]a Descallar by the Register of Deeds of Mandaue City;

3) Ordering the Register of Deeds of Mandaue City to cancel TCT Nos. 24790, 24791 and
24792 in the name of defendant Antoniet[t]a Descallar and to issue new ones in the name of
plaintiff Camilo F. Borromeo;

4) Declaring the contracts now marked as Exhibits "I," "K" and "L" as avoided insofar as they
appear to convey rights and interests over the properties in question to the defendant
Antoniet[t]a Descallar;

5) Ordering the defendant to pay plaintiff attorneys fees in the amount of 25,000.00 and
litigation expenses in the amount of 10,000.00; and,

6) To pay the costs.11

Respondent appealed to the Court of Appeals. In a Decision dated April 10, 2002,12 the appellate
court reversed the decision of the trial court. In ruling for the respondent, the Court of Appeals held:

We disagree with the lower courts conclusion. The circumstances involved in the case cited by the
lower court and similar cases decided on by the Supreme Court which upheld the validity of the title
of the subsequent Filipino purchasers are absent in the case at bar. It should be noted that in said
cases, the title to the subject property has been issued in the name of the alien transferee (Godinez
et al., vs. Fong Pak Luen et al., 120 SCRA 223 citing Krivenko vs. Register of Deeds of Manila, 79
Phils. 461; United Church Board for World Ministries vs. Sebastian, 159 SCRA 446, citing the case
of Sarsosa Vda. De Barsobia vs. Cuenco, 113 SCRA 547; Tejido vs. Zamacoma, 138 SCRA 78). In
the case at bar, the title of the subject property is not in the name of Jambrich but in the name of
defendant-appellant. Thus, Jambrich could not have transferred a property he has no title thereto.13

Petitioners motion for reconsideration was denied.

Hence, this petition for review.

Petitioner assigns the following errors:

I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING

RESPONDENTS JUDICIAL ADMISSION AND OTHER OVERWHELMING EVIDENCE
ESTABLISHING JAMBRICHS PARTICIPATION, INTEREST AND OWNERSHIP OF THE
PROPERTIES IN QUESTION AS FOUND BY THE HONORABLE TRIAL COURT.
II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT JAMBRICH
HAS NO TITLE TO THE PROPERTIES IN QUESTION AND MAY NOT THEREFORE TRANSFER
AND ASSIGN ANY RIGHTS AND INTERESTS IN FAVOR OF PETITIONER.

III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE WELL-
REASONED DECISION OF THE TRIAL COURT AND IN IMPOSING DOUBLE COSTS AGAINST
HEREIN PETITIONER (THEN, PLAINTIFF-APPELLEE).14

First, who purchased the subject properties?

The evidence clearly shows, as pointed out by the trial court, who between respondent and Jambrich
possesses the financial capacity to acquire the properties in dispute. At the time of the acquisition of
the properties in 1985 to 1986, Jambrich was gainfully employed at Simmering-Graz Panker A.G.,
an Austrian company. He was earning an estimated monthly salary of 50,000.00. Then, Jambrich
was assigned to Syria for almost one year where his monthly salary was approximately 90,000.00.

On the other hand, respondent was employed as a waitress from 1984 to 1985 with a monthly salary
of not more than 1,000.00. In 1986, when the parcels of land were acquired, she was unemployed,
as admitted by her during the pre-trial conference. Her allegations of income from a copra business
were unsubstantiated. The supposed copra business was actually the business of her mother and
their family, with ten siblings. She has no license to sell copra, and had not filed any income tax
return. All the motorized bancas of her mother were lost to fire, and the last one left standing was
already scrap. Further, the Child Study Report15 submitted by the Department of Social Welfare and
Development (DSWD) in the adoption proceedings of respondents two sons by Jambrich disclosed
that:

Antonietta tried all types of job to support the children until she was accepted as a waitress at St.
Moritz Restaurant in 1984. At first she had no problem with money because most of the customers
of St. Moritz are (sic) foreigners and they gave good tips but towards the end of 1984 there were no
more foreigners coming because of the situation in the Philippines at that time. Her financial problem
started then. She was even renting a small room in a squatters area in Gorordo Ave., Cebu City. It
was during her time of great financial distress that she met Wilhelm Jambrich who later offered her a
decent place for herself and her children.16

The DSWD Home Study Report17 further disclosed that:

[Jambrich] was then at the Restaurant of St. Moritz when he saw Antonietta Descallar, one of the
waitresses of the said Restaurants. He made friends with the girl and asked her to tutor him in [the]
English language. Antonietta accepted the offer because she was in need of additional income to
support [her] 2 young children who were abandoned by their father. Their session was agreed to be
scheduled every afternoon at the residence of Antonietta in the squatters area in Gorordo Avenue,
Cebu City. The Austrian was observing the situation of the family particularly the children who were
malnourished. After a few months sessions, Mr. Jambrich offered to transfer the family into a decent
place. He told Antonietta that the place is not good for the children. Antonietta who was miserable
and financially distressed at that time accepted the offer for the sake of the children.18

Further, the following additional pieces of evidence point to Jambrich as the source of fund used to
purchase the three parcels of land, and to construct the house thereon:

(1) Respondent Descallar herself affirmed under oath, during her re-direct examination and
during the proceedings for the adoption of her minor children, that Jambrich was the owner
of the properties in question, but that his name was deleted in the Deed of Absolute Sale
 because of legal constraints. Nonetheless, his signature remained in the deed of sale, where
he signed as buyer.

(2) The money used to pay the subject parcels of land in installments was in postdated
checks issued by Jambrich. Respondent has never opened any account with any bank.
Receipts of the installment payments were also in the name of Jambrich and respondent.

(3) In 1986-1987, respondent lived in Syria with Jambrich and her two children for ten
months, where she was completely under the support of Jambrich.

(4) Jambrich executed a Last Will and Testament, where he, as owner, bequeathed the
subject properties to respondent.

Thus, Jambrich has all authority to transfer all his rights, interests and participation over the subject
properties to petitioner by virtue of the Deed of Assignment he executed on July 11, 1991.

Well-settled is the rule that this Court is not a trier of facts. The findings of fact of the trial court are
accorded great weight and respect, if not finality by this Court, subject to a number of exceptions. In
the instant case, we find no reason to disturb the factual findings of the trial court. Even the appellate
court did not controvert the factual findings of the trial court. They differed only in their conclusions of
law.

Further, the fact that the disputed properties were acquired during the couples cohabitation also
does not help respondent. The rule that co-ownership applies to a man and a woman living
exclusively with each other as husband and wife without the benefit of marriage, but are otherwise
capacitated to marry each other, does not apply.19 In the instant case, respondent was still legally
married to another when she and Jambrich lived together. In such an adulterous relationship, no co-
ownership exists between the parties. It is necessary for each of the partners to prove his or her
actual contribution to the acquisition of property in order to be able to lay claim to any portion of it.
Presumptions of co-ownership and equal contribution do not apply.20

Second, we dispose of the issue of registration of the properties in the name of respondent alone.
Having found that the true buyer of the disputed house and lots was the Austrian Wilhelm Jambrich,
what now is the effect of registration of the properties in the name of respondent?

It is settled that registration is not a mode of acquiring ownership.21 It is only a means of confirming
the fact of its existence with notice to the world at large.22 Certificates of title are not a source of right.
The mere possession of a title does not make one the true owner of the property. Thus, the mere
fact that respondent has the titles of the disputed properties in her name does not necessarily,
conclusively and absolutely make her the owner. The rule on indefeasibility of title likewise does not
apply to respondent. A certificate of title implies that the title is quiet,23 and that it is perfect, absolute
and indefeasible.24 However, there are well-defined exceptions to this rule, as when the transferee is
not a holder in good faith and did not acquire the subject properties for a valuable
consideration.25 This is the situation in the instant case. Respondent did not contribute a single
centavo in the acquisition of the properties. She had no income of her own at that time, nor did she
have any savings. She and her two sons were then fully supported by Jambrich.

Respondent argued that aliens are prohibited from acquiring private land. This is embodied in
Section 7, Article XII of the 1987 Constitution,26 which is basically a reproduction of Section 5, Article
XIII of the 1935 Constitution,27 and Section 14, Article XIV of the 1973 Constitution.28 The capacity to
acquire private land is dependent on the capacity "to acquire or hold lands of the public domain."
Private land may be transferred only to individuals or entities "qualified to acquire or hold lands of the
public domain." Only Filipino citizens or corporations at least 60% of the capital of which is owned by
Filipinos are qualified to acquire or hold lands of the public domain. Thus, as the rule now stands,
the fundamental law explicitly prohibits non-Filipinos from acquiring or holding title to private lands,
except only by way of legal succession or if the acquisition was made by a former natural-born
citizen.29

Therefore, in the instant case, the transfer of land from Agro-Macro Development Corporation to
Jambrich, who is an Austrian, would have been declared invalid if challenged, had not Jambrich
conveyed the properties to petitioner who is a Filipino citizen. In United Church Board for World
Ministries v. Sebastian,30 the Court reiterated the consistent ruling in a number of cases31 that if land
is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to a
Filipino, the flaw in the original transaction is considered cured and the title of the transferee is
rendered valid. Applying United Church Board for World Ministries, the trial court ruled in favor of
petitioner, viz.:

[W]hile the acquisition and the purchase of (sic) Wilhelm Jambrich of the properties under litigation
[were] void ab initio since [they were] contrary to the Constitution of the Philippines, he being a
foreigner, yet, the acquisition of these properties by plaintiff who is a Filipino citizen from him, has
cured the flaw in the original transaction and the title of the transferee is valid.

The trial court upheld the sale by Jambrich in favor of petitioner and ordered the cancellation of the
TCTs in the name of respondent. It declared petitioner as owner in fee simple of the residential
house of strong materials and three parcels of land designated as Lot Nos. 1, 3 and 5, and ordered
the Register of Deeds of Mandaue City to issue new certificates of title in his name. The trial court
likewise ordered respondent to pay petitioner 25,000 as attorneys fees and 10,000 as litigation
expenses, as well as the costs of suit.

We affirm the Regional Trial Court.

The rationale behind the Courts ruling in United Church Board for World Ministries, as reiterated in
subsequent cases,32 is this since the ban on aliens is intended to preserve the nations land for
future generations of Filipinos, that aim is achieved by making lawful the acquisition of real estate by
aliens who became Filipino citizens by naturalization or those transfers made by aliens to Filipino
citizens. As the property in dispute is already in the hands of a qualified person, a Filipino citizen,
there would be no more public policy to be protected. The objective of the constitutional provision to
keep our lands in Filipino hands has been achieved.

IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of Appeals in C.A. G.R.
CV No. 42929 dated April 10, 2002 and its Resolution dated July 8, 2003 are REVERSED and SET
ASIDE. The Decision of the Regional Trial Court of Mandaue City in Civil Case No. MAN-1148 is
REINSTATED.

SO ORDERED.

Tumlos vs Fernandez
GR No. 137650, April 12, 2000

FACTS:

Mario and Lourdes Fernandez were plaintiffs in an action for ejectment filed against Guillerma, Gina
and Toto Tumlos. In the complaint, spouses Fernandez alleged that they are the absolute owners of
an apartment building that through their tolerance they allowed the Tumlos to occupy the apartment
for the last 7 years without payment of any rent. It was agreed that Guillerma will pay 1,600 a month
while the other defendants promised to pay 1,000 a month which was not complied with. Demand
was made several times for the defendants to vacate the premises as they are in need of the property
for the construction of a new building.

Defendants appealed to RTC that Mario and Guillerma had an amorous relationship and that they
acquired the property in question as their love nest. It was likewise alleged that they lived together in
the said apartment building with their 2 children for about 10 years and that Gullerma administered
the property by collecting rentals from the lessees until she discovered that Mario deceived her as to
the annulment of their marriage.

ISSUE: WON Guillerma is a co-owner of the said apartment under Article 148.

HELD:

SC rejected the claim that Guillerma and Mario were co-owners of the subject property. The claim
was not satisfactorily proven by Guillerma since there were no other evidence presented to validate it
except for the said affidavit. Even if the allegations of having cohabited with Mario and that she bore
him two children were true, the claim of co-ownership still cannot be accepted. Mario is validly
married with Lourdes hence Guillerma and Mario are not capacitated to marry each other. The
property relation governing their supposed cohabitation is under Article 148 of the Family Code.
Actual contribution is required by the said provision in contrast to Art 147 which states that efforts in
the care and maintenance of the family and household are regarded as contributions to the
acquisitions of common property by one who has no salary, income, work or industry. Such is not
included in Art 148. If actual contribution is not proven then there can be no co-ownership and no
presumption of equal shares.

G.R. No. 137650 April 12, 2000

GUILLERMA TUMLOS, petitioner,

vs.
SPOUSES MARIO FERNANDEZ and LOURDES FERNANDEZ, respondents.

PANGANIBAN, J.:

Under Article 148 of the Family Code, a man and a woman who are not legally capacitated to marry
each other, but who nonetheless live together conjugally, may be deemed co-owners of a property
acquired during the cohabitation only upon proof that each made an actual contribution to its
acquisition. Hence, mere cohabitation without proof of contribution will not result in a co-ownership.

The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the November 19,
1998 Decision of the Court of Appeals 1 (CA), which reversed the October 7, 1997 Order of the
Regional Trial Court (RTC). 2 The dispositive part of the CA Decision reads:

WHEREFORE, the instant petition is GRANTED, and the questioned orders of the court a
quo dated October 7, 1997 and November 11, 1997, are hereby REVERSED and SET
ASIDE. The judgment of the court a quodated June 5, 1997 is hereby REINSTATED. Costs
against the private respondents.3

The assailed Order of the RTC disposed as follows:

Wherefore, the decision of this Court rendered on June 5, 1997 affirming in toto the appealed
judgment of the [MTC] is hereby reconsidered and a new one is entered reversing said
decision of the [MTC] and dismissing the complaint in the above-entitled case. 4

Petitioner also assails the February 14, 1999 CA Resolution denying the Motion for Reconsideration.

The Facts

The Court of Appeals narrates the facts as follows:

[Herein respondents] were the plaintiffs in Civil Case No. 6756, an action for ejectment filed
before Branch 82 of the MTC of Valenzuela, Metro Manila against [herein Petitioner]
Guillerma Tumlos, Toto Tumlos, and Gina Tumlos. In their complaint dated July 5, 1996, the
said spouses alleged that they are the absolute owners of an apartment building located at
ARTE SUBDIVISION III, Lawang Bato, Valenzuela, Metro Manila; that through tolerance
they had allowed the defendants-private respondents to occupy the apartment building for
the last seven (7) years, since 1989, without the payment of any rent; that it was agreed
upon that after a few months, defendant Guillerma Tumlos will pay P1,600.00 a month while
the other defendants promised to pay P1,000.00 a month, both as rental, which agreement
was not complied with by the said defendants; that they have demanded several times [that]
the defendants . . . vacate the premises, as they are in need of the property for the
construction of a new building; and that they have also demanded payment of P84,000.00
from Toto and Gina Tumlos representing rentals for seven (7) years and payment of
P143,600.00 from Guillerma Tumlos as unpaid rentals for seven (7) years, but the said
demands went unheeded. They then prayed that the defendants be ordered to vacate the
property in question and to pay the stated unpaid rentals, as well as to jointly pay P30,000.00
in attorneys fees.

[Petitioner] Guillerma Tumlos was the only one who filed an answer to the complaint. She
averred therein that the Fernandez spouses had no cause of action against her, since she is
a co-owner of the subject premises as evidenced by a Contract to Sell wherein it was stated
that she is a co-vendee of the property in question together with [Respondent] Mario
Fernandez. She then asked for the dismissal of the complaint.

After an unfruitful preliminary conference on November 15, 1996, the MTC required the
parties to submit their affidavits and other evidence on the factual issues defined in their
pleadings within ten (10) days from receipt of such order, pursuant to section 9 of the
Revised Rule on Summary Procedure. [Petitioner] Guillerma Tumlos submitted her
affidavit/position paper on November 29, 1996, while the [respondents] filed their position
paper on December 5, 1996, attaching thereto their marriage contract, letters of demand to
 the defendants, and the Contract to Sell over the disputed property. The MTC thereafter
promulgated its judgment on January 22, 1997[.]

xxx xxx xxx

Upon appeal to the [RTC], [petitioner and the two other] defendants alleged in their
memorandum on appeal that [Respondent] Mario Fernandez and [Petitioner] Guillerma had
an amorous relationship, and that they acquired the property in question as their "love nest."
It was further alleged that they lived together in the said apartment building with their two (2)
children for around ten (10) years, and that Guillerma administered the property by collecting
rentals from the lessees of the other apartments, until she discovered that [Respondent
Mario] deceived her as to the annulment of his marriage. It was also during the early part of
1996 when [Respondent Mario] accused her of being unfaithful and demonstrated his
baseless [jealousy].

In the same memorandum, [petitioner and the two other] defendants further averred that it
was only recently that Toto Tumlos was temporarily accommodated in one of the rooms of
the subject premises while Gina Tumlos acted as a nanny for the children. In short, their
presence there [was] only transient and they [were] not tenants of the Fernandez spouses.

On June 5, 1997, the [RTC] rendered a decision affirming in toto the judgment of the MTC.

The [petitioner and the two other defendants] seasonably filed a motion for reconsideration
on July 3, 1997, alleging that the decision of affirmance by the RTC was constitutionally
flawed for failing to point out distinctly and clearly the findings of facts and law on which it
was based vis--vis the statements of issues they have raised in their memorandum on
appeal. They also averred that the Contract to Sell presented by the plaintiffs which named
the buyer as "Mario P. Fernandez, of legal age, married to Lourdes P. Fernandez," should
not be given credence as it was falsified to appear that way. According to them, the Contract
to Sell originally named "Guillerma Fernandez" as the spouse of [Respondent Mario]. As
found by the [RTC] in its judgment, a new Contract to Sell was issued by the sellers naming
the [respondents] as the buyers after the latter presented their marriage contract and
requested a change in the name of the vendee-wife. Such facts necessitate the conclusion
that Guillerma was really a co-owner thereof, and that the [respondents] manipulated the
evidence in order to deprive her of her rights to enjoy and use the property as recognized by
law.

xxx xxx xxx

The [RTC], in determining the question of ownership in order to resolve the issue of
possession, ruled therein that the Contract to Sell submitted by the Fernandez spouses
appeared not to be authentic, as there was an alteration in the name of the wife of
[Respondent] Mario Fernandez. Hence, the contract presented by the [respondents] cannot
be given any weight. The court further ruled that Guillerma and [Respondent Mario] acquired
the property during their cohabitation as husband and wife, although without the benefit of
marriage. From such findings, the court concluded that [Petitioner] Guillerma Tumlos was a
co-owner of the subject property and could not be ejected therefrom.

The [respondents] then filed a motion for reconsideration of the order of reversal, but the
same was denied by the [RTC]. 5

As earlier stated, the CA reversed the RTC. Hence, this Petition filed by Guillerma Tumlos only. 6
 Ruling of the Court of Appeals

The CA rejected petitioner's claim that she and Respondent Mario Fernandez were co-owners of the
disputed property. The CA ruled:

From the inception of the instant case, the only defense presented by private respondent Guillerma
is her right as a co-owner of the subject property[.]

xxx xxx xxx

This claim of co-ownership was not satisfactorily proven by Guillerma, as correctly held by the trial
court. No other evidence was presented to validate such claim, except for the said affidavit/position
paper. As previously stated, it was only on appeal that Guillerma alleged that she cohabited with the
petitioner-husband without the benefit of marriage, and that she bore him two (2) children. Attached
to her memorandum on appeal are the birth certificates of the said children. Such contentions and
documents should not have been considered by the . . . (RTC), as they were not presented in her
affidavit/position paper before the trial court (MTC).

xxx xxx xxx

However, even if the said allegations and documents could be considered, the claim of co-ownership
must still fail. As [herein Respondent] Mario Fernandez is validly married to [Respondent] Lourdes
Fernandez (as per Marriage Contract dated April 27, 1968, p. 45, Original Record), Guillerma and
Mario are not capacitated to marry each other. Thus, the property relations governing their supposed
cohabitation is that found in Article 148 of Executive Order No. 209, as amended, otherwise known
as the Family Code of the Philippines[.]

xxx xxx xxx

It is clear that actual contribution is required by this provision, in contrast to Article 147 of the Family
Code which states that efforts in the care and maintenance of the family and household are
regarded as contributions to the acquisition of common property by one who has no salary or income
or work or industry (Agapay v. Palang, 276 SCRA 340). The care given by one party [to] the home,
children, and household, or spiritual or moral inspiration provided to the other, is not included in
Article 148 (Handbook on the Family Code of the Philippines by Alicia V. Sempio-Diy, 1988 ed., p.
209). Hence, if actual contribution of the party is not proved, there will be no co-ownership and no
presumption of equal shares (Agapay, supra at p. 348, citing Commentaries and Jurisprudence on
the Civil Code of the Philippines Volume I by Arturo M. Tolentino, 1990 ed., p. 500).

In the instant case, no proof of actual contribution by Guillerma Tumlos in the purchase of the
subject property was presented. Her only evidence was her being named in the Contract to Sell as
the wife of [Respondent] Mario Fernandez. Since she failed to prove that she contributed money to
the purchase price of the subject apartment building, We find no basis to justify her co-ownership
with [Respondent Mario]. The said property is thus presumed to belong to the conjugal partnership
property of Mario and Lourdes Fernandez, it being acquired during the subsistence of their marriage
and there being no other proof to the contrary (please see Article 116 of the Family Code).

The court a quo (RTC) also found that [Respondent Mario] has two (2) children with Guillerma who
are in her custody, and that to eject them from the apartment building would be to run counter with
the obligation of the former to give support to his minor illegitimate children, which indispensably
includes dwelling. As previously discussed, such finding has no leg to stand on, it being based on
evidence presented for the first time on appeal.
 xxx xxx xxx

Even assuming arguendo that the said evidence was validly presented, the RTC failed to consider
that the need for support cannot be presumed. Article 203 of the Family Code expressly provides
that the obligation to give support shall be demandable from the time the person who has a right to
receive the same needs it for maintenance, but it shall not be paid except from the date of judicial or
extrajudicial demand. . . .
1w phi 1.nt

In contrast to the clear pronouncement of the Supreme Court, the RTC instead presumed that
Guillerma and her children needed support from [Respondent Mario]. Worse, it relied on evidence
not properly presented before the trial court (MTC).

With regard to the other [defendants], Gina and Toto Tumlos, a close perusal of the records shows
that they did not file any responsive pleading. Hence, judgment may be rendered against them as
may be warranted by the facts alleged in the complaint and limited to what is prayed for therein, as
provided for in Section 6 of the Revised Rules on Summary Procedure. There was no basis for the
public respondent to dismiss the complaint against them. 7(emphasis in the original)

The Issues

In her Memorandum, petitioner submits the following issues for the consideration of the Court:

I. The Court of Appeals gravely erred and abused its discretion in not outrightly dismissing
the petition for review filed by respondents.

II. The Court of Appeals erred in finding that petitioner is not the co-owner of the property in
litis.

III. Corollary thereto, the Court of Appeals erred in applying Art. 148 of the Family Code in
the case at bar.

IV. The Court of Appeals erred in disregarding the substantive right of support vis--vis the
remedy of ejectment resorted to by respondents. 8

In resolving this case, we shall answer two questions: (a) Is the petitioner a co-owner of the
property? (b) Can the claim for support bar this ejectment suit? We shall also discuss these
preliminary matters: (a) whether the CA was biased in favor of respondents and (b) whether the
MTC had jurisdiction over the ejectment suit.

The Courts Ruling

The Petition has no merit.

Preliminary Matters

Petitioner submits that the CA exhibited partiality in favor of herein respondents. This bias, she
argues, is manifest in the following:

1. The CA considered the respondents Petition for Review 9 despite their failure to attach
several pleadings as well as the explanation for the proof of service, despite the clear
 mandate of Section 11 10 of Rule 13 of the Revised Rules of Court and despite the ruling
in Solar Team Entertainment, Inc. v. Ricafort. 11

2. It allowed respondents to submit the pleadings that were not attached.

3. It considered respondents' Reply dated May 20, 1998, which had allegedly been filed out
of time.

4. It declared that the case was submitted for decision without first determining whether to
give due course to the Petition, pursuant to Section 6, Rule 42 of the Rules of Court. 12

The CA, for its part, succinctly dismissed these arguments in this wise:

It is too late in the day now to question the alleged procedural error after we have rendered
the decision. More importantly, when the private respondent filed their comment to the
petition on April 26, 1998, they failed to question such alleged procedural error. Neither have
they questioned all the resolutions issued by the Court after their filing of such comment.
They should, therefore, be now considered in estoppel to question the same. 13

We agree with the appellate court. Petitioner never raised these matters before the CA. She cannot
be allowed now to challenge its Decision on grounds of alleged technicalities being belatedly raised
as an afterthought. In this light, she cannot invoke Solar 14 because she never raised this issue before
the CA.

More important, we find it quite sanctimonious indeed on petitioners part to rely, on the one hand,
on these procedural technicalities to overcome the appealed Decision and, on the other hand, assert
that the RTC may consider the new evidence she presented for the first time on appeal. Such
posturing only betrays the futility of petitioner's assertion, if not its absence of merit.

One other preliminary matter. Petitioner implies that the court of origin, the Municipal Trial Court
(MTC), did not have jurisdiction over the "nature of the case," alleging that the real question involved
is one of ownership. Since the issue of possession cannot be settled without passing upon that of
ownership, she maintains that the MTC should have dismissed the case.

This contention is erroneous. The issue of ownership may be passed upon by the MTC to settle the
issue of possession. 15 Such disposition, however, is not final insofar as the issue of ownership is
concerned, 16 which may be the subject of another proceeding brought specifically to settle that
question.

Having resolved these preliminary matters, we now move on to petitioners substantive contentions.

First Issue:

Petitioner as Co-owner

Petitioners central theory and main defense against respondents' action for ejectment is her claim of
co-ownership over the property with Respondent Mario Fernandez. At the first instance before the
MTC, she presented a Contract to Sell indicating that she was his spouse. The MTC found this
document insufficient to support her claim. The RTC, however, after considering her allegation that
she had been cohabiting with Mario Fernandez as shown by evidence presented before it, 17 ruled in
her favor.
On the other hand, the CA held that the pieces of evidence adduced before the RTC could no longer
be considered because they had not been submitted before the MTC. Hence, the appellate court
concluded that "[t]he claim of co-ownership was not satisfactorily proven . . ." 18

We agree with the petitioner that the RTC did not err in considering the evidence presented before it.
Nonetheless, we reject her claim that she was a co-owner of the disputed property.

Evidence Presented on
Appeal Before the RTC

In ruling that the RTC erred in considering on appeal the evidence presented by petitioner, the CA
relied on the doctrine that issues not raised during trial could not be considered for the first time
during appeal. 19

We disagree. In the first place, there were no new matters or issues belatedly raised during the
appeal before the RTC. The defense invoked by petitioner at the very start was that she was a co-
owner. To support her claim, she presented a Contract to Sell dated November 14, 1986, which
stated that Mario Fernandez was legally married to her. The allegation that she was cohabiting with
him was a mere elaboration of her initial theory.

In the second place, procedural rules are generally premised on considerations of fair play.
Respondents never objected when the assailed evidence was presented before the RTC. Thus, they
cannot claim unfair surprise or prejudice.

Petitioner Not a Co-Owner Under

Article 144 of the Civil Code

Even considering the evidence presented before the MTC and the RTC, we cannot accept
petitioner's submission that she is a co-owner of the disputed property pursuant to Article 144 of the
Civil Code. 20 As correctly held by the CA, the applicable law is not Article 144 of the Civil Code, but
Article 148 of the Family Code which provides:

Art. 148. In cases of cohabitation not falling under the preceding Article,21 only the properties
acquired by both of the parties through their actual joint contribution of money, property, or
industry shall be owned by them in common in proportion to their respective contributions. In
the absence of proof to the contrary, their contributions and corresponding shares are
presumed to be equal. The same rule and presumption shall apply to joint deposits of money
and evidences of credit.

If one of the parties is validly married to another, his or her share in the co-ownership shall
accrue to the absolute community or conjugal partnership existing in such valid marriage. If
the party who acted in bad faith is not validly married to another, his or her share shall be
forfeited in the manner provided in the last paragraph of the preceding Article.

The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.

Art. 144 of the Civil Code applies only to a relationship between a man and a woman who are not
incapacitated to marry each other, 22 or to one in which the marriage of the parties is void 23 from the
beginning. 24 It does not apply to a cohabitation that amounts to adultery or concubinage, for it would
be absurd to create a co-ownership where there exists a prior conjugal partnership or absolute
community between the man and his lawful wife. 25
Based on evidence presented by respondents, as well as those submitted by petitioner herself
before the RTC, it is clear that Mario Fernandez was incapacitated to marry petitioner because he
was legally married to Lourdes Fernandez. It is also clear that, as readily admitted by petitioner, she
cohabited with Mario in a state of concubinage. Therefore, Article 144 of the Civil Code is
inapplicable.

As stated above, the relationship between petitioner and Respondent Mario Fernandez is governed
by Article 148 of the Family Code. Justice Alicia V. Sempio-Diy points out 26 that "[t]he Family Code
has filled the hiatus in Article 144 of the Civil Code by expressly regulating in its Article 148 the
property relations of couples living in a state of adultery or concubinage.

Hence, petitioners argument that the Family Code is inapplicable because the cohabitation and
the acquisition of the property occurred before its effectivity deserves scant consideration. Suffice
it to say that the law itself states that it can be applied retroactively if it does not prejudice vested or
acquired rights. 27 In this case, petitioner failed to show any vested right over the property in question.
Moreover, to resolve similar issues, we have applied Article 148 of the Family Code retroactively. 28

No Evidence of Actual Joint

Contribution

Another consideration militates against petitioners claim that she is a co-owner of the property.
In Agapay, 29 the Court ruled:

Under Article 148, only the properties acquired by both of the parties through their actual
joint contribution of money, property or industry shall be owned by them in common in
proportion to their respective contributions. It must be stressed that the actual contribution is
required by this provision, in contrast to Article 147 which states that efforts in the care and
maintenance of the family and household, are regarded as contributions to the acquisition of
common property by one who has no salary or income or work or industry. If the actual
contribution of the party is not proved, there will be no co-ownership and no presumption of
equal shares. (emphasis ours)

In this case, petitioner fails to present any evidence that she had made an actual contribution to
purchase the subject property. Indeed, she anchors her claim of co-ownership merely on her
cohabitation with Respondent Mario Fernandez.

Likewise, her claim of having administered the property during the cohabitation is unsubstantiated. In
any event, this fact by itself does not justify her claim, for nothing in Article 148 of the Family Code
provides that the administration of the property amounts to a contribution in its acquisition.

Clearly, there is no basis for petitioners claim of co-ownership. The property in question belongs to
the conjugal partnership of respondents. Hence, the MTC and the CA were correct in ordering the
ejectment of petitioner from the premises.

Second Issue:

Support versus Ejectment

Petitioner contends that since Respondent Mario Fernandez failed to repudiate her claim regarding
the filiation of his alleged sons, Mark Gil and Michael Fernandez, his silence on the matter amounts
to an admission. Arguing that Mario is liable for support, she advances the theory that the childrens
right to support, which necessarily includes shelter, prevails over the right of respondents to eject
her.

We disagree. It should be emphasized that this is an ejectment suit whereby respondents seek to
exercise their possessory right over their property. It is summary in character and deals solely with
the issue of possession of the property in dispute. Here, it has been shown that they have a better
right to possess it than does the petitioner, whose right to possess is based merely on their
tolerance.1wphi1.nt

Moreover, Respondent Mario Fernandez' alleged failure to repudiate petitioner's claim of filiation is
not relevant to the present case. Indeed, it would be highly improper for us to rule on such issue.
1wphi 1

Besides, it was not properly taken up below. 30 In any event, Article 298 31 of the Civil Code requires
that there should be an extrajudicial demand. 32 None was made here. The CA was correct when it
said:

Even assuming arguendo that the said evidence was validly presented, the RTC failed to
consider that the need for support cannot be presumed. Article [298] of the [New Civil Code]
expressly provides that the obligation to give support shall be demandable from the time the
person who has a right to receive the same need it for maintenance, but it shall not be paid
except from the date of judicial and extrajudicial demand. 33

WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs against
petitioner.

SO ORDERED.

Torbela vs. Rasario 661 SCRA 633

FACTS:
The spouses Eugenio and Marta Torbela received a parcel of land from Martas
sister. Upon the death of the spouses, the Land was adjudicated in equal shares
among their children. These children executed a Deed of Absolute Quitclaim over
the land in favor of their nephew, Dr. Rosario. Another Deed of Absolute Quitclaim
was executed, this time by Dr. Rosario, acknowledging that he only borrowed the
land and was already returning it to his aunts and uncles. The latter Deed was
notarized but was not immediately annotated on the title of the land, hence, the
title was still in the name of Dr. Rosario. Dr. Rosario mortgaged the land to Banco
Filipino for a loan. Dr. Rosario failed to pay the loan and the mortgage was extra-
judicially foreclosed.

The children then filed a complaint for recovery of ownership and possession of the
subject land against Dr. Rosario and Banco Filipino. The trial court ruled in their
favor which was affirmed by the Court of Appeals.
ISSUE:
Whether an express trust was created in this case.

RULING:
Yes. The Court held that Express trusts are created by direct and positive acts of
the parties, by some writing or deed, or will, or by words either expressly or
impliedly evincing an intention to create a trust. Under Article 1444 of the Civil
Code, [n]o particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended.62 It is possible to create a trust
without using the word trust or trustee. Conversely, the mere fact that these
words are used does not necessarily indicate an intention to create a trust. The
question in each case is whether the trustor manifested an intention to create the
kind of relationship which to lawyers is known as trust. It is immaterial whether or
not he knows that the relationship which he intends to create is called a trust, and
whether or not he knows the precise characteristics of the relationship which is
called a trust.

G.R. No. 140528 December 7, 2011

MARIA TORBELA, represented by her heirs, namely: EULOGIO TOSINO, husband and
children: CLARO, MAXIMINO, CORNELIO, OLIVIA and CALIXTA, all surnamed TOSINO,
APOLONIA TOSINO VDA. DE RAMIREZ and JULITA TOSINO DEAN; PEDRO TORBELA,
represented by his heirs, namely: JOSE and DIONISIO, both surnamed TORBELA;
EUFROSINA TORBELA ROSARIO, represented by her heirs, namely: ESTEBAN T. ROSARIO,
MANUEL T. ROSARIO, ROMULO T. ROSARIO and ANDREA ROSARIO-HADUCA; LEONILA
TORBELA TAMIN; FERNANDO TORBELA, represented by his heirs, namely: SERGIO T.
TORBELA, EUTROPIA T. VELASCO, PILAR T. ZULUETA, CANDIDO T. TORBELA,
FLORENTINA T. TORBELA and PANTALEON T. TORBELA; DOLORES TORBELA TABLADA;
LEONORA TORBELA AGUSTIN, represented by her heirs, namely: PATRICIO, SEGUNDO,
CONSUELO and FELIX, all surnamed AGUSTIN; and SEVERINA TORBELA
ILDEFONSO, Petitioners,
vs.
SPOUSES ANDRES T. ROSARIO and LENA DUQUE-ROSARIO and BANCO FILIPINO
SAVINGS AND MORTGAGE BANK, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 140553

LENA DUQUE-ROSARIO, Petitioner,

vs.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent.

DECISION
LEONARDO-DE CASTRO, J.:

Presently before the Court are two consolidated Petitions for Review on Certiorari under Rule 45 of
the Rules of Court, both assailing the Decision1 dated June 29, 1999 and Resolution2 dated October
22, 1999 of the Court of Appeals in CA-G.R. CV No. 39770.

The petitioners in G.R. No. 140528 are siblings Maria Torbela,3 Pedro Torbela,4 Eufrosina Torbela
Rosario,5 Leonila Torbela Tamin, Fernando Torbela,6 Dolores Torbela Tablada, Leonora Torbela
Agustin,7 and Severina Torbela Ildefonso (Torbela siblings).

The petitioner in G.R. No. 140553 is Lena Duque-Rosario (Duque-Rosario), who was married to, but
now legally separated from, Dr. Andres T. Rosario (Dr. Rosario). Dr. Rosario is the son of Eufrosina
Torbela Rosario and the nephew of the other Torbela siblings.

The controversy began with a parcel of land, with an area of 374 square meters, located in Urdaneta
City, Pangasinan (Lot No. 356-A). It was originally part of a larger parcel of land, known as Lot No.
356 of the Cadastral Survey of Urdaneta, measuring 749 square meters, and covered by Original
Certificate of Title (OCT) No. 16676,8 in the name of Valeriano Semilla (Valeriano), married to
Potenciana Acosta. Under unexplained circumstances, Valeriano gave Lot No. 356-A to his sister
Marta Semilla, married to Eugenio Torbela (spouses Torbela). Upon the deaths of the spouses
Torbela, Lot No. 356-A was adjudicated in equal shares among their children, the Torbela siblings,
by virtue of a Deed of Extrajudicial Partition9 dated December 3, 1962.

On December 12, 1964, the Torbela siblings executed a Deed of Absolute Quitclaim10 over Lot No.
356-A in favor of Dr. Rosario. According to the said Deed, the Torbela siblings "for and in
consideration of the sum of NINE PESOS (9.00) x x x transfer[red] and convey[ed] x x x unto the
said Andres T. Rosario, that undivided portion of THREE HUNDRED SEVENTY-FOUR square
meters of that parcel of land embraced in Original Certificate of Title No. 16676 of the land records of
Pangasinan x x x."11 Four days later, on December 16, 1964, OCT No. 16676 in Valerianos name
was partially cancelled as to Lot No. 356-A and TCT No. 5275112 was issued in Dr. Rosarios name
covering the said property.

Another Deed of Absolute Quitclaim13 was subsequently executed on December 28, 1964, this time
by Dr. Rosario, acknowledging that he only borrowed Lot No. 356-A from the Torbela siblings and
was already returning the same to the latter for 1.00. The Deed stated:

That for and in consideration of the sum of one peso (1.00), Philippine Currency and the fact that I
only borrowed the above described parcel of land from MARIA TORBELA, married to Eulogio
Tosino, EUFROSINA TORBELA, married to Pedro Rosario, PEDRO TORBELA, married to Petra
Pagador, LEONILA TORBELA, married to Fortunato Tamen, FERNANDO TORBELA, married to
Victoriana Tablada, DOLORES TORBELA, widow, LEONORA TORBELA, married to Matias Agustin
and SEVERINA TORBELA, married to Jorge Ildefonso, x x x by these presents do hereby cede,
transfer and convey by way of this ABSOLUTE QUITCLAIM unto the said Maria, Eufrosina, Pedro,
Leonila, Fernando, Dolores, Leonora and Severina, all surnamed Torbela the parcel of land
described above.14 (Emphasis ours.)

The aforequoted Deed was notarized, but was not immediately annotated on TCT No. 52751.

Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan from the Development Bank
of the Philippines (DBP) on February 21, 1965 in the sum of 70,200.00, secured by a mortgage
constituted on Lot No. 356-A. The mortgage was annotated on TCT No. 52751 on September 21,
1965 as Entry No. 243537.15 Dr. Rosario used the proceeds of the loan for the construction of
improvements on Lot No. 356-A.

On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an Affidavit of Adverse Claim,16 on behalf
of the Torbela siblings. Cornelio deposed in said Affidavit:

3. That ANDRES T. ROSARIO later quitclaimed his rights in favor of the former owners by
virtue of a Deed of Absolute Quitclaim which he executed before Notary Public Banaga, and
entered in his Notarial Registry as Dec. No. 43; Page No. 9; Book No. I; Series of 1964;

4. That it is the desire of the parties, my aforestated kins, to register ownership over the
above-described property or to perfect their title over the same but their Deed could not be
registered because the registered owner now, ANDRES T. ROSARIO mortgaged the
property with the DEVELOPMENT BANK OF THE PHILIPPINES, on September 21, 1965,
and for which reason, the Title is still impounded and held by the said bank;

5. That pending payment of the obligation with the DEVELOPMENT BANK OF THE
PHILIPPINES or redemption of the Title from said bank, I, CORNELIO T. TOSINO, in behalf
of my mother MARIA TORBELA-TOSINO, and my Aunts EUFROSINA TORBELA, LEONILA
TORBELA-TAMEN, DOLORES TORBELA, LEONORA TORBELA-AGUSTIN, SEVERINA
TORBELA-ILDEFONSO, and my Uncles PEDRO TORBELA and FERNANDO, also
surnamed TORBELA, I request the Register of Deeds of Pangasinan to annotate their
adverse claim at the back of Transfer Certificate of Title No. 52751, based on the annexed
document, Deed of Absolute Quitclaim by ANDRES T. ROSARIO, dated December 28,
1964, marked as Annex "A" and made a part of this Affidavit, and it is also requested that the
DEVELOPMENT BANK OF THE PHILIPPINES be informed accordingly.17

The very next day, on May 17, 1967, the Torbela siblings had Cornelios Affidavit of Adverse Claim
dated May 16, 1967 and Dr. Rosarios Deed of Absolute Quitclaim dated December 28, 1964
annotated on TCT No. 52751 as Entry Nos. 27447118 and 274472,19 respectively.

The construction of a four-storey building on Lot No. 356-A was eventually completed. The building
was initially used as a hospital, but was later converted to a commercial building. Part of the building
was leased to PT&T; and the rest to Mrs. Andrea Rosario-Haduca, Dr. Rosarios sister, who
operated the Rose Inn Hotel and Restaurant.

Dr. Rosario was able to fully pay his loan from DBP. Under Entry No. 520197 on TCT No.
5275120 dated March 6, 1981, the mortgage appearing under Entry No. 243537 was cancelled per
the Cancellation and Discharge of Mortgage executed by DBP in favor of Dr. Rosario and ratified
before a notary public on July 11, 1980.

In the meantime, Dr. Rosario acquired another loan from the Philippine National Bank (PNB)
sometime in 1979-1981. Records do not reveal though the original amount of the loan from PNB, but
the loan agreement was amended on March 5, 1981 and the loan amount was increased to
450,000.00. The loan was secured by mortgages constituted on the following properties: (1) Lot
No. 356-A, covered by TCT No. 52751 in Dr. Rosarios name; (2) Lot No. 4489, with an area of
1,862 square meters, located in Dagupan City, Pangasinan, covered by TCT No. 24832; and (3) Lot
No. 5-F-8-C-2-B-2-A, with an area of 1,001 square meters, located in Nancayasan, Urdaneta,
Pangasinan, covered by TCT No. 104189.21 The amended loan agreement and mortgage on Lot No.
356-A was annotated on TCT No. 52751 on March 6, 1981 as Entry No. 520099.22
Five days later, on March 11, 1981, another annotation, Entry No. 520469,23 was made on TCT No.
52751, canceling the adverse claim on Lot No. 356-A under Entry Nos. 274471-274472, on the basis
of the Cancellation and Discharge of Mortgage executed by Dr. Rosario on March 5, 1981. Entry No.
520469 consisted of both stamped and handwritten portions, and exactly reads:

Entry No. 520469. Cancellation of Adverse Claim executed by Andres Rosario in favor of same. The
incumbrance/mortgage appearing under Entry No. 274471-72 is now cancelled as per Cancellation
and Discharge of Mortgage Ratified before Notary Public Mauro G. Meris on March 5, 1981: Doc.
No. 215; Page No. 44; Book No. 1; Series Of 1981.

Lingayen, Pangasinan, 3-11, 19981

[Signed: Pedro dela Cruz]

Register of Deeds 24

On December 8, 1981, Dr. Rosario and his wife, Duque-Rosario (spouses Rosario), acquired a third
loan in the amount of 1,200,000.00 from Banco Filipino Savings and Mortgage Bank (Banco
Filipino). To secure said loan, the spouses Rosario again constituted mortgages on Lot No. 356-A,
Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. The mortgage on Lot No. 356-A was annotated on TCT
No. 52751 as Entry No. 53328325 on December 18, 1981. Since the construction of a two-storey
commercial building on Lot No. 5-F-8-C-2-B-2-A was still incomplete, the loan value thereof as
collateral was deducted from the approved loan amount. Thus, the spouses Rosario could only avail
of the maximum loan amount of 830,064.00 from Banco Filipino.

Because Banco Filipino paid the balance of Dr. Rosarios loan from PNB, the mortgage on Lot No.
356-A in favor of PNB was cancelled per Entry No. 53347826 on TCT No. 52751 dated December 23,
1981.

On February 13, 1986, the Torbela siblings filed before the Regional Trial Court (RTC) of Urdaneta,
Pangasinan, a Complaint for recovery of ownership and possession of Lot No. 356-A, plus damages,
against the spouses Rosario, which was docketed as Civil Case No. U-4359. On the same day,
Entry Nos. 593493 and 593494 were made on TCT No. 52751 that read as follows:

Entry No. 593494 Complaint Civil Case No. U-4359 (For: Recovery of Ownership and
Possession and Damages. (Sup. Paper).

Entry No. 593493 Notice of Lis Pendens The parcel of land described in this title is subject to Lis
Pendens executed by Liliosa B. Rosario, CLAO, Trial Attorney dated February 13, 1986. Filed to
TCT No. 52751

February 13, 1986-1986 February 13 3:30 p.m.

(SGD.) PACIFICO M. BRAGANZA

Register of Deeds27

The spouses Rosario afterwards failed to pay their loan from Banco Filipino. As of April 2, 1987, the
spouses Rosarios outstanding principal obligation and penalty charges amounted to 743,296.82
and 151,524.00, respectively.28

Banco Filipino extrajudicially foreclosed the mortgages on Lot No. 356-A, Lot No. 4489, and Lot No.
5-F-8-C-2-B-2-A. During the public auction on April 2, 1987, Banco Filipino was the lone bidder for
the three foreclosed properties for the price of 1,372,387.04. The Certificate of Sale29 dated April 2,
1987, in favor of Banco Filipino, was annotated on TCT No. 52751 on April 14, 1987 as Entry No.
610623.30

On December 9, 1987, the Torbela siblings filed before the RTC their Amended
Complaint,31 impleading Banco Filipino as additional defendant in Civil Case No. U-4359 and praying
that the spouses Rosario be ordered to redeem Lot No. 356-A from Banco Filipino.

The spouses Rosario instituted before the RTC on March 4, 1988 a case for annulment of
extrajudicial foreclosure and damages, with prayer for a writ of preliminary injunction and temporary
restraining order, against Banco Filipino, the Provincial Ex Officio Sheriff and his Deputy, and the
Register of Deeds of Pangasinan. The case was docketed as Civil Case No. U-4667. Another notice
of lis pendens was annotated on TCT No. 52751 on March 10, 1988 as Entry No. 627059, viz:

Entry No. 627059 Lis Pendens Dr. Andres T. Rosario and Lena Duque Rosario, Plaintiff versus
Banco Filipino, et. al. Civil Case No. U-4667 or Annulment of ExtraJudicial Foreclosure of Real
Estate Mortgage The parcel of land described in this title is subject to Notice of Lis Pendens
subscribed and sworn to before Notary Public Mauro G. Meris, as Doc. No. 21; Page No. 5; Book
111; S-1988. March 7, 1988-1988 March 10, 1:00 p.m.

(SGD.) RUFINO M. MORENO, SR.

Register of Deeds32

The Torbela siblings intervened in Civil Case No. U-4667. Eventually, on October 17, 1990, the RTC
issued an Order33 dismissing without prejudice Civil Case No. U-4667 due to the spouses Rosarios
failure to prosecute.

Meanwhile, the Torbela siblings tried to redeem Lot No. 356-A from Banco Filipino, but their efforts
were unsuccessful. Upon the expiration of the one-year redemption period in April 1988, the
Certificate of Final Sale34and Affidavit of Consolidation35 covering all three foreclosed properties were
executed on May 24, 1988 and May 25, 1988, respectively.

On June 7, 1988, new certificates of title were issued in the name of Banco Filipino, particularly, TCT
No. 165812 for Lot No. 5-F-8-C-2-B-2-A and TCT No. 165813 for Lot No. 356-A .36

The Torbela siblings thereafter filed before the RTC on August 29, 1988 a Complaint37 for annulment
of the Certificate of Final Sale dated May 24, 1988, judicial cancelation of TCT No. 165813, and
damages, against Banco Filipino, the Ex Officio Provincial Sheriff, and the Register of Deeds of
Pangasinan, which was docketed as Civil Case No. U-4733.

On June 19, 1991, Banco Filipino filed before the RTC of Urdaneta City a Petition for the issuance of
a writ of possession. In said Petition, docketed as Pet. Case No. U-822, Banco Filipino prayed that a
writ of possession be issued in its favor over Lot No. 5-F-8-C-2-B-2-A and Lot No. 356-A, plus the
improvements thereon, and the spouses Rosario and other persons presently in possession of said
properties be directed to abide by said writ.

The RTC jointly heard Civil Case Nos. U-4359 and U-4733 and Pet. Case No. U-822. The
Decision38 on these three cases was promulgated on January 15, 1992, the dispositive portion of
which reads:

WHEREFORE, judgment is rendered:

 1. Declaring the real estate mortgage over Lot 356-A covered by TCT 52751 executed by
Spouses Andres Rosario in favor of Banco Filipino, legal and valid;

2. Declaring the sheriffs sale dated April 2, 1987 over Lot 356-A covered by TCT 52751 and
subsequent final Deed of Sale dated May 14, 1988 over Lot 356-A covered by TCT No.
52751 legal and valid;

3. Declaring Banco Filipino the owner of Lot 356-A covered by TCT No. 52751 (now TCT
165813);

4. Banco Filipino is entitled to a Writ of Possession over Lot 356-A together with the
improvements thereon (Rose Inn Building). The Branch Clerk of Court is hereby ordered to
issue a writ of possession in favor of Banco Filipino;

5. [The Torbela siblings] are hereby ordered to render accounting to Banco Filipino the rental
they received from tenants of Rose Inn Building from May 14, 1988;

6. [The Torbela siblings] are hereby ordered to pay Banco Filipino the sum of 20,000.00 as
attorneys fees;

7. Banco Filipino is hereby ordered to give [the Torbela siblings] the right of first refusal over
Lot 356-A. The Register of Deeds is hereby ordered to annotate the right of [the Torbela
siblings] at the back of TCT No. 165813 after payment of the required fees;

8. Dr. Rosario and Lena Rosario are hereby ordered to reimburse [the Torbela siblings] the
market value of Lot 356-A as of December, 1964 minus payments made by the former;

9. Dismissing the complaint of [the Torbela siblings] against Banco Filipino, Pedro Habon
and Rufino Moreno in Civil Case No. U-4733; and against Banco Filipino in Civil Case No. U-
4359.39

The RTC released an Amended Decision40 dated January 29, 1992, adding the following paragraph
to the dispositive:

Banco Filipino is entitled to a Writ of Possession over Lot-5-F-8-C-2-[B]-2-A of the subdivision plan
(LRC) Psd-122471, covered by Transfer Certificate of Title 104189 of the Registry of Deeds of
Pangasinan[.]41

The Torbela siblings and Dr. Rosario appealed the foregoing RTC judgment before the Court of
Appeals. Their appeal was docketed as CA-G.R. CV No. 39770.

In its Decision42 dated June 29, 1999, the Court of Appeals decreed:

WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification.
Items No. 6 and 7 of the appealed decision are DELETED. Item No. 8 is modified requiring [Dr.
Rosario] to pay [the Torbela siblings] actual damages, in the amount of 1,200,000.00 with 6% per
annum interest from finality of this decision until fully paid. [Dr. Rosario] is further ORDERED to pay
[the Torbela siblings] the amount of 300,000.00 as moral damages; 200,000.00 as exemplary
damages and 100,000.00 as attorneys fees.

Costs against [Dr. Rosario].43

The Court of Appeals, in a Resolution44 dated October 22, 1999, denied the separate Motions for
Reconsideration of the Torbela siblings and Dr. Rosario.

The Torbela siblings come before this Court via the Petition for Review in G.R. No. 140528, with the
following assignment of errors:

First Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE
REGISTRATION OF THE DEED OF ABSOLUTE QUITCLAIM EXECUTED BY [DR.
ANDRES T. ROSARIO] IN FAVOR OF THE [TORBELA SIBLINGS] DATED DECEMBER 28,
1964 AND THE REGISTRATION OF THE NOTICE OF ADVERSE CLAIM EXECUTED BY
THE [TORBELA SIBLINGS], SERVE AS THE OPERATIVE ACT TO CONVEY OR AFFECT
THE LAND AND IMPROVEMENTS THEREOF IN SO FAR AS THIRD PERSONS ARE
CONCERNED.

Second Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE

SUBJECT PROPERTY COVERED BY T.C.T. NO. 52751 IS CLEAN AND FREE, DESPITE
OF THE ANNOTATION OF ENCUMBRANCES OF THE NOTICE OF ADVERSE CLAIM
AND THE DEED OF ABSOLUTE QUITCLAIM APPEARING AT THE BACK THEREOF AS
ENTRY NOS. 274471 AND 274472, RESPECTIVELY.

Third Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE

NOTICE OF ADVERSE CLAIM OF THE [TORBELA SIBLINGS] UNDER ENTRY NO.
274471 WAS VALIDLY CANCELLED BY THE REGISTER OF DEEDS, IN THE ABSENCE
OF A PETITION DULY FILED IN COURT FOR ITS CANCELLATION.

Fourth Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT

RESPONDENT BANCO FILIPINO SAVINGS AND MORTGAGE BANK IS A MORTGAGEE
IN GOOD FAITH.

Fifth Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE
FILING OF A CIVIL CASE NO. U-4359 ON DECEMBER 9, 1987, IMPLEADING
RESPONDENT BANCO FILIPINO AS ADDITIONAL PARTY DEFENDANT, TOLL OR
SUSPEND THE RUNNING OF THE ONE YEAR PERIOD OF REDEMPTION.

Sixth Issue and Assignment of Error:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT THE
OWNERSHIP OVER THE SUBJECT PROPERTY WAS PREMATURELY CONSOLIDATED
IN FAVOR OF RESPONDENT BANCO FILIPINO SAVINGS AND MORTGAGE BANK.

Seventh Issue and Assignment of Error:

 THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE
SUBJECT PROPERTY IS AT LEAST WORTH 1,200,000.00.45

The Torbela siblings ask of this Court:

WHEREFORE, in the light of the foregoing considerations, the [Torbela siblings] most respectfully
pray that the questioned DECISION promulgated on June 29, 1999 (Annex "A", Petition) and the
RESOLUTION dated October 22, 1999 (Annex "B", Petition) be REVERSED and SET ASIDE,
and/or further MODIFIED in favor of the [Torbela siblings], and another DECISION issue ordering,
among other reliefs, the respondent Banco Filipino to reconvey back Lot No. 356-A, covered by
T.C.T. No. 52751, in favor of the [Torbela siblings] who are the actual owners of the same.

The [Torbela siblings] likewise pray for such other reliefs and further remedies as may be deemed
just and equitable under the premises.46

Duque-Rosario, now legally separated from Dr. Rosario, avers in her Petition for Review in G.R. No.
140553 that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A were registered in her name, and she was
unlawfully deprived of ownership of said properties because of the following errors of the Court of
Appeals:

THE HON. COURT OF APPEALS PATENTLY ERRED IN NOT FINDING THAT THE
PERIOD TO REDEEM THE PROPERTY HAS NOT COMMENCED, HENCE, THE
CERTIFICATE OF SALE, THE CONSOLIDATION OF OWNERSHIP BY [BANCO FILIPINO],
ARE NULL AND VOID.

THE COURT OF APPEALS PATENTLY ERRED IN REFUSING TO RULE THAT THE

FILING OF THE COMPLAINT BEFORE THE COURT A QUO BY THE [TORBELA
SIBLINGS] HAD ALREADY BEEN PRESCRIBED.47

Duque-Rosario prays that the appealed decision of the Court of Appeals be reversed and set aside,
and that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A be freed from all obligations and encumbrances
and returned to her.

Review of findings of fact by the RTC and the Court of Appeals warranted.

A disquisition of the issues raised and/or errors assigned in the Petitions at bar unavoidably requires
a re-evaluation of the facts and evidence presented by the parties in the court a quo.

In Republic v. Heirs of Julia Ramos,48 the Court summed up the rules governing the power of review
of the Court:

Ordinarily, this Court will not review, much less reverse, the factual findings of the Court of Appeals,
especially where such findings coincide with those of the trial
court.http://sc.judiciary.gov.ph/jurisprudence/2010/february2010/169481.htm - _ftn The findings of
facts of the Court of Appeals are, as a general rule, conclusive and binding upon this Court, since
this Court is not a trier of facts and does not routinely undertake the re-examination of the evidence
presented by the contending parties during the trial of the case.
The above rule, however, is subject to a number of exceptions, such as (1) when the inference made
is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when
the finding is grounded entirely on speculations, surmises, or conjectures; (4) when the judgment of
the Court of Appeals is based on misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both parties; (7) when the findings of the Court of
Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without
citation of specific evidence on which they are based; (9) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties and which, if properly considered, would
justify a different conclusion; and (10) when the findings of fact of the Court of Appeals are premised
on the absence of evidence and are contradicted by the evidence on record.49

As the succeeding discussion will bear out, the first, fourth, and ninth exceptions are extant in these
case.

Barangay conciliation was not a pre-requisite to the institution of Civil Case No. U-4359.

Dr. Rosario contends that Civil Case No. U-4359, the Complaint of the Torbela siblings for recovery
of ownership and possession of Lot No. 356-A, plus damages, should have been dismissed by the
RTC because of the failure of the Torbela siblings to comply with the prior requirement of submitting
the dispute to barangay conciliation.

The Torbela siblings instituted Civil Case No. U-4359 on February 13, 1986, when Presidential
Decree No. 1508, Establishing a System of Amicably Settling Disputes at the Barangay Level, was
still in effect.50 Pertinent provisions of said issuance read:

Section 2. Subject matters for amicable settlement. The Lupon of each barangay shall have
authority to bring together the parties actually residing in the same city or municipality for amicable
settlement of all disputes except:

1. Where one party is the government, or any subdivision or instrumentality thereof;

2. Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;

3. Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding 200.00;

4. Offenses where there is no private offended party;

5. Such other classes of disputes which the Prime Minister may in the interest of justice
determine upon recommendation of the Minister of Justice and the Minister of Local
Government.

Section 3. Venue. Disputes between or among persons actually residing in the same barangay shall
be brought for amicable settlement before the Lupon of said barangay. Those involving actual
residents of different barangays within the same city or municipality shall be brought in the barangay
where the respondent or any of the respondents actually resides, at the election of the complainant.
However, all disputes which involved real property or any interest therein shall be brought in the
barangay where the real property or any part thereof is situated.

The Lupon shall have no authority over disputes:

 1. involving parties who actually reside in barangays of different cities or municipalities,
except where such barangays adjoin each other; and

2. involving real property located in different municipalities.

xxxx

Section 6. Conciliation, pre-condition to filing of complaint. No complaint, petition, action or

proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof
shall be filed or instituted in court or any other government office for adjudication unless there has
been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or
settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary, attested
by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated. x x x. (Emphases
supplied.)

The Court gave the following elucidation on the jurisdiction of the Lupong Tagapayapa in Tavora v.
Hon. Veloso51 :

The foregoing provisions are quite clear. Section 2 specifies the conditions under which the Lupon of
a barangay "shall have authority" to bring together the disputants for amicable settlement of their
dispute: The parties must be "actually residing in the same city or municipality." At the same time,
Section 3 while reiterating that the disputants must be "actually residing in the same barangay" or
in "different barangays" within the same city or municipality unequivocably declares that the
Lupon shall have "no authority" over disputes "involving parties who actually reside in barangays of
different cities or municipalities," except where such barangays adjoin each other.

Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over
disputes where the parties are not actual residents of the same city or municipality, except where the
barangays in which they actually reside adjoin each other.

It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a
given dispute, Sec. 3 of PD 1508 adds:

"However, all disputes which involve real property or any interest therein shall be brought in the
barangay where the real property or any part thereof is situated."

Actually, however, this added sentence is just an ordinary proviso and should operate as such.

The operation of a proviso, as a rule, should be limited to its normal function, which is to restrict or
vary the operation of the principal clause, rather than expand its scope, in the absence of a clear
indication to the contrary.

"The natural and appropriate office of a proviso is . . . to except something from the enacting clause;
to limit, restrict, or qualify the statute in whole or in part; or to exclude from the scope of the statute
that which otherwise would be within its terms." (73 Am Jur 2d 467.)

Therefore, the quoted proviso should simply be deemed to restrict or vary the rule on venue
prescribed in the principal clauses of the first paragraph of Section 3, thus: Although venue is
generally determined by the residence of the parties, disputes involving real property shall be
brought in the barangay where the real property or any part thereof is situated, notwithstanding that
the parties reside elsewhere within the same city/municipality.52 (Emphases supplied.)
The original parties in Civil Case No. U-4359 (the Torbela siblings and the spouses Rosario) do not
reside in the same barangay, or in different barangays within the same city or municipality, or in
different barangays of different cities or municipalities but are adjoining each other. Some of them
reside outside Pangasinan and even outside of the country altogether. The Torbela siblings reside
separately in Barangay Macalong, Urdaneta, Pangasinan; Barangay Consolacion, Urdaneta,
Pangasinan; Pangil, Laguna; Chicago, United States of America; and Canada. The spouses Rosario
are residents of Calle Garcia, Poblacion, Urdaneta, Pangasinan. Resultantly, the Lupon had no
jurisdiction over the dispute and barangay conciliation was not a pre-condition for the filing of Civil
Case No. U-4359.

The Court now looks into the merits of Civil Case No. U-4359.

There was an express trust between the Torbela siblings and Dr. Rosario.

There is no dispute that the Torbela sibling inherited the title to Lot No. 356-A from their parents, the
Torbela spouses, who, in turn, acquired the same from the first registered owner of Lot No. 356-A,
Valeriano.

Indeed, the Torbela siblings executed a Deed of Absolute Quitclaim on December 12, 1964 in which
they transferred and conveyed Lot No. 356-A to Dr. Rosario for the consideration of 9.00. However,
the Torbela siblings explained that they only executed the Deed as an accommodation so that Dr.
Rosario could have Lot No. 356-A registered in his name and use said property to secure a loan
from DBP, the proceeds of which would be used for building a hospital on Lot No. 356-A a claim
supported by testimonial and documentary evidence, and borne out by the sequence of events
immediately following the execution by the Torbela siblings of said Deed. On December 16, 1964,
TCT No. 52751, covering Lot No. 356-A, was already issued in Dr. Rosarios name. On December
28, 1964, Dr. Rosario executed his own Deed of Absolute Quitclaim, in which he expressly
acknowledged that he "only borrowed" Lot No. 356-A and was transferring and conveying the same
back to the Torbela siblings for the consideration of 1.00. On February 21, 1965, Dr. Rosarios loan
in the amount of 70,200.00, secured by a mortgage on Lot No. 356-A, was approved by DBP. Soon
thereafter, construction of a hospital building started on Lot No. 356-A.

Among the notable evidence presented by the Torbela siblings is the testimony of Atty. Lorenza
Alcantara (Atty. Alcantara), who had no apparent personal interest in the present case. Atty.
Alcantara, when she was still a boarder at the house of Eufrosina Torbela Rosario (Dr. Rosarios
mother), was consulted by the Torbela siblings as regards the extrajudicial partition of Lot No. 356-A.
She also witnessed the execution of the two Deeds of Absolute Quitclaim by the Torbela siblings
and Dr. Rosario.

In contrast, Dr. Rosario presented TCT No. 52751, issued in his name, to prove his purported title to
Lot No. 356-A. In Lee Tek Sheng v. Court of Appeals,53 the Court made a clear distinction between
title and the certificate of title:

The certificate referred to is that document issued by the Register of Deeds known as the Transfer
Certificate of Title (TCT). By title, the law refers to ownership which is represented by that document.
Petitioner apparently confuses certificate with title. Placing a parcel of land under the mantle of the
Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is
different from a certificate of title. The TCT is only the best proof of ownership of a piece of land.
Besides, the certificate cannot always be considered as conclusive evidence of ownership. Mere
issuance of the certificate of title in the name of any person does not foreclose the possibility that the
real property may be under co-ownership with persons not named in the certificate or that the
registrant may only be a trustee or that other parties may have acquired interest subsequent to the
issuance of the certificate of title. To repeat, registration is not the equivalent of title, but is only the
best evidence thereof. Title as a concept of ownership should not be confused with the certificate of
title as evidence of such ownership although both are interchangeably used. x x x.54 (Emphases
supplied.)

Registration does not vest title; it is merely the evidence of such title. Land registration laws do not
give the holder any better title than what he actually has.55 Consequently, Dr. Rosario must still prove
herein his acquisition of title to Lot No. 356-A, apart from his submission of TCT No. 52751 in his
name.

Dr. Rosario testified that he obtained Lot No. 356-A after paying the Torbela siblings 25,000.00,
pursuant to a verbal agreement with the latter. The Court though observes that Dr. Rosarios
testimony on the execution and existence of the verbal agreement with the Torbela siblings lacks
significant details (such as the names of the parties present, dates, places, etc.) and is not
corroborated by independent evidence.

In addition, Dr. Rosario acknowledged the execution of the two Deeds of Absolute Quitclaim dated
December 12, 1964 and December 28, 1964, even affirming his own signature on the latter Deed.
The Parol Evidence Rule provides that when the terms of the agreement have been reduced into
writing, it is considered as containing all the terms agreed upon and there can be, between the
parties and their successors in interest, no evidence of such terms other than the contents of the
written agreement.56 Dr. Rosario may not modify, explain, or add to the terms in the two written
Deeds of Absolute Quitclaim since he did not put in issue in his pleadings (1) an intrinsic ambiguity,
mistake, or imperfection in the Deeds; (2) failure of the Deeds to express the true intent and the
agreement of the parties thereto; (3) the validity of the Deeds; or (4) the existence of other terms
agreed to by the Torbela siblings and Dr. Rosario after the execution of the Deeds.57

Even if the Court considers Dr. Rosarios testimony on his alleged verbal agreement with the Torbela
siblings, the Court finds the same unsatisfactory. Dr. Rosario averred that the two Deeds were
executed only because he was "planning to secure loan from the Development Bank of the
Philippines and Philippine National Bank and the bank needed absolute quitclaim[.]"58 While Dr.
Rosarios explanation makes sense for the first Deed of Absolute Quitclaim dated December 12,
1964 executed by the Torbela siblings (which transferred Lot No. 356-A to Dr. Rosario for 9.00.00),
the same could not be said for the second Deed of Absolute Quitclaim dated December 28, 1964
executed by Dr. Rosario. In fact, Dr. Rosarios Deed of Absolute Quitclaim (in which he admitted that
he only borrowed Lot No. 356-A and was transferring the same to the Torbela siblings for 1.00.00)
would actually work against the approval of Dr. Rosarios loan by the banks. Since Dr. Rosarios
Deed of Absolute Quitclaim dated December 28, 1964 is a declaration against his self-interest, it
must be taken as favoring the truthfulness of the contents of said Deed.59

It can also be said that Dr. Rosario is estopped from claiming or asserting ownership over Lot No.
356-A based on his Deed of Absolute Quitclaim dated December 28, 1964. Dr. Rosario's admission
in the said Deed that he merely borrowed Lot No. 356-A is deemed conclusive upon him. Under
Article 1431 of the Civil Code, "[t]hrough estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as against the person
relying thereon."60 That admission cannot now be denied by Dr. Rosario as against the Torbela
siblings, the latter having relied upon his representation.

Considering the foregoing, the Court agrees with the RTC and the Court of Appeals that Dr. Rosario
only holds Lot No. 356-A in trust for the Torbela siblings.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another.
It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the
beneficiary. Trust relations between parties may either be express or implied. An express trust is
created by the intention of the trustor or of the parties, while an implied trust comes into being by
operation of law.61

Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will,
or by words either expressly or impliedly evincing an intention to create a trust. Under Article 1444 of
the Civil Code, "[n]o particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended."62It is possible to create a trust without using the word "trust"
or "trustee." Conversely, the mere fact that these words are used does not necessarily indicate an
intention to create a trust. The question in each case is whether the trustor manifested an intention
to create the kind of relationship which to lawyers is known as trust. It is immaterial whether or not
he knows that the relationship which he intends to create is called a trust, and whether or not he
knows the precise characteristics of the relationship which is called a trust.63

In Tamayo v. Callejo,64 the Court recognized that a trust may have a constructive or implied nature in
the beginning, but the registered owners subsequent express acknowledgement in a public
document of a previous sale of the property to another party, had the effect of imparting to the
aforementioned trust the nature of an express trust. The same situation exists in this case. When Dr.
Rosario was able to register Lot No. 356-A in his name under TCT No. 52751 on December 16,
1964, an implied trust was initially established between him and the Torbela siblings under Article
1451 of the Civil Code, which provides:

ART. 1451. When land passes by succession to any person and he causes the legal title to be put in
the name of another, a trust is established by implication of law for the benefit of the true owner.

Dr. Rosarios execution of the Deed of Absolute Quitclaim on December 28, 1964, containing his
express admission that he only borrowed Lot No. 356-A from the Torbela siblings, eventually
transformed the nature of the trust to an express one. The express trust continued despite Dr.
Rosario stating in his Deed of Absolute Quitclaim that he was already returning Lot No. 356-A to the
Torbela siblings as Lot No. 356-A remained registered in Dr. Rosarios name under TCT No. 52751
and Dr. Rosario kept possession of said property, together with the improvements thereon.

The right of the Torbela siblings to recover Lot No. 356-A has not yet prescribed.

The Court extensively discussed the prescriptive period for express trusts in the Heirs of Maximo
Labanon v. Heirs of Constancio Labanon,65 to wit:

On the issue of prescription, we had the opportunity to rule in Bueno v. Reyes that unrepudiated
written express trusts are imprescriptible:

"While there are some decisions which hold that an action upon a trust is imprescriptible, without
distinguishing between express and implied trusts, the better rule, as laid down by this Court in other
decisions, is that prescription does supervene where the trust is merely an implied one. The reason
has been expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal, 4 SCRA
84, 88, as follows:

Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real property
prescribed in 10 years, excepting only actions based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As held in the case of Diaz v. Gorricho, L-11229, March
29, 1958, however, the continuing or subsisting trusts contemplated in section 38 of the Code of Civil
Procedure referred only to express unrepudiated trusts, and did not include constructive trusts (that
are imposed by law) where no fiduciary relation exists and the trustee does not recognize the trust at
all."

This principle was amplified in Escay v. Court of Appeals this way: "Express trusts prescribe 10
years from the repudiation of the trust (Manuel Diaz, et al. vs. Carmen Gorricho et al., 54 O.G. p.
8429, Sec. 40, Code of Civil Procedure)."

In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive period for the
enforcement of an express trust of ten (10) years starts upon the repudiation of the trust by the
trustee.66

To apply the 10-year prescriptive period, which would bar a beneficiarys action to recover in an
express trust, the repudiation of the trust must be proven by clear and convincing evidence and
made known to the beneficiary.67 The express trust disables the trustee from acquiring for his own
benefit the property committed to his management or custody, at least while he does not openly
repudiate the trust, and makes such repudiation known to the beneficiary or cestui que trust. For this
reason, the old Code of Civil Procedure (Act 190) declared that the rules on adverse possession do
not apply to "continuing and subsisting" (i.e., unrepudiated) trusts. In an express trust, the delay of
the beneficiary is directly attributable to the trustee who undertakes to hold the property for the
former, or who is linked to the beneficiary by confidential or fiduciary relations. The trustee's
possession is, therefore, not adverse to the beneficiary, until and unless the latter is made aware
that the trust has been repudiated.68

Dr. Rosario argues that he is deemed to have repudiated the trust on December 16, 1964, when he
registered Lot No. 356-A in his name under TCT No. 52751, so when on February 13, 1986, the
Torbela siblings instituted before the RTC Civil Case No. U-4359, for the recovery of ownership and
possession of Lot No. 356-A from the spouses Rosario, over 21 years had passed. Civil Case No. U-
4359 was already barred by prescription, as well as laches.

The Court already rejected a similar argument in Ringor v. Ringor69 for the following reasons:

A trustee who obtains a Torrens title over a property held in trust for him by another cannot repudiate
the trust by relying on the registration. A Torrens Certificate of Title in Joses name did not vest
ownership of the land upon him. The Torrens system does not create or vest title. It only confirms
and records title already existing and vested. It does not protect a usurper from the true owner. The
Torrens system was not intended to foment betrayal in the performance of a trust. It does not permit
one to enrich himself at the expense of another. Where one does not have a rightful claim to the
property, the Torrens system of registration can confirm or record nothing. Petitioners cannot rely on
the registration of the lands in Joses name nor in the name of the Heirs of Jose M. Ringor, Inc., for
the wrong result they seek. For Jose could not repudiate a trust by relying on a Torrens title he held
in trust for his co-heirs. The beneficiaries are entitled to enforce the trust, notwithstanding the
irrevocability of the Torrens title. The intended trust must be sustained.70 (Emphasis supplied.)

In the more recent case of Heirs of Tranquilino Labiste v. Heirs of Jose Labiste,71 the Court refused
to apply prescription and laches and reiterated that:

[P]rescription and laches will run only from the time the express trust is repudiated. The Court has
held that for acquisitive prescription to bar the action of the beneficiary against the trustee in an
express trust for the recovery of the property held in trust it must be shown that: (a) the trustee has
performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such
positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence
thereon is clear and conclusive. Respondents cannot rely on the fact that the Torrens title was
issued in the name of Epifanio and the other heirs of Jose. It has been held that a trustee who
obtains a Torrens title over property held in trust by him for another cannot repudiate the trust by
relying on the registration. The rule requires a clear repudiation of the trust duly communicated to the
beneficiary. The only act that can be construed as repudiation was when respondents filed the
petition for reconstitution in October 1993. And since petitioners filed their complaint in January
1995, their cause of action has not yet prescribed, laches cannot be attributed to them.72 (Emphasis
supplied.)

It is clear that under the foregoing jurisprudence, the registration of Lot No. 356-A by Dr. Rosario in
his name under TCT No. 52751 on December 16, 1964 is not the repudiation that would have
caused the 10-year prescriptive period for the enforcement of an express trust to run.

The Court of Appeals held that Dr. Rosario repudiated the express trust when he acquired another
loan from PNB and constituted a second mortgage on Lot No. 356-A sometime in 1979, which,
unlike the first mortgage to DBP in 1965, was without the knowledge and/or consent of the Torbela
siblings.

The Court only concurs in part with the Court of Appeals on this matter.

For repudiation of an express trust to be effective, the unequivocal act of repudiation had to be made
known to the Torbela siblings as the cestuis que trust and must be proven by clear and conclusive
evidence. A scrutiny of TCT No. 52751 reveals the following inscription:

Entry No. 520099

Amendment of the mortgage in favor of PNB inscribed under Entry No. 490658 in the sense that the
consideration thereof has been increased to PHILIPPINE PESOS Four Hundred Fifty Thousand
Pesos only (450,000.00) and to secure any and all negotiations with PNB, whether contracted
before, during or after the date of this instrument, acknowledged before Notary Public of Pangasinan
Alejo M. Dato as Doc. No. 198, Page No. 41, Book No. 11, Series of 1985.

Date of Instrument March 5, 1981

Date of Inscription March 6, 198173

Although according to Entry No. 520099, the original loan and mortgage agreement of Lot No. 356-A
between Dr. Rosario and PNB was previously inscribed as Entry No. 490658, Entry No. 490658
does not actually appear on TCT No. 52751 and, thus, it cannot be used as the reckoning date for
the start of the prescriptive period.

The Torbela siblings can only be charged with knowledge of the mortgage of Lot No. 356-A to PNB
on March 6, 1981 when the amended loan and mortgage agreement was registered on TCT No.
52751 as Entry No. 520099. Entry No. 520099 is constructive notice to the whole world74 that Lot No.
356-A was mortgaged by Dr. Rosario to PNB as security for a loan, the amount of which was
increased to 450,000.00. Hence, Dr. Rosario is deemed to have effectively repudiated the express
trust between him and the Torbela siblings on March 6, 1981, on which day, the prescriptive period
for the enforcement of the express trust by the Torbela siblings began to run.

From March 6, 1981, when the amended loan and mortgage agreement was registered on TCT No.
52751, to February 13, 1986, when the Torbela siblings instituted before the RTC Civil Case No. U-
4359 against the spouses Rosario, only about five years had passed. The Torbela siblings were able
to institute Civil Case No. U-4359 well before the lapse of the 10-year prescriptive period for the
enforcement of their express trust with Dr. Rosario.

Civil Case No. U-4359 is likewise not barred by laches. Laches means the failure or neglect, for an
unreasonable and unexplained length of time, to do that which by exercising due diligence could or
should have been done earlier. It is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has abandoned it or declined
to assert it. As the Court explained in the preceding paragraphs, the Torbela siblings instituted Civil
Case No. U-4359 five years after Dr. Rosarios repudiation of the express trust, still within the 10-
year prescriptive period for enforcement of such trusts. This does not constitute an unreasonable
delay in asserting one's right. A delay within the prescriptive period is sanctioned by law and is not
considered to be a delay that would bar relief. Laches apply only in the absence of a statutory
prescriptive period.75

Banco Filipino is not a mortgagee and buyer in good faith.

Having determined that the Torbela siblings are the true owners and Dr. Rosario merely the trustee
of Lot No. 356-A, the Court is next faced with the issue of whether or not the Torbela siblings may
still recover Lot No. 356-A considering that Dr. Rosario had already mortgaged Lot No. 356-A to
Banco Filipino, and upon Dr. Rosarios default on his loan obligations, Banco Filipino foreclosed the
mortgage, acquired Lot No. 356-A as the highest bidder at the foreclosure sale, and consolidated
title in its name under TCT No. 165813. The resolution of this issue depends on the answer to the
question of whether or not Banco Filipino was a mortgagee in good faith.

Under Article 2085 of the Civil Code, one of the essential requisites of the contract of mortgage is
that the mortgagor should be the absolute owner of the property to be mortgaged; otherwise, the
mortgage is considered null and void. However, an exception to this rule is the doctrine of
"mortgagee in good faith." Under this doctrine, even if the mortgagor is not the owner of the
mortgaged property, the mortgage contract and any foreclosure sale arising therefrom are given
effect by reason of public policy. This principle is based on the rule that all persons dealing with
property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go
beyond what appears on the face of the title. This is the same rule that underlies the principle of
"innocent purchasers for value." The prevailing jurisprudence is that a mortgagee has a right to rely
in good faith on the certificate of title of the mortgagor to the property given as security and in the
absence of any sign that might arouse suspicion, has no obligation to undertake further
investigation. Hence, even if the mortgagor is not the rightful owner of, or does not have a valid title
to, the mortgaged property, the mortgagee in good faith is, nonetheless, entitled to protection.76

On one hand, the Torbela siblings aver that Banco Filipino is not a mortgagee in good faith because
as early as May 17, 1967, they had already annotated Cornelios Adverse Claim dated May 16, 1967
and Dr. Rosarios Deed of Absolute Quitclaim dated December 28, 1964 on TCT No. 52751 as Entry
Nos. 274471-274472, respectively.

On the other hand, Banco Filipino asseverates that it is a mortgagee in good faith because per
Section 70 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree,
the notice of adverse claim, registered on May 17, 1967 by the Torbela siblings under Entry Nos.
274471-274472 on TCT No. 52751, already lapsed after 30 days or on June 16, 1967. Additionally,
there was an express cancellation of Entry Nos. 274471-274472 by Entry No. 520469 dated March
11, 1981. So when Banco Filipino approved Dr. Rosarios loan for 1,200,000.00 and constituted a
mortgage on Lot No. 356-A (together with two other properties) on December 8, 1981, the only other
encumbrance on TCT No. 52751 was Entry No. 520099 dated March 6, 1981, i.e., the amended
loan and mortgage agreement between Dr. Rosario and PNB (which was eventually cancelled after
it was paid off with part of the proceeds from Dr. Rosarios loan from Banco Filipino). Hence, Banco
Filipino was not aware that the Torbela siblings adverse claim on Lot No. 356-A still subsisted.

The Court finds that Banco Filipino is not a mortgagee in good faith. Entry Nos. 274471-274472
were not validly cancelled, and the improper cancellation should have been apparent to Banco
Filipino and aroused suspicion in said bank of some defect in Dr. Rosarios title.

The purpose of annotating the adverse claim on the title of the disputed land is to apprise third
persons that there is a controversy over the ownership of the land and to preserve and protect the
right of the adverse claimant during the pendency of the controversy. It is a notice to third persons
that any transaction regarding the disputed land is subject to the outcome of the dispute.77

Adverse claims were previously governed by Section 110 of Act No. 496, otherwise known as the
Land Registration Act, quoted in full below:

ADVERSE CLAIM

SEC. 110. Whoever claims any part or interest in registered land adverse to the registered owner,
arising subsequent to the date of the original registration, may, if no other provision is made in this
Act for registering the same, make a statement in writing setting forth fully his alleged right or
interest, and how or under whom acquired, and a reference to the volume and page of the certificate
of title of the registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimants residence, and
designate a place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a
speedy hearing upon the question of the validity of such adverse claim and shall enter such decree
therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall
be cancelled. If in any case the court after notice and hearing shall find that a claim thus registered
was frivolous or vexatious, it may tax the adverse claimant double or treble costs in its discretion.

Construing the aforequoted provision, the Court stressed in Ty Sin Tei v. Lee Dy Piao78 that "[t]he
validity or efficaciousness of the [adverse] claim x x x may only be determined by the Court upon
petition by an interested party, in which event, the Court shall order the immediate hearing thereof
and make the proper adjudication as justice and equity may warrant. And it is ONLY when such
claim is found unmeritorious that the registration thereof may be cancelled." The Court likewise
pointed out in the same case that while a notice of lis pendens may be cancelled in a number of
ways, "the same is not true in a registered adverse claim, for it may be cancelled only in one
instance, i.e., after the claim is adjudged invalid or unmeritorious by the Court x x x;" and "if any of
the registrations should be considered unnecessary or superfluous, it would be the notice of lis
pendens and not the annotation of the adverse claim which is more permanent and cannot be
cancelled without adequate hearing and proper disposition of the claim."

With the enactment of the Property Registration Decree on June 11, 1978, Section 70 thereof now
applies to adverse claims:

SEC. 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the
registered owner, arising subsequent to the date of the original registrations, may, if no other
provision is made in this Decree for registering the same, make a statement in writing setting forth
fully his alleged right, or interest, and how or under whom acquired, a reference to the number of the
certificate of title of the registered owner, the name of the registered owner, and a description of the
land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimants residence, and a
place at which all notices may be served upon him. This statement shall be entitled to registration as
an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty
days from the date of registration. After the lapse of said period, the annotation of adverse claim may
be cancelled upon filing of a verified petition therefor by the party in interest: Provided, however, that
after cancellation, no second adverse claim based on the same ground shall be registered by the
same claimant.

Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First
Instance where the land is situated for the cancellation of the adverse claim, and the court shall
grant a speedy hearing upon the question of the validity of such adverse claim, and shall render
judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration
thereof shall be ordered cancelled. If, in any case, the court, after notice and hearing, shall find that
the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than
one thousand pesos nor more than five thousand pesos, in its discretion. Before the lapse of thirty
days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn
petition to that effect. (Emphases supplied.)

In Sajonas v. Court of Appeals,79 the Court squarely interpreted Section 70 of the Property
Registration Decree, particularly, the new 30-day period not previously found in Section 110 of the
Land Registration Act, thus:

In construing the law aforesaid, care should be taken that every part thereof be given effect and a
construction that could render a provision inoperative should be avoided, and inconsistent provisions
should be reconciled whenever possible as parts of a harmonious whole. For taken in solitude, a
word or phrase might easily convey a meaning quite different from the one actually intended and
evident when a word or phrase is considered with those with which it is associated. In ascertaining
the period of effectivity of an inscription of adverse claim, we must read the law in its entirety.
Sentence three, paragraph two of Section 70 of P.D. 1529 provides:

"The adverse claim shall be effective for a period of thirty days from the date of registration."

At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to
thirty days. But the above provision cannot and should not be treated separately, but should be read
in relation to the sentence following, which reads:

"After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a
verified petition therefor by the party in interest."

If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse
of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and
complete the rule. For then, no adverse claim need be cancelled. If it has been automatically
terminated by mere lapse of time, the law would not have required the party in interest to do a
useless act.

A statute's clauses and phrases must not be taken separately, but in its relation to the statute's
totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws.
Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages of the
published Act, its history, origin, and its purposes may be examined by the courts in their
construction. x x x.

xxxx

Construing the provision as a whole would reconcile the apparent inconsistency between the
portions of the law such that the provision on cancellation of adverse claim by verified petition would
serve to qualify the provision on the effectivity period. The law, taken together, simply means that the
cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription
will remain annotated and shall continue as a lien upon the property. For if the adverse claim has
already ceased to be effective upon the lapse of said period, its cancellation is no longer necessary
and the process of cancellation would be a useless ceremony.

It should be noted that the law employs the phrase "may be cancelled," which obviously indicates, as
inherent in its decision making power, that the court may or may not order the cancellation of an
adverse claim, notwithstanding such provision limiting the effectivity of an adverse claim for thirty
days from the date of registration. The court cannot be bound by such period as it would be
inconsistent with the very authority vested in it. A fortiori, the limitation on the period of effectivity is
immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to
be decided in the court hearing. It will therefore depend upon the evidence at a proper hearing for
the court to determine whether it will order the cancellation of the adverse claim or not.

To interpret the effectivity period of the adverse claim as absolute and without qualification limited to
thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of
adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of
a person over a piece of real property where the registration of such interest or right is not otherwise
provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration
Decree), and serves as a warning to third parties dealing with said property that someone is claiming
an interest or the same or a better right than the registered owner thereof.

The reason why the law provides for a hearing where the validity of the adverse claim is to be
threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where
the propriety of his claimed interest can be established or revoked, all for the purpose of determining
at last the existence of any encumbrance on the title arising from such adverse claim. This is in line
with the provision immediately following:

"Provided, however, that after cancellation, no second adverse claim shall be registered by the same
claimant."

Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be
precluded from registering a second adverse claim based on the same ground.

It was held that "validity or efficaciousness of the claim may only be determined by the Court upon
petition by an interested party, in which event, the Court shall order the immediate hearing thereof
and make the proper adjudication as justice and equity may warrant. And it is only when such claim
is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting
the interest of the adverse claimant and giving notice and warning to third parties."80 (Emphases
supplied.)

Whether under Section 110 of the Land Registration Act or Section 70 of the Property Registration
Decree, notice of adverse claim can only be cancelled after a party in interest files a petition for
cancellation before the RTC wherein the property is located, and the RTC conducts a hearing and
determines the said claim to be invalid or unmeritorious.

No petition for cancellation has been filed and no hearing has been conducted herein to determine
the validity or merit of the adverse claim of the Torbela siblings. Entry No. 520469 cancelled the
adverse claim of the Torbela siblings, annotated as Entry Nos. 274471-774472, upon the
presentation by Dr. Rosario of a mere Cancellation and Discharge of Mortgage.

Regardless of whether or not the Register of Deeds should have inscribed Entry No. 520469 on TCT
No. 52751, Banco Filipino could not invoke said inscription in support of its claim of good faith. There
were several things amiss in Entry No. 520469 which should have already aroused suspicions in
Banco Filipino, and compelled the bank to look beyond TCT No. 52751 and inquire into Dr. Rosarios
title. First, Entry No. 520469 does not mention any court order as basis for the cancellation of the
adverse claim. Second, the adverse claim was not a mortgage which could be cancelled with Dr.
Rosarios Cancellation and Discharge of Mortgage. And third, the adverse claim was against Dr.
Rosario, yet it was cancelled based on a document also executed by Dr. Rosario.

It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put
a reasonable man upon his guard, and then claim that he acted in good faith under the belief that
there was no defect in the title of the vendor or mortgagor. His mere refusal to believe that such
defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in the
vendor's or mortgagor's title, will not make him an innocent purchaser or mortgagee for value, if it
afterwards develops that the title was in fact defective, and it appears that he had such notice of the
defects as would have led to its discovery had he acted with the measure of precaution which may
be required of a prudent man in a like situation.81

While the defective cancellation of Entry Nos. 274471-274472 by Entry No. 520469 might not be
evident to a private individual, the same should have been apparent to Banco Filipino. Banco Filipino
is not an ordinary mortgagee, but is a mortgagee-bank, whose business is impressed with public
interest. In fact, in one case, 82 the Court explicitly declared that the rule that persons dealing with
registered lands can rely solely on the certificate of title does not apply to banks. In another
case,83 the Court adjudged that unlike private individuals, a bank is expected to exercise greater care
and prudence in its dealings, including those involving registered lands. A banking institution is
expected to exercise due diligence before entering into a mortgage contract. The ascertainment of
the status or condition of a property offered to it as security for a loan must be a standard and
indispensable part of its operations.

Banco Filipino cannot be deemed a mortgagee in good faith, much less a purchaser in good faith at
the foreclosure sale of Lot No. 356-A. Hence, the right of the Torbela siblings over Lot No. 356-A is
superior over that of Banco Filipino; and as the true owners of Lot No. 356-A, the Torbela siblings
are entitled to a reconveyance of said property even from Banco Filipino.

Nonetheless, the failure of Banco Filipino to comply with the due diligence requirement was not the
result of a dishonest purpose, some moral obliquity, or breach of a known duty for some interest or ill
will that partakes of fraud that would justify damages.84

Given the reconveyance of Lot No. 356-A to the Torbela siblings, there is no more need to address
issues concerning redemption, annulment of the foreclosure sale and certificate of sale (subject
matter of Civil Case No. U-4733), or issuance of a writ of possession in favor of Banco Filipino
(subject matter of Pet. Case No. U-822) insofar as Lot No. 356-A is concerned. Such would only be
superfluous. Banco Filipino, however, is not left without any recourse should the foreclosure and
sale of the two other mortgaged properties be insufficient to cover Dr. Rosarios loan, for the bank
may still bring a proper suit against Dr. Rosario to collect the unpaid balance.

The rules on accession shall govern the improvements on Lot No. 356-A and the rents thereof.

The accessory follows the principal. The right of accession is recognized under Article 440 of the
Civil Code which states that "[t]he ownership of property gives the right by accession to everything
which is produced thereby, or which is incorporated or attached thereto, either naturally or
artificially."

There is no question that Dr. Rosario is the builder of the improvements on Lot No. 356-A. The
Torbela siblings themselves alleged that they allowed Dr. Rosario to register Lot No. 356-A in his
name so he could obtain a loan from DBP, using said parcel of land as security; and with the
proceeds of the loan, Dr. Rosario had a building constructed on Lot No. 356-A, initially used as a
hospital, and then later for other commercial purposes. Dr. Rosario supervised the construction of
the building, which began in 1965; fully liquidated the loan from DBP; and maintained and
administered the building, as well as collected the rental income therefrom, until the Torbela siblings
instituted Civil Case No. U-4359 before the RTC on February 13, 1986.

When it comes to the improvements on Lot No. 356-A, both the Torbela siblings (as landowners)
and Dr. Rosario (as builder) are deemed in bad faith. The Torbela siblings were aware of the
construction of a building by Dr. Rosario on Lot No. 356-A, while Dr. Rosario proceeded with the
said construction despite his knowledge that Lot No. 356-A belonged to the Torbela siblings. This is
the case contemplated under Article 453 of the Civil Code, which reads:

ART. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on
the land of another, but also on the part of the owner of such land, the rights of one and the other
shall be the same as though both had acted in good faith.

It is understood that there is bad faith on the part of the landowner whenever the act was done with
his knowledge and without opposition on his part. (Emphasis supplied.)

When both the landowner and the builder are in good faith, the following rules govern:

ART. 448. The owner of the land on which anything has been built, sown or planted in good faith,
shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in
good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the thing may have acquired by
reason thereof.
ART. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good
faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers
no injury thereby, and if his successor in the possession does not prefer to refund the amount
expended.

Whatever is built, planted, or sown on the land of another, and the improvements or repairs made
thereon, belong to the owner of the land. Where, however, the planter, builder, or sower has acted in
good faith, a conflict of rights arises between the owners and it becomes necessary to protect the
owner of the improvements without causing injustice to the owner of the land. In view of the
impracticability of creating what Manresa calls a state of "forced co-ownership," the law has provided
a just and equitable solution by giving the owner of the land the option to acquire the improvements
after payment of the proper indemnity or to oblige the builder or planter to pay for the land and the
sower to pay the proper rent. It is the owner of the land who is allowed to exercise the option
because his right is older and because, by the principle of accession, he is entitled to the ownership
of the accessory thing.85

The landowner has to make a choice between appropriating the building by paying the proper
indemnity or obliging the builder to pay the price of the land. But even as the option lies with the
landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for
instance, compel the owner of the building to remove the building from the land without first
exercising either option. It is only if the owner chooses to sell his land, and the builder or planter fails
to purchase it where its value is not more than the value of the improvements, that the owner may
remove the improvements from the land. The owner is entitled to such remotion only when, after
having chosen to sell his land, the other party fails to pay for the same.86

This case then must be remanded to the RTC for the determination of matters necessary for the
proper application of Article 448, in relation to Article 546, of the Civil Code. Such matters include the
option that the Torbela siblings will choose; the amount of indemnity that they will pay if they decide
to appropriate the improvements on Lot No. 356-A; the value of Lot No. 356-A if they prefer to sell it
to Dr. Rosario; or the reasonable rent if they opt to sell Lot No. 356-A to Dr. Rosario but the value of
the land is considerably more than the improvements. The determination made by the Court of
Appeals in its Decision dated June 29, 1999 that the current value of Lot No. 356-A is 1,200,000.00
is not supported by any evidence on record.

Should the Torbela siblings choose to appropriate the improvements on Lot No. 356-A, the following
ruling of the Court in Pecson v. Court of Appeals87 is relevant in the determination of the amount of
indemnity under Article 546 of the Civil Code:

Article 546 does not specifically state how the value of the useful improvements should be
determined. The respondent court and the private respondents espouse the belief that the cost of
construction of the apartment building in 1965, and not its current market value, is sufficient
reimbursement for necessary and useful improvements made by the petitioner. This position is,
however, not in consonance with previous rulings of this Court in similar cases. In Javier vs.
Concepcion, Jr., this Court pegged the value of the useful improvements consisting of various fruits,
bamboos, a house and camarin made of strong material based on the market value of the said
improvements. In Sarmiento vs. Agana, despite the finding that the useful improvement, a residential
house, was built in 1967 at a cost of between eight thousand pesos (8,000.00) to ten thousand
pesos (10,000.00), the landowner was ordered to reimburse the builder in the amount of forty
thousand pesos (40,000.00), the value of the house at the time of the trial. In the same way, the
landowner was required to pay the "present value" of the house, a useful improvement, in the case
of De Guzman vs. De la Fuente, cited by the petitioner.
The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In
this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila that
the said provision was formulated in trying to adjust the rights of the owner and possessor in good
faith of a piece of land, to administer complete justice to both of them in such a way as neither one
nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is
therefore the current market value of the improvements which should be made the basis of
reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise
be allowed to acquire a highly valued income-yielding four-unit apartment building for a measly
amount. Consequently, the parties should therefore be allowed to adduce evidence on the present
market value of the apartment building upon which the trial court should base its finding as to the
amount of reimbursement to be paid by the landowner.88(Emphases supplied.)

Still following the rules of accession, civil fruits, such as rents, belong to the owner of the
building.89 Thus, Dr. Rosario has a right to the rents of the improvements on Lot No. 356-A and is
under no obligation to render an accounting of the same to anyone. In fact, it is the Torbela siblings
who are required to account for the rents they had collected from the lessees of the commercial
building and turn over any balance to Dr. Rosario. Dr. Rosarios right to the rents of the
improvements on Lot No. 356-A shall continue until the Torbela siblings have chosen their option
under Article 448 of the Civil Code. And in case the Torbela siblings decide to appropriate the
improvements, Dr. Rosario shall have the right to retain said improvements, as well as the rents
thereof, until the indemnity for the same has been paid.90

Dr. Rosario is liable for damages to the Torbela siblings.

The Court of Appeals ordered Dr. Rosario to pay the Torbela siblings 300,000.00 as moral
damages; 200,000.00 as exemplary damages; and 100,000.00 as attorneys fees.

Indeed, Dr. Rosarios deceit and bad faith is evident when, being fully aware that he only held Lot
No. 356-A in trust for the Torbela siblings, he mortgaged said property to PNB and Banco Filipino
absent the consent of the Torbela siblings, and caused the irregular cancellation of the Torbela
siblings adverse claim on TCT No. 52751. Irrefragably, Dr. Rosarios betrayal had caused the
Torbela siblings (which included Dr. Rosarios own mother, Eufrosina Torbela Rosario) mental
anguish, serious anxiety, and wounded feelings. Resultantly, the award of moral damages is
justified, but the amount thereof is reduced to 200,000.00.

In addition to the moral damages, exemplary damages may also be imposed given that Dr. Rosarios
wrongful acts were accompanied by bad faith. However, judicial discretion granted to the courts in
the assessment of damages must always be exercised with balanced restraint and measured
objectivity. The circumstances of the case call for a reduction of the award of exemplary damages to
100,000.00.

As regards attorney's fees, they may be awarded when the defendant's act or omission has
compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.
Because of Dr. Rosarios acts, the Torbela siblings were constrained to institute several cases
against Dr. Rosario and his spouse, Duque-Rosario, as well as Banco Filipino, which had lasted for
more than 25 years. Consequently, the Torbela siblings are entitled to an award of attorney's fees
and the amount of 100,000.00 may be considered rational, fair, and reasonable.

Banco Filipino is entitled to a writ of possession for Lot No. 5-F-8-C-2-B-2-A.

The Court emphasizes that Pet. Case No. U-822, instituted by Banco Filipino for the issuance of a
writ of possession before the RTC of Urdaneta, included only Lot No. 5-F-8-C-2-B-2-A and Lot No.
356-A (Lot No. 4489, the third property mortgaged to secure Dr. Rosarios loan from Banco Filipino,
is located in Dagupan City, Pangasinan, and the petition for issuance of a writ of possession for the
same should be separately filed with the RTC of Dagupan City). Since the Court has already granted
herein the reconveyance of Lot No. 356-A from Banco Filipino to the Torbela siblings, the writ of
possession now pertains only to Lot No. 5-F-8-C-2-B-2-A.

To recall, the Court of Appeals affirmed the issuance by the RTC of a writ of possession in favor of
Banco Filipino. Dr. Rosario no longer appealed from said judgment of the appellate court. Already
legally separated from Dr. Rosario, Duque-Rosario alone challenges the writ of possession before
this Court through her Petition in G.R. No. 140553.

Duque-Rosario alleges in her Petition that Lot No. 5-F-8-C-2-B-2-A had been registered in her name
under TCT No. 104189. Yet, without a copy of TCT No. 104189 on record, the Court cannot give
much credence to Duque-Rosarios claim of sole ownership of Lot No. 5-F-8-C-2-B-2-A. Also, the
question of whether Lot No. 5-F-8-C-2-B-2-A was the paraphernal property of Duque-Rosario or the
conjugal property of the spouses Rosario would not alter the outcome of Duque-Rosarios Petition.

The following facts are undisputed: Banco Filipino extrajudicially foreclosed the mortgage constituted
on Lot No. 5-F-8-C-2-B-2-A and the two other properties after Dr. Rosario defaulted on the payment
of his loan; Banco Filipino was the highest bidder for all three properties at the foreclosure sale on
April 2, 1987; the Certificate of Sale dated April 2, 1987 was registered in April 1987; and based on
the Certificate of Final Sale dated May 24, 1988 and Affidavit of Consolidation dated May 25, 1988,
the Register of Deeds cancelled TCT No. 104189 and issued TCT No. 165812 in the name of Banco
Filipino for Lot No. 5-F-8-C-2-B-2-A on June 7, 1988.

The Court has consistently ruled that the one-year redemption period should be counted not from
the date of foreclosure sale, but from the time the certificate of sale is registered with the Registry of
Deeds.91 No copy of TCT No. 104189 can be found in the records of this case, but the fact of
annotation of the Certificate of Sale thereon was admitted by the parties, only differing on the date it
was made: April 14, 1987 according to Banco Filipino and April 15, 1987 as maintained by Duque-
Rosario. Even if the Court concedes that the Certificate of Sale was annotated on TCT No. 104189
on the later date, April 15, 1987, the one-year redemption period already expired on April 14,
1988.92 The Certificate of Final Sale and Affidavit of Consolidation were executed more than a month
thereafter, on May 24, 1988 and May 25, 1988, respectively, and were clearly not premature.

It is true that the rule on redemption is liberally construed in favor of the original owner of the
property. The policy of the law is to aid rather than to defeat him in the exercise of his right of
redemption.93 However, the liberal interpretation of the rule on redemption is inapplicable herein as
neither Duque-Rosario nor Dr. Rosario had made any attempt to redeem Lot No. 5-F-8-C-2-B-2-A.
Duque-Rosario could only rely on the efforts of the Torbela siblings at redemption, which were
unsuccessful. While the Torbela siblings made several offers to redeem Lot No. 356-A, as well as
the two other properties mortgaged by Dr. Rosario, they did not make any valid tender of the
redemption price to effect a valid redemption. The general rule in redemption is that it is not sufficient
that a person offering to redeem manifests his desire to do so. The statement of intention must be
accompanied by an actual and simultaneous tender of payment. The redemption price should either
be fully offered in legal tender or else validly consigned in court. Only by such means can the auction
winner be assured that the offer to redeem is being made in good faith.94 In case of disagreement
over the redemption price, the redemptioner may preserve his right of redemption through judicial
action, which in every case, must be filed within the one-year period of redemption. The filing of the
court action to enforce redemption, being equivalent to a formal offer to redeem, would have the
effect of preserving his redemptive rights and "freezing" the expiration of the one-year period.95 But
no such action was instituted by the Torbela siblings or either of the spouses Rosario.
Duque-Rosario also cannot bar the issuance of the writ of possession over Lot No. 5-F-8-C-2-B-2-A
in favor of Banco Filipino by invoking the pendency of Civil Case No. U-4359, the Torbela siblings
action for recovery of ownership and possession and damages, which supposedly tolled the period
for redemption of the foreclosed properties. Without belaboring the issue of Civil Case No. U-4359
suspending the redemption period, the Court simply points out to Duque-Rosario that Civil Case No.
U-4359 involved Lot No. 356-A only, and the legal consequences of the institution, pendency, and
resolution of Civil Case No. U-4359 apply to Lot No. 356-A alone.

Equally unpersuasive is Duque-Rosarios argument that the writ of possession over Lot No. 5-F-8-C-
2-B-2-A should not be issued given the defects in the conduct of the foreclosure sale (i.e., lack of
personal notice to Duque-Rosario) and consolidation of title (i.e., failure to provide Duque-Rosario
with copies of the Certificate of Final Sale).

The right of the purchaser to the possession of the foreclosed property becomes absolute upon the
expiration of the redemption period. The basis of this right to possession is the purchaser's
ownership of the property. After the consolidation of title in the buyer's name for failure of the
mortgagor to redeem, the writ of possession becomes a matter of right and its issuance to a
purchaser in an extrajudicial foreclosure is merely a ministerial function.96
1avvphi 1

The judge with whom an application for a writ of possession is filed need not look into the validity of
the mortgage or the manner of its foreclosure. Any question regarding the validity of the mortgage or
its foreclosure cannot be a legal ground for the refusal to issue a writ of possession. Regardless of
whether or not there is a pending suit for the annulment of the mortgage or the foreclosure itself, the
purchaser is entitled to a writ of possession, without prejudice, of course, to the eventual outcome of
the pending annulment case. The issuance of a writ of possession in favor of the purchaser in a
foreclosure sale is a ministerial act and does not entail the exercise of discretion.97

WHEREFORE, in view of the foregoing, the Petition of the Torbela siblings in G.R. No. 140528 is
GRANTED, while the Petition of Lena Duque-Rosario in G.R. No. 140553 is DENIED for lack of
merit. The Decision dated June 29, 1999 of the Court of Appeals in CA-G.R. CV No. 39770, which
affirmed with modification the Amended Decision dated January 29, 1992 of the RTC in Civil Case
Nos. U-4359 and U-4733 and Pet. Case No. U-822, is AFFIRMED WITH MODIFICATIONS, to now
read as follows:

(1) Banco Filipino is ORDERED to reconvey Lot No. 356-A to the Torbela siblings;

(2) The Register of Deeds of Pangasinan is ORDERED to cancel TCT No. 165813 in the
name of Banco Filipino and to issue a new certificate of title in the name of the Torbela
siblings for Lot No. 356-A;

(3) The case is REMANDED to the RTC for further proceedings to determine the facts
essential to the proper application of Articles 448 and 546 of the Civil Code, particularly: (a)
the present fair market value of Lot No. 356-A; (b) the present fair market value of the
improvements thereon; (c) the option of the Torbela siblings to appropriate the improvements
on Lot No. 356-A or require Dr. Rosario to purchase Lot No. 356-A; and (d) in the event that
the Torbela siblings choose to require Dr. Rosario to purchase Lot No. 356-A but the value
thereof is considerably more than the improvements, then the reasonable rent of Lot No.
356-A to be paid by Dr. Rosario to the Torbela siblings;

(4) The Torbela siblings are DIRECTED to submit an accounting of the rents of the
improvements on Lot No. 356-A which they had received and to turn over any balance
thereof to Dr. Rosario;
 (5) Dr. Rosario is ORDERED to pay the Torbela siblings 200,000.00 as moral damages,
100,000.00 as exemplary damages, and 100,000.00 as attorneys fees; and

(6) Banco Filipino is entitled to a writ of possession over Lot-5-F-8-C-2-B-2-A, covered by

TCT No. 165812. The RTC Branch Clerk of Court is ORDERED to issue a writ of possession
for the said property in favor of Banco Filipino.

SO ORDERED.

G.R. No. L-40064 December 4, 1934

RESURRECCION TAGARAO, BUENAVENTURA TAGARAO and SERAFIN TAGARAO, plaintiffs-

appellees,
vs.
MARCOS GARCIA, ET AL., defendants.
MARGARITA GARCIA, ROSARIO GARCIA, DOLORES RUFINO, and ELUETERIO
RUFINO, appellants.

Oceeo and Alba for appellants M. Garcia, R. Garcia and D. Rufino.

Vicente T. Remitio for appellant E. Rufino.
Rafael P. Guerrero for appellees.

DIAZ, J.:

This action was brought by the brothers and sisters Resurreccion Tagarao, Buenaventura Tagarao,
and Serafin Tagarao, children of the deceased Merced Garcia, daughter of the deceased
Buenaventura Garcia who was a brother of the defendant Marcos Garcia, against the latter and the
other defendants named Paula Tabifranca, Margarita Garcia, Rosario Garcia, Dolores Rufino and
Eleuterio Rufino, praying that judgment be rendered against the defendants ordering them to deliver
to the plaintiffs, after executing the necessary deeds of transfer, one-fourth of the land known as lot
No. 510 of cadastral case No. 11 of the municipality of Isabela, Occidental Negros (G. L. R. O. Cad.
Record No. 100), which was formerly covered, first by original certificate of title No. 10009 (Exhibit
M), later by transfer certificate of title No. 3001 (Exhibit 3), and at present by transfer certificate of
title No. 8782 (Exhibit 7), all of the office of the register of deeds of said Province of Occidental
Negros.

In their amended complaint of July 29, 1931, which was reamended on March 8, 1932, said plaintiffs
prayed that should the defendants fail to deliver to them the required portion of the land in question,
the latter be ordered to pay them the value thereof based on the assessed value of the whole
property, and that they furthermore be indemnified for the value of 1,407 cavans of palay at the rate
of P4 a cavan, alleging that said 1,407 cavans represented their share in the products of said land
from the time the defendants took exclusive possession thereof.

Before the plaintiffs filed their amended complaint on the date above stated, the defendants Marcos
Garcia, Paula Tabifranca, Margarita Garcia, Rosario Garcia and Dolores Rufino filed a demurrer to
said plaintiffs' original complaint, alleging that it did not state sufficient facts to constitute a cause of
action and was furthermore ambiguous, unintelligible and uncertain. The lower court sustained said
demurrer and ordered the plaintiffs to amend their complaint within the reglementary period.
When the plaintiffs amended their complaint in the sense expressed in their pleading of February 13,
1929, said five defendants again filed another demurrer alleging this time that the lower court lack
jurisdiction to try the case by reason of the subject matter involved and the lower court overruled
said demurrer ordering them to answer within the reglementary period. In compliance therewith, the
defendants on October 28, 1929, filed their answer wherein the first two defendants, or the spouses
Marcos Garcia and Paula Tabifranca, alleged that although they formerly were the absolute and
exclusive owners of the land in question they already ceased to be so at that time, having sold the
half belonging to Paula Tabifranca to the defendants Margarita Garcia, Rosario Garcia and Dolores
Rufino, and the other half belonging to Marcos Garcia to Eleuterio Rufino. On June 9, 1931, said two
defendants filed a petition of even date stating that they had no more interest in the case, having
sold their respective participations to the two Garcias and two Rufinos and praying in succession
that they be absolved from the complaint.

A few days later, or on July 15, 1931, said two defendants Marcos Garcia and Paula Tabifranca filed
a motion to include Eleuterio Rufino among the defendants and on the following day the lower court,
granting the motion, ordered the inclusion of Eleuterio Rufino in the case as one of the defendants.
For this purpose the plaintiffs filed their said amended complaint of July 29, 1931, which they
reamended with a slight addition on March 8, 1932.

The defendants Marcos Garcia and Paula Tabifranca did not answer the plaintiffs' last amended
complaint but Margarita Garcia, Rosario Garcia and Dolores Rufino jointly entered a general denial
of all the allegations contained therein, alleging as a special defense (1) that they are the exclusive
owners of one-half of the land in question; (2) that the plaintiffs have already lost their right of action
because such right, if they ever had any, has already prescribed; and (3) said plaintiffs cannot
invoke the decision rendered in civil case No. 4091 because with respect to them it does not
constitute res judicata.

The defendant Eleuterio Rufino, answering said plaintiffs' last amended complaint, stated in his
pleading of November 19, 1931, that he denied each and every allegation contained therein, alleging
as a special defense that one half of the land in question was sold by Marcos Garcia and purchased
by him in good faith, paying the corresponding price therefor.

After due trial the lower court rendered judgment ordering the defendants to deliver to the plaintiffs
one fourth of the land in question after executing the necessary deeds of transfer in favor of said
plaintiffs or, in lieu thereof, to indemnify them in the sum of P3,882 plus the value of 1,000 cavans of
palay at P3 a cavan, with costs. In said judgment said court "declared the deeds of sale executed by
Marcos Garcia in favor of the defendant Eleuterio Rufino and by Paula Tabifranca in favor of the
defendants Margarita Garcia, Rosario Garcia and Dolores Rufino, null and void." The defendants
Margarita Garcia, Rosario Garcia, Dolores Rufino and Elueterio Rufino appealed but Marcos Garcia
and Paula Tabifranca did not. 1aw phi1.net

In support of their appeal, the defendants Margarita Garcia, Rosario Garcia, and Dolores Rufino
contend that the lower court committed the eight alleged errors assigned in their brief as follows:

1. The lower court erred in not sustaining the demurrer of the defendants-appellants
Margarita Garcia, Rosario Garcia and Dolores Rufino to the second amended complaint of
the plaintiffs.

2. The lower court erred in admitting, under objections of the defendants-appellants, oral and
documentary evidence tending to attack original certificate of title No. 10009 in the name of
the spouses Marcos Garcia and Paula Tabifranca issued on May 17, 1918.
 3. The lower court erred in holding that the deed of sale made and executed by Paula
Tabifranca with respect to her undivided one-half () share of lot No. 510 of the cadastral
survey of Isabela in favor of Margarita Garcia, Rosario Garcia and Dolores Rufino, was made
without consideration and declaring same null and void being fictitious.

4. The lower court erred in holding that the transaction made by Paula Tabifranca in favor of
Margarita Garcia, Rosario Garcia and Dolores Rufino had no other purpose than to deprive
the plaintiffs of their shares in lot No. 510, as legitimate heirs of Ventura Garcia and Merced
Garcia.

5. The lower court erred in condemning the defendants-appellants Margarita Garcia, Rosario
Garcia and Dolores Rufino, jointly and severally with the other defendants to return to the
plaintiffs one-fourth () of lot No. 510 of the cadastral survey of Isabela, or in its place, to
indemnify the plaintiffs the sum of P3,882, value of said portion.

6. The lower court erred in condemning the defendants-appellants Margarita Garcia, Rosario
Garcia and Dolores Rufino, jointly and severally with the other defendants, to pay the
plaintiffs one thousand cavanes of palay or its value at P3 per cavan.

7. The lower court erred in holding that the right of the plaintiffs to present this action to
recover a portion of lot No. 510 of the cadastral survey of Isabela has not prescribed. lawphil.net

8. The lower court erred in denying the petition for a new trial of the defendants-appellants
Margarita Garcia, Rosario Garcia and Dolores Rufino.

The appellant Eleuterio Rufino also contends that said court in rendering its judgment in question
committed the four alleged errors relied upon in his brief, which read as follows:

1. The lower court erred in admitting over the defendant's objection oral as well as
documentary evidence of the plaintiffs tending to attack the stability of original certificate of
title No. 10009 (Exhibit 5) in the name of the defendants Marcos Garcia and Paula
Tabifranca, relative to alleged facts that took place prior to the issuance of said title.

2. The lower court erred in ordering the defendant Eleuterio Rufino, jointly with his
codefendants, to deliver to the plaintiffs one-fourth () of said lot No. 510, or in lieu thereof to
indemnify them in the sum of P3,882 representing the value of said portion.

3. The lower court erred in holding in its judgment that the deed (Exhibit 8) is fictitious and
fraudulent and declaring it null and void.

4. The lower court erred in not absolving the defendant and appellant Eleuterio Rufino from
the complaint and in denying his motion for a new trial.

Without losing sight of the purpose of the complaint of the plaintiffs and appellees as expressed in
the prayer of their pleadings or last amended complaints, it is clear that the first assignment of
alleged error attributed to the lower court by the appellants is unfounded on the ground that its
purpose is not to attack the validity of the decree by virtue of which original certificate of title No.
10009 was issued in favor of Marcos Garcia and Paula Tabifranca, or that under which transfer
certificates of title Nos. 3001 and 8782, were issued later, but to compel the defendants to give them
one-fourth of the land described in said certificates and to pay them the indemnity referred to therein.
The facts which have been clearly established at the trial, according to the record and the evidence
before us, may be briefly stated as follows:

The land in question has an area of 31 hectares, 3 ares and 65 centares. It was originally purchased
with pacto de retro by the defendant Marcos Garcia and his brother Ventura Garcia from Vidal
Saravia on July 20, 1900. As the latter failed to exercise his right of repurchase the two brothers
became the absolute owners of said land and it was so held by the Court of First Instance of
Occidental Negros in case No. 274 which was instituted by Pedro Saravia, as administrator of the
intestate estate of Vidal Saravia, against said two brothers to compel the latter to resell it to him
(Exhibit L). When the two brothers purchased said land, the defendant Marcos Garcia was yet single
because he had not even been married to his former wife, as the defendant Paula Tabifranca is only
his wife by a second marriage. Marcos Garcia had by his first wife three children who are the
defendants Margarita Garcia, Rosario Garcia and the deceased Catalina Garcia, mother of the
defendant Dolores Rufino. Ventura Garcia, now deceased, also had two children: Merced Garcia
who was married to Rafael Ragarao, and Claro Garcia.

While Merced Garcia was still living, or at least until June, 1914, the defendant Marcos Garcia had
been delivering to her and her brother Claro Garcia their share of the products harvested from the
land in question. Merced Garcia who, as stated, died about the year 1914 and was followed years
later by her husband Rafael Tagarao, had three children, the herein plaintiffs Resurreccion Tagarao,
Serafin Tagarao and Buenaventura Tagarao. When this action was brought on October 14, 1928,
Resurreccion Tagarao was more than 24 years of age; Serafin was then only 23 years, 1 month and
1 day, and Buenaventura, 18 years, 4 months and 3 days.

With the plaintiffs' grandfather, Ventura Garcia, and their mother, Merced Garcia, already dead, the
defendant Marcos Garcia claimed the lands in question in cadastral case No. 11 of the municipality
of Isabela of the Province of Occidental Negros (G. L. R. O. Cadastral Record No. 100), known in
said case as lot No. 510, alleging in the pleading presented by him to that effect (Exhibit I) that he
had acquired it on July 20, 1904, when he was yet unmarried to his codefendant Paula Tabifranca.
Before the original certificate of title acknowledging him to be the owner of the land in question was
issued to him, and during the period within which any person could ask for the revision of the decree
issued to that effect, Marcos Garcia, fearing that Claro Garcia, brother of the plaintiffs' mother, might
frustrate his designs by asking for said revision, executed in favor of Claro Garcia a document
binding himself to give to the latter four hectares of said land upon the issuance to him of the
corresponding certificate of title. In view thereof, Claro did not ask for the revision of the decree but
he later brought an action, case No. 4091 of the Court of First Instance of Occidental Negros,
against Marcos Garcia to recover from him four hectares of said land, lot No. 510 of the cadastre of
Isabela, basing his claim on the document which Marcos Garcia executed in his favor in order to
promise and bind himself to give Claro said four hectares, because after Marcos Garcia had
obtained his certificate of title he refused to comply with his promise; and as a result said court, on
October 10, 1927, rendered judgment against Marcos Garcia ordering him to segregate four
hectares of said land to be delivered to Claro Garcia and furthermore to pay to the latter as
indemnity 90 cavans of palay, or the value thereof in the sum of P360.

In the certificate of title which was issued in favor of Marcos Garcia on May 17, 1918 (original
certificate of title No. 10009), by virtue of his claim presented in said cadastral case No. 11 of the
municipality of Isabela. Occidental Negros, it was stated, as in the decree ordering the issuance
thereof, that one-half of the land therein described belonged to him, and that the other half to his wife
by a second marriage, Paula Tabifranca.

A few years after the issuance of said certificate of title the defendant Paula Tabifranca, second wife
of the defendant Marcos Garcia, sold her rights to the defendants Margarita Garcia, Rosario Garcia
and Dolores Rufino, her husband's daughters and granddaughter, respectively, by his first marriage,
executing the deed Exhibit N dated December 31, 1921, while the alleged purchaser Dolores Rufino
was yet a minor. This was agreed upon between her and her husband Marcos Garcia to prevent the
land, part of which belonged to her under said certificate of title, from ever passing to her son by her
first marriage named Juan Tabigui, as she was already a widow when she contracted marriage with
said Marcos Garcia.

In the meantime the plaintiff Resurreccion Tagarao was informed that her uncle Claro Garcia had
succeeded in obtaining his share of the land in question and, desiring to protect her rights and those
of her brothers and coplaintiffs, she negotiated with Marcos Garcia so that he might give them their
corresponding share. Marcos Garcia at first entertained her with promises that he would see to it that
she got what she wanted but later, at her back, he sold his share of the land to the defendant
Eleuterio Rufino, brother of his son-in-law Lope Rufino, husband of the defendant Rosario Garcia,
executing in favor of Eleuterio Rufino the deed Exhibit 8 wherein it was made to appear that the
price paid to him for only one-half of the land, lot No. 510, was P6,567.

Twelve days after Paula Tabifranca had executed said deed of transfer Exhibit N in favor of her
stepdaughters Margarita Garcia and Rosario Garcia and of her husband Marcos Garcia's
granddaughter named Dolores Rufino, said three defendants together with Marcos Garcia obtained
transfer certificate of title No. 3001, after the cancellation of original certificate of title No. 10009, and
two days after Marcos Garcia had executed in favor of the defendant Eleuterio Rufino the deed of
sale Exhibit 8 whereby he sold to the latter his half of the land described in the above stated
certificate of title No. 10009 (Exhibit M), he and his daughters and granddaughter jointly with the
defendant Eleuterio Rufino succeeded in having said transfer certificate of title No. 3001 (Exhibit 3)
cancelled to be substituted, as it was in fact substituted, by transfer certificate of title No. 8782
(Exhibit 7).

The transfer made by Paula Tabifranca in favor of her stepdaughters Margarita and Rosario Garcia
and her husband's granddaughter Dolores Rufino, and that made by Marcos Garcia in favor of
Eleuterio Rufino, stated in said deeds Exhibits N and 8, are fictitious and feigned in view of the
following reasons inferable from the evidence of record:

Notwithstanding the fact that in the original certificate of title No. 10009 Paula Tabifranca's right to
one half of the property therein described has been acknowledged, she was conscious that she was
not entitled thereto because it belonged exclusively to her husband or, at least, he had acquired it
long before he married her. This explains the ease with which she parted with her alleged right for a
sum disproportionate to the true value of the land sold by her. The alleged purchasers Margarita
Garcia, Rosario Garcia and Dolores Rufino were not in a financial position to pay her the alleged
purchase price which, according to Exhibit N, amounted to P1,500; and Dolores Rufino, being then
of tender age, could not have taken part in said contract that she was represented by her father
Lope Rufino, because it does not appear that the latter was then the guardian of her property and it
is a fact that minors cannot give consent to any contract.

Neither was Eleuterio Rufino in a financial position to pay what he allegedly paid to the defendant
Marcos Garcia for the latter's share in the land in question on the ground that the amount of six
thousand five hundred sixty-seven pesos (P6,567) which is the price allegedly paid by him to Marcos
Garcia is a fortune greater than the income he could have had for several years, because his means
of livelihood, according to his own testimony, consisted simply of extracting tuba from about 200
coconut trees leased from different persons and in retailing fresh fish bought by him for a lump sum
in order to obtain a small profit. He is a brother of the defendant Rosario Garcia's husband, and
notwithstanding that the deed Exhibit 8 was executed in his favor, the land continues until now to be
registered for taxation purposes in the name of Marcos Garcia; and notwithstanding the alleged
deed of transfer Exhibit 8 the land in question continues to be under the Isabela Sugar Company
Inc., of Occidental Negros, as property of named "THREE SISTERS A," "THREE SISTERS B,"
and "HACIENDA GARCIA," the first portion being under the management of Macario Torilla,
husband of the defendant Margarita Garcia; the second under the management of Lope Rufino,
husband of the defendant Rosario Garcia; and the third under that of Claro Garcia, uncle of the
plaintiffs (Exhibit D). In addition to these reasons, it may and should be stated that Elueterio Rufino's
testimony explaining how the transaction between him and Marcos Garcia was effected, does not
agree with the text of the deed of transfer Exhibit 8. It is expressly stated in said document that the
price paid by him for the land in question was P6,567 and that he also assumed the lien in the form
of a mortgage constituted on said land to secure the payment of Candido Montilla of a loan in the
sum of P4,675 from which it may be inferred that the total price paid by him for said land was really
P11,242. Notwithstanding this, he testified that he paid only P1,892 to the defendant Marcos Garcia.
It should be stated furthermore that on December 1, 1928, or scarcely two and a half months from
the time he bought said land from Marcos Garcia, Eleuterio Rufino leased it, according to Exhibit 9,
to Marcos Garcia's sons-in-law and husbands of the defendants Margarita Garcia and Rosario
Garcia, when it is natural that as he was poor and his business of tapping tuba and reselling fishes
was not lucrative, he should have personally taken charge of the cultivation and exploitation of the
land bought by him. Furthermore, on January 10, 1930, long after the alleged transfer of said land,
Exhibit 8, Macario Torilla and Lope Rufino, as Marcos Garcia's attorneys-in-fact, the latter having
executed in their favor the power of attorney, Exhibit O-1, by virtue of which they mortgaged the land
in question in the name of their principal to Candido Montilla on July 7, 1928, Exhibit O, paid to
Montilla the sum of P514.25 as interest on the loan secured by the mortgage above stated (Exhibit
4). This last fact convinces us more that said deed of transfer Exhibit 8 is fictitious because if it were
genuine, there being as in fact there is in said document a stipulation that the purchaser Eleuterio
Rufino assumed all the lien on said property, Eleuterio Rufino, not Marcos Garcia, personally, nor
through his sons-in-law Macario Torilla and Lope Rufino, should have paid said interest.

The foregoing proves to our satisfaction that errors 2, 3 and 4 relied upon by the appellants
Margarita Garcia, Rosario Garcia and Dolores Rufino in their brief are absolutely unfounded, and so
is alleged error No. 3 attributed to the lower court by the appellant Eleuterio Rufino.

It follows from the foregoing conclusions and considerations that errors 5 and 2 attributed to said
court by the defendants Garcia and Eleuterio Rufino, respectively, are likewise unfounded. If the
transfers made under the deeds which later made possible the issuance to the interested parties of
certificates of title Nos. 3001 and 8782 (Exhibits 3 and 7) are fraudulent, it is but proper, being in
accordance with law, that the defendants execute the deeds of transfer prayed for by the plaintiffs in
their complaint in order to give them what is theirs; and this is undoubtedly one fourth of the entire
land because if one half belonged to the plaintiffs' grandfather who, as already stated, had only two
children: Claro Garcia, the plaintiffs' uncle, and Merced Garcia, their mother.

But the question now arises whether or not the three plaintiffs are entitled to what they jointly pray for
in their complaint. There is no doubt but that the plaintiffs Serafin Tagarao and Buenaventura
Tagarao are entitled thereto on the ground that the former was only 23 years, 1 month and 1 day,
when this action was brought, and therefore the three years exception granted by the provisions of
section 42 of Act No. 190 had not yet elapsed as to him, and because Buenaventura Tagarao, then
being only 18 years, 4 months and 3 days of age, was yet a minor and the period of prescription as
to him is extended to three years after he was attained majority.

The plaintiff Resurreccion Tagarao, notwithstanding that she was of legal age when this action was
brought, contends that neither has her right to seek the same relief prayed for by her brothers and
coplaintiffs prescribed, and cites in support of her contention the ruling laid down in the case
of Velazquez vs. Teodoro (46 Phil., 757). It was truly stated in said case, citing with approval a
doctrine laid down by the Supreme Court of the State of Ohio in the case of Sturges and
Anderson vs. Longworth and Horne (1 Ohio St., 545), that:

Where the interests of two defendants are joint and inseparable, and the rights of one are
saved under the provision of the statute of limitations, on account of his disability, such
saving inures to the benefit of the other defendant, although laboring under no disability.

As may be seen, this ruling refers to cases in which the rights of the defendants are joint and
inseparable because when they are not so, that is, when they are joint and several at the same time,
as is the case of the plaintiffs whose rights are joint and several, the rule according to said court,
interpreting the section from which section 42 of Act No. 190 was copied, is different; and said court
stated that in said cases the disability which protects an heir from the effects of prescription is no
protection to coheirs, or in other words, using the same language of the author of the footnotes on
the decision rendered in the case of Moore vs. Armstrong, reported in 36 Am. Dec., 63, 78, wherein
the same Supreme Court of the State of Ohio sustained the latter point of view, "where the rights of
the parties are not joint, the cases are uniform, and hold that the disability of one will prevent the
operation of the statute as to him, but that those who are not under a disability will be barred."

The case of Moore vs. Armstrong, supra, has more points in common with the case at bar than
those of Sturges and Anderson vs. Longworth and Horne, and Wilkins vs. Philips cited in said case
of Velazquez vs. Teodoro, supra. The question for determination in the former case was whether or
not the period of prescription runs not only against the heir who is laboring under disability but also
against his coheirs who are sui juris. The plaintiffs, to all appearances, were the heirs of one Furgus
Moore and the heiress who seemed to be laboring under disability was a married woman named
Mrs. Fleming. The Supreme Court of Ohio decided the question in the negative with the remark that
whatever doubt might once have been entertained on this subject, it was conclusively settled both in
Great Britain and in the United States that the statute is saved in favor only of the person laboring
under the alleged disability, adding in succession that this is precisely the rule with respect both to
coparceners and tenants in common.

It cannot be argued that the separation of rights among the plaintiffs was not practicable in the sense
that one of them could not have disposed of or alienate his legal portion of the thing possessed in
common without the consent of the others, because the law provides otherwise. It says:

Every part owner shall have the absolute ownership of his part, and of the fruits and benefits
derived therefrom, and he may, therefore, sell, assign, or mortgage it, and even substitute
another person in its enjoyment, unless personal rights are involved, but the effect of the sale
or mortgage, with respect to the other participants, shall be limited to the share which may be
allotted him in the partition upon the dissolution of the community.

Furthermore, whosoever among said plaintiffs should have desired the partition of the property of
which he was a coowner, could have demanded such partition inasmuch as the law then allowed
and still allows such act (article 400, Civil Code; and section 181, Act No. 190). What particularly
distinguishes the case at bar from that of Sturges and Anderson vs. Longworth and
Horne, supra, and the other cases wherein it was established that when the rights and joint the
exception which saves one of the interested parties also inures to the benefit of the others, is that it
was assumed in the latter cases that the rights and interests involved therein pertained to joint
tenancy, not tenancy in common, which are two distinct relations, each having its own juridical
meaning. The distinguishing feature between the one and the other, as stated in the case of
Mette vs. Feltgen (148 Ill., 357, 371), is that the surviving coowner in joint tenancy is subrogated in
the rights of the deceased coowner immediately upon the death of the latter, by the mere fact of said
death, but this does not take place in cases of tenancy in common which corresponds to what is
known in our law as community of property (articles 392 et seq. of the Civil Code). For this reason,
according to American jurisprudence, a coowner in joint tenancy can not dispose of his share or
interest in the property which is the subject matter of the joint tenancy, without the consent of the
other coowner because in so doing he prejudices the other's rights and interests.

That the separation of rights and interests among the plaintiffs was practicable is further evidenced
by the fact that Claro Garcia with whom they were entitled to one-half of the land in question could
recover his legal portion thereof from Marcos Garcia, although certainly not in its entirety, having
failed to assert his rights. This being so, and it being known as it is in fact known that the purpose of
the statute of limitations is no other than to protect the diligent and vigilant, not the person who
sleeps on his rights, forgetting them and taking no trouble of exercising them one way or another to
show that he truly has such rights, it is logical to conclude that the right of action of the plaintiff
Resurreccion Tagarao is barred, and the fact that that of her brothers and coplaintiffs Serafin and
Buenaventura Tagarao still subsists does not inure to her benefit.

Although Resurreccion Tagarao could have enforced the right which she exercised in this case on
May 17, 1918, when Marcos Garcia and Paula Tabifranca obtained original certificate of title No.
10009 (Exhibit M) or shortly afterwards, or long before, that is, from the death of her mother Merced
Garcia in 1914 or 1915, she did nothing to protect her rights. On the contrary, she allowed said
spouses to perform acts of ownership on the land covered by said certificate, publicly, peacefully,
uninterrupted and adversely to the whole world including herself, and from that time until the filing of
her first complaint more than ten years had elapsed. It is for this reason why it cannot be sustained
that the defendants Marcos Garcia and Paula Tabifranca, after it has been shown that the transfers
made by them are null and void, being fictitious and false, hold the land in question in trust, because
if they ever held it in said capacity it had been during the lifetime of the plaintiffs' mother to whom
said defendants used to give part of the fruits thereof. But after she had died, their possession was
under the circumstances above stated and the law provides that in whatever way the occupancy by
a person claiming to be the owner of a real property may have commenced, if said occupancy is
under claim of title and is furthermore open, continuous for ten years and adverse, it constitutes
sufficient title for the occupant thereof (sections 40 and 41 of Act No. 190), and there can be no
other exception to this rule than the disability of persons who are entitled to said property, by reason
of age, some mental defect, or imprisonment, for whom the same law provides the exceptions
contained in its section 42.

It having been established by the evidence for both the plaintiffs and the defendants that Candido
Montilla holds a lien on the land in question, which is noted at the back of transfer certificates of title
Nos. 3001 and 8782 (Exhibits 3 and 7) for a loan in the sum of P4,675 which he granted to Marcos
Garcia in the honest belief that the latter was the true owner of the land described in certificates of
title Nos. 10009 (Exhibit M), 3001 (Exhibit 3), and 8782 (Exhibit 7), it is but just that said lien be
acknowledged by the plaintiffs Serafin Tagarao and Buenaventura Tagarao, with the necessary
reservations in favor of said two plaintiffs.

It should be stated in passing that the land in question, lot No. 510 of cadastral case No. 11 of
Isabela, Occidental Negros, is assessed at P15,530, and therefore one-twelfth (1/12) thereof is
worth P1,294.17 on that basis.

As to the indemnity which the plaintiffs claim for the defendants, the conclusion arrived at by the
lower court in its decision and judgment is supported by the evidence, that is, the plaintiffs' share of
the crops from 1918 to 1929, including that of Resurreccion Tagarao, should be 1,000 cavans of
palay. However, it being clear that Resurreccion Tagarao's action is barred, it should be understood
that only the plaintiffs Serafin Tagarao and Buenaventura Tagarao are entitled to compel the
defendants to pay to them the value of two-thirds of the 1,000 cavans of palay at the rate of P3 a
cavan.

For all the foregoing, the judgment appealed from is affirmed in so far as it favors the plaintiffs
Serafin Tagarao and Buenaventura Tagarao, and said defendants are hereby ordered to execute in
favor of said Tagarao brothers and deed or deeds necessary to transfer to them, by virtue of this
judgment, two-twelfths (2/12) of the entire lot No. 510 of the cadastre of Isabela, Occidental Negros,
including the portion transferred to Claro Garcia (G. L. R. O. Cad. Record No. 100); to indemnify
each of them in a sum equal to what he may pay to the mortgage creditor Candido Montilla to free
his said portion from the lien thereof in favor of said Montilla; or likewise to pay to each of them,
upon failure of the defendants to deliver said portion and execute the necessary deed of transfer, the
sum of P1,294.17; and furthermore to pay, as indemnity, the value of two-thirds of 1,000 cavans of
palay, at the rate of P3 a cavan, with costs against the defendants. Said judgment is reversed as to
the plaintiff Resurreccion Tagarao. So ordered.

Street, Abad Santos, Hull, Vickers, Imperial, and Butte, JJ., concur.

G.R. No. 56550 October 1, 1990

MARINA Z. REYES, AUGUSTO M. ZABALLERO and SOCORRO Z. FRANCISCO, petitioners,

vs.
THE HONORABLE ALFREDO B. CONCEPCION, Presiding Judge, CFI of Cavite, Tagaytay, Br.
IV, SOCORRO MARQUEZ VDA. DE ZABALLERO, EUGENIA Z. LUNA, LEONARDO M.
ZABALLERO, and ELENA FRONDA ZABALLERO, respondents.

Law Firm of Raymundo A. Armovit for petitioners.

Leonardo M. Zaballero for private respondents.

CORTS, J.:

On March 13, 1980, petitioners filed with the CFI a complaint for injunction and damages, docketed as Civil Case No. TG-572, seeking to
enjoin private respondents Socorro Marquez Vda. De Zaballero, Eugenia Z. Luna and Leonardo M. Zaballero from selling to a third party
their pro-indiviso shares as co-owners in eight parcels of registered land (covered by TCT Nos. A-1316 to A-1322) located in the province of
Cavite, with an aggregate area of about 96 hectares. Petitioner claimed that under Article 1620 of the new Civil Code, they, as co-owners,
had a preferential right to purchase these shares from private respondents for a reasonable price.

On March 17, 1980, respondent trial judge denied the ex parte application for a writ of preliminary
injunction, on the ground that petitioners' registered notice of lis pendens was ample protection of
their rights.

On April 24, 1980, private respondents received the summons and copies of the complaint. Private
respondents then filed their answer with counterclaim, praying for the partition of the subject
properties. Private respondent Elena Fronda Zaballero filed a motion for intervention dated April 29,
1980, adopting therein her co-respondents answer with counterclaim.

At the pre-trial hearing, the parties agreed on the following stipulation of facts:

xxx xxx xxx

1. That the plaintiffs, the defendants and the intervenor are the pro-indiviso co-
owners of the properties cited and described in the complaint;

2. That six and nine tenth (6-9/10) hectares of the land covered by TCT No. T-1319;
approximately twelve (12) hectares of that covered by TCT No. T-1320; and the
entire parcel of covered by TCT No. T-1321, are subject of expropriation proceedings
instituted by the National Housing Authority (NHA) now pending before this Court in
Civil Case Nos. TG-392, TG-396 and TG-417;

3. That based on the evidence presented by the herein parties in the aforecited
expropriation cases, the current valuation of the land and the improvements thereon
is at P95,132.00 per hectare;

4. That on 16 April 1980, the plaintiffs received a written notice from the defendants
and the intervenor that the VOLCANO SECURITIES TRADERS AND AGRI-
BUSINESS CORPORATION had offered to buy the latter's share in the properties
listed in the complaint subject to the following terms:

1. The selling price shall be net at TWELVE & 50/100 (P12.50)

PESOS per square meter, or a total price of NINE MILLION
(P9,000,000.00) PESOS for a total area of SEVENTY TWO (72)
HECTARES ONLY;

2. A downpayment equivalent to THIRTY (30%) PERCENT of the

selling price, or a minimum downpayment of TWO MILLION SEVEN
HUNDRED THOUSAND (P2,700,000.00) PESOS;

3. The balance of the purchase price to be payable within THREE (3)

YEARS from the date of downpayment in THREE (3) EQUAL,
ANNUAL PAYMENTS with interest at the legal rate prevailing at the
time of payment;

4. The balance shall be covered by a BANK GUARANTEE of

payments and shall not be governed by Art. 1250 of the Civil Code.

(Cf. Annexes 1, 2 and 3, Answer)

5. That in said letters (Annexes 1, 2 and 3, Answer), the plaintiffs were requested:

a) To exercise their pre-emptive right to purchase defendants' and

intervenor's shares under the above-quoted terms; or

b) To agree to a physical partition of the properties; or

c) To sell their shares, jointly with the defendants and the intervenor,
to the VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS
CORPORATION at the price and under the terms aforequoted.

6. That the VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS

CORPORATION is ready, willing and able to purchase not only the aliquot shares of
the defendants and the intervenor, but also that of the plaintiffs, in and to all the
 properties subject of this case, for and in consideration of the net amount of
TWELVE and 50/100 (P12.50) PESOS per square meter and under the afore-quoted
terms;

xxx xxx xxx

[Annex "C" of the Petition, pp. 1-2, Rollo, pp. 43-44.]

The parties laid down their respective positions, as follows:

PLAINTIFFS

1. That the subject properties are incapable of physical partition;

2. That the price of P12.50 per square meter is grossly excessive;

3. That they are willing to exercise their pre-emptive right for an amount of not more
that P95,132.00 per hectare, which is the fair and reasonable value of said
properties;

4. That the statutory period for exercising their pre-emptive right was suspended
upon the filing of the complaint;

DEFENDANTS AND INTERVENOR

1. That the reasonable price of the subject properties is P12.50 per square meter;

2. That plaintiffs' right of legal pre-emption had lapsed upon their failure to exercise
the same within the period prescribed in Art. 1623 of the Civil Code of the
Philippines;

3. That, assuming the soundness of plaintiffs' claim that the price of P12.50 per
square meter is grossly excessive, it would be to the best interest of the plaintiffs to
sell their shares to the VOLCANO SECURITIES TRADERS AND AGRI-BUSINESS
CORPORATION, whose sincerity, capacity and good faith is beyond question, as the
same was admitted by the parties herein;

4. That the subject properties consisting approximately 95 hectares may be

physically partitioned without difficulty in the manner suggested by them to plaintiffs,
and as graphically represented in the subdivision plan, which will be furnished in due
course to plaintiffs' counsel.

[Annex "C" of the Petition, pp. 2-3; Rollo, pp. 44-45.]

Based on the foregoing, respondent trial judge rendered a pre-trial order dated July 9, 1980 granting
petitioners a period of ten days from receipt of the subdivision plan to be prepared by a competent
geodetic engineer within which to express their approval or disapproval of the said plan, or to submit
within the same period, if they so desire, an alternative subdivision plan.

On July 16, 1980, counsel for private respondents sent to the counsel for petitioners a letter
enclosed with a subdivision plan.
On August 4, 1980, petitioners filed their comment to the pre-trial order, contending that the question
of reasonable value of the subject properties remains a contentious issue of fact ascertainable only
after a full trial. Petitioners likewise insisted on their pre- emptive right to purchase private
respondents' shares in the co-ownership after due determination of the reasonable price thereof.

Thereafter, counsel for private respondents sent the counsel for petitioners another subdivision plan
prepared by a geodetic engineer. Still, no definite communication was sent by petitioners signifying
their approval or disapproval to the subdivision plans.

In order to settle once and for all the controversy between the parties, private respondents filed a
motion dated December 16, 1980 requesting that petitioners be required to formally specify which of
the two options under Article 498 of the New Civil Code they wished to avail of: that petitioners'
shares in the subject properties be sold to private respondents, at the rate of P12.50 per square
meter; or that the subject properties be sold to a third party, VOLCANO LAKEVIEW RESORTS, INC.
(claimed to have been erroneously referred to in the pre-trial as VOLCANO SECURITIES TRADERS
AND AGRI-BUSINESS CORPORATION) and its proceeds thereof distributed among the parties.

Finding merit in the private respondents' request, and for the purpose of determining the applicability
of Article 498 of the New Civil Code, respondent trial judge issued an order dated February 4, 1981
which directed the parties to signify whether or not they agree to the scheme of allotting the subject
properties to one of the co-owners, at the rate of P12.50 per square meter, or whether or not they
know of a third party who is able and willing to buy the subject properties at terms and conditions
more favorable than that offered by VOLCANO LAKEVIEW RESORTS, INC. The order contained a
series of questions addressed to all the parties, who were thereupon required to submit their
answers thereto.

Private respondents filed a "Constancia" expressing that they were willing to allot their shares in the
subject properties to Socorro Marquez Vda. de Zaballero, at the rate of P12.50 per square meter,
and that they did not know of any other party who was willing and able to purchase the subject
properties under more favorable conditions than that offered by VOLCANO LAKEVIEW RESORTS,
INC.

However, instead of submitting their answers to the queries posed by respondent trial judge,
petitioners filed a motion for clarification as to the true identity of the third party allegedly willing to
purchase the subject properties.

On February 26, 1981, respondent trial judge rejected petitioners' motion on the ground that it was
irrelevant.

Thereupon, on February 27, 1981, petitioners filed a pleading captioned "Compliance and Motion",
(1) reiterating the relevance of ascertaining the true identity of the third party buyer, VOLCANO
SECURITIES TRADERS AND AGRI-BUSINESS CORPORATION or VOLCANO LAKEVIEW
RESORTS, INC., (2) expressing their view that there is actually no bona fide and financially able
third party willing to purchase the subject properties at the rate of P12.50 per square meter, and, (3)
once again insisting on their pre-emptive right to purchase the shares of private respondents in the
co-ownership at a "reasonable price", which is less than that computed excessively by the latter at
the rate of P12.50 per square meter. Petitioners therein prayed that further proceedings be
conducted in order to settle the factual issue regarding the reasonable value of the subject
properties.

On March 16, 1981, respondent trial judge issued an order denying petitioners' motion. The judge
ruled that petitioners did not possess a pre-emptive right to purchase private respondents' shares in
the co-ownership. Thus, finding that the subject properties were essentially indivisible, respondent
trial judge ordered the holding of a public sale of the subject properties pursuant to Article 498 of the
New Civil Code. A notice of sale was issued setting the date of public bidding for the subject
properties on April 13, 1981.

Petitioners then filed a motion for reconsideration from the above order. Respondent trial judge reset
the hearing on petitioners' motion for reconsideration to April 6, 1981, and moved the scheduled
public sale to April 14, 1981.

Without awaiting resolution of their motion for reconsideration, petitioners filed the present petition
for certiorari, alleging that the respondent trial judge acted without jurisdiction, or in grave abuse of
its discretion amounting to lack of jurisdiction, in issuing his order dated March 16, 1981 which
denied petitioners' claim of a pre-emptive right to purchase private respondents' pro-indiviso shares
and which, peremptorily ordered the public sale of the subject properties. On April 8, 1981, this Court
issued a temporary restraining order enjoining the sale of the subject properties at public auction.

With the comment and reply, the Court considered the issues joined and the case submitted for
decision.

The Court finds no merit in the present petition.

The attack on the validity of respondent trial judge's order dated March 16, 1981 is ultimately
premised on petitioners' claim that they had a pre-emptive right to purchase the pro-indiviso shares
of their co-owners, private respondents herein, at a "reasonable price". It is this same claim which
forms the basis of their complaint for injunction and damages filed against private respondents in the
court a quo.

This claim is patently without basis. In this jurisdiction, the legal provisions on co-ownership do not
grant to any of the owners of a property held in common a pre-emptive right to purchase the pro-
indiviso shares of his co-owners. Petitioners' reliance on Article 1620 of the New Civil Code is
misplaced. Article 1620 provides:

A co-owner of a thing may exercise the right of redemption in case the shares of all
the co-owners or of any of them, are sold to a third person. If the price of the
alienation is grossly excessive, the redemptioner shall pay only a reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they may
only do so in proportion to the share they may respectively have in the thing owned
in common [Emphasis supplied].

Article 1620 contemplates of a situation where a co-owner has alienated his pro-indiviso shares to a
stranger. By the very nature of the right of "legal redemption", a co-owner's light to redeem is
invoked only after the shares of the other co-owners are sold to a third party or stranger to the co-
ownership [See Estrada v. Reyes, 33 Phil. 31 (1915)]. But in the case at bar, at the time petitioners
filed their complaint for injunction and damages against private respondents, no sale of the
latter's pro-indiviso shares to a third party had yet been made. Thus, Article 1620 of the New Civil
Code finds no application to the case at bar.

There is likewise no merit to petitioners' contention that private respondents had acknowledged the
pre-emptive right of petitioners to purchase their shares at a "reasonable price". Although it appears
that private respondents had agreed to sell their pro-indiviso shares to petitioners, the offer was
made at a fixed rate of P12.50 per square meter [See Pre-trial Order dated July 9, 1980, Annex "C"
of the Petition; Rollo, pp. 43-45]. It cannot be said that private respondents had agreed, without
qualification, to sell their shares to petitioners. Hence, petitioners cannot insist on a right to purchase
the shares at a price lower than the selling price of private respondents.

Neither do petitioners have the legal right to enjoin private respondents from alienating their pro-
indiviso shares to a third party. The rights of a co-owner of a property are clearly specified in Article
493 of the New Civil Code, thus:

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and
even substitute another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation of the mortgage, with respect to the co-
owners shall be limited to the portion which may be allotted to him in the division
upon the termination of the co-ownership.

The law does not prohibit a co-owner from selling, alienating or mortgaging his ideal share in the
property held in common. The law merely provides that the alienation or mortgage shall be limited
only to the portion of the property which may be allotted to him upon termination of the co-ownership
[See Mercado v. Liwanag, G.R. No. L-14429, June 30, 1962, 5 SCRA 472; PNB v. The Honorable
Court of Appeals, G.R. No. L-34404, June 25, 1980, 98 SCRA 207; Go Ong v. The Honorable Court
of Appeals, G.R. No. 75884, September 24, 1987, 154 SCRA 270,] and, as earlier discussed, that
the remaining co-owners have the right to redeem, within a specified period, the shares which may
have been sold to the third party. [Articles 1620 and 1623 of the New Civil Code.]

Considering the foregoing, the Court holds that respondent trial judge committed no grave abuse of
discretion when he denied petitioners' claim of a pre-emptive right to purchase private
respondents' pro-indiviso shares.

Moreover, there is no legal infirmity tainting respondent trial judge's order for the holding of a public
sale of the subject properties pursuant to the provisions of Article 498 of the New Civil Code. After a
careful examination of the proceedings before respondent trial judge, the Court finds that respondent
trial judge's order was issued in accordance with the laws pertaining to the legal or juridical
dissolution of co-ownerships.

It must be noted that private respondents, in their answer with counterclaim prayed for, inter alia, the
partition of the subject properties in the event that the petitioners refused to purchase their pro-
indiviso shares at the rate of P12.50 per square meter. Unlike petitioners' claim of a pre-emptive
right to purchase the other co-owners' pro-indiviso shares, private respondents' counterclaim for the
partition of the subject properties is recognized by law, specifically Article 494 of the New Civil Code
which lays down the general rule that no co-owner is obliged to remain in the co-ownership. Article
494 reads as follows:

No co-owner shall be obliged to remain in the co-ownership. Each co-owner may

demand at any time partition of the thing owned in common, insofar as his share is
concerned.

Nevertheless, an agreement to keep the thing undivided for a certain period of time,
not exceeding ten years, shall be valid. This term may be extended by a new
agreement.

A donor or testator may prohibit partition for a period which shall not exceed twenty
years.
 Neither shall there be partition when it is prohibited by law.

No prescription shall run in favor of a co-owner or co-heir against his co-owners or

co-heirs so long as he expressly or impliedly recognizes the co-ownership.

None of the legal exceptions under Article 494 applies to the case at bar. Private respondents'
counterclaim for the partition of the subject properties was therefore entirely proper. However, during
the pre-trial proceedings, petitioners adopted the position that the subject properties were incapable
of physical partition. Initially, private respondents disputed this position. But after petitioners
inexplicably refused to abide by the pretrial order issued by respondent trial judge, and stubbornly
insisted on exercising an alleged pre-emptive right to purchase private respondents' shares at a
"reasonable price", private respondents relented and adopted petitioner's position that the partition of
the subject properties was not economically feasible, and, consequently, invoked the provisions of
Article 498 of the New Civil Code [Private respondents' "Motion To Allot Properties To Defendants
Or To Sell the Same Pursuant To Article 498 Of The Civil Code", Annex "D" of the Petition; Rollo,
pp. 46-49].

Inasmuch as the parties were in agreement as regards the fact that the subject properties should not
be partitioned, and private respondents continued to manifest their desire to terminate the co-
ownership arrangement between petitioners and themselves, respondent trial judge acted within his
jurisdiction when he issued his order dated February 4, 1981 requiring the parties to answer certain
questions for the purpose of determining whether or not the legal conditions for the applicability of
Article 498 of the New Civil Code were present in the case.

Art. 498 provides that:

Whenever the thing is essentially indivisible and the co-owners cannot agree that it
be alloted to one of them who shall indemnify the others, it shall be sold and its
proceeds distributed.

The sale of the property held in common referred to in the above article is resorted to when (1) the
right to partition the property among the co-owners is invoked by any of them but because of the
nature of the property, it cannot be subdivided or its subdivision [See Article 495 of the New Civil
Code] would prejudice the interests of the co-owners (See Section 5 of Rule 69 of the Revised Rules
of Court) and (2) the co-owners are not in agreement as to who among them shall be allotted or
assigned the entire property upon reimbursement of the shares of the other co-owners.

Petitioners herein did not have justifiable grounds to ignore the queries posed by respondent trial
judge and to insist that hearings be conducted in order to ascertain the reasonable price at which
they could purchase private respondents' pro-indiviso shares [Petitioners' "Compliance and Motion"
dated February 27, 1981, Annex "H" of the Petition; Rollo, pp. 57-60].

Since at this point in the case it became reasonably evident to respondent trial judge that the parties
could not agree on who among them would be allotted the subject properties, the Court finds that
respondent trial judge committed no grave abuse of discretion in ordering the holding of a public sale
for the subject properties (with the opening bid pegged at P12.50 per square meter), and the
distribution of the proceeds thereof amongst the co-owners, as provided under Article 498 of the
New Civil Code.

Contrary to petitioners' contention, there was no need for further hearings in the case because it is
apparent from the various allegations and admissions of the parties made during the pre-trial
proceedings, and in their respective pleadings, that the legal requisites for the application of Article
498 of the New Civil Code were present in the case. No factual issues remained to be litigated upon.

WHEREFORE, the present petition is DISMISSED for lack of merit. The temporary restraining order
issued by the Court is hereby LIFTED.

SO ORDERED.

Heirs of dela rosa vs batongbacal

Facts: Guillermo Rustia and Josefa Delgado died intestate and without descendants.
Guillermo outlived Josefa by two years. Petitioners and respondents are their respective relatives
claiming rights to their intestate estate.

The petition for letters of administration stated that Josefa Delgado and Guillermo Rustia were never
married. According to petitioners, sometime in 1917, Guillermo proposed marriage to Josefa. Josefa
and Guillermo eventually lived together as husband and wife but were never married. To prove their
assertion, petitioners point out that no record of the contested marriage existed in the civil registry.
Moreover, a baptismal certificate naming Josefa Delgado as one of the sponsors referred to her as
"Seorita" or unmarried woman.

Josefa was the daughter of Felisa Delgado by one Lucio Ocampo with five other children without the
benefit of marriage. Felisa had another son by way of Ramon Osorio who is Luis Delgado, one of
the claimants in Josefas estate. But, unlike her relationship with Lucio Campo which was admittedly
one without the benefit of marriage, the legal status of Ramon Osorios and Felisa Delgados union is
in dispute.

The question of whether Felisa Delgado and Ramon Osorio ever got married is crucial to the claimants
because if Ramon Osorio and Felisa Delgado had been validly married, then their only child Luis
Delgado was a legitimate half-blood brother of Josefa Delgado and therefore excluded from the latters
intestate estate. He and his heirs would be barred by the principle of absolute separation between the
legitimate and illegitimate families. Conversely, if the couple were never married, Luis Delgado and his
heirs would be entitled to inherit from Josefa Delgados intestate estate, as they would all be within
the illegitimate line.

Issue: Whether or not there was a valid marriage between Guillermo and Josefa and
between Felisa and Ramon.

Held:
The marriage of Guillermo Rustia and Josefa Delgado

Rule 131, Section 3 of the Rules of Court provides:

Sec. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted, but
may be contradicted and overcome by other evidence: xxx xxx xxx
(aa) That a man and a woman deporting themselves as husband and wife have entered into a lawful
contract of marriage;
In this case, several circumstances give rise to the presumption that a valid marriage existed between
Guillermo Rustia and Josefa Delgado. Their cohabitation of more than 50 years cannot be doubted.
Their family and friends knew them to be married. Their reputed status as husband and wife was such
that even the original petition for letters of administration filed by Luisa Delgado vda. de Danao in
1975 referred to them as "spouses."

Yet, petitioners maintain that Josefa Delgado and Guillermo Rustia had simply lived together as
husband and wife without the benefit of marriage. They make much of the absence of a record of the
contested marriage, the testimony of a witness attesting that they were not married, and a baptismal
certificate which referred to Josefa Delgado as "Seorita" or unmarried woman.

We are not persuaded.

First, although a marriage contract is considered a primary evidence of marriage, its absence is not
always proof that no marriage in fact took place. Once the presumption of marriage arises, other
evidence may be presented in support thereof. The evidence need not necessarily or directly establish
the marriage but must at least be enough to strengthen the presumption of marriage. Here, the
certificate of identity issued to Josefa Delgado as Mrs. Guillermo Rustia, the passport issued to her as
Josefa D. Rustia, the declaration under oath of no less than Guillermo Rustia that he was married to
Josefa Delgado and the titles to the properties in the name of "Guillermo Rustia married to Josefa
Delgado," more than adequately support the presumption of marriage. These are public documents
which are prima facie evidence of the facts stated therein. No clear and convincing evidence sufficient
to overcome the presumption of the truth of the recitals therein was presented by petitioners.

Second, Elisa vda. de Anson, petitioners own witness whose testimony they primarily relied upon to
support their position, confirmed that Guillermo Rustia had proposed marriage to Josefa Delgado and
that eventually, the two had "lived together as husband and wife." This again could not but strengthen
the presumption of marriage.

Third, the baptismal certificate was conclusive proof only of the baptism administered by the priest
who baptized the child. It was no proof of the veracity of the declarations and statements contained
therein, such as the alleged single or unmarried ("Seorita") civil status of Josefa Delgado who had no
hand in its preparation.

Petitioners failed to rebut the presumption of marriage of Guillermo Rustia and Josefa Delgado. In this
jurisdiction, every intendment of the law leans toward legitimizing matrimony. Persons dwelling
together apparently in marriage are presumed to be in fact married. This is the usual order of things
in society and, if the parties are not what they hold themselves out to be, they would be living in
constant violation of the common rules of law and propriety. Semper praesumitur pro matrimonio.
Always presume marriage.

The marriage of Felisa Delgado and Ramon Osorio

Presumptions of law are either conclusive or disputable. Conclusive presumptions are inferences which
the law makes so peremptory that no contrary proof, no matter how strong, may overturn them. On
the other hand, disputable presumptions, one of which is the presumption of marriage, can be relied
on only in the absence of sufficient evidence to the contrary.

Little was said of the cohabitation or alleged marriage of Felisa Delgado and Ramon Osorio. The
oppositors (now respondents) chose merely to rely on the disputable presumption of marriage even in
the face of such countervailing evidence as (1) the continued use by Felisa and Luis (her son with
Ramon Osorio) of the surname Delgado and (2) Luis Delgados and Caridad Concepcions Partida de
Casamiento identifying Luis as "hijo natural de Felisa Delgado" (the natural child of Felisa Delgado).

All things considered, we rule that these factors sufficiently overcame the rebuttable presumption of
marriage. Felisa Delgado and Ramon Osorio were never married. (Dela Rosa vs Heirs of Rustia Vda De
Guzman, G.R. No. 155733, January 27, 2006).

G.R. No. 179205 July 30, 2014

HEIRS OR REYNALDO DELA ROSA, Namely: TEOFISTA DELA ROSA, JOSEPHINE SANTIAGO
AND JOSEPH DELA ROSA, Petitioners,
vs.
MARIO A. BA TONGBACAL, IRENEO BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR
BATONGBACAL AND LOURDES BA TONGBACAL, Respondents.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari1 pursuant to Rule 45 of the Revised Rules of Court,
assailing the 7 December 2006 Decision2 and 8 August 2007 Resolution3 of the Fourth Division of the
Court of Appeals in CA-G.R. CV No. 64172. In its assailed Resolution, the appellate court modified
its earlier ruling and proceeded to direct petitioners to execute the requisite Deed of Sale over the
subject property.

The Facts

The subject prope1iy consists of a 3, 750 square meter-portion of the 15,00 l square meters parcel
of land situated in Barrio Saog, Marilao, Bulacan denominated as Lot No. 1, and registered under
Transfer Certificate of Title (TCT) No. T-1074494 under the names of Reynaldo Dela Rosa
(Reynaldo), Eduardo Dela Rosa (Eduardo), Araceli Dela Rosa (Araceli) and Zenaida Dela Rosa
(Zenaida).

Sometime in 1984, Reynaldo offered to sell the subject property to Guillermo Batongbacal
(Guillermo) and Mario Batongbacal (Mario) for 50.00 per square meter or for a total of
187,500.00. Pursuant to the agreement, Reynaldo received an advance payment of 31,500.00
leaving a balance of 156,000.00. As shown in the document denominated as Resibo and signed by
Reynaldo on 18 February 1987, the parties agreed that the amount of 20,000.00 as part of the
advance payment shall be paid upon the delivery of the Special Power-of-Attorney (SPA), which
would authorize Reynaldo to alienate the subject property on behalf of his co-owners and siblings
namely, Eduardo, Araceli and Zenaida. The balance thereon shall be paid in 10,000.00 monthly
installments until the purchase price is fully settled, to wit:

RESlBO

Tinaggap ko ngayong araw na ilo kay Engr. Guillermo A. Batongbacal, ng Poblacion II, Marilao,
Bulacan, ang halagang sampung libong piso (10,000.00) salaping Pilipino, hilang bahaging hayad
sa bahagi ng lupang may sukal na 3,750 sq.m. na aking kabahagi sa isang (1) lagay na lupang
nasasaog, Marilao, Bulakan, sinasaklcrw ng T.C.T. No. T-107449, ng Bulakan, na ipinagkasundo
kong ipaghili sa naulil na Engr. Guillermo A. Batongbacal sa halagang Limampung Piso (50.00)
salaping Filipino, bawat isang (1) melrong parisukal. Ang paunang bayad na aking tinanggap ukol sa
lupang nabanggil sa ilaas ay 21,500.00, nuong Abril 14-18, 1984. Ang halagang dapal pa niyang
bayaran sa akin ay P 156,000.00, na ang halagang dalawampung Ii bong piso (20,000.00) ay
babayaran niya sa akin sa arcrw na nag power-of-attorney nina Zenaida dcla Rosa, at Enrique
Magsaloc ay aking nabigay sa nasabing Engr. Guillermo A. Batongbacal; na ang nalalabing
hahaging bayad ay kanyang habayaran sa akin ng Sampung libong piso (P 10,000.00) salaping
Filipino, bawat buwan hanggang sa matapusan ang pagbabayad ng kabuuang halaga na Isang
Daang at Walumput Pitong libo Limang Daang Piso (187,500.00). An,g- bahaging aking
ipinagbibili ay ang Lote No. I, may sukat na 3,750 sq.m. na makikita sa nakalakip na sketch plan na
aking ding nilagdaan sa ikaliliwanag ng kasulutang ito.5
Subsequent to the execution of the said agreement, Mario and Guillermo, on their own instance,
initiated a survey to segregate the area of 3,750 square meters from the whole area covered by TCT
No. T-107449, delineating the boundaries of the subdivided parts. As a result, they came up with a
subdivision plan specifically designating the subject property signed by a Geodetic Engineer.6 Mario
and Guillermo thereafter made several demands from Reynaldo to deliver the SP A as agreed upon,
but such demands all went unheeded.

Consequently, Guillermo and Mario initiated an action for Specific Performance or Rescission and
Damages before the Regional Trial Court (RTC) of Malolos, Bulacan, seeking to enforce their
Contract to Sell dated 18 February 1987. In their Complaint docketed as Civil Case No. 215-M
90,7 Mario and Guillermo asserted that they have a better right over the subject property and alleged
that the subsequent sale thereof effected by Reynaldo to third persons is void as it was done in bad
faith. It was prayed in the Complaint that Reynaldo be directed to deliver the SPA and, in case of its
impossibility, to return the amount of 31,500.00 with legal interest and with damages in either case.

To protect their rights on the subject property, Mario and Guillermo, after initiating Civil Case No.
215-M-90, filed a Notice of Lis Pendens registering their claim on the certificate of title covering the
entire property.

In refuting the allegations of Mario and Guillermo in their Complaint. Reynaldo in his
Answer8 countered that the purported Contract to Sell is void, because he never gave his consent
thereto. Reynaldo insisted that he was made to understand that the contract between him and the
Batongbacals was merely an equitable mortgage whereby it was agreed that the latter will loan to
him the amount of 3 l ,500.00 payable once he receives his share in the proceeds of the sale of the
land registered under TCT No. T-107449.

Following the pre-trial conference without the parties reaching an amicable settlement, trial on the
merits ensued.9Both parties proceeded to present, in open court, documentary and testimonial
evidence to substantiate their claims.

For failure of Mario and Guillermo as plaintiffs therein to adduce sufficient evidence to support their
complaint, the RTC, in a Decision10 dated 24 March 1999, dismissed Civil Case No. 215-M-90 and
ordered Reynaldo to return to the former the sum of 28,000.00 with 12% annual interest. Reynaldo
failed to convince the court a quo that the contract he entered into with Mario was an equitable
mortgage. It was held by the trial court, however, that the supposed Contract to Sell denominated as
Resibo is unenforceable under Article 1403 of the New Civil Code because Reynaldo cannot bind
his co-owners into such contract without an SPA authorizing him to do so. As such, Reynaldo cannot
be compelled to deliver the subject property but he was nonetheless ordered by the court to return
the amount he received as pmi of the contract price since no one should be allowed to unjustly
enrich himself at the expense of another. The RTC disposed in this wise:

WHEREFORE, premises considered, the instant complaint is hereby DISMISSED.

However, [Reynaldo is] hereby ordered to return to [Mario and Guillermoj the sum of 28,000.00
plus 12% interest per annum from the date of this decision until fully paid.11

On appeal, the Comi of Appeals, in its Decision12 dated 7 December 2006, brushed aside the claim
of equitable mortgage and held that the sale effected by Reynaldo of his undivided share in the
property is valid and enforceable. According to the appellate court, no SPA is necessary for
Reynaldo's disposition of his undivided share as it is limited to the portion that may be allotted to him
upon the termination of the co-ownership. The Batongbacals could have validly demanded from
Reynaldo to deliver the subject property pursuant to the Contract to Sell but such option is no longer
feasible because the entire property has already been sold to third persons to whom a new title was
issued. The appellate court thus proceeded to rescind the contract and ordered Reynaldo to return
the amount he received as consideration thereby restoring the parties to their situation before
entering into the agreement. The decretal portion of the decision reads:

WHEREFORE, the decision dated March 24, 1999 is AFFIRMED with modification that appellee is
ordered to return to appellants the amount of 31,500.00 plus 12% interest per annum from the date
of decision of the trial court until full payment thereof.

In addition, the appellee is ordered:

1. To pay appellants 50,000.00 as compensatory damages; 50,000.00 as moral damages;

and 30,000.00 as exemplary damages.

2. To pay attorney's fees and litigation expenses of 50,000.00; and

3. Double costs.13

In seeking modification of the appellate court's decision, Mario and Guillermo pointed out that the
title of the subject property has not yet been transferred to third persons, and thus, Reynaldo can still
be compelled to execute a deed of conveyance over his undivided share of the entire property.

In a Resolution14 dated 8 August 2007, the Court of Appeals granted the Motion for Reconsideration
of Mario and Guillermo and directed Reynaldo to convey the subject property to them, viz:

WHEREFORE, [Reynaldo's] Motion for Reconsideration is DENIED for lack of merit.

Upon the other hand, [Mario and Guillermo] Motion for Reconsideration is GRANTED. Accordingly,
the decision dated December 7, 2006 is PARTIALLY RECONSIDERED ordering defendant-appellee
Reynaldo dela Rosa or his successor-in-interest to execute the requisite Deed of Sale over his Y-i
undivided share in the subject property covered by TCT T-107449 and to accept the consideration of
156,000.00 within thirty (30) days from the finality of the decision.

In case of failure of [Reynaldo] to execute the deed of sale, the Branch Clerk of Court of RTC Br. 16
of Malolos, Bulacan is directed to execute the same and receive the 156,000.00 balance on the
purchase price on behalf of Reynaldo de la Rosa.15

On 9 September 2007, the appellate court was notified of the death or Reynaldo, and his heirs
sought to be substituted as party in this case.16

Petitioners Heirs of Reynaldo are now before this Court via this instant Petition for Review on
Certiorari praying that the Court of Appeals Decision and Resolution be reversed on the ground that
it was rendered not in accordance with the applicable law and jurisprudence.

Issues

I.

WHETHER OR NOT THERE IS A CONTRACT OF SALE BETWEEN REYNALDO DELA

ROSA AND GUILLERMO BATONGBACAL;
 II.

ASSUMING THAT THERE IS A CONTRACT OF SALE, WHETHER OR NOT GUILLERMO

BATONGBACAL COMPLIED WITII I IIS OBLIGATION [UNDER THE CONTRACTl;

III.

WHETHER OR NOT RESPONDENTS ARE GUILTY OF LACHES;

IV.

WHETHER OR NOT MARIO BATONGBACAL IS A PARTY TO THE TRANSACTION

BETWEEN REYNALDO DELA ROSA AND GUILLERMO BATONGBACAL;

V.

WHETHER OR NOT RESPONDEN'qS] ARE ENTITLED TO AN A WARD OF DAMAGES;

VI.

ASSUMING ARGUENDO THAT RESPONDENTS ARE ENTITLED TO AW ARD OF

DAMAGES. WHETHER OR NOT THE COURT OF APPEALS" A WARD OF DAMAGES
WAS EXCESSIVE.17

The various contentions revolve on the sole issue of whether the contract entered into by parties
was a Contract to Sell or an equitable mortgage. The Court will not delve into questions which arc
factual in nature, consistent with the rule that this Court is not a trier of facts.

The Court's Ruling

In assailing the Court of Appeals' Decision and Resolution, petitioners are unflinching in their stand
that the disputed contract purporting to be an absolute deed of sale was an equitable mortgage with
the subject p roperty as security for a loan obligation. To prove their point, petitioners asserted that
the consideration in the amount of 187,500.00 for a property consisting of 15,001 square meters is
grossly inadequate because the land valuation in Barrio Saog, Marilao, Bulacan, at the time the
transaction was entered into by the parties in 1984, was already 80.00 to 100.00 per square
meter. The gross inadequacy of the price, the Heirs of Reynaldo argued, is telling of the intention of
the parties to mortgage and not to sell the property with the end view of affording the mortgagor an
easy opportunity to redeem the property should his means permit him to do so.

An equitable mortgage is defined as one although lacking in some formality, or form or words, or
other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge
real property as security for a debt, and contains nothing impossible or contrary to law. For the
presumption of an equitable mortgage to arise, two requisites must concur: (1) that the parties
entered into a contract denominated as a sale; and (2) the intention was to secure an existing debt
by way of mortgage. Consequently, the non-payment of the debt when due gives the mortgagee the
right to foreclose the mortgage, sell the property and apply the proceeds of the sale for the
satisfaction of the loan obligation.18 While there is no single test to determine whether the deed of
absolute sale on its face is really a simple loan accommodation secured by a mortgage, the Civil
Code, however, enumerates several instances when a contract is presumed to be an equitable
mortgage, to wit:
Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases:

1) When the price of a sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending
the period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.

In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as
rent or otherwise shall be considered as interest which shall be subject to the usury laws.

A perusal of the contract denominated as Resibo reveals the utter frailty of petitioners' position
because nothing therein suggests, even remotely, that the subject property was given to secure a
monetary obligation. The terms of the contract set forth in no uncertain terms that the instrument was
executed with the intention of transferring the ownership of the subject prope1iy to the buyer in
exchange for the price. Nowhere in the deed is it indicated that the transfer was merely intended to
secure a debt obligation. On the contrary, the document clearly indicates the intent of Reynaldo to
sell his share in the property. The primary consideration in determining the true nature of a contract
is the intention of the parties.19 If the words of a contract appear to contravene the evident intention of
the paiiies, the latter shall prevail.20 Such intention is determined not only from the express terms of
their agreement, but also from the contemporaneous and subsequent acts of the parties.21 That the
parties intended some other acts or contracts apart from the express terms of the agreement, was
not proven by Reynaldo during the trial or by his heirs herein.22Beyond their bare and uncorroborated
asseverations that the contract failed to express the true intention of the parties, the record is bereft
of any evidence indicative that there was an equitable mortgage.

Neither could the allegation of gross inadequacy of the price carry the day for the petitioners. It must
1w phi 1

be underscored at this point that the subject of the Contract to Sell was limited only to '14 pro-
indiviso share of Reynaldo consisting an area of 3,750 square meter and not the entire 15,001-
square meter parcel of land. As a co-owner of the subject property, Reynaldo's right to sell, assign or
mortgage his ideal share in the property held in common is sanctioned by law. The applicable law is
Article 493 of the New Civil Code, which spells out the rights of co-owners over a co-owned property,
to wit:

Art. 493. Each co-owner shall have the foll ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another
person in its enjoyment, except when personal rights are involved. But the effect of the alienation or
the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to
him in the division upon the termination of the co-ownership.
Pursuant to this law, a co-owner has the right to alienate his proindiviso share in the co-owned
property even without the consent of his coowners.23 This right is absolute and in accordance with
the well-settled doctrine that a co-owner has a full ownership of his pro-indiviso share and has the
right to alienate, assign or mortgage it, and substitute another person for its enjoyment.24 In other
words, the law does not prohibit a co-owner from selling, alienating, mortgaging his ideal share in the
property held in common.25

In Vaglidad v. Vaglidad, Jr., a case nearly on all fours to the present petition, the Court upheld the
right of the co-owner to alienate his proindiviso share in the co-owned property as part of his right of
dominion. It was even pointed out that since the previous sale is valid, the subsequent conveyance
effected by the co-owner is null and void pursuant to the principle that "no one can give what he
does not have," nemo dat quod non habet, thus:

LORETO sold the subject property to GABINO, JR. on May 12, 1986 as a co-owner. LORETO had a
right, even before the partition of the property on January 19, 1987, to transfer in whole or in part his
undivided interest in the lot even without the consent of his co-heirs. This right is absolute in
accordance with the well-settled doctrine that a co-owner has full ownership of his pro-indiviso share
and has the right to alienate, assign or mortgage it, and substitute another person for its enjoyment.
Thus, what GABINO, JR. obtained by virtue of the sale on May 12, 1986 were the same rights as the
vendor LORETO had as co-owner, in an ideal share equivalent to the consideration given under
their transaction.

LORETO sold some 1,604 square meters of Lot No. 1253 to GABINO, JR. Consequently, when
LORETO purportedly sold to WILFREDO on December 7, 1989 the same portion of the lot, he was
no longer the owner of Lot No. 1253-B. Based on the principle that "no one can give what he does
not have," LORETO could not have validly sold to WILFREDO on December 7, 1989 what he no
longer had. As correctly pointed out by the appellate court, the sale made by LORETO in favor of
WILFREDO is void as LORETO did not have the right to transfer the ownership of the subject
property at the time of sale.26 (Emphasis supplied).

In the same breadth, a co-owner cannot be compelled by the court to give their consent to the sale
of his share in a co-owned property. In Arambulo v. Nolasco, the Court intimated:

The ultimate authorities in civil law, recognized as such by the Court, agree that co-owners such as
respondents have over their part, the right of full and absolute ownership. Such right is the same as
that or individual owners which is not diminished by the fact that the entire property is co-owned with
others. That part which ideally belongs to them, or their mental portion, may be disposed of as they
please, independent of the decision of their co-owners. So we rule in this case. The respondents
cannot be ordered to sell their portion of the co-owned properties. In the language of Rodriguez v.
Court of first Instance of Rizal, "each party is the sole judge of what is good for him."27(Underscoring
ours).

Thus, even if the impression of the Court of Appeals were true, i.e., that the entire property has been
sold to thirds persons, such sale could not have affected the right of Mario and Guillermo to recover
the property from Reynaldo. In view of the nature of co-ownership, the Comi of Appeals correctly
ruled that the terms in the Contract to Sell, which limited the subject to Reynaldo's ideal share in the
property held in common is perfectly valid and binding. In fact, no authority from the other co-owners
is necessary for such disposition to be valid as he is afforded by the law fullownership of his paii and
of the fruits and benefits pertaining thereto. J\ condition set forth in a sale contract requiring a co-
owner to secure an authority from his co-owners for the alienation of his share, as seemingly
indicated in this case, should be considered mere surplusage and docs not, in any way, affect the
validity or the enforceability of the contract. Nor should such a condition indicate an intention to sell
the whole because the contrary intention has been clearly written:

x x x Ang bahaging aking ipinagbibili ay ang f,ote No. 1, may sukat na 3,750 sq.m. na makikita sa
nakalakip na sketch plan na aking ding nilagdaan sa ikaliliwanag ng kasulatang ito.28 Indeed, the
intention clearly written, settles the issue regarding the purchase price. A contract of sale is a
consensual contract, which becomes valid and binding upon the meeting of minds of the parties on
the price and the object of the sale.29 The mere inadequacy of the price docs not affect its validity
when both parties are in a position to form an independent judgment concerning the transaction,
unless fraud, mistake or undue influence indicative of a defect in consent is present.30 A contract may
consequently be annulled on the ground of vitiated consent and not due to the inadequacy of the
price.31 In the case at bar, however, no evidence to prove fraud, mistake or undue influence
indicative of vitiated consent is attendant.

As the parties invoking equitable mortgage, the Heirs of Reynaldo did not even come close to
proving that the parties intended to charge the property as security for a debt, leaving us with no
other choice but to uphold the stipulations in the contract. Basic is the rule that if the terms of the
contract are clear and leave no doubt upon the intention of the parties, the literal meaning of its
stipulations shall control,32 we find that the Court of Appeals cannot be faulted for ruling, in
modification of its original judgment, that the sale effected by Reynaldo of his undivided share in the
property is valid and enforceable.

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and Resolution
of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.

G.R. No. L-29727 December 14, 1988

PEDRO OLIVERAS, TEODORA GASPAR, MELECIO OLIVERAS and ANICETA MINOR, plaintiffs-
appellees,
vs.
CANDIDO LOPEZ, SEVERO LOPEZ, HIPOLITO LOPEZ, EUGENIA LOPEZ, PRIMITIVO
GASPAR, CORAZON LOPEZ, ALEJANDRO CACAYURIN, FAUSTINA BOTUYAN, MODESTO
SALAZAR, ADORACION BOTUYAN, CLAUDIO GANOTICE and ENONG BOTUYAN, defendants-
appellants.

Venancio B. Fernando for defendants-appellants.

FERNAN, C.J.:

This case exemplifies the Filipino custom of keeping inherited property in a prolonged juridical condition of co-owner ship.

Lorenzo Lopez owned Lot 4685 of the Cadastral survey of Villasis, Pangasinan with an area of
69,687 square meters as evidenced by Original Certificate of Title No. 15262.1 In December, 1931,
Lorenzo Lopez died, 2 leaving said property to his wife, Tomasa Ramos and six (6) children. From
that time on, the heirs of Lorenzo Lopez did not initiate any moves to legally partition the property.
More than twenty-one years later, or on February 11, 1953, Tomasa Ramos and her eldest son,
Candido Lopez, executed a deed of absolute sale of the "eastern undivided four thousand two
hundred and fifty seven-square meters (4,257) more or less, of the undivided portion of (their)
interests, rights and participation" over Lot 4685, in favor of the spouses Melecio Oliveras and
Aniceta Minor, in consideration of the amount of one thousand pesos (P1,000). 3

On the same day, Tomasa and Candido executed another deed of absolute sale of the "undivided"
four thousand two hundred and fifty-seven (4,257) square meters of the "eastern part" of Lot 4685 in
favor of the spouses Pedro Oliveras and Teodora Gaspar, also in consideration of P1,000. 4 Each of
the said documents bear the thumbmark of Tomasa and the signature of Candido.

In his affidavit also executed on February 11, 1953, Candido stated that a month prior to the
execution of the deed of sale in favor of Melecio Oliveras, he offered his: "undivided portion" of Lot
4685 to his "adjacent owners" but none of them was "in a position to purchase" said property. 5

Since the execution of the two deeds of absolute sale, the vendees, brothers Melecio and Pedro,
had been paying the real property taxes for their respectively purchased properties. 6 They also had
been in possession of their purchased properties which, being planted to palay and peanuts, were
segregated from the rest of Lot 4685 by dikes. 7

More than thirteen years later or on November 21, 1966, the counsel of the Oliveras brothers wrote
the heirs of Lorenzo Lopez reminding them of the Oliverases' demands to partition the property so
that they could acquire their respective titles thereto without resorting to court action, and that,
should they fail to respond, he would be forced to file a case in court. 8 Apparently, the Lopezes did
not answer said letter since on December 15, 1966, the Oliveras brothers and their wives filed a
complaint for partition and damages 9 in the Court of First Instance of Pangasinan. 10

The Oliverases stated in their complaint that possession of the disputed properties was delivered to
them with the knowledge and consent of the defendants; that they had been paying the real estate
taxes thereon; that prior to the sale, said properties were offered to the other co-owners for sale but
they refused to buy them; that on February 18, 1953, the transactions were duly annotated and
entered in the Memorandum of encumbrances of OCT No. 15262 as adverse claims; and that their
desire to segregate the portions of Lot 4685 sold to them was frustrated by defendants' adamant
refusal to lend them the owner's duplicate of OCT No. 15262 and to execute a deed of partition of
the whole lot.

In claiming moral damages in the amount of P2,000.00 plaintiffs alleged that defendants also
refused to allow them to survey and segregate the portions bought by them. Plaintiffs prayed that the
court order the defendants to partition Lot 4685 and to allow them to survey and segregate the
portions they had purchased. They also demanded payment of P800.00 as attorney's fees and cost
of the suit.

In their answer, the defendants alleged that no sale ever transpired as the alleged vendors could not
have sold specific portions of the property; that plaintiffs' possession and occupation of specific
portions of the properties being illegal, they could not ripen into ownership; and that they were not
under any obligation to lend their copy of the certificate of title or to accede to plaintiffs' request for
the partition or settlement of the property. As special and affirmative defenses, the defendants
contended that the deeds of sale were null and void and hence, unenforceable against them; that
the complaint did not state a cause of action and that the cause or causes of action if any, had
prescribed.
Defendants averred in their counterclaim that despite repeated demands, plaintiffs refused and failed
to vacate the premises; that the properties occupied by the plaintiffs yielded an average net produce
in palay and peanuts in the amount of P1,600.00 annually, and that the complaint was filed to harass
them. They prayed for the dismissal of the complaint and the payment of P1,600.00 per year from
1953 until plaintiffs shall have vacated the premises and P1,000.00 for attorney's fees.

Plaintiffs filed an answer to defendants' counterclaim, denying all the allegations therein and stating
that defendants never demanded that plaintiffs vacate the portions of Lot 4685 they had bought.

The lower court explored the possibility of an amicable settlement between the parties without
success. Hence, it set the case for trial and thereafter, it rendered a
decision 11 declaring valid the deeds of absolute sale 12 and ordering the defendants to allow the
segregation of the sold portions of Lot 4685 by a licensed surveyor in order that the plaintiffs could
obtain their respective certificates of title over their portions of said lot.

In resolving the case, the lower court passed upon the issue of whether the two deeds of absolute
sale were what they purported to be or merely mortgage documents. It considered as indicia of
plaintiffs' absolute dominion over the portions sold to them their actual possession thereof without
any opposition from the defendants until the filing of the complaint, their payment of taxes thereon
and their having benefited from the produce of the land. The court ruled that the defendants'
testimonial evidence that the deeds in question were merely mortgage documents cannot overcome
the evidentiary value of the public instruments presented by the plaintiffs.

On the issue of whether the two deeds of absolute sale were null and void considering that the land
subject thereof had not yet been partitioned, the court observed that the total area of 8,514 square
meters sold to plaintiffs by Candido was less than his share should Lot 4685 with an area of 69,687
square meters be divided among the six children of Lorenzo Lopez and their mother. In this
connection, the lower court also found that during his lifetime, and before Candido got married,
Lorenzo Lopez had divided Lot 4685 among his children who then took possession of their
respective shares. *

The defendants appealed said decision to this Court contending that the lower court erred in declaring the two deeds of absolute sale as
valid, in ordering the segregation of the sold portions of Lot 4685 to enable the plaintiffs to obtain their respective certificates of title, and in
not considering their defense of prescription.

The extrinsic validity of the two deeds of absolute sale is not in issue in this case in view of the
finding of the trial court that the defendants admittedly do not question their due execution.13 What
should pre-occupy the Court is the intrinsic validity of said deeds insofar as they pertain to sales of
designated portions of an undivided, co-owned property.

In a long line of decisions, this Court has held that before the partition of a land or thing held in
common, no individual co-owner can claim title to any definite portion thereof. All that the co-owner
has is an Ideal or abstract quota or proportionate share in the entire land or thing. 14

However, the duration of the juridical condition of co-ownership is not limitless. Under Article 494
and 1083 of the Civil Code, co-ownership of an estate should not exceed the period of twenty (20)
years. And, under the former article, any agreement to keep a thing or property undivided should be
for a ten-year period only. Where the parties stipulate a definite period of in division which exceeds
the maximum allowed by law, said stipulation shall be void only as to the period beyond such
maximum.15

Although the Civil Code is silent as to the effect of the in division of a property for more than twenty
years, it would be contrary to public policy to sanction co-ownership beyond the period set by the
law. Otherwise, the 20-year limitation expressly mandated by the Civil Code would be rendered
meaningless.

In the instant case, the heirs of Lorenzo Lopez maintained the co-ownership for more than twenty
years. We hold that when Candido and his mother (who died before the filing of the complaint for
partition) sold definite portions of Lot 4685, they validly exercised dominion over them because, by
operation of law, the co-ownership had ceased. The filing of the complaint for partition by the
Oliverases who, as vendees, are legally considered as subrogated to the rights of Candido over
portions of Lot 4685 in their possession, 16 merely served to put a stamp of formality on Candido's
otherwise accomplished act of terminating the co-ownership.

The action for partition has not prescribed. Although the complaint was filed thirteen years from the
execution of the deeds of sale and hence, as contended by the defendants-appellants, prescription
might have barred its filing under the general provision of Article 1144 (a) of the Civil Code, Article
494 specifically mandates that each
co-owner may demand at any time the partition of the thing owned in common insofar as his share is
concerned. Hence, considering the validity of the conveyances of portions of Lot 4685 in their favor
and as subrogees of Candido Lopez, the Oliverases' action for partition was timely and properly
filed. 17

We cannot write finis to this decision without commenting on the compliance with the resolution of
September 1, 1986 of counsel for defendants-appellants. In said resolution, the court required the
parties to move in the premises "considering the length of time that this case has remained pending
in this Court and to determine whether or not there might be supervening events which may render
the case moot and academic. 18 In his manifestation and motion dated August 12, 1987, said counsel
informed the Court that he had contacted the defendants-appellants whom he advised "to move in
the premises which is the land in question and to maintain the status quo with respect to their actual
possession thereon" and that he had left a copy of said resolution with the defendants-appellants"
for their guidance in the compliance of their obligations (sic) as specified in said
resolution." 19

Obviously, said counsel interpreted literally the Court's directive "to move in the premises." For the
enlightenment of said counsel and all others of similar perception, a "move in the premises"
resolution is not a license to occupy or enter the premises subject of litigation especially in cases
involving real property. A "move in the premises" resolution simply means what is stated therein: the
parties are obliged to inform the Court of developments pertinent to the case which may be of help to
the Court in its immediate disposition.

WHEREFORE, the decision of the lower court insofar as it declares the validity of the two deeds of
sale and directs the partition of Lot 4685, is AFFIRMED. The lower court is hereby ordered to
facilitate with dispatch the preparation of a project of partition which it should thereafter approve.
This decision is immediately executory. No costs.

SO ORDERED.

G.R. No. 75886 August 30, 1988

CONCEPCION ROQUE, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT, ERNESTO ROQUE, FILOMENA OSMUNDO,
CECILIA ROQUE, MARCELA ROQUE, JOSE ROQUE and RUBEN ROQUE, respondents.
Lorenzo J. Liwag for petitioner.

Dominador Ad Castillo for private respondents.

FELICIANO, J.:

The subject of the present Petition for Review is the 31 July 1986 Decision of the former Intermediate Appellate Court in AC-G.R. CV No.
02248 (entitled, "Concepcion Roque, plaintiff-appellee, vs. Ernesto Roque, Filomena Osmunda Cecilia Roque, Marcela Roque, Jose Roque
and Ruben Roque, defendants-appellants") which reversed and set aside on appeal the decision of the Regional Trial Court of Malolos,
Branch 9.

The controversy here involves a 312 square meter parcel of land situated in San Juan, Malolos,
Bulacan and designated as Lot No. 1549 of the Cadastral Survey of Malolos. The property was
registered originally in the name of Januario Avendao, a bachelor who died intestate and without
issue on 22 October 1945.

On 21 September 1959, the intestate heirs of Januario Avendafio executed a document entitled
"Paghahati at Pagtagabuyan ng Mana sa Labas ng Hukuman." 1 Through this instrument,
extrajudicial partition of Lot No. 1549 was effected among the intestate heirs as follows:

a. One-fourth (1/4) undivided portion to Illuminada Avendao.

b. One-fourth (1/4) undivided portion to Gregorio Avendafio and Miguel Avendao.

c. One-fourth (1/4) undivided portion to Bernardino, Bienvenido, Numeriano and

Rufina, all surnamed Avendao.

d. One-fourth (1/4) undivided portion to respondent Emesto Roque and Victor

Roque. 2

On 28 September 1959, co-owners Illuminada, Gregorio, Miguel, Bernardino, Bienvenido,

Numeriano and Rufina, all surnamed Avendao, in consideration of the aggregate amount of
P500.00, transferred their collective and undivided threefourths (3/4) share in Lot No. 1549 to
respondent Ernesto Roque and Victor Roque, thereby vesting in the latter full and complete
ownership of the property. The transactions were embodied in two (2) separate deeds of sale both
entitled "Kasulatan ng Bilihang Patuluyan" 3 and both duly notarized. Subsequently, in an
unnotarized "Bilihan Lubos at Patuluyan" 4 dated 27 November 1961, Emesto and Victor Roque
purportedly sold a three-fourths (3/4) undivided portion of Lot No. 1549 to their half-sister, petitioner
Concepcion Roque, for the same amount. The property, however, remained registered in the name
of the decedent, Januario Avendao.

Upon the instance of petitioner Concepcion Roque and allegedly of respondent Ernesto Roque, Lot
No. 1549 was surveyed on 20 September 1975. Consequent thereto, a Subdivision Plan 5 was
drawn up by the Geodetic Engineer Identifying and delineating a one-fourth (1/4) portion (78 square
meters) of the property as belonging to respondent Ernesto Roque and Victor Roque (who had died
on 14 April 1962), upon the one hand, and a three-fourths (3/4) portion (234 square meters) of the
same property as belonging to petitioner Concepion Roque, upon the other hand. Petitioner claimed
that preparation of the Subdivision Plan, which was approved on 3 November 1975 by the Land
Registration Commission was a preliminary step leading eventually to partition of Lot No. 1549,
partition allegedly having been previously agreed upon inter se by the co-owners. Respondents
Ernesto Roque and the legal heirs of Victor Roque, however, refused to acknowledge petitioner's claim of ownership of any portion of Lot
No. 1549 and rejected the plan to divide the land.

Attempts at amicable settlement having fallen through, petitioner Concepcion Roque, on 6

December 1977, filed a Complaint for "Partition with Specific Performance" 6 (docketed as Civil Case
No. 5236-M) with Branch 2 of the then Court of First Instance of Malolos against respondents
Emesto Roque and the heirs of Victor Roque. In her complaint, petitioner (plaintiff below) claimed
legal ownership of an undivided threefourths (3/4) portion of Lot No. 1549, by virtue of the 27
November 1961 "Bilihan Lubos at Patuluyan" executed in her favor by Emesto Roque and Victor
Roque. In support of this claim, petitioner also presented an undated and unnotarized "Kasulatang
Pagkilala sa Bilihan Patuluyan ng Bahagui at Pagmamana sa Labas ng Hukuman at Paghahati-hati
at Abuyan ng Bahagui" 7said to have been signed by the respondents in acknowledgment of the
existence and validity of the Bilihan in favor of petitioner. Finally, petitioner alleged that, as a
coowner of Lot No. 1549, she had a right to seek partition of the property, that she could not be
compelled to remain in the coownership of the same.

In an Answer with Compulsory Counterclaim 8 filed on 28 December 1977, respondents (defendants

below) impugned the genuineness and due execution of the "Bilihan Lubos at Patuluyan" dated 27
November 1961 on the ground "that the signatures appearing thereon are not the authentic
signatures of the supposed signatories ...." It was also alleged that petitioner Concepcion Roque, far
from being a co-owner of Lot No. 1549, "occupied a portion of the lot in question by mere tolerance
of the [defendants]." Respondents also refused to honor the unnotarized Kasulatan and, additionally,
denied having had any participation in the preparation of the Subchvision Plan.

On 27 June 1983, the trial court (now Branch 9, Regional Trial Court of Malolos) rendered a
Decision, 9 the dispositive portion of which read:

WHEREFORE, judgment is hereby rendered, in favor of the plaintiff and against the
defendants;

1. Ordering the heirs of the late Victor Roque namely Filomena Osmunda his spouse,
his children, Cecilia Roque, Marcela Roque, Jose Roque and Ruben Roque and their
uncle and co-defendant Emesto Roque, to execute a deed of confirmation of the sale
made by Emesto and Victor Roque in favor of plaintiff Concepcion Roque, entitled
"Bilihan Lubos at Patuluyan," executed on November 27, 1961, Exh. E, over the 3/4
portion of the subject property;

2. Ordering the partition of the parcel of land described in par. 3 of tie complaint
covered by Original Certificate of Title No. 1442 Bulacan issued in the name of
Januario Avendafio, in the proportion of 3/4 to pertain to Concepcion Roque, and 1/4
to pertain to Emesto Roque and his co- defendants, his sister-in-law, nephews and
nieces, in accordance with the approved subdivision plan (LRC Psd-230726).

3. Ordering defendants,jointly and severally, to pay to plaintiff the sum of P2,000.00

as and for attomey's fees and the costs of suit.

SO ORDERED.

The respondents appealed from this decision alleging the following errors:

I
 The lower court erred when it decided and ordered defendantsappellants to execute
a confirmation of the "Bilihan Lubos at Patuluyan," Exh. "E."

II

The lower court erred when it decided and ordered the defendantsappellant,s to
deliver unto the plaintiff [a] 3/4 share of the land in question.

III

The lower court erred in deciding this case in favor of the plaintiff-appellee, based on
an unnotarized and forged signature of defendantappellant Ernesto Roque.

IV

The lower court erred in giving credence to the testimony of the plaintiff-appellee
Concepcion Roque despite [its] gross inconsistencies. 10

Acting on the appeal (docketed as A.C.-G.R. CV No. 02248), the Intermediate Appellate Court, in a
Decision 11dated 31 July 1986, reversed the judgment of the trial court and dismissed both the
petitioner's complaint and the respondents' appeal. A Motion for Reconsideration of petitioner
Concepcion Roque was denied.

The present Petition for Review was filed with this Court on 18 September 1986. In a resolution
dated 27 July 1987, we gave due course to the Petition and required the parties to submit their
respective Memoranda.

1. On the matter of dismissal of petitioner's complaint, the Intermediate Appellate Court stated in its
decision:

While the action filed by the plaintiff is for partition, the defendantz, after denying
plaintiff's assertion of co-ownership, asserted that they are the exclusive and sole
owners of the 314 portion of the parcel of land claimed by the plaintiff.

Upon the issue thusjoined by the pleadings, it is obvious that the case has become
one ofownership of the disputed portion of the subject lot.

It is well settled that an action for partition will not prosper as such from the moment
an alleged co-owner asserts an adverse title. The action that may be brought by an
aggrieved co-owner is accion reivindicatoria or action for recovery of title and
possession (Jardin vs. Hallasgo, 11 7 SCRA 532, 536, 537; Paner vs. Gaspar, 3 CA
Rep. 155, 158). (Emphasis supplied)

Viewed in the light of the facts of the present case, the Intermediate Appellate Court's decision
appears to imply that from the moment respondents (defendants below) alleged absolute and
exclusive ownership of the whole of Lot No. 1549 in their Answer, the trial court should have
immediately ordered the dismissal of the action for partition and petitioner (plaintiff below), if she so
desired, should have refiled the case but this time as an accion reinvindicatoria. Taking this analysis
a step further should the reivindicatory action prosper i.e., a co-ownership relation is found to
have existed between the parties a second action for partition would still have to be instituted in
order to effect division of the property among the co-owners.
We do not agree with the above view. An action for partition-which is typically brought by a person
claiming to be co-owner of a specified property against a defendant or defendants whom the plaintiff
recognizes to be co-owners may be seen to present simultaneously two principal issues. First,
there is the issue of whether the plaintiff is indeed a co-owner of the property sought to be
partitioned. Second, assuming that the plaintiff successfully hurdles the first issue, there is the
secondary issue of how the property is to be divided between plaintiff and defendant(s) i.e., what
portion should go to which co-owner.

Should the trial court find that the defendants do not dispute the status of the plaintiff as co-owner,
the court can forthwith proceed to the actual partitioning of the property involved. In case the
defendants assert in their Answer exclusive title in themselves adversely to the plaintiff, the court
should not dismiss the plaintiffs action for partition but, on the contrary and in the exercise of its
general jurisdiction, resolve the question of whether the plaintiff is co-owner or not. Should the trial
court find that the plaintiff was unable to sustain his claimed status as co-owner, or that the
defendants are or have become the sole and exclusive owners of the property involved, the court will
necessarily have to dismiss the action for partition. This result would be reached, not because the
wrong action was commenced by the plaintiff, but rather because the plaintiff having been unable to
show co-ownership rights in himself, no basis exists for requiring the defendants to submit to
partition the property at stake. If, upon the other hand, the court after trial should find the eidstence
of co-ownership among the parties litigant, the court may and should order the partition of the
property in the same action. Judgment for one or the other party being on the merits, the losing party
(respondents in this case) may then appeal the same. In either case, however, it is quite
unnecessary to require the plaintiff to file another action, separate and independent from that for
partition originally instituted. Functionally, an action for partition may be seen to be at once an action
for declaration of coownership and for segregation and conveyance of a determinate portion of the
property involved. This is the import of our jurisprudence on the matter. 12 and is sustained by the
public policy which abhors multiplicity of actions.

The question of prescription also needs to be addressed in this connection. It is sometimes said that
"the action for partition of the thing owned in common (actio communi dividendo or actio familiae
erciscundae) does not prescribe." 13 This statement bears some refinement. In the words of Article
494 of the Civil Code, "each co-owner may demand at any time the partition of the thing owned in
common, insofar as his share is concemed." No matter how long the co-ownership has lasted, a co-
owner can always opt out of the co-ownership, and provided the defendant co-owners or co-heirs
have theretofore expressly or impliedly recognized the co-ownership, they cannot set up as a
defense the prescription of the action for partition. But if the defendants show that they had
previously asserted title in themselves adversely to the plaintiff and for the requisite period of time,
the plaintiffs right to require recognition of his status as a co-owner will have been lost by
prescription and the court cannot issue an order requiring partition. This is precisely what happened
in Jardin v. Hallasgo, 117 SCRA 532 (1982), which the respondent appellate court cited to support
its position quoted above.

The case of Jardin involved, among others, two (2) parcels of land which were inherited in 1920 by
the brothers Catalino jardin and Galo Jardin together with their half-brother, Sixto Hallasgo. The
three (3) held these lands in co-ownership until Sixto later (the date was not specified) repudiated
the coownership and occupied and possessed both parcels of land, claiming the same exclusively
as his own. Sometime in 1973, the heirs of Catalino and Galo instituted an action for partition of the
two (2) properties against Sixto's heirs, who had refused to surrender any portion of the same to the
former. The trial court, assuming that prescription had started to run in that case even before the
Civil Code took effect, held that the action for partition filed by the heirs of Catalino and Galo had
already prescribed. On appeal, this Court affirmed the trial court on this point in the following terms:
 Article 494 of the Civil Code provides that "no co-owner shall be obliged to remain in
the co- ownership" and that "each co-owner may demand at any time the partition of
the thing owned in common, insofar as his share is concerned." It also provides that
'no prescription shall run in favor of a co-owner or co-heir against his co-owners or
co-heirs so long as he expressly or impliedly recognizes the co-ownership.

While the action for the partition of the thing owned in common (actio communi
dividendo or actio familiae erciscundae) does not prescribe, the co-ownership does
not last forever since it may be repudiated by a co-owner [i.e., Sixto]. In such a case,
the action for partition does not lie. What may be brought by the aggrieved co-owner
[i.e., the heirs of Catalino and Galo] is an accion reivindicatoria or action for recovery
of title and possession. That action may be barred by prescription.

If the co-heir or co-owner having possession of the hereditary or community property,

holds the same in his own name, that is, under claim of exclusive ownership, he may
acquire the property by prescription if his possession meets all the other
requirements of the law, and after the expiration of the prescriptive period, his co-heir
or co-owner may lose their right to demand partition, and their action may then be
held to have prescribed (De los Santos vs. Santa Teresa, 44 Phil. 811).

xxx xxx xxx

(Emphasis supplied)

In the light of the foregoing discussion, it will be seen that the underscored portion of the Court's
opinion in Jardin is actually obiter. For there, the Court simply held the action for partition by the
heirs of Catalino and Galo had prescribed and did not require such heirs to start a new action (which
would have been quite pointless); on the other hand, the Court remanded the case to the lower court
for further proceedings in respect of the recovery of a 350 square meter lot which the evidence
showed was owned by the plaintiffs but wrongfully included by Sixto in the cadastral survey of his
share of the adjoining lot.

In Jardin, the claim of co-ownership asserted by the heirs of Catalino and Galo was effectively
refuted by the heirs of Sixto, who not only claimed for themselves absolute and exclusive ownership
of the disputed properties but were also in actual and adverse possesion thereof for a substantial
length of time. The Court found, further, that the action for partition initially available to the heirs of
Catalino and Galo had, as a result of the preceding circumstance, already prescribed.

An entirely different situation, however, obtains in the case at bar. First of all, petitioner Concepcion
Roque-the co-owner seeking partition has been and is presently in open and continuous
possession of a three-fourths (3/4) portion of the property owned in common. The Court notes in this
respect the finding of the trial court that petitioner, following execution of the "Bilihan Lubos at
Pattlluyan" on 27 November 1961, had been in "continuous occupancyof the 3/4 portion of the lot
... up to the present, and whereon plaintifrs house and that of her son are erected. " 14Respondents
do not dispute this finding of fact, although they would claim that petitioner's possession is merely
tolerated by them. Second, prior to filing in 1977 of the Complaint in Civil Case No. 5236-M, neither
of the parties involved had asserted or manifested a claim of absolute and exclusive ownership over
the whole of Lot No. 1549 adverse to that of any of the other co-owners: in other words, co-
ownership of the property had continued to be recognized by all the owners. Consequently, the
action for partition could not have and, as a matter of fact, had not yet prescribed at the time of
institution by Concepcion of the action below.
2. Coming now to the matter regarding dismissal of the respondents'appeal, the Intermediate
Appellate Court held that inasmuch as the attack on the validity of the "Bilihan Lubos at Patuluyan"
was predicated on fraud and no action for annulment of the document had been brought by
respondents within the four (4) year prescriptive period provided under Article 1391 of the Civil
Code, such action had already prescribed.

We find it unnecessary to deal here with the issue of prescription discussed by the respondent court
in its assailed decision. The facts on record clearly show that petitioner Concepcion Roque had been
in actual, open and continuous possession of a three-fourths (3/4) portion of Lot No. 1549 ever since
execution of the "Bilihan Lubos at Patuluyan" in November of 1961. The Court notes that it was only
in their Answer with Compulsory Counterclaim filed with the trial court in December of 1977 more
than sixteen (16) years later that respondents first questioned the genuineness and authenticity of
the "Bilihan Lubos at Patuluyan." Not once during those sixteen (16) years did respondents contest
petitioner's occupation of a three-fourths (3/4) portion of Lot No. 1549. Furthermore, if indeed it is
true that respondents, as they claim, are the absolute owners of the whole of Lot No. 1549, it is most
unusual that respondents would have allowed or tolerated such prolonged occupation by petitioner
of a major portion (3/4) of the land while they, upon the other hand, contented themselves with
occupation of only a fourth thereof. This latter circumstance, coupled with the passage of a very
substantial length of time during which petitioner all the while remained undisturbed and
uninterrupted in her occupation and possession, places respondents here in laches: respondents
may no longer dispute the existence of the co-ownership between petitioner and themselves nor the
validity of petitioner's claim of a threefourths (3/4) interest in Lot No. 1549, as they are deemed, by
their unreasonably long inaction, to have acquiesced in the coow,aership. 15 In this respect, we affirm
the decision of the respondent appellate court presently under review.

WHEREFORE, the Decision of the Intermediate Appellate Court dated 31 July 1986 in A.C.-G.R. CV
No. 02248 is SET ASIDE with respect to that portion which orders the dismissal of the Complaint in
Civil Case No. 5236-M, but is AFFIRMED with respect to that portion which orders the dismissal of
the respondents'appeal in A.C.-G.R. CV No. 02248. The Decision of Branch 9 of the Regional Trial
Court of Malolos dated 27 June 1983 in Civil Case No. 5236-M is hereby REINSTATED. No
pronouncement as to costs.

SO ORDERED.

Ining v Vega (Succession)

Ining v Vega
GR No. 174727, August 12, 2013

ANTIPOLO INING (DECEASED), SURVIVED BY MANUEL VILLANUEVA, TEODORA VILLANUEVA-FRANCISCO,

CAMILO
*
FRANCISCO, ADOLFO FRANCISCO, LUCIMO FRANCISCO, JR., MILAGROS FRANCISCO, CELEDONIO
FRANCISCO, HERMINIGILDO FRANCISCO; RAMON TRESVALLES, ROBERTO TAJONERA, NATIVIDAD INING-
IBEA (DECEASED) SURVIVED BY EDILBERTO IBEA, JOSEFA IBEA, MARTHA IBEA, CARMEN IBEA, AMPARO
IBEA- FERNANDEZ, HENRY RUIZ, EUGENIO RUIZ AND PASTOR RUIZ; DOLORES INING-RIMON (DECEASED)
SURVIVED BY JESUS RIMON, CESARIA RIMON GONZALES AND REMEDIOS RIMON CORDERO; AND PEDRO
INING (DECEASED) SURVIVED BY ELISA TAN INING (WIFE) AND PEDRO INING, JR., Petitioners, v.
LEONARDO R. VEGA, SUBSTITUTED BY LOURDES VEGA, RESTONILO I. VEGA, CRISPULO M. VEGA, MILBUENA
VEGA-RESTITUTO, AND LENARD VEGA, Respondents.
FACTS:

Leon Roldan (Leon), married to Rafaela Menez (Rafaela), is the owner of a 3,120-square meter parcel of land
(subject property) in Kalibo, Aklan. Leon and Rafaela died without issue. Leon was survived by his siblings
Romana Roldan (Romana) and Gregoria Roldan Ining (Gregoria), who are now both deceased.
Sibling #1: Romana was survived by her daughter Anunciacion Vega and grandson, herein respondent
Leonardo R. Vega (Leonardo) (also both deceased). Leonardo in turn is survived by his wife Lourdes and
children Restonilo I. Vega, Crispulo M. Vega, Milbuena Vega-Restituto and Lenard Vega, the substituted
respondents.
Sibling # 2: Gregoria, on the other hand, was survived by her six children. In short, herein petitioners, except
for Ramon Tresvalles (Tresvalles) and Roberto Tajonera (Tajonera), are Gregorias grandchildren or spouses
thereof (Gregorias heirs). Tresvalles and Tajonera are transferees of the said property.
In 1997, acting on the claim that one-half of subject property belonged to him as Romanas surviving heir,
Leonardo filed with the Regional Trial Court (RTC) of Kalibo, Aklan Civil Case No. 5275 for partition, recovery
of ownership and possession, with damages, against Gregorias heirs.
In their Answer with counterclaim, Gregorias heirs (through son Antipolo) claimed that Leonardo had no
cause of action against them; that they have become the sole owners of the subject property through Lucimo
Sr. who acquired the same in good faith by sale from Juan Enriquez (Enriquez), who in turn acquired the same
from Leon, and Leonardo was aware of this fact.

ISSUES BEFORE LOWER COURTS:

1. Whether Leonardo is entitled to a share in Leons estate;

2. Whether Leon sold the subject property to Lucimo Sr.; and
3. Whether Leonardos claim has prescribed, or that he is barred by estoppel or laches.

DECISION OF LOWER COURTS:

(1) RTC
1. No. Declared lot to be the common property of the heirs of Gregoria Roldan Ining
2. Concluded that Leon never sold the property to Enriquez, and in turn, Enriquez never sold the property to
Lucimo Sr., hence, the subject property remained part of Leons estate at the time of his death in 1962.
3. Dismissing the complaint on the ground of prescription (30 years adverse possession).
(2) CA:
1. Declaring 1/2 portion of Lot 1786 as the share of the plaintiffs as successors-in-interest of Romana Roldan;
Declaring 1/2 portion of Lot 1786 as the share of the defendants as successors-in-interest of Gregoria Roldan
Ining;

2. Trial courts declaration of nullity of the April 4, 1943 and November 25, 1943 deeds of sale in favor of
Enriquez and Lucimo Sr., respectively, became final and was settled by petitioners failure to appeal the same.
3. There was no prescription. Prescription began to run not from Leons death in 1962, but from Lucimo Sr.s
execution of the Affidavit of Ownership of Land in 1979, which amounted to a repudiation of his co-
ownership of the property with Leonardo. Applying the fifth paragraph of Article 494 of the Civil Code, which
provides that [n]o prescription shall run in favor of a co- owner or co-heir against his co-owners or co-heirs
so long as he expressly or impliedly recognizes the co-ownership,

ISSUES:
I
THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION OF THE
TRIAL COURT ON THE GROUND THAT LUCIMO FRANCISCO REPUDIATED THE CO-OWNERSHIP ONLY ON
FEBRUARY 9, 1979.
II
THE APPELLATE COURT ERRED IN NOT UPHOLDING THE DECISION OF THE TRIAL COURT DISMISSING THE
COMPLAINT ON THE GROUND OF PRESCRIPTION AND LACHES.

RULING:
No, the Court of Appeals is correct based on the following reasons:
1. The finding that Leon did not sell the property to Lucimo Sr. had long been settled and had become final for
failure of petitioners to appeal. Thus, the property remained part of Leons estate.
2. Leon died without issue; his heirs are his siblings Romana and Gregoria.
3. Gregorias and Romanas heirs are co-owners of the subject property. no prescription shall run in favor of
one of the co-heirs against the others so long as he expressly or impliedly recognizes the co-ownership.
4. For prescription to set in, the repudiation must be done by a co-owner. The CA held that prescription began
to run against Leonardo only in 1979 or even in 1980 when it has been made sufficiently clear to him that
Lucimo Sr. has renounced the co-ownership and has claimed sole ownership over the property. The CA thus
concluded that the filing of Civil Case No. 5275 in 1997, or just under 20 years counted from 1979, is clearly
within the period prescribed under Article 1141.
Lucimo Sr. is not a co-owner of the property. Indeed, he is not an heir of Gregoria; he is merely Antipolos son-
in-law, being married to Antipolos daughter Teodora.
One who is merely related by affinity to the decedent does not inherit from the latter and cannot become a co-
owner of the decedents property. Consequently, he cannot effect a repudiation of the co-ownership of the
estate that was formed among the decedents heirs.

OTHER NOTES:
1. Possession by a co-owner will not be presumed to be adverse to the other co- owners but will be held to
benefit all, and that a co-owner or co-heir is in possession of an inheritance pro-indiviso for himself and in
representation of his co-owners or co- heirs if he administers or takes care of the rest thereof with the
obligation to deliver the same to his co- owners or co-heirs, as is the case of a depositary, lessee or trustee.
2. Principle of laches cannot apply as against Leonardo and the respondents. It held that laches is controlled
by equitable considerations and it cannot be used to defeat justice or to perpetuate fraud; it cannot be utilized
to deprive the respondents of their rightful inheritance.
3. A co-owner cannot acquire by prescription the share of the other co-owners, absent any clear repudiation
of the co- ownership. In order that the title may prescribe in favor of a co-owner, the following requisites
must concur:
(1) the co-owner has performed unequivocal acts of repudiation amounting to an ouster of the other co-
owners;
(2) such positive acts of repudiation have been made known to the other co-owners; and

(3) the evidence thereof is clear and convincing.

4. Under the Family Code, family relations, which is the primary basis for succession, exclude relations by
affinity.

Art. 150. Family relations include those:

(1) Between husband and wife;chanr0blesvirtualawlibrary
(2) Between parents and children;chanr0blesvirtualawlibrary
(3) Among other ascendants and descendants; and
(4) Among brothers and sisters, whether of the full or half blood.

In fine, since none of the co-owners made a valid repudiation of the existing co-ownership, Leonardo could
seek partition of the property at any time.

G.R. No. 174727 August 12, 2013

ANTIPOLO INING (DECEASED), SURVIVED BY MANUEL VILLANUEVA, TEODORA

VILLANUEVA-FRANCISCO, CAMILO FRANCISCO, ADOLFO FRANCISCO, LUCIMO
FRANCISCO, JR., MILAGROS FRANCISCO,* CELEDONIO FRANCISCO, HERMINIGILDO
FRANCISCO; RAMON TRESVALLES, ROBERTO TAJONERA, NATIVIDAD INING-IBEA
(DECEASED) SURVIVED BY EDILBERTO IBEA, JOSEFA IBEA, MARTHA IBEA, CARMEN
IBEA, AMPARO IBEA-FERNANDEZ, HENRY RUIZ, EUGENIO RUIZ AND PASTOR RUIZ;
DOLORES INING-RIMON (DECEASED) SURVIVED BY JESUS RIMON, CESARIA RIMON
GONZALES AND REMEDIOS RIMON CORDERO; AND PEDRO INING (DECEASED) SURVIVED
BY ELISA TAN INING (WIFE) AND PEDRO INING, JR., PETITIONERS,
vs.
LEONARDO R. VEGA, SUBSTITUTED BY LOURDES VEGA, RESTONILO I. VEGA, CRISPULO
M. VEGA, MILBUENA VEGA-RESTITUTO, AND LENARD VEGA, RESPONDENTS.

DECISION

DEL CASTILLO, J.:

One who is merely related by affinity to the decedent does not inherit from the latter and cannot
become a co-owner of the decedents property. Consequently, he cannot effect a repudiation of the
co-ownership of the estate that was formed among the decedents heirs.

Assailed in this Petition for Review on Certiorari1 are the March 14, 2006 Decision2 of the Court of
Appeals (CA) in CA-G.R. CV No. 74687 and its September 7, 2006 Resolution3 denying petitioners
Motion for Reconsideration.4

Factual Antecedents

Leon Roldan (Leon), married to Rafaela Menez (Rafaela), is the owner of a 3,120-square meter
parcel of land (subject property) in Kalibo, Aklan covered by Original Certificate of Title No. (24071)
RO-6305 (OCT RO-630). Leon and Rafaela died without issue. Leon was survived by his siblings
Romana Roldan (Romana) and Gregoria Roldan Ining (Gregoria), who are now both deceased.

Romana was survived by her daughter Anunciacion Vega and grandson, herein respondent
Leonardo R. Vega (Leonardo) (also both deceased). Leonardo in turn is survived by his wife
Lourdes and children Restonilo I. Vega, Crispulo M. Vega, Milbuena Vega-Restituto and Lenard
Vega, the substituted respondents.

Gregoria, on the other hand, was survived by her six children: petitioners Natividad Ining-Ibea
(Natividad), Dolores Ining-Rimon (Dolores), Antipolo, and Pedro; Jose; and Amando. Natividad is
survived by Edilberto Ibea, Josefa Ibea, Martha Ibea, Carmen Ibea, Amparo Ibea-Fernandez, Henry
Ruiz and Pastor Ruiz. Dolores is survived by Jesus Rimon, Cesaria Rimon Gonzales and Remedios
Rimon Cordero. Antipolo is survived by Manuel Villanueva, daughter Teodora Villanueva-Francisco
(Teodora), Camilo Francisco (Camilo), Adolfo Francisco (Adolfo), Lucimo Francisco, Jr. (Lucimo Jr.),
Milagros Francisco, Celedonio Francisco, and Herminigildo Francisco (Herminigildo). Pedro is
survived by his wife, Elisa Tan Ining and Pedro Ining, Jr. Amando died without issue. As for Jose, it
is not clear from the records if he was made party to the proceedings, or if he is alive at all.

In short, herein petitioners, except for Ramon Tresvalles (Tresvalles) and Roberto Tajonera
(Tajonera), are Gregorias grandchildren or spouses thereof (Gregorias heirs).

In 1997, acting on the claim that one-half of subject property belonged to him as Romanas surviving
heir, Leonardo filed with the Regional Trial Court (RTC) of Kalibo, Aklan Civil Case No. 52756 for
partition, recovery of ownership and possession, with damages, against Gregorias heirs. In his
Amended Complaint,7 Leonardo alleged that on several occasions, he demanded the partition of the
property but Gregorias heirs refused to heed his demands; that the matter reached the level of the
Lupon Tagapamayapa, which issued a certification to file a court action sometime in 1980; that
Gregorias heirs claimed sole ownership of the property; that portions of the property were sold to
Tresvalles and Tajonera, which portions must be collated and included as part of the portion to be
awarded to Gregorias heirs; that in 1979, Lucimo Francisco, Sr. (Lucimo Sr.), husband of herein
petitioner Teodora, illegally claimed absolute ownership of the property and transferred in his name
the tax declaration covering the property; that from 1988, Lucimo Sr. and Teodora have deprived
him (Leonardo) of the fruits of the property estimated at 1,000.00 per year; that as a result, he
incurred expenses by way of attorneys fees and litigation costs. Leonardo thus prayed that he be
declared the owner of half of the subject property; that the same be partitioned after collation and
determination of the portion to which he is entitled; that Gregorias heirs be ordered to execute the
necessary documents or agreements; and that he (Leonardo) be awarded actual damages in the
amount of 1,000.00 per year from 1988, attorneys fees of 50,000.00, and lawyers appearance
fees of 500.00 per hearing.

In their Answer8 with counterclaim, Teodora, Camilo, Adolfo, Lucimo Jr. and Herminigildo claimed
that Leonardo had no cause of action against them; that they have become the sole owners of the
subject property through Lucimo Sr. who acquired the same in good faith by sale from Juan
Enriquez (Enriquez), who in turn acquired the same from Leon, and Leonardo was aware of this fact;
that they were in continuous, actual, adverse, notorious and exclusive possession of the property
with a just title; that they have been paying the taxes on the property; that Leonardos claim is barred
by estoppel and laches; and that they have suffered damages and were forced to litigate as a result
of Leonardos malicious suit. They prayed that Civil Case No. 5275 be dismissed; that Leonardo be
declared to be without any right to the property; that Leonardo be ordered to surrender the certificate
of title to the property; and that they be awarded 20,000.00 as moral damages, 10,000.00 as
temperate and nominal damages, 20,000.00 as attorneys fees, and double costs.

The other Gregoria heirs, as well as Tresvalles and Tajonera were declared in default.9

As agreed during pre-trial, the trial court commissioned Geodetic Engineer Rafael M. Escabarte to
identify the metes and bounds of the property.10 The resulting Commissioners Report and
Sketch,11 as well as the Supplementary Commissioners Report,12 were duly approved by the parties.
The parties then submitted the following issues for resolution of the trial court:

Whether Leonardo is entitled to a share in Leons estate;

Whether Leon sold the subject property to Lucimo Sr.; and

Whether Leonardos claim has prescribed, or that he is barred by estoppel or laches.13

In the meantime, Leonardo passed away and was duly substituted by his heirs, the respondents
herein.14

During the course of the proceedings, the following additional relevant facts came to light:

1. In 1995, Leonardo filed against petitioners Civil Case No. 4983 for partition with the RTC
Kalibo, but the case was dismissed and referred to the Kalibo Municipal Trial Court (MTC),
where the case was docketed as Civil Case No. 1366. However, on March 4, 1997, the MTC
dismissed Civil Case No. 1366 for lack of jurisdiction and declared that only the RTC can
take cognizance of the partition case;15

2. The property was allegedly sold by Leon to Enriquez through an unnotarized document
dated April 4, 1943.16 Enriquez in turn allegedly sold the property to Lucimo Sr. on November
25, 1943 via another private sale document;17

3. Petitioners were in sole possession of the property for more than 30 years, while Leonardo
acquired custody of OCT RO-630;18

4. On February 9, 1979, Lucimo Sr. executed an Affidavit of Ownership of Land19 claiming

sole ownership of the property which he utilized to secure in his name Tax Declaration No.
16414 (TD 16414) over the property and to cancel Tax Declaration No. 20102 in Leons
name;20

5. Lucimo Sr. died in 1991; and

6. The property was partitioned among the petitioners, to the exclusion of Leonardo.21

Ruling of the Regional Trial Court

On November 19, 2001, the trial court rendered a Decision,22 which decreed as follows:

WHEREFORE, premises considered, judgment is hereby rendered:

Dismissing the complaint on the ground that plaintiffs right of action has long prescribed under
Article 1141 of the New Civil Code;

Declaring Lot 1786 covered by OCT No. RO-630 (24071) to be the common property of the heirs of
Gregoria Roldan Ining and by virtue whereof, OCT No. RO-630 (24071) is ordered cancelled and the
Register of Deeds of the Province of Aklan is directed to issue a transfer certificate of title to the
heirs of Natividad Ining, one-fourth (1/4) share; Heirs of Dolores Ining, one-fourth (1/4) share; Heirs
of Antipolo Ining, one-fourth (1/4) share; and Heirs of Pedro Ining, one-fourth (1/4) share.

For lack of sufficient evidence, the counterclaim is ordered dismissed.

With cost against the plaintiffs.

SO ORDERED.23

The trial court found the April 4, 1943 and November 25, 1943 deeds of sale to be spurious. It
concluded that Leon never sold the property to Enriquez, and in turn, Enriquez never sold the
property to Lucimo Sr., hence, the subject property remained part of Leons estate at the time of his
death in 1962. Leons siblings, Romana and Gregoria, thus inherited the subject property in equal
shares. Leonardo and the respondents are entitled to Romanas share as the latters successors.

However, the trial court held that Leonardo had only 30 years from Leons death in 1962 or up to
1992 within which to file the partition case. Since Leonardo instituted the partition suit only in 1997,
the same was already barred by prescription. It held that under Article 1141 of the Civil Code,24 an
action for partition and recovery of ownership and possession of a parcel of land is a real action over
immovable property which prescribes in 30 years. In addition, the trial court held that for his long
inaction, Leonardo was guilty of laches as well. Consequently, the property should go to Gregorias
heirs exclusively.

Respondents moved for reconsideration25 but the same was denied by the RTC in its February 7,
2002 Order.26

Ruling of the Court of Appeals

Only respondents interposed an appeal with the CA. Docketed as CA-G.R. CV No. 74687, the
appeal questioned the propriety of the trial courts dismissal of Civil Case No. 5275, its application of
Article 1141, and the award of the property to Gregorias heirs exclusively.

On March 14, 2006, the CA issued the questioned Decision,27 which contained the following decretal
portion:

IN LIGHT OF ALL THE FOREGOING, this appeal is GRANTED. The decision of the Regional Trial
Court, Br. 8, Kalibo, Aklan in Civil Case No. 5275 is REVERSED and SET ASIDE. In lieu thereof,
judgment is rendered as follows:

1. Declaring 1/2 portion of Lot 1786 as the share of the plaintiffs as successors-in-interest of
Romana Roldan;

2. Declaring 1/2 portion of Lot 1786 as the share of the defendants as successors-in-interest
of Gregoria Roldan Ining;

3. Ordering the defendants to deliver the possession of the portion described in paragraphs 8
and 9 of the Commissioners Report (Supplementary) to the herein plaintiffs;

4. Ordering the cancellation of OCT No. RO-630 (24071) in the name of Leon Roldan and
the Register of Deeds of Aklan is directed to issue transfer certificates of title to the plaintiffs
in accordance with paragraphs 8 and 9 of the sketch plan as embodied in the
Commissioners Report (Supplementary) and the remaining portion thereof be adjudged to
the defendants.

Other claims and counterclaims are dismissed.

Costs against the defendants-appellees.

SO ORDERED.28

The CA held that the trial courts declaration of nullity of the April 4, 1943 and November 25, 1943
deeds of sale in favor of Enriquez and Lucimo Sr., respectively, became final and was settled by
petitioners failure to appeal the same. Proceeding from the premise that no valid prior disposition of
the property was made by its owner Leon and that the property which remained part of his estate
at the time of his death passed on by succession to his two siblings, Romana and Gregoria, which
thus makes the parties herein who are Romanas and Gregorias heirs co-owners of the property
in equal shares, the appellate court held that only the issues of prescription and laches were needed
to be resolved.

The CA did not agree with the trial courts pronouncement that Leonardos action for partition was
barred by prescription. The CA declared that prescription began to run not from Leons death in
1962, but from Lucimo Sr.s execution of the Affidavit of Ownership of Land in 1979, which
amounted to a repudiation of his co-ownership of the property with Leonardo. Applying the fifth
paragraph of Article 494 of the Civil Code, which provides that "[n]o prescription shall run in favor of
a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly
recognizes the co-ownership," the CA held that it was only when Lucimo Sr. executed the Affidavit of
Ownership of Land in 1979 and obtained a new tax declaration over the property (TD 16414) solely
in his name that a repudiation of his co-ownership with Leonardo was made, which repudiation
effectively commenced the running of the 30-year prescriptive period under Article 1141.

The CA did not consider Lucimo Sr.s sole possession of the property for more than 30 years to the
exclusion of Leonardo and the respondents as a valid repudiation of the co-ownership either, stating
that his exclusive possession of the property and appropriation of its fruits even his continuous
payment of the taxes thereon while adverse as against strangers, may not be deemed so as
against Leonardo in the absence of clear and conclusive evidence to the effect that the latter was
ousted or deprived of his rights as co-owner with the intention of assuming exclusive ownership over
the property, and absent a showing that this was effectively made known to Leonardo. Citing
Bargayo v. Camumot29 and Segura v. Segura,30 the appellate court held that as a rule, possession
by a co-owner will not be presumed to be adverse to the other co-owners but will be held to benefit
all, and that a co-owner or co-heir is in possession of an inheritance pro-indiviso for himself and in
representation of his co-owners or co-heirs if he administers or takes care of the rest thereof with the
obligation to deliver the same to his co-owners or co-heirs, as is the case of a depositary, lessee or
trustee.

The CA added that the payment of taxes by Lucimo Sr. and the issuance of a new tax declaration in
his name do not prove ownership; they merely indicate a claim of ownership. Moreover, petitioners
act of partitioning the property among themselves to the exclusion of Leonardo cannot affect the
latter; nor may it be considered a repudiation of the co-ownership as it has not been shown that the
partition was made known to Leonardo.

The CA held further that the principle of laches cannot apply as against Leonardo and the
respondents. It held that laches is controlled by equitable considerations and it cannot be used to
defeat justice or to perpetuate fraud; it cannot be utilized to deprive the respondents of their rightful
inheritance.

On the basis of the above pronouncements, the CA granted respondents prayer for partition,
directing that the manner of partitioning the property shall be governed by the Commissioners
Report and Sketch and the Supplementary Commissioners Report which the parties did not contest.

Petitioners filed their Motion for Reconsideration31 which the CA denied in its assailed September 7,
2006 Resolution.32 Hence, the present Petition.

Issues

Petitioners raise the following arguments:

 I

THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION IN

REVERSING THE DECISION OF THE TRIAL COURT ON THE GROUND THAT LUCIMO
FRANCISCO REPUDIATED THE CO-OWNERSHIP ONLY ON FEBRUARY 9, 1979.

II

THE APPELLATE COURT ERRED IN NOT UPHOLDING THE DECISION OF THE TRIAL
COURT DISMISSING THE COMPLAINT ON THE GROUND OF PRESCRIPTION AND
LACHES.33

Petitioners Arguments

Petitioners insist in their Petition and Reply34 that Lucimo Sr.s purchase of the property in 1943 and
his possession thereof amounted to a repudiation of the co-ownership, and that Leonardos
admission and acknowledgment of Lucimo Sr.s possession for such length of time operated to
bestow upon petitioners as Lucimo Sr.s successors-in-interest the benefits of acquisitive
prescription which proceeded from the repudiation.

Petitioners contend that Leonardos inaction from Lucimo Sr.s taking possession in 1943, up to
1995, when Leonardo filed Civil Case No. 4983 for partition with the RTC Kalibo amounted to
laches or neglect. They add that during the proceedings before the Lupon Tagapamayapa in 1980,
Leonardo was informed of Lucimo Sr.s purchase of the property in 1943; this notwithstanding,
Leonardo did not take action then against Lucimo Sr. and did so only in 1995, when he filed Civil
Case No. 4983 which was eventually dismissed and referred to the MTC. They argue that, all this
time, Leonardo did nothing while Lucimo Sr. occupied the property and claimed all its fruits for
himself.

Respondents Arguments

Respondents, on the other hand, argue in their Comment35 that

For purposes of clarity, if [sic] is respectfully submitted that eighteen (18) legible copies has [sic] not
been filed in this case for consideration in banc [sic] and nine (9) copies in cases heard before a
division in that [sic] all copies of pleadings served to the offices concern [sic] where said order [sic]
was issued were not furnished two (2) copies each in violation to [sic] the adverse parties [sic] to the
clerk of court, Regional Trial Court, Branch 8, Kalibo, Aklan, Philippines; to the Honorable Court of
Appeals so that No [sic] action shall be taken on such pleadings, briefs, memoranda, motions, and
other papers as fail [sic] to comply with the requisites set out in this paragraph.

The foregoing is confirmed by affidavit of MERIDON F. OLANDESCA, the law secretary of the
Petitioner [sic] who sent [sic] by Registered mail to Court of Appeals, Twentieth Division, Cebu City;
to Counsel for Respondent [sic] and to the Clerk of Court Supreme Court Manila [sic].

These will show that Petitioner has [sic] violated all the requirements of furnishing two (2) copies
each concerned party [sic] under the Rule of Courts [sic].36

Our Ruling

The Court denies the Petition.

The finding that Leon did not sell the property to Lucimo Sr. had long been settled and had become
final for failure of petitioners to appeal. Thus, the property remained part of Leons estate.

One issue submitted for resolution by the parties to the trial court is whether Leon sold the property
to Lucimo Sr. The trial court, examining the two deeds of sale executed in favor of Enriquez and
1wphi 1

Lucimo Sr., found them to be spurious. It then concluded that no such sale from Leon to Lucimo Sr.
ever took place. Despite this finding, petitioners did not appeal. Consequently, any doubts regarding
this matter should be considered settled. Thus, petitioners insistence on Lucimo Sr.s 1943
purchase of the property to reinforce their claim over the property must be ignored. Since no transfer
from Leon to Lucimo Sr. took place, the subject property clearly remained part of Leons estate upon
his passing in 1962.

Leon died without issue; his heirs are his siblings Romana and Gregoria.

Since Leon died without issue, his heirs are his siblings, Romana and Gregoria, who thus inherited
the property in equal shares. In turn, Romanas and Gregorias heirs the parties herein became
entitled to the property upon the sisters passing. Under Article 777 of the Civil Code, the rights to
the succession are transmitted from the moment of death.

Gregorias and Romanas heirs are co-owners of the subject property.

Thus, having succeeded to the property as heirs of Gregoria and Romana, petitioners and
respondents became co-owners thereof. As co-owners, they may use the property owned in
common, provided they do so in accordance with the purpose for which it is intended and in such a
way as not to injure the interest of the co-ownership or prevent the other co-owners from using it
according to their rights.37 They have the full ownership of their parts and of the fruits and benefits
pertaining thereto, and may alienate, assign or mortgage them, and even substitute another person
in their enjoyment, except when personal rights are involved.38 Each co-owner may demand at any
time the partition of the thing owned in common, insofar as his share is concerned.39 Finally, no
prescription shall run in favor of one of the co-heirs against the others so long as he expressly or
impliedly recognizes the co-ownership.40

For prescription to set in, the repudiation must be done by a co-owner.

Time and again, it has been held that "a co-owner cannot acquire by prescription the share of the
other co-owners, absent any clear repudiation of the co-ownership. In order that the title may
prescribe in favor of a co-owner, the following requisites must concur: (1) the co-owner has
performed unequivocal acts of repudiation amounting to an ouster of the other co-owners; (2) such
positive acts of repudiation have been made known to the other co-owners; and (3) the evidence
thereof is clear and convincing."41

From the foregoing pronouncements, it is clear that the trial court erred in reckoning the prescriptive
period within which Leonardo may seek partition from the death of Leon in 1962. Article 1141 and
Article 494 (fifth paragraph) provide that prescription shall begin to run in favor of a co-owner and
against the other co-owners only from the time he positively renounces the co-ownership and makes
known his repudiation to the other co-owners.

Lucimo Sr. challenged Leonardos co-ownership of the property only sometime in 1979 and 1980,
when the former executed the Affidavit of Ownership of Land, obtained a new tax declaration
exclusively in his name, and informed the latter before the Lupon Tagapamayapa of his 1943
purchase of the property. These apparent acts of repudiation were followed later on by Lucimo Sr.s
act of withholding Leonardos share in the fruits of the property, beginning in 1988, as Leonardo
himself claims in his Amended Complaint. Considering these facts, the CA held that prescription
began to run against Leonardo only in 1979 or even in 1980 when it has been made sufficiently
clear to him that Lucimo Sr. has renounced the co-ownership and has claimed sole ownership over
the property. The CA thus concluded that the filing of Civil Case No. 5275 in 1997, or just under 20
years counted from 1979, is clearly within the period prescribed under Article 1141.

What escaped the trial and appellate courts notice, however, is that while it may be argued that
Lucimo Sr. performed acts that may be characterized as a repudiation of the co-ownership, the fact
is, he is not a co-owner of the property. Indeed, he is not an heir of Gregoria; he is merely Antipolos
son-in-law, being married to Antipolos daughter Teodora.42 Under the Family Code, family relations,
which is the primary basis for succession, exclude relations by affinity.

Art. 150. Family relations include those:

(1) Between husband and wife;

(2) Between parents and children;

(3) Among other ascendants and descendants; and

(4) Among brothers and sisters, whether of the full or half blood.

In point of law, therefore, Lucimo Sr. is not a co-owner of the property; Teodora is. Consequently, he
cannot validly effect a repudiation of the co-ownership, which he was never part of. For this reason,
prescription did not run adversely against Leonardo, and his right to seek a partition of the property
has not been lost.

Likewise, petitioners argument that Leonardos admission and acknowledgment in his pleadings
that Lucimo Sr. was in possession of the property since 1943 should be taken against him, is
unavailing. In 1943, Leon remained the rightful owner of the land, and Lucimo Sr. knew this very
well, being married to Teodora, daughter of Antipolo, a nephew of Leon. More significantly, the
property, which is registered under the Torrens system and covered by OCT RO-630, is in Leons
name. Leons ownership ceased only in 1962, upon his death when the property passed on to his
heirs by operation of law.

In fine, since none of the co-owners made a valid repudiation of the existing co-ownership, Leonardo
could seek partition of the property at any time.

WHEREFORE, the Petition is DENIED. The assailed March 14, 2006 Decision and the September
7, 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 74687are AFFIRMED.

SO ORDERED.

[G.R. No. 152658. July 29, 2005]

LILY ELIZABETH BRAVO-GUERRERO, BEN MAURICIO P. BRAVO,[1] ROLAND P. BRAVO, JR.,

OFELIA BRAVO-QUIESTAS, HEIRS OF CORPUSINIA BRAVO-NIOR namely: GERSON U. NIOR, MARK
GERRY B. NIOR, CLIFF RICHARD B. NIOR, BRYAN B. NIOR, WIDMARK B. NIOR, SHERRY ANNE B.
NIOR, represented by LILY ELIZABETH BRAVO-GUERRERO as their attorney-in-fact, and HONORABLE
FLORENTINO A. TUASON, JR., Presiding Judge, Regional Trial Court, Branch 139, Makati City,
petitioners, vs. EDWARD P. BRAVO, represented by his attorney-in-fact FATIMA C. BRAVO, respondent,
and DAVID B. DIAZ, JR., intervenor-respondent.

FACTS:

Spouses Mauricio Bravo ("Mauricio") and Simona Andaya Bravo ("Simona") owned two parcelsof land
("Properties") located along Evangelista Street, Makati City, Metro Manila. They have three children -
Roland, Cesar and Lily, all surnamed Bravo. Cesar died without issue. Lily Bravo married David Diaz, and
had a son, David B. Diaz, Jr. ("David Jr."). Roland had six children, namely, Lily Elizabeth Bravo-Guerrero
("Elizabeth"), Edward Bravo ("Edward"), Roland Bravo, Jr. ("Roland Jr."), Senia Bravo, Benjamin Mauricio
Bravo, and their half-sister, Ofelia Bravo ("Ofelia").

Simona executed a General Power of Attorney ("GPA") on 17 June 1966 appointing Mauricio as her
attorney-in-fact. In the GPA, Simona authorized Mauricio to "mortgage or otherwise hypothecate, sell,
assign and dispose of any and all of my property, real, personal or mixed, of any kind whatsoever and
wheresoever situated, or any interest therein xxx." Mauricio subsequently mortgaged the Properties to the
Philippine National Bank (PNB) and Development Bank of the Philippines (DBP) for P10,000 and P5,000,
respectively.

On 25 October 1970, Mauricio executed a Deed of Sale with Assumption of Real Estate Mortgage "Deed
of Sale") conveying the Properties to "Roland A. Bravo, Ofelia A. Bravo and Elizabeth Bravo" ("vendees").
However, the Deed of Sale was not annotated on TCT Nos.58999 and 59000. Neither was it presented to
PNB and DBP. The mortgage loans and the receipts for loan payments issued by PNB and DBP continued
to be in Mauricios name even after his death on 20 November 1973.

Simona died in 1977.On 23 June 1997, Edward, represented by his wife, Fatima Bravo, filed an action for
the judicial partition of the Properties. Edward claimed that he and the other grandchildren of Mauricio and
Simona are co-owners of the Properties by succession. Despite this, petitioners refused to share with him
the possession and rental income of the Properties.

In 1999, David Jr., whose parents died in 1944 and who was subsequently raised by Simona, moved to
intervene in the case. David Jr. filed a complaint-in-intervention impugning the validity of the Deed of Sale
and praying for the partition of the Properties among the surviving heirs of Mauricio and Simona. The trial
court allowed the intervention.

Trial Court: The trial court upheld Mauricios sale of the Properties to the vendees. The trial court ruled that
the sale did not prejudice the compulsory heirs, as the Properties were conveyed for valuable
consideration. The trial court also noted that the Deed of Sale was duly notarized and was in existence for
many years without question about its validity. It DENIED the JUDICIAL PARTITION of the properties.
Court of Appeals: REVERSED; the Court of Appeals declared the Deed of Sale void for lack of Simonas
consent. The appellate court held that the GPA executed by Simona in 1966 was not sufficient to authorize
Mauricio to sell the Properties.

ISSUE: WHETHER THE COURT OF APPEALS ERRED IN ORDERING THE PARTITION OF THE
PROPERTY IN QUESTION

HELD:

This Court finds it proper to grant the partition of the Properties.

Petitioners have consistently claimed that their father is one of the vendees who bought the Properties.
Vendees Elizabeth and Ofelia both testified that the Roland A. Bravo in the Deed of Sale is their father,
although their brother, Roland Bravo, Jr., made some of the mortgage payments. Petitioners counsel, Atty.
Paggao, made the same clarification before the trial court.

As Roland Bravo, Sr. is also the father of respondent Edward Bravo, Edward is thus a compulsory heir of
Roland Bravo, and entitled to a share, along with his brothers and sisters, in his fathers portion of the
Properties. In short, Edward and petitioners are co-owners of the Properties.

As such, Edward can rightfully ask for the partition of the Properties. Any co-owner may demand at any
time the partition of the common property unless a co-owner has repudiated the co-ownership. This action
for partition does not prescribe and is not subject to laches.

OTHER ISSUES:

1. Whether Simona validly appointed Mauricio as her attorney-in-fact to dispose the properties in question -
YES

HELD:

We hold that the Court of Appeals erred when it declared the Deed of Sale void. In this case, Simona
expressly authorized Mauricio in the GPA to "sell, assign and dispose of any and all of my property, real,
personal or mixed, of any kind whatsoever and wheresoever situated, or any interest therein xxx" as well as
to "act as my general representative and agent,with full authority to buy, sell, negotiate and contract for me
and in my behalf." Taken together, these provisions constitute a clear and specific mandate to Mauricio to
sell the Properties. Even if it is called a "general power of attorney," the specific provisions in the GPA are
sufficient for the purposes of Article 1878. These provisions in the GPA likewise indicate that Simona
consented to the sale of the Properties
2. Whether the Sale of the Properties was Simulated or is Void for Gross Inadequacy of Price - No

HELD: We point out that the law on legitime does not bar the disposition of property for valuable
consideration to descendants or compulsory heirs. In a sale, cash of equivalent value replaces the
property taken from the estate. There is no diminution of the estate but merely a substitution in values.
Donations and other dispositions by gratuitous title, on the other hand, must be included in the computation
of legitimes.

Gross inadequacy of price by itself will not result in a void contract. Gross inadequacy of price does not
even affect the validity of a contract of sale, unless it signifies a defect in the consent or that the parties
actually intended a donation or some other contract. Inadequacy of cause will not invalidate a contract
unless there has been fraud, mistake or undue influence. In this case, respondents have not proved any of
the instances that would invalidate the Deed of Sale.

G.R. No. 152658. July 29, 2005

LILY ELIZABETH BRAVO-GUERRERO, BEN MAURICIO P. BRAVO,1 ROLAND P. BRAVO, JR.,

OFELIA BRAVO-QUIESTAS, HEIRS OF CORPUSINIA BRAVO-NIOR namely: GERSON U. NIOR,
MARK GERRY B. NIOR, CLIFF RICHARD B. NIOR, BRYAN B. NIOR, WIDMARK B. NIOR,
SHERRY ANNE B. NIOR, represented by LILY ELIZABETH BRAVO-GUERRERO as their
attorney-in-fact, and HONORABLE FLORENTINO A. TUASON, JR., Presiding Judge, Regional
Trial Court, Branch 139, Makati City, Petitioners,
vs.
EDWARD P. BRAVO, represented by his attorney-in-fact FATIMA C. BRAVO, respondent, and
DAVID B. DIAZ, JR., intervenor-respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review2 assailing the Decision3 of 21 December 2001 of the Court of
Appeals in CA-G.R. CV No. 67794. The Court of Appeals reversed the Decision4 of 11 May 2000 of
the Regional Trial Court of Makati, Branch No. 139, in Civil Case No. 97-1379 denying respondents
prayer to partition the subject properties.

Antecedent Facts

Spouses Mauricio Bravo ("Mauricio") and Simona5 Andaya Bravo ("Simona") owned two parcels of
land ("Properties") measuring 287 and 291 square meters and located along Evangelista Street,
Makati City, Metro Manila. The Properties are registered under TCT Nos. 58999 and 59000 issued
by the Register of Deeds of Rizal on 23 May 1958. The Properties contain a large residential
dwelling, a smaller house and other improvements.

Mauricio and Simona had three children - Roland, Cesar and Lily, all surnamed Bravo. Cesar died
without issue. Lily Bravo married David Diaz, and had a son, David B. Diaz, Jr. ("David Jr."). Roland
had six children, namely, Lily Elizabeth Bravo-Guerrero ("Elizabeth"), Edward Bravo ("Edward"),
Roland Bravo, Jr. ("Roland Jr."), Senia Bravo, Benjamin Mauricio Bravo, and their half-sister, Ofelia
Bravo ("Ofelia").

Simona executed a General Power of Attorney ("GPA") on 17 June 1966 appointing Mauricio as her
attorney-in-fact. In the GPA, Simona authorized Mauricio to "mortgage or otherwise hypothecate,
sell, assign and dispose of any and all of my property, real, personal or mixed, of any kind
whatsoever and wheresoever situated, or any interest therein xxx."6 Mauricio subsequently
mortgaged the Properties to the Philippine National Bank (PNB) and Development Bank of the
Philippines (DBP) for 10,000 and 5,000, respectively.7

On 25 October 1970, Mauricio executed a Deed of Sale with Assumption of Real Estate Mortgage
("Deed of Sale") conveying the Properties to "Roland A. Bravo, Ofelia A. Bravo and Elizabeth
Bravo"8 ("vendees"). The sale was conditioned on the payment of 1,000 and on the assumption by
the vendees of the PNB and DBP mortgages over the Properties.

As certified by the Clerk of Court of the Regional Trial Court of Manila, the Deed of Sale was
notarized by Atty. Victorio Q. Guzman on 28 October 1970 and entered in his Notarial
Register.9 However, the Deed of Sale was not annotated on TCT Nos. 58999 and 59000. Neither
was it presented to PNB and DBP. The mortage loans and the receipts for loan payments issued by
PNB and DBP continued to be in Mauricios name even after his death on 20 November 1973.
Simona died in 1977.

On 23 June 1997, Edward, represented by his wife, Fatima Bravo, filed an action for the judicial
partition of the Properties. Edward claimed that he and the other grandchildren of Mauricio and
Simona are co-owners of the Properties by succession. Despite this, petitioners refused to share
with him the possession and rental income of the Properties. Edward later amended his complaint to
include a prayer to annul the Deed of Sale, which he claimed was merely simulated to prejudice the
other heirs.

In 1999, David Jr., whose parents died in 1944 and who was subsequently raised by Simona, moved
to intervene in the case. David Jr. filed a complaint-in-intervention impugning the validity of the Deed
of Sale and praying for the partition of the Properties among the surviving heirs of Mauricio and
Simona. The trial court allowed the intervention in its Order dated 5 May 1999.10

The Ruling of the Trial Court

The trial court upheld Mauricios sale of the Properties to the vendees. The trial court ruled that the
sale did not prejudice the compulsory heirs, as the Properties were conveyed for valuable
consideration. The trial court also noted that the Deed of Sale was duly notarized and was in
existence for many years without question about its validity.

The dispositive portion of the trial courts Decision of 11 May 2000 reads:

WHEREFORE, premises considered, the Court hereby DENIES the JUDICIAL PARTITION of the
properties covered by TCT Nos. 58999 and 59000 registered with the Office of the Register of
Deeds of Rizal.

SO ORDERED.11

Dissatisfied, Edward and David Jr. ("respondents") filed a joint appeal to the Court of Appeals.
The Ruling of the Court of Appeals

Citing Article 166 of the Civil Code ("Article 166"), the Court of Appeals declared the Deed of Sale
void for lack of Simonas consent. The appellate court held that the GPA executed by Simona in
1966 was not sufficient to authorize Mauricio to sell the Properties because Article 1878 of the Civil
Code ("Article 1878") requires a special power of attorney for such transactions. The appellate court
reasoned that the GPA was executed merely to enable Mauricio to mortgage the Properties, not to
sell them.

The Court of Appeals also found that there was insufficient proof that the vendees made the
mortgage payments on the Properties, since the PNB and DBP receipts were issued in Mauricios
name. The appellate court opined that the rental income of the Properties, which the vendees never
shared with respondents, was sufficient to cover the mortgage payments to PNB and DBP.

The Court of Appeals declared the Deed of Sale void and ordered the partition of the Properties in its
Decision of 21 December 2001 ("CA Decision"), as follows:

WHEREFORE, the decision of the Regional Trial Court of Makati City, Metro-Manila, Branch 13[9]
dated 11 May 2000[,] review of which is sought in these proceedings[,] is REVERSED.

1. The Deed of Sale with Assumption of Real Estate Mortgage (Exh. 4) dated 28 October 1970 is
hereby declared null and void;

2. Judicial Partition on the questioned properties is hereby GRANTED in the following manner:

A. In representation of his deceased mother, LILY BRAVO-DIAZ, intervenor DAVID DIAZ, JR., is
entitled to one-half (1/2) interest of the subject properties;

B. Plaintiff-appellant EDWARD BRAVO and the rest of the five siblings, namely: LILY ELIZABETH,
EDWARD, ROLAND, JR., SENIA, BENJAMIN and OFELIA are entitled to one-sixth (1/6)
representing the other half portion of the subject properties;

C. Plaintiff-appellant Edward Bravo, intervenor DAVID DIAZ, JR., SENIA and BENJAMIN shall
reimburse the defendant-appellees LILY ELIZABETH, OFELIA and ROLAND the sum of One
Thousand (P1,000.00) PESOS representing the consideration paid on the questioned deed of sale
with assumption of mortgage with interest of six (6) percent per annum effective 28 October 1970
until fully paid.

SO ORDERED.12

The Issues

Petitioners seek a reversal of the Decision of the Court of Appeals, raising these issues:

1. WHETHER THE COURT OF APPEALS ERRED IN NOT UPHOLDING THE VALIDITY AND
ENFORCEMENT OF THE DEED OF SALE WITH ASSUMPTION OF MORTGAGE.

2. WHETHER THE COURT OF APPEALS ERRED IN ORDERING THE PARTITION OF THE

PROPERTY IN QUESTION.13

At the least, petitioners argue that the subject sale is valid as to Mauricios share in the Properties.
On the other hand, respondents maintain that they are co-owners of the Properties by succession.
Respondents argue that the sale of the conjugal Properties is void because: (1) Mauricio executed
the Deed of Sale without Simonas consent; and (2) the sale was merely simulated, as shown by the
grossly inadequate consideration Mauricio received for the Properties.

While this case was pending, Leonida Andaya Lolong ("Leonida"), David Jr.s aunt, and Atty.
Cendaa, respondents counsel, informed the Court that David Jr. died on 14 September 2004.
Afterwards, Leonida and Elizabeth wrote separate letters asking for the resolution of this case. Atty.
Cendaa later filed an urgent motion to annotate attorneys lien on TCT Nos. 58999 and 59000. In
its Resolution dated 10 November 2004,14 the Court noted the notice of David Jr.s death, the letters
written by Leonida and Elizabeth, and granted the motion to annotate attorneys lien on TCT Nos.
58999 and 59000.

The Ruling of the Court

The petition is partly meritorious.

The questions of whether Simona consented to the Deed of Sale and whether the subject sale was
simulated are factual in nature. The rule is factual findings of the Court of Appeals are binding on this
Court. However, there are exceptions, such as when the factual findings of the Court of Appeals and
the trial court are contradictory, or when the evidence on record does not support the factual
findings.15 Because these exceptions obtain in the present case, the Court will consider these issues.

On the Requirement of the Wifes Consent

We hold that the Court of Appeals erred when it declared the Deed of Sale void based on Article
166, which states:

Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil
interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real
property of the conjugal partnership without the wifes consent. If she refuses unreasonably to give
her consent, the court may compel her to grant the same.

This article shall not apply to property acquired by the conjugal partnerships before the effective date
of this Code.

Article 166 expressly applies only to properties acquired by the conjugal partnership after the
effectivity of the Civil Code of the Philippines ("Civil Code"). The Civil Code came into force on 30
August 1950.16 Although there is no dispute that the Properties were conjugal properties of Mauricio
and Simona, the records do not show, and the parties did not stipulate, when the Properties were
acquired.17 Under Article 1413 of the old Spanish Civil Code, the husband could alienate conjugal
partnership property for valuable consideration without the wifes consent.18

Even under the present Civil Code, however, the Deed of Sale is not void. It is well-settled that
contracts alienating conjugal real property without the wifes consent are merely voidable under the
Civil Code that is, binding on the parties unless annulled by a competent court and not void ab
initio.19

Article 166 must be read in conjunction with Article 173 of the Civil Code ("Article 173"). The latter
prescribes certain conditions before a sale of conjugal property can be annulled for lack of the wifes
consent, as follows:
Art. 173. The wife may, during the marriage and within ten years from the
transaction questioned, ask the courts for the annulment of any contract of the husband entered
into without her consent, when such consent is required, or any act or contract of the husband which
tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail
to exercise this right, she or her heirs after the dissolution of the marriage, may demand the
value of property fraudulently alienated by the husband. (Emphasis supplied)

Under the Civil Code, only the wife can ask to annul a contract that disposes of conjugal real
property without her consent. The wife must file the action for annulment during the marriage and
within ten years from the questioned transaction. Article 173 is explicit on the remedies available if
the wife fails to exercise this right within the specified period. In such case, the wife or her heirs can
only demand the value of the property provided they prove that the husband fraudulently alienated
the property. Fraud is never presumed, but must be established by clear and convincing evidence.20

Respondents action to annul the Deed of Sale based on Article 166 must fail for having been filed
out of time. The marriage of Mauricio and Simona was dissolved when Mauricio died in 1973. More
than ten years have passed since the execution of the Deed of Sale.

Further, respondents, who are Simonas heirs, are not the parties who can invoke Article 166. Article
173 reserves that remedy to the wife alone. Only Simona had the right to have the sale of the
Properties annulled on the ground that Mauricio sold the Properties without her consent.

Simona, however, did not assail the Deed of Sale during her marriage or even after Mauricios
death. The records are bereft of any indication that Simona questioned the sale of the Properties at
any time. Simona did not even attempt to take possession of or reside on the Properties after
Mauricios death. David Jr., who was raised by Simona, testified that he and Simona continued to
live in Pasay City after Mauricios death, while her children and other grandchildren resided on the
Properties.21

We also agree with the trial court that Simona authorized Mauricio to dispose of the Properties when
she executed the GPA. True, Article 1878 requires a special power of attorney for an agent to
execute a contract that transfers the ownership of an immovable. However, the Court has clarified
that Article 1878 refers to the nature of the authorization, not to its form.22 Even if a document is titled
as a general power of attorney, the requirement of a special power of attorney is met if there is a
clear mandate from the principal specifically authorizing the performance of the act.23

In Veloso v. Court of Appeals,24 the Court explained that a general power of attorney could contain
a special power to sell that satisfies the requirement of Article 1878, thus:

An examination of the records showed that the assailed power of attorney was valid and regular on
its face. It was notarized and as such, it carries the evidentiary weight conferred upon it with respect
to its due execution. While it is true that it was denominated as a general power of attorney, a
perusal thereof revealed that it stated an authority to sell, to wit:

"2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and
hereditaments or other forms of real property, more specifically TCT No. 49138, upon such terms
and conditions and under such covenants as my said attorney shall deem fit and proper."

Thus, there was no need to execute a separate and special power of attorney since the general
power of attorney had expressly authorized the agent or attorney in fact the power to sell the subject
property. The special power of attorney can be included in the general power when it is
specified therein the act or transaction for which the special power is required. (Emphasis
supplied)

In this case, Simona expressly authorized Mauricio in the GPA to "sell, assign and dispose of any
and all of my property, real, personal or mixed, of any kind whatsoever and wheresoever situated,
or any interest therein xxx" as well as to "act as my general representative and agent, with full
authority to buy, sell, negotiate and contract for me and in my behalf."25 Taken together, these
provisions constitute a clear and specific mandate to Mauricio to sell the Properties. Even if it is
called a "general power of attorney," the specific provisions in the GPA are sufficient for the
purposes of Article 1878. These provisions in the GPA likewise indicate that Simona consented to
the sale of the Properties.

Whether the Sale of the Properties was Simulated

or is Void for Gross Inadequacy of Price

We point out that the law on legitime does not bar the disposition of property for valuable
consideration to descendants or compulsory heirs. In a sale, cash of equivalent value replaces the
property taken from the estate.26There is no diminution of the estate but merely a substitution in
values. Donations and other dispositions by gratuitous title, on the other hand, must be included in
the computation of legitimes.27

Respondents, however, contend that the sale of the Properties was merely simulated. As proof,
respondents point to the consideration of 1,000 in the Deed of Sale, which respondents claim is
grossly inadequate compared to the actual value of the Properties.

Simulation of contract and gross inadequacy of price are distinct legal concepts, with different
effects. When the parties to an alleged contract do not really intend to be bound by it, the contract is
simulated and void.28 A simulated or fictitious contract has no legal effect whatsoever29 because
there is no real agreement between the parties.

In contrast, a contract with inadequate consideration may nevertheless embody a true agreement
between the parties. A contract of sale is a consensual contract, which becomes valid and binding
upon the meeting of minds of the parties on the price and the object of the sale.30 The concept of a
simulated sale is thus incompatible with inadequacy of price. When the parties agree on a price as
the actual consideration, the sale is not simulated despite the inadequacy of the price.31

Gross inadequacy of price by itself will not result in a void contract. Gross inadequacy of price does
not even affect the validity of a contract of sale, unless it signifies a defect in the consent or that the
parties actually intended a donation or some other contract.32 Inadequacy of cause will not invalidate
a contract unless there has been fraud, mistake or undue influence.33 In this case, respondents have
not proved any of the instances that would invalidate the Deed of Sale.

Respondents even failed to establish that the consideration paid by the vendees for the Properties
was grossly inadequate. As the trial court pointed out, the Deed of Sale stipulates that, in addition to
the payment of 1,000, the vendees should assume the mortgage loans from PNB and DBP. The
consideration for the sale of the Properties was thus 1,000 in cash and the assumption of the
15,000 mortgage.

Respondents argue that 16,000 is still far below the actual value of the Properties. To bolster their
claim, respondents presented the following: (1) Tax Declarations No. A-001-0090534 and A-001-
0090635 for the year 1979, which placed the assessed value of the Properties at 70,020 and their
approximate market value at 244,290; and (2) a certified copy of the Department of Finances
Department Order No. 62-9736 dated 6 June 1997 and attached guidelines37 which established the
zonal value of the properties along Evangelista Street at 15,000 per square meter.

The subject Deed of Sale, however, was executed in 1970. The valuation of the Properties in 1979
or 1997 is of little relevance to the issue of whether 16,000 was a grossly inadequate price to pay
for the Properties in 1970. Certainly, there is nothing surprising in the sharp increase in the value of
the Properties nine or twenty-seven years after the sale, particularly when we consider that the
Properties are located in the City of Makati.

More pertinent are Tax Declarations No. 1581238 and No. 15813,39 both issued in 1967, presented by
petitioners. These tax declarations placed the assessed value of both Properties at 16,160.
Compared to this, the price of 16,000 cannot be considered grossly inadequate, much less so
shocking to the conscience40 as to justify the setting aside of the Deed of Sale.

Respondents next contend that the vendees did not make the mortgage payments on the Properties.
Respondents allege that the rents paid by the tenants leasing portions of the Properties were
sufficient to cover the mortgage payments to DBP and PNB.

Again, this argument does not help respondents cause. Assuming that the vendees failed to pay the
full price stated in the Deed of Sale, such partial failure would not render the sale void.
In Buenaventura v. Court of Appeals,41 the Court held:

xxx If there is a meeting of the minds of the parties as to the price, the contract of sale is valid,
despite the manner of payment, or even the breach of that manner of payment. xxx

It is not the act of payment of price that determines the validity of a contract of sale. Payment of the
price has nothing to do with the perfection of the contract. Payment of the price goes into the
performance of the contract. Failure to pay the consideration is different from lack of consideration.
The former results in a right to demand the fulfillment or cancellation of the obligation under an
existing valid contract while the latter prevents the existence of a valid contract. (Emphasis
supplied.)

Neither was it shown that the rentals from tenants were sufficient to cover the mortgage payments.
The parties to this case stipulated to only one tenant, a certain Federico M. Puno, who supposedly
leased a room on the Properties for 300 per month from 1992 to 1994.42 This is hardly significant,
when we consider that the mortgage was fully paid by 1974. Indeed, the fact that the Properties
were mortgaged to DBP and PNB indicates that the conjugal partnership, or at least Mauricio, was
short of funds.

Petitioners point out that they were duly employed and had the financial capacity to buy the
Properties in 1970. Respondents did not refute this. Petitioners presented 72 receipts43 showing the
mortgage payments made to PNB and DBP, and the Release of the Real Estate
Mortgage44 ("Mortgage Release") dated 5 April 1974. True, these documents all bear Mauricios
name. However, this tends to support, rather than detract from, petitioner-vendees explanation that
they initially gave the mortgage payments directly to Mauricio, and then later directly to the banks,
without formally advising the bank of the sale. The last 3 mortgage receipts and the Mortgage
Release were all issued in Mauricios name even after his death in 1970. Obviously, Mauricio could
not have secured the Mortgage Release and made these last payments.

Presumption of Regularity and Burden of Proof

The Deed of Sale was notarized and, as certified by the Regional Trial Court of Manila, entered in
the notarial books submitted to that court. As a document acknowledged before a notary public, the
Deed of Sale enjoys the presumption of regularity45 and due execution.46 Absent evidence that is
clear, convincing and more than merely preponderant, the presumption must be upheld.47

Respondents evidence in this case is not even preponderant. Respondents allegations, testimony
and bare denials cannot prevail over the documentary evidence presented by petitioners. These
documents the Deed of Sale and the GPA which are both notarized, the receipts, the Mortgage
Release and the 1967 tax declarations over the Properties support petitioners account of the sale.

As the parties challenging the regularity of the Deed of Sale and alleging its simulation, respondents
had the burden of proving these charges.48 Respondents failed to discharge this burden.
Consequentially, the Deed of Sale stands.

On the Partition of the Property

Nevertheless, this Court finds it proper to grant the partition of the Properties, subject to modification.

Petitioners have consistently claimed that their father is one of the vendees who bought the
Properties. Vendees Elizabeth and Ofelia both testified that the "Roland A. Bravo" in the Deed of
Sale is their father,49 although their brother, Roland Bravo, Jr., made some of the mortgage
payments. Petitioners counsel, Atty. Paggao, made the same clarification before the trial court.50

As Roland Bravo, Sr. is also the father of respondent Edward Bravo, Edward is thus a compulsory
heir of Roland Bravo, and entitled to a share, along with his brothers and sisters, in his fathers
portion of the Properties. In short, Edward and petitioners are co-owners of the Properties.

As such, Edward can rightfully ask for the partition of the Properties. Any co-owner may demand at
any time the partition of the common property unless a co-owner has repudiated the co-
ownership.51 This action for partition does not prescribe and is not subject to laches.52

WHEREFORE, we REVERSE the Decision of 21 December 2001 of the Court of Appeals in CA-
G.R. CV No. 67794. We REINSTATE the Decision of 11 May 2000 of the Regional Trial Court of
Makati, Branch No. 139, in Civil Case No. 97-137, declaring VALID the Deed of Sale with
Assumption of Mortgage dated 28 October 1970, with the following MODIFICATIONS:

1. We GRANT judicial partition of the subject Properties in the following manner:

a. Petitioner LILY ELIZABETH BRAVO-GUERRERO is entitled to one-third (1/3) of the Properties;

b. Petitioner OFELIA BRAVO-QUIESTAS is entitled to one-third (1/3) of the Properties; and

c. The remaining one-third (1/3) portion of the Properties should be divided equally between the
children of ROLAND BRAVO.

2. The other heirs of ROLAND BRAVO must reimburse ROLAND BRAVO, JR. for whatever
expenses the latter incurred in paying for and securing the release of the mortgage on the
Properties.

SO ORDERED.
G.R. No. L-55225 September 30, 1982

HEIRS OF CATALINO JARDIN, namely, RUSTICA, CEFERINA, VICTORINA, REMEDIOS, ELSIE,

CIRILA, PURIFICACION, and VIRGINIA, all surnamed JARDIN, and WALDERICO Z. JARDIN, as
Heir of Galo Jardin, plaintiffs-appellants,
vs.
HEIRS OF SIXTO HALLASGO, namely, PAZ, CORAZON, NERIO, and ELIODORA, all surnamed
HALLASGO, defendants- appellees.

Galdino B. Jardin for plaintiffs-appellants.

Bernardo Semine for defendants-appellees.

AQUINO, J.:

This case is about the enforcement in 1973 of a 1920 partition of certain unregistered lands. The
following is a summary of the allegations in the complaint filed in 1973 by the heirs of Catalino Jardin
and Galo Jardin against the heirs of Sixto Hallasgo in the Court of First Instance of Misamis Oriental
in Civil Case No. 4234:

The spouses Braulio Jardin and Maura Hallasgo were survived by their two children named Catalino
and Galo and by Sixto Hallasgo, apparently Maura's child by her first husband.

In 1920, Catalino, Galo and Sixto partitioned in a private document the following properties inherited
from the Jardin spouses:

(1) A residential lot in the poblacion of Jasaan, now Lower Jasaan, Misamis Oriental,
with an assessed value of P1,000. Catalino and Galo each received as their share
495 square meters and seven coconut trees. The remainder of the lot and seven
coconut trees were allotted to Sixto.

(2) A parcel of cornland located at Barrio Camposanto planted to 2-1/2 gantas with
an assessed value of P500. An area planted to five gantas was given to Sixto while
the remainder was adjudicated to Galo and Catalino.

(3) A parcel of land located at Barrio Cabagtucan planted to 21/2 gantas with an
assessed value of P200 was assigned to Galo and Catalino.

(4) A parcel of cornland located at Barrio Canajawan planted to fourteen gantas was
assigned to Sixto.

(5) A parcel of land also located at Barrio Canajawan planted to thirteen gantas with
an assessed value of P500 was assigned to Galo and Catalino.

(6) A parcel of riceland located at Barrio Sagpolon planted to ten gantas was
assigned to Galo and Catalino.

(7) A parcel of riceland located at Barrio Mandagisiao planted to five gantas was
assigned to Sixto.
 (8) A parcel of riceland located at Barrio Calabugon planted to six gantas was divided
equally among the three heirs.

(9) A parcel of land located at Barrio Mingomon, Claveria, Bukidnon, plus one cow,
was assigned to Sixto in exchange for a house of strong materials located at the
poblacion.

Galo later ceded to Catalino his share of 495 square meters in the lot at the poblacion of Jasaan in
exchange for Catalino's one-half share of the riceland in Barrio Sagpolon (No. 6). Catalino became
the owner of 990 square meters of the poblacion lot. Galo became the sole owner of the riceland at
Sagpolon.

In 1963, Sixto was allowed by Catalino's children to use as a garden an area of 350 square meters
which is a part of the 990 square meters owned by them. However, in 1964 Sixto fraudulently and
without the knowledge of Catalino's children (Sixto's nephews and nieces) included said portion in
the cadastral survey of his share of the poblacion lot. Sixto and his children refused to reconvey the
said 350-square-meter portion to Catalino's children.

Allegedly taking advantage of the minority of the children of Catalino and Galo, who both died after
the war, Sixto occupied the parcels of land adjudicated to Galo and Catalino in the 1920 deed of
partition including the house of strong materials. Sixto used those lands after the death of Galo and
Catalino and did not give to their heirs any share of the harvests.

It was only in the early part of 1973 that the children of Galo and Catalino came to know of the 1920
deed of partition which was shown to them by Corazon Hallasgo during a confrontation in the
provincial commander's office at Camp Alagar when they sought to recover the said portion of 350
square meters from the Hallasgos.

On that occasion, the children of Galo and Catalino came to know that the shares of Galo and
Catalino in that partition allegedly had been in the possession of Sixto and his children "for a long
time". In spite of earnest efforts, Sixto's heirsrefused to settle the case amicably with the heirs of
Galo and Catalino.

The heirs of Galo and Catalino prayed in their 1973 complaint that Sixto's heirs be ordered to
reconvey to them the lands allocated to their parents in the 1920 partition and the portion of 350
square meters in the poblacion lot appropriated by Sixto. The plaintiffs also prayed for damages.

Defendants Hallasgo filed a motion to dismiss. The trial court in a minute order dismissed the
complaint on the ground of prescription, citing Bargayo vs. Camumot, 40 Phil. 857. The plaintiffs
appealed. They contend that their action had not prescribed and that its dismissal had no factual
basis. The defendants did not file any brief.

Incidentally, plaintiffs-appellants also contend for the first time that defendants' motion to dismiss,
which was filed on August 22, 1973 and set for hearing on September 27, 1973, was a mere scrap
of paper. That contention is devoid of merit. The plaintiffs interposed a written opposition to that
motion. They were heard before it was granted by the trial court.

The appellants invoke the rule that the action for partition among co-heirs does not prescribe and
that a co-owner's possession of the community property is not deemed adverse to the other co-
owners. They argue that the 1920 handwritten partition signifies that Sixto recognized the existence
of the co-ownership.
We find these contentions to be flimsy and untenable. The poorly drafted complaint is vitiated by
grave deficiencies and loose ends. Its draftsman had not thoroughly studied the facts and the law
involved in the action.

There are no allegations as to the specific dates when Galo and Catalino died (it was merely alleged
that they died "after the war") and when Sixto died; when the heirs of Galo and Catalino became of
age; the date when Sixto allegedly usurped the lands allocated to Galo and Catalino; what lands are
in the possession of Galo and Catalino's heirs and why they did not sue Sixto during his lifetime to
recover what pertained to them.

The document of partition itself shows that it was already implemented in 1920. Under that partition,
the land located at Barrio Cabagtucan planted to 2- gantas, the land located at Barrio Canajawan
and the land located at Barrio Sagpolon planted to ten gantas (Nos. 3, 5 and 6) were definitely
adjudicated to Galo and Catalino. Sixto could not have usurped those lands for if he did so his
uterine brothers Galo and Catalino would have resisted the usurpation. There was no co-ownership
as to these lands.

That the 1920 partition among the three heirs was implemented is shown in the allegations of the
complaint with respect to the poblacion lot. As already stated, Galo and Catalino were each given
495 square meters and seven coconut trees out of the poblacion lot. The remainder of the lot and
seven coconut trees were given to Sixto.

That partition of the poblacion lot shows that the 1920 agreement was actually enforced. There was
no co-ownership as to the poblacion lot. If the 1920 partition was enforced as to the poblacion lot,
there would be no reason why it would not have been implemented with respect to the other lands.

The only lands held in co-ownership under the 1920 partition were the Camposanto cornland planted
to 7- gantas and the Calabugon riceland planted to six gantas (Nos. 2 and 8). But it was not
alleged with particularity when Sixto repudiated the co-ownership as to those lands and claimed
them as his own.

Article 494 of the Civil Code provides that "no co-owner shag be obliged to remain in the co-
ownership" and that "each co-owner may demand at any time the partition of the thing owned in
common, insofar as his share is concerned". It also provides that "no prescription shall run in favor of
a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly
recognizes the co-ownership."

While the action for the partition of the thing owned in common (actio communi dividendo or actio
familiae erciscundae) does not prescribe, the co-ownership does not last forever since it may be
repudiated by a co-owner. In such a case, the action for partition does not lie. What may be brought
by the aggrieved co-owner is an accion reivindicatoria or action for recovery of title and possession.
That action may be barred by prescription.

If the co-heir or co-owner, having possession of the hereditary or community

property, holds the same in his own name, that is, under claim of exclusive
ownership, he may acquire the property by prescription if his possession meets all
the other requirements of the law, and after the expiration of the prescriptive period,
his co-heir or co-owner may lose their right to demand partition, and their action may
then be held to have prescribed. (De los Santos vs. Santa Teresa, 44 Phil. 811).
In the instant case, as the partition was made in 1920 and the plaintiffs did not specify when Sixto
Hallasgo repudiated the co-ownership of the lands in Composanto and Calabugon, the trial court
assumed that prescription started to run even before the Civil Code took effect,

Under the Code of Civil Procedure, a period of ten years was the maximum period for acquisitive
and extinctive prescription. Hence, the trial court concluded that the 1973 action was barred by
prescription.

With respect to the portion of 350 square meters of the poblacion lot, the same is governed by other
legal rules. That portion was loaned to Sixto by his nephews and nieces by way of commodatum
or precanum (Art. 1947, Civil Code). In grievous violation of the trust, he allegedly included it in the
cadastral survey of his share of the poblacion lot. (Whether he obtained a Torrens title for it is not
specified.)

The action of Catalino's children for the recovery of that 350-square-meter portion from Sixto's heirs
has not yet prescribed. The trial court erred in dismissing that part of plaintiffs' complaint.

WHEREFORE, the trial court's judgment is affirmed with the modification that the plaintiffs' action for
the recovery of the 350-square-meter portion of the poblacion lot may be maintained. The
defendants-appellees should answer that part of the complaint referring to that lot. No costs.

SO ORDERED.

G.R. No. 149313 January 22, 2008

JULITA ROMBAUA PANGANIBAN, PAQUITO ROMBAUA, RUPERTO ROMBAUA, TERESITA

ROMBAUA TELAJE and LEONOR ROMBAUA OPIANA, petitioners,
vs.
JULITA S. OAMIL, respondent.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari are the Decision1 of the Court of Appeals dated March
2, 2001 in CA-G.R. CV No. 57557, which affirmed in toto the Order dated October 23, 1997 of the
Regional Trial Court of Olongapo City, Branch 73, and the Resolution2 dated July 10, 2001 denying
the motion for reconsideration.

The facts as culled from the records are as follows:

On April 26, 1993 Julita Oamil, herein respondent, filed a complaint for specific performance with
damages3 with the Regional Trial Court of Olongapo City, praying that Partenio Rombaua (Partenio)
be ordered to execute a final deed of sale over the parcel of land which was the subject of a prior
"Agreement to Sell" executed by and between them on May 17, 1990. The property which is alleged
to be covered by the said "Agreement to Sell" consists of 204.5 square meters of land located at #11
21st St., East Bajac-Bajac, Olongapo City, and is claimed by respondent Oamil to be Partenios
conjugal share in a parcel of commercial land (the subject property) with an aggregate area of 409
square meters acquired by Partenio and his deceased first wife Juliana4 during their marriage.
There are two portions of the subject property in contention: one consisting of 204.5 square meters
facing 21stStreet (the 21st St. portion), and another consisting of 204.5 square meters facing Canda
Street (the Canda St. portion). Petitioners and their father Partenio are acknowledged co-owners of
the subject property to the following extent: one-half to Partenio as his conjugal share, and one-sixth
each of the remaining half to petitioners and Partenio as the surviving heirs of Juliana.

For failure to file an answer, Partenio was declared in default, and respondent presented her
evidence ex parte.

On December 26, 1993, the trial court promulgated its Decision,5 the dispositive portion of which
reads as follows:

WHEREFORE, viewed from all the foregoing, judgment is hereby rendered as follows:

(1) The defendant is hereby ordered to execute a deed of absolute sale over the portion
(front) of the realty subject matter of this case in favor of the plaintiff and to surrender the
possession thereof to the plaintiff. Failure of the defendant to do so, then the City Assessor
of Olongapo is hereby directed to effect the transfer of all rights/interest on the one-half (1/2)
front portion of the said realty in the name of the plaintiff, upon the finality of this decision;

(2) Plaintiff, however, is ordered to pay the amount of EIGHT THOUSAND PESOS
(P8,000.00) representing the balance of the interests due on the amount of P200,000.00,
delinquent for one (1) year computed at 12% per annum;

(3) Defendant is, likewise, hereby ordered to pay the plaintiff attorneys fees in the amount of
TEN THOUSAND PESOS (P10,000.00).

Let a copy of this Decision be furnished the City Assessor of Olongapo City.

SO ORDERED.6

Note that the trial court did not specify which portion of the property the 21st St. portion or the
Canda St. portion should be deeded to respondent as buyer of Partenios conjugal share.

Partenio failed to appeal, and the decision became final and executory on February 4, 1994. Entry of
judgment was made on February 8, 1994, and a writ of execution was issued on February 15, 1994
and served upon Partenio on February 21, 1994. The writ was served as well upon the City
Assessor of Olongapo City, who caused the transfer of the Tax Declaration covering the 21st St.
portion in respondents name.

In June 1994, petitioners filed a verified petition for relief from the decision of the trial court,
grounded on the following: 1) that Partenios conjugal share in the property, and that of petitioners as
well, are being litigated in a judicial partition proceeding7 (the partition case) which is pending with
the Court of Appeals, hence the trial court may not yet render a decision disposing of a definite area
of the subject property in respondents favor; and, (2) that petitioners were unjustly deprived of the
opportunity to protect and defend their interest in court because, notwithstanding that they are
indispensable parties to the case (being co-owners of the subject property), they were not impleaded
in Civil Case No. 140-0-93.
In lieu of a hearing, the parties were directed to submit their respective position papers. Respondent,
meanwhile, moved to dismiss the petition, claiming that the stated grounds for relief are not included
in the enumeration under Section 2, Rule 38 of the Rules of Court. Petitioners opposed the motion.

In an Order dated January 13, 1995, the trial court denied the petition for relief because the decision
in Civil Case No. 140-0-93 had become final and executory. It held that only indispensable parties to
the case may participate in the proceedings thereof, and since petitioners may not be considered as
indispensable parties because the subject matter of the proceedings involves Partenios conjugal
share in the property, they are precluded from filing a petition for relief from the courts judgment.

Petitioners moved for reconsideration insisting that they are indispensable parties in Civil Case No.
140-0-93 because as co-owners of the subject property by virtue of succession to the rights of their
deceased mother, they possess an interest that must be protected. Instead of resolving the motion,
the trial court, with the concurrence of the petitioners and the respondent, deferred the proceedings,
to await the result of a pending appeal with the Court of Appeals of the decision in Special Civil
Action No. 340-0-86,8 the partition case, where the trial court, in its decision, awarded specifically the
Canda St. portion to Partenio as his conjugal share.

In the meantime, or sometime in 1995, a Motion for leave of court to file a Complaint in Intervention
was filed by Sotero Gan (Gan), who claims to be the actual and rightful owner of Partenios conjugal
share. Gan claims to have purchased Partenios conjugal share in the property, and in return, the
latter on November 29, 1990 executed a deed of waiver and quitclaim of his possessory rights. Gan
likewise claims that the tax declaration covering the portion of the property had been transferred in
his name. He thus seeks the dismissal of Civil Case No. 140-0-93 and the reinstatement of his name
on the tax declaration which by then had been placed in respondents name.

The parties submitted their respective oppositions to Gans motion, the core of their argument being
that with the finality of the decision in the case, intervention was no longer proper, and that Gans
cause of action, if any, should be litigated in a separate proceeding.

The trial court, in an Order dated January 22, 1996, denied Gans motion for intervention for being
filed out of time, considering that the decision of the court had become final and executory in
February 1994. Gan moved for reconsideration which was opposed by respondent, citing, among
others, an Order dated April 18, 1994 issued by the Department of Environment and Natural
Resources (CENRO of Olongapo) which includes a finding that Gan had transferred his rights and
interest in the subject property to one Chua Young Bing.

In another Order dated October 23, 1997,9 the trial court denied Gans motion for reconsideration, as
well as the petitioners motion for reconsideration of the January 13, 1995 order denying the petition
for relief. In said order, the court made reference to the decision in Special Civil Action No. 340-0-86,
which by then had become final and executory.10 The trial court likewise substantially modified its
Decision dated December 26, 1993, by awarding specifically the 21st St. portion of the property to
Partenio as his conjugal share, despite the pronouncement in Special Civil Action No. 340-0-86
which awards the Canda St. portion to him.

From the foregoing October 23, 1997 order, the petitioners and Gan interposed their separate
appeals to the Court of Appeals. Meanwhile, respondent filed a motion for execution pending appeal,
which was denied on the ground that there exist no special or compelling reasons to allow it.

On March 2, 2001, the appellate court rendered the herein assailed Decision, which affirmed in toto
the appealed October 23, 1997 Order of the trial court.
The appellate court sustained the trial courts ruling that Partenios conjugal share in the subject
property consists of the 21st St. portion, thereby disregarding the prior final and executory decision in
Special Civil Action No. 340-0-86 which declares that Partenio is entitled to the Canda St. portion.
The appellate court based the award of the 21st St. portion to respondent on the ground that
petitioners have always acknowledged their father Partenios "acts of ownership" over the 21st St.
portion, thus signifying their consent and thereby barring them from questioning the award.

Respondents moved for reconsideration but it was denied.

Petitioners are now before us via the present petition, raising the sole issue of whether petitioners
can intervene in the proceedings in Civil Case

No. 140-0-93 in order to protect their rights as co-owners of the subject property.

We resolve to GRANT the petition.

Under a co-ownership, the ownership of an undivided thing or right belongs to different persons.
During the existence of the co-ownership, no individual can claim title to any definite portion of the
community property until the partition thereof; and prior to the partition, all that the co-owner has is
an ideal or abstract quota or proportionate share in the entire land or thing.11 Before partition in a co-
ownership, every co-owner has the absolute ownership of his undivided interest in the common
property. The co-owner is free to alienate, assign or mortgage this undivided interest, except as to
purely personal rights. The effect of any such transfer is limited to the portion which may be awarded
to him upon the partition of the property.12

Under Article 497 of the Civil Code, in the event of a division or partition of property owned in
common, assignees of one or more of the co-owners may take part in the division of the thing owned
in common and object to its being effected without their concurrence. But they cannot impugn any
partition already executed, unless there has been fraud, or in case it was made notwithstanding a
formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to
maintain its validity.

The decision in Special Civil Action No. 340-0-86, which is an action for judicial partition of the
subject property, determines what Partenio, and ultimately, respondent, as his successor-in-interest,
is entitled to in Civil Case No. 140-0-93. As Partenios successor-in-interest to the property,
respondent could not acquire any superior right in the property than what Partenio is entitled to or
could transfer or alienate after partition. In a contract of sale of co-owned property, what the vendee
obtains by virtue of such a sale are the same rights as the vendor had as co-owner, and the vendee
merely steps into the shoes of the vendor as co-owner.13

As early as May 17, 1990, when respondent and Partenio executed the "Agreement to Sell", the
former knew that the property she was purchasing was conjugal property owned in common by
Partenio and the heirs of his deceased wife.14 And while Civil Case No. 140-0-93 (the specific
performance case) was pending, respondent was apprised of the pendency of Special Civil Action
No. 340-0-86 (the partition case). Yet, respondent did not intervene, nor did she take part, nor enter
any formal opposition as assignee of Partenios conjugal share in the property in said partition
proceedings. She did not exercise the rights granted her under Article 497 of the Civil Code. Instead,
when the court in Civil Case No. 140-0-93 decided to suspend the proceedings and hold the same in
abeyance while the appeal in Special Civil Action No. 340-0-86 remained unresolved, the
respondent unconditionally agreed to its temporary abatement. In other words, she chose to sit back
and await the resolution thereof.
Consequently, when the decision in Special Civil Action No. 340-0-86 became final and executory
without the respondent having questioned the same in any manner whatsoever, by appeal or
otherwise, the division of property decreed therein may no longer be impugned by her.

Thus said, the trial court in Civil Case No. 140-0-93 could not award the 21st St. portion to Partenio,
since the court in Special Civil Action No. 340-0-86 specifically awarded the Canda St. portion to
him. The decision in Special Civil Action No. 340-0-86, which became final and executory, should
put an end to the co-ownership between Partenio and the respondents, and the award made to each
co-owner of specific portions of the property as their share in the co-ownership should be respected.

Since the issue of each of the co-owners specific portion in the aggregate property has been laid to
rest in Special Civil Action No. 340-0-86, the final and executory decision in said proceeding should
be conclusive on the issue of which specific portion of the property became the subject matter of the
sale between Partenio and the respondent; that is, that Partenio, as declared owner of the Canda St.
portion, could have transferred to respondent only that part of the property and not the 21st St.
portion. Although Partenio was free to sell or transfer his undivided interest to the respondent, the
effect of such transfer is limited to the portion which may be awarded to him upon the partition of the
property.

It was likewise error for the appellate court to have considered the alleged acts of ownership
exercised upon the 21st St. portion by Partenio as weighing heavily against the decreed partition in
Special Civil Action No. 340-0-86. The determination of this issue is beyond the ambit of the trial
court in Civil Case No. 140-0-93. As far as it was concerned, it could only award to the respondent, if
proper, whatever specific portion Partenio is found to be entitled to in the event of a partition, in
accordance with Article 493 of the Civil Code and the procedure outlined in the Rules of Court. It
could not, in an ordinary proceeding for specific performance with damages, subject the property to
a partial division or partition without the knowledge and participation of the other co-owners, and
while a special civil action for partition was simultaneously pending in another court.

The court in Civil Case No. 140-0-93 is not a partition court but one litigating an ordinary civil case,
and all evidence of alleged acts of ownership by one co-owner should have been presented in the
partition case, there to be threshed out in order that the partition court may arrive at a just division of
the property owned in common; it is not for the trial court in the specific performance case to
properly appreciate. Being a court trying an ordinary civil suit, the court in Civil Case No. 140-0-93
had no jurisdiction to act as a partition court. Trial courts trying an ordinary action cannot resolve to
perform acts pertaining to a special proceeding because it is subject to specific prescribed rules.15

That the trial court suspended the proceedings in Civil Case No. 140-0-93 to make way for the
resolution of Special Civil Action No. 340-0-86 was an indication that it intended to abide by
whatever would be decreed in the latter case. For, understandably, the resolution of Special Civil
Action No. 340-0-86 will settle the issue in Civil Case No. 140-0-93 with respect to which specific
portion of the property constitutes the subject matter of the specific performance suit and which
would, in any case, be adjudicated to either of the two the defendant co-owner and seller Partenio
or the plaintiff buyer Oamil, the herein respondent. Yet in the end, the trial court ultimately
disregarded what had been finally adjudicated and settled in Special Civil Action No. 340-0-86, and
instead it took a position that was entirely diametrically opposed to it.

It was likewise irregular for the respondent to have obtained a certificate of title over specific property
which has not been partitioned, especially where she concedes awareness of the existing co-
ownership which has not been terminated, and recognizes her status as mere successor-in-interest
to Partenio. The spring may not rise higher than its source.
In sum, the trial court and the Court of Appeals, by disregarding the final and executory judgment in
Special Civil Action No. 340-0-86, certainly ignored the principle of conclusiveness of judgments,
which states that

[A] fact or question which was in issue in a former suit and was there judicially passed upon
and determined by a court of competent jurisdiction, is conclusively settled by the judgment
therein as far as the parties to that action and persons in privity with them are concerned and
cannot be again litigated in any future action between such parties or their privies, in the
same court or any other court of concurrent jurisdiction on either the same or different cause
of action, while the judgment remains unreversed by proper authority. It has been held that in
order that a judgment in one action can be conclusive as to a particular matter in another
action between the same parties or their privies, it is essential that the issue be identical. If a
particular point or question is in issue in the second action, and the judgment will depend on
the determination of that particular point or question, a former judgment between the same
parties or their privies will be final and conclusive in the second if that same point or question
was in issue and adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732
[1991]). Identity of cause of action is not required but merely identity of issues.16

The ruling in Special Civil Action No. 340-0-86 that the Canda St. portion shall go to Partenio
became the law of the case and continues to be binding between the parties as well as their
successors-in-interest, the decision in said case having become final and executory. Hence, the
binding effect and enforceability of that dictum can no longer be relitigated anew in Civil Case No.
140-0-93 since said issue had been resolved and finally laid to rest in the partition case, by
conclusiveness of judgment, if not by the principle of res judicata. It may not be reversed, modified or
altered in any manner by any court.

As a result of the trial courts refusal to abide by the decision in Special Civil Action No. 340-0-86,
the rights of the petitioners have been unnecessarily transgressed, thereby giving them the right to
seek relief in court in order to annul the October 23, 1997 Order of the trial court which substantially
and wrongly modified its original decision in Civil Case No. 140-0-93. It was clear mistake for the trial
court to have gone against the final and executory decision in Special Civil Action No. 340-0-86 and
its original decision, which does not award a definite portion of the disputed property to Partenio,
precisely because, as a court litigating an ordinary civil suit, it is not authorized to partition the
subject property but only to determine the rights and obligations of the parties in respect to
Partenios undivided share in the commonly owned property. As a result of this mistake, the
petitioners are entitled to relief.

Finally, with respect to Gans intervention, we affirm the appellate courts finding that the same is no
longer proper considering that the decision in Civil Case No. 140-0-93 had become final and
executory. Gan moved to intervene only in 1995, when the decision became final and executory in
February 1994. Certainly, intervention, being merely collateral or ancillary to the principal action,
may no longer be allowed in a case already terminated by final judgment.17 Moreover, since Gan did
not appeal the herein assailed decision of the appellate court, then the same, as against him, has
become final and executory.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated March 2, 2001
in CA-G.R. CV No. 57557 and the Resolution dated July 10, 2001 are REVERSED and SET ASIDE,
with the exception that the denial of the intervenor Sotero Gans motion for intervention
is AFFIRMED.

The Order dated October 23, 1997 of the Regional Trial Court of Olongapo City in Civil Case No.
140-0-93 is hereby DECLARED of no effect. In all other respects, the Decision of the trial court in
Civil Case No. 140-0-93 dated December 26, 1993 is AFFIRMED. The said court is
moreover ORDERED to abide by the pronouncement in Special Civil Action No. 340-0-86 with
respect to Partenio Rombauas conjugal share in the disputed property.

SO ORDERED.

G.R. No. 160956 February 13, 2008

JOAQUIN QUIMPO, SR., substituted by Heirs of Joaquin Quimpo, Sr., petitioners,

vs.
CONSUELO ABAD VDA. DE BELTRAN, IRENEO ABAD, DANILO ABAD, MARITES ABAD,
ANITA AND HELEN ABAD, respondents.

RESOLUTION

NACHURA, J.:

This Petition for Review on Certiorari assails the July 22, 2003 Decision1 of the Court of Appeals in
CA-G.R. CV No. 56187, and the October 16, 2003 Resolution denying the motion for its
reconsideration.

Eustaquia Perfecto-Abad (Eustaquia) was the owner of several parcels of land in Goa, Camarines
Sur, described as follows:

Parcel I - Residential land situated at Abucayan, Goa, Camarines Sur covering an area of
684 square-meters;

Parcel II Coconut land situated at Abucayan, Goa, Camarines Sur covering an area of
4.3731 hectares;

Parcel III Residential land situated at San Jose Street, Goa, Camarines Sur covering an
area of 1,395 square meters; and

Parcel IV Abaca and coconut land situated at Abucayan, Goa, Camarines Sur covering an
area 42.6127 hectares.2

Eustaquia died intestate in 1948 leaving these parcels of land to her grandchild and great
grandchildren, namely, Joaquin Quimpo and respondents Consuelo, Ireneo, Danilo, Marites, Anita
and Helen, all surnamed Abad.

In 1966, Joaquin and respondents undertook an oral partition of parcel III (San Jose property) and
parcel IV. Half of the properties was given to Joaquin and the other half to the respondents.
However, no document of partition was executed, because Joaquin refused to execute a deed.
Consuelo and Ireneo occupied their respective shares in the San Jose property, and installed
several tenants over their share in parcel IV. Joaquin, on the other hand, became the administrator
of the remaining undivided properties and of the shares of respondents Danilo, Marites, Anita and
Helen, who were still minors at that time.

In 1989, Danilo, Marites, Anita and Helen wanted to take possession of the portions allotted to them,
but Joaquin prevented them from occupying the same. Joaquin also refused to heed respondents
demand for partition of parcels I and II, prompting respondents to file a complaint for judicial partition
and/or recovery of possession with accounting and damages with the Regional Trial Court (RTC) of
Camarines Sur.3

Joaquin denied the material allegations in the complaint, and averred, as his special and affirmative
defenses, lack of cause of action and prescription. He asserted absolute ownership over parcels III
and IV, claiming that he purchased these lands from Eustaquia in 1946, evidenced by deeds of sale
executed on August 23, 1946 and December 2, 1946. He, likewise, claimed continuous, peaceful
and adverse possession of these lots since 1946, and alleged that Consuelos occupation of the
portion of the San Jose property was by mere tolerance.4

During the pendency of the case, Joaquin died. Accordingly, he was substituted by his wife, Estela
Tena-Quimpo and his children, namely, Jose, Adelia, Joaquin, Anita, Angelita, Amelia, Arlene, Joy
and Aleli, all surnamed Quimpo (the Quimpos).

On December 12, 1996, the RTC rendered a Decision5 in favor of respondents, declaring them as
co-owners of all the properties left by Eustaquia. It rejected Joaquins claim of absolute ownership
over parcels III and IV, and declared void the purported deeds of sale executed by Eustaquia for lack
of consideration and consent. The court found that at the time of the execution of these deeds,
Joaquin was not gainfully employed and had no known source of income, which shows that the
deeds of sale state a false and fictitious consideration. Likewise, Eustaquia could not have possibly
given her consent to the sale because she was already 91 years old at that time. The RTC also
sustained the oral partition among the heirs in 1966. According to the trial court, the possession and
occupation of land by respondents Consuelo and Ireneo, and Joaquins acquiescence for 23 years,
furnish sufficient evidence that there was actual partition of the properties. It held that Joaquin and
his heirs are now estopped from claiming ownership over the entire San Jose property as well as
over parcel IV.

The RTC disposed, thus:

WHEREFORE, decision is hereby rendered in favor of the plaintiffs Consuelo Vda. de

Beltran, Ireneo Abad, Marites Abad, Danilo Abad, Anita Abad and Helen Abad and against
defendant Joaquin Quimpo, substituted by the latters wife Estela Tena and their children,
Amparo, Jose, Amelia, Joaquin Jr., Adelia, Arlene, Anita, Joy, Angelita and Aleli, all
surnamed Quimpo, as follows:

1. Ordering the above-named substituted defendants, and the plaintiffs to execute

their written agreement of partition with respect to parcel Nos. III and IV more
particularly described in paragraph 7 of the complaint, and for them to execute an
agreement of partition with respect to parcel Nos. I and II, both parcels are more
particularly described in paragraph 7 of the complaint;

2. Declaring the plaintiffs Danilo Abad, Marites Abad, Anita Abad and Helen Abad the
owner of six (6) hectares a portion included in parcel No. IV also described in
paragraph 7 of the complaint, and therefore, entitled to its possession and ordering
the said substituted defendants to deliver that portion to them as their share thereto;

3. Ordering the above-named substituted defendants to pay plaintiffs the sum of Six
Thousand Pesos (P6,000.00), Philippine Currency, as reasonable attorneys fees
and the sum of One Thousand Pesos (P1,000.00) also of Philippine Currency, as
litigation expenses and for the said defendants to pay the costs.

The counterclaim, not being proved, the same is hereby ordered dismissed.
 SO ORDERED.6

On appeal, the CA affirmed the RTC ruling. Sustaining the RTC, the CA declared that it was
plausible that Eustaquias consent was vitiated because she was then 91 years old and sickly. It was
bolstered by the fact that the deeds of sale only surfaced 43 years after its alleged execution and 23
years from the time of the oral partition. The CA also rejected petitioners argument that the action
was barred by prescription and laches, explaining that prescription does not run against the heirs so
long as the heirs, for whose benefit prescription is invoked, have not expressly or impliedly
repudiated the co-ownership. The CA found no repudiation on Joaquins part. It, therefore,
concluded that respondents action could not be barred by prescription or laches.

The Quimpos, thus, filed the instant petition for review on certiorari imputing the following errors to
the CA:

1) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS DID

NOT ACQUIRE OWNERSHIP OVER [THE] SUBJECT PARCELS OF LAND BY WAY OF
DEEDS OF ABSOLUTE SALE EXECUTED IN THEIR FAVOR;

2) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT CO-OWNERSHIP

EXISTS AMONG PETITIONERS AND RESPONDENTS OVER THE SUBJECT PARCELS
OF LAND;

3) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS

HAVE PROVEN THEIR FILIATION TO THE ORIGINAL OWNER OF THE SUBJECT
PARCELS OF LAND BY MERE SCANT EVIDENCE;

4) THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT LACHES HAS
TIMEBARRED THE RESPONDENTS FROM ASSAILING THE ABSOLUTE OWNERSHIP
OF PETITIONERS OVER THE SUBJECT PARCELS OF LAND; AND

5) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS

ARE ENTITLED TO ATTORNEYS FEES.7

The Quimpos insist on the validity of the deeds of sale between Joaquin and Eustaquia. They assail
the probative value and weight given by the RTC and the CA in favor of the respondents pieces of
evidence while refusing to give credence or value to the documents they presented. Specifically,
they contend that the notarized deeds of sale and the tax declarations should have adequately
established Joaquins ownership of parcels III and IV.

The contention has no merit. Well-entrenched is the rule that the Supreme Courts role in a petition
under Rule 45 is limited to reviewing or reversing errors of law allegedly committed by the appellate
court. Factual findings of the trial court, especially when affirmed by the Court of Appeals, are
conclusive on the parties. Since such findings are generally not reviewable, this Court is not duty-
bound to analyze and weigh all over again the evidence already considered in the proceedings
below, unless the factual findings complained of are devoid of support from the evidence on record
or the assailed judgment is based on a misapprehension of facts.8

Petitioners fail to convince us that the CA committed reversible error in affirming the trial court and in
giving no weight to the pieces of evidence they presented.
The stated consideration for the sale are P5,000.00 and P6,000.00, respectively, an amount which
was so difficult to raise in the year 1946. Respondents established that at the time of the purported
sale Joaquin Quimpo was not gainfully employed. He was studying in Manila and Eustaquia was the
one supporting him; that when Eustaquia died two (2) years later, Joaquin was not able to continue
his studies. The Quimpos failed to override this. Except for the incredible and unpersuasive
testimony of Joaquins daughter, Adelia Magsino, no other testimonial or documentary evidence was
offered to prove that Joaquin was duly employed and had the financial capacity to buy the subject
properties in 1946.

In Rongavilla v. Court of Appeals,9 reiterated in Cruz v. Bancom Finance Corp,10 we held that a deed
of sale, in which the stated consideration has not been, in fact, paid is a false contract; that it is
void ab initio. Furthermore, Ocejo v. Flores,11 ruled that a contract of purchase and sale is null and
void and produces no effect whatsoever where it appears that the same is without cause or
consideration which should have been the motive thereof, or the purchase price which appears
thereon as paid but which in fact has never been paid by the purchaser to the vendor.

Likewise, both the trial court and the CA found that Eustaquia was 91 years old, weak and senile, at
the time the deeds of sale were executed. In other words, she was already mentally incapacitated by
then, and could no longer be expected to give her consent to the sale. The RTC and CA cannot,
therefore, be faulted for not giving credence to the deeds of sale in favor of Joaquin.

Petitioners also presented Tax Declaration Nos. 3650,12 3708,13 and 365914 to substantiate Joaquins
claim of absolute dominion over parcels III and IV. But we note that these tax declarations are all in
the name of Eustaquia Perfecto-Abad. These documents, therefore, do not support their claim of
absolute dominion since 1946, but enervate it instead. Besides, the fact that the disputed property
may have been declared for taxation purposes in the name of Joaquin Quimpo does not necessarily
prove ownership for it is well settled that a tax declaration or tax receipts are not conclusive evidence
of ownership.15 The CA, therefore, correctly found this proof inadequate to establish Joaquins claim
of absolute dominion.

For forty-three (43) years, Consuelo and Ireneo occupied their portions of the San Jose property and
significantly, Joaquin never disturbed their possession. They also installed tenants in parcel IV, and
Joaquin did not prevent them from doing so, nor did he assert his ownership over the same. These
unerringly point to the fact that there was indeed an oral partition of parcels III and IV.

In Maglucot-aw v. Maglucot,16 we held, viz.:

[P]artition may be inferred from circumstances sufficiently strong to support the presumption.
Thus, after a long possession in severalty, a deed of partition may be presumed. It has been
held that recitals in deeds, possession and occupation of land, improvements made thereon
for a long series of years, and acquiescence for 60 years, furnish sufficient evidence that
there was an actual partition of land either by deed or by proceedings in the probate court,
which had been lost and were not recorded.

Furthermore, in Hernandez v. Andal,17 we explained that:

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.

Regardless of whether a parol partition or agreement to partition is valid and

enforceable at law, equity will in proper cases, where the parol partition has actually
been consummated by the taking of possession in severalty and the exercise of
 ownership by the parties of the respective portions set off to each, recognize and
enforce such parol partition and the rights of the parties thereunder. Thus, it has
been held or stated in a number of cases involving an oral partition under which the
parties went into possession, exercised acts of ownership, or otherwise partly
performed the partition agreement, that equity will confirm such partition and in a
proper case decree title in accordance with the possession in severalty.

In numerous cases it has been held or stated that parol partitions may be sustained
on the ground of estoppel of the parties to assert the rights of a tenant in common as
to parts of land divided by parol partition as to which possession in severalty was
taken and acts of individual ownership were exercised. And a court of equity will
recognize the agreement and decree it to be valid and effectual for the purpose of
concluding the right of the parties as between each other to hold their respective
parts in severalty.

A parol partition may also be sustained on the ground that the parties thereto have
acquiesced in and ratified the partition by taking possession in severalty, exercising
acts of ownership with respect thereto, or otherwise recognizing the existence of the
partition.

A number of cases have specifically applied the doctrine of part performance, or

have stated that a part performance is necessary, to take a parol partition out of the
operation of the statute of frauds. It has been held that where there was a partition in
fact between tenants in common, and a part performance, a court of equity would
have regard to and enforce such partition agreed to by the parties.

The CA, therefore, committed no reversible error in sustaining the oral partition over parcels III and
IV and in invalidating the deeds of sale between Eustaquia and Joaquin.

Similarly, we affirm the CA ruling that respondents are co-owners of the subject four (4) parcels of
land, having inherited the same from a common ancestor Eustaquia Perfecto-Abad. Petitioners
assertion that respondents failed to prove their relationship to the late Eustaquia deserves scant
consideration.

During the pre-trial, Joaquin Quimpo admitted that:

Eustaquia Perfecto Abad and Diego Abad had two (2) children by the names of Leon Abad
and Joaquin Abad; that Leon Abad has three (3) children namely: Anastacia, Wilfredo and
Consuelo, all surnamed Abad; that Joaquin Abad has only one (1) child, a daughter by the
name of Amparo; that Wilfredo has four (4) children, namely, Danilo, Helen, Marites and
Anita; Amparo has one child, son Joaquin Quimpo, x x x 18

Consuelo was the grandchild of Eustaquia, while respondents Danilo, Helen, Marites, Anita and also
Joaquin Quimpo were Eustaquias great grandchildren. As such, respondents can rightfully ask for
the confirmation of the oral partition over parcels III and IV, and the partition of parcels I and II.
Jurisprudence is replete with rulings that any co-owner may demand at any time the partition of the
common property unless a co-owner has repudiated the co-ownership. This action for partition does
not prescribe and is not subject to laches.19

Finally, petitioners challenge the attorneys fees in favor of respondents.

The grant of attorneys fees depends on the circumstances of each case and lies within the
discretion of the court. It may be awarded when a party is compelled to litigate or to incur expenses
to protect its interest by reason of an unjustified act by the other,20 as in this case.

In fine, we find no reversible error in the assailed rulings of the Court of Appeals.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-
G.R. CV No. 56187, are AFFIRMED.

SO ORDERED.

G.R. No. 105608 April 30, 2008

TIRSO D. MONTEROSO, petitioner,

vs.
COURT OF APPEALS, SOLEDAD TINGA, MONTEROSO-CAGAMPANG, REYGULA
MONTEROSO-BAYAN, PERFECTO L. CAGAMPANG, SR., SOFIA PENDEJITO VDA. DE
MONTEROSO, FLORENDA MONTEROSO, ALBERTO MONTEROSO, HEIRS OF FABIAN
MONTEROSO, JR., REYNATO MONTEROSO, RUBY MONTEROSO, MARLENE MONTEROSO-
POSPOS, ADELITA MONTEROSO-BERENGUEL, and HENRIETO MONTEROSO, respondents.

x-----------------------------------------------x

G.R. No. 113199 April 30, 2008

SOFIA PENDEJITO VDA. DE MONTEROSO, SOLEDAD MONTEROSO-CAGAMPANG,

PERFECTO L. CAGAMPANG, SR., REYGULA MONTEROSO-BAYAN, FLORENDA
MONTEROSO, ALBERTO MONTEROSO, RUBY MONTEROSO, MARLENE MONTEROSO-
POSPOS, HENRIETO MONTEROSO, ADELITA MONTEROSO-BERENGUEL, and REYNATO
MONTEROSO, petitioners,
vs.
COURT OF APPEALS and TIRSO D. MONTEROSO, respondents.

DECISION

VELASCO, JR., J.:

The Case

Before us are two petitions for review under Rule 45, the first docketed as G.R. No. 105608, and the
second docketed as G.R. No. 113199, both assailing the Decision1 dated March 31, 1992 of the
Court of Appeals (CA) in CA-G.R. CV No. 15805 which modified the June 9, 1987 Decision2 of the
Regional Trial Court (RTC), Branch 4 in Butuan City in Civil Case Nos. 1292 and 1332.

The Facts

It is not unusual. Acrimonious litigation between and among siblings and immediate relatives over
inheritance does occur. It is unfortunate when the decedent had, while still alive, taken steps to
precisely avoid a bruising squabble over inheritance.
In a sense, Don Fabian B. Monteroso, Sr., a former justice of the peace and municipal mayor of
Cabadbaran, Agusan del Norte, started it all. During his lifetime, Don Fabian married twice and sired
eight children, four from each union.

In 1906, Don Fabian married Soledad Doldol. Out of this marriage were born Soledad, Reygula,
Benjamin, and Tirso. On April 8, 1927, Soledad Doldol Monteroso passed away.

A little over a year later, Don Fabian contracted a second marriage with Sofia Pendejito. From this
union were born Florenda, Reynato, Alberto, and Fabian, Jr.

After the death of his first wife, but during the early part of his second marriage, Don Fabian filed
before the Court of First Instance (CFI) of Agusan an intestate proceeding for the estate of his
deceased first wife, Soledad D. Monteroso, docketed as Special Proceeding (SP) No. 309,
apparently to obviate any dispute over the inheritance of his children from his first marriage.
Subsequently, the CFI receivedand later approved per an Orden3 (Order) dated March 11, 1936
a Proyecto de Particion4 (Project of Partition) dated February 21, 1935.

The partition in SP No. 309 covered Parcels F-1 to F-5, and adjudicated to Don Fabian the whole of
Parcels F-1, F-2, and F-3, and one-half of Parcel F-5, while the intestate estate of Soledad D.
Monteroso comprised the whole of Parcel F-4 and one-half of Parcel F-5. The intestate estate of
Soledad D. Monteroso was partitioned and distributed to her four children in equal shares.

Subsequently, a Mocion5 (Motion) was filed for the delivery to Soledad D. Monterosos four children,
her legal heirs, their respective shares in her intestate estate, as adjudicated among them under the
duly CFI-approved Project of Partition.

In the meantime, the children of Don Fabian from his first marriage married accordingly: The eldest,
Soledad to Atty. Perfecto Cagampang, Sr.; Reygula to Jose Bayan; Benjamin to Mauricia Nakila;
and Tirso to Melecia Taa. Benjamin died on February 1, 1947 leaving behind four children with wife
Nakila, namely: Ruby, Marlene, Adelita, and Henrieto. A year and a half later, or on October 26,
1948, Don Fabian also passed away.

Before and shortly after Don Fabians demise, conveyances involving certain of parcels thus
mentioned were purportedly made.

The following is an illustration of the lineal relation of the parties or the family tree of the direct
descendants of Don Fabian from his two marriages:
This brings us to the objects of the squabble: the conjugal patrimonies of Don Fabian from his two
successive marriages.

During the lifetime of Don Fabian, the following properties were acquired, viz:

PARCEL F-ONE

A parcel of coconut plantation on sitio Pandanon, Cabadbaran, Agusan described as follows:

North by the property of Telesforo Ago and Gregorio Cupay; East by Miguel Y Climaco
Cabonce, Isidro Maamo and Buenaventura Sandigan and Pandanon River, and West by
Gregorio Axamin, Alex Fores and Ventura Sandigan with a superficial extension of 10 has.
62 ares and 42 centares.

PARCEL F-TWO
A parcel of coconut land situated on sitio Pandanon, Cabadbaran, Agusan, with a superficial
extension of 6 hectares, 50 ares bearing Tax No. 14801 of the Municipality of Cabadbaran,
Agusan, x x x.

PARCEL F-THREE

A parcel of coconut land under Tax No. 17167 situated on sitio Calibunan, Cabadbaran,
Agusan with superficial extension of 8 hectares and 34 centares x x x.

PARCEL F-FOUR

A parcel of coconut land under Tax No. 14600 situated on sitio Pandanon, Cabadbaran,
Agusan, with a superficial extension of 27 hectares, 96 ares and 28 centares x x x.

PARCEL F-FIVE

A parcel of residential lot under Tax No. 18477 situated within the Poblacion of the
Municipality of Cabadbaran, Agusan, with a house of strong materials found on the same lot
with a superficial extension of 660 square meters x x x.

PARCEL F-SIX

A parcel of residential lot under Tax No. 5374 situated within the Poblacion of the
Municipality of Cabadbaran, Agusan, with a superficial extension of 3,890 square meters x x
x.

PARCEL F-SEVEN

A parcel of coconut and corn land under Tax No. 1769 situated at Ambahan, Tubay, Agusan,
with a superficial extension of 8 hectares x x x.

PARCEL F-EIGHT

A parcel of coconut land situated at Ambahan, Tubay, Agusan, under Tax No. 2944, with a
superficial extension of 7 hectares, 59 ares and 96 centares x x x.6

PARCEL S-ONE

A parcel of land situated at Tagbongabong, Cabadbaran, Agusan under Tax Dec. No. 5396
with an area of 24 hectares more or less x x x.

PARCEL S-TWO

A parcel of coconut land situated at Dal-as, Bay-ang, Cabadbaran, Agusan under Tax No. 69
with an area of 24 hectares more or less x x x.

PARCEL S-THREE

A parcel of coconut land situated at Pandanon, Mabini, Cabadbaran, Agusan, under Tax No.
21639 with an area of 1.4080 hectares more or less x x x.
 PARCEL S-FOUR

A parcel of land situated at Mabini, Cabadbaran, Agusan under Tax No. 3367 with an area of
1,000 sq. m. bounded x x x.7

The "F" designation signified that the covered properties were acquired during the first marriage, to
distinguish them from those acquired during the second marriage which are designated as "S"
properties.

On July 28, 1969, the children of the late Benjamin D. Monteroso, namely: Ruby Monteroso, Marlene
M. Pospos, Henrieto Monteroso, and Adelita Monteroso-Berenguel, filed with the RTC a Complaint
for Recovery of Property with Damages against their uncle, Tirso D. Monteroso. Docketed as Civil
Case No. 1292, and later raffled to Branch 4 of the court, the complaint involved a portion of Parcel
F-4, described in the Project of Partition, as follows:

(1) One parcel of coconut land with the improvements thereon existing, Tax No. 14600 with a
superficial extension of 6 hectares, 99 ares and 32 centares, bounded as follows: on the
North, Regula Monteroso; on the East by the Provincial Road Butuan-Cabadbaran; on the
Sourth Tirso Monteroso and on the West Diego Calo.8

As the heirs of Benjamin alleged in their complaint, their uncle, Tirso, was entrusted with the above-
described one-fourth portion of Parcel F-4 as part of the share from the estate of Soledad D.
Monteroso allotted to their father per SP No. 309. However, their uncle refused to surrender and
deliver the same when they demanded such delivery upon their reaching the majority age.

Tirso countered that the portion pertaining to Benjamin was never entrusted to him; it was in the
possession of their sister, Soledad Monteroso-Cagampang, who was not entitled to any share in
Parcel F-4, having previously opted to exchange her share in said property for another parcel of
land, i.e., Parcel F-7, then being occupied by her.

On April 14, 1970, Tirso, in turn, filed a Complaint for Partition and Damages with
Receivership docketed as Civil Case No. 1332, involving 12 parcels of land (i.e., Parcels F-1 to F-8
and Parcels S-1 to S-4, mentioned above) against his stepmother, Pendejito, and all his full and half-
siblings and/or their representatives. The complaint in Civil Case No. 1332 was subsequently
amended to include Perfecto, as co-defendant, and Pendejito, as guardian ad litem for the minor
children of Fabian P. Monteroso, Jr., who died in 1970 after the filing of the complaint.

In Civil Case No. 1332, Tirso, inter alia, alleged the following: (1) the aforementioned 12 parcels of
land belong to the conjugal partnerships of the first and second marriages contracted by Don
Fabian; (2) SP No. 309, which purportedly judicially settled the intestate estate of his mother, is null
and void for the reason that the project of partition failed to comprehend the entire estate of the
decedent as Parcels F-6, F-7, and F-8 were excluded, thereby depriving Tirso of his one-fourth
share or legitime over the said three parcels of land; and (3) Parcels S-1 to S-4, having been
acquired during the second marriage of Don Fabian, are not paraphernal properties of Sofia
Pendejito Vda. de Monteroso.

Answering, the defendants in Civil Case No. 1332 contended that Don Fabian acquired Parcel F-6
during the second marriage, while Parcels F-7 and F-8 were Don Fabians exclusive properties
having been acquired through a donation from the heirs of one Benito Tinosa. They further
maintained the validity of the judicial partition under SP No. 309 which operates as res
judicata insofar as Parcels F-1 to F-5 are concerned. In particular, they asserted that Parcels F-1, F-
2, F-3, and one-half of F-5 were adjudicated to Don Fabian as his share in the conjugal partnership
of the first marriage, while Parcel F-4 and the other half of Parcel F-5 were equally divided among
the four children of the first marriage; that during his lifetime, Don Fabian sold Parcels F-1, F-2, F-3,
F-7, and F-8 to Soledad Monteroso-Cagampang; that Soledad Monteroso-Cagampang, Tirso D.
Monteroso, and Mauricia Nakila Vda. de Benjamin Monteroso donated Parcel F-6 to Reygula
Monteroso-Bayan; and that Parcels S-1 to S-4 are truly paraphernal properties of Sofia Pendejito
Vda. de Monteroso as Parcel S-1 was acquired by her through a homestead patent, Parcel S-2
through adverse possession, and Parcels S-3 and S-4 by purchase.

The Initial Ruling of the RTC

Involving practically the same properties and parties, Civil Case Nos. 1292 and 1332 were
consolidated and jointly heard. After a long drawn-out trial spanning almost 15 years, with six
different judges successively hearing the case, the RTC, presided by Judge Miguel Rallos, rendered
on July 22, 1985 a Decision,9 dismissing Civil Case No. 1292 on the ground of failure to state a
cause of action, but finding, in Civil Case No. 1332, for Tirso.

What appears to be a victory for Tirso was, however, short-lived. Acting on four separate motions for
reconsideration duly filed by the various defendants in Civil Case No. 1332, a new judge, who took
over the case from Judge Rallos who inhibited himself from the case, rendered a new decision.

The Subsequent Ruling of the RTC

Dated June 9, 1987, the new Decision set aside the July 22, 1985 RTC Decision of Judge Rallos
and gave due course to both Civil Case Nos. 1292 and 1332. In full, the fallo of the new decision
reads:

WHEREFORE, premises considered, both complaints in Civil Cases No. 1292 and 1332 are
hereby given due course and judgment is hereby rendered as follows:

1. Declaring, confirming and ordering that Lot 380, Pls-736 located at Pandanon,
Cabadbaran, belongs to the children of first marriage and partitioned as per subdivision
survey map made by Geodetic Engineer Antonio Libarios, Exh. 7, page 72 of the records as
follows:

(a.) Lot 380-A, Share of Soledad Monteroso Cagampang with an area of 5.3376
hectares, with technical description therein;

(b.) Lot 380-B, Share of Reygula Monteroso Bayan with an area of 5.3376 hectares,
with technical description therein;

(c.) Lot 380-C, Share of the Heirs of Benjamin D. Monteroso with an area of 5.3376
hectares with technical description therein;

(d.) Lot 380-D, Share of Tirso D. Monteroso with an area of 5.3376 hectares and Lot
351, Pls-736 with an area of 6,099 sq. meters, with both technical description therein;

2. It is hereby ordered that Tirso D. Monteroso must deliver, return, relinquish, cede, waive
and/or quit claim immediately the area of 3.7815 hectares being portion of Lot 380-C, Pls-
736 indicated in the subdivision survey plan by Engr. Libarios, page 72, Records, Civil Case
No. 1292, Folio 2, Exh. "V", to the Heirs of Benjamin D. Monteroso who are absolute owners
of Lot 380-C, Pls-736 and to pay, return and deliver immediately to the said Heirs of
Benjamin D. Monteroso the net income in arrears from 1948 to 1983, the total sum of Two
Hundred Sixty Thousand Eight Hundred Forty Four and 70/100 (P260,844.70) Pesos with
interest of 12% per annum compounded annually from January 1, 1984 up to the present
and until fully paid;

3. It is hereby ordered that Reygula Monteroso Bayan must deliver, return, relinquish, cede,
waive and/or quit claim immediately the area of 1.6128 hectares which is part of Lot 380-C,
Pls-736, indicated in the subdivision survey plan by Engr. Libarios, page 72, Records (Civil
Case No. 1292, Folio 2), Exh. V, to the Heirs of Benjamin D. Monteroso who are the
absolute owners of Lot 380-C, Pls-736 and to pay, return and deliver immediately to the said
Heirs of Benjamin D. Monteroso the net income in arrears from 1948 to 1983 the total sum of
One Hundred Six Thousand Nine Hundred Sixty and 40/100 (P106,960.40) Pesos with
interest of 12% per annum compounded annually from January 1, 1984 up to the present
and until fully paid;

4. It is hereby ordered that Soledad Monteroso Cagampang must deliver, return, relinquish,
cede, waive and/or quit claim immediately the area of 1.0929 hectares being portion of Lot
380-C, Pls-736, indicated in the subdivision survey plan by Engr. Libarios, page 72, Records
(Civil Case No. 1292, Folio 2), Exh. V, to her sister Reygula Monteroso Bayan who is the
absolute owner of Lot 380-C, Pls-736 and to pay, return and deliver immediately to the said
Reygula Monteroso Bayan the net income in arrears from 1948 to 1983, the total sum of
Seventy Seven Thousand Six Hundred Twenty Five and 96/100 (P77,625.96) Pesos with
interest of 12% per annum compounded annually from January 1, 1984 up to the present
and until fully paid, subject to deduction of whatever cash advances, if any, was ever
received by Reygula M. Bayan.

5. The three alleged Absolute Sale, Exh. C, D and E with all its submarkings are declared
fictitious, simulated and no consideration. It can never be considered a donation because
aside from being inofficious and impairing the legitime of other heirs, the vendee had not
signed therein which could be considered acceptance and above all, these documents were
prepared and acknowledged by Notary Public squarely disqualified and highly prohibited.
Therefore, all are declared null and void and of no legal effect.

So, parcels F-1, F-2, F-3, F-6, F-7 and F-8 [remain] as part of the intestate estate of Don
Fabian B. Monteroso, Sr.

6. The Register of Deeds and the Provincial Assessor, both in the Province of Agusan del
Norte are hereby ordered to cancel as the same are cancelled and nullified, all transfer of
certificates and tax declarations now in the name of Soledad Monteroso de Cagampang and
Atty. Perfecto L. Cagampang, Sr. which parcels of land originally were registered and
declared in the name of Don Fabian B. Monteroso, Sr., and to register and declare again in
the name of Heirs of Don Fabian B. Monteroso, Sr., more particularly the following:

(a.) [TCT No. RT-203] (420) for Lot 432, Cad. 121, with an area of 10.0242 hectares
under Tax Dec. No. 02-018-0224, Series of 1980, PIN-02-019-05-050 known as
Parcel F-1;

(b.) TCT No. RT-205 (424) for Lot 100, Cad. 121, with an area of 1.9083 hectares
under Tax Dec. No. 02-019-0488, Series of 1980, PIN-02-019-08-002 known as F-2;
(c.) TCT No. RT-204 (423) for Lot 103, Cad. 121, with an area of 2.8438 hectares
under Tax Declaration No. 02-019-0335, Series of 1980, PIN-02-019-08-017 known
as F-2;

(d.) Parcel of coconut land located at Poblacion, Cabadbaran, known as F-3 with
area of 6.3100 hectares under Tax Dec. No. 02-001-1810, Series of 1980 and PIN-
02-001-30-027;

(e.) Residential Lot, known as F-5 located at Poblacion, Cabadbaran under Tax Dec.
No. 18447 then under Tax Dec. No. 1922, containing an area of 660 sq. meters
bounded on the North by Washington Street; on the East by Progresso Street; on the
South by Rizal Street; and on the West by Ramon Cabrera.

(f.) Residential Lot known as F-6 located at Poblacion under Tax Dec. No. 5374,
Series of 1949 and Tax Dec. No. 499, Series of 1954, consisting of 3,890 sq. meters
bounded as follows:

North Andres Atega

South Rill

East Luis Jamboy now Celestino Udarbe,

Sixto Ferrer and New Road

West Atega Street;

(g.) Coconut land known as F-7, located at Ambajan, Tubay, Agusan del Norte under
Tax Dec. No. 1769, Series of 1955 and Tax Dec. No. 10-03-0273, Series of 1980
with an area of [8.000] hectares;

(h.) Parcel of coconut land known as F-8, located at Ambajan, Tubay, Agusan del
Norte with an area of 7.5996 hectares under Tax Dec. No. 2944 and Tax Dec. No.
10-03-0273, Series of 1980;

(i.) Parcel of S-1, located at Tagbongabong, Cabadbaran under Tax Dec. No. 11506,
Series of 1963 with an area of 24 hectares in the name of Sofia Vda. de Monteroso;

(j.) Parcel of S-2, located at Dal-as, Bay-ang, Cabadbaran, under Tax Dec. No. 1888,
Series of 1948, Tax Dec. No. 669, Series of 1952, and subsequently transferred in
fraud of other heirs, in the name of Florenda P. Monteroso under Tax Dec. No.
11507, Series of 1964, Tax Dec. No. 3381, Series of 1972, Tax Dec. No. 5036,
Series of 1974, Tax Dec. No. 02-006-0047, Series of 1980;

(k.) Parcel of S-3, located at Pandanon, Mabini, Cabadbaran, under Tax Dec. No.
5373, Series of 1949 with an area of 1.4080 hectares and bounded as follows:

North Pandanon River

South Crisanto Dolleroso

 East Pandanon River

West Pandanon River and Peregrino Aznar;

(L.) Parcel S-4, located at Mabini, Cabadbaran, under Tax Dec. No. 3367 with an
area of 1.6500 hectares and bounded as follows:

North Hrs. of G. Corvera

South C. Vda. de Alburo

East Ellodoro Delleroso

West A. Ventura

7. It is hereby declared that upon the death of Don Fabian B. Monteroso, Sr. on March 26,
1948, the following are the properties belonging to his intestate estate:

(a.) Whole parcel Lot 432, F-1;

(b.) Whole parcels Lot 100 and 103, F-2;

(c.) Whole parcel cocoland, Calibunan, F-3;

(d.) One-half (1/2) parcel F-5;

(e.) One-half (1/2) parcel F-6;

(f.) One-half (1/2) parcel F-7;

(g.) One-half (1/2) parcel F-8;

(h.) One-half (1/2) parcel S-1;

(i.) One-half (1/2) parcel S-2;

(j.) One-half (1/2) parcel S-3;

(k.) One-half (1/2) parcel S-4.

8. It is hereby ordered that Lot 432 under TCT [No.] RT-203 (420) with an area of 10.0242
hectares under Tax Dec. No. 02-018-0224 (1980) is hereby divided into nine (9) equal
shares for the eight (8) children of Don Fabian B. Monteroso and the one-ninth (1/9) share
be held in usufruct by the widow Sofia Pendejito Monteroso during her lifetime.

Sofia Pendejito Monteroso being in possession and enjoying the fruits or income of F-1 is
hereby ordered to pay and deliver immediately to the following heirs the corresponding
amount of net income of F-1, Lot 432, from 1948 to 1983:

(a.) To Soledad Monteroso Cagampang P78,521.32

 (b.) To Reygula Monteroso Bayan P78,521.32

(c.) To Hrs. of Benjamin D. Monteroso P78,521.32

(d.) To Tirso D. Monteroso P78,521.32

(e.) To Florenda P. Monteroso P78,521.32

(f.) To Reynato P. Monteroso P78,521.32

(g.) To Alberto P. Monteroso P78,521.32

(h.) To Hrs. of Fabian P. Monteroso, Jr. P78,521.32

The above-mentioned [amounts] shall be subject to deduction for whatever cash advance
any heir may have received. Then the net balance of said [amounts] shall be subject to
interest at the rate of twelve percent (12%) per annum compounded annually from January
1, 1984 to the present until fully paid.

9. It is hereby ordered that Lot 100 under [TCT No. RT-205] (424) with an area of 1.9083
hectares under Tax Dec. No. 02-019-0488, Series of 1980 and Lot No. 103 under [TCT No.
RT-204] (423) with an area of 2.8438 hectares and under Tax Dec. No. 02-019-0335, Series
of 1980, [both known as Parcel F-2,] shall be divided into nine (9) equal shares for the eight
(8) children of Fabian B. Monteroso, Sr. and one-ninth (1/9) share shall be held in usufruct by
the widow, Sofia P. Monteroso, during her lifetime.

Soledad Monteroso Cagampang and Atty. Perfecto L. Cagampang, Sr. are ordered to deliver
to [their] co-heirs their shares in these parcels of land, F-2, free from any lien and
encumbrances whatsoever, and to pay each of them the net income in arrears from 1948 to
1983, namely:

(a.) To Reygula Monteroso Bayan P34,976.85

(b.) To Hrs. of Benjamin D. Monteroso P34,976.85

(c.) To Tirso D. Monteroso P34,976.85

(d.) To Florenda P. Monteroso P34,976.85

(e.) To Reynato P. Monteroso P34,976.85

(f.) To Alberto P. Monteroso P34,976.85

(g.) To Hrs. of Fabian P. Monteroso, Jr. P34,976.85

(h.) To Sofia P. Monteroso (usufruct) P34,976.85

The above-mentioned [amounts] shall be subjected to deduction of whatever amount any

heir may have received by way of cash advances.
The net amount shall be subjected to an interest at the rate of twelve percent (12%) per
annum compounded annually from January 1, 1984 to the present or until fully paid.

10. Soledad Monteroso Cagampang and Atty. Perfecto L. Cagampang, Sr. being in
possession and enjoying the fruits and income of Parcel F-3, are hereby ordered to pay to
the following heirs, the net income in arrears from 1948 to 1983:

(a.) To Reygula Monteroso Bayan P49,727.35

(b.) To Hrs. of Benjamin D. Monteroso P49,727.35

(c.) To Tirso D. Monteroso P49,727.35

(d.) To Florenda P. Monteroso P49,727.35

(e.) To Reynato P. Monteroso P49,727.35

(f.) To Alberto P. Monteroso P49,727.35

(g.) To Hrs. of Fabian P. Monteroso, Jr. P49,727.35

(h.) To Sofia P. Monteroso (usufruct) P49,727.35

The above-mentioned [amounts] shall be subject to deduction for whatever cash advance, if
any, such heir may have received. Then the net [amounts] shall be subject to interest at the
rate of twelve percent (12%) per annum compounded annually from January 1, 1984 to the
present until fully paid.

Soledad Monteroso Cagampang and Atty. Perfecto L. Cagampang, Sr. are both ordered to
deliver to the above-mentioned co-heirs their respective shares free from any lien and
encumbrances whatsoever.

11. Parcels F-5, F-6, F-7 and F-8 are declared real properties belonging to the first marriage.
Hence one-half (1/2) of each of these four parcels shall equally be divided by the four (4)
children of the first marriage and the other half must be divided into nine (9) equal shares for
the eight (8) children of Fabian B. Monteroso, Sr., and one-ninth (1/9) shall be held in
usufruct by the widow, Sofia Pendejito Vda. de Monteroso.

Therefore, it is hereby ordered that F-6 is divided as follows:

(a.) To Soledad Monteroso Cagampang - - - - 702 sq. m.

(b.) To Reygula Monteroso Bayan - - - - - - - 702 sq. m.

(c.) To Hrs. of Benjamin D. Monteroso - - - - 702 sq. m.

(d.) To Tirso D. Monteroso - - - - - - - - - - - - 702 sq. m.

(e.) To Florenda P. Monteroso - - - - - - - - - - 216 sq. m.

 (f.) To Reynato P. Monteroso - - - - - - - - - - - 216 sq. m.

(g.) To Alberto P. Monteroso - - - - - - - - - - - 216 sq. m.

(h.) To Hrs. of Fabian Monteroso, Jr. - - - - - - 216 sq. m.

(i.) To Sofia P. Monteroso - - - - - - - - - - - - - 216 sq. m.

12. It is hereby ordered, that Soledad Monteroso Cagampang and Atty. Perfecto L.
Cagampang, Sr. must deliver to all heirs their respective shares on F-7 and F-8 including
usufruct of Sofia P. Monteroso as declared in paragraph five (5) and in addition, must pay
and deliver the net income in arrears from 1948 to 1983, summarized as follows:

(a.) To Reygula Monteroso Bayan - - - - - P189,665.88

(b.) To Hrs. of Benjamin D. Monteroso - - P189,665.88

(c.) To Tirso D. Monteroso - - - - - - - - - - P189,665.88

(d.) To Florenda P. Monteroso - - - - - - - - P 58,358.73

(e.) To Reynato P. Monteroso - - - - - - - - - P 58,358.73

(f.) To Alberto P. Monteroso - - - - - - - - - P 58,358.73

(g.) To Hrs. of Fabian Monteroso, Jr. - - - - P 58,358.73

(h.) To Sofia P. Monteroso (usufruct) - - - - P 58,358.73

all with interest at the rate of twelve percent (12%) per annum compounded annually from
January 1, 1984 to the present until fully paid. However, it is subject to deduction of whatever
cash advances, if ever any heir, may have received.

13. The Deed of Donation in 1948, Exh. "F", over parcel known as F-5, is declared null and
void because the same was prepared and acknowledged before a Notary Public disqualified
and prohibited to do so under Notarial Law (Barretto vs. Cabreza, 33 Phil. Reports 112).
Hence, the transfer of tax declaration is hereby ordered cancelled and the same must be
declared again in the name of the Heirs of Fabian B. Monteroso, Sr. and ordered partitioned
in the proportion stated in paragraph eleven (11) hereof.

14. Parcels of land known as S-1, S-2, S-3 and S-4 are declared conjugal properties of the
second marriage. Hence, one-half (1/2) thereof belongs to Sofia Pendejito Monteroso and
one-half (1/2) shall be equally divided into nine (9) shares for the eight (8) children of Don
Fabian B. Monteroso, Sr. where the one-ninth (1/9) shall be held in usufruct by Sofia P.
Monteroso during her lifetime.

15. For the net income in arrears of S-1 located at Tagbongabong, Cabadbaran, from 1948
to 1983, Sofia Pendejito Monteroso is hereby ordered to pay and deliver to the following
heirs the corresponding share:
 (a.) To Soledad Monteroso Cagampang - - P93,998.12

(b.) To Reygula Monteroso Bayan - - - - - P93,998.12

(c.) To Hrs. of Benjamin D. Monteroso - - P93,998.12

(d.) To Tirso D. Monteroso - - - - - - - - - - P93,998.12

(e.) To Florenda P. Monteroso - - - - - - - - P93,998.12

(f.) To Reynato P. Monteroso - - - - - - - - P93,998.12

(g.) To Alberto P. Monteroso - - - - - - - - - P93,998.12

(h.) To Hrs. of Fabian P. Monteroso, Jr. - - P93,998.12

However, all these amounts shall be subject to deduction, if any cash advance was ever
made or received by any heir.

The above-mentioned [amounts are] subject to an interest at the rate of twelve percent
(12%) compounded annually from January 1, 1948 to the present until fully paid.

16. The alleged Deed of Absolute Sale executed by Sofia P. Monteroso in favor of Florenda
P. Monteroso over a coconut land located at Dal-as, Bay-ang, Cabadbaran, consisting of 24
hectares is hereby declared null and void being in fraud of other heirs. It is clearly inofficious
and impairs the legitime of her brothers, sisters and nephews and nieces. Therefore, the tax
declaration in the name of Florenda P. Monteroso under Tax Dec. No. 11507, Series of
1964, Tax Dec. No. 3381, Series of 1972, Tax Dec. No. 5036, Series of 1974 and Tax Dec.
No. 02-006-0047, PIN-02-006-02-002 are hereby ordered cancelled and the said land shall
be declared again in the name of Heirs of Fabian B. Monteroso.

Sofia Pendejito Monteroso is not required to render accounting as to the income of S-2
because the coconut trees therein were planted by her while being already a widow. One-
half (1/2) of the land where the coconut trees are planted shall be her share and the other
one-half (1/2) shall be divided into nine (9) shares for the eight (8) children of Fabian B.
Monteroso including her 1/9 usufruct thereon.

17. Sofia Pendejito Monteroso is hereby ordered to pay and deliver immediately the net
income in arrears of parcel S-3 located at Pandanon to the following heirs with the
corresponding amount:

(a.) To Soledad Monteroso Cagampang - - P49,349.02

(b.) To Reygula Monteroso Bayan - - - - - P49,349.02

(c.) To Hrs. of Benjamin D. Monteroso - - P49,349.02

(d.) To Tirso D. Monteroso - - - - - - - - - - P49,349.02

(e.) To Florenda P. Monteroso - - - - - - - - P49,349.02

 (f.) To Reynato P. Monteroso - - - - - - - - P49,349.02

(g.) To Alberto P. Monteroso - - - - - - - - - P49,349.02

(h.) To Hrs. of Fabian P. Monteroso, Jr. - - P49,349.02

However, [the] above-mentioned [amounts] shall be subject to deductions, if any cash

advance was ever made or received by any heir.

Then the net amount receivable shall be subject to an interest at the rate of twelve percent
(12%) compounded annually from January 1, 1984 to the present until fully paid.

18. For the net income in arrears of parcel S-4, located at Mabini, Cabadbaran, from 1948 to
1983, Sofia P. Monteroso is hereby ordered to pay and deliver to the following heirs their
corresponding shares:

(a.) To Soledad Monteroso Cagampang - - P6,477.54

(b.) To Reygula Monteroso Bayan - - - - - P6,477.54

(c.) To Hrs. of Benjamin D. Monteroso - - P6,477.54

(d.) To Tirso D. Monteroso - - - - - - - - - - P6,477.54

(e.) To Florenda P. Monteroso - - - - - - - - P6,477.54

(f.) To Reynato P. Monteroso - - - - - - - - P6,477.54

(g.) To Alberto P. Monteroso - - - - - - - - - P6,477.54

(h.) To Hrs. of Fabian P. Monteroso, Jr. - - P6,477.54

However, all these amounts shall be subject to deductions, if any cash advance was ever
made or received by any heir.

The above-mentioned amount is subject to an interest at the rate of twelve percent (12%)
compounded annually from January 1, 1984 to the present until fully paid.

Sofia Pendejito Monteroso is ordered to deliver to the above-mentioned heirs their respective
shares free from any lien and encumbrances whatsoever.

19. These cases involved inheritance, hence the Bureau of Internal Revenue (BIR) of
Agusan del Norte at Butuan City is hereby notified for prompt, proper and appropriate action.
Likewise, the Provincial Treasurer of Agusan del Norte and the Municipal Treasurers of
Cabadbaran and Tubay are hereby informed and reminded for their prompt, proper and
appropriate action in the assessment and collection of real estate taxes including transfers
tax.

20. That all the heirs are hereby directed, and ordered to pay all taxes due in favor of the
Government of the Republic of the Philippines within thirty (30) days from the finality of
judgment hereof, otherwise, upon proper application or manifestation by appropriate or
concerned government agency, a portion of the intestate estate of Don Fabian B. Monteroso,
Sr., shall be sold at public auction for such purpose.

21. Under Civil Case No. 1292, Tirso D. Monteroso or his heirs, assigns and successors-in-
interest, is hereby ordered to pay Ruby Monteroso, Marlene Monteroso-Pospos, Adelita
Monteroso-Berenguel and Henrieto Monteroso the following sums of money:

(a.) P10,000.00 for moral damages;

(b.) P10,000.00 for exemplary damages;

(c.) P3,000.00 for costs of suit; and

(d.) P10,000.00 for attorneys fees.

22. Under Civil Case No. 1292, Soledad Monteroso de Cagampang and Reygula Monteroso
Bayan are hereby ordered jointly and severally to pay Ruby Monteroso, Marlene Monteroso-
Pospos, Adelita Monteroso-Berenguel and Henrieto Monteroso the following sums of money:

(a.) P10,000.00 for moral damages;

(b.) P10,000.00 for exemplary damages;

(c.) P2,000.00 for costs of suit; and

(d.) P10,000.00 for attorneys fees.

23. Under Civil Case No. 1332, Soledad Monteroso Cagampang, Atty. Perfecto L.
Cagampang, Sr. and Sofia Pendejito Vda. de Monteroso or their heirs, assigns and
successors-in-interest, are hereby ordered to pay jointly and severally, unto and in favor of
Tirso D. Monteroso or his heirs, assigns and successors-in-interest, the following sums of
money:

(a.) P20,000.00 for moral damages;

(b.) P20,000.00 for exemplary damages;

(c.) P5,000.00 for costs of suit; and

(d.) P10,000.00 for attorneys fees.

24. It is hereby ordered that a judicial administrator of the intestate estate of Don Fabian B.
Monteroso, Sr. shall be appointed by this Court upon written recommendation by all the
parties within thirty (30) days from promulgation of this decision. Should the parties fail to
submit unanimously a recommendee, the Court at its discretion may appoint an
administrator, unless none of the parties appeal this decision and this judgment is complied
with by all the parties and/or so executed in accordance with the provisions of the New Rules
of Court.
 SO ORDERED.10

As regards Civil Case No. 1292, the RTC found that the heirs of Benjamin have indeed been
deprived of their inheritance which corresponds to one-fourth share due their father from the
intestate estate of their grandmother, Soledad D. Monteroso. Thus, the court ordered the equal
distribution of Parcel F-4, i.e., Lot 380, Pls-736 located in Pandanon, Cabadbaran, Agusan del
Norte, among the children of the first marriage of Don Fabian, and partitioned it based on the
subdivision survey map prepared by a geodetic engineer.

Turning on the alleged sale of Parcels F-1, F-2, F-3, F-7, and F-8 by Don Fabian to Soledad
Monteroso-Cagampang, the RTC found the covering three deeds of absolute sale11 to be null and
void for the reason that the alleged conveyances were fictitious, simulated, and/or without sufficient
consideration. Alternatively, the RTC ruled that the conveyances, even if considered as donation,
would be inofficious for impairing the legitime of the other compulsory heirs, not to mention the lack
of due acceptance of the donation by Soledad Monteroso-Cagampang. Adding a vitiating element to
the conveyances, as the RTC noted, was the fact that the corresponding documents were prepared
by and acknowledged before Perfecto, who happened to be the husband of the alleged vendee,
Soledad Monteroso-Cagampang.

The RTC also declared as null and void the donation of Parcel F-5 to Reygula Monteroso-Bayan
owing to clear legal infirmities attaching to the covering deed of donation.12 For one, the parcel in
question, while purportedly donated free from any liens or encumbrance, was in fact the subject of a
deed of absolute sale between Don Fabian and the Cagampang spouses. For another, one of the
signatory-donors, Mauricia Nakila, Benjamins widow, did not have the right to effect a donation
because she was not a compulsory heir of her husband by representation. The RTC added that the
real owners of the rights and interests of Benjamin over Parcel F-5 are her children as representative
heirs.

Finally, the RTC declared the Order dated March 11, 1936 issued in SP No. 309 approving the
Project of Partition to be valid, and that it constitutes res judicata on the affected properties, i.e.,
Parcel F-4 and one-half of Parcel F-5, which were equally distributed to the heirs of Soledad D.
Monteroso. Pursuing this point and on the finding that Parcels F-1 to F-8 were acquired during the
first marriage and Parcels S-1 to S-4 during the second, the RTC thus held that Don Fabians
intestate estate consisted of the whole of Parcels F-1, F-2, and F-3; and half of Parcels F-5 to F-8
and half of Parcels S-1 to S-4, to be distributed in accordance with the law on intestate succession.
This means, the RTC concluded, that the estate shall descend to Don Fabians compulsory heirs
and their representatives, as in the case of the late Benjamin and Fabian, Jr., subject to accounting
of the income or produce of the subject properties for the applicable period, less advances made or
received by any heir, if any.

The Ruling of the CA

From the above June 9, 1987 Decision, Tirso, defendant in Civil Case No. 1292, appealed to the CA,
so did the Cagampang spouses, defendants in Civil Case No. 1332. The other defendants in Civil
Case No. 1332, namely: Sofia Pendejito Vda. de Monteroso, Florenda Monteroso, Alberto
Monteroso, Heirs of Fabian Monteroso, Jr., Reynato Monteroso, and Reygula Monteroso-Bayan,
also interposed their own appeal. The separate appeals were consolidated and docketed as CA-
G.R. CV No. 15805.

On March 31, 1992, the CA rendered the assailed decision, affirming with modification the June 9,
1987 RTC Decision, disposing as follows:
 WHEREFORE, the decision appealed from is hereby modified, as follows:

a) In the event that a homestead patent over Parcel S-1 is issued by the Bureau of
Lands pursuant to the patent application of Sofia Pendejito Vda. de Monteroso, said
patent shall issue not in the name of the applicant but in favor of the eight heirs of
Fabian Monteroso, Sr. who thereafter shall be declared absolute owners of the said
parcel of land in the proportion stated in this decision but who nevertheless shall
allow Sofia Pendejito Vda. de Monteroso to exercise during her lifetime usufructuary
rights over a portion of the said parcel of land equivalent to the share therein of each
of the heirs of her deceased husband;

b) The said heirs of Fabian Monteroso, Sr. are hereby declared absolute owners of
Parcel F-6 to the extent of their respective shares therein as presently individually
possessed by them pursuant to an extrajudicial partition of the said parcel of land
which the Court hereby declares as a valid contract among the said heirs; and

c) With the exception of those pertaining to Parcel F-4 as stated in this decision, the
parties thus found to have unjustly misappropriated the fruits of the subject parcels of
land are hereby directed to render an accounting thereof consistent with our findings
in the case at bar.

With the exception of the foregoing modifications, the decision under review is hereby
AFFIRMED in all other respects.

No pronouncement as to costs.

SO ORDERED.13

The CA summarized into three issues the multifarious assignments of errors raised by the parties, to
wit: first, whether or not the intestate estate of Soledad Doldol Monteroso was settled in SP No. 309,
thus according the Project of Partition approved therein the effect of res judicata; second, whether or
not it was appropriate to partition Parcels F-1, F-2, and F-3, and half of Parcels F-5, F-6, F-7, F-8, S-
1, S-2, S-3, and S-4; and third, whether or not Tirso D. Monteroso is entitled to damages.

The CA resolved the first issue in the affirmative, SP No. 309 being a valid and binding proceedings
insofar as the properties subject thereof are concerned, i.e., Parcels F-1 to F-5 of which the whole of
Parcel F-4 and one-half of Parcel F-5, as Soledad D. Monterosos intestate estate, were distributed
to her heirs. This is not to mention that the authenticity and due execution of the documents filed or
issued in relation therewithreferring to the Proyecto de Particion dated February 12, 1935 which is
a carbon copy of the original, the Orden issued by the CFI on March 11, 1936, and the Mocion dated
March 18, 1936having duly been established. Affirming the RTC, the CA rejected Tirsos claim
that SP No. 309 is void for settling only a part of the estate of Soledad D. Monteroso. The CA held
that partial settlement is not a ground for the nullification of the judicial partition under either the
Spanish Civil Code of 1889 or the present Civil Code. The appellate court added that the proper
remedy in such a situation is to ask for the partition and the subsequent distribution of the property
omitted.

The CA likewise disposed of the second issue in the affirmative, dismissing the opposition of the
Cagampang spouses and Reygulo Monteroso-Bayan who all claimed ownership over some of the
parcels of land on the strength of the deeds of conveyance executed in their favor. The CA upheld
the RTCs finding that the three deeds of absolute sale in which Don Fabian purportedly sold Parcels
F-1, F-2, F-3, F-7, and F-8 to Soledad Monteroso-Cagampang were infirm. The CA noted that even
the Cagampang spouses recognized these infirmities, and instead of denying their existence, they
tried to justify the same and seek an exception therefrom.

On the alleged donation of Parcel F-5 by Don Fabian to Reygula Monteroso-Bayan, the CA likewise
agreed with the RTCs finding on the nullity thereof. The CA pointed out that Reygula Monteroso-
Bayan did not controvert the RTCs finding, except to gratuitously say that the trial courts declaration
of nullity was wrong since nobody questioned the authenticity of the donation in the first place.

Apropos Parcel S-1, a disposable agricultural land of the public domain which is the subject of a
homestead patent application by Don Fabian, the CA, as opposed to the RTCs disposition, held that
a patent, if eventually issued, ought to be in the name of the legal heirs of Don Fabian, not of his
surviving spouse, Pendejito. This conclusion, so the CA explained, is in line with the provision of
Section 105 of the Public Land Act or Commonwealth Act No. 141 (CA 141), as amended.

As to Parcel S-2, the CA agreed with the RTC that it is a conjugal property acquired during the
second marriage through a deed of sale14 executed on August 15, 1947 by Marcelo Morancel.
Likewise, the CA said that Parcels S-3 and S-4 are conjugal properties as no evidence was adduced
supporting the alleged purchase by Pendejito of said properties with her own funds.

Anent the RTCs order partitioning Parcel F-6, the CA agreed with the defendants in Civil Case No.
1332 that Parcel F-6 has long been partitioned equitably among all the eight children of Don Fabian.
Thus, the CA further modified the RTC on this point.

On the third and last issues, the CA set aside all awards of actual damages made by the RTC
premised on the income generating capacity of the subject properties, except that of Parcel F-4, as
an order of accounting of the fruits of the other subject properties unjustly appropriated by them
would address the issue of damages.

It bears to stress at this juncture that, save for the grant of damages and the disposition of Parcels F-
6 and S-1, the CA affirmed the questioned RTC Decision on all other points. On June 15, 1992,
Tirso D. Monteroso thereafter filed before the Court his partial petition for review under Rule 45,
docketed as G.R. No. 105608.

On the other hand, Pendejito, together with the other defendants in Civil Case No. 1332, first
interposed a joint motion for partial reconsideration, which the CA denied per its equally assailed
December 16, 1993 Resolution,15before elevating the case via a petition for review under Rule 45,
docketed as G.R. No. 113199.

G.R. No. 105608 Denied with Finality

Per its Resolution16 dated June 29, 1992, the Court denied Tirso D. Monterosos petition under G.R.
No. 105608 for late payment of fees and non-compliance with the requirements of the Rules of Court
and Circular Nos. 1-88 and 28-91 on the submission of a certified copy of the assailed decision/order
and a certification of non-forum shopping. Another Resolution17 of August 12, 1992 followed, this
time denying with finality Tirso D. Monterosos motion for reconsideration filed on July 29, 1992. On
August 31, 1992, an Entry of Judgment18 was issued.

In net effect, the March 31, 1992 CA Decision in CA-G.R. CV No. 15805 is final and executory as to
Tirso D. Monteroso, and the Court need not pass upon the issues he raised in his petition
under G.R. No. 105608, albeit we shall take stock of his Comment19 and Memorandum20 in G.R. No.
113199.
 The Issues

Petitioners in G.R. No. 113199 raise the following issues for our consideration:

1. Whether the finding that the Deeds of Sale (Exhibits "C", "D" and "E") were not supported
by valuable consideration and sham, fictitious and simulated is supported by the evidence.

2. Whether the finding or conclusion that petitioners Spouses Atty. Perfecto and Soledad
Cagampang did not dispute the finding of the trial Court that the Deeds of Sale in question
are sham, fictitious and simulated is supported by evidence.

3. Whether the [CA] committed reversible error in concluding that, "By invoking the benefits
of prescription in their favor, the Cagampang spouses are deemed to have admitted the
existence of a co-ownership."

4. Whether the [CA] committed reversible error in upholding partition as the proper remedy of
private respondent Tirso Monteroso to recover the properties sold by Fabian Monteroso, Sr.
to Soledad D. Monteroso de Cagampang when co-ownership is not pleaded as theory in the
Complaint.

5. Whether the [CA] committed reversible error in holding that the cause of action of private
respondent Tirso Monteroso is not barred by extinctive prescription and laches.

6. Whether the [CA] committed reversible error in granting reliefs not prayed for in the
Complaint in favor of parties who did not assert or claim such relief, such as partition and
accounting among the parties and the nullification of the donation in favor of petitioner
Reygula Bayan when x x x Tirso Monteroso and the petitioners herein who are signatories to
the Deed of Donation did not question or ask for the nullification of the donation in favor of
Reygula Bayan.

7. Whether the [CA] committed reversible error in ordering the partition of parcels S-1, S-2,
S-3 and S-4 which are admitted in the Complaint to be in the exclusive, adverse possession
of petitioners Sofia vda. de Monteroso, Florenda, Alberto and Reynato and the Heirs of
Fabian Monteroso, Jr. since the death of Fabian Monteroso, Sr. in 1948, appropriating the
harvests unto themselves, to the exclusion of plaintiff (private respondent Tirso Monteroso)
who was deprived of his share continuously up to the present.21

The Courts Ruling

After a circumspect consideration of the arguments earnestly pressed by the parties and in the light
of the practically parallel findings of the RTC and CA, we find the petition under G.R. No. 113199 to
be devoid of merit.

It is a rule of long standing that:

[T]he jurisdiction of the Court in cases brought before it from the Court of Appeals via Rule
45 of the Rules of Court is limited to reviewing errors of law. Findings of fact of the latter are
conclusive, except in the following instances: (1) when the findings are grounded entirely on
speculation, surmises, or conjectures; (2) when the inference made is manifestly mistaken,
absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in
 making its findings the Court of Appeals went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the appellee; (7) when the findings
are contrary to those of the trial court; (8) when the findings are conclusions without citation
of specific evidence on which they are based; (9) when the facts set forth in the petition as
well as in the petitioners main and reply briefs are not disputed by the respondent; and (10)
when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record.22

None of the above exceptions, however, obtains in the instant case.

First and Second Issues: Simulated Sale

In connection with the first two related issues, petitioners maintain that the CA erred when it affirmed
the RTCs conclusion on the fictitious or simulated nature, for lack or inadequate consideration, of
the Deeds of Sale (Exhibits "C," "D," and "E"), noting that Tirso failed to present substantial evidence
to support the alleged infirmity of the underlying sale. The fact that one of the lots sold under Exhibit
"C" on May 10, 1939 for PhP 2,500 was used as collateral for a PhP 600 loan is not, so petitioners
claim, proof that the amount of PhP 600 represents the maximum loan value of the property or that
the sale in question is not supported by valuable consideration.

Moreover, petitioners belabored to explain that the trial court erred in concluding that the property
conveyed under Exhibit "C" and covered by Transfer Certificate of Title (TCT) No. RT-203 (420) in
the name of Soledad Monteroso-Cagampang, married to Perfecto, was fictitious on the ground that
the certificate did not indicate that it was a conjugal property. Petitioners assert that the registration
of a property only in the name of one of the spouses is not proof that no consideration was paid
therefor. As petitioners would stress, what determines whether a given property is conjugal or
separate is the law itself, not what appears in the certificate of title.

Lastly, petitioners take exception from the appellate courts posture that the Cagampang spouses
did not dispute the trial courts finding that the deeds of sale (Exhibits "C," "D," and "E") were
simulated and fictitious for lack of consideration. Petitioners insist that they in fact contested such
conclusion of the RTC in their brief before the CA, adding they only raised the issue of prescription
as an alternative defense without conceding the RTCs findings on contract infirmity.

We are not persuaded.

The antecedent facts, as borne by the records, strongly indicate the simulated character of the sale
covered by the deeds of absolute sale over Parcels F-1 (Exhibit "C"), F-2 (Exhibit "D"), F-3, F-5, F-7,
and F-8 (Exhibit "E"). As found below, Don Fabian never relinquished possession of the covered
properties during his lifetime. The first deed, Exhibit "E," was executed on May 1, 1939; the second,
Exhibit "C," on May 10, 1939; and the third, Exhibit "D," on September 24, 1939. Soledad
Monteroso-Cagampang, however, only took possession of the subject properties after Don Fabians
death in 1948 or nine years after contract execution. The gap, unexplained as it were, makes for a
strong case that the parties to the sale never intended to be bound thereby.

The more telling circumstance, however, is the fact that Perfecto had judicially sought the
amendment of the corresponding TCTs so that only the name of his wife, Soledad, shall be inscribed
as real party-in-interest on the Memorandum of Encumbrances at the back portion of the titles. If
only to stress the point, when the deeds were executed in 1939, Soledad and Perfecto Cagampang,
the notarizing officer, were already married.
A property acquired during the existence of a marriage is presumed conjugal. This postulate
notwithstanding, Perfecto Cagampang went out of his way to make it appear that the subject parcels
of land were effectively his wifes paraphernal properties. No explanation was given for this unusual
move.

Hence, we agree with the trial and appellate courts that the unexplained situations described above
sufficiently show that the purported conveyances were simulated. We also accord credence to
Tirsos allegation that the Cagampang spouses tricked Don Fabian into believing that his creditors
were after the properties which have to be "hidden" by means of simulated conveyances to Soledad
Monteroso-Cagampang. The fact that only one of the subject lots was used as collateral for a PhP
600 loan which the Cagampang spouses took out does not weaken the conclusion on the simulated
character of the contracts, as logically drawn from the twin circumstances adverted to.

The Court can allow that petitioners indeed attempted to traverse, before the CA, the RTCs findings
on the area of simulated sale and that they only raised the matter of acquisitive prescription as an
alternative defense. However, as we shall explain shortly, the fact of petitioners having made the
attempt aforestated will not carry the day for them.

Third Issue: Recognition of Co-ownership in Acquisitive Prescription

In its assailed decision, the CA declared, "By invoking the benefits of prescription in their favor, the
Cagampang spouses are deemed to have admitted the existence of a co-ownership x x x." The
petitioners tag this declaration as flawed since the benefit of prescription may be availed of without
necessarily recognizing co-ownership. Prescription and co-ownership, they maintain, are so
diametrically opposed legal concepts, such that one who invokes prescription is never deemed to
admit the existence of co-ownership.

Petitioners are mistaken; their error flows from compartmentalizing what the CA wrote. The
aforecited portion of the CAs decision should not have been taken in isolation. It should have been
read in the context of the appellate courts disquisition on the matter of Tirso being a co-owner of the
subject undivided properties whose rights thereto, as a compulsory heir, accrued at the moment of
death of Don Fabian, vis--vis the defense of acquisitive prescription foisted by the Cagampang
spouses. For clarity, we reproduce the pertinent portion of the assailed decision:

Nor do we find any merit in the third. From the allegation in the Complaint in Civil Case No.
1332 as well as from the arguments advanced by the parties on the issues raised therein,
this Court is convinced that therein plaintiff Tirso Monterosos principal cause of action is
unmistakably one for partition which by its very nature is imprescriptible and cannot be
barred by laches x x x. The only exception to the rule on the imprescriptibility of an action for
partition is provided in a case where the co-ownership of the properties sought to be
partitioned had been properly repudiated by a co-owner at which instance the remedy
available to the aggrieved heirs lies not in action for partition but for reconveyance which is
subject to the rules on extinctive prescription. By invoking the benefits of prescription in
their favor, the Cagampang spouses are deemed to have admitted the existence of a
co-ownership among the heirs of Fabian Monteroso, Sr. over the properties forming
the decedents estate.23 (Emphasis ours.)

From the foregoing disquisition, what the appellate court tried to convey is clear and simple: partition
is the proper remedy available to Tirso who is a co-owner of the subject properties by virtue of his
being a compulsory heir, like siblings Soledad, Reygula, and Benjamin, of Don Fabian. The right to
seek partition is imprescriptible and cannot be barred by laches. Consequently, acquisitive
prescription or laches does not lie in favor of the Cagampang spouses and against Tirso, the general
rule being that prescription does not run against a co-owner or co-heir. The only exception to the
imprescriptibility of an action for partition against a co-owner is when a co-owner repudiates the co-
ownership. Thus, the appellate court ruled that by invoking extinctive prescription as a defense, the
lone exception against imprescriptibility of action by a co-owner, the Cagampang spouses are
deemed to have contextually recognized the co-ownership of Tirso and must have repudiated such
co-ownership in order for acquisitive prescription to set in. Taking off from that premise, the appellate
court then proceeded to tackle the issue of repudiation by the Cagampang spouses. Therefore, we
hold that the appellate court did not err in finding that the Cagampang spouses are effectively barred
from invoking prescription, given that the subject properties are conjugal properties of the decedent,
Don Fabian, which cannot be subjected to acquisitive prescription, the necessary consequence of
recognizing the co-ownership stake of other legal heirs.

Fourth and Fifth Issues: Partition Proper, not Barred by Laches

nor by Acquisitive Prescription

Being inextricably intertwined, we tackle both issues together. Petitioners, citing Article 494 of the
Civil Code24 and Art. 1965 of the Spanish Civil Code, aver that the right to ask partition is proper only
where co-ownership is recognized. They also suggest that no co-ownership obtains in this case
considering that no less than Tirso avers in his complaint in Civil Case No. 1332 that from the time of
Don Fabians death in 1948, the lots in question have been in the exclusive, adverse, and public
possession of the Cagampang spouses. Assayed against this perspective, petitioners submit that
partition is not proper, ergo unavailing, but an action for reconveyance which is subject to the rules
on extinctive prescription.

Corollary to the posture above taken, petitioners assert that there being no co-ownership over the
properties sold by Don Fabian to Soledad Monteroso-Cagampang, Tirsos cause of action, under the
Code of Civil Procedure (Act No. 190) in relation to Art. 1116 of the Civil Code,25 had already
prescribed, either in 1949, i.e., 10 years after the subject properties were registered in Soledad
Monteroso-Cagampangs name, or in 1958, i.e., 10 years after the cause of action accrued in 1948
(death of Don Fabian), citing Osorio v. Tan.26 Tirsos complaint in Civil Case No. 1332 was
commenced in 1970.

Petitioners contend that the evidence adduced clearly demonstrates that Soledad Monteroso-
Cagampang acquired ownership of the subject properties by virtue of the deeds of sale executed in
1939 by Don Fabian. After the sale, she registered them under her name and then took exclusive,
adverse, and public possession over them. Thus, they submit that the prescriptive period applicable
to the instant case under Act No. 190 had long expired, adding that the CA erred in finding that
Soledad Monteroso-Cagampang repudiated the co-ownership only in 1961 when she and the other
heirs ignored the demand of Tirso for partition.

As a final point, petitioners alleged that the exclusion of Tirso from the enjoyment of the fruits of the
subject properties since after the death of Don Fabian in 1948 is consistent with Soledad Monteroso-
Cagampangs claim of exclusive ownership and dominion.

We cannot subscribe to petitioners theory.

The fact that Tirso and the other compulsory heirs of Don Fabian were excluded from the
possession of their legitime and the enjoyment of the fruits thereof does not per se argue against the
existence of a co-ownership. While Tirso may not have expressly pleaded the theory of co-
ownership, his demand from, and act of initiating Civil Case No. 1332 against, the Cagampang
spouses for his share necessarily implies that he was asserting his right as co-owner or co-heir of
the properties unjustly withheld by the Cagampang spouses through the instrumentality of simulated
deeds of sale covering some of the hereditary properties. By asserting his right as a compulsory
heir, Tirso has effectively brought into the open the reality that the Cagampang spouses were
holding some of the subject properties in trust and that he is a co-owner of all of them to the extent
of his legal share or legitime thereon.

Consequently, we are one with the trial and appellate courts that partition is the proper remedy for
compulsory or legal heirs to get their legitime or share of the inheritance from the decedent. An
action for partition is at once an action for declaration of co-ownership and for segregation and
conveyance of a determinate portion of the properties involved.27 Also, Sec. 1, Rule 69 of the Rules
of Court pertinently provides:

SECTION 1. Complaint in action for partition of real estate. A person having the right to
compel the partition of real estate may do so as provided in this Rule, setting forth in his
complaint the nature and extent of his title and an adequate description of the real estate of
which partition is demanded and joining as defendants all other persons interested in the
property. (Emphasis ours.)

Being a compulsory heir of Don Fabian, Tirso has the right to compel partition of the properties
comprising the intestate estate of Don Fabian as a measure to get his hereditary share. His right as
an heir to a share of the inheritance covers all the properties comprising the intestate estate of Don
Fabian at the moment of his death,28 i.e., on October 26, 1948. Before partition and eventual
distribution of Don Fabians intestate estate, a regime of co-ownership among the compulsory heirs
existed over the undivided estate of Don Fabian. Being a co-owner of that intestate estate, Tirsos
right over a share thereof is imprescriptible.29 As a matter of law, acquisitive prescription does not
apply nor set in against compulsory heirs insofar as their pro-indiviso share or legitime is concerned,
unless said heirs repudiate their share.30 Contrary to petitioners stance, reconveyance is not the
proper remedy available to Tirso. Be it remembered in this regard that Tirso is not asserting total
ownership rights over the subject properties, but only insofar as his legitime from the intestate estate
of his father, Don Fabian, is concerned.

Acquisitive prescription, however, may still set in in favor of a co-owner, "where there exists a clear
repudiation of the co-ownership, and the co-owners are apprised of the claim of adverse and
exclusive ownership."31 In the instant case, however, no extinctive or acquisitive prescription has set
in against Tirso and other compulsory heirs in favor of the Cagampang spouses because effective
repudiation had not timely been made against the former. As aptly put by the appellate court, the
repudiation which must be clear and open as to amount to an express disavowal of the co-ownership
relation happened not when the deeds of absolute sale were executed in 1939, as these could not
have amounted to a clear notice to the other heirs, but in 1961 when the Cagampang spouses
refused upon written demand by Tirso for the partition and distribution of the intestate estate of Don
Fabian. Since then, Tirso was deemed apprised of the repudiation by the Cagampang spouses.

However, considering that the new Civil Code was already then in effect, Art. 1141 of said
Code32 applies; thus, Tirso has at the very least 10 years and at the most 30 years to file the
appropriate action in court. The records show that Tirsos cause of action has not prescribed as he
instituted an action for partition in 1970 or only nine years after the considered express repudiation.
Besides, acquisitive prescription also does not lie against Tirso even if we consider that a valid
express repudiation was indeed made in 1961 by the Cagampang spouses since in the presence of
evident bad faith, the required extraordinary prescription period33 of 30 years has not yet lapsed,
counted from said considered repudiation. Such would still be true even if the period is counted from
the time of the death of Don Fabian when the Cagampang spouses took exclusive possession of the
subject properties.
 Sixth Issue: Partition Proper for Conjugal Properties
of Second Marriage

On the ground of prescription under Act No. 190, petitioners assert that Tirso lost the right to seek
the partition of Parcels S-1, S-2, S-3, and S-4, he having admitted, as early as 1948, the adverse,
exclusive, and public possession thereof by Pendejito and her children. This type of possession,
they maintain, works as a repudiation by Pendejito and her children of the co-ownership claim of
Tirso. They further argue that Parcel S-1 pertains to Pendejito as her paraphernal property since the
homestead application therefor was under her name.

We are not persuaded.

Tirsos acknowledgment of Pendejito and her childrens possession of Parcels S-1, S-2, S-3, and S-
4 cannot be viewed as the required repudiation to bar Tirso from pursuing his right to seek partition.
Under the law on co-ownership, it behooves on the person desiring to exclude another from the co-
ownership to do the repudiating. Verily, the records do not show that Pendejito and her children
performed acts clearly indicating an intention to repudiate the co-ownership and then apprising Tirso
and other co-owners or co-compulsory heirs of such intention.

To be sure, Tirso and his siblings from the first marriage have a stake on Parcels S-2, S-3, and S-4,
even if these parcels of land formed part of the conjugal partnership of gains of the second marriage.
There can be no serious dispute that the children of the first marriage have a hereditary right over
the share of Don Fabian in the partnership assets of the first marriage.

Anent Parcel S-1, we join the CA in its holding that it belongs to the heirs of Don Fabian under Sec.
105 of CA 141, which pertinently provides:

Sec. 105. If at any time the applicant or grantee shall die before the issuance of the patent or
the final grant of the land, or during the life of the lease, or while the applicant or grantee still
has obligations pending towards the Government, in accordance with this Act, he shall
be succeeded in his rights and obligations with respect to the land applied for or
granted or issued under this Act by his heirs in law, who shall be entitled to have
issued to them the patent or final concession if they show that they have complied with
the requirements therefor, and who shall be subrogated in all his rights and obligations for
the purposes of this Act. (Emphasis ours.)

It is undisputed that Don Fabian was the homestead patent applicant who was subrogated to the
rights of the original applicants, spouses Simeon Cagaanan and Severina Naranjo, by purchasing
from the latter Parcel S-1 on May 8, 1943. Don Fabian cultivated the applied area and declared it for
taxation purposes. The application, however, would be rejected because death supervened. In 1963,
Pendejito filed her own homestead application for Parcel S-1.

Assayed against the foregoing undisputed facts in the light of the aforequoted Sec. 105 of CA 141,
the heirs of Don Fabian are entitled to Parcel S-1. Said Sec. 105 has been interpreted in Soliman v.
Icdang34 as having abrogated the right of the widow of a deceased homestead applicant to secure
under Sec. 3 of Act No. 926, otherwise known as the Public Land Act of 1903, a patent in her own
name, thus:

[W]e should bear in mind that, although Adolfo Icdang was married to plaintiff when he filed
the homestead application, "an applicant may be said to have acquired a vested right over a
homestead only by the presentation of the final proof and its approval by the Director of
Lands". (Ingara vs. Ramelo, 107 Phil., 498; Balboa vs. Farrales, 51 Phil., 498; Republic vs.
 Diamon, 97 Phil., 838.) In the case at bar, the final proof appears to have been presented to,
and approved by the Director of Lands, in 1954, or several years after the death of Adolfo
Icdang and the dissolution of his conjugal partnership with plaintiff herein. Hence, the land in
question could not have formed part of the assets of said partnership. It belonged to the heirs
of Adolfo Icdang, pursuant to section 105 of Commonwealth Act No. 141, reading:

xxxx

It is worthy of notice that, under the Public Land Act of 1903 (Act No. 926, section 3), "in the
event of the death of an applicant prior to the issuance of a patent, his widow shall be
entitled to have a patent for the land applied for issue to her upon showing that she has
consummated the requirements of law for homesteading the lands", and that only in case the
deceased applicant leaves no widow shall his interest in the land descend and the patent
issue to his legal heirs. Incorporated substantially in section 103 of the Public Land Act of
1919 (Act No. 2874), this policy was changed by Act No. 3517, pursuant to which the
deceased shall be succeeded no longer by his widow, but "by his heirs in law, who shall be
entitled to have issued to them the patentif they show that they have complied with the
requirements therefor". And this is, in effect, the rule maintained in the above quoted section
105 of Commonwealth Act No. 141.35 (Emphasis added.)

It appearing that Don Fabian was responsible for meeting the requirements of law for homesteading
Parcel S-1, said property, following Soliman, cannot be categorized as the paraphernal property of
Pendejito. Thus, the homestead patent thereto, if eventually issued, must be made in the name of
the compulsory heirs of Don Fabian. Over it, Pendejito shall be entitled, pursuant to Art. 834 of the
Spanish Civil Code of 1889, only to a usufructuary right over the property equal to the corresponding
share of each of Don Fabians compulsory heirs, i.e., his eight children.

Seventh Issue: Judgment Must not Only be Clear but

Must Also be Complete

Petitioners bemoan the fact that both the trial and appellate courts granted relief and remedies not
prayed for by the parties. As argued, Civil Case No. 1292, initiated by the heirs of Benjamin against
Tirso, basically sought recovery of real properties; while Civil Case No. 1332, a countersuit filed by
Tirso, was for partition and damages, the main thrust of which is to recover his alleged share from
properties in the exclusive possession and enjoyment of other heirs since the death of Don Fabian in
1948. Thus, petitioners take issue against both decisions of the trial and appellate courts which
ordered partition not only in favor of Tirso but also in favor of the other petitioners he sued. What is
particularly appalling, according to them, is the order for accounting which no one requested.

Petitioners lament, while understandable, is specious. Our judicial system requires courts to apply
the law and grant remedies when appropriately called for by law and justice. In the exercise of this
mandate, courts have the discretion to apply equity in the absence or insufficiency of the law. Equity
has been defined as justice outside law, being ethical rather than jural and belonging to the sphere
of morals than of law. It is grounded on the precepts of conscience and not on any sanction of
positive law, for equity finds no room for application where there is law.36

In the instant case, a disposition only ordering partial partition and without accounting, as petitioners
presently urge, would be most impractical and against what we articulated in Samala v. Court of
Appeals.37 There, we cautioned courts against being dogmatic in rendering decisions, it being
preferable if they take a complete view of the case and in the process come up with a just and
equitable judgment, eschewing rules tending to frustrate rather than promote substantial justice.
Surely, the assailed path taken by the CA on the grant of relief not specifically sought is not without
precedent. In National Housing Authority v. Court of Appeals, where the petitioner questioned the
competence of the courts a quo to resolve issues not raised in the pleadings, and to order the
disposition of the subject property when what was raised was the issue of right to possession, this
Court in dismissing the challenge stated that "a case should be decided in its totality, resolving all
interlocking issues in order to render justice to all concerned and to end the litigation once and for
all."38 Verily, courts should always strive to settle the entire controversy in a single proceeding
leaving no root or branch to bear the seed of future litigation.39

Eighth Issue: Deed of Donation Null and Void

Finally, as an incidental issue, petitioners asseverate that the deed of donation (Exhibit "F") executed
on September 19, 1948, or after the death of Don Fabian, in favor of Reygula M. Bayan, is valid,
particularly so since Tirso and the heirs of Benjamin, as represented by their mother, Nakila, do not
question the validity of said deed as they in fact signed the same. That the donated property was the
same property described and included in the deed of sale (Exhibit "E") in favor of Soledad
Monteroso-Cagampang is not, they contend, an invalidating factor since what Don Fabian sold
under Exhibit "E" did not extend beyond his conjugal share thereon.

Just like the issue of the nullity of the three deeds of absolute sale (Exhibits "C," "D," and "E")
heretofore discussed, we agree with the determination of the RTC and CA as to the invalidity of the
donation of Parcel F-5 to Reygula M. Bayan. We need not repeat the reasons for such
determination, except the most basic. We refer to the authority of the person who executed the deed
of donation. As it were, the widow of Benjamin, Nakila, signed the deed of donation. She, however,
cannot give consent to the donation as she has no disposable right thereto. The legal maxim nemo
dat quod non habet40 applies to this instance as Nakila only has usufructuary right equal to the share
of her children under Art. 834 of the Spanish Civil Code of 1889. Besides, Nakila signed the deed of
donation in her name and not in the name of her children who are the heirs in representation of their
father, Benjamin. Lest it be overlooked, the then minor children were not under the legal
guardianship of Nakila, a situation which thus disqualifies her from signing on their behalf.

The fact that nobody objected to the donation is of little consequence, for as the CA aptly observed,
"The circumstance that parties to a void contract choose to ignore its nullity can in no way enhance
the invalid character of such contract. It is axiomatic that void contracts cannot be the subject of
ratification, either express or implied."41

WHEREFORE, the petition in G.R. No. 113199 is DENIED for lack of merit. The assailed Decision
and Resolution dated March 31, 1992 and December 16, 1993, respectively, of the CA in CA-G.R.
CV No. 15805 are hereby AFFIRMED IN TOTO. Costs against the petitioners.

SO ORDERED.

Lacbayan Vs. Samoy

Socialize Us

Facts:
 Betty Lacbayan (petitioner) and Bayani S. Samoy (respondent) had an illicit relationship.
During their relationship, they, together with three more incorporators, were able to
establish a manpower services company.
The company acquired five parcels of land were registered in petitioner and respondents
names, ostensibly as husband and wife.
When their relationship turned sour, they decided to divide the said properties and
terminate their business partnership by executing a Partition Agreement.
Initially, respondent agreed to petitioners proposal that the properties in Malvar St. and
Don Enrique Heights be assigned to the latter, while the ownership over the three other
properties will go to respondent.
However, when Lacbayan wanted additional demands to be included in the partition
agreement, Samoy refused.
Feeling aggrieved, petitioner filed a complaint for judicial partition of the said properties.
Petitioners contention: She claimed that they started to live together as husband and wife
in 1979 without the benefit of marriage and worked together as business partners,
acquiring real properties amounting to P15,500,000.00.
Respondents contention: He purchased the properties using his own personal funds.
RTC and CA ruled in favor or respondent.

Issues:

1. WON an action for partition precludes a settlement on the issue of ownership.

2. Would a resolution on the issue of ownership subject the Torrens title issued over the
disputed realties to a collateral attack?

Held:
1. No.

While it is true that the complaint involved here is one for partition, the same is premised on the
existence or non-existence of co-ownership between the parties. Until and unless this issue of
co-ownership is definitely and finally resolved, it would be premature to effect a partition of the
disputed properties. More importantly, the complaint will not even lie if the claimant, or petitioner
in this case, does not even have any rightful interest over the subject properties.

A careful perusal of the contents of the so-called Partition Agreement indicates that the
document involves matters which necessitate prior settlement of questions of law, basic of
which is a determination as to whether the parties have the right to freely divide among
themselves the subject properties.

2. No.

There is no dispute that a Torrens certificate of title cannot be collaterally attacked, but that rule
is not material to the case at bar. What cannot be collaterally attacked is the certificate of title
and not the title itself. The certificate referred to is that document issued by the Register of
Deeds known as the TCT. In contrast, the title referred to by law means ownership which is,
more often than not, represented by that document.

Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that
ownership thereof can no longer be disputed. Mere issuance of the certificate of title in the
name of any person does not foreclose the possibility that the real property may be under co-
ownership with persons not named in the certificate, or that the registrant may only be a trustee,
or that other parties may have acquired interest over the property subsequent to the issuance of
the certificate of title. Needless to say, registration does not vest ownership over a property, but
may be the best evidence thereof.
Other topic:

Whether respondent is estopped from repudiating co-ownership over the subject realties.
YES. Petitioner herself admitted that she did not assent to the Partition Agreement after seeing
the need to amend the same to include other matters. Petitioner does not have any right to
insist on the contents of an agreement she intentionally refused to sign.

Moreover, to follow petitioners argument would be to allow respondent not only to admit against
his own interest but that of his legal spouse as well, who may also be lawfully entitled co-
ownership over the said properties.

G.R. No. 165427 March 21, 2011

BETTY B. LACBAYAN, Petitioner,

vs.
BAYANI S. SAMOY, JR., Respondent.

DECISION

VILLARAMA, JR., J.:

This settles the petition for review on certiorari filed by petitioner Betty B. Lacbayan against
respondent Bayani S. Samoy, Jr. assailing the September 14, 2004 Decision1 of the Court of
Appeals (CA) in CA-G.R. CV No. 67596. The CA had affirmed the February 10, 2000 Decision2 of
the Regional Trial Court (RTC), Branch 224, of Quezon City declaring respondent as the sole owner
of the properties involved in this suit and awarding to him 100,000.00 as attorneys fees.

This suit stemmed from the following facts.

Petitioner and respondent met each other through a common friend sometime in 1978. Despite
respondent being already married, their relationship developed until petitioner gave birth to
respondents son on October 12, 1979.3

During their illicit relationship, petitioner and respondent, together with three more incorporators,
were able to establish a manpower services company.4 Five parcels of land were also acquired
during the said period and were registered in petitioner and respondents names, ostensibly as
husband and wife. The lands are briefly described as follows:

1. A 255-square meter real estate property located at Malvar St., Quezon City covered by
TCT No. 303224 and registered in the name of Bayani S. Samoy, Jr. "married to Betty
Lacbayan."5

2. A 296-square meter real estate property located at Main Ave., Quezon City covered by
TCT No. 23301 and registered in the name of "Spouses Bayani S. Samoy and Betty
Lacbayan."6
 3. A 300-square meter real estate property located at Matatag St., Quezon City covered by
TCT No. RT-38264 and registered in the name of Bayani S. Samoy, Jr. "married to Betty
Lacbayan Samoy."7

4. A 183.20-square meter real estate property located at Zobel St., Quezon City covered by
TCT No. 335193 and registered in the name of Bayani S. Samoy, Jr. "married to Betty L.
Samoy."8

5. A 400-square meter real estate property located at Don Enrique Heights, Quezon City
covered by TCT No. 90232 and registered in the name of Bayani S. Samoy, Jr. "married to
Betty L. Samoy."9

Initially, petitioner lived with her parents in Mapagbigay St., V. Luna, Quezon City. In 1983, petitioner
left her parents and decided to reside in the property located in Malvar St. in Project 4, Quezon City.
Later, she and their son transferred to Zobel St., also in Project 4, and finally to the 400-square
meter property in Don Enrique Heights.10

Eventually, however, their relationship turned sour and they decided to part ways sometime in 1991.
In 1998, both parties agreed to divide the said properties and terminate their business partnership by
executing a Partition Agreement.11 Initially, respondent agreed to petitioners proposal that the
properties in Malvar St. and Don Enrique Heights be assigned to the latter, while the ownership over
the three other properties will go to respondent.12However, when petitioner wanted additional
demands to be included in the partition agreement, respondent refused.13 Feeling aggrieved,
petitioner filed a complaint for judicial partition14 of the said properties before the RTC in Quezon City
on May 31, 1999.

In her complaint, petitioner averred that she and respondent started to live together as husband and
wife in 1979 without the benefit of marriage and worked together as business partners, acquiring real
properties amounting to 15,500,000.00.15 Respondent, in his Answer,16 however, denied
petitioners claim of cohabitation and said that the properties were acquired out of his own personal
funds without any contribution from petitioner.17

During the trial, petitioner admitted that although they were together for almost 24 hours a day in
1983 until 1991, respondent would still go home to his wife usually in the wee hours of the
morning.18 Petitioner likewise claimed that they acquired the said real estate properties from the
income of the company which she and respondent established.19

Respondent, meanwhile, testified that the properties were purchased from his personal funds,
salaries, dividends, allowances and commissions.20 He countered that the said properties were
registered in his name together with petitioner to exclude the same from the property regime of
respondent and his legal wife, and to prevent the possible dissipation of the said properties since his
legal wife was then a heavy gambler.21 Respondent added that he also purchased the said
properties as investment, with the intention to sell them later on for the purchase or construction of a
new building.22

On February 10, 2000, the trial court rendered a decision dismissing the complaint for lack of
merit.23 In resolving the issue on ownership, the RTC decided to give considerable weight to
petitioners own admission that the properties were acquired not from her own personal funds but
from the income of the manpower services company over which she owns a measly 3.33% share.24

Aggrieved, petitioner elevated the matter to the CA asserting that she is the pro indiviso owner of
one-half of the properties in dispute. Petitioner argued that the trial courts decision subjected the
certificates of title over the said properties to collateral attack contrary to law and jurisprudence.
Petitioner also contended that it is improper to thresh out the issue on ownership in an action for
partition.25

Unimpressed with petitioners arguments, the appellate court denied the appeal, explaining in the
following manner:

Appellants harping on the indefeasibility of the certificates of title covering the subject realties is, to
say the least, misplaced. Rather than the validity of said certificates which was nowhere dealt with in
the appealed decision, the record shows that what the trial court determined therein was the
ownership of the subject realties itself an issue correlative to and a necessary adjunct of the claim
of co-ownership upon which appellant anchored her cause of action for partition. It bears
emphasizing, moreover, that the rule on the indefeasibility of a Torrens title applies only to original
and not to subsequent registration as that availed of by the parties in respect to the properties in
litigation. To our mind, the inapplicability of said principle to the case at bench is even more
underscored by the admitted falsity of the registration of the selfsame realties in the parties name as
husband and wife.

The same dearth of merit permeates appellants imputation of reversible error against the trial court
for supposedly failing to make the proper delineation between an action for partition and an action
involving ownership. Typically brought by a person claiming to be co-owner of a specified property
against a defendant or defendants whom the plaintiff recognizes to be co-owners, an action for
partition may be seen to present simultaneously two principal issues, i.e., first, the issue of whether
the plaintiff is indeed a co-owner of the property sought to be partitioned and, second assuming
that the plaintiff successfully hurdles the first the issue of how the property is to be divided between
plaintiff and defendant(s). Otherwise stated, the court must initially settle the issue of ownership for
the simple reason that it cannot properly issue an order to divide the property without first making a
determination as to the existence of co-ownership. Until and unless the issue of ownership is
definitely resolved, it would be premature to effect a partition of the properties. This is precisely what
the trial court did when it discounted the merit in appellants claim of co-ownership.26

Hence, this petition premised on the following arguments:

I. Ownership cannot be passed upon in a partition case.

II. The partition agreement duly signed by respondent contains an admission against
respondents interest as to the existence of co-ownership between the parties.

III. An action for partition cannot be defeated by the mere expedience of repudiating co-
ownership based on self-serving claims of exclusive ownership of the properties in dispute.

IV. A Torrens title is the best evidence of ownership which cannot be outweighed by
respondents self-serving assertion to the contrary.

V. The properties involved were acquired by both parties through their actual joint
contribution of money, property, or industry.27

Noticeably, the last argument is essentially a question of fact, which we feel has been squarely
threshed out in the decisions of both the trial and appellate courts. We deem it wise not to disturb the
findings of the lower courts on the said matter absent any showing that the instant case falls under
the exceptions to the general rule that questions of fact are beyond the ambit of the Courts
jurisdiction in petitions under Rule 45 of the 1997 Rules of Civil Procedure, as amended. The issues
may be summarized into only three:

I. Whether an action for partition precludes a settlement on the issue of ownership;

II. Whether the Torrens title over the disputed properties was collaterally attacked in the
action for partition; and

III. Whether respondent is estopped from repudiating co-ownership over the subject realties.

We find the petition bereft of merit.

Our disquisition in Municipality of Bian v. Garcia28 is definitive. There, we explained that the
determination as to the existence of co-ownership is necessary in the resolution of an action for
partition. Thus:

The first phase of a partition and/or accounting suit is taken up with the determination of whether or
not a co-ownership in fact exists, and a partition is proper (i.e., not otherwise legally proscribed) and
may be made by voluntary agreement of all the parties interested in the property. This phase may
end with a declaration that plaintiff is not entitled to have a partition either because a co-ownership
does not exist, or partition is legally prohibited. It may end, on the other hand, with an adjudgment
that a co-ownership does in truth exist, partition is proper in the premises and an accounting of rents
and profits received by the defendant from the real estate in question is in order. x x x

The second phase commences when it appears that "the parties are unable to agree upon the
partition" directed by the court. In that event[,] partition shall be done for the parties by the [c]ourt
with the assistance of not more than three (3) commissioners. This second stage may well also deal
with the rendition of the accounting itself and its approval by the [c]ourt after the parties have been
accorded opportunity to be heard thereon, and an award for the recovery by the party or parties
thereto entitled of their just share in the rents and profits of the real estate in question. x x
x29 (Emphasis supplied.)

While it is true that the complaint involved here is one for partition, the same is premised on the
existence or non-existence of co-ownership between the parties. Petitioner insists she is a co-owner
pro indiviso of the five real estate properties based on the transfer certificates of title (TCTs) covering
the subject properties. Respondent maintains otherwise. Indubitably, therefore, until and unless this
issue of co-ownership is definitely and finally resolved, it would be premature to effect a partition of
the disputed properties.30 More importantly, the complaint will not even lie if the claimant, or
petitioner in this case, does not even have any rightful interest over the subject properties.31

Would a resolution on the issue of ownership subject the Torrens title issued over the disputed
realties to a collateral attack? Most definitely, it would not.

There is no dispute that a Torrens certificate of title cannot be collaterally attacked,32 but that rule is
not material to the case at bar. What cannot be collaterally attacked is the certificate of title and not
the title itself.33 The certificate referred to is that document issued by the Register of Deeds known as
the TCT. In contrast, the title referred to by law means ownership which is, more often than not,
represented by that document.34 Petitioner apparently confuses title with the certificate of title. Title
as a concept of ownership should not be confused with the certificate of title as evidence of such
ownership although both are interchangeably used.35
Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that
ownership thereof can no longer be disputed. Ownership is different from a certificate of title, the
latter only serving as the best proof of ownership over a piece of land. The certificate cannot always
be considered as conclusive evidence of ownership.36In fact, mere issuance of the certificate of title
in the name of any person does not foreclose the possibility that the real property may be under co-
ownership with persons not named in the certificate, or that the registrant may only be a trustee, or
that other parties may have acquired interest over the property subsequent to the issuance of the
certificate of title.37 Needless to say, registration does not vest ownership over a property, but may
be the best evidence thereof. 1avvphi1

Finally, as to whether respondents assent to the initial partition agreement serves as an admission
against interest, in that the respondent is deemed to have admitted the existence of co-ownership
between him and petitioner, we rule in the negative.

An admission is any statement of fact made by a party against his interest or unfavorable to the
conclusion for which he contends or is inconsistent with the facts alleged by him.38 Admission
against interest is governed by Section 26 of Rule 130 of the Rules of Court, which provides:

Sec. 26. Admissions of a party. The act, declaration or omission of a party as to a relevant fact
may be given in evidence against him.

To be admissible, an admission must (a) involve matters of fact, and not of law; (b) be categorical
and definite; (c) be knowingly and voluntarily made; and (d) be adverse to the admitters interests,
otherwise it would be self-serving and inadmissible.39

A careful perusal of the contents of the so-called Partition Agreement indicates that the document
involves matters which necessitate prior settlement of questions of law, basic of which is a
determination as to whether the parties have the right to freely divide among themselves the subject
properties. Moreover, to follow petitioners argument would be to allow respondent not only to admit
against his own interest but that of his legal spouse as well, who may also be lawfully entitled co-
ownership over the said properties. Respondent is not allowed by law to waive whatever share his
lawful spouse may have on the disputed properties. Basic is the rule that rights may be waived,
unless the waiver is contrary to law, public order, public policy, morals, good customs or prejudicial
to a third person with a right recognized by law.40

Curiously, petitioner herself admitted that she did not assent to the Partition Agreement after seeing
the need to amend the same to include other matters. Petitioner does not have any right to insist on
the contents of an agreement she intentionally refused to sign.

As to the award of damages to respondent, we do not subscribe to the trial courts view that
respondent is entitled to attorneys fees. Unlike the trial court, we do not commiserate with
respondents predicament. The trial court ruled that respondent was forced to litigate and engaged
the services of his counsel to defend his interest as to entitle him an award of 100,000.00 as
attorneys fees. But we note that in the first place, it was respondent himself who impressed upon
petitioner that she has a right over the involved properties. Secondly, respondents act of
representing himself and petitioner as husband and wife was a deliberate attempt to skirt the law
and escape his legal obligation to his lawful wife. Respondent, therefore, has no one but himself to
blame the consequences of his deceitful act which resulted in the filing of the complaint against him.

WHEREFORE, the petition is DENIED. The September 14, 2004 Decision of the Court of Appeals in
CA-G.R. CV No. 67596 is AFFIRMED with MODIFICATION. Respondent Bayani S. Samoy, Jr. is
hereby declared the sole owner of the disputed properties, without prejudice to any claim his legal
wife may have filed or may file against him. The award of 100,000.00 as attorneys fees in
respondents favor is DELETED.

No costs.

SO ORDERED.

EQUATORIAL REALTY V. MAYFAIR (November 21, 1996)

FACTS:

Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-storey building to respondent
Mayfair Theater Inc.

They entered a contract which provides that if the LESSOR should desire to sell the leased premises, the
LESSEE shall be given 30-days exclusive option to purchase the same.

Carmelo informed Mayfair that it will sell the property to Equatorial. Mayfair made known its interest to buy
the property but only to the extent of the leased premises.

Notwithstanding Mayfairs intention, Carmelo sold the property to Equatorial.

ISSUE:

WON the sale of the property to Equatorial is valid.

HELD:

The sale of the property should be rescinded because Mayfair has the right of first refusal. Both
Equatorial and Carmelo are in bad faith because they knew of the stipulation in the contract regarding the
right of first refusal.

The stipulation is a not an option contract but a right of first refusal and as such the requirement of a
separate consideration for the option, has no applicability in the instant case. The consideration is built in
the reciprocal obligation of the parties.

In reciprocal contract, the obligation or promise of each party is the consideration for that of the other.
(Promise to lease in return of the right to first refusal)
With regard to the impossibility of performance, only Carmelo can be blamed for not including the entire
property in the right of first refusal. Court held that Mayfair may not have the option to buy the property.
Not only the leased area but the entire property.

G.R. No. 133879 November 21, 2001

EQUATORIAL REALTY DEVELOPMENT, INC., petitioner,

vs.
MAYFAIR THEATER, INC., respondent.

PANGANIBAN, J.:

General propositions do not decide specific cases. Rather, laws are interpreted in the context of the
peculiar factual situation of each proceeding. Each case has its own flesh and blood and cannot be
ruled upon on the basis of isolated clinical classroom principles.

While we agree with the general proposition that a contract of sale is valid until rescinded, it is
equally true that ownership of the thing sold is not acquired by mere agreement, but by tradition or
delivery. The peculiar facts of the present controversy as found by this Court in an earlier relevant
Decision show that delivery was not actually effected; in fact, it was prevented by a legally effective
impediment. Not having been the owner, petitioner cannot be entitled to the civil fruits of ownership
like rentals of the thing sold. Furthermore, petitioner's bad faith, as again demonstrated by the
specific factual milieu of said Decision, bars the grant of such benefits. Otherwise, bad faith would be
rewarded instead of punished.

The Case

Filed before this Court is a Petition for Review1 under Rule 45 of the Rules of Court, challenging the
March 11, 1998 Order2 of the Regional Trial Court of Manila (RTC), Branch 8, in Civil Case No. 97-
85141. The dispositive portion of the assailed Order reads as follows:

"WHEREFORE, the motion to dismiss filed by defendant Mayfair is hereby GRANTED, and
the complaint filed by plaintiff Equatorial is hereby DISMISSED."3

Also questioned is the May 29, 1998 RTC Order4 denying petitioner's Motion for Reconsideration.

The Facts

The main factual antecedents of the present Petition are matters of record, because it arose out of
an earlier case decided by this Court on November 21, 1996, entitled Equatorial Realty
Development, Inc. v. Mayfair Theater, Inc.5(henceforth referred to as the "mother case"), docketed
as G.R No. 106063.

Carmelo & Bauermann, Inc. ("Camelo" ) used to own a parcel of land, together with two 2-storey
buildings constructed thereon, located at Claro M. Recto Avenue, Manila, and covered by TCT No.
18529 issued in its name by the Register of Deeds of Manila.

On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. ("Mayfair") for
a period of 20 years. The lease covered a portion of the second floor and mezzanine of a two-storey
building with about 1,610 square meters of floor area, which respondent used as a movie house
known as Maxim Theater.
Two years later, on March 31, 1969, Mayfair entered into a second Contract of Lease with Carmelo
for the lease of another portion of the latter's property namely, a part of the second floor of the
two-storey building, with a floor area of about 1,064 square meters; and two store spaces on the
ground floor and the mezzanine, with a combined floor area of about 300 square meters. In that
space, Mayfair put up another movie house known as Miramar Theater. The Contract of Lease was
likewise for a period of 20 years.

Both leases contained a provision granting Mayfair a right of first refusal to purchase the subject
properties. However, on July 30, 1978 within the 20-year-lease term the subject properties
were sold by Carmelo to Equatorial Realty Development, Inc. ("Equatorial") for the total sum of
P11,300,000, without their first being offered to Mayfair.

As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the
Regional Trial Court of Manila (Branch 7) for (a) the annulment of the Deed of Absolute Sale
between Carmelo and Equatorial, (b) specific performance, and (c) damages. After trial on the
merits, the lower court rendered a Decision in favor of Carmelo and Equatorial. This case, entitled
"Mayfair" Theater, Inc. v. Carmelo and Bauermann, Inc., et al.," was docketed as Civil Case No.
118019.

On appeal (docketed as CA-GR CV No. 32918), the Court of Appeals (CA) completely reversed and
set aside the judgment of the lower court.

The controversy reached this Court via G.R No. 106063. In this mother case, it denied the Petition
for Review in this wise:

"WHEREFORE, the petition for review of the decision of the Court of Appeals, dated June
23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale
between petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is
hereby deemed rescinded; Carmelo & Bauermann is ordered to return to petitioner
Equatorial Realty Development the purchase price. The latter is directed to execute the
deeds and documents necessary to return ownership to Carmelo & Bauermann of the
disputed lots. Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to buy the
aforesaid lots for P11,300,000.00."6

The foregoing Decision of this Court became final and executory on March 17, 1997. On April 25,
1997, Mayfair filed a Motion for Execution, which the trial court granted.

However, Carmelo could no longer be located. Thus, following the order of execution of the trial
court, Mayfair deposited with the clerk of court a quo its payment to Carmelo in the sum of
P11,300,000 less; P847,000 as withholding tax. The lower court issued a Deed of Reconveyance in
favor of Carmelo and a Deed of Sale in favor of Mayfair. On the basis of these documents, the
Registry of Deeds of Manila canceled Equatorial's titles and issued new Certificates of Title7 in the
name of Mayfair.

Ruling on Equatorial's Petition for Certiorari and Petition contesting the foregoing manner of
execution, the CA in its Resolution of November 20, 1998, explained that Mayfair had no right to
deduct the P847,000 as withholding tax. Since Carmelo could no longer be located, the appellate
court ordered Mayfair to deposit the said sum with the Office of the Clerk of Court, Manila, to
complete the full amount of P11,300,000 to be turned over to Equatorial.

Equatorial questioned the legality of the above CA ruling before this Court in G.R No. 136221
entitled "Equatorial Realty Development, Inc. v. Mayfair Theater, Inc." In a Decision promulgated on
May 12, 2000,8 this Court directed the trial court to follow strictly the Decision in GR. No. 106063, the
mother case. It explained its ruling in these words:

"We agree that Carmelo and Bauermann is obliged to return the entire amount of eleven
million three hundred thousand pesos (P11,300,000.00) to Equatorial. On the other hand,
Mayfair may not deduct from the purchase price the amount of eight hundred forty-seven
thousand pesos (P847,000.00) as withholding tax. The duty to withhold taxes due, if any, is
imposed on the seller Carmelo and Bauermann, Inc."9

Meanwhile, on September 18, 1997 barely five months after Mayfair had submitted its Motion for
Execution before the RTC of Manila, Branch 7 Equatorial filed with the Regional Trial Court of
Manila, Branch 8, an action for the collection of a sum of money against Mayfair, claiming payment
of rentals or reasonable compensation for the defendant's use of the subject premises after its lease
contracts had expired. This action was the progenitor of the present case.

In its Complaint, Equatorial alleged among other things that the Lease Contract covering the
premises occupied by Maxim Theater expired on May 31, 1987, while the Lease Contract covering
the premises occupied by Miramar Theater lapsed on March 31, 1989.10 Representing itself as the
owner of the subject premises by reason of the Contract of Sale on July 30, 1978, it claimed rentals
arising from Mayfair's occupation thereof.

Ruling of the RTC Manila, Branch 8

As earlier stated, the trial court dismissed the Complaint via the herein assailed Order and denied
the Motion for Reconsideration filed by Equatorial.11

The lower court debunked the claim of petitioner for unpaid back rentals, holding that the rescission
of the Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual
proprietary rights, even in expectancy.

In granting the Motion to Dismiss, the court a quo held that the critical issue was whether Equatorial
was the owner of the subject property and could thus enjoy the fruits or rentals therefrom. It declared
the rescinded Deed of Absolute Sale as avoid at its inception as though it did not happen."

The trial court ratiocinated as follows:

"The meaning of rescind in the aforequoted decision is to set aside. In the case of Ocampo
v. Court of Appeals, G.R. No. 97442, June 30, 1994, the Supreme Court held that, 'to rescind
is to declare a contract void in its inception and to put an end as though it never were. It is
not merely to terminate it and release parties from further obligations to each other but to
abrogate it from the beginning and restore parties to relative positions which they would have
occupied had no contract ever been made.'

"Relative to the foregoing definition, the Deed of Absolute Sale between Equatorial and
Carmelo dated July 31, 1978 is void at its inception as though it did not happen.

"The argument of Equatorial that this complaint for back rentals as 'reasonable
compensation for use of the subject property after expiration of the lease contracts presumes
that the Deed of Absolute Sale dated July 30, 1978 from whence the fountain of Equatorial's
all rights flows is still valid and existing.
 xxx xxx xxx

"The subject Deed of Absolute Sale having been rescinded by the Supreme Court,
Equatorial is not the owner and does not have any right to demand backrentals from the
subject property. . .12

The trial court added: "The Supreme Court in the Equatorial case, G.R No. 106063, has categorically
stated that the Deed of Absolute Sale dated July 31, 1978 has been rescinded subjecting the
present complaint to res judicata."13

Hence, the present recourse.14

Issues

Petitioner submits, for the consideration of this Court, the following issues:15

"A

The basis of the dismissal of the Complaint by the Regional Trial Court not only disregards
basic concepts and principles in the law on contracts and in civil law, especially those on
rescission and its corresponding legal effects, but also ignores the dispositive portion of the
Decision of the Supreme Court in G.R. No. 106063 entitled 'Equatorial Realty Development,
Inc. & Carmelo & Bauermann, Inc. vs. Mayfair Theater, Inc.'

"B.

The Regional Trial Court erred in holding that the Deed of Absolute Sale in favor of petitioner
by Carmelo & Bauermann, Inc., dated July 31, 1978, over the premises used and occupied
by respondent, having been 'deemed rescinded' by the Supreme Court in G.R. No. 106063,
is 'void at its inception as though it did not happen.'

"C.

The Regional Trial Court likewise erred in holding that the aforesaid Deed of Absolute Sale,
dated July 31, 1978, having been 'deemed rescinded' by the Supreme Court in G.R. No.
106063, petitioner 'is not the owner and does not have any right to demand backrentals from
the subject property,' and that the rescission of the Deed of Absolute Sale by the Supreme
Court does not confer to petitioner 'any vested right nor any residual proprietary rights even
in expectancy.'

"D.

The issue upon which the Regional Trial Court dismissed the civil case, as stated in its Order
of March 11, 1998, was not raised by respondent in its Motion to Dismiss.

"E.

The sole ground upon which the Regional Trial Court dismissed Civil Case No. 97-85141 is
not one of the grounds of a Motion to Dismiss under Sec. 1 of Rule 16 of the 1997 Rules of
Civil Procedure."
Basically, the issues can be summarized into two: (1) the substantive issue of whether Equatorial is
entitled to back rentals; and (2) the procedural issue of whether the court a quo's dismissal of Civil
Case No. 97-85141 was based on one of the grounds raised by respondent in its Motion to Dismiss
and covered by Rule 16 of the Rules of Court.

This Court's Ruling

The Petition is not meritorious.

First Issue:
Ownership of Subject Properties

We hold that under the peculiar facts and circumstances of the case at bar, as found by this Court
en banc in its Decision promulgated in 1996 in the mother case, no right of ownership was
transferred from Carmelo to Equatorial in view of a patent failure to deliver the property to the buyer.

Rental a Civil
Fruit of Ownership

To better understand the peculiarity of the instant case, let us begin with some basic parameters.
Rent is a civil fruit16 that belongs to the owner of the property producing it17 by right of
accession.18 Consequently and ordinarily, the rentals that fell due from the time of the perfection of
the sale to petitioner until its rescission by final judgment should belong to the owner of the property
during that period.

By a contract of sale, "one of the contracting parties obligates himself to transfer ownership of and to
deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent."19

Ownership of the thing sold is a real right,20 which the buyer acquires only upon delivery of the
thing to him "in any of the ways specified in articles 1497 to 1501, or in any other manner signifying
an agreement that the possession is transferred from the vendor to the vendee."21 This right is
transferred, not merely by contract, but also by tradition or delivery.22 Non nudis pactis sed traditione
dominia rerum transferantur. And there is said to be delivery if and when the thing sold "is placed in
the control and possession of the vendee."23 Thus, it has been held that while the execution of a
public instrument of sale is recognized by law as equivalent to the delivery of the thing sold,24 such
constructive or symbolic delivery, being merely presumptive, is deemed negated by the failure of the
vendee to take actual possession of the land sold.25

Delivery has been described as a composite act, a thing in which both parties must join and the
minds of both parties concur. It is an act by which one party parts with the title to and the possession
of the property, and the other acquires the right to and the possession of the same. In its natural
sense, delivery means something in addition to the delivery of property or title; it means transfer of
possession.26 In the Law on Sales, delivery may be either actual or constructive, but both forms of
delivery contemplate "the absolute giving up of the control and custody of the property on the part of
the vendor, and the assumption of the same by the vendee."27

Possession Never
Acquired by Petitioner

Let us now apply the foregoing discussion to the present issue. From the peculiar facts of this case,
it is clear that petitioner never took actual control and possession of the property sold, in view of
respondent's timely objection to the sale and the continued actual possession of the property. The
objection took the form of a court action impugning the sale which, as we know, was rescinded by a
judgment rendered by this Court in the mother case. It has been held that the execution of a contract
of sale as a form of constructive delivery is a legal fiction. It holds true only when there is no
impediment that may prevent the passing of the property from the hands of the vendor into those of
the vendee.28 When there is such impediment, "fiction yields to reality the delivery has not been
effected."29

Hence, respondent's opposition to the transfer of the property by way of sale to Equatorial was a
legally sufficient impediment that effectively prevented the passing of the property into the latter's
hands.

This was the same impediment contemplated in Vda. de Sarmiento v. Lesaca,30 in which the Court
held as follows:

"The question that now arises is: Is there any stipulation in the sale in question from which
we can infer that the vendor did not intend to deliver outright the possession of the lands to
the vendee? We find none. On the contrary, it can be clearly seen therein that the vendor
intended to place the vendee in actual possession of the lands immediately as can be
inferred from the stipulation that the vendee 'takes actual possession thereof . . . with full
rights to dispose, enjoy and make use thereof in such manner and form as would be most
advantageous to herself.' The possession referred to in the contract evidently refers to actual
possession and not merely symbolical inferable from the mere execution of the document.

"Has the vendor complied with this express commitment? she did not. As provided in Article
1462, the thing sold shall be deemed delivered when the vendee is placed in
the control and possession thereof, which situation does not here obtain because from the
execution of the sale up to the present the vendee was never able to take possession of the
lands due to the insistent refusal of Martin Deloso to surrender them claiming ownership
thereof. And although it is postulated in the same article that the execution of a public
document is equivalent to delivery, this legal fiction only holds true when there is no
impediment that may prevent the passing of the property from the hands of the vendor into
those of the vendee. x x x."31

The execution of a public instrument gives rise, therefore, only to a prima facie presumption of
delivery. Such presumption is destroyed when the instrument itself expresses or implies that delivery
was not intended; or when by other means it is shown that such delivery was not effected, because
a third person was actually in possession of the thing. In the latter case, the sale cannot be
considered consummated.

However, the point may be raised that under Article 1164 of the Civil Code, Equatorial as buyer
acquired a right to the fruits of the thing sold from the time the obligation to deliver the property to
petitioner arose.32 That time arose upon the perfection of the Contract of Sale on July 30, 1978, from
which moment the laws provide that the parties to a sale may reciprocally demand
performance.33 Does this mean that despite the judgment rescinding the sale, the right to the
fruits34 belonged to, and remained enforceable by, Equatorial?

Article 1385 of the Civil Code answers this question in the negative, because "[r]escission creates
the obligation to return the things which were the object of the contract, together with their fruits, and
the price with its interest; x x x" Not only the land and building sold, but also the rental payments
paid, if any, had to be returned by the buyer.
Another point. The Decision in the mother case stated that "Equatorial x x x has received rents" from
Mayfair "during all the years that this controversy has been litigated." The Separate Opinion of
Justice Teodoro Padilla in the mother case also said that Equatorial was "deriving rental income"
from the disputed property. Even herein ponente'sSeparate Concurring Opinion in the mother case
recognized these rentals. The question now is: Do all these statements concede actual delivery?

The answer is "No." The fact that Mayfair paid rentals to Equatorial during the litigation should not be
interpreted to mean either actual delivery or ipso facto recognition of Equatorial's title.

The CA Records of the mother case 35 show that Equatorial as alleged buyer of the disputed
properties and as alleged successor-in-interest of Carmelo's rights as lessor submitted two
ejectment suits against Mayfair. Filed in the Metropolitan Trial Court of Manila, the first was docketed
as Civil Case No. 121570 on July 9, 1987; and the second, as Civil Case No. 131944 on May 28,
1990. Mayfair eventually won them both. However, to be able to maintain physical possession of the
premises while awaiting the outcome of the mother case, it had no choice but to pay the rentals.

The rental payments made by Mayfair should not be construed as a recognition of Equatorial as the
new owner. They were made merely to avoid imminent eviction. It is in this context that one should
understand the aforequoted factual statements in the ponencia in the mother case, as well as the
Separate Opinion of Mr. Justice Padilla and the Separate Concurring Opinion of the herein ponente.

At bottom, it may be conceded that, theoretically, a rescissible contract is valid until rescinded.
However, this generalprinciple is not decisive to the issue of whether Equatorial ever acquired the
right to collect rentals. What is decisive is the civil law rule that ownership is acquired, not by mere
agreement, but by tradition or delivery. Under the factual environment of this controversy as found
by this Court in the mother case, Equatorial was never put in actual and effective control or
possession of the property because of Mayfair's timely objection.

As pointed out by Justice Holmes, general propositions do not decide specific cases. Rather, "laws
are interpreted in the context of the peculiar factual situation of each case. Each case has its own
flesh and blood and cannot be decided on the basis of isolated clinical classroom principles."36

In short, the sale to Equatorial may have been valid from inception, but it was judicially rescinded
before it could be consummated. Petitioner never acquired ownership, not because the sale was
void, as erroneously claimed by the trial court, but because the sale was not consummated by
a legally effective delivery of the property sold.

Benefits Precluded by
Petitioner's Bad Faith

Furthermore, assuming for the sake of argument that there was valid delivery, petitioner is not
entitled to any benefits from the "rescinded" Deed of Absolute Sale because of its bad faith. This
being the law of the mother case decided in 1996, it may no longer be changed because it has long
become final and executory. Petitioner's bad faith is set forth in the following pertinent portions of the
mother case:

"First and foremost is that the petitioners acted in bad faith to render Paragraph 8 'inutile.'

xxx xxx xxx

 "Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in
question rescissible. We agree with respondent Appellate Court that the records bear out the
fact that Equatorial was aware of the lease contracts because its lawyers had, prior to the
sale, studied the said contracts. As such, Equatorial cannot tenably claim to be a purchaser
in good faith, and, therefore, rescission lies.

xxx xxx xxx

"As also earlier emphasized, the contract of sale between Equatorial and Carmelo is
characterized by bad faith, since it was knowingly entered into in violation of the rights of and
to the prejudice of Mayfair. In fact, as correctly observed by the Court of Appeals, Equatorial
admitted that its lawyers had studied the contract of lease prior to the sale. Equatorial's
knowledge of the stipulations therein should have cautioned it to look further into the
agreement to determine if it involved stipulations that would prejudice its own interests.

xxx xxx xxx

"On the part of Equatorial, it cannot be a buyer in good faith because it bought the property
with notice and full knowledge that Mayfair had a right to or interest in the property superior
to its own. Carmelo and Equatorial took unconscientious advantage of Mayfair."37 (Italics
supplied)

Thus, petitioner was and still is entitled solely to he return of the purchase price it paid to Carmelo;
no more, no less. This Court has firmly ruled in the mother case that neither of them is entitled to any
consideration of equity, as both "took unconscientious advantage of Mayfair."38

In the mother case, this Court categorically denied the payment of interest, a fruit of ownership. By
the same token, rentals, another fruit of ownership, cannot be granted without mocking this Court's
en banc Decision, which has long become final.

Petitioner's claim of reasonable compensation for respondent's use and occupation of the subject
property from the time the lease expired cannot be countenanced. If it suffered any loss, petitioner
must bear it in silence, since it had wrought that loss upon itself. Otherwise, bad faith would be
rewarded instead of punished. @lawphil.net

We uphold the trial court's disposition, not for the reason it gave, but for (a) the patent failure to
deliver the property and (b) petitioner's bad faith, as above discussed.

Second Issue: itc-alf

Ground in Motion to Dismiss

Procedurally, petitioner claims that the trial court deviated from the accepted and usual course of
judicial proceedings when it dismissed Civil Case No. 97-85141 on a ground not raised in
respondent's Motion to Dismiss. Worse, it allegedly based its dismissal on a ground not provided for
in a motion to dismiss as enunciated in the Rules of Court. @lawphil.net

We are not convinced A review of respondent's Motion to Dismiss Civil Case No. 97-85141 shows
that there were two grounds invoked, as follows:

"(A)
 Plaintiff is guilty of forum-shopping. itc-alf

"(B)

Plaintiff's cause of action, if any, is barred by prior judgment."39

The court a quo ruled, inter alia, that the cause of action of petitioner plaintiff in the case below) had
been barred by a prior judgment of this Court in G.R No. 106063, the mother case.

Although it erred in its interpretation of the said Decision when it argued that the rescinded Deed of
Absolute Sale was avoid," we hold, nonetheless, that petitioner's cause of action is indeed barred by
a prior judgment of this Court. As already discussed, our Decision in G.R No. 106063 shows that
petitioner is not entitled to back rentals, because it never became the owner of the disputed
properties due to a failure of delivery. And even assuming arguendo that there was a valid delivery,
petitioner's bad faith negates its entitlement to the civil fruits of ownership, like interest and rentals.

Under the doctrine of res judicata or bar by prior judgment, a matter that has been adjudicated by a
court of competent jurisdiction must be deemed to have been finally and conclusively settled if it
arises in any subsequent litigation between the same parties and for the same cause.40 Thus, "[a]
final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the
rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving
the same claim, demand, or cause of action."41 Res judicata is based on the ground that the "party to
be affected, or some other with whom he is in privity, has litigated the same matter in a former action
in a court of competent jurisdiction, and should not be permitted to litigate it again.42

It frees the parties from undergoing all over again the rigors of unnecessary suits and repetitive
trials. At the same time, it prevents the clogging of court dockets. Equally important, it stabilizes
rights and promotes the rule of law. @lawphil.net

We find no need to repeat the foregoing disquisitions on the first issue to show satisfaction of the
elements of res judicata. Suffice it to say that, clearly, our ruling in the mother case bars petitioner
from claiming back rentals from respondent. Although the court a quo erred when it declared "void
from inception" the Deed of Absolute Sale between Carmelo and petitioner, our foregoing discussion
supports the grant of the Motion to Dismiss on the ground that our prior judgment in G.R No. 106063
has already resolved the issue of back rentals.

On the basis of the evidence presented during the hearing of Mayfair's Motion to Dismiss, the trial
court found that the issue of ownership of the subject property has been decided by this Court in
favor of Mayfair. We quote the RTC:

"The Supreme Court in the Equatorial case, G.R. No. 106063 has categorically stated that
the Deed of Absolute Sale dated July 31, 1978 has been rescinded subjecting the present
complaint to res judicata."43(Emphasis in the original)

Hence, the trial court decided the Motion to Dismiss on the basis of res judicata, even if it erred in
interpreting the meaning of "rescinded" as equivalent to "void" In short, it ruled on the ground raised;
namely, bar by prior judgment. By granting the Motion, it disposed correctly, even if its legal reason
for nullifying the sale was wrong. The correct reasons are given in this Decision.

WHEREFORE, the Petition is hereby DENIED. Costs against petitioner. itc-alf

SO ORDERED.

Davide Jr., C.J., Quisumbing, Pardo, Buena, Ynares-Santiago and Carpio, JJ., concur.
Bellosillo, J., I join the dissent of J. Gutierrez.
Melo, J., concurring opinion.
Puno, J., concur and also join the concurring opinion of J. Melo.
Vitug, J., see dissenting opinion.
Kapunan, J., join the dissenting opinions of Justices Vitug and Sandoval-Gutierrez.
Mendoza, J., concur in this and Melo, J.'s concurring opinion.
De Leon, Jr., J., join the dissenting opinion of Justice J.C. Vitug.

Concurring Opinion

MELO, J., concurring:

While I express my conformity to the ponencia of our distinguished colleague, Mr. Justice Artemio V.
Panganiban, I would just like to make the following observations:

1. The issue in this case was squarely resolved in our 1996 En Banc decision in the main
case. What petitioner is asking us to do now is to reverse or modify a judgment which is
accurate in every respect, conformable to law and jurisprudence, and faithful to principles of
fairness and justice.

2. Petitioner's submissions are deceiving. It is trying to collect unjustified and unbelievably

increased rentals by provoking a purely academic discussion, as far as respondent is
concerned, of a non-applicable provision of the Civil Code on contracts.

3. To grant the petition is to reward bad faith, for petitioner has deprived respondent of the
latter's property rights for twenty-three (23) years and has forced it to defend its interests in
case after case during that lengthy period. Petitioner now tries to inflict further injury in the
fantastic and groundless amount of P115,947,867.00. To remand this case to the lower court
in order to determine the back rentals allegedly due to petitioner Equatorial Realty
Development Corporation, Inc. is to encourage continuation of crafty tactics and to allow the
further dissipation of scarce judicial time and resources.

The instant petition arose from a complaint for back rentals, increased rentals and interests filed by
petitioner Equatorial Realty Development, Inc. (Equatorial) against respondent Mayfair Theater, Inc.
(Mayfair). It has to be adjudicated in the context of three earlier petitions decided by this Court.

A dispute between the two parties over the ownership of a commercial lot and building along Claro
M. Recto Avenue in Manila has led to 23 years of protracted litigation, including the filing of 4
petitions with the Court, namely, G.R. No. L-106063, decided on November 21, 1996 (264 SCRA
483); G.R. No. 103311 decided on March 4, 1992; G.R. No. 136221, decided on May 12, 2000; and
the present petition, G.R. No. 133879.

The case at bar is a classic illustration of how a dubious interpretation of the dispositive portion of
the 1996 decision for petitioner could lead to 5 more years of bitter litigation after the initial 18 years
of legal proceedings over the first case.
Lease contracts over the subject property were executed on June 1, 1967 and March 31, 1969 by
original owner Carmelo and Bauermann, Inc. (Carmelo) in favor of herein respondent Mayfair. The
leases expired on May 31, 1987 and March 31, 1989, respectively. The lease contracts embodied
provisions giving Mayfair a right-of-first-refusal should Carmelo sell the property.

In an act characterized as bad faith by this Court, the property, in violation of the right of first refusal,
was sold by Carmelo to herein petitioner Equatorial, on July 31, 1978 for P11,300,000.00. On
September 13, 1978, Mayfair filed the first case for annulment of the contract of sale, specific
performance of the right-of-first-refusal provision, and damages. The Regional Trial Court (RTC) of
Manila decided the case in favor of Equatorial on February 7, 1991. Counterclaims for compensation
arising from the use of the premises were awarded to Equatorial by the 1991 RTC decision.

On June 23, 1992, the Court of Appeals reversed the RTC decision, thus leading to the first petition,
G.R. No. 106063, filed against Mayfair by both Equatorial and Carmelo.

On November 21, 1996, this Court En Banc rendered its decision (264 SCRA 483 [1996]), disposing:

WHEREFORE, the petition for review of the decision of the Court of Appeals dated June 23,
1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale between
petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby
rescinded; petitioner Carmelo & Bauermann is ordered to return to petitioner Equatorial
Realty Development the purchase price. The latter is directed to execute the deeds and
documents necessary to return ownership to Carmelo & Bauermann of the disputed lots.
Carmelo and Bauermann is ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots
for P11,300,000.00.

In the Court of Appeals decision (CA-G.R. CV No. 32918, June 23, 1992) in the main case, raised to
this Court, Mayfair was ordered to directly pay P11,300,000.00 to Equatorial whereupon Equatorial
would execute the deeds and documents necessary for the transfer of ownership to Mayfair and the
registration of the property in its name. The execution of documents and the transfer of the property
were directly between Equatorial and Mayfair. Our decision in 1996 (G.R. No. 106063) affirmed the
appellate decision. However, while the 1978 deed of sale questioned by Mayfair was rescinded, we
ordered Carmelo to first return to Equatorial the purchase price of the property, whereupon
Equatorial would return ownership to Carmelo, after which Mayfair would buy the lot for
P11,300,000.00 from Carmelo.

When the case was remanded to the RTC for execution of the decision, it was ascertained that
Carmelo and Bauermann, Inc. was no longer in existence. The Sheriff could not enforce the portions
of the judgment calling for acts to be performed by Carmelo. Mayfair, therefore, deposited the
amount of P11,300,000.00 with the RTC for payment to Equatorial, hoping that the latter would
faithfully comply with this Court's decision. In this regard, it may be mentioned that buyer Mayfair
also paid P847,000.00 in taxes which the vendors should have paid. The RTC ordered the execution
of deeds of transfer, the cancellation of Equatorial's titles to the property, and the issuance of new
titles in favor of Mayfair. Accordingly, the property was registered in the name of Mayfair and titles
issued in its favor.

Equatorial, however, saw an opening for further litigation. It questioned the method employed by the
RTC to execute the Court's judgment, arguing that the directives involving Carmelo's participation
were ignored by the trial court. The litigation over the alleged incorrectness of the execution
eventually led to the second petition earlier mentioned G.R. No. 136221.
It may be mentioned at this point that on July 9, 1987, while the right-of-first-refusal and cancellation
case was pending, Equatorial filed an action for ejectment against Mayfair. Because the issue of
ownership was still pending in the case for rescission of deed of sale including the enforcement of
the right-of-first-refusal provision, the ejectment case was dismissed. Appeals to the RTC and the
Court of Appeals were denied.

On March 26, 1990, still another ejectment case was filed by Equatorial. In decisions which reached
all the way to this Court in G.R. No. 103311, the cases for ejectment did not prosper. Mayfair won
the cases on March 4, 1992.

The three cases decided by the Court in these litigations between Equatorial and Mayfair, all of them
in favor of Mayfair, are antecedents of the present and fourth petition. Equatorial has been adjudged
as having unlawfully and in bad faith acquired property that should have belonged to Mayfair since
1978. Ownership and title have been unquestionably transferred to Mayfair.

Seemingly, Equatorial now seeks to profit from its bad faith. While the case involving the allegedly
incorrect execution of the 1996 decision on cancellation of the deed of sale in G.R. No. 106063 was
being litigated, Equatorial filed on September 18, 1997 with the RTC of Manila two complaints for
payment of back and increased rentals arising from the use by Mayfair of the lot, building, and other
fixed improvements. From the time the property was sold by Carmelo to Equatorial, lessee Mayfair
had been paying to Equatorial the rentals fixed in the 1967 and 1969 lease contracts with the original
owner. This was during the pendency of the complaint for annulment of the contract of sale, specific
performance of the right-of-first-refusal provision, and damages.

As found in our 1998 decision in G.R. No. 106063, the disputed property should have actually
belonged to Mayfair at the time. However, to avoid the ejectment cases, which Equatorial
nonetheless later filed, Mayfair was forced to pay rentals to Equatorial. It paid the rentals based on
the rates fixed by Carmelo in the lease contracts.

Equatorial, claiming the 1967 and 1969 rentals to be inadequate, claimed increased amounts as
reasonable compensation. Because the amounts fixed by the lease contract with Carmelo but paid
to Equatorial were only at the rate of P17,966.21 monthly while Equatorial wanted P210,000.00
every month plus legal interests, the suit was for the payment of P115,947,867.68 as of June 19,
1997.

Citing the 1996 decision in G.R. No. 106063, Mayfair contended that it owned the property under the
decision. It stated that the sale by Carmelo to Equatorial had been cancelled, and, as owner, Mayfair
owed no increased rentals to Equatorial based on said decision.

The present case on back rentals could not be conclusively decided because the execution and
finality of the issue of ownership were being contested for 5 years in the petition on the proper
execution filed in G.R. No. 136221. This petition had to wait for the resolution of G.R. No. 136221.

In its decision dated May 12, 2000, in G.R. No. 136221 (First Division, per Mr. Justice Pardo;
Davide, Jr., C.J., Kapunan, and Ynares-Santiago, JJ., concurring), this Court reiterated the judgment
in G.R. No. 106063. It emphasized that the 1996 decision awarding the property to Mayfair was
clear. It stated that the decision having attained finality, there was nothing left for the parties to do
but to adhere to the mandates of the decision.

In the dispositive portion, however, the Court ordered the trial court "to carry out the execution
following strictly the terms" of the 1996 decision. However, as earlier stated, this could not be done
because Carmelo had ceased to exist. There was no longer any Carmelo which could return the
P11,300,000.00 consideration of the 1978 sale to Equatorial as ordered in the dispositive portion of
the 1996 decision. Equatorial could not and would not also execute the deeds returning the property
to Carmelo, as directed in the decision. Neither could the defunct Carmelo sell the property to
Mayfair at the sale price in 1978 when the right of first refusal was violated.

Mayfair had to file a motion for partial reconsideration, emphasizing that it was impossible for a
corporation which has gone out of existence to obey the specific orders of this Court. A resolution
was, therefore, rendered on June 25, 2001 putting an end to the controversy over the proper
implementation of the 1996 judgment.

This June 25, 2001 Resolution in G.R. No. 136221 validated the issuance of new titles in the name
of the adjudicated owner, Mayfair. The Court ordered the direct release to Equatorial of the
P11,300,000.00 deposited in court for the account of the defunct Carmelo.

In the follow-up Resolution of the First Division in G.R. No. 136221 dated June 25, 2001, the Court,
after describing the case as a Promethean one involving the execution of a decision which has been
long final, and after calling the efforts to stave off execution as a travesty of justice, instructed the
trial court:

1. To execute the Court's Decision strictly in accordance with the ruling in G.R. No. 106063
by validating the acts of the sheriff of Manila and the titles in the name of Mayfair Theater,
Inc. issued by the Register of Deeds of Manila consistent therewith;

2. In case of failure of Carmelo and Bauermann to accept the amount of P11,300,000.00

deposited by Mayfair Theater, Inc. with the Clerk of Court, Regional Trial Court, Manila, to
authorize the Clerk of Court to RELEASE the amount of P11,300,000.00 deposited with the
court for the account of Carmelo and Bauermann, Inc. to petitioner;

3. To devolve upon the trial court the determination of other issues that may remain
unresolved among the parties, relating to the execution of this Court's final decision in G.R.
No. 106063.

In light of the Court's judgments in G.R. No. 106063 and G.R. No. 136221, the present petition in
G.R. No. 133879 for back rentals should now be finally resolved, applying the rulings in those earlier
decisions.

Indubitably, the 1978 deed of sale executed by Carmelo in favor of Equatorial over the disputed
property has been set aside by this Court. Equatorial was declared a buyer in bad faith. The contract
was characterized as a fraudulent sale and the entirety of the indivisible property sold to Equatorial
was the property we ordered to be conveyed to Mayfair for the same price paid by Equatorial to
Carmelo.

It is also beyond question that the method of execution of the 1996 decision by the RTC, the direct
payment by Mayfair to Equatorial, bypassing and detouring the defunct Carmelo corporation, has
been validated by this Court. There are no longer any procedural obstacles to the full implementation
of the decision.

And finally, the property sold to Equatorial in violation of Mayfair's right of first refusal is now
indisputably possessed by, and owned and titled in the name of, respondent Mayfair.
Parenthetically, the issue on the payment of back and increased rentals, plus interests, was actually
settled in the 1996 decision in G.R. No. 106063. It could not be enforced at the time only because of
the controversy unfortunately raised by Equatorial over the proper execution of the 1996 decision.

It is now time to reiterate the 1996 decision on interests and settle the dispute between Mayfair and
Equatorial once and for all.

Thus, we reiterate that:

On the question of interest payments on the principal amount of P11,300.000.00, it must be

borne in mind that both Carmelo and Equatorial acted in bad faith. Carmelo knowingly and
deliberately broke a contract entered into with Mayfair. It sold the property to Equatorial with
purpose and intent to withhold any notice or knowledge of the sale coming to the attention of
Mayfair. All the circumstances point to a calculated and contrived plan of non-compliance
with the agreement of first refusal.

On the part of Equatorial, it cannot be a buyer in good faith because it bought the property
with notice and full knowledge the Mayfair had a right to or interest in the property superior to
its own. Carmelo and Equatorial took unconscientious advantage of Mayfair.

Neither may Carmelo and Equatorial avail of consideration based on equity which might
warrant the grant of interests. The vendor received as payment from the vendee what, at the
time, was a full and fair price for the property. It has used the P11,300,000.00 all these years
earning income or interest from the amount. Equatorial, on the other hand, has received
rents and otherwise profited from the use of the property turned over to it by Carmelo. In fact,
during all the years that this controversy was being litigated. Mayfair paid rentals regularly to
the buyer who had an inferior right to purchase the property. Mayfair is under no obligation to
pay any interests arising from this judgment to either Carmelo or Equatorial (264 SCRA 483,
pp. 511-512).

Worthy quoting too is the concurring opinion in our 1996 decision of Mr. Justice Teodoro R. Padilla
as follows:

The equities of the case support the foregoing legal disposition. During the intervening years
between 1 August 1978 and this date, Equatorial (after acquiring the C.M. Recto property for
the price of P11,300,000.00) had been leasing the property and deriving rental income
therefrom. In fact, one of the lessees in the property was Mayfair. Carmelo had, in turn, been
using the proceeds of the sale, investment-wise and/or operation wise in its own business.

It may appear, at first blush, that Mayfair is unduly favored by the solution submitted by this opinion,
because the price of P11,300,000.00 which it has to pay Carmelo in the exercise of its right of first
refusal, has been subjected to the inroads of inflation so that its purchasing power today is less than
when the same amount was paid by Equatorial to Carmelo. But then it cannot be overlooked that it
was Carmelo's breach of Mayfair's right of first refusal that prevented Mayfair from paying the price
of P11,300,000.00 to Carmelo at about the same time the amount was paid by Equatorial to
Carmelo. Moreover, it cannot be ignored that Mayfair had also incurred consequential or
"opportunity" losses by reason of its failure to acquire and use the property under its right of first
refusal. In fine, any loss in purchasing power of the price of P11,300,000.00 is for Carmelo to incur
or absorb on account of its bad faith in breaching Mayfair's contractual right of first refusal to the
subject property. (ibid., pp. 511-512).
It can be seen from the above ruling that the issue of rentals and interests was fully discussed and
passed upon in 1996. Equatorial profited from the use of the building for all the years when it had no
right or, as stated in our decision, had an inferior right over the property. Mayfair, which had the
superior right, continued to pay rent but it was the rate fixed in the lease contract with Carmelo. We
see no reason for us to now deviate from the reasoning given in our main decision. The decision has
been final and executory for five (5) years and petitioner has failed to present any valid and
reasonable ground to reconsider, modify or reverse it. Let that which has been fairly adjudicated
remain final.

My second observation relates to the clever but, to my mind, deceptive argument foisted by
Equatorial on the Court.

Equatorial relies on the Civil Code provision on rescissible contracts to bolster its claim. Its argument
is that a rescissible contract remains valid and binding upon the parties thereto until the same is
rescinded in an appropriate judicial proceeding.

Equatorial conveniently fails to state that the July 31, 1978 Deed of Absolute Sale was between
Equatorial and Carmelo only. Respondent Mayfair was not a party to the contract. The deed of sale
was surreptitiously entered into between Carmelo and Equatorial behind the back and in violation of
the rights of Mayfair. Why should the innocent and wronged party now be made to bear the
consequences of an unlawful contract to which it was not privy? Insofar as Equatorial and Carmelo
are concerned, their 1978 contract may have validly transferred ownership from one to the other. But
not as far as Mayfair is concerned.

Mayfair starts its arguments with a discussion of Article 1381 of the Civil Code that contracts entered
into in fraud of creditors are rescissible. There is merit in Mayfair's contention that the legal effects
are not restricted to the contracting parties only. On the contrary, the rescission is for the benefit of a
third party, a stranger to the contract. Mayfair correctly states that as far as the injured third party is
concerned, the fraudulent contract, once rescinded, is non-existent or void from its inception. Hence,
from Mayfair's standpoint, the deed of absolute sale which should not have been executed in the first
place by reason of Mayfair's superior right to purchase the property and which deed was cancelled
for that reason by this Court, is legally non-existent. There must be a restoration of things to the
condition prior to the celebration of the contract (Respondent relies on Almeda vs. J. M. & Company,
43072-R, December 16, 1975, as cited in the Philippine Law Dictionary; IV Arturo M. Tolentino, Civil
Code of the Philippines, 570, 1990 Ed., citing Manresa; IV Edgardo L. Paras, Civil Code of the
Philippines, 717-718, 1994 Ed.).

It is hard not to agree with the explanations of Mayfair, to wit:

4.22. As a consequence of the rescission of the Deed of Absolute Sale, it was as if

Equatorial never bought and became the lessor of the subject properties. Thus, the court a
quo did not err in ruling that Equatorial is not the owner and does not have any right to
demand back rentals from [the] subject property.

4.23. Tolentino, supra, at 577-578 further explains that the effects of rescission in an accion
pauliana retroact to the date when the credit or right being enforced was acquired.

"While it is necessary that the credit of the plaintiff in the accion pauliana must be
prior to the fraudulent alienation, the date of the judgment enforcing it is
immaterial. Even if the judgment be subsequent to the alienation, it is merely
declaratory, with retroactive effect to the date when the credit was constituted. . ."
(emphasis supplied)
 4.24. The clear rationale behind this is to prevent conniving parties, such as Equatorial and
Carmelo, from benefiting in any manner from their unlawful act of entering into a contract in
fraud of innocent parties with superior rights like Mayfair. Thus, to allow Equatorial to further
collect rentals from Mayfair is to allow the former to profit from its own act of bad faith. Ex
dolo malo non oritur actio. (Respondent's Comment, pp. 338-339, Rollo).

This brings me to my third and final observation in this case. This Court emphasized in the main
case that the contract of sale between Equatorial and Carmelo was characterized by bad faith. The
Court described the sale as "fraudulent" in its 1996 decision. It stated that the damages which
Mayfair suffered are in terms of actual injury and lost opportunities, emphasizing that Mayfair should
not be given an empty or vacuous victory. Moreover, altogether too many suits have been filed in
this case. Four separate petitions have come before us, necessitating full length decisions in at least
3 of them. The 1996 decision stressed that the Court has always been against multiplicity of suits.

There was bad faith from the execution of the deed of sale because Equatorial and Carmelo
affirmatively operated with furtive design or with some motive of self-interest or ill-will or for ulterior
purposes (Air France vs. Carrascoso, 18 SCRA 166 [1966]). There was breach of a known duty by
the two parties to the unlawful contract arising from motives of interests or ill-will calculated to cause
damage to another (Lopez vs. Pan American World Airways, 123 Phil. 264 [1966]).

The presence of bad faith is clear from the records. Our resolution of this issue in 1996 (G.R.
106063) is res judicata.

We stated:

First and foremost is that the petitioners (referring to Equatorial and Carmelo) acted in bad
faith to render Paragraph 8 "inutile".

xxx xxx xxx

Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in
question rescissible. We agree with respondent Appellate Court that the records bear out the
fact that Equatorial was aware of the lease contracts because its lawyers had, prior to the
sale, studied the said contracts. As such Equatorial cannot tenably claim to be a purchaser in
good faith and, therefore, rescission lies.

xxx xxx xxx

As also earlier emphasized, the contract of sale between Equatorial and Carmelo is
characterized by bad faith, since it was knowingly entered into in violation of the rights of and
to the prejudice of Mayfair. In fact, as correctly observed by the Court of Appeals, Equatorial
admitted that its lawyers had studied the contract of lease prior to the sale. Equatorial's
knowledge of the stipulations therein should have cautioned it to look further into the
agreement to determine if it involved stipulations that would prejudice its own interests.

xxx xxx xxx

On the part of Equatorial, it cannot be a buyer in good faith because it bought the property
with notice and full knowledge that Mayfair had a right to or interest in the property superior
to its own. Carmelo and Equatorial took unconscientious advantage of Mayfair (264 SCRA
506, 507-511).
We ruled that because of bad faith, neither may Carmelo and Equatorial avail themselves of
considerations based on equity which might warrant the grant of interests and, in this case,
unconscionably increased rentals.

Verily, if Mayfair were a natural person it could very well have asked for moral damages instead of
facing a lengthy and expensive suit to pay rentals many times higher than those stipulated in the
contract of lease. Under the Civil Code, Mayfair is the victim in a breach of contract where Carmelo
and Equatorial acted fraudulently and in bad faith.

Considering the judgments in our 3 earlier decisions, Mayfair is under no obligation to pay any
interests, whether based on law or equity, to Carmelo or Equatorial. Mayfair is the wronged entity,
the one which has suffered injury since 1978 or for the 23 years it was deprived of the property.

Equatorial has received rentals and other benefits from the use of the property during these 23
years, rents and benefits which would have accrued to Mayfair if its rights had not been violated.

There is no obligation on the part of respondent Mayfair to pay any increased, additional, back or
future rentals or interests of any kind to petitioner Equatorial under the circumstances of this case.

I, therefore, concur with the majority opinion in denying due course and dismissing the petition.

Puno and Mendoza, JJ., concur.

Dissenting Opinion

VITUG, J., dissenting:

Civil Law, in its usual sophistication, classifies defective contracts (unlike the seemingly generic
treatment in Common Law), into, first, the rescissible contracts,1 which are the least infirm; followed
by, second, the voidable contracts;2 then, third, the unenforceable contracts;3 and, finally, fourth, the
worst of all or the void contracts.4 In terms of their efficaciousness, rescissible contracts are
regarded, among the four, as being the closest to perfectly executed contracts. A rescissible contract
contains all the requisites of a valid contract and are considered legally binding, but by reason of
injury or damage to either of the contracting parties or to third persons, such as creditors, it is
susceptible to rescission at the instance of the party who may be prejudiced thereby. A rescissible
contract is valid, binding and effective until it is rescinded. The proper way by which it can be
assailed is by an action for rescission based on any of the causes expressly specified by law.5

The remedy of rescission in the case of rescissible contracts under Article 1381 is not to be
confused with the remedy of rescission, or more properly termed "resolution," of reciprocal
obligations under Article 1191 of the Civil Code. While both remedies presuppose the existence of a
juridical relation that, once rescinded, would require mutual restitution, it is basically, however, in this
aspect alone when the two concepts coincide.

Resolution under Article 1191 would totally release each of the obligors from compliance with their
respective covenants. It might be worthwhile to note that in some cases, notably Ocampo vs. Court
of Appeals,6 and Velarde vs. Court of Appeals,7 where the Court referred to rescission as being
likened to contracts which are deemed "void at inception," the focal issue is the breach of the
obligation involved that would allow resolution pursuant to Article 1191 of the Civil Code. The
obvious reason is that when parties are reciprocally bound, the refusal or failure of one of them to
comply with his part of the bargain should allow the other party to resolve their juridical relationship
rather than to leave the matter in a state of continuing uncertainty. The result of the resolution, when
decreed, renders the reciprocal obligations inoperative "at inception."

Upon the other hand, the rescission of a rescissible contract under Article 1381, taken in conjunction
with Article 1385, is a relief which the law grants for the protection of a contracting party or a third
person from injury and damage that the contract may cause, or to protect some incompatible and
preferent right created by the contract.8Rescissible contracts are not void ab initio, and the principle,
"quod nullum est nullum producit effectum," in void and inexistent contracts is inapplicable. Until set
aside in an appropriate action rescissible contracts are respected as being legally valid, binding and
in force. It would be wrong to say that rescissible contracts produce no legal effects whatsoever and
that no acquisition or loss of rights could meanwhile occur and be attributed to the terminated
contract. The effects of the rescission, prospective in nature, can come about only upon its proper
declaration as such.

Thus when the Court9 held the contract to be "deemed rescinded" in G.R. No. 106063, the Court did
not mean a "declaration of nullity" of the questioned contract. The agreement between petitioner and
Carmelo being efficacious until rescinded, validly transferred ownership over the property to
petitioner from the time the deed of sale was executed in a public instrument on 30 July 1978 up to
the time that the decision in G.R. No. 106063 became final on 17 March 1997. It was only from the
latter date that the contract had ceased to be efficacious. The fact that the subject property was in
the hands of a lessee, or for that matter of any possessor with a juridical title derived from an owner,
would not preclude a conferment of ownership upon the purchaser nor be an impediment from the
transfer of ownership from the seller to the buyer. Petitioner, being the owner of the property (and
none other) until the judicial rescission of the sale in its favor, was entitled to all incidents of
ownership inclusive of, among its other elements, the right to the fruits of the property. Rentals or
rental value over that disputed property from 30 July 1978 up to 17 March 1997 should then properly
pertain to petitioner. In this respect, the much abused terms of "good faith" or "bad faith " play no
role; ownership, unlike other concepts, is never described as being either in good faith or in bad
faith.

With all due respect, I am thus unable to join in this instance my colleagues in the majority.

Kapunan and De Leon, Jr., JJ., concur.

Dissenting Opinion

SANDOVAL-GUTIERREZ, J., dissenting:

"Stare decisis et non quieta movere follow past precedents and do not disturb what has been
settled. Adherence to this principle is imperative if this Court is to maintain stability in jurisprudence.

I regret that I am unable to agree with the majority opinion.

The principal issue in this case is whether a rescissible contract is void and ineffective from its
inception. This issue is not a novel one. Neither is it difficult to resolve as it involves the application
of elementary principles in the law on contracts, specifically on rescissible contracts, as
distinguished from void or inexistent contracts.

The facts are simple.

On June 1, 1967, respondent Mayfair Theater, Inc. (Mayfair) leased portions of the ground,
mezzanine and second floors of a two storey commercial building located along C.M. Recto Avenue
Manila. The building together with the land on which it was constructed was then owned by Carmelo
& Bauermann, Inc. (Carmelo). Respondent used these premises as "Maxim Theater." The lease was
for a period of twenty (20) years.

On March 31, 1969, Mayfair leased from Carmelo another portion of the second floor, as well as two
(2) store spaces on the ground and mezzanine floors of the same building. Respondent Mayfair
used the premises as a movie theater known as "Miramar Theater."

Both leases contained the following identical provisions:

"That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given
30-days exclusive option to purchase the same.

In the event, however, that the leased premises is sold to someone other than the LESSEE,
the LESSOR is bound and obligated, as it hereby binds and obligates itself, to stipulate in the
Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the
terms and conditions thereof.

On July 31, 1978, Carmelo entered into a Deed of Absolute Sale whereby it sold the subject land
and two-storey building to petitioner Equatorial Realty Development, Inc. (Equatorial) for
P11,300,000.00. Having acquired from Carmelo ownership of the subject property, Equatorial
received rents from Mayfair for sometime.

Subsequently, Mayfair, claiming it had been denied its right to purchase the leased property in
accordance with the provisions of its lease contracts with Carmelo, filed with the Regional Trial
Court, Branch 7, Manila, a suit for specific performance and annulment of sale with prayer to enforce
its "exclusive option to purchase" the property. The dispute between Mayfair, on the one hand, and
Carmelo and Equatorial on the other, reached this Court in G.R. No. 106063, "Equatorial Realty
Development, Inc. & Carmelo & Bauermann, Inc. vs. Mayfair Theater, Inc."1 On November 21, 1996,
this Court rendered a Decision, the dispositive portion of which reads:

"WHEREFORE, the petition for review of the decision of the Court of Appeals, dated June
23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale
between petitioners Equatorial Realty-Development, Inc. and Carmelo & Bauermann, Inc. is
hereby deemed rescinded; Carmelo & Bauermann is ordered to return to petitioner
Equatorial Realty Development the purchase price. The latter is directed to execute the
deeds and documents necessary to return ownership to Carmelo & Bauermann of the
disputed lots. Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to buy the
aforesaid lots for P11,300,000.00.

SO ORDERED."

The Decision of this Court in G.R. No. 106063 became final and executory on March 17, 1997.
On April 25, 1997, Mayfair filed with the trial court a motion for execution which was granted.

However, Carmelo could no longer be located. Thus, Mayfair deposited with the trial court its
payment to Carmelo in the sum of P11,300,000.00 less P847,000.00 as withholding tax.

The Clerk of Court of the Manila Regional Trial Court, as sheriff, executed a deed of re-conveyance
in favor of Carmelo and a deed of sale in favor of Mayfair. On the basis of these documents, the
Registry of Deeds of Manila cancelled Equatorial's titles and issued new Certificates of Title2 in the
name of Mayfair.

In G.R. No. 136221,3 "Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.," this Court
instructed the trial court to execute strictly this Court's Decision in G.R. No. 106063.

On September 18, 1997, or after the execution of this Court's Decision in G.R. No. 106063,
Equatorial filed with the Regional Trial Court of Manila, Branch 8, an action for collection of a sum of
money against Mayfair, docketed as Civil Case No. 97-85141. Equatorial prayed that the trial court
render judgment ordering Mayfair to pay:

(1) the sum of P11,548,941.76 plus legal interest, representing the total amount of unpaid
monthly rentals/reasonable compensation from June 1, 1987 (Maxim Theater) and March
31,1989 (Miramar Theater) to July 31, 1997;

(2) the sums of P849,567.12 and P458,853.44 a month, plus legal interest, as
rental/reasonable compensation for the use and occupation of the subject property from
August 1, 1997 to May 31, 1998 (Maxim Theater) and March 31, 1998 (Miramar Theater);

(3) the sum of P500,000.00 as and for attorney's fees, plus other expenses of litigation; and

(4) the costs of the suit.4

On October 14, 1997, before filing its answer, Mayfair filed a "Motion to Dismiss" Civil Case No. 97-
85141 on the following grounds:

"(A)

PLAINTIFF IS GUILTY OF FORUM SHOPPING.

(B)

PLAINTIFF'S CAUSE OF ACTION, IF ANY, IS BARRED BY PRIOR JUDGMENT."5

On March 11, 1998, the court a quo issued an order dismissing Civil Case No. 97-85141 on the
ground that since this Court, in G.R. No. 106063, rescinded the Deed of Absolute Sale between
Carmelo and Equatorial, the contract is void at its inception.6 Correspondingly, Equatorial is not the
owner of the subject property and, therefore, does not have any right to demand from Mayfair
payment of rentals or reasonable compensation for its use and occupation of the premises.

Equatorial filed a motion for reconsideration but was denied.

Hence, the present petition.

At this stage, I beg to disagree with the ruling of the majority that (1) Equatorial did not acquire
ownership of the disputed property from Carmelo because of lack of delivery; and that (2) Equatorial
is not entitled to the payment of rentals because of its bad faith.

Firmly incorporated in our Law on Sales is the principle that ownership is transferred to the vendee
by means of delivery, actual or constructive.7 There is actual delivery when the thing sold is placed in
the control and possession of the vendee.8 Upon the other hand, there is constructive delivery when
the delivery of the thing sold is represented by other signs or acts indicative thereof. Article 1498 of
the Civil Code is in point. It provides that "When the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if
from the deed the contrary does not appear or cannot clearly be inferred."9

Contrary to the majority opinion, the facts and circumstances of the instant case clearly indicate that
there was indeed actual and constructive delivery of the disputed property from Carmelo to
Equatorial.

Let me substantiate my claim.

First, I must take exception to the majority's statement that this Court found in G.R. No.
10606310 that, "no right of ownership was transferred from Carmelo to Equatorial in view of a patent
failure to deliver the property to the buyer."11

A perusal of the Decision dated November 21, 1996 would reveal otherwise.

To say that this Court found no transfer of ownership between Equatorial and Carmelo is very
inaccurate. For one, this Court, in disposing of G.R. No. 106063, explicitly ordered Equatorial to
"execute the deeds and documents necessary to return ownership to Carmelo & Bauermann of the
disputed lots."12 I suppose this Court would not have made such an order if it did not recognize the
transfer of ownership from Carmelo to Equatorial under the contract of sale. For why would the Court
order Equatorial to execute the deeds and documents necessary to return ownershipto Carmelo if,
all along, it believed that ownership remained with Carmelo?

Furthermore, is Court explicitly stated in the Decision that Equatorial received rentals from Mayfair
during the pendency of the case. Let me quote the pertinent portion of the Decision, thus:

". . . Equatorial, on the other hand, has received rents and otherwise profited from the use of
the property turned over to it by Carmelo. In fact, during all the years that this controversy
was being litigated, Mayfair paid rentals regularly to the buyer (Equatorial) who had an
inferior right to purchase the property. Mayfair is under no obligation to pay any interests
arising from this judgment to either Carmelo or Equatorial."13

Justice Teodoro R. Padilla, in his Separate Opinion, made the following similar observations:

"The equities of the case support the foregoing legal disposition. During the intervening
years between 1 August 1978 and this date, Equatorial (after acquiring the C.M. Recto
property for the price of P11,300,000.00) had been leasing the property and deriving rental
income therefrom. In fact, one of the lessees in the property was Mayfair. Carmelo had, in
turn, been using the proceeds of the sale, investment-wise and/or operation-wise in its own
business."14
Obviously, this Court acknowledged the delivery of the property from Carmelo to Equatorial. As aptly
described by Justice Panganiban himself, the sale between Carmelo and Equatorial had not only
been "perfected" but also "consummated".15

That actual possession of the property was turned over by Carmelo to Equatorial is clear from the
fact that the latter received rents from Mayfair. Significantly, receiving rentals is an exercise of actual
possession. Possession, as defined in the Civil Code, is the holding of a thing or the enjoyment of a
right.16 It may either be by material occupation or by merely subjecting the thing or right to the action
of our will.17 Possession may therefore be exercised through one's self or through another.18 It is not
necessary that the person in possession should himself be the occupant of the property, the
occupancy can be held by another in the name of the one who claims possession. In the case at
bench, Equatorial exercised possession over the disputed property through Mayfair. When Mayfair
paid its monthly rentals to Equatorial, the said lessee recognized the superior right of Equatorial to
the possession of the property. And even if Mayfair did not recognize Equatorial's superior right over
the disputed property, the fact remains that Equatorial was then enjoying the fruits of its possession.

At this juncture, it will be of aid to lay down the degrees of possession. The first degree is the mere
holding, or possession without title whatsoever, and in violation of the right of the owner. Here, both
the possessor and the public know that the possession is wrongful. An example of this is the
possession of a thief or a usurper of land. The second is possession with juridical title, but not that of
ownership. This is possession peaceably acquired, such that of a tenant, depositary, or pledge.
The third is possession with a just title, or a title sufficient to transfer ownership, but not from the true
owner. An example is the possession of a vendee of a piece of land from one who pretends to be
the owner but is in fact not the owner thereof. And the fourth is possession with a just title from the
true owner. This is possession that springs from ownership.19 Undoubtedly, Mayfair's possession is
by virtue of juridical title under the contract of lease, while that of Equatorial is by virtue of its right of
ownership under the contract of sale.

Second, granting arguendo that there was indeed no actual delivery, would Mayfair's alleged "timely
objection to the sale and continued actual possession of the property" constitute an "impediment"
that may prevent the passing of the property from Carmelo to Equatorial?20

I believe the answer is no.

The fact that Mayfair has remained in "actual possession of the property," after the perfection of the
contract of sale between Carmelo and Equatorial up to the finality of this Court's Decision in G.R.
No. 106063 (and even up to the present), could not prevent the consummation of such contract. As I
have previously intimated, Mayfair's possession is not under a claim of ownership. It cannot in any
way clash with the ownership accruing to Equatorial by virtue of the sale. The principle has always
been that the one who possesses as a mere holder acknowledges in another a superior right or right
of ownership. A tenant possesses the thing leased as a mere holder, so does the usufructuary of the
thing in usufruct; and the borrower of the thing loaned in commodatum. None of these holders
asserts a claim of ownership in himself over the thing. Similarly, Mayfair does not claim ownership,
but only possession as a lessee with the prior right to purchase the property.

In G.R. No. 106063, Mayfair's main concern in its action for specific performance was the recognition
of its right of first refusal. Hence, the most that Mayfair could secure from the institution of its suit
was to be allowed to exercise its right to buy the property upon rescission of the contract of sale. Not
until Mayfair actually exercised what it was allowed to do by this Court in G.R. No. 106063,
specifically to buy the disputed property for P11,300,000.00, would it have any right of ownership.
How then, at that early stage, could Mayfair's action be an impediment in the consummation of the
contract between Carmelo and Equatorial?
Pertinently, it does not always follow that, because a transaction is prohibited or illegal, title, as
between the parties to the transaction, does not pass from the seller, donor, or transferor to the
vendee, donee or transferee.21

And third, conformably to the foregoing disquisition, I maintain that Equatorial has the right to be paid
whatever monthly rentals during the period that the contract of sale was in existence minus the rents
already paid. In Guzman v. Court of Appeals,22 this Court decreed that upon the purchase of the
leased property and proper notice by the vendee, the lessee must pay the agreed monthly rentals to
the new owner since, by virtue of the sale the vendee steps into the shoes of the original lessor to
whom the lessee bound himself to pay. His belief that the subject property should have been sold to
him does not justify the unilateral withholding of rental payments due to the new owner of the
property.23 It must be stressed that under Article 1658 of the Civil Code, there are only two instances
wherein the lessee may suspend payment of rent, namely: in case the lessor fails to make the
necessary repairs or to maintain the lessee in peaceful and adequate enjoyment of the property
leased.24 In this case, the fact remains that Mayfair occupied the leased property. It derived benefit
from such occupation, thus, it should pay the corresponding rentals due. Nemo cum alterius
detrimento locupletari potest. No one shall enrich himself at the expense of another.25

Neither should the presence of bad faith prevent the award of rent to Equatorial. While Equatorial
committed bad faith in entering into the contract with Camelo, it has been equitably punished when
this Court rendered the contract rescissible. That such bad faith was the very reason why the
contract was declared rescissible is evident from the Decision itself.26 To utilize it again, this time, to
deprive Equatorial of its entitlement to the rent corresponding to the period during which the contract
was supposed to validly exist, would not only be unjust, it would also disturb the very nature of a
rescissible contract.

Let me elucidate on the matter.

Articles 1380 through 1389 of the Civil Code deal with rescissible contracts. A rescissible contract is
one that is validly entered into, but is subsequently terminated or rescinded for causes provided for
by law.

This is the clear implication of Article 1380 of the same Code which provides:

"Art. 1380. Contracts validly agreed upon may be rescinded in the cases established by law."

Rescission has been defined as follows:

"Rescission is a remedy granted by law to the contracting parties and even to third persons,
to secure the reparation of damages caused to them by a contract, even if this should be
valid, by means of the restoration of things to their condition at the moment prior to the
celebration of said contract. It is a relief for the protection of one of the contracting parties
and third persons from all injury and damage the contract may cause, or to protect some
incompatible and preferential right created by the contract. It implies a contract which, even if
initially valid, produces a lesion or pecuniary damage to someone. It sets aside the act or
contract for justifiable reasons of equity."27

Necessarily, therefore, a rescissible contract remains valid and binding upon the parties thereto until
the same is rescinded in an appropriate judicial proceeding.
On the other hand, a void contract, which is treated in Articles 1409 through 1422 of the Civil Code,
is inexistent and produces no legal effect whatsoever. The contracting parties are not bound thereby
and such contract is not subject to ratification.

In dismissing petitioner Equatorial's complaint in Civil Case No. 97-85141, the trial court was
apparently of the impression that a rescissible contract has the same effect as a void contract, thus:

"However, the words in the dispositive portion of the Supreme Court "is hereby deemed
rescinded" does not allow any other meaning. The said Deed of Absolute Sale is void at its
inception.

xxx xxx xxx

The subject Deed of Absolute Sale having been rescinded by the Supreme Court, Equatorial
is not the owner and does not have any right to demand back rentals from subject property.
The law states that only an owner can enjoy the fruits of a certain property or jus
utendi which includes the right to receive from subject property what it produces, . . ."

The trial court erred. In G.R. No. 106063 (involving Mayfair's suit for specific performance), this
Court clearly characterized the Deed of Absolute Sale between Carmelo and petitioner Equatorial as
a rescissible contract. We stated therein that:

"Since Equatorial is a buys in bad faith. this finding renders the sale to it of the property in
question rescissible. We agree with respondent Appellate Court that the records bear out the
fact that Equatorial was aware of the lease contracts because its lawyers had, prior to the
sale, studied the said contracts. As such, Equatorial cannot tenably claim to be a purchaser
in good faith, and therefore, rescission lies."

This Court did not declare the Deed of Absolute Sale between Carmelo and Equatorial void but
merely rescissible. Consequently, the contract was, at inception, valid and naturally, it validly
transferred ownership of the subject property to Equatorial. It bears emphasis that Equatorial was
not automatically divested of its ownership. Rather, as clearly directed in the dispositive portion of
our Decision, Carmelo should return the purchase price to Equatorial which, in turn, must execute
such deeds and documents necessary to enable Carmelo to reacquire its ownership of the property.

As mentioned earlier, Mayfair deposited with the Regional Trial Court, Branch 7, Manila, the
purchase price of P10,452,000.00 (P11,300,000.00 less P847,000.00 as withholding tax). In turn,
the Clerk of Court executed the deed of sale of the subject property in favor of Mayfair.

In the meantime, Mayfair has continued to occupy and use the premises, the reason why Equatorial
filed against it Civil Case No. 97-85141 for sum of money representing rentals and reasonable
compensation.

At this point, I must reiterate that Equatorial purchased the subject property from Carmelo and
became its owner on July 31, 1978. While the contract of sale was "deemed rescinded" by this Court
in G.R. No. 106063, nevertheless the sale had remained valid and binding between the contracting
parties until March 17, 1997 when the Decision in G.R. No. 106063 became final. Consequently,
being the owner, Equatorial has the right to demand from Mayfair payment of rentals corresponding
to the period from July 31, 1978 up to March 17, 1997.
Records show that the rentals and reasonable compensation which Equatorial demands from
Mayfair are those which accrued from the year 1987 to 1998. As earlier stated, prior thereto, Mayfair
had been paying the rents to Equatorial.

In line with this Court's finding that Equatorial was the owner of the disputed property from July 31,
1978 to March 17, 1997, it is, therefore, entitled to the payment of rentals accruing to such period.

Consequently, whether or not Mayfair paid Equatorial the rentals specified in the lease contracts
from June 1, 1987 to March 17, 1997 is for the trial court to resolve.

One last word. In effect, the majority have enunciated that:

1. A lessor, in a contract of sale, cannot transfer ownership of his property, occupied by the
lessee, to the buyer because there can be no delivery of such property to the latter; and

2. Not only a possessor, but also an owner, can be in bad faith.

I cannot subscribe to such doctrines.

WHEREFORE, I vote to GRANT the petition.

Bellosillo and Kapunan, JJ., concur.

G.R. No. 94490 August 6, 1992

JOSE DE LUNA, petitioner,

vs.
THE COURT OF APPEALS, HON. SANTIAGO G. MALIWANAG, RTC EXECUTIVE JUDGE,
BRANCH 71, IBA, ZAMBALES; JUAN DIMAANO, JR. and GERINO DOBLE, respondents.

Mario O. Leyco for private respondents.

NOCON, J.:

Petition for review on certiorari by petitioner Jose de Luna from the decision of the Court of Appeals
in CA-G.R. SP No. 12922 1 which affirmed the reversal made by the Regional Trial Court of Iba,
Zambales, Branch LXXI, of the decision of the Municipal Circuit Trial Court of Botolan, Zambales in a
forcible entry case filed by petitioner against several persons, including private respondents Juan
Dimaano, Jr. and Gerino Doble.

In his complaint filed on February 7, 1972 before the Municipal Trial Court, petitioner alleged that he
is the owner of an unregistered parcel of land with an area of 30,856 square meters, located in
Babon San Juan, Botolan, Zambales, since 1938; that on December 18 and 19, 1971, defendants
Octavio Daclison, Oscar Crispin, and private respondents Juan Dimaano, Jr. and Gerino Doble
entered the land and began plowing it; and that said defendants fenced the land with barbed wire on
January 15 and 16, 1972 and began planting sugar cane on February 5 and 6, 1972, despite his
objections. Petitioners prayed that the defendants be ordered to vacate the land and pay him the
amount of P45.00 monthly per hectare until possession thereof would be transferred to him, with
litigation expenses and costs.
In their answer, the defendants denied the material allegations of the complaint. Declison, Crispin
and Doble alleged as a special and affirmative defense that they have not entered nor occupied the
disputed property.

For his part, defendant Dimaano, Jr. raised as his special and affirmative defense that petitioner was
not the owner of the property, alleging instead that the owner thereof was Agustin Dequia, Jr.,
Dimaano, Jr. contended that the property was originally owned by Agustin Dequia, Sr., who had
declared the property in his name for taxation purposes in 1906. Upon the death of Agustin Dequia,
Sr. in 1945, he was succeeded by his son Agustin Dequia, Jr., who possessed the property from
1945 up to February 1972, when the same was leased to defendant Dimaano, Jr., Agustin Dequia,
Sr. happens to be the uncle of petitioner, the former being the elder brother of the latter's mother,
Apolonia Dequia.

After trial on the merits, judgment was rendered in favor of petitioner, with the trial court ordering the
defendants or persons acting for and in their behalf to restore to petitioner possession of the
property. In addition, respondent Dimaano, Jr. was ordered to pay petitioner the amounts of
P12,312.00 representing actual damages and P5,000.00 as costs of the suit.

The defendants appealed to the Regional Trial Court of Iba, Zambales, which reversed the decision
of the inferior court and dismissed the complaint. Petitioner brought the case on a petition for review
to the Court of Appeals, which affirmed the judgment of the Regional Trial Court.

Aggrieved, petitioner, elevated the case to Us, alleging that the Court of Appeals and the Regional
Trial Court erred in determining the ownership of the disputed property in an action for ejectment,
and in concluding that Agustin Dequia, Jr. is the owner of the property.

We find the petition impressed with merit.

Well-established is the rule in ejectment cases that the only issue to be resolved therein is who is
entitled to the physical or material possession of the premises, or possession de facto, independent
of any claim of ownership that either party may set forth in their pleadings. 2 If petitioner can prove
prior possession in himself, he may recover such possession from even the owner himself .
Whatever may be the character of his prior possession, if he has in is favor priority of time, he has
the security that entitles him to stay on the property until he is lawfully ejected by a person having a
better right by either accion publiciana or accion reindivicatoria. 3

However, where the question of possession can not be resolved without deciding the question of
ownership, an inferior court has the power to resolve the question of ownership but only insofar as to
determine the issue of possession. 4

In the case at bar, the inferior court acted correctly in receiving evidence regarding the ownership of
the disputed property, inasmuch as respondent Dimaano, Jr. claimed to possess the property by
virtue of a lease agreement with the alleged owner thereof, Agustin Dequia, Jr.

Be that as it may, the respondent Court erred in upholding the Regional Trial Court regarding the
conclusion that the subject property is owned by Agustin Dequia, Jr. and therefore respondent
Dimaano, Jr. is entitled to possess the same.

First of all, petitioner has shown that he had prior possession of the property. The prior possession
of petitioner was established by the testimony of his witnesses, notably of his tenant Epigenio Dilag
and Victor dela Cruz. While petitioner admitted that he declared the property for taxation purposes
only in 1957, he had possessed the property beginning 1953 at the very latest, when he leased the
same to Epigenio Dilag, who in turn possessed the same until respondent Dimaano, Jr. entered
upon the property in 1972. The possession of the property by Dilag since 1953 redounds to the
benefit of petitioner, since possession may be exercised in one's own name or in that of another. 5

Moreover, there is evidence to the effect that petitioner possessed the property even earlier than
1953. Petitioner's witness, Victor dela Cruz, who lived about 400 meters from the land in
controversy, testified that he had witnessed the delivery of the of property to the petitioner and his
mother Apolonia Dequia by Agustin Dequia, Sr. in 1938, when they and their brothers and sisters
petitioned among themselves the properties of their deceased parents. He further testified that he
saw petitioner and his mother cultivate the land from 1938 to 1941, and that he leased the land from
them from 1944 to 1952. 6

On the other hand, respondent Dimaano, Jr. had failed to prove that Agustin Dequia, Jr. possessed
the property prior to his possession, much less the ownership of the latter over said property. While
Agustin Dequia, Jr. testified that he is a co-owner of the disputed property, there is nothing to
support this self-serving claim; neither does his testimony support the defense's theory that he had
prior possession of the property. The mere fact that Agustin Dequia, Sr. had declared the subject
for taxation purposes from 1908 up to 1945 did not constitute possession thereof, 7 nor is it proof of
ownership 8 in the absence of Dequia, Jr.'s actual possession of said property.

Therefore, the Court of Appeals erred in ruling that Agustin Dequia, Jr. was the owner of the
disputed property since there is no evidence whatsoever to support such a conclusion.

However, it goes without saying that this case does not bar petitioner and Agustin Dequia, Jr. from
resolving the issue of ownership over the disputed property in an appropriate proceeding.

WHEREFORE, the decision appealed from hereby REVERSED and SET ASIDE. The decision of
the Municipal Trial Court of Botolan, Zambales is hereby REINSTATED and AFFIRMED. Costs
against private respondents.

SO ORDERED.

G.R. No. 127608 September 30, 1999

GUADALUPE S. REYES, petitioner,

vs.
COURT OF APPEALS and JUANITA L. RAYMUNDO, respondents.

BELLOSILLO, J.:

Petitioner Guadalupe S. Reyes sold to respondent Juanita L. Raymundo on 21 June 1967 one-half
(1/2) of a 300 square meter lot located at No. 4-F Calderon St., Project 4, Quezon City,
denominated as Lot 8-B, for P10,000.00. Consequently, a new title, TCT No. 119205, was issued for
the whole lot in the name of original owner Guadalupe S. Reyes and vendee Juanita L. Raymundo in
equal shares.1wphi1.nt

Thereafter respondent was granted a P17,000.00 loan by the Government Service Insurance
System (GSIS), where she was employed as records processor, with her one-half (1/2) share of the
property as collateral. On 24 September 1969 petitioner sold her remaining interest in the property to
respondent for P15,000.00 as evidenced by a deed of absolute sale, Exh. "E," 1 and TCT No. 149036
was issued in the name of respondent in lieu of TCT No. 119205.

Since 1967 the house standing on the property subject of the second sale was being leased by the
spouses Mario Palacios and Zenaida Palacios from petitioner. In December 1984 petitioner allegedly
refused to receive the rentals thus prompting the Palacios spouses to file on 13 March 1985 a
petition for consignation before the Metropolitan Trial Court of Quezon City. Later, the parties
entered into a compromise agreement principally stating that the Palacios spouses would pay to
petitioner the accrued rentals and that the leased period would be extended to 24 November 1986.
On 28 May 1985 the compromise agreement was approved and judgment was rendered in
accordance therewith.

It appears however that the Palacios spouses were subsequently ejected from the premises but
managed somehow to return. When a contempt case was filed by petitioner against her lessees,
respondent intervened and claimed ownership of the entire 300 square meter property as well as
the existence of a lease contract between her and the Palacios spouses supposedly dated 17 March
1987 but retroactive to 1 January 1987. On 12 August 1987 the trial court dismissed the case and
from then on, the Palacioses paid rentals to respondent.

On 23 August 1987 petitioner filed a complaint against respondent before the Regional Trial Court of
Quezon City for cancellation of TCT No. 149036 and reconveyance with damages. Petitioner alleged
that the sale of 24 September 1969 was simulated since she was merely constrained to execute the
deed without any material consideration pursuant to an agreement with respondent that they would
construct an apartment on the property through the proceeds of an additional loan respondent would
secure from the GSIS with the entire 300 square meter property as collateral. But should the loan
fail to materialize, respondent would reconvey the property subject of the second sale to petitioner.
After petitioner learned that the loan was disapproved she repeatedly asked respondent for
reconveyance but to no avail. Their true agreement was embodied in a private writing dated 10
January 1970. 2

The trial court found that the second deed of sale was indeed simulated as it held that since the date of its
execution respondent allowed petitioner to exercise ownership over the property by collecting rentals from
the lessees until December 1986. It was only in 1987 when respondent intervened in the contempt case
that she asserted ownership thereof. Likewise, the trial court sustained petitioner's claim that she was
only prevailed upon to transfer the title to the whole lot to respondent in order to obtain a loan from the
GSIS which, after all, did not materialize. Thus, on 29 May 1992 the trial court cancelled and declared null
and void TCT No. 149036 as well as the second deed of sale. It ordered respondent to reconvey subject
property to petitioner and to pay P25,000.00 as actual and exemplary damages, P10,000.00 as attorney's
fees, and to pay the costs. 3

Respondent Court of Appeals however held otherwise. It ruled that as between a notarized deed of sale
earlier executed and the agreement of 10 January 1970 contained in a private writing, the former
prevailed. It also found that petitioner's cause of action had prescribed since the complaint should have
been filed either within ten (10) years from 1969 as an action to recover title to real property, or within ten
(10) years from 1970 as an action based on a written contract. The appellate court further found that
petitioner's cause of action was barred by laches having allowed respondent to stay in possession of the
lot in question for eighteen (18) years after the execution of the second deed of sale. On 19 July 1996 the
Court of Appeals set aside the ruling of the trial court and dismissed petitioner's complaint. 4 On 22
October 1996 it denied the motion to reconsider its decision. 5

Petitioner posits that it was only in 1987 when respondent intervened in the contempt case alleging to
be the owner and lessor did her cause of action accrue; hence, her complaint filed on 23 August 1987
has not yet prescribed. Petitioner asserts that the 10 January 1970 agreement is more credible and
probable than the second deed of sale because such document contains their real intention.

In Heirs of Jose Olviga v. Court of Appeals 6 we restated the rule that an action for reconveyance of a
parcel of land based on implied or constructive trust prescribes in ten (10) years, the point of reference
being the date of registration of the deed or the date of the issuance of the certificate of title over the
property. However, we emphasized that this rule applies only when the plaintiff or the person enforcing
the trust is not in possession of the property since if a person claiming to be the owner thereof is in actual
possession of the property the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason is that the one who is in actual possession of a piece of land
claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right. His undisturbed possession gives him a continuing right to seek the aid
of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its
effect on his own title, which right can be claimed only by one who is in possession.

Actual possession of land consists in the manifestation of acts of dominion over it of such a nature
as those a party would naturally exercise over his own property. 7 It is not necessary that the owner of
a parcel of land should himself occupy the property as someone in his name may perform the act. In
other words, the owner of real estate has possession, either when he himself is physically in occupation
of the property, or when another person who recognizes his rights as owner is in such occupancy. 8 This
declaration is conformably with Art. 524 of the Civil Code providing that possession may be exercised in
one's own name or in the name another.

An example of actual possession of real property by an owner through another is a lease agreement
whereby the lessor transfers merely the temporary use and enjoyment of the thing leased. 9 The
Palacios spouses have been the lessees of petitioner since 1967 occupying the house erected on the
property subject of the second sale. Petitioner was in actual possession of the property through the
Palacioses and remained so even after the execution of the second deed of sale. It was only in 1987
when respondent asserted ownership over the property and showed a lease contract between her and
the Palacioses dated 17 March 1987 but effective 1 January 1987 that petitioner's possession was
disturbed. Consequently, the action for reconveyance filed on 23 August 1987 based on circumstances
obtaining herein and contrary to the finding of respondent court has not prescribed. To be accurate, the
action does not prescribe. Under Art. 1144, par. (1), of the Civil Code, an action upon a written contract
must be brought within ten (10) years from the time the right of action accrues. And so respondent court
also relied on this provision in ruling that petitioner's cause of action had prescribed. This is error. What is
applicable is Art. 1410 of the same Code which explicitly states that the action or defense for the
declaration of the inexistence of a contract, such as the second deed of sale, does not prescribe.

Respondent court declared petitioner guilty of laches anchored on the finding that for eighteen (18)
years after the execution of the contract, respondent was in possession of the lot in question. But
this finding is utterly unsupported by the evidence. On the contrary, the Palacioses alleged in their
petition for consignation filed 13 March 1985 that they were "renting the apartment of the respondent
(petitioner herein) located at No. 4-F Calderon Street, Project 4, Quezon City, since 1967 up to the
present." 10 Even respondent herself admitted in her lease contract of 17 March 1987 with the Palacios
spouses that "the LESSEES have been staying in the premises since 1967 under a previous lease
contract with Guadalupe S. Reyes which, however, already expired." 11 Having thus corrected the finding
of respondent court, our concern now is to determine whether laches should be appreciated against
petitioner. The essence of laches is the failure or neglect for an unreasonable and unexplained length of
time to do that which, by exercising due diligence, could or should have been done earlier; it is the
negligence or omission to assert a right within a reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it. 12

To be sure, there is no absolute rule as to what constitutes staleness of demand; each case is to be
determined according to its particular circumstances. The question of laches is addressed to the sound
discretion of the court and since laches is an equitable doctrine, its application is controlled by equitable
considerations. It cannot be applied to defeat justice or to perpetrate fraud. In the case under
consideration, it would be the height of injustice and inequity to apply laches against petitioner and vest
ownership over a valuable piece of real property in favor of respondent by virtue of an absolutely
simulated deed of sale never intended to convey any right over the subject property. It is the better rule
that courts, under the principle of equity, be not guided or bound strictly by the doctrine of laches when to
do so, manifest wrong of injustice would result.

Suntay v. Court of Appeals 13 and Santiago v. Court of Appeals 14 are binding precedents. In Suntay,
Federico Suntay applied as a miller-contractor with the then National Rice and Corn Corporation but his
application was disapproved due to several unpaid loans. He then told his nephew Rafael to apply
instead. To obtain an approval, Rafael prepared a notarized absolute deed of sale whereby Federico, for
and in consideration of P20,000.00, conveyed to Rafael a parcel of land with all its existing structures.
Federico's title to the property was thereafter cancelled and another one issued to Rafael. Subsequently,
Federico requested Rafael to reconvey to him the property for he intended to use it as collateral. Rafael
however refused to do so, clinging to the deed of sale in his favor. We upheld the claim of Federico as we
found that the deed of sale was absolutely simulated and therefore void. We observed that

Indeed the most protuberant index of simulation is the complete absence of an

attempt in any manner on the part of the late Rafael to assert his rights of ownership
over the land and rice mill in question. After the sale, he should have entered the
land and occupied the premises thereof. He did not even attempt to. If he stood as
owner, he would have collected rentals from Federico for the use and occupation of
the land and its improvements. All that the late Rafael had was a title in his name. . . .

. . . . The fact that, notwithstanding the title transfer, Federico remained in actual
possession, cultivation and occupation of the disputed lot from the time the deed of
sale was executed until the present, is a circumstance which is unmistakably added
proof of the fictitiousness of the said transfer, the same being contrary to the principle
of ownership.

In Santiago, Paula Arcega executed a deed of absolute sale of her parcel of land in favor of Josefina
Arcega and spouses Regalado Santiago and Rosita Palabyab for P20,000.00. A new title was
issued in the name of the vendees cancelling that of Paula. Later, a four (4) bedroom house was
built on the property. The master's bedroom, with toilet and bath, was occupied by Paula until her
death despite the execution of the deed of sale. The three (3) other bedrooms, smaller than the
master's bedroom, were occupied by the vendees. Then, an heir of Paula filed an action seeking to
declare the nullity of the deed of sale on the ground of absence of consideration and that it was
merely designed as an accommodation for the purpose of obtaining a loan from the Social Security
System. Guided by Suntay, we annulled the deed of sale and the title of the vendees and ordered
reconveyance of the property. We ratiocinated that

. . . . while petitioners were able to occupy the property in question, they were
relegated to a small bedroom without bath and toilet, while Paula Arcega remained
virtually in full possession of the completed house and lot using the big master's
bedroom with bath and toilet up to the time of her death on April 10, 1985. If, indeed,
the transaction entered into by the petitioners and the late Paula Arcega on July 8,
1971 was a veritable deed of absolute sale, as it was purported to be, then Mrs.
Arcega had no business whatsoever remaining in the property and, worse, to still
occupy the big master's bedroom with all its amenities until her death . . . . Definitely,
any legitimate vendee of real property who paid for the property with good money will
not accede to an arrangement whereby the vendor continues occupying the most
favored room in the house while he or she, as the new owner, endures the disgrace
 and absurdity of having to sleep in a small bedroom without bath and toilet as if he or
she is a guest or a tenant in the house. In any case, if petitioners really stood as
legitimate owners of the property, they would have collected rentals from Paula
Arcega for the use and occupation of the master's bedroom as she would then be a
mere lessee of the property in question. However, not a single piece of evidence was
presented to show that this was the case. All told, the failure of petitioners to take
exclusive possession of the property allegedly sold to them, or in the alternative, to
collect rentals from the alleged vendee Paula Arcega, is contrary to the principle of
ownership and a clear badge of simulation that renders the whole transaction void
and without force and effect . . . . 15

Squarely with Suntay and Santiago, petitioner remained in actual possession of subject property through
the Palacioses even after the execution of the second deed of sale in 1969. The lessees paid rentals to
petitioner since 1967. We note likewise that petitioner was the defendant in the consignation case.
Respondent disdained to explain that she allowed petitioner to collect the rentals because she "did not
mind" the nominal amount involved.

We are unconvinced simply because the supposed "unmindfulness" involved, not a short period, but
a span of seventeen (17) years, or from 1969 up to 1986. Besides, it defies logic and borders more
on absurdity that respondent bought the disputed property only to allow petitioner to continue
exercising dominion over it by leasing it to the Palacioses at the same time benefiting therefrom in
the form of rentals collected. The only change effected by the purported second deed of sale was
the transfer of title to respondent. Respondent's "generosity" is too good to be true, in a manner of
speaking. Rather, we agree with the trial court that the second deed of sale was simulated.
Petitioner was constrained to transfer title over the property to respondent to enable the latter to
mortgage it to the GSIS, the proceeds of which would be used to construct an apartment on the
property.

True it is that as between a public document and a private document, the former prevails.
But Santiago went further. We said therein that although the notarization of the deed of sale in
question vests in its favor the presumption of regularity, it is not the intention or the function of the
notary public to validate and make binding an instrument that did not intend to have any binding
legal effect upon the parties thereto. The intention of the parties still is and always will be the primary
consideration in determining the true nature of a contract which in the present case was contained in
the agreement of 10 January 1970.

Then, too, a comparison between respondent's signature on the 10 January 1970 agreement, on
one hand, and her signatures on the application for the reconstitution of TCT No. 149036 16 and the
lease contract between her and the Palacios spouses, 17 on the other hand, discloses a striking similarity.
No amount of denial by respondent will render ineffectual the 10 January 1970 agreement.

Moreover, the fact that respondent was able to secure a title in her name did not operate to vest
ownership upon her of the property. Santiago cannot be any less unequivocal

. . . . That act has never been recognized as a mode of acquiring ownership. As a

matter of fact, even the original registration of immovable property does not vest title
thereto. The Torrens system does not create or vest title. It only confirms and records
title already existing and vested. It does not protect a usurper from the true owner. It
cannot be a shield for the commission of fraud. It does not permit one to enrich
himself at the expense of another. Where one does not have any rightful claim over a
real property, the Torrens system of registration can confirm or record nothing. 18
WHEREFORE, the petition is GRANTED. The Decision of respondent Court of Appeals of 19 July 1996
ordering the dismissal of the complaint of petitioner Guadalupe S. Reyes and the Resolution of 22
October 1996 denying reconsideration are SET ASIDE. The Decision of the Regional Trial Court of
Quezon City, Branch 106, of 29 May 1992 cancelling and declaring null and void TCT No. 149036, as
well as the second deed of sale dated 24 September 1969 between petitioner and private respondent
Juanita L. Raymundo ordering the latter to reconvey the property subject of the second deed of sale to
petitioner, and further ordering private respondent to pay petitioner P25,000.00 as actual and exemplary
damages, P10,000.00 as attorney's fees, and to pay the costs, is REINSTATED and ADOPTED as the
Decision in this case.
1w phi 1.nt

SO ORDERED.

G.R. No. 129507 September 29, 2000

CHAN SUI BI, JOHNNY C. ONG, BOBBY C. ONG, PHILLIP C. ONG, HOMER C. ONG, DAVID C.
ONG, HELEN C. ONG-MAYPA, AND GLENN C. ONG, as substituted widow and children of the
late Jose C. Ong in his personal capacity, ROBSON ONG, and DAVID C. ONG, as Special
Administrator of the Intestate Estates of Uy Hian and Ong Chuan, RTC-Iloilo Sp. Procs. Nos.
2647 and 2370*, petitioners,
vs.
COURT OF APPEALS, SOFIA DALIPE, ROLANDO D. ONG, SPOUSES LORENZO D. ONG AND
VILMA TAN-ONG, SPOUSES EDDIE D. ONG AND LIZA TE-ONG, HENRY D. ONG, YELSON D.
ONG, WILSON D. ONG, ASUNCION ONG-JARDIOLIN, MA. LOURDES ONG, LAS TRES
ESTRELLAS TEXTILES CO., GOLDEN GATE REALTY CORPORATION, AND GOLDEN
PORTALS INDUSTRIES, INC., respondents.

DECISION

QUISUMBING, J.:

For review is the Decision promulgated on December 19, 1996 by the Court of Appeals in CA-G.R.
CV No. 32242, affirming with modification the judgment of the Regional Trial Court in Iloilo City,
Branch 28, in Civil Case No. 17530.

The facts as narrated by the Court of Appeals,1 are supported by the records as follows:

Petitioner Chan Sui Bi is the widow of the late Jose C. Ong, one of two sons of Ong Chuan and Uy
Hian whose settlement of estate is being contested. The others Johnny, Bobby, Phillip, Homer,
David, Helen Ong-Maypa and Glenn are the children of Chan Sui Bi and Jose Ong. David Ong is the
appointed Special Administrator of the intestate estate of Ong Chuan and Uy Hian. Co-petitioner
Robson Uy is the other son of Ong Chuan and Uy Hian.

Private respondent Sofia Dalipe is Ong Chuan's common-law wife. The other respondents, Rolando,
Lorenzo, Eddie, Henry, Yelson, Wilson, and Asuncion are their children. Las Tres Estrellas
Company, Golden Gate Realty Corporation (GGRC), and Golden Portals Industries, Inc. (GPII) are
among the corporations established by private respondents, which petitioners claim are part of the
estate of Ong Chuan and Uy Hian.

Ong Chuan, also known as Ong See Lim, was a Chinese national who had settled in Iloilo City. He
left his wife Uy Hian and his two sons, Jose and Robson, in Hongkong. He commuted between
Hongkong and the Philippines. In Hongkong, Ong Chuan bought the Golden Gate Building and the
land on which it was located at No. 18 Kimberly Street. Uy Hian resided in a portion of the building.
Robson administered the building, and remitted Ong Chuan's share in the income from the building
to the latter's account with the Hongkong and Shanghai Bank in Hongkong.

While in the Philippines, Ong Chuan lived with his common-law wife, Sofia. They had eight (8)
children, namely: Rolando, Lorenzo, Henry, Yelson, Wilson, Asuncion, Sonia and Maria, all
surnamed Ong.

In Iloilo, Ong Chuan put up Las Tres Estrellas (Ong Chuan & Co.), a textile merchandising business
in partnership with his son Jose (Sy Dee), who had become a Filipino citizen. On February 6, 1964,
Jose, sold all his shares in the partnership to his father and put up his own business.

Ong Chuan continued Las Tres Estrellas, which prospered. In 1977, when he retired at age 76, he
filed gross receipts amounting to P1,609,345.93 with the Bureau of Internal Revenue. He and his
partner Juan Tong also decided to sell their holdings in Hongkong. Ong Chuan executed a General
Power of Attorney in favor of Rolando, one of his sons by Sofia, while Juan Tong similarly named as
attorney-in-fact his son, Jose Tong. The sons were given instructions to sell the Hongkong
properties owned by the fathers. On April 30, 1979, Rolando and Jose sold the land and the Golden
Gate Building to Denkin Limited, for HK$11,500,000.00. Rolando and Juan received the check
issued in the names of Ong Chuan and Juan Tong. They left the check with Solicitor Jerry Chung in
Hongkong. Ong Chuan told his son that as soon as the former recovered from his heart ailment, he
and Juan Tong would go to Hongkong to encash the check, settle obligations, and pay the
commission of the solicitor. Ong Chuan and Juan Tong left Manila about a week after Rolando
arrived in Hongkong. As of January 19, 1979, Ong Chuan had a bank balance of HK$351,426.00
reflected in his bank statement.

Meantime, Sofia and her children also engaged in various businesses in Iloilo: farming, real estate,
retail merchandising, and textile manufacturing. Sometime in 1960, about 21 years before the death
of Ong Chuan, Sofia started farming a 10-hectare farmland in Alimodian, Iloilo, from which she
derived an annual income of P5,000.00 to P10,000.00. Rolando worked for his father with a monthly
salary. In April 1968, Sofia, with P30,000.00 of her own money and a P120,000.00 loan from the
Pacific Banking Corporation purchased a parcel of land with a two-storey four-door commercial
building located in Aldeguer St., Iloilo City, using the lot and building as collateral. On April 26, 1968,
on the basis of a Deed of Absolute Sale between Jose Marquez and Sofia, TCT No. 23149 of the
Registry of Deeds of Iloilo City was issued in the name of Sofia, who was referred to in said title as
'single'. Sofia leased portions of the building, and put up two registered businesses in the premises,
the Perma Press Enterprises and the Sofillems Fabrics and Knitwear. Subsequently, Sofia and her
children acquired real estates in Manduriao, Alimodian and Iloilo City. Rolando with his brother Eddie
set up Octagon Gift Shop also in Iloilo City; and together with his sister Asuncion, the Casa Rey and
Linea Italiana Dress Shop. They inherited seven parcels of land from Sonia, one of the siblings who
died intestate. Rolando and Sofia also put up Las Tres Estrellas Textiles Co. (also known as
Rolando D. Ong & Co.).

On December 2, 1978, Uy Hian died in Hongkong. Her sons, Jose and Robson, claiming to be the
legitimate children of Ong Chuan and Uy Hian, filed a petition with the Regional Trial Court of Iloilo
City for the settlement of the intestate estate of Uy Hian, docketed as Special Proceedings No.
2647. Jose and Robson alleged that they are the legitimate heirs of the couple and that Uy Hian had
an interest of 50% in the following real and personal properties: a parcel of land valued at
P376,000.00 located in Aldeguer St., Iloilo City; a building worth P167,172.84 on said lot; a parcel of
land valued at P215,672.00 in Las Tres Estrellana, JM Basa St., Iloilo City; assets of Golden Gate
Realty Corp. (GGRC) Iloilo City valued at P1,000,000.00; a savings deposit of HK$524,000.00
(P752,464.00) with Shanghai Banking Corp. Kowloon Branch; and HK$5,750,000.00
(P8,275,000.00) cash c/o Ong Chuan, in Iloilo City.
On November 19, 1979, Ong Chuan filed an Opposition to the petition alleging that Jose and
Robson were not the legitimate sons of Uy Hian and that the two had no interest whatsoever in the
estate of Uy Hian.

About four months earlier, on June 29, 1979, when S.P. NO. 2647 was still pending, Rolando, Eddie
and Jose Juan Tong, Luisa Tan, Feliza Cheng and Lucio Juantong as incorporators, established the
GOLDEN GATE REALTY CORPORATION (GGRC). Rolando was Treasurer while Jose Juan Tong
was President and Chairman of the Board of Directors. On July 17, 1979, GGRC bought the parcels
of land described in TCT Nos. 53007, 53008 and 53011 from Frolu Locsin and Dennis Locsin.

On December 13, 1979, Jose Juan Tong, Lucio Juan Tong, Lily Juan Tong, Victoria Siady, with
Sofia Dalipe, Rolando Ong, Eddie Ong and Henry Ong incorporated GOLDEN GATE PORTALS,
INDUSTRIES, INC. (GGPII). Rolando was Chairman of the Board of Directors. GGPII secured loans
from Allied Banking Corporation and used said loans for the purchase of four parcels of land, in Iloilo
City.

Per records of the Assessor's Office, GGRC also owned 5 parcels of land, all in Iloilo City. Lorenzo
owned 3 pieces of property also in Iloilo City. Rolando, Eddie and Sofia had lands in Alimodian.

On June 24, 1981, during the pendency of the case for the settlement of the estate of Uy Hian, Ong
Chuan died.Rolando and his siblings were substituted as oppositors in S.P. No. 2647.

On October 13, 1981, Jose and Robson filed a petition in the RTC for the settlement of the intestate
estate of Ong Chuan docketed as S.P. No. 2370. Rolando and his siblings filed their opposition
thereto. The two (2) estate proceedings, S.P. No 2647 and S.P. No. 2370 were heard jointly. On
November 22, 1985, the Court promulgated its Decision appointing Jose Ong administrator of the
estate of Uy Hian and Ong Chuan and requiring said Jose Ong to file an administrator's bond of
P10,000.00.2 The intestate court found that Jose and Robson were children of the deceased Uy Hian
and Ong Chuan, and that the oppositors were the children of Ong Chuan and his common-law wife,
Sofia Dalipe.3

The decision was appealed and docketed as CA-G.R. Nos. 10526 and 10527-CV. During the
pendency of said appeal, GGRI sold over a hectare of land covered by TCT No. 71948 to the Iloilo
Central Commercial High School Alumni Association, Inc. (ICCHSAAI). A new title, TCT No. 72352
was issued in lieu of TCT No. 71948.4 On April 20, 1987, petitioners filed Civil Case No. 17530, for
the declaration of nullity of the aforementioned sale and the reconveyance of the land and all the
fruits thereof to the estates of Uy Hian and Ong Chuan. Petitioners also asked for moral damages,
attorney's fees and costs of litigation.

On August 19, 1987, the trial court issued an order dismissing the Civil Case No. 17530 as against
ICCHSAAI and the latter's counterclaims. Rolando filed a motion for a preliminary hearing and for
the dismissal of Civil Case No. 17530 on the ground of litis pendentia. The motion was denied.

Private respondent Rolando filed a Petition for Certiorari before this court which was also dismissed.

On October 5, 1988, Jose died. The court ordered substitution by his wife, Chan Sui Bi Ong, and
their children.

On February 19, 1991, the court dismissed the Civil Case 17530 and ordered herein petitioners to
pay respondents P100,000.00 for attorney's fees and P50,000.00 as actual expenses.
Said decision was appealed. The Court of Appeals rendered its decision, disposing:

IN THE LIGHT OF ALL THE FOREGOING, the assailed Decision is AFFIRMED with the
modification that the award of P50,000.00 by way of actual expenses is deleted. With costs against
Appellants.

SO ORDERED.5

The appellate court declared that: (1) The trial court did not err in not resolving the issue of filiation of
Jose and Robson as legitimate children of Uy Hian and Ong Chuan,6 conformably with Sec. 1, Rule
90 of the Rules of Court;7(2) Appellants had the burden of proving, with the requisite quantum of
evidence, that Rolando withdrew the money of Ong Chuan from Hongkong Shanghai Bank in
accordance with Section 1, Rule 131, of the Revised Rules on Evidence;8 (3) Petitioners did not show
that Ong Chuan's health deteriorated from December 7, 1978 to April 30, 1979 making him unable
him to travel to Hongkong to encash the check from the sale of the Hongkong properties and wrap
up his business; (4) The numerous properties and businesses of private respondents were not
acquired with Ong Chuan's money, thus these properties are not part of the estate of Ong Chuan;
and (5) Contrary to petitioners assertion, Sofia and her children were not dummies of Ong Chuan so
the latter could circumvent Republic Act No. 1180, (Otherwise known as the Retail Trade Law) and
Commonwealth Act No. 108 (Otherwise known as the Anti-Dummy Law), which disallowed Ong
Chuan, as an alien to engage in the retail business and buy land in the Philippines.

Hence, this instant petition, claiming that the Court of Appeals erred:

I . . . IN HOLDING THAT THE TRIAL COURT DID NOT ERR IN NOT RESOLVING THE
ISSUE OF THE FILIATION OF THE DECEASED JOSE ONG AND PETITIONER ROBSON
ONG AS LEGITIMATE CHILDREN OF THE DECEASED SPOUSES UY HIAN AND ONG
CHUAN.

II . . . IN AFFIRMING THE FINDING OF THE TRIAL COURT THAT ROLANDO ONG DID
NOT GET THE BANK DEPOSIT OF ONG CHUAN AND HIS SHARE OF THE SALE OF
THE PROPERTY IN HONGKONG, CONTRARY TO LOGIC AND REASON/THE FINDING
OF THE ESTATES COURT.

III . . . IN NOT APPLYING THE LEGAL PRESUMPTION IN THE ANTI-DUMMY LAW TO

THE REAL PROPERTIES ACQUIRED BY ONG CHUAN IN THE PHILIPPINES AND TO
HIS RETAIL BUSINESSES PLACED IN THE NAMES OF THE RESPONDENTS.

IV . . . IN DEPRIVING THE PETITIONERS OF THEIR JUST SHARES IN THE FUNDS OF

THE TWO ESTATES WHICH WERE FUNNELED INTO CORPORATIONS AND ENTITIES
ORGANIZED BY THE RESPONDENTS;

V . . . IN NOT GIVING JUSTICE TO THE PETITIONERS.9

At the outset, we note that the issues raised before this Court are the very same issues raised
before the Court of Appeals. The issue of whether or not Ong Chuan withdrew his deposit from the
Hongkong and Shanghai Bank and Hongkong, and the issue of whether or not Sofia and her
children used the money of the deceased for their own business acquisitions are factual matters.
Factual matters cannot be inquired into by this Court in an appeal by certiorari. The Court can no
longer be tasked to go over the proofs presented by the parties and analyze, assess, and weigh
them to ascertain if the trial court and appellate court were correct in according them superior credit
in this or that piece of evidence of one party or the other.10
Nevertheless the Court notes that the majority of the pieces of real estate and other acquisitions of
Sofia and her children were made even before the death of Uy Hian and Ong Chuan. As early as the
1960's Sofia had started her farm and purchased real estate through bank loans and on installment
basis. These facts bear strongly against the allegation that Sofia and her children used the estate of
Ong Chuan and Uy Hian to further their own businesses. The appellate court observed that the
financing of the business acquisitions of Sofia were from her own funds and from bank loans which
benefited her and her children, not her Chinese common-law husband. If the evidence on record
shows that a Filipino citizen purchased or acquired real estate with the use of his or her own money
or funds or that he or she did so not for the benefit of an alien but for his or her own benefit, then the
Filipino is not a dummy in fact and in law.

But even if Ong Chuan gave Sofia money, we agree with the Court of Appeals when it cited People
vs. Aurelia Altea et. al.,11 that if an alien gave or donated his money to a citizen of the Philippines so
that the latter could invest it in the purchase of private agricultural lands, or purchased private
agricultural lands for a citizen of the Philippines, such acts, provided they are done in good faith, do
not violate our laws.12 What was prohibited by the anti-dummy law and the retail trade law then
prevailing were the acquisition by an alien for himself of private lands in the Philippines, and the
conduct of retail trade by the alien, respectively.

Thus, the remaining issue for our consideration is whether the trial court erred in refusing to resolve
the question of filiation of Jose and Robson as legitimate children of Uy Hian and Ong Chuan. We
recall that the issue of filiation was already passed upon in Special Proceeding Nos. 2647 and
2370,13 involving the settlement of the estates of Uy Hian and Ong Chuan. The issue of filiation is
now mooted by the decision in the aforementioned cases. Since the intestate court had ascertained
in the settlement proceedings who the lawful heirs are, there is no need for a separate, independent
action to resolve claims of legitimate children of the deceased. The court first taking cognizance of
such proceeding acquires exclusive jurisdiction to resolve all questions concerning the settlement of
the estate to the exclusion of all other courts or branches of the same court.14 As early as 1905, we
said that while the estate is being settled in the Court of First Instance (now Regional Trial Court) in
a special proceeding, no ordinary action can be maintained in that court, or in any other court, by
persons claiming to be heirs, for the purpose of having the rights of the plaintiffs in the estate
determined.15

WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Court of Appeals dated
December 19, 1996, affirming the decision with modification of the Regional Trial Court, in Iloilo City,
Branch 28, in Civil Case No. 17530 and the Resolution dated May 14, 1997 are AFFIRMED. Costs
against petitioners.

SO ORDERED.

G.R. No. L-27976 December 7, 1982

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,

vs.
ANSELMA AVENGOZA, ET. AL., defendants-appellees.

G.R. No. L-27977 December 7, 1982

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellant,

vs.
ANSELMA AVENGOZA, ET. AL., defendants-appellees.
The Solicitor General for plaintiff-appellee.

German G. Vilgera for defendant-appellant.

RELOVA, J.:

Go Gam alias Luistro Sancho a Chinese, his wife Anselina Avengoza and the latter's mother Gavina
Avengoza, were charged in Criminal Case No. 6201 of the Court of First Instance of Camarines Sur
with violation of Commonwealth Act No. 108, as amended, in the information which reads:

That during the period comprised between July 19, 1954 and April 1957, in the
Municipalities of Libmanan and Sipocot province of Camarines Sur, Philippines, and
within the jurisdiction of this Honorable Court, the said accused Anselina Avengoza
and Go Gam ahas Luistro Sancho being Chinese citizens, who as such are barred
from acquiring private agricultural lands in the Philippines and with deliberate intent
to defraud, mislead, and for the evident purpose of evading Section 5 of Article XIII of
the Philippine Constitution did then and there willfully, unlawfully and feloniously and
for their own benefits and for profits, utilize as a dummy their co-accused Gavina
Avengoza, a Filipino citizen, who in turn deliberately allowed and permitted herself to
be used as such dummy in the acquisition and sale of private agricultural land
described as follows, to wit:

Six parcels of land situated in the municipality of Sipocot province of

Camarines Sur, Philippines, embraced in and covered by Tax
Declaration Nos. 3105, 3323, 3338, 3348, 3621 and 3223 of the said
municipality.

One (1) parcel of land situated in the municipality of Libmanan,

province of Camarines Sur, Philippines, embraced in and covered by
Tax Declaration No. 6979 of said municipality.

by making it appear in the instruments of conveyance that the said Gavina Avengoza
was the real purchaser, when in truth and in fact, the true vendees are the then-
accused Anselina Avengoza and Go Gam, as a result of which the latter were able to
possess and own real properties and have profited themselves by the aid of their
coaccused Gavina Avengoza.

Acts contrary to law.

In Criminal Case No. 6643 of the same court, Anselina Avengoza was charged together with Rafaela
Alfante of violation of Section 2 of Commonwealth Act No. 108 in an information which reads:

That on or about the 12th day of February 1950 in the municipality of Sipocot
province of Camarines Sur, Philippines, and within the jurisdiction of this Honorable
Court, accused Rafaela Alfante, who is a Filipina citizen and being then the owner of
a private agricultural land registered under original certificate of Title No. 289 situated
in said municipality and the ownership of which is expressly reserved by the
Constitution or the laws to the citizens of the Philippines, did, then and there
knowingly, willfully, unlawfully and feloniously cede transfer and convey by way of
 deed of sale said property to accused Anselina Avengoza, a Chinese citizen and
who, knowingly aids, assists or abets in the consummation or perpetration of the
aforementioned sale, then an alien by reason of lawful marriage with Go Gam alias
Luistro Sancho a Chinese citizen, who as such is barred from acquiring private
agricultural lands in the Philippines.

Acts contrary to law.

All the accused pleaded not guilty and the two cases were tried jointly .

While the cases were pending in the lower court, the accused Gavina Avengoza and Go Gam alias
Luistro Sancho died; thus trial continued only as regard Anselina Avengoza and Rafaela Alfante.

Counsel for the said accused subsequently filed a motion for leave to withdraw their plea of not guilty
and to be permitted to file a motion to quash alleging that accused Anselina Avengoza had
reacquired her Philippine citizenship by repatriation, by reason whereof the criminal liability of said
accused and that of the remaining defendant Rafaela Alfante, if any, was thereby extinguished; and
that the issue in the criminal cases had thus been rendered moot and academic.

The trial court allowed defendants to withdraw their plea, admitted and found defendants' motion to
quash meritorious, and ordered the dismissal of the two cases, with costs de oficio. Reason for the
dismissal is principally predicated on the trial court's opinion that defendant Anselina Avengoza has
validly reacquired her Philippine citizenship.

From the said order, the plaintiff appealed to this Court and claimed that the trial court has
committed the following errors:

THE LOWER COURT ERRED IN HOLDING THAT THE ACCUSED, ANSELMA

AVENGOZA, BY EXECUTING AN OATH OF ALLEGIANCE TO THE REPUBLIC OF
THE PHILIPPINES AND REGISTERING IT WITH THE LOCAL CIVIL REGISTRY OF
SIPOCOT CAMARINES SUR HAD LEGALLY REPATRIATED HERSELF AND
THEREBY REACQUIRED HER PHILIPPINE CITIZENSHIP.

II

THE LOWER COURT ERRED IN HOLDING THAT, HAVING REACQUIRED HER

PHILIPPINE CITIZENSHIP BY REPATRIATION, ANSELMA AVENGOZA'S TITLE
OVER THE AGRICULTURAL LANDS PURCHASED BY GAVINA AVENGOZA FOR
HER AND HER HUSBAND, BECAME LAWFUL AND VALID AS OF THE DATE OF
THEIR CONVEYANCE OR TRANSFER TO HER AND HER ALIEN HUSBAND, AND
IN CONCLUDING THAT AS A RESULT OF SAID REPATRIATION THE CRIMINAL
ACTS COMMITTED BY HER AND HER HUSBAND, AND THOSE WHO AIDED
THEM TO POSSESS THOSE LANDS, HAD BEEN EXTINGUISHED.

We find merit in this appeal. Records show that defendant Anselina Avengoza merely executed an
that of allegiance to the Philippine Republic, filed it with the Office of the Municipal Treasurer of
Sipocot Camarines Sur on October 18, 1966, and the trial court considered it sufficient for her to
reacquire Philippine citizenship by repatriation. Section 4 of Commonwealth Act 63 provides that
would be repatriate should show by conclusive evidence that he or she has the qualifications to be
so repatriated. Without such conclusive proof, he or she has to file with the proper Court of First
Instance a petition for repatriation.

Pertinent sections of Commonwealth Act No. 63 provides:

Section 2. How Citizenship may be reacquired:

xxx xxx xxx

2. By repatriation of deserters of the Army, Navy or Air Corps: Provided That a

woman who lost her citizenship by reason of her marriage to an alien may be
repatriated in accordance with this Act after the termination of the marital status:

xxx xxx xxx

Sec. 4. Repatriation shall be effected by merely taking the necessary oath of

allegiance to the Commonwealth (now Republic) of the Philippines and registration in
the proper civil registry.

Sec. 5. The Secretary of Justice shall issue the necessary regulations for the proper
enforcement of this Act. ...

And, the Rules and Regulations issued by The Department of Justice on July 1, 1937, pursuant to
Section 5 of Commonwealth Act No. 63 governing the reacquisition of Philippine citizenship, provide:

Rule 3. Any person who has lost his or her Philippine citizenship in any of the
following ways and/or events:

1. By having been declared, by competent authority, a deserter of the Philippine

Army, Navy, or Air corps in time of war, unless subsequently a plenary pardon or
amnesty has been granted; and

2. In the case of a woman, upon her marriage to a foreigner if, by virtue of the law in
force in her husband's country, she acquires his nationality.

Anyone wishing to reacquire his or her Philippine citizenship by repatriation under the
provisions of Commonwealth Act No. 63, shall file an application with any Court of
First Instance setting forth his name and surname; his present and former places of
residences; his occupation; the place and date of his birth; whether single or married,
in the case of deserter of the Army, Navy, or Air Corps, and if married, the name,
age; and birth place, and residence of his wife and each of the children. In the case
of a woman who lost her Philippine citizenship by reason of her marriage to an alien,
the applicant shall state the date and place of her marriage, the nationality of her
former husband, and the cause of the dissolution of the marriage. The petition must
be supported by the affidavit of at least two persons stating that they are citizens of
the Philippine Islands, and that said petitioner, in their opinion, has all the
qualifications necessary to be repatriated. lf after the hearing the court believes in
view of the evidence taken that the petitioner has all the qualifications required by
Commonwealth Act No. 63, it shall require the petitioner to take in open court the
following oath of allegiance: ... "and shall order the registration of such oath in the
proper civil registry through the clerk of court. "
Defendant Avengoza's sole evidence on record to support her repatriation is her oath of allegiance
to the Republic of the Philippines. No evidence has been presented to show conclusively that she
has the right to be repatriated under Section 4 of Commonwealth Act No. 63. As aptly stated by the
Solicitor General in his brief, "to sustain the findings of the trial court on this point would establish a
very dangerous precedent as any alien woman married to a Chinese citizen can easily "acquire"
Philippine citizenship upon the death of her Chinese husband by merely executing an oath of
allegiance to the Republic and filing the same with the local civil registry even if she does not
possess the required citizenship." Defendant Anselina Avengoza became an alien by reason of her
lawful marriage to a Chinese citizen; however, this does not necessarily mean that she was a
Filipino citizen previous to such marriage. Thus, she should first prove her citizenship previous to her
marriage and as there is no conclusive proof of this matter on record, this question must be judicially
determined before she can be legally repatriated.

Further, even Filipino citizens can be criminally liable under the anti-dummy law; and, aliens violating
said law are not exempted from criminal liability upon becoming a Filipino citizen.

Finally, the sales in favor of alien Anselina Avengoza, through a dummy, of various parcels of land
are void for being contrary to public policy. And, like an alien who became a naturalized Filipino
citizen, her repatriation did not exempt her from criminal liability for violation of the Anti-Dummy Law.

ACCORDINGLY, the appealed order of the trial court is hereby SET ASIDE and the case is
remanded to the lower court for trial on the merits.

SO ORDERED.

G.R. No. 95815 March 10, 1999

SERVANDO MANGAHAS, petitioner,

vs.
THE HON. COURT OF APPEALS and SPOUSES SIMEON and LEONORA CAYME, respondents.

PURISIMA, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court seeking to
nullify the decision of the Court of Appeals1 dated May 25, 19902 and the Court of Appeals'
Resolution of October 12, 1990,3 denying petitioner's motion for reconsideration.

From the records on hand, the antecedent facts that matter can be culled as follows:

Since April 1955,4 the spouses, Severo S. Rodil and Caridad S. Rodil, occupied and possessed the
subject property,5 which is an agricultural land with an area of 15.0871 hectares.6 On February
1,1971, they sold the said piece of land to the spouses, Pablo Simeon and Leonora Cayme, for
Seven Thousand (P7,000.00) Pesos, as evidenced by the affidavit7 executed by the former in favor
of the latter in the presence of the herein petitioner, Servando Mangahas 8 During the trial below, the
lower court gave credence to the evidence on record that it was the herein petitioner himself who
approached the buyer and offered to sell subject parcel of land and he was also the one who
received said consideration of P7,000,000.
On the same day, the private respondents filed with the Bureau of Lands a Free Patent application
for the same land in dispute, which application was approved on August 27, 1975 by the Bureau of
Lands under Free Patent No. 576411.9 Pursuant thereto the Register of Deeds in Mamburao,
Occidental Mindoro issued the corresponding Original Certificate of Title No. P-6924.10

Records show that before the sale, the spouses Rodil had already applied for subject tract of land
with the Bureau of Lands which application was not acted upon even until the aforesaid sale. It was
also shown that petitioner, Servando Mangahas, had been in possession thereof by virtue of the
agreement between him and the spouses Rodil, allowing him (petitioner) to occupy and cultivate the
said parcel of land.11 For allowing him to occupy and cultivate the same, petitioner Servando
Mangahas paid the amount of P7,000.00 to the Rodils, as mentioned in the "Kasulatan ng
Pagtanggap ng Salapi12 Twelve (12) hectares of the property were then developed into a fishpond,
two (2) hectares planted to rice and one (1) hectare used as "tumana" with a house erected thereon.

Petitioner was permitted by the private respondents to continue possessing and working on the
same land, even after the sale, upon the request of the private respondents themselves because
they were then busy in their palay business. Private respondents did not get any share in the fruits or
harvest of the land except on one occasion, when the petitioner gave them one-half (1/2) "tiklis" (big
basket) of "tilapia". However, the private respondents had long before demanded from the petitioner
the return of the premises in question but the latter refused to vacate the place. Private respondents
tolerated petitioner's possession until February 5, 1985, when they commenced the present action
for recovery of ownership and the possession of real property, docketed as Civil Case No. R-528
before Branch 45 of the Regional Trial Court in San Jose, Occidental Mindoro.

Petitioner theorized that he entered into the possession of the land under controversy, sometime in
1969, by virtue of a prior sale he inked with the spouses Rodil on December 7, 1969, and since then,
he has been in continuous occupation and possession in concepto de dueo up to the present,
enjoying the fruits thereof to the exclusion of all others, his right thereto being evidenced by the
"Kasulatan ng Pagtangap ng Salapi" dated December 7, 1969. Petitioner denied having offered the
same land for sale to the private respondents or ever receiving the amount of P7,000.00, the
consideration of the alleged sale of February 1, 1971.13 He further averred that respondent Leonora
Cayme misled the Bureau of Lands into granting her a Free Patent for subject parcel of land on the
basis of a "Deed of Relinquishment of Rights", supposedly executed by Severe Rodil, and to which
document the signature of petitioner as a witness was procured through fraud, deceit and
misrepresentation.14

In due time, the parties went to trial which culminated in the rendition by the court a quo of its
decision of November 14, 1986, in favor of the plaintiffs (now the private respondents), disposing as
follows:

WHEREFORE, premises considered, judgment is hereby rendered:

(a) Declaring the plaintiffs to be the absolute and registered owners of the land in
question covered by and described in OCT No. P-6924 (Free Patent NO. 576411) of
the Office of the Register of Deeds for the Province of Occidental Mindoro;

(b) Ordering defendant and all persons claiming under him to remove their respective
houses constructed thereon, and to deliver the possession of the land in question
together with all the improvements thereon unto the plaintiffs;

(c) Ordering the defendant to pay the plaintiffs the sum of

P5, 000. 00 as and for attorney's fees; and
 (d) Ordering the defendant to pay the costs of suit.

SO ORDERED.15

With the denial16 of his Motion for Reconsideration and/or New Trial, petitioner seasonably appealed
to the Court of Appeals which came out with a judgment of affirmance on May 25, 1990.17

The issues posited by petitioner boil down to:

I WHETHER THE LOWER COURT ERRED IN NOT HOLDING THAT THE LAND IN
QUESTION IS NO LONGER PART OF THE PUBLIC DOMAIN FOR THE REASON
THAT DEFENDANT IS ALREADY, BY OPERATION OF LAW, THE OWNER
THEREOF BY VIRTUE OF A GOVERNMENT GRANT IN ACCORDANCE WITH
THE LAW AND EXISTING JURISPRUDENCE.

II. WHETHER THE LOWER COURT ERRED IN NOT FINDING PLAINTIFF

LEONORA CAYM E GUILTY OF FRAUD AND MISREPRESENTATION IN
SECURING FREE PATENT NO. 576411 FROM THE BUREAU OF LANDS.

The first issue is mainly predicated on the theory that the petitioner acquired ownership of the
disputed land by acquisitive prescription. Petitioner theorized that with the length of possession of
his predecessors-in-interest, the spouses Rodil, tacked to his own possession, the total period of
possession in his favor would suffice to vest in him the ownership of the property under the law on
prescription.18 So also, citing the early case of Cario vs. Insular Government19 up to and including
the more recent cases of The Director of Lands vs. Bengzon, et al.20 and The Director of Lands vs.
Manila Electric Company, et al.21, petitioner stressed that by prescription, he became the owner of
subject property ipso jure, which land became a private property by operation of law, and had been
withdrawn and segregated from the alienable and disposable part of the public domain.
Consequently, the Bureau of Lands had no authority to issue the Free Patent in question, which was
then null and void;22 petitioner argued.

The factual milieu obtaining with respect to the petition under scrutiny has rendered petitioner's
reliance on the applicability of the aforestated principles misplaced. In disposing of the issue, the
Court of Appeals opined:

. . . Even if we were to disregard the need for a proper application, Article 1138 of the
Civil Code provides,

In the computation of time necessary for prescription the following

rules srules shall be observed:

(1) The present possessor may complete the period

necessary for prescription by tacking his possession
to that of his grantor or predecessor in interest . . .

The defendant-appellant's grantor or predecessor in interest (Severo Rodil)

possession of the property, subject matter of the litigation, on April 1955 (Exhibit "F"
for the plaintiff-appellees and exhibit "5" for the defendant). Since the complaint in
the case at bar was filed on February 25, 1985,23 the requirement of at least thirty
years continuous possession has not been complied with even if We were to tack
Rodil's period of possession. . . .24
As found by the lower court below, petitioner had admitted,25 contrary to his disclaimer, that the
possession of the spouses Rodil, from whom he traces the origin of his supposed title, commenced
only in April 1955. Petitioner can not now feign ignorance of such judicial admission which he has
resolutely repudiated in his present petition. 26Acquisition of ownership under the law on prescription
cannot be pleaded in support of petitioner's submission that subject land has ipso jure become his
private property.

As regards the issue of fraud tainting the acquisition of the questioned Free Patent, the Court
discerns no basis for disturbing the finding by the lower court as affirmed by the Court of Appeals.
Findings of fact by the trial court are not to be disturbed on appeal, except for cogent reasons, as
when the findings of fact are not duly supported by evidence.27 On the other hand, findings by the
Court of Appeals on factual questions are conclusive and ought not to be disregarded. But the rule
admits of some exceptions as when such findings of fact are contrary to what the trial court
found.28 Mere allegation of error without more will not prevail over the findings by the trial court,
especially when affirmed by the Court of Appeals, as in the case under consideration.

Petitioner has not adduced before the lower court a preponderance of evidence of fraud. It is well
settled that a party who alleges a fact has the burden of proving it.29 Thus, whoever alleges fraud or
mistake affecting a transaction must substantiate his allegation, since it is presumed that a person
takes ordinary care of his concerns and private transactions have been fair and
regular. 30 The requirement that fraud must be established by clear and convincing evidence has
been reiterated in Cuizon vs. Court of Appeals,31 viz.:

We are not, however, inclined to toe the line of the trial court's finding that private
respondents are liable for fraud. Fraud is the deliberate or intentional evasion of the
normal fulfillment of an obligation. The mere failure of private respondents to execute
a deed of sale because they demanded first an accounting of the lots used as
collaterals by petitioner and the amount of loans secured could not be considered as
fraud. Fraud is never presumed. It must be alleged and proven. Fraus est odiosa et
non praesumeda . . . (Emphasis ours).

In the petition under scrutiny, the fraud theorized upon by petitioner is belied by what the Court of
Appeals found, to wit:

This court has found that the defendant-appellant is a person whose credibility is
much in doubt. On the other hand, We have found the plaintiff-appellee Leonora
Simeon Cayme to be straightforward and credible. She has convincingly shown to
this court, through her testimony and the supporting documentary evidence, that she
is in fact the rightful owner of the property in dispute . . . 32 (Emphasis supplied.)

WHEREFORE, the petition is DENIED and the decision appealed from AFFIRMED. No
pronouncement as to costs.

SO ORDERED.

G.R. No. 132518 March 28, 2000

GAVINA MAGLUCOT-AW, CATALINA ORCULLO, RICHARD ESTANO, NIDA MAGLUCOT,

MELANIA MAGLUCOT-CATUBIG, EMILIANO CATUBIG, LADISLAO SALMA, petitioners,
vs.
LEOPOLDO MAGLUCOT, SEVERO MAGLUCOT, WILFREDA MAGLUCOT-ALEJO and
CONSTANCIO ALEJO,respondents.
KAPUNAN, J.:

This petition for review on certiorari assails the Decision, dated 11 November 1997, of the Court of
Appeals in CA-G.R. CV No. 48816 which reversed and set aside the Decision, dated 13 December
1994, of the Regional Trial Court, Branch 30 of Dumaguete City, Negros Oriental in an action for
recovery of possession and damages.

The core issue in this case is whether a partition of Lot No. 1639 had been effected in 1952.
Petitioners contend that there was already a partition of said lot; hence, they are entitled to exclusive
possession and ownership of Lot No. 1639-D which originally formed part of Lot No. 1639 until its
partition. Private respondents, upon the other hand, claim that there was no partition; hence, they
are co-owners of Lot No. 1639-D. Notably, this case presents a unique situation where there is an
order for partition but there is no showing that the sketch/subdivision plan was submitted to the then
Court of First Instance for its approval or that a decree or order was registered in the Register of
Deeds.

The antecedent facts of the case are as follows:

Petitioners filed with the RTC a complaint for recovery of possession and damages alleging, inter
alia, that they are the owners of Lot No. 1639-D. Said lot was originally part of Lot No. 1639 which
was covered by Original Certificate Title No. 6775 issued in the names of Hermogenes Olis,
Bartolome Maglucot. Pascual Olis, Roberto Maglucot, Anselmo Lara and Tomas Maglucot on 16
August 1927. 1 On 19 April 1952, Tomas Maglucot, one of the registered owners and respondents
predecessors-in-interest, filed a petition to subdivide lot No. 1639. 2 Consequently, on 13 May 1952,
then CFI of Negros Oriental issued an order 3 directing the parties to subdivide said lot into six
portions as follows:

a) Hermogenes Olis lot 1639-A

b) Pascual Olis lot 1639-B

c) Bartolome Maglucot lot 1639-C

d) Roberto (Alberto) Maglucot lot 1639-D

e) Anselmo Lara lot 1639-E

f) Tomas Maglucot lot 1639-F. 4

Sometime in 1963, Guillermo Maglucot rented a portion of Lot No. 1639-D (subject lot).
Subsequently, Leopoldo and Severo, both surnamed Maglucot, rented portions of subject lot in 1964
and 1969, respectively, and each paying rentals therefor. Said respondents built houses on their
corresponding leased lots. They paid the rental amount of P100.00 per annum to Mrs. Ruperta
Salma, who represented the heirs of Roberto Maglucot, petitioners predecessors-in-interest. In
December 1992, however, said respondents stopped paying rentals claiming ownership over the
subject lot. Petitioners thus filed the complaint a quo.
After trail, the lower court rendered judgment in favor of petitioners. The RTC found the existence of
tax declarations in the names of Hermogenes Olis and Pascual Oils (purported owners of Lot Nos.
1639-A and 1639-B, respectively) 5 as indubitable proof that there was a subdivision of Lot No. 1639.
It likewise found that Tomas Maglucot, respondents' predecessors-in-interest, took active part in the
partition as it was he, in fact, who commenced the action for partition. 6 The court a quo cited Article
1431 of the Civil Code which states that "[t]hrough estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot be denied or disproved as against the
person relying thereon." Applying said provision of law, it held that while there was no court order
showing that Lot No. 1639 was partitioned, its absence could not be used by Tomas Maglucot, or
respondents as his successors-in-interest, to deny the existence of an approved partitioned against
the other co-owners who claim that there was one. 7 Said court, likewise, ruled that the tax
declarations 8 over the houses of respondents, expressly stating that the same are constructed on
the lots of Roberto Maglucot, constitute a conclusive admission by them of the ownership of the
subject lot by the latter. 9

The dispositive portion of the lower court's decision reads as follows:

WHEREFORE, on the basis of the foregoing discussion, judgment is hereby rendered in

favor of the plaintiffs against the defendants ordering the latter:

1. To demolish their houses inside lot 1639-D, vacate the premises thereof
and deliver the possession of the same to Plaintiffs;

2. To jointly and solidarily pay plaintiffs the sum of P15,000.00 for attorney's
fees:

3. To each pay plaintiffs the sum of P100.00 every year from 1993 for actual
damages representing the amount of unpaid rentals up to the time they
actually vacate the premises in question;

4. To pay the costs. 10

On appeal, the CA reversed the decision of the RTC. The appellate court ruled that the sketch plan
and tax declarations relied upon by petitioners are not conclusive evidence of partition. 11 The CA
likewise found that the prescribed procedure under Rule 69 of the Rules of Court was not followed. It
thus declared that there was no partition of Lot No. 1639.

Petitioners filed this petition for review on certiorari alleging that the CA committed the following
reversible errors:

IN VIOLATING THE LAW ON ACQUISITIVE PRESCRIPTION PLAINTIFFS HAVING

POSSESSED LOT 1639-D SINCE 1946;

II

IN VIOLATING THE LAW ON ESTOPPEL, THE FACT OF PAYMENT OF RENTALS AND

OFFER TO BUY THE DEFENDANTS IS ADMISSION THAT THE AREA IN LOT 1639-D.
HAD LONG BEEN ADJUDICATED TO PLAINTIFFS;
 III

IN DECLARING THAT THERE WAS NO PRIOR PARTITION, CONTRARY TO THE

FINDINGS OF THE TRIAL COURT, AND AGAINST THE EVIDENCE ON RECORD, OF
WHICH IF PROPERLY CONSIDERED WOULD CHANGE THE OUTCOME OF THE CASE;

IV

IN DECLARING THAT THERE IS NO LAW OR JURISPRUDENCE APPLICABLE UNDER

THE PREMISES; THIS WOULD ONLY SHOW THAT THE RECORD OF THE CASE WAS
NOT PROPERLY SCRUTINIZED, AND THE LAW WAS NOT PROPERLY STUDIED;
ESPECIALLY IN THE CASE AT BENCH THAT THE ORAL AND MUTUAL PARTITION
HAPPENED DURING THE REGIME OF THE OLD RULES OF PROCEDURE; 12

Petitioners maintain that Lot No. 1639 was mutually partitioned and physically subdivided among the
co-owners and that majority of them participated in the actual execution of the subdivision. Further,
the co-owners accepted their designated shares in 1946 as averred by Tomas Maglucot in his
petition for partition. 13 Petitioners opine that in 1952, Tomas Maglucot himself initiated a court
proceeding for a formal subdivision of Lot No. 1639. In said petition, he averred that only
Hermogenes Olis and the heirs of Pascual Olis were not agreeable to the partition. 14Petitioners
further contend that respondents admitted in their tax declarations covering their respective houses
that they are "constructed on the land of Roberto Maglucot." 15 Simply put, petitioners vigorously
assert that respondents are estopped from claiming to be co-owners of the subject lot in view of the
mutual agreement in 1946, judicial confirmation in 1952, and respondents' acquiescence because
they themselves exclusively exercised ownership over Lot No. 1639-A beginning 1952 up to the
present. 16

For their part, respondents posit three points in support of their position. First, they emphasize that
petitioners failed to show that the interested parties were apprised, or notified of the tentative
subdivision contained in the sketch and that the CFI subsequently confirmed the same. 17 Second,
they point to the fact that petitioners were unable to show any court approval of any partition. 18 Third,
they maintain that Lot No. 1639 remain undivided since to date, OCT No. 6275 is still an existing and
perfectly valid title, containing no annotation of any encumbrance or partition whatsoever. 19

After a careful consideration of the pleadings filed by the parties and the evidence on record, we find
that the petition is meritorious. As stated earlier, the core issue in this case is whether there was a
valid partition in 1952.

Preliminary, this Court recognizes that "the jurisdiction of this Court in cases brought before it from
the Court of Appeals via Rule 45 of the Rules of Court is limited to reviewing errors of law. Findings
of fact of the latter are conclusive, except in the following instances: (1) when the findings are
grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is
manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when in making its findings the Court of Appeals went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the respondent; and (10) when the findings of
fact are premised on the supposed absence of evidence and contradicted by the evidence on
record." 20 This case falls under exceptions (7), (8) and (10) in that the findings of facts of the CA are
in conflict with that of the RTC, are mere conclusions without citation of specific evidence on which
they are based and are premised on absence of evidence but are contradicted by the evidence on
record. For these reasons, we shall consider the evidence on record to determine whether indeed
there was partition.

In this jurisdiction, an action for partition is comprised of two phases: first, an order for partition which
determines whether a co-ownership in fact exists, and whether partition is proper, and, second, a
decision confirming the sketch or subdivision submitted by the parties or the commissioners
appointed by the court, as the case may be. 21 The first phase of a partition and/or accounting suit is
taken up with the determination of whether or not a co-ownership in fact exists, (i.e., not otherwise
legally proscribed) and may be made by voluntary agreement of all the parties interested in the
property. This phase may end with a declaration that plaintiff is not entitled to have a partition either
because a co-ownership does not exist, or partition is legally prohibited. It may end, upon the other
hand, with an adjudgment that a co-ownership does in truth exist, partition is proper in the premises
and an accounting of rents and profits received by the defendant from the real estate in question is
in order. In the latter case, "the parties may, if they are able to agree, make partition among
themselves by proper instruments of conveyance, and the court shall confirm the partition so agreed
upon. In either case i.e., either the action is dismissed or partition and/or accounting is decreed
the order is a final one, and may be appealed by any party aggrieved thereby. 22 The second phase
commences when it appears that "the parties are unable to agree upon the partition" directed by the
court. In that event, partition shall be done for the parties by the court with the assistance of not
more than three (3) commissioners. This second stage may well also deal with the rendition of the
accounting itself and its approval by the court after the parties have been accorded opportunity to be
heard thereon, and an award for the recovery by the party or parties thereto entitled of their just
share in the rents and profits of the real estate in question." Such an order is, to be sure, final and
appealable. 23

The present rule on the question of finality and appealability of a decision or order decreeing
partition is that it is final and appealable. 23 The order of partition is a final determination of the co-
ownership over Lot No. 1639 by the parties and the propriety of the partition thereof. Hence, if the
present rule were applied, the order not having been appealed or questioned by any of the parties to
the case, it has become final and executory and cannot be disturbed.

The true test to ascertain whether or not an order or a judgment is interlocutory or final is: Does it
leave something to be done in the trial court with respect to the merits of the case? If it does, it is
interlocutory; if it does not, it is final. The key test to what is interlocutory is when there is something
more to be done on the merits of the case. 24 An order for partition is final and not interlocutory and,
hence, appealable because it decides the rights of the parties upon the issue submitted. 25

However, this Court notes that the order of partition was issued when the ruling in Fuentebella
vs. Carrascoso, 26which held that the order of partition is interlocutory, was controlling. In addition,
the reports of the commissioners not having been confirmed by the trial court are not binding. 27 In
this case, both the order of partition and the unconfirmed sketch plan are, thus, interlocutory.
Nevertheless, where parties do not object to the interlocutory decree, but show by their conduct that
they have assented thereto, they cannot thereafter question the decree, 28especially, where, by
reason of their conduct, considerable expense has been incurred in the execution of the
commission. 29 Respondents in this case have occupied their respective lots in accordance with the
sketch/subdivision plan. They cannot after acquiescing to the order for more than forty (40) years be
allowed to question the binding effect thereof.

This case is to be distinguished from the order in the action for partition in Arcenas vs. Cinco. 30 In
that case, the order was clearly interlocutory since it required the parties "to submit the
corresponding deed of partition to the Court for its approval." Here, the order appointed two
commissioners and directed them merely to approve the sketch plan already existing and tentatively
followed by the parties.

Under the present rule, the proceedings of the commissioners without being confirmed by the court
are not binding upon the parties. 31 However, this rule does not apply in case where the parties
themselves actualized the supposedly unconfirmed sketch/subdivision plan. The purpose of the
court approval is to give effect to the sketch/subdivision plan. In this case, the parties themselves or
through their predecessors-in-interest implemented the sketch plan made pursuant to a court order
for partition by actually occupying specific portions of Lot No. 1639 in 1952 and continue to do so
until the present until this case was filed, clearly, the purpose of the court approval has been met.
This statement is not to be taken to mean that confirmation of the commissioners may be dispensed
with but only that the parties herein are estopped from raising this question by their own acts of
ratification of the supposedly non-binding sketch/subdivision plan.

The records of the case show that sometime in 1946 there was a prior oral agreement to tentatively
partition Lot No. 1639. 32 By virtue of this agreement, the original co-owners occupied specific
portions of Lot No. 1639.33 It was only in 1952 when the petition to subdivide Lot No. 1639 was filed
because two of the co-owners, namely Hermogenes Olis and heirs of Pascual Olis, refused to have
said lot subdivided and have separate certificates of title. Significantly, after the 1952 proceedings,
the parties in this case by themselves and/or through their predecessors-in-interest occupied specific
portions of Lot No. 1639 in accordance with the sketch plan. Such possession remained so until this
case arose, or about forty (40) years later.

From its order in 1952, it can be gleaned that the CFI took notice of the tentative subdivision plan by
oral partition of the parties therein. Further, it appears that the court was aware that the parties
therein actually took possession of the portions in accordance with the sketch/subdivision plan. With
the factual backdrop, said court ordered the partition and appointed two (2) commissioners to
approve the tentative sketch/subdivision plan. It would not be unreasonable to presume that the
parties therein, having occupied specific portions of Lot No. 1639 in accordance with the
sketch/subdivision plan, were aware that it was that same sketch/subdivision plan which would be
considered by the commissioners for approval. There is no showing that respondents by themselves
or through their predecessors-in-interest raised any objections. On the contrary, the records show
that the parties continued their possession of the specific portions of Lot No. 1639 pursuant to the
sketch/subdivision plan.

It has been previously held that a co-owner, who, though not a party to a partition accepts the
partition allotted to him, and holds and conveys the same in severalty, will not be subsequently
permitted to avoid partition. 34 It follows that a party to a partition is also barred from avoiding partition
when he has received and held a portion of the subdivided land especially in this case where
respondents have enjoyed ownership rights over their share for a long time.

Parties to a partition proceeding, who elected to take under partition, and who took possession of the
portion allotted to them, are estopped to question title to portion allotted to another party. 35 A person
cannot claim both under and against the same instrument. 36 In other words, they accepted the lands
awarded them by its provisions, and they cannot accept the decree in part, and repudiate it in part.
They must accept all or none. 37 Parties who had received the property assigned to them are
precluded from subsequently attacking its validity of any part of it. 38 Here, respondents, by
themselves and/or through their predecessors-in-interest, already occupied of the lots in accordance
with the sketch plan. This occupation continued until this action was filed. They cannot now be heard
to question the possession and ownership of the other co-owners who took exclusive possession of
Lot 1639-D also in accordance with the sketch plan.
In technical estoppel, the party to be estopped must knowingly have acted so as to mislead his
adversary, and the adversary must have placed reliance on the action and acted as he would
otherwise not have done. Some authorities, however, hold that what is tantamount to estoppel may
arise without this reliance on the part of the adversary, and this is called, ratification or election by
acceptance or benefits, which arises when a party, knowing that he is not bound by a defective
proceeding, and is free to repudiate it if he will, upon knowledge, and while under no disability,
chooses to adopt such defective proceeding as his own. 39 Ratification means that one under no
disability voluntarily adopts and gives sanction to some unauthorized act or defective proceeding,
which without his sanction would not be binding on him. It is this voluntary choice, knowingly made,
which amounts to ratification of what was therefore unauthorized, and becomes the authorized act of
the party so making the ratification. 40

The records show that respondents were paying rent for the use of a portion of Lot No. 1639-D. Had
they been of the belief that they were co-owners of the entire Lot No. 1639 they would not have paid
rent. Respondents attempted to counter this point by presenting an uncorroborated testimony of their
sole witness to the effect that the amount so paid to Roberto Maglucot and, subsequently, to
Ruperta Salma was for the payment of real property taxes. We are not persuaded. In its quite
improbable that the parties would be unaware of the difference in their treatment of their transactions
for so long a time. Moreover, no evidence was ever presented to show that a tax declaration for the
entire Lot No. 1639 has ever been made. Replete in the records are tax declarations for specific
portions of Lot 1639. It is inconceivable that respondents would not be aware of this. With due
diligence on their part, they could have easily verified this fact. This they did not do for a period
spanning more than four decades.

The payment of rentals by respondents reveal that they are mere lessees. As such, the possession
of respondents over Lot No. 1639-D is that of a holder and not in the concept of an owner. One who
possesses as a mere holder acknowledges in another a superior right which he believes to be
ownership, whether his belief be right or wrong. 41Since the possession of respondents were found to
be that of lessors of petitioners, it goes without saying that the latter were in possession of Lot No.
1639-D in the concept of an owner from 1952 up to the time the present action was commenced.

Partition may be inferred from circumstances sufficiently strong to support presumption. 42 Thus, after
a long possession in severalty, a deed of partition may be presumed. 43 It has been held that recitals
in deeds, possession and occupation of land, improvements made thereon for a long series of years,
and acquiescence for 60 years, furnish sufficient evidence that there was an actual partition of land
either by deed or by proceedings in the probate court, which had been lost and were not
recorded. 44 And where a tract of land held in common has been subdivided into lots, and one of the
lots has long been known and called by the name of one of the tenants in common, and there is no
evidence of any subsequent claim of a tenancy in common, it may fairly be inferred that there has
been a partition and that such lot was set off to him whose name it bears. 45

Respondents insist that the absence of any annotation in the certificate of title showing any partition
of Lot No. 1639 and that OCT No. 6725 has not been canceled clearly indicate that no partition took
place. The logic of this argument is that unless partition is shown in the title of the subject property,
there can be no valid partition or that the annotation in the title is the sole evidence of partition.

Again, we are not persuaded. The purpose of registration is to notify and protect the interests of
strangers to a given transaction, who may be ignorant thereof, but the non-registration of the deed
evidencing such transaction does not relieve the parties thereto of their obligations thereunder. 46 As
originally conceived, registration is merely a species of notice. The act of registering a document is
never necessary in order to give it legal effect as between the parties. 47 Requirements for the
recording of the instruments are designed to prevent frauds and to permit and require the public to
act with the presumption that recorded instrument exist and are genuine. 48

It must be noted that there was a prior oral partition in 1946. Although the oral agreement was
merely tentative, the facts subsequent thereto all point to the confirmation of said oral partition. By
virtue of that agreement, the parties took possession of specific portions of the subject lot. The
action for partition was instituted because some of the co-owners refused to have separate titles
issued in lieu of the original title. In 1952, an order for partition was issued by the cadastral court.
There is no evidence that there has been any change in the possession of the parties. The only
significant fact subsequent to the issuance of the order of partition in 1952 is that respondents rented
portions of Lot No. 1639-D. It would be safe to conclude, therefore, that the oral partition as well as
the order of partition in 1952 were the bases for the finding of actual partition among the parties. The
legal consequences of the order of partition in 1952 having been discussed separately, we now deal
with oral partition in 1946. Given that the oral partition was initially tentative, the actual possession of
specific portions of Lot No. 1639 in accordance with the oral partition and the continuation of such
possession for a very long period indicate the permanency and ratification of such oral partition. The
validity of an oral partition is already well-settled. In Espina vs. Abaya, 49 we declared that an oral
partition is valid. In Hernandez vs. Andal, 50 reiterated in Tan vs. Lim, 51 this Court has ruled, thus:

On general principle, independent and in spite of the statute of frauds, courts of equity have
enforce oral partition when it has been completely or partly performed.

Regardless of whether a parol partition or agreement to partition is valid and enforceable at

law, equity will proper cases where the parol partition has actually been consummated by the
taking of possession in severalty and the exercise of ownership by the parties of the
respective portions set off to each, recognize and enforce such parol partition and the rights
of the parties thereunder. Thus, it has been held or stated in a number of cases involving an
oral partition under which the parties went into possession, exercised acts of ownership, or
otherwise partly performed the partition agreement, that equity will confirm such partition and
in a proper case decree title in accordance with the possession in severalty.

In numerous cases it has been held or stated that parol partition may be sustained on the
ground of estoppel of the parties to assert the rights of a tenant in common as to parts of
land divided by parol partition as to which possession in severalty was taken and acts of
individual ownership were exercised. And a court of equity will recognize the agreement and
decree it to be valid and effectual for the purpose of concluding the right of the parties as
between each other to hold their respective parts in severalty.

A parol partition may also be sustained on the ground that the parties thereto have
acquiesced in and ratified the partition by taking possession in severalty, exercising acts of
ownership with respect thereto, or otherwise recognizing the existence of the partition.

A number of cases have specifically applied the doctrine of part performance, or have stated
that a part performance is necessary, to take a parol partition out of the operation of the
statute of frauds. It has been held that where there was a partition in fact between tenants in
common, and a part performance, a court of equity would have regard to enforce such
partition agreed to by the parties.

Two more points have constrained this Court to rule against respondents. First, respondents
Wilfreda Maglucot-Alejo and Constancio Alejo offered to buy the share of Roberto
Maglucot. Second, the tax declarations contain statements that the houses of respondents were built
on the land owned by Roberto Maglucot.
On the first point, petitioners presented Aida Maglucot who testified that after respondents were
informed that petitioners were going to use Lot No. 1639-D belonging to Roberto Maglucot,
respondents Wilfreda Maglucot-Alejo and Constancio Alejo went to the house of said witness and
offered to buy the share of Roberto Maglucot. 52 Aida Maglucot further testified that they refused the
offer because they also intend to use the lot for a residential purpose. 53 This testimony of Aida
Maglucot is unrebutted by respondents, and the CA did not touch upon this finding of fact. Hence,
the offer to buy has been established by the unrebutted evidence of the petitioners. Why would they
give such offer if they claim to be at least a co-owner of the said lot? In effect, respondents impliedly
admit the title of the petitioners and that they are not co-owners, much less the sole owners, of Lot
No. 1639-D.

On the second point, the existence of Tax Declaration No. 04-557 in the names of Constancio Alejo
and Godofreda Maglucot, 54 Tax Declaration No. 04-87-13 in the names of Leopoldo Maglucot and
Regina Barot, 55 Tax Declaration No. 04-593 in the names of Severo Maglucot and Samni
Posida 56 showing that the houses of the above-mentioned persons are constructed on the land of
Roberto Maglucot 57 constitute incontrovertible evidence of admission by the same persons of the
ownership of the land by Roberto Maglucot. Tax Declarations are public documents. Unless their
veracity is directly attacked, the contents therein are presumed to be true and accurate. 58The lone
testimony of Severo Maglucot that Roberto Maglucot was only made to appear as owner of the land
in their respective declarations because he was the administrator of Lot No. 1639 is uncorroborated
and not supported by any other evidence.

No injustice is dealt upon respondents because they are entitled to occupy a portion of Lot No. 1639,
particularly Lot No. 1639-A, in their capacity as heirs of Tomas Maglucot, one of the original co-
owners of Lot No. 1639 in accordance with the sketch plan of said lot showing the partition into six
portions. 59

Finally, this Court takes notice of the language utilized by counsel for petitioners in their petition for
review on certiorari. Thrice in the petition, counsel for petitioners made reference to the researcher
1wphi 1

of the CA. First, he alluded to the lack of scrutiny of the records and lack of study of the law "by the
researcher." 60 Second, he cited the researcher of the CA as having "sweepingly stated without
reference to the record" 61 that "[w]e have scanned the records on hand and found no evidence of
any partition." Finally, counsel for petitioners assailed the CA decision, stating that "this will only
show that there was no proper study of the case by the researcher." 62

Any court when it renders a decision does so as an arm of the justice system and as an institution
apart from the persons that comprise it. Decisions are rendered by the courts and not the persons or
personnel that may participate therein by virtue of their office. It is highly improper and unethical for
counsel for petitioners to berate the researcher in his appeal. Counsel for petitioner should be
reminded of the elementary rules of the legal profession regarding respect for the courts by the use
of proper language in its pleadings and admonished for his improper references to the researcher of
the CA in his petition. A lawyer shall abstain from scandalous, offensive, or menacing language or
behavior before the courts. 63

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is SET ASIDE and
the decision of the Regional Trial Court is hereby REINSTATED. 1wphi1.nt

SO ORDERED.
REPUBLIC vs BALLOCANAG

REPUBLIC vs HON. NORMELITO BALLOCANAG and Danilo ReyesG.R. NO. 163794 28 November
2008

FACTS: Danilo Reyes bought the subject land with 162,500 sq.m. at Brgy Banus, Pimanalayan, Oriental
Mindoro from Regina Castillo. Right after his purchase, Reyes introduced improvements and planted
Mangoes, Mandarin citrus, and Guyabanos. Also, the title of the land transferred in his name.
Unfortunately, It turned out that the subject land is part of the Timberland of Oriental Mindoro and
therefore, not subject to any disposition or acquisition under any existing law and is not transferable.
The Office of the Solicitor General (OSG) in behalf of petitioner, filed a complaint for Cancellation of
Title and/or Revision that the issued Transfer Certificate of Title (TCT) is spurious, fictitious, and
irregularly issued on account of the subject title was part of the Timberland of Oriental Mindoro per
Bureau of Forest Department (BFD) Land Classification Map; that the said land are entirely inside the 140
hectares Agro-Forestry Farm Lease Agreement No. 175 in favor of Atty. Augusto D. Marte; that the subject
land cannot be subject of any disposition or acquisition under the law.
The Regional Trial Court (RTC) held that Reyes TCT No. 45238 are null and void and ordered to
surrender the owners duplicate copy of the said title and to vacate the premises. Reyes then appealed the
RTC Decision to the Court of Appeal (CA), apparently, Motion for Reconsideration was DENIED.

ISSUE: Whether or not the Republic should pay Reyes the value of the Improvements he introduced on
the property.

HELD: Yes, Supreme Court resolved to deny Reyes petition for failure to sufficient show that the CA had
committed any reversible error in the questioned the judge. The SC agree with the CA that Reyes was of
the belief that he was the owner of the subject land. He titled the land, planted fruit trees thereon and
invested money from 1970. It is no longer feasible to permit him to remove the trees he planted the only
equitable alternative would be to order the Republic to pay Reyes.

Petition DENIED and DIRECTED the RTC to determines the actual improvements introduced on the
subject land, their current value and the amount of the expenses actually spent by Reyes and DIRECTED
the DENR-BFD to pay private respondent the value of such actual improvements he introduced on the
subject land.

G.R. No. 163794 November 28, 2008

REPUBLIC OF THE PHILIPPINES, represented by Romeo T. Acosta

(formerly Jose D. Malvas), Director of Forest Management Bureau,
Department of Environment and Natural Resources,petitioners,
vs.
HON. NORMELITO J. BALLOCANAG, Presiding Judge, Branch 41,
Regional Trial Court, Pinamalayan, Oriental Mindoro and DANILO
REYES, respondents.

DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the
Rules of Civil Procedure seeking the reversal of the Court of
Appeals (CA) Decision2 dated June 4, 2004, in CA-G.R. SP No. 52261, which
affirmed the Joint Order3 of the Regional Trial Court (RTC) of Pinamalayan,
Oriental Mindoro, Branch 41, dated December 28, 1998.

The facts, as summarized by the CA, are as follows:

Sometime in 1970, [private respondent Danilo] Reyes bought the

subject 182,941-square-meter land at Bgy. Banus, Pinamalayan,
Oriental Mindoro [subject land] from one Regina Castillo (or Castillo) in
whose name it was titled under Original Transfer Certificate of Title No.
P-2388 issued pursuant to Free Patent No. V-79606. Right after his
purchase, Reyes introduced improvements and planted the land with
fruit trees, including about a thousand mango[es], more than a hundred
Mandarin citrus, and more than a hundred guyabanos. He also had the
title transferred in his name and was issued TCT No. 45232.

Reyes so prized this land which he bought in good faith. Unfortunately,

it turned out that about 162,500 square meters of this land is part of the
timberland of Oriental Mindoro and, therefore, cannot be subject to any
disposition or acquisition under any existing law, and is not registrable.

Thus, in the Complaint (Annex "A", pp. 15 to 21, rollo) for "Cancellation
of Title and/or Reversion" filed by the Office of the Solicitor General (or
OSG) in behalf of the Republic [petitioner], as represented by the
Bureau of Forest Development (or BFD), it was explained that the
source[,] Original Transfer Certificate of Title No. P-2388 of Castillo,
issued pursuant to Free Patent No. V-79606, is spurious, fictitious and
irregularly issued on account of:

a) ONE HUNDRED SIXTY-TWO THOUSAND FIVE HUNDRED

(162,500) SQUARE METERS, more or less, of the land covered
by OCT No. P-2388 was, at the time it was applied for patent and
or titling, a part of the timberland of Oriental Mindoro, per BFD
Land Classification Map Nos. 2319 and 1715. Copy of said maps
are attached hereto as Annexes "B" and "C";

b) The 162,500 square meters covered by OCT No. P-2388 are

entirely inside the 140 hectares Agro-Forestry Farm Lease
Agreement No. 175 in favor of Atty. Augusto D. Marte4 [Atty.
Marte], copy of the Map of AFFLA No. 175 and AFFLA No. 175
are attached hereto as Annexes "D" and "E";
 c) Neither the private defendant nor his predecessors-in-interest
have been in possession of the property because the rightful
occupant is Atty. Augusto D. Marte by virtue of the Agro-Forestry
Farm Lease Agreement [AFFLA] No. 175, issued to him by the
Ministry of Natural Resources in 1986 to expire on December 21,
2011;

d) Since the parcel of land covered by TCT No. 45232, in the

name of defendant Danilo Reyes, is a part of the timberland of
Oriental Mindoro, per BFD Land Classification Map Nos. 2319 &
1715, the same cannot be the subject of any disposition or
acquisition under any existing law (Li Hong Giap vs. Director of
Lands, 55 Phil. 693; Veno vs. Gov't of P.I. 41 Phil. 161; Director of
Lands vs. Abanzado, 65 SCRA 5). (pp. 18 to 19, rollo)

Aside from the documentary evidence presented to support these

allegations, the Republic presented as well and called to the witness
stand:

a) Armando Cruz, the supervising cartographer of the DENR, who

explained that based on Land Classification Map No. 1715 (Exh.
"A") which was later amended to LC Map No. 2319 (Exh. "B"), the
plotting shows that the 162,000 square meters covered by OCT
No. 2388 are entirely inside the 140 hectares of the Agro-Forestry
Farm Lease Agreement No. 175 in favor of Atty. Marte and the
alienable and disposable area of Castillo's land is only around two
(2) hectares;

b) Alberto Cardio, an employee of the DENR who conducted the

survey on the land under litigation, corroborated the testimony of
Cruz that only two hectares is alienable and disposable land; and

c) Vicente Mendoza, a Geodetic Engineer, who expounded on the

procedure before the title could be issued to an applicant for a
disposable and alienable public land. He clarified that he did not
make the survey for Castillo but upon presentation to him of the
carpeta in open court he noticed that, while it appears to be valid,
it however has no certification of the Bureau of Forestry - an
essential requirement before title could be issued.

For his side, Reyes presented evidence showing his extensive

development of and investment in the land, but however failed to
traverse squarely the issue raised by the Republic against the
inalienability and indisposability of his acquired land. His lame argument
that the absence of the Certification by the Bureau of Forestry on
his carpeta does not necessarily mean that there was none issued,
failed to convince the court a quo.

Hence, Judge Edilberto Ramos, the then Presiding Judge of Branch 41

of the Regional Trial Court of Pinamalayan, Oriental Mindoro, held5 that:

The defendants in this case did not assail the evidence of the plaintiff
but concentrated itself to the expenses incurred in the cultivation and in
the planting of trees in that disputed areas. Aside thereto, the plaintiff
cited that it is elementary principle of law that said areas not being
capable of registration their inclusion in a certification of ownership or
confer title on the registrant. (Republic of the Philippines, et al. vs. Hon.
Judge Jaime de los Angeles of the Court of First Instance of Balayan,
Batangas, et al., G.R. No. L-30240) It is also a matter of principle that
public forest [are non-alienable public lands. Accession of public forests]
on the part of the claimant, however long, cannot convert the same into
private property. (Vano v. Government of PI, 41 Phils. 161)

In view thereof, it appears that the preponderance of evidence is in

favor of the plaintiff and against the defendants and therefore it is
hereby declared that Free Patent No. V-79606 issued on July 22,
1957 with Psu No. 155088 and OCT No. P-2388 in the name of
Regina Castillo and its derivative TCT No. 45232 in the name of
Danilo Reyes is hereby declared null and void; and the defendant
Danilo Reyes is hereby ordered to surrender the owner's duplicate
copy of TCT No. 45232 and to vacate the premises and directing
the defendant Register of Deeds of Calapan, Oriental Mindoro, to
cancel the title as null and void ab initio; and declaring the
reversion of the land in question to the government subject to the
Agro-Forestry Farm Lease Agreement No. 175, to form part of the
public domain in the province of Oriental Mindoro.

The two-hectare lot, which appears disposable and alienable, is

declared null and void for failure to secure certification from the
Bureau of Forest Development.

The counter-claim of the defendant is hereby denied for lack of

merit, with cost against the defendant.6
Reyes appealed the aforementioned RTC Decision to the CA. In its
Decision7 dated September 16, 1996, the CA affirmed the RTC Decision. His
motion for reconsideration was denied.8

Thus, Reyes sought relief from this Court via a petition for review on certiorari.
But in our Resolution9dated June 23, 1997, we resolved to deny his petition
for failure to sufficiently show that the CA had committed any reversible error
in the questioned judgment. On November 24, 1997, this Court denied with
finality Reyes' motion for reconsideration.10

On February 4, 1998, Reyes filed a Motion11 to Remove Improvements

Introduced by Defendant Danilo D. Reyes on the Property which is the
Subject of Execution in Accordance with Rule 39, Section 10, paragraph (d) of
the 1997 Rules of Civil Procedure (motion).12 There he averred that: he
occupied in good faith the subject land for around thirty years; he had already
spent millions of pesos in planting fruit-bearing trees thereon; and he
employed many workers who regularly took care of the trees and other plants.
Reyes prayed that he and/or his agents be given at least one (1) year from the
issuance of the corresponding order to remove his mango, citrus
and guyabano trees, and that they be allowed to stay in the premises within
that period to work on the cutting and removal of the said trees. He also asked
the RTC that in the meantime that these trees are not yet removed, all the
unharvested fruits be appropriated by him, as provided for by law, to the
exclusion of all other persons who may take advantage of the situation and
harvest said fruits.

Petitioner opposed the motion, citing the principle of accession under Article
44013 of the Civil Code. It further argued that the subject land, being timber
land, is property of public dominion and, therefore, outside the commerce of
man and cannot be leased, donated, sold, or be the object of any contract.
This being the case, there are no improvements to speak of, because the land
in question never ceased to be a property of the Republic, even if Reyes
claimed that he was a purchaser for value and in good faith and was in
possession for more than thirty (30) years. Moreover, petitioner averred that,
assuming Reyes was initially a planter/sower in good faith, Article 448 of the
Civil Code cannot be of absolute application since from the time the reversion
case was filed by the petitioner on May 13, 1987, Reyes ceased to be a
planter/sower in good faith and had become a planter/sower in bad faith.14

Meanwhile, on March 2, 1998, Atty. Marte filed a Complaint for Injunction With
an Ancillary Prayer for the Immediate Issuance of a Temporary Restraining
Order against Reyes for allegedly encroaching upon and taking possession by
stealth, fraud and strategy some 16 hectares of his leased area without his
permission or acquiescence and planted trees thereon in bad faith despite the
fact that the area is non-disposable and part of the public domain, among
others.

But the respondent RTC dismissed the said complaint in the assailed Joint
Order and ruled in favor of Reyes, finding Rule 39, Section 10, paragraph (d)
of the 1997 Rules of Civil Procedure, applicable. The RTC ratiocinated:

Under the circumstance, it is but just and fair and equitable that Danilo
Reyes be given the opportunity to enjoy the fruits of his labor on the
land which he honestly believes was legally his. He was not aware that
his certificate of title which was derived from OCT No. P-2388 issued in
1957 by the government itself in the name of Regina Castillo contained
legal infirmity, otherwise he would not have expoused (sic) himself from
the risk of being ejected from the land and losing all improvements
thereon. Any way, if the court will grant the motion for the defendant's
(sic) Danilo Reyes to remove his improvements on the disputed
property, it will not prejudice Augusto Marte, otherwise, as the court
sees it, he will immensely [benefit] from the toils of Danilo Reyes.

and then disposed, as follows:

WHEREFORE, premises considered, the motion to remove

improvements filed by defendant Danilo Reyes dated January 28, 1998
is hereby GRANTED pursuant to the provisions of section 10,
paragraph (d) of Rule 39 of the 1997 Rules of Civil Procedure and he is
given a period of one (1) year from the issuance of this ORDER to
remove, cut and appropriate the fruit-bearing trees which he had
planted in the property in disputes (sic).

The COMMENT filed by the Office of the Solicitor General dated August
11, 1998 is hereby denied for lack of merit.

The [C]omplaint for Injunction filed by Augusto D. Marte on March 2,

1998 against Danilo Reyes is hereby ordered dismissed for lack of
merit.

Petitioner, through the OSG, filed its Motion for Reconsideration15 which was
denied by the RTC.16Aggrieved, petitioner went to the CA via Certiorari under
Rule 65 of the Rules of Civil Procedure17ascribing to the RTC grave abuse of
discretion and acting without jurisdiction in granting Reyes' motion to remove
improvements.

However, the CA dismissed the petition for certiorari, and affirmed the ruling
of the RTC, in this wise:

It is notable that in the course of the suit for "Cancellation of Title and/or
Reversion" there was not an iota of evidence presented on record that
Reyes was in bad faith in acquiring the land nor in planting thereon
perennial plants. So it could never be said and held that he was a
planter/sower in bad faith. Thus, this Court holds that Reyes sowed and
planted in good faith, and that being so the appropriate provisions on
right accession are Articles 445 and 448 also of the Civil Code.18

Hence, this Petition based on the sole ground that:

THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION

OF THE TRIAL COURT HOLDING THAT THE MOTION TO REMOVE
IMPROVEMENTS FILED BY PRIVATE RESPONDENT IS BUT AN
INCIDENT OF THE REVERSION CASE OVER WHICH THE TRIAL
COURT STILL HAS JURISDICTION DESPITE THE FACT THAT THE
DECISION IN THE REVERSION CASE HAD LONG BECOME FINAL
AND EXECUTORY.19

The OSG posits that Reyes' assailed motion is barred by prior judgment under
Section 47, Rule 39 of the 1997 Rules of Civil Procedure because said motion
merely sprang from the civil case of reversion tried and decided on the merits
by the RTC, and the decision is already final, after it was duly affirmed by the
CA and by this Court. The OSG stresses that one of Reyes' assigned errors in
the reversion case before the CA was that the RTC "erred in not granting his
(Reyes') counterclaims as well as his claims for improvements." The OSG
claims that such assigned error was duly resolved by the CA when it held, to
wit:

The non-award of appellant's "counterclaims" is understandable.

To begin with, no evidence whatsoever was presented by the appellant

to sustain his plea for damages. In fact, appellant never testified to
prove his allegations as regards his counterclaims.
 Then, too, there is no showing that appellant paid the docket fees for
the court to acquire jurisdiction over his purported counterclaims (Metal
Engineering Resources Corp. vs. Court of Appeals, 203 SCRA 273).

Lastly, the allegations made in the Answer in support of the so-called

"counterclaims" clearly negate the nature of the claims as compulsory
counterclaim like that of reimbursement of the useful expenses
(Cabangis vs. Court of Appeals, 200 SCRA 414).20

Thus, the OSG posits that the issue of the improvements cannot be made the
subject of the assailed motion on the pretext that such removal of
improvements is merely incidental to the reversion case. The OSG submits
that the consideration of the issue is now barred by res judicata. Lastly, the
OSG argues that: the RTC and CA cannot vary a decision which has already
attained finality; for purposes of execution, what is controlling is the dispositive
portion of the decision; the RTC, except to order the execution of a decision
which had attained finality, had long lost jurisdiction over the case; and the
RTC erred and acted without jurisdiction when it granted Reyes' motion to
remove the improvements when the dispositive portion of the decision in the
reversion case did not provide for the removal of the same.21

In his Comment22 on the OSG petition, Reyes avers that the points raised by
the OSG are merely rehashed arguments which were adequately passed
upon by the CA. He fully agrees with the ruling of the CA that: he is a
planter/sower in good faith, as such, Articles 445 and 448 of the New Civil
Code are applicable; his motion is not entirely a new case, but merely an
incident to the reversion case, a consequence of its grant and a legal solution
to an important issue overlooked, if not ignored by the State and by the courts
in their decisions in the reversion case; under Section 10, Rule 39 of the 1997
Rules of Civil Procedure, he is allowed to remove the improvements; and the
instant Petition failed to abide with the proper manner as to the "proof of
service" required under Section 13, Rule 13 of the 1997 Rules of Civil
Procedure. Most importantly, Reyes avers that the land on which about 1,000
mango trees, 100 mandarin citrus trees and 100 guyabano trees are planted,
was leased by the government to Atty. Marte, who entered into the
possession of the subject land when the trees were already bearing fruits.
Thus, if said trees are not removed, Atty. Marte would be unduly enriched as
the beneficiary of these fruits without even spending a single centavo, at the
expense of Reyes. Reyes posits that it is a well-established fact, unrebutted
by the petitioner, that he planted these trees and to deny him the right to
remove them would constitute a grave injustice and amount to confiscation
without just compensation which is violative of the Constitution.
The OSG counters that copies of the instant Petition were properly served as
shown by the photocopies of the registry return cards. Moreover, the OSG
avers that granting, without admitting, that another person would stand to be
benefited by the improvements that Reyes introduced on the land is beside
the point and is not the fault of the petitioner because the particular issue of
the improvements was already resolved with finality in the reversion case. The
OSG claims that a lower court cannot reverse or set aside decisions or orders
of a superior court, for to do so will negate the principle of hierarchy of courts
and nullify the essence of review - a final judgment, albeit erroneous, is
binding on the whole world.23

The instant Petition lacks merit.

In an action for reversion, the pertinent allegations in the complaint would

admit State ownership of the disputed land.24 Indeed, the ownership over the
subject land reverted to the State by virtue of the decisions of the

RTC and CA and our Resolution on the matter. But these decisions simply
ordered the reversion of the property to the State, and did not consider the
improvements that Reyes had introduced on the property or provide him with
any remedy relative thereto. Thus, Reyes was left out in the cold, faced with
the prospect of losing not only the land which he thought he owned, but also
of forfeiting the improvements that he painstakingly built with his effort, time
and money.

We cannot agree with the OSG that the denial by the CA of Reyes'
counterclaim in the reversion case had the effect of completely foreclosing
whatever rights Reyes may have over these improvements. We note that the
counterclaim was denied because Reyes failed to prove that it was in the
nature of a compulsory counterclaim, and he did not pay docket fees thereon,
even as the CA found that Reyes "never testified to prove his allegations as
regards his counterclaims." Yet, the records of the reversion case reveal that
Reyes adduced ample evidence of the extent of the improvements he
introduced and the expenses he incurred therefor. This is reflected in the
findings of the CA in the case at bench, and we concur with the appellate
court when it said:

But this Court notes that while Reyes was half-hearted in his opposition
to the reversion, he instead focused on proving the improvements he
has introduced on the land, its extent and his expenses. Despite these
proofs, the Decision of April 13, 1992 made no mention nor provision for
the improvements on the land. With this legal vacuum, Reyes could not
 exercise the options allowed the sower and planter in good faith. This
thus left him no other alternative but to avail of Paragraph (d) of Section
10 of Rule 39 of the 1997 Rules of Civil Procedure in order to collect or
get a return of his investment as allowed to a sower and planter in good
faith by the Civil Code.

Correlatively, the courts in the reversion case overlooked the issue of whether
Reyes, vis--vis his improvements, is a builder or planter in good faith. In the
instant case, the issue assumes full significance, because Articles 44825 and
54626 of the Civil Code grant the builder or planter in good faith full
reimbursement of useful improvements and retention of the premises until
reimbursement is made. A builder or planter in good faith is one who builds or
plants on land with the belief that he is the owner thereof, unaware of any flaw
in his title to the land at the time he builds or plants on it. 27

On this issue, we are disposed to agree with the CA that Reyes was a planter
in good faith. Reyes was of the belief that he was the owner of the subject
land; in fact, a TCT over the property was issued in his name. He tilled the
land, planted fruit trees thereon, and invested money from 1970. He received
notice of the Republic's claim only when the reversion case was filed on May
13, 1987. The trees are now full-grown and fruit-bearing.

To order Reyes to simply surrender all of these fruit-bearing trees in favor of

the State -- because the decision in the reversion case declaring that the land
is part of inalienable forest land and belongs to the State is already final and
immutable -- would inequitably result in unjust enrichment of the State at the
expense of Reyes, a planter in good faith.

Nemo cum alterius detrimento locupletari potest.28 This basic doctrine on

unjust enrichment simply means that a person shall not be allowed to profit or
enrich himself inequitably at another's expense.29 There is unjust enrichment
when a person unjustly retains a benefit to the loss of another, or when a
person retains money or property of another against the fundamental
principles of justice, equity and good conscience.30 Article 22 of the Civil Code
states the rule in this wise:

ART. 22. Every person who, through an act of performance by another,

or any other means, acquires or comes into possession of something at
the expense of the latter without just or legal ground, shall return the
same to him.
The requisites for the application of this doctrine are present in the instant
case. There is enrichment on the part of the petitioner, as the State would
come into possession of -- and may technically appropriate -- the more than
one thousand fruit-bearing trees planted by the private respondent. There is
impoverishment on the part of Reyes, because he stands to lose the
improvements he had painstakingly planted and invested in. There is lack of
valid cause for the State to acquire these improvements, because, as
discussed above, Reyes introduced the improvements in good faith. Thus, the
Court of Appeals did not commit any error in ruling that Reyes is entitled to the
benefits of Articles 448 and 546 of the Civil Code.

Thus, even if we accept the OSG's submission that Reyes' entitlement to

these benefits is not absolute because he can no longer claim good faith after the
filing of the reversion case in 1987, still, there is no gainsaying that prior to that all
the way back to 1970 he had possessed the land and introduced improvements
thereon in good faith. At the very least, then, Reyes is entitled to these benefits for the
17 years that he had been a planter in good faith.

However, we are mindful of the fact that the subject land is currently covered by
Agro-Forestry Farm Lease Agreement (AFFLA) No. 175 issued by the Ministry of
(now Department of Environment and) Natural Resources in favor of Atty. Augusto
D. Marte, which will expire on December 21, 2011. By the terms of the AFFLA, the
lessee shall, among others, do all in his power to suppress fires, cooperate with the
Bureau of Forest Development (BFD) in the protection and conservation of the forest
growth in the area and undertake all possible measures to insure the protection of
watershed and environmental values within the leased area and areas adjacent thereto.
This obligation to prevent any damage to the land subject of the lease is consonant
with fundamental principles and state policies set forth in Section 16,31 Article II and
Section 4,32 Article XII of the Constitution.

To allow Reyes to remove the fruit-bearing trees now full-grown on the subject land,
even if he is legally entitled to do so, would be risking substantial damage to the land.
It would negate the policy consideration underlying the AFFLA -- to protect and
preserve the biodiversity and the environment, and to prevent any damage to the land.
Further, it would violate the implicit mandate of Article 547 of the Civil Code which
provides:

ART. 547. If the useful improvements can be removed without damage to the
principal thing, the possessor in good faith may remove them unless the person
who recovers the possession exercises the option under paragraph 2 of the
preceding article.
In this light, the options that Reyes may exercise under Articles 448 and 546 of the
Civil Code have been restricted. It is no longer feasible to permit him to remove the
trees he planted. The only equitable alternative would be to order the Republic to pay
Reyes the value of the improvements he introduced on the property. This is only fair
because, after all, by the terms of the AFFLA, upon the expiration of the lease or upon
its cancellation if there be any violation or breach of its terms, all permanent
improvements on the land shall pass to the ownership of the Republic without any
obligation on its part to indemnify the lessee.

However, the AFFLA is not due to expire until December 21, 2011. In the interim, it
is logical to assume that the lessee, Atty. Augusto D. Marte, will derive financial gain
from the fruits that the trees planted by Reyes would yield. In fact, Atty. Marte may
already have profited therefrom in the past several years. It is, therefore, reasonable to
grant the Republic the right of subrogation against the lessee who may have benefited
from the improvements. The Republic may, thus, demand reimbursement from Atty.
Marte for whatever amount it will have to pay Reyes for these improvements.

As to the OSG's insistent invocation of res judicata and the immutability of final
judgments, our ruling in Temic Semiconductors, Inc. Employees Union (TSIEU)-FFW,
et al. v. Federation of Free Workers (FFW), et al.33 is instructive:

It is axiomatic that a decision that has acquired finality becomes immutable and
unalterable. A final judgment may no longer be modified in any respect, even if
the modification is meant to correct erroneous conclusions of fact and law; and
whether it be made by the court that rendered it or by the highest court in the
land. Any act which violates such principle must immediately be struck down.
Indeed, the principle of conclusiveness of prior adjudications is not confined in
its operation to the judgments of what are ordinarily known as courts, but it
extends to all bodies upon which judicial powers had been conferred.

The only exceptions to the rule on the immutability of a final judgment are: (1)
the correction of clerical errors; (2) the so-called nunc pro tunc entries which
cause no prejudice to any party; (3) void judgments; and (4) whenever
circumstances transpire after the finality of the decision rendering its execution
unjust and inequitable.

In the exercise of our mandate as a court of justice and equity,34 we rule in favor of
Reyes pro hac vice. We reiterate that this Court is not precluded from rectifying errors
of judgment if blind and stubborn adherence to the doctrine of immutability of final
judgments would involve the sacrifice of justice for technicality.35Indubitably, to
order the reversion of the subject land without payment of just compensation, in
absolute disregard of the rights of Reyes over the improvements which he, in good
faith, introduced therein, would not only be unjust and inequitable but cruel as well.

WHEREFORE, the instant Petition is DENIED. The Decision dated June 4, 2004 of
the Court of Appeals is AFFIRMED with MODIFICATION in that:

1) The Regional Trial Court of Pinamalayan, Oriental Mindoro, Branch 41, is

hereby DIRECTED to determine the actual improvements introduced on the
subject land, their current value and the amount of the expenses actually spent
by private respondent Danilo Reyes for the said improvements thereon from
1970 until May 13, 1987 with utmost dispatch.

2) The Republic, through the Bureau of Forest Development of the Department

of Environment and Natural Resources, is DIRECTED to pay private
respondent Danilo Reyes the value of such actual improvements he introduced
on the subject land as determined by the Regional Trial Court, with the right of
subrogation against Atty. Augusto D. Marte, the lessee in Agro-Forestry Farm
Lease Agreement No. 175.

No costs.

SO ORDERED.

G.R. No. 194538 November 27, 2013

MORETO MIRALLOSA and all persons claiming rights and interests under him, Petitioner,
vs.
CARMEL DEVELOPMENT INC., Respondent.

DECISION

SERENO, CJ:

This is an appeal by way of a Petition for Review on Certiorari1 dated 6 December 2010 assailing the
Decision2 and Resolution3 of the Court of Appeals CA) in C.A.-G.R. SP No. 105190, which reversed
the Decision4 and Order5 of the Regional Trial Court RTC), Branch 121, Caloocan City in Civil Case
No. C-22018. The RTC had reversed the Decision6 of the Metropolitan Trial Court MeTC), Branch
52, Caloocan City in Civil Case No. 03-27114, ordering petitioner to vacate the subject property in
this case for ejectment.

The antecedent facts are as follows:

Respondent Carmel Development, Inc. was the registered owner of a Caloocan property known as
the Pangarap Village located at Barrio Makatipo, Caloocan City.7 The property has a total land area
of 156 hectares and consists of three parcels of land registered in the name of Carmel Farms, Inc.
under Transfer Certificate of Title (TCT) Nos. (62603) 15634, (62605) 15632 and (64007)
15807.8 The lot that petitioner presently occupies is Lot No. 32, Block No. 73 covered by the titles
above-mentioned.9

On 14 September 1973, President Ferdinand Marcos issued Presidential Decree No. 293 (P.D.
293),10 which invalidated the titles of respondent and declared them open for disposition to the
members of the Malacaang Homeowners Association, Inc. (MHAI), to wit:

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the

powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of the
Philippines, and pursuant to Proclamation 1081, dated September 21, 1972 and General Order No.
1 dated September 22, 1972 do hereby order and decree that any and all sales contracts between
the Government and the original purchasers, are hereby cancelled, and those between the latter and
the subsequent transferees, and any and all transfers thereafter, covering lots 979, 981, 982, 985,
988, 989, 990, 991-new, 1226, 1228, 1230, and 980-C-2 (LRC PSD-1730), all of Tala Estate,
Caloocan City are hereby declared invalid and null and void ab initio as against the Government;
that Transfer Certificates of Title Nos. 62603, 6204, 6205, covering lots 1, 2, and 3., PCS-4383, all in
the name of Carmel Farms, Inc., which are a consolidation and subdivision survey of the lots
hereinbefore enumerated, are declared invalid and considered cancelled as against the
Government; and that said lots are declared open for disposition and sale to the members of the
Malacaang Homeowners Association, Inc., the present bona fide occupants thereof, pursuant to
Commonwealth Act No. 32, as amended. (Emphasis supplied)

By virtue of P.D. 293, a Memorandum11 was inscribed on the last page of respondents title, as
follows:

Memorandum Pursuant to Presidential Decree No. 293, this Certificate of Title is declared invalid
and null and void ab initio and considered cancelled as against the government and the property
described herein is declared open for disposition and sale to the members of the Malacaang
Homeowners Association, Inc.

On the basis of P.D. 293, petitioners predecessor-in-interest, Pelagio M. Juan, a member of the
MHAI, occupied Lot No. 32 and subsequently built houses there.12 On the other hand, respondent
was constrained to allow the members of MHAI to also occupy the rest of Pangarap Village.13

On 29 January 1988, the Supreme Court promulgated Roman Tuason and Remedio V. Tuason,
Attorney-in-fact, Trinidad S. Viado v. The Register of Deeds, Caloocan City, Ministry of Justice and
the National Treasurer14(Tuason), which declared P.D. 293 as unconstitutional and void ab initio in all
its parts. The dispositive portion is herein quoted as follows:

WHEREFORE, Presidential Decree No. 293 is declared to be unconstitutional and void ab initio in all
its parts. The public respondents are commanded to cancel the inscription on the titles of the
petitioners and the petitioners in intervention of the memorandum declaring their titles null and void
and declaring the property therein respectively described open for disposition and sale to the
members of the Malacaang Homeowners Association, Inc. to do whatever else is needful to restore
the titles to full effect and efficacy; and henceforth to refrain, cease and desist from implementing
any provision or part of said Presidential Decree No. 293. No pronouncement as to costs.

On 17 February 1988, the Register of Deeds then cancelled the Memorandum inscripted on
respondents title,15eventually restoring respondents ownership of the entire property. Meanwhile,
sometime in 1995, petitioner took over Lot No. 32 by virtue of an Affidavit executed by Pelagio M.
Juan in his favor.16
As a consequence of Tuason, respondent made several oral demands on petitioner to vacate the
premises, but to no avail.17 A written demand letter which was sent sometime in April 2002 also went
unheeded.18

On 14 January 2003, respondent filed a Complaint for Unlawful Detainer19 before the MeTC. After
due hearing on 9 November 2007, the trial court rendered a Decision20 in the following manner:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendant, in the following manner:

1. Ordering the defendant to vacate the subject property located at Lot No. 32, Block 73,
Gregorio Araneta Ave., Makatipo, Caloocan City, together with all persons claiming right
under her;

2. To pay the sum of 10,000.00 as Attorneys fees;

3. To pay the costs of suit.

SO ORDERED. (Emphases in the original)

In so ruling, the trial court stated that respondent was the registered owner of the property until its
title was voided by P.D. 293.21 It had no alternative but to allow petitioners occupancy of the
premises.22 Since the latters occupation was only by mere tolerance of respondent, petitioner was
necessarily bound by an implied promise that he would vacate the property upon demand.23 Failure
to do so would render him liable for unlawful detainer.

Aggrieved, petitioner appealed to the RTC. On 30 April 2008, it rendered a Decision24 reversing the
findings of the MTC, as follows:

WHEREFORE, premises considered, the decision appealed from is hereby REVERSED AND SET
ASIDE and the complaint is accordingly DISMISSED. With costs against plaintiff-appellee.

SO ORDERED. (Emphasis in the original)

In the opinion of the RTC, respondents Complaint did not make out a case for unlawful detainer.25 It
maintained that respondents supposed acts of tolerance must have been present right from the start
of petitioners possession.26Since the possession was sanctioned by the issuance of P.D. 293, and
respondents tolerance only came after the law was declared unconstitutional, petitioner thus
exercised possession under color of title.27 This fact necessarily placed the Complaint outside the
category of unlawful detainer.28

On 24 September 2008, respondent appealed to the CA.29 The appellate court rendered a
Decision30 on 25 May 2010, the dispositive portion of which states:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The assailed decision dated April
30, 2008 of the RTC (Branch 121) of Caloocan City in Civil Case No. C-22018 is REVERSED and
SET ASIDE and the Decision dated November 9, 2007 of the MTC (Branch 52) of Caloocan City in
Civil Case No. 03-27114 is hereby REINSTATED.

SO ORDERED. (Emphases in the original)

In disposing of the issues, the CA observed that petitioners arguments could not be upheld.31 The
question of whether tolerance had been exercised before or after the effectivity of P.D. 293 would
only matter if what was at issue was the timeliness of the Complaint or whether the Complaint was
one for unlawful detainer or forcible entry.32Since the Complaint specifically alleged that the
possession of respondent was by petitioners tolerance, and that respondents dispossession had
not lasted for more than one year, it then follows that the MeTC rightly acquired jurisdiction over the
Complaint.33

Moreover, with the determination of who was the lawful and registered owner of the property in
question, the owner necessarily enjoyed or had a better right to the possession and enjoyment
there.34 Hence, petitioner had no right to the continued possession of the property.35

Neither could he be considered a builder in good faith who could avail himself of the benefits under
Article 448 of the Civil Code.36 From the moment P.D. 293 was declared unconstitutional and the title
to the property restored to respondent, petitioner could no longer claim good faith.37 Thus, as
provided under Article 449, petitioner loses what he would be building, planting, or sowing without
right of indemnity from that time.38

On 25 May 2010, petitioner filed a Motion for Reconsideration, but it was denied in a
Resolution39 issued by the CA on 15 October 2010. Hence, the instant Petition.

On 2 May 2011, respondent filed a Comment40 on the Petition for Review; and on 17 May 2011,
petitioner filed a Reply.41

ISSUES

From the foregoing, we reduce the issues to the following:

1. Whether or not the MeTC had jurisdiction over the case;

2. Whether or not Tuason may be applied here, despite petitioner not being a party to the
case; and

3. Whether or not petitioner is a builder in good faith.

THE COURTS RULING

We shall discuss the issues seriatim.

The MeTC rightly exercised
jurisdiction, this case being one of
unlawful detainer.

Petitioner alleges that the MeTC had no jurisdiction over the subject matter, because respondent
had filed the Complaint beyond the one-year prescriptive period for ejectment cases. Despite losing
ownership and possession of the property as early as 14 September 1973 when P.D. 293 took
effect, respondent allegedly still failed to take the necessary action to recover it.42

Petitioner also insists that tolerance had not been present from the start of his possession of the
property, as respondent extended its tolerance only after P.D. 293 was declared
unconstitutional.43 This situation necessarily placed respondents cause of action outside the
category of unlawful detainer44 Consequently, the presence of an ownership dispute should have
made this case either an accion publiciana or an accion reivindicatoria.45

Unfortunately, petitioners contentions are without merit. The MeTC rightly exercised jurisdiction, this
case being one of unlawful detainer.

An action for unlawful detainer exists when a person unlawfully withholds possession of any land or
building against or from a lessor, vendor, vendee or other persons, after the expiration or termination
of the right to hold possession by virtue of any contract, express or implied.46 Here, possession by a
party was originally legal, as it was permitted by the other party on account of an express or implied
contract between them.47 However, the possession became illegal when the other party demanded
that the possessor vacate the subject property because of the expiration or termination of the right to
possess under the contract, and the possessor refused to heed the demand.48

The importance of making a demand cannot be overemphasized, as it is jurisdictional in

nature.49 The one-year prescriptive period for filing a case for unlawful detainer is tacked from the
date of the last demand, the reason being that the other party has the right to waive the right of
action based on previous demands and to let the possessor remain on the premises for the
meantime.50

In this case, it is clear from the facts that what was once a legal possession of petitioner, emanating
from P.D. 293, later became illegal by the pronouncement in Tuason that the law was
unconstitutional. While it is established that tolerance must be present at the start of the
possession,51 it must have been properly tacked after P.D. 293 was invalidated. At the time the
decree was promulgated, respondent had no option but to allow petitioner and his predecessor-in-
interest to enter the property. This is not the "tolerance" envisioned by the law. As explained in
Tuason, the decree "was not as claimed a licit instance of the application of social justice principles
or the exercise of police power. It was in truth a disguised, vile stratagem deliberately resorted to
favor a few individuals, in callous and disdainful disregard of the rights of others. It was in reality a
taking of private property without due process and without compensation whatever, from persons
relying on the indefeasibility of their titles in accordance with and as explicitly guaranteed by law."52

When respondent sent petitioner a demand letter in April 2002 and subsequently filed the Complaint
in January 2003, it did so still within the one-year prescriptive period imposed by the rules. It matters
not whether there is an ownership issue that needs to be resolved, for as we have previously held, a
determination of the matter would only be provisional. In Heirs of Ampil v. Manahan,53 we said:

In an unlawful detainer case, the physical or material possession of the property involved,
independent of any claim of ownership by any of the parties, is the sole issue for resolution. But
where the issue of ownership is raised, the courts may pass upon said issue in order to determine
who has the right to possess the property. This adjudication, however, is only an initial determination
of ownership for the purpose of settling the issue of possession, the issue of ownership being
inseparably linked thereto. As such, the lower courts adjudication of ownership in the ejectment
case is merely provisional and would not bar or prejudice an action between the same parties
involving title to the property.

Tuason may be applied despite

petitioner not being a party to that
case, because an unconstitutional
law produces no effect and confers
no right upon any person.
Petitioner argues that respondent has no cause of action against him, because under the doctrine of
operative fact and the doctrine of res inter alios judicatae nullum aliis praejudicium faciunt, petitioner
should not be prejudiced by Tuason; the declaration of the unconstitutionality of P.D. 293 should not
affect the rights of other persons not party to the case.54

Again, petitioners argument deserves scant consideration. In declaring a law null and void, the real
issue is whether the nullity should have prospective, not retroactive, application.55 Republic v. Court
of Appeals56 is instructive on the matter:

The strict view considers a legislative enactment which is declared unconstitutional as being, for all
legal intents and purposes, a total nullity, and it is deemed as if had never existed. x x x.

A judicial declaration of invalidity, it is also true, may not necessarily obliterate all the effects and
consequences of a void act occurring prior to such a declaration. Thus, in our decisions on the
moratorium laws, we have been constrained to recognize the interim effects of said laws prior to
their declaration of unconstitutionality, but there we have likewise been unable to simply ignore
strong considerations of equity and fair play. x x x.

As a general rule, a law declared as unconstitutional produces no effect whatsoever and confers no
right on any person. It matters not whether the person is a party to the original case, because "not
only the parties but all persons are bound by the declaration of unconstitutionality, which means that
no one may thereafter invoke it nor may the courts be permitted to apply it in subsequent cases. It is,
in other words, a total nullity."57 Thus, petitioners invocation of the doctrine of res inter alios judicatae
nullum aliis praejudicium faciunt cannot be countenanced. We have categorically stated that the
doctrine does not apply when the party concerned is a "successor in interest by title subsequent to
the commencement of the action, or the action or proceeding is in rem, the judgment in which is
binding against him."58 While petitioner may not have been a party to Tuason, still, the judgment is
binding on him because the declaration of P.D. 293 as a nullity partakes of the nature of an in rem
proceeding.

Neither may petitioner avail himself of the operative fact doctrine, which recognizes the interim
effects of a law prior to its declaration of unconstitutionality.59 The operative fact doctrine is a rule of
equity. As such, it must be applied as an exception to the general rule that an unconstitutional law
produces no effects.60 The doctrine is applicable when a declaration of unconstitutionality will impose
an undue burden on those who have relied on the invalid law,61 but it can never be invoked to
validate as constitutional an unconstitutional act.62

In this case, petitioner could not be said to have been unduly burdened by reliance on an invalid law.
Petitioner merely anchored his right over the property to an Affidavit allegedly issued by Pelagio M.
Juan, a member of the MHIA, authorizing petitioner to occupy the same.63 However, this Affidavit was
executed only sometime in 1995, or approximately seven years after the Tuason case was
promulgated.64 At the time petitioner built the structures on the premises, he ought to have been
aware of the binding effects of the Tuason case and the subsequent unconstitutionality of P.D. 293.
These circumstances necessarily remove him from the ambit of the operative fact doctrine.

Petitioner may not be deemed to be a builder in good faith. Petitioner also argues that he is a builder
in good faith for want of knowledge of any infirmity in the promulgation of P.D. 293.65 Being a builder
in good faith, he believes that he is entitled to the reimbursement of his useful expenses and that he
has a right to retain possession of the premises, pending reimbursement of the value of his
improvements to be proven during trial, in accordance with Article 545 of the Civil Code.66
Upon perusal of the records, however, we hold that petitioner is not a builder in good faith. A builder
in good faith is one who builds with the belief that the land he is building on is his, or that by some
title one has the right to build thereon, and is ignorant of any defect or flaw in his title.67 Since
petitioner only started occupying the property sometime in 1995 (when his predecessor-in-interest
executed an Affidavit in his favor), or about seven years after Tuason was promulgated, he should
have been aware of the binding effect of that ruling. Since all judicial decisions form part of the law of
the land, its existence should be on one hand, x x x matter of mandatory judicial notice; on the other,
ignorantia. legis non excusat.68 He thus loses whatever he has built on the property, without right to
indemnity, in accordance with Article 449 of the Civil Code.69

WHEREFORE, the Petition for Review on Certiorari is hereby DISMISSED. The assailed Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 105190 are AFFIRMED.

SO ORDERED.

G.R. No. L-13343 December 29, 1962

EULOGIO RODRIGUEZ, SR., plaintiff-appellant,

vs.
SOFRONIO FRANCISCO as Administrator of the Estate of MAXIMO FRANCISCO, defendant-
appellee.

Tolentino and Garcia for plaintiff-appellant.

Antonio C. Masaquel for defendant-appellee.

MAKALINTAL, J.:

Plaintiff filed this action in the Court of First Instance of Rizal for judicial declaration of ownership,
recovery of possession, and damages. The facts are set forth in the decision of that court, dated
September 15, 1956, as follows:

It appears that Exequiel Ampil, now deceased, was the registered owner of the land in
question under Original Certificate of Title No. 2497 issued way back on May 25, 1918,
Exhibit B-1. On March 24, 1924, Exequiel Ampil executed a deed of sale covering the land in
favor of defendant Maximo Francisco for the sum of P1,500, Exhibit 4. Sometime thereafter,
the defendant took possession of the premises which, upon his death, was continued by his
heirs up to the present, publicly and in the concept of owner. The land taxes thereon since
1924 was religiously paid by Maximo Francisco up to 1955 (See Exhibits 5, 5-2 to p for 1924-
1948). Despite the sale, the Torrens title continued until 1937 in the name of the vendor
Exequiel Ampil. At the trial, defendant presented the owner's duplicate, Exhibit 1, of Original
Certificate of Title No. 2497 which was delivered to defendant by Ampil.

Prior to October 21, 1933, Exequiel Ampil was indebted to various creditors, to wit: (1) China
Banking Corporation P11,995.00, (2) Philippine National Bank P9,000.00, (3) Don
Wenceslao Trinidad P10,000.00, total P31,395.00. The payment of this indebtedness
was guaranteed by the plaintiff Eulogio Rodriguez, Sr., on the date Exequiel Ampil executed
a document entitled "Venta Condicional", Exhibit D-1. The deed was duly registered in the
Office of the Register of Deeds on November 15, 1933 (See Exhibit 1, memoranda of
encumbrances). This deed conveyed the land together with some other parcels to plaintiff by
a conditional sale, the conveyance to be absolute upon the fulfillment of certain conditions
specified therein.
 On February 9, 1934, as Exequiel Ampil made payment amounting to P15,181.67, plaintiff
executed "Release of Part of the Conditionally Sold Premises," Exhibit 2. Therein the real
properties covered by Certificates of Title Nos. 8756, 8670, 2673 and 8672 which were
embraced in the "Venta Condicional" were released. As to the other parcels conditionally
sold, among which was the land covered by Original Certificate of Title No. 2497 it was
provided in Exhibit 2 that they were to be held and retained by the plaintiff as security for the
money remaining due on the conditional sale.

On December 10, 1936, plaintiff filed an affidavit consolidating ownership over the land in
question together with five other parcels by virtue of the fact that the conditional sale of
October 21, 1933 between him and Ampil had become absolute (Exhibits C and C-1).
However, as the Owner's Duplicate Certificate of Title was unavailable, a petition was filed in
the original registration proceedings, Case No. 106, G.L.R.O. Rec. No. 13181, of the Court of
First Instance of Rizal for the issuance of a new owner's duplicate and after due notice and
hearing the Court ordered that the lost certificate be cancelled and a new one issued to the
owner (see Exhibit B-1, memo. of encumbrances). Then, on February 12, 1937 by virtue of
the affidavit of consolidation, the Register of Deeds of Rizal cancelled Original Certificate of
Title No. 2497 and issued to plaintiff Transfer Certificate of Title No. 31204, Exhibit A-1.

Upon the foregoing facts, the trial court adjudged plaintiff the rightful owner of the disputed land and
ordered defendant to deliver its possession to him, but found defendant to be a possessor in good
faith and hence free from liability for damages. Both parties appealed from the decision: plaintiff to
the Court of Appeals on this last finding in favor of defendant; and the latter directly to this Court on
the issue of ownership (G.R. No.
L-12039). By resolution dated November 19, 1957 upon motion of plaintiff, as appellee, this Court
agreed to take cognizance of both appeals. That taken by plaintiff was accordingly forwarded here,
docketed under G.R. No. L-13343 and is now the subject of this decision G.R. No. L-12039, wherein
defendant was the appellant was decided by us on June 30, 1961. The judgment appealed from was
affirmed in so far as it declared plaintiff the owner, and therefore entitled to the possession, of the
land in question.

In the present appeal by plaintiff the only error assigned by him refers to the conclusion of the court
below that Maximo Francisco (and now herein defendant as administrator of his estate after his
death on June 20, 1950) was a possessor in good faith. Although at first blush the issue may seem
to be one of fact, it is in reality one of law, involving as it does the correctness of that conclusion in
the light of the facts found by the said court, which are not seriously disputed. Appellant draws the
inference of bad faith in the possession of appellee from the following circumstances: (1) that the
description of the land in the deed of sale executed by Exequiel Ampil in favor of Maximo Francisco
in 1924 (Exhibit 4) does not tally with the description in the vendor's certificate of title, No. 2497; (2)
that Maximo Francisco never registered the sale in the office of the Register of Deeds of Rizal
thereafter; and (3) that when appellant consolidated in himself the ownership of the land in 1926 he
had to obtain previous order from the court in the original registration case for the issuance of a new
owner's duplicate certificate of title, after notice to interested parties, notwithstanding which appellee
did not appear to assert his rights to the land.

All the foregoing circumstances, in our opinion, did not necessarily make appellee a possessor in
bad faith. The first circumstance cited is of no material importance because as ground by the lower
court and later on by this Court itself on appeal in G.R. No. L-12039, the land sold by virtue of Exhibit
4 is the same one covered by TCT 2497. And the non-registration of the sale did not make the
vendee one in bad faith. With particular reference to the last circumstance stated, it has not been
shown that Maximo Francisco was notified or had actual knowledge of the said proceeding for
consolidation of ownership in appellant. Francisco was then and for a long time had been in
possession of the land, and there can be no question that for purposes of such possession the deed
of sale marked Exhibit 4 was a good and sufficient title. It was acquired without any flaw which would
invalidate it. The possession having begun in good faith the presumption is that it continued to be
enjoyed in the same character until it could be proven that the possessor was not unaware that his
possession was wrongful (Articles 528 and 529, Civil Code). It appears that in spite of the
consolidation of ownership in appellant and the issuance of a transfer certificate of title in his name
in 1937, he never attempted to exercise possessory rights over the property or paid taxes thereon,
nor did he demand its possession from appellee until the complaint in this case was filed on January
20. 1949.

However, we agree with appellant's alternative contention that on the date of the service of
summons upon appellee in this case, considering that the former was thereafter declared owner by
final judgment (G.R. No. L-12039), appellee's possession in good faith was interrupted and hence
from that time he lost the right to the fruits. * In the case of Tacas vs. Tobon, 53 Phil. 356, 361, this
court, citing Manresa (Vol. 4, 270, 271), stated:

"But to every possessor in good faith there comes a time when he is considered a possessor
in bad faith. When the owner possessor with a better right comes along, when he becomes
aware that what he had taken for granted is at least doubtful, and when he learns the
grounds in support of the adverse contention, good faith ceases. The possessor may still
believe that his right is more secure, because we resign ourselves with difficulty to the sight
of our vanishing hopes; but when the final judgment of the court deprives him of the
possession, all illusion necessarily disappears. Although he may not have been convinced of
it before, the possessor becomes aware that his possession is unlawful from the time he
learns of the complaint, from the time his is summoned to the trial. It is at this time that his
possession is interrupted, according to article 1945, and that he ceases to receive the fruits,
according to the first paragraph of article 451. The ruling of the court retroacts to that time;
but shall good faith be deemed to cease then? Although there is a great difference between
requiring the possessor in good faith to return the fruits he received from the time when his
possession was legally interrupted, and considering him a possessor in bad faith for all legal
purposes from that time, the law had to establish a definite rule in the matter, which is none
other than that deducible from a combination of articles 452, 1945, and 435. Whether or not
the defendant be a possessor in good faith, for there is no doubt that he can be, and the law
make no attempt to deny it, from the service of judicial summons there exists an act that this
possessor knows that his right is not secure, that someone disputes it, and that he may yet
lose it; and if the court holds that restitution be made, that time determines all the legal
consequences of the interruption, the time when the possession in good faith ceased to be
so before the law."

Maximo Francisco died on June 20, 1950. Damages up to that time should be claimed against his
estate in the administration proceeding, if still feasible (Sec. 5, Rule 87). Damages accruing after his
death are not debts left by him and hence recoverable by ordinary action, such as the one before us.
Considering, however, that there is no evidence as to when the cultivation of the land started and
when it was finished in the year 1950, appellee should be held liable for damages, consisting of the
fruits of the land in question, only from the year 1951. The undisputed evidence shows that the
owner's share of the fruits consists of 25 cavans of palay a year, valued at P8.00 per cavan, or
P200.00 yearly.

The judgment appealed from is modified in the sense that defendant-appellee, as administrator of
the estate of the deceased Maximo Francisco, is ordered to pay plaintiff-appellant the sum of
P200.00 yearly, starting from 1951 until the restoration of the possession of the land to said
appellant pursuant to the judgment in civil case No. 12039, with interest at the legal rate, plus costs. lawphil.net
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes,
Dizon and Makalintal, JJ., concur.

G.R. No. 111737 October 13, 1999

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner,

vs.
THE HONORABLE COURT OF APPEALS AND SPOUSES TIMOTEO and SELFIDA S.
PIEDA, respondents.

GONZAGA-REYES, J.:

Before us is a Petition for Review on Certiorari of the decision of the Court of Appeals 1 in CA-G.R.
CV No. 28549 entitled "SPOUSES TIMOTEO PIEDA, ET. AL. vs. DEVELOPMENT BANK OF THE
PHILIPPINES" which affirmed the decision of the Regional Trial Court (RTC), Branch 16 2, Roxas
City in Civil Case No. V-4590, for cancellation of certificate of title and/or specific performance,
accounting and damages with a prayer for the issuance of a writ of preliminary injunction. 1wphi1.nt

The records show that respondent spouses Pieda (PIEDAS) are the registered owners of a parcel
of land (Lot 11-14-1-14) situated at barangay Astorga Dumarao, Capiz containing an area of
238,406 square meters, more or less, and covered by Homestead Patent No. 0844 and Original
Certificate of Title No. P-1930. On March 7, 1972, the PIEDAS mortgaged the above described
parcel of land to petitioner, Development Bank of the Philippines (DBP) to secure their agricultural
loan in the amount of P20,000.00. The PIEDAS failed to comply with the terms and conditions of
the mortgage compelling DBP to extrajudicially foreclose on February 2, 1977. In the foreclosure
sale, DBP was the highest bidder and a Sheriff Certificate of Sale was executed in its favor. In the
corresponding Certificate of Sale, the sheriff indicated that "This property is sold subject to the
redemption within five (5) years from the date of registration of this instrument and in the manner
provided for by law applicable to this case". The certificate of sale was registered in the Register of
Deeds of Capiz on April 25, 1977. On March 10, 1978, after the expiration of the one-year
redemption period provided for under Section 6, ACT 3135, DBP consolidated its title over the
foreclosed property by executing an Affidavit of Consolidation of Ownership. Subsequently, a Final
Deed of Sale was executed in DBP's favor, which was registered together with the Affidavit of
Consolidation of Ownership with the Register of Deeds of Capiz on May 30, 1978. Consequently,
Original Certificate of Title No. P-1930 was cancelled and TCT No. T-15559 was issued in the name
of DBP. Thereafter, DBP took possession of the foreclosed property and appropriated the produce
thereof.

On July 5, 1978, the Ministry of Justice issued Opinion No. 92, Series of 1978 3 which declared that
lands covered by P.D. No. 27 4 , like the herein subject property, may not be the object of foreclosure
proceedings after the promulgation of said decree on Oct. 21, 1972.

On August 24, 1981, the PIEDAS offered to redeem the foreclosed property by offering P10,000.00
as partial redemption payment. This amount was accepted by DBP who issued O.R. No. 1665719
and through a letter, conditionally approved the offer of redemption considering the P10,000.00 as
down payment. 5 However, on November 11, 1981, DBP sent the PIEDAS another letter informing
them that pursuant to P.D. 27, their offer to redeem and/or repurchase the subject property could not
be favorably considered for the reason that said property was tenanted. 6 On November 16, 1981, in
deference to the above-mentioned opinion, DBP through Ramon Buenaflor sent a letter to the Acting
Register of Deeds of Capiz requesting the latter to cancel TCT No. T-15559 and to restore Original
Certificate of Title No. P-1930 in the name of the PIEDAS. The Acting Register of Deeds, in reply
to such request, suggested that DBP file a petition in court pursuant to Section 108 of Presidential
Decree 1529 7. In compliance with said suggestion, DBP petitioned for the cancellation of TCT No. T-
15559 with then Court of First Instance of Capiz, Branch II, docketed as Special Case No. 2653. The
petition was favorably acted upon on February 22, 1982. Thus, the foreclosure proceeding
conducted on February 2, 1977 was declared null and void and the Register of Deeds of Capiz was
ordered to cancel TCT No. 15559; OCT No. 1930 was ordered revived.

Meanwhile, on December 21, 1981, the PIEDAS filed the instant complaint against DBP for
cancellation of certificate of title and/or specific performance, accounting and damages with a prayer
for the issuance of a writ of preliminary injunction averring that DBP, in evident bad faith, caused the
consolidation of its title to the parcel of land in question in spite of the fact that the 5-year redemption
period expressly stated in the Sheriff's Certificate of Sale had not yet lapsed and that their offer to
redeem the foreclosed property was made well within said period of redemption. 8

After trial, the RTC ruled in favor of the PIEDAS stating that DBP violated the stipulation in the
Sheriff's Certificate of Sale which provided that the redemption period is five (5) years from the
registration thereof in consonance with Section 119 9 of CA No. 141 10. DBP should therefore assume
liability for the fruits that said property produced from said land considering that it prematurely took
possession thereof. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the

defendant Development Bank of the Philippines as follows:

1. Condemning the defendant DBP to pay the plaintiffs P201,138.28 less whatever
amount the plaintiffs still have to pay the said defendant DBP as balance of their loan
account reckoned up to the date of this decision; P20,000.00 as attorney's fees;
P5,000.00 as litigation expenses and costs.

SO ORDERED. 11

DBP appealed to the Court of Appeals, which affirmed the decision of the RTC. The Court of
Appeals stated that since DBP was in evident bad faith when it unlawfully took possession of the
property subject of the dispute and defied what was written on the Sheriff's Certificate of Sale, the
PIEDAS were entitled to recover the fruits produced by the property or its equivalent valued at
P72,000.00 per annum or a total of P216,000.00 for the three-year period. Respondent court stated
that said amount was not rebutted by DBP and was fair considering the size of the land in question.
The court added that any discussion with respect to the redemption period was of little significance
since the foreclosure proceeding was declared null and void in Special Civil Case No. 2653 12 on
February 22, 1982. Thus, the right of the PIEDAS to redeem the property has become moot and
academic. Finally, the award of attorney's fees amounting to P10,000.00 13 was justified considering
that the PIEDAS were compelled to protect their interests. 14

DBP's Motion for Reconsideration 15 was denied; hence this petition where it assigns the following
errors:

Ground No. 1 The Honorable Court Of Appeals Gravely Erred In Affirming The
Court A Quo's Decision Awarding Actual Damages In The Amount Of P216,000.00 In
Favor Of The Private Respondents Notwithstanding The Absence Of Evidence
Substantiating Said Award. Thus, The Honorable Court Of Appeals Had Decided
This Instant Case In A Way Not In Accord With Applicable Law And Jurisprudence.

2. Ground No. 2 The Honorable Court Of Appeals Gravely Erred In Affirming The
Court A Quo's Finding That DBP Was In Bad Faith When It Took Possession Of The
 Property In Question Notwithstanding the Contrary Evidence Adduced By Petitioner
DBP. Thus, The Honorable Court Of Appeals Departed From The Accepted And
Usual Course f Judicial Proceedings.

3. Ground No. 3 The Honorable Court Of Appeals Gravely Erred In Affirming The
Court A Quo's Decision Awarding Attorney's Fees And Litigation Costs In Favor Of
The Private Respondents Notwithstanding Absence Of Evidence Proving The
Same. Clearly, The Lower Court Be Committed Misapprehension Of Facts That Can
Be Considered A Question Of Law. 16

DBP maintains that the valuation of the income derived from the property in dispute allegedly
amounting to P216,000.00 was not proven by the PIEDAS. DBP argues that they granted the
PIEDAS a loan of P20,000.00 in March 7, 1972 and up to the time of the foreclosure of the
property, the PIEDAS have paid only P2,000.00 on their principal. The failure of the PIEDAS to
pay this loan is attributable to the fact that said property did not produce income amounting to
P72,000.00 per annum. According to DBP, in the absence of receipts or other evidence to support
such a claim, the Court of Appeals should not have granted said amount considering that the
PIEDAS had the burden of proving actual damages. Furthermore, Selfida Pieda herself admitted
that the property never produced income amounting to P72,000.00 per annum. At any rate, the
actual amount earned by the property in terms of rentals turned over by the tenant-farmers or
caretakers of the land were duly receipted and were duly accounted for by the DBP.

DBP also alleges that the mere fact that DBP took possession and administration of the property
does not warrant a finding that DBP was in bad faith. First, records show that the PIEDAS
consented to and approved the takeover of DBP. Second, Sec. 7 17 of Act No. 3135 18 allows the
mortgagee-buyer to take possession of the mortgaged property even during the redemption
period. Third, DBP's act of consolidating the title of the property in its name does not constitute bad
faith as there is no law which prohibits the purchaser at public auction from consolidating title in its
name after the expiration of the one (1) year redemption period reckoned from the time the
Certificate of Sale was registered; and neither is there any law or jurisprudence which prohibits the
PIEDAS from exercising their right of redemption over said property within five (5) years even if title
is consolidated in the name of the purchaser. When DBP consolidated title over the property in its
name, the new TCT issued in its favor was subject to the lien i.e. the right of redemption of the
PIEDAS; if there was a failure to register this in the TCT, DBP should not be faulted. Besides, even
if the five (5) year period of redemption was not indicated therein, Sec. 44 19 and 46 20 of Presidential
Decree No. 1529 21 attaches such lien by operation of law even in the absence of an annotation in
the title. Moreover, Sec. 119 of CA No. 141 also makes said right of redemption a statutory lien,
which subsists and binds the whole world despite the absence of registration.

DBP also could not have been in bad faith when it denied the PIEDAS' offer to redeem the property
since the denial was premised on Opinion No. 92 of the Minister of Justice series of 1978 which
stated that said land was covered under P.D. 27 and could not be the subject of foreclosure
proceedings. For this reason, DBP immediately filed a petition to nullify the foreclosure proceedings
which was favorably acted upon prior to the service of summons and the complaint in the present
case on DBP on June 30, 1982. If DBP was really in bad faith, it would not have filed said petition for
said petition was against its own interests.

Further, DBP asserts that PIEDAS appointed DBP as their attorney-in-fact or agent in case of
foreclosure of the property under Section 4 of the mortgage contract, which provides:

4. . . . In case of foreclosure, the Mortgagor hereby consents to the appointment of

the mortgagee or any of its employees as receiver, without any bond, to take charge
 of the mortgage property at once, and to hold possession of the case and the rents
and profits derived from the mortgaged property before the sale. . . . 22

DBP was therefore entitled to take possession of the property pursuant to the mortgage
contract.

Finally, considering that DBP lawfully had material possession of the property after it consolidated its
title, DBP was entitled to the fruits and income thereof pursuant to Section 34, Rule 39 of the Rules
of Court:

Sec. 34. Rents and Profits Pending Redemption. Statement thereof and credit
therefor on redemption. The purchaser, from the time of the sale until a
redemption, and a redemptioner, from the time of his redemption until another
redemption, is entitled to receive the rents of the property sold or the value of the use
or occupation thereof when such property is in the possession of a tenant. . . .

Taking all this into consideration, DBP cannot be faulted for taking over possession of the property in
question.

The core issue in this case is whether DBP was in bad faith when it took possession of the disputed
lot.

We rule in the negative and find DBP's contentions meritorious.

A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition
any flaw, which invalidates it. 23 Good faith is always presumed, and upon him who alleges bad faith
on the part of a possessor rests the burden of proof. 24 It was therefore incumbent on the PIEDAS
to prove that DBP was aware of the flaw in its title i.e. the nullity of the foreclosure. This, they failed
to do.

Respondent PIEDAS argue that DBP's bad faith stems from the fact that DBP consolidated title
over the disputed property despite the statement in the Sheriff's Certificate of Sale to the effect that
said land was subject to a five year redemption period. The period of redemption of extrajudicially
foreclosed land is provided under Section 6 of ACT No. 3135 to wit:

Sec. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial creditor
or judgment creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one year from and after the date of
sale; and such redemption shall be governed by the provisions of section four
hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil
Procedure, 25 in so far as these are not inconsistent with the provisions of this Act.

If no redemption is made within one year, the purchaser is entitled as a matter of right to
consolidate 26 and to possess 27 the property. 28 Accordingly, DBP's act of consolidating its title and
taking possession of the subject property after the expiration of the period of redemption was in
accordance with law. Moreover, it was in consonance with Section 4 of the mortgage contract
between DBP and the PIEDAS where they agreed to the appointment of DBP as receiver to take
charge and to hold possession of the mortgage property in case of foreclosure. DBP's acts cannot
therefore be tainted with bad faith.
The right of DBP to consolidate its title and take possession of the subject property is not affected by
the PIEDAS' right to repurchase said property within five years from the date of conveyance
granted by Section 119 of CA No. 141. In fact, without the act of DBP consolidating title in its name,
the PIEDAS would not be able to assert their right to repurchase granted under the aforementioned
section. Respondent PIEDAS are of the erroneous belief that said section prohibits a purchaser of
homestead land in a foreclosure sale from consolidating his title over said property after the one-
year period to redeem said property has expired. Section 119 does not contain any prohibition to
convey homestead land but grants the homesteader, his widow or legal heirs a right to repurchase
said land within a period of five years in the event that he conveys said land. This is in consonance
with the policy of homestead laws to distribute disposable agricultural lands of the State to land-
destitute citizens for their home and cultivation. 29 The right to repurchase under Section 119 aims to
preserve and keep in the family of the homesteader that portion of public land which the State had
gratuitously given him. 30 Such right is based on the assumption that the person under obligation to
reconvey the property has the full title to the property because it was voluntarily conveyed to him or
that he consolidated his title thereto by reason of a redemptioner's failure to exercise his right of
redemption. 31 It is also settled that "the five-year period of redemption fixed in Section 119 of the
Public Land Law of homestead sold at extrajudicial foreclosure begins to run from the day after the
expiration of the one-year period of repurchase allowed in an extrajudicial foreclosure". 32 Thus
DBP's consolidation of title did not derogate from or impair the right of the PIEDAS to redeem the
same under C.A. No. 141.

It may be argued that P.D. 27 was already in effect when DBP foreclosed the property. However, the
legal propriety of the foreclosure of the land was put into question only after Opinion No. 92 series of
1978 of the Ministry of Justice declared that said land was covered by P.D. 27 and could not be
subject to foreclosure proceedings. The Opinion of the Ministry of Justice was issued on July 5, 1978
or almost two months after DBP consolidated its title to the property on March 10, 1978. By law and
jurisprudence, a mistake upon a doubtful or difficult question of law may properly be the basis of
good faith. 33

In the case of Maneclang vs. Baun, 34 we held that when a contract of sale is void, the possessor is
entitled to keep the fruits during the period for which it held the property in good faith. Good faith of
the possessor ceases when an action to recover possession of the property is filed against him and
he is served summons therefore. 35 In the present case, DBP was served summons on June 30,
1982. 36 By that time, it was no longer in possession of the disputed land as possession thereof was
given back to the PIEDAS after the foreclosure of DBP was declared null and void on February 22,
1982. Therefore, any income collected by DBP after it consolidated its title and took possession of
the property on May 30, 1978 up to February 22, 1982 belongs to DBP as a possessor in good faith
since its possession was never legally interrupted.

Finally, we delete the award for attorney's fees. Although attorney's fees may be awarded if the
claimant is compelled to litigate with third persons or to incur expenses to protect his interest by
reason of an unjustified act or omission of the party from whom it is sought 37, we hold that DBP's
acts were clearly not unjustified.

WHEREFORE, the instant petition is hereby GRANTED, and the appealed decision of the Court of
Appeals is REVERSED. The Development Bank of the Philippines is absolved from any liability to
Timoteo and Selfida Pieda in so far as it orders the DBP to pay the PIEDAS P216,000.00 as
annual produce value of the land; P20,000.00 in attorney's fees, P5,000.00 in litigation expenses
and the costs of the suit. This decision is without prejudice to whatever liability the PIEDAS may
still have to the DBP with respect to their loan.

SO ORDERED.
G.R. No. L-27876 April 22, 1992

ADELAIDA S. MANECLANG, in her capacity as Administrator of the Intestate Estate of the

late Margarita Suri Santos, plaintiff-appellee,
vs.
JUAN T. BAUN and AMPARO S. BAUN, ET AL., defendants. CITY OF DAGUPAN, defendant-
appellant.

DAVIDE, JR., J.:

The issue presented in this case is the validity of a sale of a parcel of land by the administrator of an
intestate estate made pursuant to a petition for authority to sell and an order granting it which were
filed and entered, respectively, without notice to the heirs of the decedents.

The records disclose that on 12 June 1947, Margarita Suri Santos died intestate. She was survived
by her husband Severo Maneclang and nine (9) children. On 30 July 1947, a petition for the
settlement of her estate was filed by Hector S. Maneclang, one of her legitimate children, with the
Court of First Instance at Dagupan City, Pangasinan; the case was docketed as Special Proc. No.
3028. At the time of the filing of the petition, the ages of her children were as follows:

Hector Maneclang 21 years old

Cesar Maneclang 19
Oscar Maneclang 17
Amanda Maneclang 16
Adelaida Meneclang 13
Linda Maneclang 7
Priscila Maneclang 6
Natividad Maneclang 3
Teresita Maneclang 2

No guardian ad litem was appointed by the court for the minor children.

Margarita left several parcels of land, among which is Lot No. 203 of the Cadastral Survey of
Dagupan City containing an area of 7, 401 square meters, more or less , and covered by Transfer
Certificate of Title No. 1393.

On 2 September 1949, Pedro M. Feliciano, the administrator of the intestate estate of Margarita,
filed a petition in SP Proc. No. 3028 asking the court to give him "the authority to dispose of so much
of the estate that is necessary to meet the debts enumerated" in the petition. While notice thereof
was given to the surviving spouse, Severo Maneclang, through his counsel, Atty. Teofilo Guadiz, no
such notice was sent to the heirs of Margarita.

On 9 September 1949, despite the absence of notice to the heirs, the intestate court issued an Order
"authorizing the administrator to mortgage or sell so much of the properties of the estate for the
purposes (sic) of paying off the obligations" referred to in the petition.

Pursuant to this Order, Oscar Maneclang, the new administrator of the intestate estate, executed on
4 October 1952 a deed of sale1 in favor of the City of Dagupan, represented by its mayor, Angel B.
Fernandez, of a portion consisting of 4,415 square meters of the aforementioned Lot No. 203 for and
in consideration of P11,687.50. This sale was approved by the intestate court on 15 March 1954.

The City of Dagupan immediately took possession of the land and constructed thereon a public
market, known as the Perez Boulevard Public Market, at a cost of P100,00.00, more or less. It has
been in continuous and uninterrupted possession of the property since the construction of the
market. 2

Some other parcels of land belonging to the intestate estate were sold by the administrator pursuant
of the same authority granted by the 9 September 1949 Order. 3

On 28 September 1965, the new judicial administratrix of the intestate estate, Adelaida S.
Maneclang, daughter of the late Margarita Suri Santos, filed with the Court of First Instance of
Pangasinan an action for the annulment of the sales made by the previous administrator pursuant to
the order of 9 September 1949, cancellation of titles, recovery of possession and damages against
the vendees Juan T. Baun and Amparo Baun, Marcelo Operaa and Aurora Pagurayan, Crispino
Tandoc and Brigida Tandoc, Jose Infante and Mercedes Uy Santos, Roberto Cabugao, Basilisa
Callanta and Fe Callanta, Ricardo Bravo and Francisca Estrada, the City of Dagupan, and
Constantino Daroya and Marciana Caramat. 4 The complaint was docketed as Civil Case No. D-
1785. The cause of action against the City of Dagupan centers around the deed of sale executed in
its favor on 4 October 1952 by former judicial administrator Oscar S. Maneclang. In its Answer filed
on 5 November 1965, 5 the City of Dagupan interposed the following affirmative defenses: (a) the
sale in its favor is valid, legal and above board; (b) plaintiff has no cause of action against it, or that
the same, if any, had prescribed since the complaint was filed thirteen (13) years after the execution
of the sale; (c) plaintiff is barred by estoppel and laches; (d) it is a buyer in good faith; and (e) it has
introduced necessary and useful improvements and contructed a supermarket worth P200,000.00;
hence, assuming arguendo that the sale was illegal, it has the right to retain the land and the
improvements until it is reimbursed for the said improvements.

On 30 March 1966, plaintiff and the City of Dagupan entered into a Stipulation of Facts wherein they
agreed on the facts earlier adverted to. They, however, agreed: (a) to adduce evidence concerning
the reasonable rental of the property in question and other facts not embodied therein but which are
material and vital to the final determination of the case, and (b) to request the court to take judicial
notice of SP Proc. No. 3028.

The evidence adduced by plaintiff discloses that Oscar Maneclang was induced by its then
incumbent Mayor, Atty. Angel B. Fernandez, to sell the property to the City of Dagupan and that the
said City has been leasing the premises out to numerous tenants at the rate of P0.83 per square
meter per month, or a total monthly rental of P3,747.45, since 4 October 1952. 6

On 9 November 1966, the trial court rendered a partial decision in Civil Case No. D-1785 against the
City of Dagupan, the dispositive portion of which reads as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders

judgment:

(a) Annulling (sic) the Deed of Sale executed by the Administrator on October 4,
1952 (Exh. F) being null and void ab initio;

(b) Ordering the cancellation of the Certificate of Title issued in favor of the defendant
City of Dagupan by virtue of said Deed of Sale, and directing the Register of Deeds
 of said City to issue a new Certificate of Title in favor of the plaintiff as Administratrix
covering the property in question;

(c) Ordering the defendant City of Dagupan to restore the possession to the plaintiff
in her capacity as Judicial Administratrix of the Intestate Estate of Margarita Suri
Santos of the parcel of land in question, together with all the improvements thereon
existing;

(d) Ordering the defendant City of Dagupan City to pay the plaintiff the sum of
P584,602.20 as accumulated rentals or reasonable value of the use of the property
in question from October 4, 1952 up to the filing of the complaint in 1985, plus
interest thereon at the rate of 6% per annum from the later date;

(e) Ordering the defendant City of Dagupan to pay a monthly rental or reasonable
value of its occupation of the premises in the amount of P3,747.45 from October 9,
1985 up to the date the possession of the premises is delivered (sic) the plaintiff by
said defendant, and

(f) Ordering the plaintiff to reimburse the defendant City of Dagupan the sums of
P100,000.00 and P11,687.50 both amounts to be deducted from the amount due the
plaintiff from said defendant.

Defendant shall also pay the costs.

SO ORDERED. 7

In arriving at the said disposition, the trial court held that:

(a) Under Rule 90 of the Rules of Court, 8 which is similar to the provisions of Section 722 of the Code
of Civil Procedure, it is essential and mandatory that the interested parties be given notices of the application for
authority to sell the estate or any portion thereof which is pending settlement in a probate court. As held in the early
case of Estate of Gamboa vs. Floranza, 9 an order issued by a probate court for the sale of real property belonging to
the estate of a deceased person would be void if no notice for the hearing of the petition for such sale is given as
required by said Section 722. Under this section, when such a petition is made, the court shall designate a time and
place for the hearing and shall require notice of such hearing to be given in a newspaper of general circulation;
moreover, the court may require the giving of such further notice as it deems proper.

In the instant case, no notice of the application was given to the heirs; hence, both
the order granting authority to sell and the deed of sale executed in favor of the City
of Dagupan pursuant thereto, are null and void.

(b) Estoppel does not lie against plaintiff as no estoppel can be predicated on an
illegal act and estoppel is founded on ignorance. In the instant case, the nullity is by
reason of the non-observance of the requirements of law regarding notice; this legal
defect or deficiency deprived the probate court of its jurisdiction to dispose of the
property of the estate. Besides, the City of Dagupan was represented in the
transaction by lawyers who are presumed to know the law. This being the case, they
should not be allowed to plead estoppel; finally, estoppel cannot give validity to an
act which is prohibited by law or is against public policy. 10

(c) Laches and prescription do not apply. The deed of sale being void ab initio, it is in
contemplation of law inexistent and therefore the right of the plaintiff to bring the
action for the declaration of inexistence of such contract does not prescribe. 11
 (d) The City of Dagupan is not a purchaser in good faith and for value as the former
judicial administrator, Oscar Maneclang, testified that he was induced by then
incumbent Mayor of the City Councilor Atty. Teofilo Guadiz, Sr. to sell the property;
moreover, the City Fiscal signed as witness to the deed of sale. These lawyers are
presumed to know the law.

Not satisfied with the decision, the City of Dagupan appealed to this Court 12 alleging that said
decision is contrary to law, the facts and the evidence on record, and that the amount involved
exceeds P500,000.00.

In its Brief, the City of Dagupan submits the following assigned errors:

FIRST ERROR

THE LOWER COURT ERRED IN HOLDING THAT THE SALE EXECUTED BY THE
JUDICIAL ADMINISTRATOR TO THE CITY OF DAGUPAN IS NULL AND VOID AB
INITIO.

SECOND ERROR

THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF IS NOT IN

ESTOPPEL FROM ASSAILING THE LEGALITY OF THE SALE.

THIRD ERROR

THE LOWER COURT ERRED IN HOLDING THAT THE INSTANT ACTION IS NOT
BARRED BY LACHES AND PRESCRIPTION.

FOURTH ERROR

THE LOWER COURT ERRED IN DECLARING THAT DEFENDANT CITY OF

DAGUPAN IS NOT A PURCHASER IN GOOD FAITH AND FOR VALUE.

FIFTH ERROR

THE LOWER COURT ERRED IN ORDERING DEFENDANT CITY OF DAGUPAN

TO PAY THE PLAINTIFF THE SUM OF P584,602.20 AS ACCUMULATED
RENTALS OR REASONABLE VALUE OF (sic) THE USE OF THE PROPERTY IN
QUESTION FROM OCTOBER 4, 1952 UP TO THE FILING OF THE COMPLAINT
IN 1965, PLUS INTEREST THEREON AT THE RATE OF 6% PER ANNUM FROM
THE LATER DATE.

SIXTH ERROR

THE LOWER COURT ERRED IN ORDERING THE DEFENDANT CITY OF

DAGUPAN TO PAY A MONTHLY RENTAL OR REASONABLE VALUE OF (sic) ITS
OCCUPATION OF THE PREMISES IN THE AMOUNT OF P3,747,45 FROM
OCTOBER 9, 1965 UP TO THE DATE THE POSSESSION OF THE PREMISES IS
DELIVERED TO THE PLAINTIFF BY SAID DEFENDANT.

We shall consider these assigned errors sequentially.

1. In support of the first, appellant maintains that notice of the application for authority to sell was
given to Severo Maneclang, surviving spouse of Margarita. As the designated legal representative of
the minor children in accordance with Article 320 of the Civil Code, notice to him is deemed sufficient
notice to the latter; moreover, after Oscar Maneclang signed the deed of sale 13 in his capacity as
judicial administrator, he "sent copies of his annual report and the deed of sale to Severo
Maneclang, and his brothers Hector Maneclang and Oscar Maneclang and sister Amanda
Maneclang, all of legal ages (sic), while the other minor heirs received theirs through his
lawyer." 14Besides, per Flores vs. Ang Bansing, 15 the sale of property by the judicial administrator
cannot be set aside on the sole ground of lack of notice.

These contentions are without merit.

Article 320 of the Civil Code does not apply. While the petition for authority to sell was filed on 2
September 1949, the Civil Code took effect only on 30 August 1950. 16 Thus, the governing law at the
time of the filing of the petition was Article 159 of the Civil Code of Spain which provides as follows:

The father, or in his default, the mother, shall be the legal administrator of the
property of the children who are subject to parental authority.

However, the provisions of the Code of Civil Procedure on guardianship impliedly repealed those of
the Civil Code relating to that portion of the patria potestad (parental authority) which gave to the
parents the administration and usufruct of their minor children's property; said parents were however
entitled, under normal conditions, to the custody and care of the persons of their minor children. 17

Article 320 of the present Civil Code, taken from the aforesaid Article 159, incorporates the
amendment that if the property under administration is worth more than two thousand pesos
(P2,000.00), the father or the mother shall give a bond subject to the approval of the Court of First
Instance. This provision then restores the old rule 18 which made the father or mother, as such, the
administrator of the child's property. Be that as it may, it does not follow that for purposes of
complying with the requirement of notice under Rule 89 of the Rules of the Court, notice to the father
is notice to the children. Sections 2, 4 and 7 of said Rule state explicitly that the notice, which must
be in be writing, must be given to the heirs, devisees, and legatees and that the court shall fix a time
and place for hearing such petition and cause notice to be given to the interested parties.

There can be no dispute that if the heirs were duly represented by counsel or by a guardian ad
litem in the case of the minors, the notice may be given to such counsel or guardian ad litem. In this
case, however, only the surviving spouse, Severo Maneclang, was notified through his counsel. Two
of the heirs, Hector Maneclang and Oscar Maneclang, who were then of legal age, were not
represented by counsel. The remaining seven (7) children were still minors with no guardian ad
litem having been appointed to represent them. Obviously then, the requirement of notice was not
satisfied. The requisite set forth in the aforesaid sections of Rule 89 are mandatory and essential.
Without them, the authority to sell, the sale itself and the order approving it would be null and void ab
initio. 19 The reason behind this requirement is that the heirs, as the presumptive owners 20 since they
succeed to all the rights and obligations of the deceased from the moment of the latter's death, 21 are
the persons directly affected by the sale or mortage and therefore cannot be deprived of the property
except in the manner provided by law.

Consequently, for want of notice to the children, the Order of 9 September 1949 granting the
application, the sale in question of 4 October 1952 and the Order of 15 March 1954 approving the
sale are all void ab initio as against said children. Severo Maneclang, however, stands on different
ground altogether. Having been duly notified of the application, he was bound by the said order, sale
and approval of the latter. However, the only interest which Severino Maneclang would have over
the property is his right of usufruct which is equal to that corresponding by way of legitime pertaining
to each of the surviving children pursuant to Article 834 of the Civil Code of Spain, the governing law
at that time since Margarita Suri Santos died before the effectivity of the Civil Code of the
Philippines.

2 Estoppel is unavailable as an argument against the administratrix of the estate and against the
children.

As to the former, this Court, in Boaga vs. Soler, supra, reiterated the rule "that a decedent's
representative is not estopped to question the validity of his own void deed purporting to convey
land; 22 and if this be true of the administrator as to his own acts, a fortiori, his successor can not be
estopped to question the acts of his predecessor are not conformable to law." 23 Not being the party
who petitioned the court for authority to sell and who executed the sale, she cannot be held liable for
any act or omission which could give rise to estoppel. Under Article 1431 of the Civil Code, through
estoppel an admission or representation is rendered conclusive upon the person making it, and
cannot be denied or disproved as against the person relying thereon. In estoppel by pais, as related
to the party sought to be estopped, it is necessary that there be a concurrence of the following
requisites: (a) conduct amounting to false representation or concealment of material facts or at least
calculated to convey the impression that the facts are otherwise than, and inconsistent with, those
which the party subsequently attempts to assert; (b) intent, or at least expectation that this conduct
shall be acted upon, or at least influenced by the other party; and (c) knowledge, actual or
constructive of the actual facts. 24 In estoppel by conduct, on the other hand, (a) there must have
been a representation or concealment of material facts; (c) the party to whom it was made must
have been ignorant of the truth of the matter; and (d) it must have been made with the intention that
the other party would act upon it. 25

As to the latter, considering that, except as to Oscar Maneclang who executed the deed of sale in
his capacity as judicial administrator, the rest of the heirs did not participate in such sale, and
considering further that the action was filed solely by the administratrix without the children being
impleaded as parties plaintiffs or intervenors, there is neither rhyme nor reason to hold these heirs in
estoppel. For having executed the deed of sale, Oscar Maneclang is deemed to have assented to
both the motion for and the actual order granting the authority to sell. Estoppel operates solely
against him.

3 As to prescription, this Court ruled in the Boaga case that "[a]ctions to declare the inexsistence of
contracts do not prescribe (Art. 1410, N.C.C.), a principle applied even before the effectivity of the
new Civil Code (Eugenio, et al. vs. Perdido, et al., supra, citing Tipton vs. Velasco, 6 Phil. 67, and
Sabas vs. Germa , 66 Phil. 471 )."

4. Laches is different from prescription. As the court held in Nielsen & Co. Inc . vs. Lepanto
Consolidated Mining Co.,26 the defense of laches applies independently of prescription. While
prescription is concerned with the fact of delay, laches is concerned with the effect of delay.
Prescription is a matter of time; laches is principally a question of inequity of permitting a claim to be
enforced, this inequity being founded on some change in the condition of the property or the relation
of the parties. Prescription is statutory; laches is not. Laches applies in equity, whereas prescription
applies at law. Prescription is based on fixed time, laches is not.

The essential elements of laches are the following: (1) conduct on the part of the defendant, or of
one under whom he claims, giving rise to the situation of which complaint is made and for which the
complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having
been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the
defendant that the complainant would assert the right on which he bases his suit; and (4) injury or
prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held
barred. 27

In the instant case, from time the deed of sale in favor of the City of Dagupan was executed on 4
October 1952, up to the time of the filing of the complaint for annulment on 28 September 1965,
twelve (12) years, ten (10) months and twenty-four (24) days had elapsed.

The respective ages of the children of Margarita Suri Santos on these two dates were, more or less,
as follows:

Upon execution At the filing

of the deed of sale of the complaint

Hector Maneclang 26 39
Cesar Maneclang 24 37
Oscar Maneclang 22 35
Amanda Maneclang 21 34
Adelaida Maneclang 18 31
Linda Maneclang 12 25
Priscila Maneclang 11 24
Natividad Maneclang 8 20
Teresita Maneclang 7 20

It is an undisputed fact that the City of Dagupan immediately took possession of the property and
constructed thereon a public market; such possession was open, uninterrupted and continuous.
Obviously, Hector, Cesar, Oscar and Amanda were already of legal age when the deed of sale was
executed. As it was Oscar who executed the deed of sale, he cannot be expected to renounce his
own act. With respect to Hector, Cesar and Amanda, they should have taken immediate steps to
protect their rights. Their failure to do so for thirteen (13) years amounted to such inaction and delay
as to constitute laches. This conclusion, however, cannot apply to the rest of the children who
were then minors and not represented by any legal representative. They could not have filed an
action to protect their interests; hence, neither delay nor negligence could be attributed to them as a
basis for laches. Accordingly, the estate is entitled to recover 5/9 of the questioned property.

5. In ruling out good faith, the trial court took into account the testimony of Oscar Maneclang to the
effect that it was Mayor Fernandez of Dagupan City and Councilor Teofilo Guadiz, Sr., both lawyers,
who induced him to sell the property and that the execution of the sale was witnessed by the City
Fiscal.

We are unable to agree.

While the order granting the motion for authority to sell was actually issued on 9 September 1949,
the same was secured during the incumbency of the then judicial administrator Pedro Feliciano.
Even if it is to be assumed that Mayor Fernandez and Councilor Guadiz induced Oscar Maneclang
to sell the property, the fact remains that there was already the order authorizing the sale. Having
been issued by a Judge who was lawfully appointed to his position, he was disputably presumed to
have acted in the lawful exercise of jurisdiction and that his official duty was regularly performed. 28 It
was not incumbent upon them to go beyond the order to find out if indeed there was a valid motion
for authority to sell. Otherwise, no order of any court can be relied upon by the parties. Under Article
526 of the Civil Code, a possessor in good faith is one who is not aware that there exists in his title
or mode of acquisition any flaw which invalidates it; furthermore, mistake upon a doubtful or difficult
question of law may be the basis of good faith. It implies freedom from knowledge and
circumstances which ought to put a person on inquiry. 29 We find no circumstance in this case to
have alerted the vendee, the City of Dagupan, to a possible flaw or defect in the authority of the
judicial administrator to sell the property. Since good faith is always presumed, and upon him who
alleges bad faith on the part of the possessor rests the burden of proof, 30 it was incumbent upon the
administrator to established such proof, which We find to be wanting. However, Article 528 of the
Civil Code provides that: "Possession acquired in good faith does not lose this character except in
the case and from the moment facts exist which show that the possessor is not unaware that he
possesses the thing improperly or wrongfully." The filing of a case alleging bad faith on the part of a
vendee gives cause for cessation of good faith.

In Tacas vs. Tobon, 31 this Court held that if there are no other facts from which the interruption of
good faith may be determined, and an action is filed to recover possession, good faith ceases from
the date of receipt of the summons to appear at the trial and if such date does not appear in the
record, that of the filing of the answer would control. 32

The date of service of summons to the City of Dagupan in Civil Case No. D-1785 is not clear from
the record. Its Answer, however, was filed on 5 November 1965. Accordingly, its possession in good
faith must be considered to have lasted up to that date. As a possessor in good faith, it was entitled
to all the fruits of the property and was under no obligation to pay rental to the intestate of Margarita
for the use thereof. Under Article 544 of the Civil Code, a possessor in good faith is entitled to the
fruits received before the possession is legally interrupted. Thus, the trial court committed an error
when it ordered the City of Dagupan to pay accumulated rentals in the amount of P584,602.20 from
4 October 1952 up to the filing of the complaint.

6. However, upon the filing of the Answer, the City of Dagupan already became a possessor in bad
faith. This brings Us to the issue of reasonable rentals, which the trial court fixed at P3,747.45 a
month. The basis thereof is the monthly earnings of the city from the lessees of the market stalls
inside the Perez Boulevard Supermarket. The lesses were paying rental at the rate of P0.83 per
square meter. Appellant maintains that this is both unfair and unjust. The property in question is
located near the Chinese cemetery and at the time of the questioned sale, it had no access to the
national road, was located "in the hinterland" and, as admitted by the former judicial administrator,
Oscar Maneclang, the persons who built houses thereon prior to the sale paid only P6.00 to P8.00
as monthly rentals and the total income from them amounted only to P40.00 a month. Appellant
contends that it is this income which should be made the basis for determining the reasonable rental
for the use of the property.

There is merit in this contention since indeed, if the rental value of the property had increased, it
would be because of the construction by the City of Dagupan of the public market and not as a
consequence of any act imputable to the intestate estate. It cannot, however, be denied that
considering that the property is located within the city, its value would never decrease; neither can it
be asserted that its price remained constant. On the contrary, the land appreciated in value at least
annually, if not monthly. It is the opinion of this Court that the reasonable compensation for the use
of the property should be fixed at P1,000.00 a month. Taking into account the fact that Severo
Maneclang, insofar as his usufructuary right is concerned, but only until his death, is precluded from
assailing the sale, having been properly notified of the motion for authority to sell and considering
further that the heirs, Hector, Cesar, Oscar and Amanda, all surnamed Maneclang, are, as
discussed above, barred by laches, only those portions of the monthly rentals which correspond to
the presumptive shares of Adelaida, Linda, Priscila, Natividad and Teresita, all surnamed
Maneclang, to the extent untouched by the usufructuary right of Severo Maneclang, should be paid
by the City of Dagupan. There is no showing as to when Severo Maneclang died; this date of death
is necessary to be able to determine the cessation of his usufructuary right and the commencement
of the full enjoyment of the fruits of the property by the unaffected heirs. Under the circumstances,
and for facility of computation, We hereby fix the presumptive shares in the rentals of the
aforenamed unaffected heirs at P500.00 a month, or at P100.00 each, effective 5 November 1965
until the City of Dagupan shall have effectively delivered to the intestate estate 5/9 of the property in
question. The latter, however, shall reimburse the City of Dagupan of that portion of the real estate
taxes it had paid on the land corresponding to 5/9 of the lot commencing from taxable year 1965
until said 5/9 part is effectively delivered to the intestate estate.

Pursuant to Article 546 of the Civil Code, the City of Dagupan may retain possession of the property
until it shall have been fully reimbursed the value of the building in the amount of P100,000.00 and
5/9 of the purchase price amounting to P6,493.05

WHEREFORE, judgment is hereby rendered AFFIRMING the decision in all respects, except to the
extent as above modified. As modified, (a) the sale in favor of the City of Dagupan, executed on 4
October 1952 (Exhibit "F"), is hereby declared null and void; however, by reason of estoppel and
laches as abovestated, only 5/9 of the subject property representing the presumptive shares of
Adelaida, Linda, Priscila, Natividad and Teresita, all surnamed Maneclang, may be recovered; (b)
subject, however, to its right to retain the property until it shall have been refunded the amounts of
P100,000.00 and P6,493.05, the City of Dagupan is hereby ordered to reconvey to the intestate
estate of Margarita Suri Santos 5/9 of the property in question, for which purpose said parties shall
cause the appropriate partition thereof, expenses for which shall be borne by them proportionately;
and (c) the City of Dagupan is further ordered to pay reasonable compensation for the use of 5/9 of
the property in question at the rate of P500.00 a month from 5 November 1965 until it shall have
effectively delivered the possession of the property to the intestate estate of Margarita Suri Santos.
Upon the other hand, said intestate estate is hereby ordered to refund to the City of Dagupan that
portion of the real estate taxes the latter had paid for the lot corresponding to 5/9 thereof effective
taxable year 1965 and until the latter shall have delivered to said intestate estate.

SO ORDERED.

G.R. No. 109903 November 20, 1995

SPOUSES ANDRES SUOBIRON and SOCORRO SUOBIRON, JOSE SULLANO JR. and IRENEO
FERRARIS, petitioners,
vs.
COURT OF APPEALS, LAND REGISTRATION COMMISSION, REGISTER OF DEEDS of the
PROVINCE OF ILOILO, FORTUNATA PONCE VDA. DE ADELANTAR, REMEDIOS
ADELANTAR, CARIDAD A. CHANCO, FLORECITA A. MONTILLA, EVANGELINA A.
COSCOLUELA, LYNDE ADELANTAR, DOUGLAS M. ADELANTAR, PROTACIO ADELANTAR
himself and as Administrator of the INTESTATE ESTATE of the late LUIS
ADELANTAR, respondents.

BELLOSILLO, J.:

Petitioner-spouses Andres Suobiron and Socorro Suobiron, Jose Sullano Jr. and Ireneo Ferraris
instituted on 2 December 1980 an action to annul the orders dated 25 August 1945 and 28 January
1946 of the then Court of First Instance (CFI) of Iloilo in LRC Case No. 673, GLRO Record No.
54404, as well as OCT Nos. 69237 and 69238 and the corresponding decrees issued by the Land
Registration Commission. Public respondents Land Registration Commission and Register of Deeds
of the Province of Iloilo, and private respondents Fortunata Ponce Vda. de Adelantar, Caridad A.
Chanco, Florecita A. Montilla, Evangelina A. Coscoluela, and Remedios, Lynde, Douglas and
Protacio, all surnamed Adelantar, were named defendants.
Petitioners alleged in their complaint that the land registration court acted without or in excess of
jurisdiction in issuing both orders because the requirements of the law on reconstitution of court
records were not complied with thus rendering void not only the orders but also the decrees and
certificates of title issued thereunder.

Private respondents denied the allegations for the annulment of the orders and decrees. They
counterclaimed for the delivery to them of the property in litigation consisting of 26.5 hectares of
sugarland and for the payment of the net produce which they could have received had they not been
deprived of possession thereof.

From the evidence and the admission of the parties the trial court found that the two (2) parcels of
land were previously subject of LRC Case No. 673, GLRO Record No. 54404, before the CFI of Iloilo
and that aside from the Director of Lands, the other oppositors who appeared therein were Doroteo
Legarde and Bernabe, Basilia, Quintin and Fortunate, all surnamed Lorezo.

On 1 September 1941, after due notice, publication and hearing, the CFI rendered judgment
adjudicating the parcels of land in favor of spouses Luis Adelantar and Fortunata Ponce. The
oppositors elevated the decision to the Court of Appeals. On 23 March 1943, however, for failure of
the oppositors to pay the docket fees and to deposit the estimated cost of printing the record on
appeal within the reglementary period, the appellate court dismissed the appeal.

On 22 March 1945, four days after the American forces liberated Panay Island, the CFI was
reorganized. Pursuant to Act 3110,1 the clerk of court submitted a report stating that all court records
were destroyed or burned as a result of the battle for liberation. Thereafter, on 7 June 1945 the court
issued an order directing the reconstitution of the records. The order was published in two (2)
leading newspapers in Iloilo City, namely, "Ang Tigbatas" and "The Times," once a week for six (6)
months.

On 18 August 1945 Luis Adelantar filed a motion for reconstitution of the records of LRC Case No.
673 furnishing copies thereof to oppositors Sabas, Ireneo, Pilar and Preciosa, all surnamed Lucero,
and Bernabe, Basilia, Quintin and Fortunato, all surnamed Lorezo, through their respective counsel,
as well as the Provincial Fiscal of Iloilo representing the Director of Lands. The oppositors did not
however appear when the motion was heard on 25 August 1945. Thus on the same day the CFI
gave due course to the motion for reconstitution.

On 28 January 1946, on motion of the Adelantar spouses, the CFI directed the issuance of decrees
covering the property in litigation after which Decrees Nos. 766623 and 766624 were issued by the
Land Registration Commission. On the basis of these decrees OCT Nos. 69237 and 69238 were
issued in the name of the spouses Luis Adelantar and Fortunata Ponce.

Taking advantage in the meantime of the chaotic conditions during the war, Quintin Lorezo and
Bernabe Lorezo entered the litigated property and appropriated the produce thereof to the damage
and prejudice of the registered owners. Consequently, on 26 August 1947 the Adelantars filed an
action in the CFI of Iloilo against the Lorezos for recovery of possession, docketed as Civil Case No.
938. Basilia Lorezo, Isabel Lorezo and Canuto Lucero intervened and were allowed to file their
answers.

On 3 September 1953 the CFI rendered judgment declaring the Adelantar spouses owners of the
property and ordering the receiver earlier appointed by the court to deliver to them the possession
thereof as well as the produce received by the receiver since his appointment.
The decision having become final and executory the trial court issued a writ of execution which was
implemented by the Provincial Sheriff on 27 February 1954 by delivering to the spouses Luis
Adelantar and Fortunata Ponce the possession of the two (2) parcels of land. On the same occasion
Luis Adelantar accepted from the receiver the produce consisting of five (5) bultos of palay.
However, after the delivery of the property by the Provincial Sheriff to the Adelantars, Quintin,
Basilia, Bernabe and Fortunato Lorezo re-entered the premises. Other persons followed suit.

The property soon became the subject of a cadastral survey. Fortunata Ponce, who was already a
widow, filed an answer claiming ownership. The spouses Andres Suobiron and Socorro Suobiron
also filed an answer claiming ownership of portions thereof by purchases from Quintin in 1960, from
Basilia and Isabel Lorezo in 1961, and from Canuto Lucero in 1969 thus prompting the cadastral
court to advise the parties to file the proper action and to litigate the question of ownership.

Accordingly, on 22 July 1970 Fortunata Ponce and the other private respondents, as heirs of Luis
Adelantar, filed an action for quieting of title and for recovery of possession with damages before the
CFI of Iloilo, docketed as Civil Case No. 8283. The complaint however was dismissed without
prejudice.

On 21 December 1972 petitioners sought annulment of the certificates of title of the Adelantars but
their action was also dismissed without prejudice on 22 February 1980. Thus petitioners filed their
complaint alleging co-ownership of the property.

On 29 August 1986, finding no factual nor legal basis to grant petitioners' prayer, the trial court
dismissed the complaint and directed them to vacate the property and deliver possession thereof to
private respondents and to pay them jointly and severally P39,750.00 annually as net produce from
1970 until possession was restored to the latter, P10,000.00 as attorney's fees, and to pay the costs
of suit.2

On 19 January 1993 respondent Court of Appeals affirmed the ruling of the trial court except with
respect to the award of attorney's fees which was deleted as no reason was given therefor.3 On 15
March 1993 the motion for reconsideration was denied.4

Petitioners raise these issues before us: whether the provisions of Act 3110 have been complied
with; whether the decision in Civil Case No. 938 is conclusive upon them; and, whether they are
liable to private respondents for damages.

Petitioners allege that Act 3110 was violated since (a) the general notice of loss required to be
served by registered mail to interested parties and its publication in the Official Gazette were not
complied with; (b) no notice of loss was sent to counsel of record of their predecessors-in-interest;
and, (c) no duly certified or authentic copy of the Court of Appeals' resolution of 23 March 1943 was
produced in the reconstitution proceedings. They also claim that the decision in Civil Case No. 938 is
not conclusive upon them because the subject matter thereof does not involve the legality of the
reconstitution of LRC Case No. 673, and that damages should not have been awarded against them
as their possession of the parcels of land was lawful.

We affirm the decision of the Court of Appeals as we find no reversible error therein. Sections 1, 2
and 3 of Act 3110 provide:

Sec. 1. As soon as practicable after the occurrence of any fire or other public
calamity resulting in the loss of all or part of the records of judicial proceedings on file
in the office of the clerk of a Court of First Instance, said officer shall send a notice by
registered mail to the Secretary of Justice, the Attorney-General,5 the Director of
 Lands, the Chief of the General Land Registration Office,6 the clerk of the Supreme
Court, the judge of the province, the register of deeds of the province, the provincial
fiscal, and all lawyers who may be interested, stating the date on which such fire or
public calamity occurred and whether the loss or destruction was total or partial, and
giving a brief list of the proceedings not affected in case the loss or destruction was
partial.

Sec. 2. Upon receipt of the notice mentioned in the preceding section, the court shall
issue or cause to be issued a general notice which shall be addressed and sent by
registered mail to the lawyers and officers mentioned in the preceding section, and to
such other persons as might be interested, advising them of the destruction of the
records, with a brief list of the proceedings not affected in case the destruction was
partial, and of the time fixed by this Act for the reconstitution of the destroyed
records.

This notice shall also be published in the Official Gazette and in one of the
newspapers most widely read in the province, once a week, for four consecutive
weeks.

Sec. 3. The parties to civil cases, or their counsels, shall appear and file, within thirty
days after having been notified in accordance with the next preceding section, an
application for the reconstitution of the records in which they are interested, and the
clerk of the court, upon receiving such application, shall send notice to all parties
interested, or their counsels, of the day, hour, and place when the Court will proceed
to the reconstitution, requesting them to present, on said day and hour, and at said
place, all copies of motions, decrees, orders, and other documents in their
possession, having reference to the record or records to be reconstituted.

As may be gleaned from the above, the Act provides that after the occurrence of any fire or other
public calamity resulting in the loss of all or part of the records of judicial proceedings, the clerk of
court shall send a notice by registered mail, among other officers, to the judge of the province and all
lawyers who may be interested in the proceedings (Sec. 1) and upon receipt of such notice, the
court shall issue a general notice which shall be addressed and sent by registered mail to said
lawyers and offices, and to such other persons as might be interested, advising them of the
destruction of the records. This notice shall be published in the Official Gazette and in one of the
newspapers of wide circulation in the province once a week for four consecutive weeks (Sec. 2). The
Act likewise provides that any interested party or his counsel shall appear and file within thirty days
after having been notified of the destruction as above stated an application for the reconstitution of
the records of the case, and the clerk of court upon receiving such application shall send notice to
other parties interested or their counsel of the clay, hour and place when the court will proceed with
the reconstitution (Sec. 3).

This briefly is the procedure laid down by Act 3110 for the reconstitution of a court record in case of
loss or destruction.

In Paluay v. Bacudao7 we held that there was substantial compliance with the law if the clerk of court
sent a notice to the judge of the province informing him of the destruction of all court records in the
province and that acting thereon the judge immediately issued an order for their reconstitution which
was published in a newspaper of general circulation in the city or province once a week for six (6)
months. The law was considered substantially complied with even if it did not appear that notice of
the destruction was ever served by registered mail to all lawyers or persons who appeared to be
interested in the cases affected. It was enough that the applicant sent a copy of his petition for
reconstitution to the oppositors or their counsel in order that they may be notified of the date and
place of the hearing thereof.8

In the case at bench, the requirements of the law for the reconstitution of a court record were
fulfilled. The clerk of court, soon after liberation, sent a notice to the then presiding judge of the Court
of First Instance of Iloilo informing him of the destruction of all court records in the province. Acting
thereon the judge immediately issued an order for their reconstitution which was published in two (2)
newspapers of general circulation in the Province and City of Iloilo once a week for six (6) months.
Copies of the motion for reconstitution were served by the movant (the now deceased Luis
Adelantar) on the oppositors through their respective counsel. It appearing that Atty. Felix Evidente
was not the oppositors' counsel of record the allegation that no notice was served on him may no
longer be relevant.

The Adelantar spouses might have failed to submit in the reconstitution proceedings an authentic
copy of respondent court's resolution of 23 March 1943 as what they submitted instead was the
order dated 10 June 1944 of the CFI in LRC Case No. 673 directing compliance with and execution
of the resolution quoted in the order.9 But we find that this is another instance of substantial
compliance with Act 3110, particularly Sec. 3 thereof, regarding presentation by the interested
parties of all copies of motions, decrees, orders and other documents in their possession relative to
the record or records to be reconstituted.

The decision in Civil Case No. 938 declaring the Adelantar spouses owners of the two (2) parcels of
land claimed by Basilia Lorezo, Isabel Lorezo and Canuto Lucero is conclusive upon the parties
therein as well as their successors-in-interest, the parties herein, under the doctrine of res judicata.
The trial court held petitioners liable to private respondents for the net produce of the properties in
question from the time the former's possession in good faith was legally interrupted when they were
served summons in connection with private respondents' complaint for recovery of possession with
damages filed 22 July 1970, docketed as Civil Case No. 8283, at the rate of P1,500.00 per hectare
or P39,750.00 for 26.5 hectares annually until possession was restored. It may be that petitioners
acquired the disputed properties in good faith and had since then occupied the same but such bona
fide character of possession ceased when they were served summons. Possession acquired in good
faith may not lose this character except in the case and from the moment facts exist which show that
the possessor is not unaware that he possesses the thing improperly or wrongfully, conformably with
Art. 528 of the Civil Code.

As early as Rodriquez v. Francisco,10 this Court already ruled that

. . . on the date of the service of summons upon appellee in this case, considering
that (appellant) was thereafter declared owner by final judgment (G.R No. L-12039),
appellee's possession in good faith was interrupted and hence from that time he lost
the right to the fruits.11

In turn, that decision was based on Tacas v. Tobon12 where this Court, citing Manresa,13 stated

But to every possessor in good faith there comes a time when he is considered a
possessor in bad faith. When the owner or possessor with a better right comes
along, when he becomes aware that what he had taken for granted is at least
doubtful, and when he learns the grounds in support of the adverse contention, good
faith ceases. The possessor may still believe that his right is more secure, because
we resign ourselves with difficulty to the sight of our vanishing hopes; but when the
final judgment of the court deprives him of the possession, all illusion necessarily
disappears. Although he may not have been convinced of it before, the possessor
 becomes aware that his possession is unlawful from the time he learns of the
complaint, from the time he is summoned to the trial. It is at this time that his
possession is interrupted, according to article 1945, and that he ceases to receive
the fruits, according to the first paragraph of article 451. The ruling of the court
retroacts to that time; but shall good faith be deemed to cease then? Although there
is a great difference between requiring the possessor in good faith to return the fruits
he received from the time when his possession was legally interrupted, and
considering him a possessor in bad faith for all legal purposes from that time, the law
had to establish a definite rule on the matter, which is none other than that deducible
from a combination of articles 452, 1945 and 435. Whether or not the defendant be a
possessor in good faith, for there is no doubt that he can be, and the law makes no
attempt to deny it, from the service of judicial summons, there exists an act that this
possessor knows that his right is not secure, that someone disputes it, and that he
may yet lose it; and if the court holds that restitution be made, that time determines
all the legal consequences of the interruption, the time when the possession in good
faith ceased to be so before the law . . .

WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals dated 19
January 1993 and its resolution of 15 March 1993 are AFFIRMED. Costs against petitioners.

SO ORDERED.

WONG V. CARPIO
Possession in good faith ceases once defects in title are made known to the possessor by
extraneous evidence or by suit for recovery by the owner; interruption takes place upon service of
summons.

FACTS:
Mr. Giger sold to Plaintiff Mr. Mercado a piece of property for the price of P3,500 under the terms of
a pacto de retro.

Mr.Mercado paid land taxes and planted coconut trees but failed to erect signs of occupancy, nor did
he establish a hut. He spent much of his time away at his place of business where he ran a store. He
visited the land occasionally only to make copra. Other than this, the place resembled a ghost town.
Mr Wong happened to chance upon the land, and finding no one occupying the same, purchased
the property from Mr. Giger. Thereupon, he obtained a TCT, established a hut, populated the place
with laborers and fenced the property.

Mr. Mercado returned to the property and was dismayed to find his land occupied. He had the
incident blottered and filed for forcible entry against Mr. Wong. He also demanded rentals.
Unfortunately, the MTC ruled in favor of Mr. Wong, stating that the latter was in open, actual, prior
and continuous possession. On appeal, the CFI reversed and ruled for Mr. Mercado stating that he
had taken possession of the property much earlier and that Mr. Wong is the actual intruder. Mr.
Wong took the case to the CA which ruled against him.
(interesting note: Wong says Mercado was a mere laborer who was tolerated to gather fruits. How
thick faced is that?)

ISSUE:
Whether or not Mercado was the real owner

HELD:Yes.
Art. 135 provides that possession is acquired by the material occupation of a thing or the exercise of
a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal
formalities for acquiring such right."

The law and jurisprudence indicate that the execution of a sale thru a public instrument shall be
equivalent to the delivery of the thing, unless there is stipulation to the contrary . But theres a catch.
Even if there exists the execution of the instrument, the purchaser cannot have the enjoyment and
material tenancy of the purchased thing when such tenancy and enjoyment is opposed by another.
In this case, delivery has not been effected.

It is crystal clear that possession passed from William Giger to Mercado by virtue of the first sale.
This being the case, , the later sale in favor of thick-faced Wong failed to pass the possession of the
property because there is an impediment the possession exercised by respondent Mercado.
Possession cannot be recognized at the same time in two different personalities except in the cases
of co-possession.
Should a question arise regarding the fact of possession, the present possessor shall be preferred; if
there are two possessions, the one longer in possession, if the dates of possession are the same,
the one who presents a title; and if these conditions are equal, the thing shall be placed in judicial
deposit pending determination of its possession or ownership through proper proceedings (Art. 538,
Civil Code).
Furthermore, Wong cannot claim good faith to deny Mercado due rentals. The moment he received
the complaint of forcible entry and summons, he should have been aware of defects in his title. He
owes rentals from that point onwards.

G.R. No. L-50264 October 21, 1991

IGNACIO WONG, petitioner,

vs.
HON. LUCAS D. CARPIO, as Presiding Judge, Court of First Instance of Davao del Sur,
Branch V and MANUEL MERCADO, respondents.

Rodolfo B. Quiachon for petitioner.

Jose M. Ilagan for private respondent.

BIDIN, J.:

This is a petition for review on certiorari, certified to this Court by the Court of Appeals as it involves
purely question of law, seeking the annulment of the September 29, 1978 decision of the then Court
of First Instance ** of Davao del Sur, Branch V, in Civil Case No. 1258 which reversed the February
20, 1978 decision of the Municipal Court of Sta. Maria, *** Davao del Sur in an action for Forcible
Entry (Civil Case No. 13) ordering the dismissal of the complaint as well as the counterclaim.

The undisputed facts of this case, as found by both the trial court and the then Court of First
Instance of Davao del Sur, are as follows:

On the basis of the admission of parties in their respective pleadings, the oral testimonies of
all witnesses for both plaintiff and defendants and the documentary evidence offered and
admitted this Court finds that plaintiff Manuel Mercado acquired his rights to possess the
land in litigation, particularly lot 3 (LRC) Pcs-295, (situated at Colonga, Sta. Maria, Davao del
Sur) and which is particularly described and embraced in Transfer Certificate of title No. (T-
4244) T-972 from William Giger by virtue of a deed of sale with right to repurchase which
was executed in 1972 for a consideration of P3,500.00 (testimony of plaintiff, T.S.N., p. 3,
hearing of January 7, 1977). Then, in 1973, William Giger again asked an additional amount
of P2,500.00 from plaintiff and so he required William Giger to sign a new deed of Pacto de
Retro Sale (Exhibit "A") on November 5,1973 at Davao City before Notary Public Gregorio C.
Batiller (T.S.N., p. 5, hearing of January 7, 1977). In 1972, plaintiff began harvesting only the
coconut fruits and he paid the taxes on the land (Exhibits B to E) for Mr. Giger. He went
periodically to the land to make copra but he never placed any person on the land in litigation
to watch it. Neither did he reside on the land as he is a businessman and storekeeper by
occupation and resides at Lower Sta. Maria, Davao del Sur while the land in litigation is at
Colongan, Sta. Maria. Neither did he put any sign or hut to show that he is in actual
possession (p. 8, T.S.N., p. 7, hearing of January 14, 1978). He knew defendants' laborers
were in the land in suit as early as August, 1976 and that they have a hut there but he did not
do anything to stop them. Instead plaintiff was happy that there were people and a hut on the
land in suit (p. 14, T.S.N., hearing of January 14, 1978).

Before July, 1976, defendant Ignacio Wong went to the land in litigation to find out if there
were other people residing there or claiming it besides the owner and he found none. So, in
July, 1976, defendant Ignacio Wong bought the parcel of land in litigation from William Giger
and his wife Cecilia Valenzuela (Exhibit 5). After the execution of Exhibit 5, defendant
Ignacio Wong asked for the delivery of the title to him and so he has in his possession TCT
No. (T-4244) T-974 (Exhibit 6) in the name of William Giger. Mr. Wong declared the land in
suit for taxation purposes in his name (Exhibit 7). He tried to register the pacto de retro sale
with the Register of Deeds by paying the registration fee (Exhibit 8) but due to some
technicalities, the pacto de retro sale could not be registered. The defendant Wong placed
laborers on the land in suit, built a small farm house after making some clearings and fenced
the boundaries. He also placed signboards (T.S.N., pp. 14-15, hearing of September 15,
1977). On September 27, 1976, plaintiff Manuel Mercado again went to the land in suit to
make copras. That was the time the matter was brought to the attention of the police of Sta.
Maria, Davao del Sur and the incident entered in the police blotter (Exhibit 11). Then on
November 18, 1976, defendant Wong ordered the hooking of the coconuts from the land in
litigation and nobody disturbed him. But on November 29, 1976, defendant received a copy
of plaintiff's complaint for forcible entry with summons to answer which is the case now
 before the Court. During the pendency of this instant complaint for forcible entry, spouses
William Giger and Cecilia Valenzuela filed a case for reformation of instrument with the Court
of First Instance of Digos, Davao del Sur against plaintiff Mercado (Exhibit 4). The case
pertains to Exhibit "A" of plaintiff. (pp. 1-3, CA Decision, pp. 82-84, Rollo).

On the basis of the aforestated undisputed facts, the Municipal Court of Sta. Maria, Davao del Sur in
its February 20, 1978 Decision found that herein petitioner (defendant Ignacio Wong) had prior,
actual and continuous physical possession of the disputed property and dismissed both the
complaint and the counter-claim.

On appeal, the then Court of First Instance of Davao del Sur, in its September 29, 1978 Decision
drew a completely different conclusion from the same set of facts and ruled in favor of herein private
respondent (plaintiff Manuel Mercado). The decretal portion of the said decision, reads:

WHEREFORE, the Court finds the plaintiff to have taken possession of the property earlier in
point of time and defendant is an intruder and must, as he is hereby ordered to return, the
possession of the land in question for the plaintiff, paying a monthly rental of P400.00 from
August, 1976, till the property is returned with costs against the defendant. Judgment is
reversed.

Petitioner filed the instant petition with the Court of Appeals. But the Court of Appeals, in its March 1,
1979 Resolution **** found that the only issue is a pure question of law the correctness of the conclusion drawn from the
undisputed facts and certified the case to this Court.

In its April 4, 1979 Resolution, the Second Division of this Court docketed the case in this
Court and considered it submitted for decision.

Petitioner alleged two (2) errors committed by respondent judge, to wit:

A) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER IS AN

INTRUDER IS WITHOUT FACTUAL AND LEGAL BASIS FOR PURPOSES OF A FORCIBLE
ENTRY.

B) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER MUST PAY A

MONTHLY RENTAL OF P400.00 FROM AUGUST, 1976 TILL THE PROPERTY IS RETURNED
HAS NO LEGAL AND FACTUAL BASIS.

The petition is without merit.

Petitioner, in claiming that the private respondent has not established prior possession,
argues that private respondent's periodic visit to the lot to gather coconuts may have
been consented to and allowed or tolerated by the owner thereof for the purposes of paying
an obligation that may be due to the person gathering said nuts and that a person who enters
a property to gather coconut fruits and convert the same to copras may only be a hired
laborer who enters the premises every harvest season to comply with the contract of labor
with the true owner of the property.

The argument is untenable.

It should be stressed that "possession is acquired by the material occupation of a thing or

the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper
acts and legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co.,
Inc. vs. Villareal, 135 SCRA 15 [1985]); and that the execution of a sale thru a public
instrument shall be equivalent to the delivery of the thing, unless there is stipulation to the
contrary . . . . If, however, notwithstanding the execution of the instrument, the purchaser
cannot have the enjoyment and material tenancy of the thing and make use of it herself,
because such tenancy and enjoyment are opposed by another, then delivery has not been
effected. (Paras, Civil Code of the Philippines, Vol. II, 1989 Ed., p. 400).

Applying the above pronouncements on the instant case, it is clear that possession passed
from vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a
retro (Exhibit A), and accordingly, the later sale a retro (Exhibit 5) in favor of petitioner failed
to pass the possession of the property because there is an impediment the possession
exercised by private respondent. Possession as a fact cannot be recognized at the same time
in two different personalities except in the cases of co-possession. Should a question arise
regarding the fact of possession, the present possessor shall be preferred; if there are two
possessions, the one longer in possession, if the dates of possession are the same, the one
who presents a title; and if these conditions are equal, the thing shall be placed in judicial
deposit pending determination of its possession or ownership through proper proceedings
(Art. 538, Civil Code).

As to petitioner's query that "Is the entry of petitioner to the property characterized by force,
intimidation, threat, strategy, or stealth in order to show that private respondent has had
possession so that the case is within the jurisdiction of the inferior court?" (p. 15, Petition; p.
16, Rollo). The same is answered in the affirmative.

The act of entering the property and excluding the lawful possessor therefrom necessarily
implies the exertion of force over the property, and this is all that is necessary. Under the
rule, entering upon the premises by strategy or stealth is equally as obnoxious as entering by
force. The foundation of the action is really the forcible exclusion of the original possessor
by a person who has entered without right. The words "by force, intimidation, threat,
strategy, or stealth" include every situation or condition under which one person can
wrongfully enter upon real property and exclude another who has had prior possession
therefrom. If a trespasser enters upon land in open daylight, under the very eyes of person
already clothed with lawful possession, but without the consent of the latter, and there plants
himself and excludes such prior possessor from the property, the action of forcible entry and
detainer can unquestionably be maintained, even though no force is used by the trespasser
other than such as is necessarily implied from the mere acts of planting himself on the
ground and excluding the other party. (Tolentino, Civil Code of the Philippines, Vol. II, 1983
Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]).

Anent the award of rentals in favor of private respondent, the same is in order. Petitioner's
argument that there is no legal or factual basis for the payment of monthly rentals because
bad faith on the part of petitioner was never proved deserves no merit.

It should be noted that possession acquired in good faith does not lose this character except
in the case and from the moment facts exist which show that the possessor is not unaware
that he possesses the thing improperly or wrongfully. (Art. 528, Civil Code).

Possession in good faith ceases from the moment defects in the title are made known to the
possessors, by extraneous evidence or by suit for recovery of the property by the true owner.
Whatever may be the cause or the fact from which it can be deduced that the possessor has
knowledge of the defects of his title or mode of acquisition, it must be considered sufficient
to show bad faith. (Tolentino, Civil Code of the Philippines, Vol. II, p. 226). Such interruption
takes place upon service of summons (Manotok Realty vs. Judge Tecson, 164 SCRA 587
[1988] citing Mindanao Academy, Inc. v. Yap (13 SCRA 190 [1965]). In the latter case, this
Court held:

. . . Although the bad faith of one party neutralizes that of the other and hence as
between themselves their rights would be as if both of them had acted in good faith at
the time of the transaction, this legal fiction of Yap's good faith ceased when the
complaint against him was filed, and consequently the court's declaration of liability
for the rents thereafter is correct and proper. A possessor in good faith is entitled to
the fruits only so long as his possession is not legally interrupted, and such
interruption takes place upon service of judicial summons (Arts. 544 and 1123, Civil
Code).

A perusal of the records of the case shows that petitioner received private respondent's
complaint for forcible entry with summons on November 29, 1976 (Rollo, p. 46). His good faith
therefore ceased on November 29,1976. Accordingly, the computation of the payment of
monthly rental should start from December, 1976, instead of August, 1976.

WHEREFORE, with the modification that the computation of the monthly rental should start
from December, 1976 instead of August, 1976, the September 29, 1978 decision of respondent
judge is Affirmed in all other respects, with costs against petitioner.

SO ORDERED.

G.R. No. L-32531 August 31, 1977

JOSE O. BARRIOS (deceased) (substituted by son Joselito Barrios), petitioner,

vs.
COURT OF APPEALS, HERACLEO B. VILLACIN, JR. and VICENTE B. VILLACIN, respondents.

Raymundo M. Lozada, Jr. for petitioner.

Rodolfo S. Layumas for respondents.

GUERRERO, J.:

Appeal certiorari to review the Decision of the respondent Court of Appeals 1 in CA-G.R. No. 38142-R
entitled "Jose O. Barrios versus Heracleo B. Villacin, Jr. and Vicente B. Villacin" and from its order
denying the motion for reconsideration of the petitioner.

Originally., there were two (2) cases appealed to the Court of Appeals: 1. CA-G.R. No. 38138-R
(Civil Case No. 223) entitled "Jose O. Barrios v. Apolonia Vda. de Alegre, et al. and 2. CA G.R. No
38142-R (Civil Case No. 229) entitled "Jose O. Barrios v. Heracleo B. Villacin, Jr. and Vicente
Villacin." Both are ordinary actions for the recovery of possession of a parcel of land, damages and
attorney's fees originating from the Court of

First Instance of Negros Occidental where they were tried jointly on the ground that the land in
controversy is the same, although different portions thereof were respectively claimed by the two (2)
sets of defendants, and the issues raised therein are Identical.
In a decision dated May 12, 1966 as modified on June 16, 1966, the trial court found the defendants
in the said two cases as possessors in bad faith and ordered them to vacate the premises and to
pay the plaintiff (petitioner herein) damages, which in the case of the present respondents is the sum
of P18,000.00 per year from 1964 until they vacate the property.

On appeal by both the defendants, the Court of Appeals, in a decision dated May 15, 1970, affirmed
the findings of the trial court in Civil Case No. 223 entitled "Jose Barrios v. Apolonia Vda. de Alegre,
et al." declaring the defendants possessors in bad faith, but reversed that in Civil Case No. 229
entitled "Jose O. Barrios v. Heracleo B. Villacin, Jr. and Vicente Villacin. The Appellate Court now
found the respondents Villacins possessors in good faith and ordered the petitioner to exercise the
options available to him tinder Article 448 of the New Civil Code, that is, either to appropriate the
improvements introduced by the said defendants on the area in ; controversy and to pay the value
thereof in the amount f P22,000.00, or to compel these, defendants respondents herein to pay the
reasonable price of that area.

Petitioner now comes to Us seeing the review only of the decision of the Court of Appeals in CA-
G.R. No. 38142-R (Civil Case No. 229).

In said Civil case No, 229 entitled "Jose O. Barrios v. Heracleo B. Villacin Jr. and Vicente B.
Villacin," the following facts appear.

A certain Lorenzo Montano was the original registered owner of a large tract of land with an area of
188,212 sq. meters, more or less, situated in Barrio Mabini Cadiz, Negros Occidental. Her ownership
was evidenced b Original Certificate of Title No. F-1670 entered under her name pursuant to Free
Patent V-4415 issued to her on June 13, 1956.

However, prior to March 25, 1960, the area in controversy was part of the forestal zone. This
notwithstanding and before its release from the forestal zone, a certain Graciano Lamis entered the
same and from then on, was known to be in continuous and uninterrupted possession and
occupation thereof, continuing the cultivation of the land begun by the Alegres (defendants in Civil
Case No. 223). On March 25, 1960, that area was released from the forestal zone and declared part
of the disposable patrimony of the State.

On September 6, 1962, Lorenzo Montano sold her land to the petitioner herein as a consequence of
which her Original Certificate of Title was cancelled and in lieu thereof Transfer Certificate of Title
No. T-33012 was issued in the name of petitioner, Jose O. Barrios, by the Register of Deeds of
Negros Occidental.

On March 27, 1963, Graciano Lamis sold his rights over the area in controversy to a certain Virgilio
Butaz. However, on March 5, 1964, Lamis repurchased the same from Butaz and on the same day,
Lamis sold all his rights and interests in the controverted area and all the improvements found
therein to respondents Villacins, the sale being unsupported by any kind of evidence of title of the
vendor, Lamis.

Meanwhile, petitioner received information that his land was being sold by one Valentine Botas,
whom he erroneously thought to be the vendor, to Mayor Heracleo Villacin, Sr. of Cadiz City and the
father of herein respondents. On March 31, 1964, petitioner thru his lawyer, sent a letter to Mayor
Villacin informing the later of the true ownership of the land, to wit,

Bacolod City

March 31, 1964

 The Honorable

Mayor Heracleo Villacin

Cadiz, Negros Occidental

Dear Mayor Villacin:

Last week, my client Mr. Jose 0. Barrios informed me that he received an information
that you bought from a certain Valentine Botas a piece of land located at Barrio
Mabini, Cadiz, Negros Occidental. That incidentally, the land sold to you by this
person who professes to be the owner thereof is Lot No. 209 covered by Transfer
Certificate of Title No. T-33012 issued in the name of my client, Mr. Jose O. Barrios.
Hence this letter.

To protect your rights and interest, I suggest that you make an inquiry from the Office
of the Register of Deeds, Bacolod City, about the description and ownership of the
property sold to you by this Valentine Botas Otherwise, you will be left holding an
empty bag.

I am sending you a photostatic copy of Transfer Certificate of Title No. T-33012

issued in a name of Mr. Barrios to help guide you in determining whether the land
sold to you by Mr. Valentine Botas located at Bario MAbini, Cadiz, is the very one
described therein or not. May you guided accordingly.

(SGD) RAYMUNDO
M. LOZADA, JR.

(p. 14, Rollo, Exhibit B)

Despite this letter, the ,mayor's men using tractors bearing the mayor's initials, entered and
occupied, on April 7, 1964, nine(9) hectares of the middle portion of the petitioners property and
threatened petitionr's encargado, Bienvenido C. Artegen a, with bodily harm unless he vacates the
premises.

On April 15, 1964, another letter was sent by the petitioner reiterating his ownership and demanding
that the mayor vacate the premises, to wit:
 B
a
c
o
l
o
d

C
i
t
y

A
p
r
i
l

1
5
,

1
9
6
4

The Honorable

Mayor Heracleo Villacin

Cadiz, Negros Occidental

Dear Mayor Villacin:

I have been informed by Jose O. Barrios that his land situated at Barrio Mabini,
Cadiz, Negros Occidental, isbeing worked by your men with the use of two tractors.
Thisis lamentable because notwithstanding my letter toyou dated March 31, 1964, in
which you were fully apprised of the ownership of the land as eviddence by Transfer
Certificte of Title No. T-33012 issued in the name of Mr. Jose O. Barrios, you
presisted in forcibly entering the place with intent to gain. Consequently, this is
manifestly an act done in bad faith.

Please consider this letter as a demand to vacate the premises immediately and to
return to the owner the peaceful possession and occupation thereof. We will be
expecting your wise judgement to guide you in this matter before we will be forced,
much toour regret, to invoke the law to protect the rights and interest of our client.
 Y
o
u
r
s

T
u
l
y
,

(SGD) RAYMUNDO
M. LOZADA, JR.

(p. 15,
Rollo,
Exhibit
C)

There being non-compliance with said demand, petitioner filed Civil Case No. 472 before the
Municipal Court against the Mayor for forcible entry. The inferior Court dismissed the complaint upon
agreement of the parties and for the purpose of filing the proper pleading before the competent
court; and on July 16, 1965, petitioner filed Civil Case No. 229 in the Court of First Instance of Silay
City, Negros Occidental against Mayor Villacin, the complaint later amended to include the sons of
the Mayor, Heracleo Jr. and Vicente, as the real defendants.

In his brief, petitioner makes the following assignment of errors to wit:

I. The Court of Appeals erred in holding the respondent buyers and possessors in good faith of the
land in dispute.

II. The Court of Appeals erred in ordering petitioner to exercise the option under Article 448 of the
New Civil Code either by appropriating the improvements introduced by the respondents or to
compel them to pay the price of the land.

III. The Court of Appeals erred in disregarding the letters sent to respondent's father, Mayor
Heracleo Villacin advising him of the ownership of the land in dispute.

After perusal of this assignment of errors and considering that all are closely related, We deem that
the lone issue presented to Us is whether or not the Court of Appeals was correct in interpreting the
facts and circumstances attending To possession of the. Villacins of the area in question as
constituting possession in good faith.

At the very outset, We must hold that there is no merit to the contention of the respondents Villacins
that the aforesaid issue is a question of fact, the finding of the Court of Appeals being binding on this
Court. True, except for some exceptions, findings of facts made by the Court of Appeals are
conclusive on this Court. But in the case at bar, whether or not the facts, as found by the Court of
Appeals, are constitutive of possession in good faith or possession in bad faith, is a question of law
which may properly be brought before Us.

The Court of Appeals in imputing good faith to respondents Villacins declared, and We Quote:
 Consequently, considering that portion B of the plan Exhibit F had been n the
possession of Graciano Lamis publicly and continuously since time immemorial,
without anyone disturbing him in his possession, and considering further that this
particular parcel was released from the forestal zone only on March 5, 1960,
defendants Villacins had certainly no reason to suspect that such land could have
been included in the free patent of Lorenzo Montano issued in 1956. Under these
circumstances, when they bought the rights of Lamis over that land on March 5,
1964, they must have done so in good faith. This is especially so in view of the fact
that the evidence has not clearly proved the bad faith of sad defendants. (p. 38,
Rollo)

We do not agree. Several facts, as disclosed by the records and taken together, are reasonably
suspicious to have put the respondents Villacins in inquiry as to the alleged rights of the vendor,
Lamis, over the area in controversy.

Firstly, when respondents bought the land from Lamis, the latter could not and did not at any time
produce any title or application to said land.

Well settled is the rule that,

The law protects to a greater degree a purchaser who buys from the registered
owner himself. Corollarily, it requires a higher degree of prudence from one who buys
from a person who is not the registered owner, although the land object of the
transaction is registered. While one who buys from the registered owner does not
have to look behind the certificate of title, one who buys from one who is not the
registered owner is expected to examine not only the Certificate of Title bull all
factual circumstances necessary, for him to determine if there are any flaws in the
title of the transferor, or in his capacity to transfer the land. 2

If such a degree of prudence is required of a purchaser of registered land from one who shows a
Certificate of Title but who appears not to be the registered owner, more so should the law require the
utmost caution from a purchaser of registered land from one who could not show any title nor any
evidence of his capacity to transfer the land. Failing to exercise caution of and kind whatsoever, as in the
case of the respondents Villacins, is tantamount to bad faith.

Secondly, petitioner sent letters to the father of the respondents informing him of the true ownership
of the aforesaid land. The Court of Appeals in disregarding this fact said, to wit:

The registered letter dated March 31, 1964 ... is not proof that herein defendants
Villacin's were also apprised of the information supposedly given by said plaintiff to
the Mayor, It will be observed that Mayor Villacin is not a party to this case and is a
person different from the herein two defendants Villacins. Moreover, such advise was
given after defendants Villacins had already bought the rights of Lamis over the
controverted area on March 5, 1964. (p. 21, Rollo)

We deem this untenable. In the normal course of daily life, it is very probable, if not decidedly
certain, that sons and father had occasion to talk about the aforesaid letters containing this
information. It must be noted that it was never controverted in the trial that men of the mayor entered
the premises of the petitioner and that land tractors bearing the initials of the mayor were used. This
being so, the mayor had knowledge that his sons bought the land and it is difficult for Us to imagine
that he withheld the information of the true ownership of the land from his sons, unless he was not
acting in their interest, which is quite remote. Learning of this information, the more must We require
of the respondents that exercise of prudence required by law in inquiring as to the status of the land
they bought. But instead, they did nothing but took possession of the land and started planting sugar
cane thereon. Of a case similarly situated, the Supreme Court ruled:

Defendant's bad faith began after the warning given in a letter by the plaintiff's
daughter in March 1909, for after having received it, she then had ground to doubt
that Sotera and Juan Cano could transfer any title of possession in the following
December.3

Thirdly, respondents herein knew of the case of forcible entry brought by petitioner against their father,
Mayor Villacin, Sr., under the impression that the latter was the vendee. Such knowledge was a warning
to them that the land they bought is subject to the claim of other parties, but again they continued in their
possession of the land and planting thereon.

Considering these facts, We are constrained to hold that the respondents cannot now come to this
Court claiming the benefit of being purchasers of registered land in good faith.

Art. 256 of the New Civil Code is clear.

Art. 526: He is deemed a possessor in good faith who is not aware that there exists
in his title or mode of acquisition any flaw which invalidates it.

He is deemed a possessor in bad faith who possesses in any case contrary to the
foregoing.

In interpreting the above quoted provision, We have repeatedly ruled that if circumstances exist that
require a prudent man to investigate, and he does not, he is deemed to have acted in mala fide. A
party's mere refusal. to believe that a defect exists or his willful closing of his eyes to the possibility
of the existence of a defect in his vendor's title will not make him an innocent purchaser for value, if it
afterwards develops that the title was in fact defective. 4 Similarly, a buyer of registered land who fails
5
to act with the diligence of a prudent man cannot be a purchaser in good faith.

Lastly, as a special defense in the proceedings below, respondents Villacins alleged the non-efficacy
and nullity of the title of Lorenzo Montano from which the title of the petitioner stemmed. We need
not pass upon this. The Court of Appeals is correct in holding that this is a collateral attack on a
Torrens Title which under our laws and established jurisprudence is not permitted and cannot be
legally done. 6

Premises considered, We now apply Arts. 449, 450, 451 and 452, New Civil Code.

Art. 449. He who builds, plants or sows in bad faith on the land of another, loses that
is built, planted, or sown without right to indemnity.

Art. 450. The owner of the land on which anything has been built, planted or sown in
bad faith may demand the demolition of the work, or that the planting or sowing be
removed, in order to replace things in their former condition at the expense of the
person who built, planted or sowed or he may compel the builder or planter to pay
the price of the land and the sower the proper rent.

Art. 451. In the cases of the two preceding articles, the landowner is entitled to
damages from the builder, planter or sower.
 Art. 452. The builder, planter, or sower in bad faith is entitled to reimbursement for
the necessary expenses of the preservation of the land.

As the records show that the Villacins planted sugar cane which is harvested every crop year and,
therefore, cannot be considered as a necessary expense for the preservation of the land, they are
not entitled to any such reimbursement of amount expended by them.

The records also indicate that the parties, at the pre-trial hearing, agreed to the payment of
liquidated damages to the prevailing party the amount of P18,000.00 per year until the final
adjudication of the case (Record on Appeal, pp. 37-38), which the trial court incorporated in its
modified Decision dated June 16, 1966, ordering the Villacins to pay liquidated damages of
P18,000.00 per year beginning 1964. (Record on Appeal, pp. 8490). We hold that the amount
agreed as liquidated damages complies with Art. 451 of the New Civil Code.

WHEREFORE, the decision of the Court of Appeals is reversed and another one is entered
declaring the Villacins to be purchasers s and possessors n bad faith without tight to limit to that built
planted or sown by them on the land, further ordering said respondents to restore, possession of the
land to the petitioner and to pay to the petitioner liquidated damages in the amount of P18,000.00
per year beginning 1964 until the time same is restored to the possession of the respondent's
Villacin's shall also pay the petitioner the amount of P3,000.00 for and as attorney's fees plus costs.
The Villacins liability this judgment is declared joint and several.

SO ORDERED.

G.R. No. 184274 February 23, 2011

MARK SOLEDAD y CRISTOBAL, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

NACHURA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse
and set aside the Court of Appeals (CA) Decision1 dated June 18, 2008 and Resolution2 dated
August 22, 2008 in CA-G.R. CR. No. 30603. The assailed Decision affirmed with modification the
September 27, 2006 decision3 of the Regional Trial Court (RTC), Branch 202, Las Pias City, finding
petitioner Mark C. Soledad guilty beyond reasonable doubt of Violation of Section 9(e), Republic Act
(R.A.) No. 8484, or the Access Devices Regulations Act of 1998; while the assailed Resolution
denied petitioners motion for reconsideration.

The facts of the case, as narrated by the CA, are as follows:

Sometime in June 2004, private complainant Henry C. Yu received a call on his mobile phone from a
certain "Tess" or "Juliet Villar" (later identified as Rochelle Bagaporo), a credit card agent, who
offered a Citifinancing loan assistance at a low interest rate. Enticed by the offer, private complainant
invited Rochelle Bagaporo to go to his office in Quezon City. While in his office, Rochelle Bagaporo
indorsed private complainant to her immediate boss, a certain "Arthur" [later identified as petitioner].
In their telephone conversation, [petitioner] told private complainant to submit documents to a certain
"Carlo" (later identified as Ronald Gobenchiong). Private complainant submitted various documents,
such as his Globe handyphone original platinum gold card, identification cards and statements of
accounts. Subsequently, private complainant followed up his loan status but he failed to get in touch
with either [petitioner] or Ronald Gobenchiong.

During the first week of August 2004, private complainant received his Globe handyphone statement
of account wherein he was charged for two (2) mobile phone numbers which were not his. Upon
verification with the phone company, private complainant learned that he had additional five (5)
mobile numbers in his name, and the application for said cellular phone lines bore the picture of
[petitioner] and his forged signature. Private complainant also checked with credit card companies
and learned that his Citibank Credit Card database information was altered and he had a credit card
application with Metrobank Card Corporation (Metrobank).

Thereafter, private complainant and Metrobanks junior assistant manager Jefferson Devilleres
lodged a complaint with the National Bureau of Investigation (NBI) which conducted an entrapment
operation.

During the entrapment operation, NBIs Special Investigator (SI) Salvador Arteche [Arteche],
together with some other NBI operatives, arrived in Las Pias around 5:00 P.M. [Arteche] posed as
the delivery boy of the Metrobank credit card. Upon reaching the address written on the delivery
receipt, [Arteche] asked for Henry Yu. [Petitioner] responded that he was Henry Yu and presented to
[Arteche] two (2) identification cards which bore the name and signature of private complainant,
while the picture showed the face of [petitioner]. [Petitioner] signed the delivery receipt. Thereupon,
[Arteche] introduced himself as an NBI operative and apprehended [petitioner]. [Arteche] recovered
from [petitioner] the two (2) identification cards he presented to [Arteche] earlier.4

Petitioner was thus charged with Violation of Section 9(e), R.A. No. 8484 for "possessing a
counterfeit access device or access device fraudulently applied for." The accusatory portion of the
Information reads:

That on or about the 13th day of August 2004, or prior thereto, in the City of Las Pias, and within
the jurisdiction of this Honorable Court, the above-named accused, conspiring and confederating
with certain Rochelle Bagaporo a.k.a. Juliet Villar/Tess and a certain Ronald Gobenciong a.k.a.
Carlo and all of them mutually helping and aiding each other, did then and there willfully, unlawfully
and feloniously defraud complainant HENRY YU by applying a credit card, an access device defined
under R.A. 8484, from METROBANK CARD CORPORATION, using the name of complainant Henry
C. Yu and his personal documents fraudulently obtained from him, and which credit card in the name
of Henry Yu was successfully issued and delivered to said accused using a fictitious identity and
addresses of Henry Yu, to the damage and prejudice of the real Henry Yu.

CONTRARY TO LAW.5

Upon arraignment, petitioner pleaded "not guilty." Trial on the merits ensued. After the presentation
of the evidence for the prosecution, petitioner filed a Demurrer to Evidence, alleging that he was not
in physical and legal possession of the credit card presented and marked in evidence by the
prosecution. In an Order dated May 2, 2006, the RTC denied the Demurrer to Evidence as it
preferred to rule on the merits of the case.6

On September 27, 2006, the RTC rendered a decision finding petitioner guilty as charged, the
dispositive portion of which reads:

In the light of the foregoing, the Court finds accused Mark Soledad y Cristobal a.k.a. "Henry Yu,"
"Arthur" GUILTYbeyond reasonable doubt of violation of Section 9(e), Republic Act 8484 (Access
Device Regulation Act of 1998). Accordingly, pursuant to Section 10 of Republic Act 8484 and
applying the Indeterminate Sentence Law, said accused is hereby sentenced to suffer an
imprisonment penalty of six (6) years of prision correccional, as minimum, to not more than ten (10)
years of prision mayor, as maximum. Further, accused is also ordered to pay a fine of Ten Thousand
Pesos (10,000.00) for the offense committed.

SO ORDERED.7

On appeal, the CA affirmed petitioners conviction, but modified the penalty imposed by the RTC by
deleting the terms prision correccional and prision mayor.

Hence, this petition raising the following issues:

(1) Whether or not the Information is valid;

(2) Whether or not the Information charges an offense, or the offense petitioner was found
guilty of;

(3) Whether or not petitioner was sufficiently informed of the nature of the accusations
against him;

(4) Whether or not petitioner was legally in "possession" of the credit card subject of the
case.8

The petition is without merit.

Petitioner was charged with Violation of R.A. No. 8484, specifically Section 9(e), which reads as
follows:

Section 9. Prohibited Acts. The following acts shall constitute access device fraud and are hereby
declared to be unlawful:

xxxx

(e) possessing one or more counterfeit access devices or access devices fraudulently applied for.

Petitioner assails the validity of the Information and claims that he was not informed of the
accusation against him. He explains that though he was charged with "possession of an access
device fraudulently applied for," the act of "possession," which is the gravamen of the offense, was
not alleged in the Information.

We do not agree.

Section 6, Rule 110 of the Rules of Criminal Procedure lays down the guidelines in determining the
sufficiency of a complaint or information. It states:

SEC. 6. Sufficiency of complaint or information. A complaint or information is sufficient if it states

the name of the accused; the designation of the offense given by the statute; the acts or omissions
complained of as constituting the offense; the name of the offended party; the approximate date of
the commission of the offense; and the place where the offense was committed.
In the Information filed before the RTC, it was clearly stated that the accused is petitioner "Mark
Soledad y Cristobal a.k.a. Henry Yu/Arthur." It was also specified in the preamble of the Information
that he was being charged with Violation of R.A. No. 8484, Section 9(e) for possessing a counterfeit
access device or access device fraudulently applied for. In the accusatory portion thereof, the acts
constituting the offense were clearly narrated in that "[petitioner], together with other persons[,]
willfully, unlawfully and feloniously defrauded private complainant by applying [for] a credit card, an
access device defined under R.A. [No.] 8484, from Metrobank Card Corporation, using the name of
complainant Henry C. Yu and his personal documents fraudulently obtained from him, and which
credit card in the name of Henry Yu was successfully issued, and delivered to said accused using a
fictitious identity and addresses of Henry Yu, to the damage and prejudice of the real Henry Yu."
Moreover, it was identified that the offended party was private complainant Henry Yu and the crime
was committed on or about the 13th day of August 2004 in the City of Las Pias. Undoubtedly, the
Information contained all the necessary details of the offense committed, sufficient to apprise
petitioner of the nature and cause of the accusation against him. As aptly argued by respondent
People of the Philippines, through the Office of the Solicitor General, although the word "possession"
was not used in the accusatory portion of the Information, the word "possessing" appeared in its
preamble or the first paragraph thereof. Thus, contrary to petitioners contention, he was apprised
that he was being charged with violation of R.A. No. 8484, specifically section 9(e) thereof, for
possession of the credit card fraudulently applied for.

The Courts discussion in People v. Villanueva9 on the relationship between the preamble and the
accusatory portion of the Information is noteworthy, and we quote:

The preamble or opening paragraph should not be treated as a mere aggroupment of descriptive
words and phrases. It is as much an essential part [of] the Information as the accusatory paragraph
itself. The preamble in fact complements the accusatory paragraph which draws its strength from the
preamble. It lays down the predicate for the charge in general terms; while the accusatory portion
only provides the necessary details. The preamble and the accusatory paragraph, together, form a
complete whole that gives sense and meaning to the indictment. x x x.

xxxx

Moreover, the opening paragraph bears the operative word "accuses," which sets in motion the
constitutional process of notification, and formally makes the person being charged with the
commission of the offense an accused. Verily, without the opening paragraph, the accusatory portion
would be nothing but a useless and miserably incomplete narration of facts, and the entire
Information would be a functionally sterile charge sheet; thus making it impossible for the state to
prove its case.

The Information sheet must be considered, not by sections or parts, but as one whole document
serving one purpose, i.e., to inform the accused why the full panoply of state authority is being
marshaled against him. Our task is not to determine whether allegations in an indictment could have
been more artfully and exactly written, but solely to ensure that the constitutional requirement of
notice has been fulfilled x x x.10
lawph!l

Besides, even if the word "possession" was not repeated in the accusatory portion of the
Information, the acts constituting it were clearly described in the statement "[that the] credit card in
the name of Henry Yu was successfully issued, and delivered to said accused using a fictitious
identity and addresses of Henry Yu, to the damage and prejudice of the real Henry Yu." Without a
doubt, petitioner was given the necessary data as to why he was being prosecuted.

Now on the sufficiency of evidence leading to his conviction.

Petitioner avers that he was never in possession of the subject credit card because he was arrested
immediately after signing the acknowledgement receipt. Thus, he did not yet know the contents of
the envelope delivered and had no control over the subject credit card.11

Again, we find no value in petitioners argument.

The trial court convicted petitioner of possession of the credit card fraudulently applied for, penalized
by R.A. No. 8484. The law, however, does not define the word "possession." Thus, we use the term
as defined in Article 523 of the Civil Code, that is, "possession is the holding of a thing or the
enjoyment of a right." The acquisition of possession involves two elements: the corpus or the
material holding of the thing, and the animus possidendi or the intent to possess it.12 Animus
possidendi is a state of mind, the presence or determination of which is largely dependent on
attendant events in each case. It may be inferred from the prior or contemporaneous acts of the
accused, as well as the surrounding circumstances.13

In this case, prior to the commission of the crime, petitioner fraudulently obtained from private
complainant various documents showing the latters identity. He, thereafter, obtained cellular phones
using private complainants identity. Undaunted, he fraudulently applied for a credit card under the
name and personal circumstances of private complainant. Upon the delivery of the credit card
applied for, the "messenger" (an NBI agent) required two valid identification cards. Petitioner thus
showed two identification cards with his picture on them, but bearing the name and forged signature
of private complainant. As evidence of the receipt of the envelope delivered, petitioner signed the
acknowledgment receipt shown by the messenger, indicating therein that the content of the
envelope was the Metrobank credit card.

Petitioner materially held the envelope containing the credit card with the intent to possess. Contrary
to petitioners contention that the credit card never came into his possession because it was only
delivered to him, the above narration shows that he, in fact, did an active part in acquiring
possession by presenting the identification cards purportedly showing his identity as Henry Yu.
Certainly, he had the intention to possess the same. Had he not actively participated, the envelope
would not have been given to him. Moreover, his signature on the acknowledgment receipt indicates
that there was delivery and that possession was transferred to him as the recipient. Undoubtedly,
petitioner knew that the envelope contained the Metrobank credit card, as clearly indicated in the
acknowledgment receipt, coupled with the fact that he applied for it using the identity of private
complainant.

Lastly, we find no reason to alter the penalty imposed by the RTC as modified by the CA. Section 10
of R.A. No. 8484 prescribes the penalty of imprisonment for not less than six (6) years and not more
than ten (10) years, and a fine of 10,000.00 or twice the value of the access device obtained,
whichever is greater. Thus, the CA aptly affirmed the imposition of the indeterminate penalty of six
years to not more than ten years imprisonment, and a fine of 10,000.00.

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals
Decision dated June 18, 2008 and Resolution dated August 22, 2008 in CA-G.R. CR. No. 30603 are
AFFIRMED.

SO ORDERED.

G.R. No. 168222 April 18, 2006

SPS. TEODULO RUMARATE, (deceased) and ROSITA RUMARATE; deceased TEODULO

RUMARATE is represented herein by his Heirs/Substitutes, namely, ANASTACIA RUMARATE,
CELSO RUMARATE, MARINA RUMARATE, ROMEO RUMARATE, GUILLERMO RUMARATE,
FIDEL RUMARATE, MERLINDA RUMARATE, MARISSA RUMARATE, CLEMENCIA
RUMARATE, SANCHO RUMARATE and NENITA RUMARATE, Petitioners,
vs.
HILARIO HERNANDEZ, JOAQUIN HERNANDEZ, SALVADOR HERNANDEZ, BENJAMIN
HERNANDEZ, LEONORA HERNANDEZ-LAZA, VICTORIA HERNANDEZ-MERCURIO,
RODRIGOHERNANDEZ, BERNARDO HERNANDEZ, LOURDES HERNANDEZ-CABIDA, MARIO
SALVATIERRA, ADELAIDA FONTILA-CIPRIANO, and THE REGISTER OF DEEDS OF QUEZON
PROVINCE, Respondents.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review is the May 26, 2005 Decision1 of the Court of Appeals in CA-G.R.
CV No. 57053, which reversed and set aside the March 31, 1997 Decision2 of the Regional Trial
Court of Calauag, Quezon, Branch 63, in Civil Case No. C-964, declaring petitioners as owners of
Lot No. 379 with an area of 187,765 square meters and located in Barrio Catimo,3 Municipality of
Guinayangan, Province of Quezon.

The facts show that on September 1, 1992, petitioner spouses Teodulo Rumarate (Teodulo) and
Rosita Rumarate filed an action for reconveyance of real property and/or quieting of title with
damages against respondent heirs of the late spouses Cipriano Hernandez and Julia
Zoleta.4 Teodulo averred that Lot No. 379 was previously possessed and cultivated by his godfather,
Santiago Guerrero (Santiago), a bachelor, who used to live with the Rumarate family in San Pablo
City. Between 1923 and 1924, Santiago and the Rumarate family transferred residence to avail of
the land distribution in Catimo, Guinayangan, Quezon. From 1925 to 1928, Santiago occupied Lot
No. 379 cultivating five hectares thereof. Before moving to Kagakag, Lopez, Quezon in 1929,
Santiago orally bequeathed his rights over Lot No. 379 to Teodulo and entrusted to him a copy of a
Decision of the Court of First Instance (CFI) of Tayabas dated April 21, 1925 recognizing his
(Santiago) rights over Lot No. 379.5 Since Teodulo was only 14 years old then, his father helped him
cultivate the land.6 Their family thereafter cleared the land, built a house7 and planted coconut trees,
corn, palay and vegetables thereon.8 In 1960, Santiago executed an "Affidavit (quit-claim)"9ratifying
the transfer of his rights over Lot No. 379 to Teodulo. Between 1960 and 1970, three conflagrations
razed the land reducing the number of coconut trees growing therein to only 400, but by the time
Teodulo testified in 1992, the remaining portions of the land was almost entirely cultivated and
planted with coconuts, coffee, jackfruits, mangoes and vegetables.10 From 1929, Teodulo and later,
his wife and 11 children possessed the land as owners and declared the same for taxation, the
earliest being in 1961.11

In 1970, Teodulo discovered that spouses Cipriano Hernandez and Julia Zoleta, respondents
predecessors-in-interest, were able to obtain a title over Lot No. 379. He did not immediately file a
case against respondents because he was advised to just remain on the land and pay the
corresponding taxes thereon.12

Respondents, on the other hand, claimed that on November 11, 1964, Santiago sold the questioned
lot to their parents, the spouses Cipriano Hernandez and Julia Zoleta, for P9,000.00.13 Respondents
alleged that on April 21, 1925, the CFI of Tayabas rendered a Decision written in Spanish, declaring
Lot No. 379 as a public land and recognizing Santiago as claimant thereof in Cadastral Proceeding
No. 12. However, no title was issued to Santiago because he failed to file an Answer. Spouses
Cipriano Hernandez and Julia Zoleta filed a motion to re-open Cadastral Proceeding No. 12, alleging
that though no title was issued in the name of Santiago, the same decision is, nevertheless, proof
that Santiago was in possession of Lot No. 379 since 1925 or for more than 30 years. Having
succeeded in the rights of Santiago, the spouses prayed that Cadastral Proceeding No. 12 be re-
opened and that the corresponding title over Lot No. 379 be issued in their name. On September 13,
1965, the CFI of Tayabas rendered a decision adjudicating Lot No. 379 in favor of the spouses, in
whose name Original Certificate of Title (OCT) No. O-1184414 was issued on the same
date.15 Cipriano Hernandez planted coconut trees on the land through the help of a certain
Fredo16 who was instituted as caretaker. In 1970, Fredo informed Cipriano Hernandez that he will no
longer stay on the land because there are people instructing him to discontinue tilling the same.17

After the death of the spouses,18 respondents executed a deed of partition over the subject lot and
were issued TCT No. T- 237330 on June 28, 1988 in lieu of OCT No. O-11844.19

Respondent Joaquin Hernandez (Joaquin) testified that in 1964, he accompanied his father in
inspecting the lot which was then planted with coconut trees.20 Thereafter, he visited the land twice,
once in 1966 and the other in 1970. From 1966 up to the time he testified, his family declared the lot
for taxation and paid the taxes due thereon.21Joaquin explained that after the death of his father in
1971, he no longer visited the land and it was only when the complaint was filed against them when
he learned that petitioners are in actual possession of the property.22 He added that his siblings had
planned to convert Lot No. 379 into a grazing land for cattle but decided to put it off for fear of the
rampant operations then of the New Peoples Army between the years 1965-1970.23 1avvphil.net

On March 31, 1997, the trial court rendered a decision in favor of petitioners. It held that since the
latter possessed the land in the concept of an owner since 1929, they became the owners thereof by
acquisitive prescription after the lapse of 10 years, pursuant to the Code of Civil Procedure. Thus,
when Santiago sold the lot to respondents parents in 1964, the former no longer had the right over
the property and therefore transmitted no title to said respondents. The dispositive portion of the trial
courts decision, reads:

WHEREFORE, in the light of all the foregoing considerations judgment is hereby rendered in favor of
the plaintiffs and against the defendants, to wit:

1. Declaring that the parcel of land (Lot No. 379 of the Cadastral Survey of Guinayangan,
Cadastral Case No. 12, LRC Cadastral Record No. 557), situated in Brgy. Katimo,
Tagkawayan, Quezon had been fraudulently, deceitfully and mistakenly registered in the
names of the spouses Cipriano Hernandez and Julia Zoleta;

2. Declaring that herein defendants [heirs] of spouses Cipriano Hernandez and Julia Zoleta
have no better rights than their parents/predecessors-in-interest, they having stepped only
on (sic) their shoes;

3. Declaring that the plaintiff Rosita Victor Rumarate and substitute plaintiffs-[heirs] of the
deceased Teodulo Rumarate are the true, real and legal owners/or the owners in fee simple
absolute of the above described parcel of land;

4. Ordering the defendants to convey the above-described parcel of land to plaintiff Rosita
Victor Rumarate and to the substitute plaintiffs (heirs) of the deceased Teodulo Rumarate;

5. Ordering the Register of Deeds for Quezon Province in Lucena City to cancel Transfer
Certificate of Title No. T-237330 and to issue in lieu thereof a new certificate of title in favor
of plaintiff Rosita Victor Rumarate and the substitute plaintiffs (heirs) of the deceased plaintiff
Teodulo Rumarate, in accordance with law and settled jurisprudence; and
 6. Ordering the defendants to pay the costs of the suit. 1avvphil.net

SO ORDERED.24

Respondents appealed to the Court of Appeals which on May 26, 2005, reversed and set aside the
decision of the trial court. It ruled that Teodulo did not acquire title over Lot No. 379, either by
donation or acquisitive prescription; that Teodulos bare allegation that Santiago orally bequeathed
to him the litigated lot is insufficient to prove such transfer of ownership; and that even assuming that
the property was truly donated by Santiago to Teodulo in 1929, or in the 1960 Affidavit, said
conveyance is void for not complying with the formalities of a valid donation which require the
donation and the acceptance thereof by the donee to be embodied in a public instrument. Both
requirements, however, are absent in this case because in 1929, the alleged donation was not
reduced to writing while the purported 1960 donation was never accepted in a public document by
Teodulo. The appellate court thus surmised that since it was not established that Santiago donated
Lot No. 379 to Teodulo, it follows that the latter also failed to prove that he possessed the land
adversely, exclusively and in the concept of an owner, a vital requisite before one may acquire title
by acquisitive prescription. In conclusion, the Court of Appeals ruled that even assuming further that
Teodulo had a right over the property, his cause of action is now barred by laches because he filed
an action only in 1992 notwithstanding knowledge as early as 1970 of the issuance of title in the
name of spouses Cipriano Hernandez and Julia Zoleta. The decretal portion of the decision states:

WHEREFORE, premises considered, the instant appeal is GRANTED. The assailed March 31, 1997
decision of the Regional Trial Court of Calauag, Quezon, Branch 63, in Civil Case No. C-964 is
hereby REVERSED and SET ASIDE. No costs.

SO ORDERED.25

Hence, the instant appeal.

The issue to be resolved is to whom should Lot No. 379 be awarded? To petitioners who possessed
and cultivated the lot since 1929 up to the present, but do not have a certificate of title over the
property, or to respondents who have a certificate of title but are not in possession of the
controverted lot?

In an action for quieting of title, the court is tasked to determine the respective rights of the parties so
that the complainant and those claiming under him may be forever free from any danger of hostile
claim.26 Under Article 47627 of the Civil Code, the remedy may be availed of only when, by reason of
any instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact,
invalid, ineffective, voidable or unenforceable, a cloud is thereby cast on the complainants title to
real property or any interest therein. Article 477 of the same Code states that the plaintiff must have
legal or equitable title to, or interest in the real property which is the subject matter of the suit.

For an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the
plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the
action; and (2) the deed, claim, encumbrance or proceeding claimed to be casting cloud on his title
must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.28

In Evangelista v. Santiago,29 it was held that title to real property refers to that upon which ownership
is based. It is the evidence of the right of the owner or the extent of his interest, by which means he
can maintain control and, as a rule, assert a right to exclusive possession and enjoyment of the
property.
In the instant case, we find that Teodulos open, continuous, exclusive, notorious possession and
occupation of Lot No. 379, in the concept of an owner for more than 30 years vested him and his
heirs title over the said lot. The law applicable at the time Teodulo completed his 30-year possession
(from 1929 to 1959) of Lot No. 379, in the concept of an owner was Sec. 48(b) of Commonwealth
Act No. 141 or the Public Land Act, as amended by Republic Act (RA) No. 1942, effective June 22,
195730 which provides:

Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such lands or an interest therein, but whose titles have not been perfected or
completed, may apply to the Court of First Instance (now Regional Trial Courts) of the province
where the land is located for confirmation of their claims and the issuance of a certificate of title
thereafter, under the Land Registration Act (now Property Registration Decree), to wit:

xxxx

(b) Those who by themselves or through their predecessors-in-interest have been, in continuous,
exclusive, and notorious possession and occupation of agricultural lands of the public domain, under
a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the
filing of the application for confirmation of title, except when prevented by war or force majeure.
Those shall be conclusively presumed to have performed all the conditions essential to a
government grant and shall be entitled to a certificate of title under the provisions of this chapter.

When the conditions specified therein are complied with, the possessor is deemed to have acquired,
by operation of law, a right to a government grant, without necessity of a certificate of title being
issued, and the land ceases to be part of the public domain. The confirmation proceedings would, in
truth be little more than a formality, at the most limited to ascertaining whether the possession
claimed is of the required character and length of time; and registration thereunder would not confer
title, but simply recognize a title already vested. The proceedings would not originally convert the
land from public to private land, but only confirm such conversion already effected by operation of
law from the moment the required period of possession became complete. 31

In the instant case, the trial court gave full faith and credence to the testimony of Teodulo and his
witnesses that his (Teodulos) possession of the land since 1929 was open, continuous, adverse,
exclusive, and in the concept of an owner. It is a settled rule in civil cases as well as in criminal
cases that in the matter of credibility of witnesses, the findings of the trial courts are given great
weight and highest degree of respect by the appellate court considering that the latter is in a better
position to decide the question, having heard the witnesses themselves and observed their
deportment and manner of testifying during the trial.32

A careful examination of the evidence on record shows that Teodulo possessed and occupied Lot
No. 379 in the concept of an owner. Since 1929, Teodulo cultivated the controverted land, built his
home, and raised his 11 children thereon. In 1957, he filed a homestead application over Lot No.
379 but failed to pursue the same.33 After his demise, all his 11 children, the youngest being 28
years old,34 continued to till the land. From 1929 to 1960, Santiago never challenged Teodulos
possession of Lot No. 379 nor demanded or received the produce of said land. For 31 years
Santiago never exercised any act of ownership over Lot No. 379. And, in 1960, he confirmed that he
is no longer interested in asserting any right over the land by executing in favor of Teodulo a
quitclaim.

Indeed, all these prove that Teodulo possessed and cultivated the land as owner thereof since 1929.
While the oral donation in 1929 as well as the 1960 quitclaim ceding Lot No. 379 to Teodulo are void
for non-compliance with the formalities of donation, they nevertheless explain Teodulo and his
familys long years of occupation and cultivation of said lot and the nature of their possession
thereof.

In Bautista v. Poblete,35 the Court sustained the registration of a parcel of land in the name of the
successors-in-interest of the donee notwithstanding the invalidity of the donation inasmuch as said
donee possessed the property in the concept of an owner. Thus

There is no question that the donation in question is invalid because it involves an immovable
property and the donation was not made in a public document as required by Article 633 of the old
Civil Code, in connection with Article 1328 of the same Code (concerning gifts propter nuptias), but it
does not follow that said donation may not serve as basis of acquisitive prescription when on the
strength thereof the donee has taken possession of the property adversely and in the concept of
owner.

It follows therefore that Teodulos open, continuous, exclusive, and notorious possession and
occupation of Lot No. 379 for 30 years, or from 1929 to 1959 in the concept of an owner, earned him
title over the lot in accordance with Sec. 48 (b) of the Public Land Act. Considering that Lot No. 379
became the private property of Teodulo in 1959, Santiago had no more right to sell the same to
spouses Cipriano Hernandez and Julia Zoleta in 1964. Consequently, the latter and herein
respondents did not acquire ownership over Lot No. 379 and the titles issued in their name are void.

Interestingly, respondents adopted the theory that Santiago acquired title over Lot No. 379 not from
the April 21, 1925 Decision of the CFI of Tayabas which merely recognized his rights over said lot,
but from his more than 30 years of possession since 1925 up to 1964 when he sold same lot to their
(respondents) predecessors-in-interest, the spouses Cipriano Hernandez and Julia Zoleta. On the
basis of said claim, said spouses filed an action for, and successfully obtained, confirmation of
imperfect title over Lot No. 379, pursuant to Sec. 48 (b) of the Public Land Act.

However, the records do not support the argument of respondents that Santiagos alleged
possession and cultivation of Lot No. 379 is in the nature contemplated by the Public Land Act which
requires more than constructive possession and casual cultivation. As explained by the Court
in Director of Lands v. Intermediate Appellate Court:36

It must be underscored that the law speaks of "possession and occupation." Since these words are
separated by the conjunction and, the clear intention of the law is not to make one synonymous with
the other. Possession is broader than occupation because it includes constructive possession.
When, therefore, the law adds the word occupation, it seeks to delimit the all-encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and notorious,
the word occupation serves to highlight the fact that for one to qualify under paragraph (b) of the
aforesaid section, his possession of the land must not be mere fiction. As this Court stated, through
then Mr. Justice Jose P. Laurel, in Lasam vs. The Director of Lands:

"x x x Counsel for the applicant invokes the doctrine laid down by us in Ramos vs. Director of Lands
(39 Phil. 175, 180). (See also Rosales vs. Director of Lands, 51 Phil. 302, 304). But it should be
observed that the application of the doctrine of constructive possession in that case is subject to
certain qualifications, and this court was careful to observe that among these qualifications is one
particularly relating to the size of the tract in controversy with reference to the portion actually in
possession of the claimant. While, therefore, possession in the eyes of the law does not mean that
a man has to have his feet on every square meter of ground before it can be said that he is in
possession, possession under paragraph 6 of section 54 of Act No. 926, as amended by paragraph
(b) of section 45 of Act No. 2874, is not gained by mere nominal claim. The mere planting of a sign
or symbol of possession cannot justify a Magellan-like claim of dominion over an immense tract of
territory. Possession as a means of acquiring ownership, while it may be constructive, is not a mere
fiction x x x."

Earlier, in Ramirez vs. The Director of Lands, this Court noted:

"x x x The mere fact of declaring uncultivated land for taxation purposes and visiting it every once in
a while, as was done by him, does not constitute acts of possession."

In the instant case, Santiagos short-lived possession and cultivation of Lot No. 379 could not vest
him title. While he tilled the land in 1925, he ceased to possess and cultivate the same since 1928.
He abandoned the property and allowed Teodulo to exercise all acts of ownership. His brief
possession of Lot No. 379 could not thus vest him title. Nemo potest plus juris ad alium transferre
quam ipse habet. No one can transfer a greater right to another than he himself has. Hence,
spouses Cipriano Hernandez and Julia Zoleta and herein respondents did not acquire any right over
the questioned lot and the title issued in their names are void, because of the legal truism that the
spring cannot rise higher than the source.37

Furthermore, spouses Cipriano Hernandez and Julia Zoleta cannot be considered as purchasers in
good faith because they had knowledge of facts and circumstances that would impel a reasonably
cautious man to make such inquiry.38 The Court notes that Santiago was not residing in Lot No. 379
at the time of the sale. He was already 81 years old, too old to cultivate and maintain an 18-hectare
land. These circumstances should have prompted the spouses to further inquire who was actually
tilling the land. Had they done so, they would have found that Teodulo and his family are the ones
possessing and cultivating the land as owners thereof.

In the same vein, respondents could not be considered as third persons or purchasers in good faith
and for value or those who buy the property and pay a full and fair price for the same39 because
they merely inherited Lot No. 379 from spouses Cipriano Hernandez and Julia Zoleta.

Then too, even if Santiago acquired title over Lot No. 379 by virtue of the April 21, 1925 Decision of
the CFI of Tayabas, and not on account of his alleged 30-year possession thereof, we will still arrive
at the same conclusion. This is so because the declaration of this Court that petitioners are the
rightful owners of the controverted lot is based on Teodulos own possession and occupation of said
lot under a bona fide claim of acquisition of ownership, regardless of the manner by which Santiago
acquired ownership over same lot.

On the issue of prescription, the settled rule is that an action for quieting of title is imprescriptible, as
in the instant case, where the person seeking relief is in possession of the disputed property. A
person in actual possession of a piece of land under claim of ownership may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his right, and that his
undisturbed possession gives him the continuing right to seek the aid of a court of equity to ascertain
and determine the nature of the adverse claim of a third party and its effect on his title.40Considering
that petitioners herein continuously possessed Lot No. 379 since 1929 up to the present, their right
to institute a suit to clear the cloud over their title cannot be barred by the statute of limitations.

Neither could petitioners action be barred by laches because they continuously enjoyed the
possession of the land and harvested the fruits thereof up to the present to the exclusion of and
without any interference from respondents. They cannot therefore be said to have slept on their
rights as they in fact exercised the same by continuously possessing Lot No. 379.

On the contrary, we find that it is respondents who are actually guilty of laches. Though not
specifically pleaded, the Court can properly address the issue of laches based on petitioners
allegation in the complaint that "[n]either spouses Cipriano Hernandez and Julia Zoleta x x x nor
[herein respondents] had taken steps to possess or lay adverse claim to said parcel of land from the
date of their registration of title in November, 1965 up to the present."41Such averment is sufficient to
impute abandonment of right on the part of respondents. At any rate, laches need not be specifically
pleaded. On its own initiative, a court may consider it in determining the rights of the parties.42

The failure or neglect, for an unreasonable length of time to do that which by exercising due
diligence could or should have been done earlier constitutes laches. It is negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party entitled to assert it
has either abandoned it or declined to assert it. While it is by express provision of law that no title to
registered land in derogation of that of the registered owner shall be acquired by prescription or
adverse possession, it is likewise an enshrined rule that even a registered owner may be barred
from recovering possession of property by virtue of laches.43

In applying the doctrine of laches, we have ruled that where a party allows the following number of
years to lapse from the emergence of his cause of action without enforcing his claim, laches sets in:
36 years; 12 years; 50 years; 34 years; 37 years; 32 years; 20 years; 47 years; 11 years; 25 years;
40 years; 19 years; 27 years; 7 years; 44 years; 4 years; and 67 years.44

The elements of laches are: (1) conduct of a party on the basis of which the other party seeks a
remedy; (2) delay in asserting ones rights, despite having had knowledge or notice of the other
partys conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or
notice on the part of a party that the person against whom laches is imputed would assert the right;
and (4) injury or prejudice to the party asserting laches in the event the suit is allowed to prosper.45

All these elements are present in this case. Petitioners continuous possession and occupation of Lot
No. 379 should have prompted the respondents to file an action against petitioners, but they chose
not to. Respondents cannot deny knowledge of said possession by petitioners as they even asserted
in their Answer that in 1970, Teodulo ousted the tenant they (respondents) instituted in the lot. From
1970 up to the filing of petitioners complaint in 1992, or after 22 years, respondents never bothered
to assert any right over Lot No. 379. Respondent Joaquin Hernandez testified that he and his
siblings had a plan to convert the land into a grazing land for cattle but decided to put it off for fear of
the rampant operations of the New Peoples Army between the years 1965-1970. However, even
after said years, respondents took no step to implement their plan. Worse, among the siblings of
spouses Cipriano Hernandez and Julia Zoleta who are all living in the Philippines,46 only Joaquin
Hernandez visited the land and only thrice, i.e., once in each years of 1964, 1966 and 1970.
Thereafter, not one of them paid visit to Lot No. 379, up to the time Joaquin Hernandez testified in
1996,47 despite the fact that two of them are living only in Calauag, Quezon; one in Agdangan,
Quezon;48 and two in Lucena City.49 Neither did they send a notice or correspondence to petitioners
invoking their right over the property. From all indications, the late spouses Cipriano Hernandez and
Julia Zoleta as well respondents, have neglected Lot No. 379. Were it not for this action instituted by
petitioners in 1992, their conflicting claims over the property could not have been settled. It goes
without saying that to lose a property that has been in the family from 1929 up to the present, or for
77 years will certainly cause irreparable pecuniary and moral injury to petitioners, especially so if the
same ancestral land will be lost under most unfair circumstances in favor of respondents who appear
to have no real interest in cultivating the same.

Finally, payment of taxes alone will not save the day for respondents. Only a positive and categorical
assertion of their supposed rights against petitioners would rule out the application of laches. It
means taking the offensive by instituting legal means to wrest possession of the property which,
however, is absent in this case. Respondents payment of taxes alone, without possession could
hardly be construed as an exercise of ownership. What stands out is their overwhelming passivity by
allowing petitioners to exercise acts of ownership and to enjoy the fruits of the litigated lot for 22
years without any interference.

In sum, the Court finds that Lot No. 379 should be adjudicated in favor of petitioners.

One last point. Notwithstanding this Courts declaration that Lot No. 379 should be awarded in favor
of petitioners, their title over the same is imperfect and is still subject to the filing of the proper
application for confirmation of title under Section 48 (b) of the Public Land Act, where the State and
other oppositors may be given the chance to be heard. It was therefore premature for the trial court
to direct the Register of Deeds of Lucena City to issue a certificate of title in the name of petitioners.

Nevertheless, the imperfect title of petitioners over Lot No. 379 is enough to defeat the certificate of
title issued to respondents.50

WHEREFORE, the petition is GRANTED and the May 26, 2005 Decision of the Court of Appeals in
C.A. GR. CV No. 57053, is REVERSED and SET ASIDE. The March 31, 1997 Decision of the
Regional Trial Court of Calauag, Quezon, Branch 63, in Civil Case No. C-964, awarding Lot No. 379
in favor petitioners and ordering the cancellation of respondents Transfer Certificate of Title No. T-
237330, is REINSTATED with the MODIFICATION deleting the trial courts order directing the
Register of Deed of Lucena City to issue a certificate of title in the name of petitioners.

SO ORDERED.

HEIRS OF SORIANO V. CA and

SPOUSES ABALOS
A person may be declared the owner of a property but he may not be entitled to possession.The
exercise of the rights of ownership is subject to limitations that may be imposed by law. Although
declared to be the lawful owner, such owner cannot automatically evict the physical possessor of the
land unless it has been determined that no rights of the possessor will be violated by such eviction.

FACTS:
A piece of land located in Lingayen, Pangasinan is the disputed property in this case. Said land was
originally owned by one Adriano Soriano, subsequently it was leased for a period of 15 years to the
Spouses David and Consuelo with RAMON SORIANO, son of Adriano and herein petitioner, acting
as caretaker/tenant of the property during the duration of the lease. Upon the death of Adriano the
lot he owned was divided into TWO and given to his heirs. One of the lots inherited was sold to the
Spouses ABALOS, here. The other lot was also bought by the Spouses Abalos although not
completely (only of the lot). The lots in question were subsequently registered in the name of the
Spouses Abalos. The courts later declared them to be the undisputed owners thereof. Soriano
questions their ownership of the land and so filed cases against the spouses. Currently Soriano is
still in possession of the land claiming rights of Security of Tenure as a tenant of the land.
ISSUE:
May a winning party in a land registration case effectively eject the possessor thereof?

RULING/RATIO:
No. Possession and ownership are distinct legal concepts. Possession is the holding of a thing or
the enjoyment of a right. Literally, to possess means to actually and physically occupy a thing with or
without right. A judgment of ownership does not necessarily include possession as a necessary
incident. Such declaration pertains only to OWNERSHIP and does not automatically include
possession. This is especially true in the case at bar wherein petitioner is occupying the land
allegedly in the concept of an agricultural tenant. The court says allegedly due to the fact that there
is still a pending case in the DARAB (Department of Agrarian Reform and Adjudication Board) on the
issue. The issue of ownership of the subject land has been laid to rest by final judgment; however
the right of possession is yet to be resolved. The Tenancy Act, which protects the rights of
agricultural tenants, may limit the exercise of rights by the lawful owners. The exercise of the rights
of ownership yields to the exercise of the rights of an agricultural tenant. Since the rights of Soriano
to possess the land are still pending litigation in the DARAB he is protected from dispossession of
the land until final judgment of said court unless Sorianos occupancy is found by the court to be
unlawful.

G.R. No. 128177 August 15, 2001

HEIRS OF ROMAN SORIANO, petitioners,

vs.
THE HONORABLE COURT OF APPEALS, SPOUSES BRAULIO ABALOS and AQUILINA
ABALOS,respondents.

YNARES-SANTIAGO,J.:

May a winning party in a land registration case effectively eject the possessor thereof, whose
security of tenure rights are still pending determination before the DARAB?

The instant petition for certiorari seeks to set aside the Decision 1 dated September 20, 1996 of the
Court of Appeals in CA-G.R. SP No. 34930 as well as its Resolution 2 dated January 15, 1997,
denying petitioners' Motion for Reconsideration.

We quote the undisputed facts as narrated by the Court of Appeals, to wit

The property subject of this case is a parcel of land containing an area of 24,550 square
meters, more or less, located in Lingayen, Pangasinan, and particularly described as follows:

A parcel of land (Nipa with an area of 8,410 square meters; fishpond with an area of
14,000 square meters; and residential land with an area of 1,740 square meters,
more or less. Bounded on the N, by river and Filemon Anselmo; on the South by
Alejandro Soriano and Filemon Anselmo; and on the West by Fortunata Soriano.

Originally owned by Adriano Soriano until his death in 1947, the above-described property
passed on to his heirs who leased the same to spouses David de Vera and Consuelo
Villasista for a period of fifteen (15) years beginning July 1, 1967 with Roman Soriano, one of
the children of Adriano Soriano, acting as caretaker of the property during the period of the
lease. After executing an extra judicial settlement among themselves, the heirs of Adriano
Soriano subsequently subdivided the property into two (2) lots, Lot No. 60052 and Lot No.
8459. Lot No. 60052 was assigned to Lourdes, Candido and the heirs of Dionisia while Lot
No. 8459 was assigned to Francisca, Librada, Elocadio and Roman. In 1971, Lot No. 60052
was sold by Lourdes, Candido and the heirs of Dionisia to petitioner spouses Braulio and
Aquilina Abalos (hereinafter referred to as petitioners), while, Elocadio, Francisca and
Librada sold their three-fourths shares in Lot No. 8459 also to petitioners.

On March 14, 1968, the de Vera spouses ousted Roman Soriano as caretaker and
appointed Isidro Verzosa and Vidal Verzosa as his substitutes. Thereafter, Roman Soriano
filedCAR Case No. 1724-P-68 for reinstatement and reliquidation against the de Vera
spouses. The agrarian court authorized the ejectment of Roman Soriano but on appeal, the
decision was reversed by the Court of Appeals, which decision became final and executory.
However, prior to the execution of the said decision, the parties entered into a post-
decisional agreement wherein the de Vera spouses allowed Roman Soriano to sub-lease the
property until the termination of the lease in 1982. In an Order dated December 22, 1972, the
post-decisional agreement was approved by the agrarian court.

On August 16, 1976, petitioners filed with the Regional Trial Court of Lingayen, Pangasinan,
Branch 38, an application for registration of title over Lot No. 60052 and three-fourths
(3/4)pro-indiviso of Lot No. 8459, docketed asLRC Case No. N-3405. Said application for
registration was granted by the trial court, acting as a land registration court, per Decision
dated June 27, 1983. On appeal, the Court of Appeals affirmed the decision of the land
registration court. The petition for review filed with the Supreme Court by Roman Soriano
docketed asG.R. 70842, was denied for lack of merit and entry of judgment was entered on
December 16, 1985.

Meanwhile, it appears that on July 15, 1983, a day after the promulgation of the land
registration court's decision, Roman Soriano, together with Elocadio and Librada Soriano,
filed before the Regional Trial Court of Lingayen, Branch 37, and against petitioners, an
action for annulment of document and/or redemption, ownership and damages, docketed
asCivil Case No. 159568 (sic; should be 15958). Petitioners filed a motion to dismiss on the
ground ofres judicata, pendency of another action, laches, misjoinder of parties and lack of
jurisdiction, which was denied by the trial court.

Thereafter, on August 22, 1984, or eleven (11) years after the approval of the post-decisional
agreement between Roman Soriano and the spouses de Vera inCAR Case No. 1724-P-
68 for reinstatement and reliquidation, petitioners filed with the agrarian court a motion for
execution of said post-decisional agreement which allowed Roman Soriano to sub-lease the
property. The motion prayed that petitioners be placed in possession of the subject property,
jointly with Roman Soriano, and to levy so much of Roman's property to answer for the use
and occupation by Soriano of 6/7 share of the property. On October 25, 1984, Roman
Soriano filed a motion to suspend hearing on the rental demanded by petitioners, which,
however, was denied by the agrarian court. The agrarian court likewise authorized the
substitution of the de Vera spouses by petitioners. Soriano's motion for reconsideration was
also denied, prompting Soriano to file a petition for certiorari with the Court of Appeals.

In the meantime, Roman Soriano died on December 11, 1985. Thus, the complaint inCivil
Case No. 159568(sic) for annulment of document and/or redemption, ownership and
damages, was amended to substitute Soriano's heirs, herein private respondents, as party-
plaintiffs. The complaint was again amended to include Juanito Ulanday as party-defendant
for having allegedly purchased part of the disputed property from petitioners. On motion of
petitioners, the re-amended complaint was dismissed by the trial court on the ground that the
re-amended complaint altered the cause of action. Upon reconsideration, the dismissal was
set aside and petitioners were ordered to file their Answer, in view of which petitioners filed a
petition for certiorari and prohibition with the Court of Appeals, docketed asC.A. GR SP No.
22149.

On April 25, 1990, the Court of Appeals denied the petition filed by Roman Soriano
(substituted by private respondents) impugning the denial of their motion to suspend hearing
on the rental demanded by petitioners, and authorizing the substitution of the de Vera
spouses by petitioners, on the ground that no grave abuse of discretion was committed by
the agrarian court. Thus, private respondents filed a petition for review on certiorari with the
Supreme Court, docketed asG.R. 93401.

Meanwhile, on December 7, 1990, the Court of Appeals inC.A. GR SP No. 22149, also
denied the petition for certiorari and prohibition filed by petitioners, ruling that the land
registration court committed no error when it refused to adhere to the rule ofres judicata.
Petitioners then filed with the Supreme Court a petition for review on certiorari, docketed
asG.R. 99843.

On June 26, 1991, the Supreme Court promulgated its decision inG.R. 93401, and granted
the petition filed by private respondents. Thus, the decision of the Court of Appeals denying
the petition of private respondents was set aside, and the motion for execution filed by
petitioners inCAR Case No. 1724-P-48 was denied.

On June 22, 1993, the Supreme Court, inG.R. 99843, reversed and set aside the denial of
the Court of Appeals inC.A. GR SP No. 22149, and consequently,Civil Case No. 15958 for
annulment of document and/or redemption, ownership and damages, was ordered
dismissed.

On October 18, 1993, private respondents filed with the Department of Agrarian Adjudication
Board (sic), a complaint against petitioners for "Security of Tenure with prayer for Status Quo
Order and Preliminary Injunction" docketed asDARAB Case No. 528-P-93.

Meanwhile, it appears that the decision of the land registration court inLRC Case No. N-
3405 was partially executed with the creation of a Committee on Partition per Order dated
March 25, 1987. On July 27, 1988, the land registration court approved the partition of Lot
No. 8459, with Lot No. 8459-A assigned to private respondent, and Lot No. 8459-B assigned
to petitioners. For Lot No. 60052, O.C.T. No. 22670 was issued in the name of petitioners;
for Lot No. 8459-B, O.C.T. No. 22687 was issued, also in the name of petitioner; and for Lot
No. 8459-A, O.C.T. No. 22686 was issued in the name of Roman Soriano. Dissatisfied with
said partition, private respondents appealed to the Court of Appeals, docketed asCA G.R.
SP No. 119497. The appellate court affirmed the partition but reversed the order of the land
registration court directing the issuance of a writ of possession on the ground of pendency
ofCivil Case No. 15958.

On November 15, 1993, the trial court in compliance with the decision of the Supreme Court
inG.R. No. 99843, dismissedCivil Case No. 15958, in view of which, petitioner, on November
25, 1993, inLRC Case No. N-3405, moved for the issuance of an alias writ of execution
and/or writ of possession to place them in possession of Lot No. 60052 and Lot No. 8459-B.
Per Resolution dated January 21, 1994, said motion was held in abeyance by the land
 registration court until and afterDARAB Case No. 528-P-93 for security of tenure with prayer
forstatus quo, has been resolved.

Their motion for reconsideration having been denied on April 5, 1984, petitioners interposed
an appeal to the Supreme Court, docketed asG.R. 115073. In a Resolution dated July 27,
1994 issued by the Supreme Court, petitioners' appeal, which was treated as a petition for
certiorari, was referred to this Court [of Appeals] for determination and disposition.3

The Court of Appeals annulled and set aside the Resolution of the land registration court and
ordered instead the issuance of the corresponding writ of possession in favor of private respondents.
With the denial of their Motion for Reconsideration, petitioners are now before us raising the
following grounds:

1. THE DECISION AND RESOLUTION OF THE RESPONDENT COURT OF APPEALS

ARE CONTRARY TO THE PROVISIONS OF THE AGRARIAN REFORM LAWS AND
JURISPRUDENCE ON THE SECURITY OF TENURE OF TENANT-CARETAKER.

2. THE DECISION AND RESOLUTION OF THE RESPONDENT COURT OF APPEALS

ARE VIOLATIVE OF THE PROVISION ON RIGHT TO DUE PROCESS.

3. THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN

GIVING DUE COURSE TO THE PETITION CONSIDERING THAT PRIVATE
RESPONDENTS HAD EARLIER PERFECTED AN APPEAL OF THE RESOLUTION
SUBJECT OF THEIR PETITION.4

Possession and ownership are distinct legal concepts. There is ownership when a thing pertaining to
one person is completely subjected to his will in a manner not prohibited by law and consistent with
the rights of others. Ownership confers certain rights to the owner, among which are the right to
enjoy the thing owned and the right to exclude other persons from possession thereof. On the other
hand, possession is defined as the holding of a thing or the enjoyment of a right. Literally, to possess
means to actually and physically occupy a thing with or without right. Possession may be had in one
of two ways: possession in the concept of an owner and possession of a holder.5 A person may be
declared owner but he may not be entitled to possession. The possession may be in the hands of
another either as a lessee or a tenant. A person may have improvements thereon of which he may
not be deprived without due hearing. He may have other valid defenses to resist surrender of
possession. A judgment for ownership, therefore, does not necessarily include possession as a
necessary incident.6

There is no dispute that private respondents' (petitioners below) title over the land under litigation
has been confirmed with finality. As explained above, however, such declaration pertains only to
ownership and does not automatically include possession, especially so in the instant case where
there is a third party occupying the said parcel of land, allegedly in the concept of an agricultural
tenant.

While the issue of ownership of the subject land has been laid to rest in the final judgment of the
land registration court, the right of possession thereof is, as yet, controverted. This is precisely what
is put in issue in the security of tenure case filed by petitioners (private respondents below) before
the DARAB.

It is important to note that although private respondents have been declared titled owners of the
subject land, the exercise of their rights of ownership are subject to limitations that may be imposed
by law.7 The Tenancy Act provides one such limitation. Agricultural lessees are entitled to security of
tenure and they have the right to work on their respective landholdings once the leasehold
relationship is established. Security of tenure is a legal concession to agricultural lessees which they
value as life itself and deprivation of their landholdings is tantamount to deprivation of their only
means of livelihood.8 The exercise of the right of ownership, then, yields to the exercise of the rights
of an agricultural tenant.

However, petitioners' status as tenant has not yet been declared by the DARAB. In keeping with
judicial order, we refrain from ruling on whether petitioners may be dispossessed of the subject
property. As ratiocinated inNona v. Plan9

It is to the credit of respondent Judge that he has shown awareness of the recent
Presidential Decrees which are impressed with an even more solicitous concern for the
rights of the tenants.If, therefore, as he pointed out in his order granting the writ of
possession, there is a pending case between the parties before the Court of Agrarian
Relations, ordinary prudence, let alone the letter of the law, ought to have cautioned him
against granting the plea of private respondents that they be placed in possession of the land
in controversy,x x x. At the time the challenged orders were issued, without any showing of
how the tenancy controversy in the Court of Agrarian Relations was disposed of, respondent
Judge could not by himself and with due observance of the restraints that cabin and confine
his jurisdiction pass upon the question of tenancy. (Emphasis ours)

In its challenged Decision, the Court of Appeals relied heavily on the principle of finality of
judgments. It applied the legal doctrine that once a judgment has become final, the issuance of a writ
of execution becomes ministerial. The appellate court held that petitioner's situation does not fall
under any of the exceptions to this rule since his occupation of the subject land did not transpire
after the land registration court's adjudication became final.

In so ruling, however, the Court of Appeals loses sight of the fact that petitioner's claim of
possession as a tenant of the litigated property, if proven, entitles him to protection against
dispossession.

Private respondents argue that petitioners' tenancy claim is barred byres judicata, having been ruled
upon in G.R. Nos. 99843 and 93401. However, not being an issue in the case before us, this
question should properly be resolved in DARAB Case No. 528-P-93. To restate, the only issue
before us is whether or not a winning party in a land registration case can effectively eject the
possessor thereof, whose security of tenure rights are still pending determination before the DARAB.

A judgment in a land registration case cannot be effectively used to oust the possessor of the land,
whose security of tenure rights are still pending determination before the DARAB. Stated differently,
the prevailing party in a land registration case cannot be placed in possession of the area while it is
being occupied by one claiming to be an agricultural tenant, pending a declaration that the latter's
occupancy was unlawful.

WHEREFORE, the instant petition for certiorari is hereby GRANTED. The Decision of respondent
Court of Appeals in CA-G.R. SP No. 34930 dated September 20, 1996, as well as its Resolution
dated January 15, 1997 are SET ASIDE. The Resolution of the Regional Trial Court of Lingayen,
Pangasinan in LRC Case No. N-3405 dated January 21, 1994 is ordered REINSTATED.

SO ORDERED.

G.R. No. 147549 October 23, 2003

JESUS DELA ROSA and LUCILA DELA ROSA, petitioners,
vs.
SANTIAGO CARLOS and TEOFILA PACHECO, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari1 seeking to set aside the Decision2 of the Court of Appeals in
CA-G.R. SP No. 54055 dated 20 July 2000 and the Resolution dated 23 February 2001 denying the
motion for reconsideration. The Court of Appeals reversed the Decision3 of the Regional Trial Court,
Branch 22, of Malolos, Bulacan ("RTC") and dismissed the complaint of Jesus Dela Rosa and Lucila
Dela Rosa for forcible entry against Santiago Carlos and Teofila Pacheco.

The Antecedents

This case stemmed from a complaint4 for forcible entry filed by Jesus Dela Rosa and Lucila Dela
Rosa ("Spouses Dela Rosa") against Santiago Carlos ("Santiago") and Teofila Pacheco ("Teofila")
with the Municipal Trial Court5 of Paombong, Bulacan ("MTC").

In their complaint filed on 25 February 1998, the Spouses Dela Rosa alleged that they are the
owners of a house and lot ("Property") with an area of 352 square meters located at No. 25 San
Roque, Paombong, Bulacan. The Spouses Dela Rosa claimed that Leonardo Carlos ("Leonardo")
transferred to them the ownership of the Property under the Absolute Deed of Sale ("Deed of Sale")
executed on 1 September 1966. The Spouses Dela Rosa registered on 6 October 1966 the Deed of
Sale under Act No. 3344 with the Register of Deeds of Bulacan. The Spouses Dela Rosa asserted
that they renovated the house, furnished and occupied the same from 1966 to the present. Since the
Spouses Dela Rosa work and their children study in Manila, they reside in the Property only during
weekends and holidays. However, they padlock the house on the Property while they are away and
instruct relatives who live nearby to watch over the Property.

The Spouses Dela Rosa further asserted that they have been paying the taxes for the land since
1966 to 1997, and for the house from 1966 to 1993. In addition, the Spouses Dela Rosa had a
perimeter fence built to separate the Property from the municipal road and to protect it from
trespassers.

The Spouses Dela Rosa also asserted that in October 1997, they discovered that, through stealth
and without their knowledge and consent, Santiago had built a house of strong materials on a vacant
lot of the Property. Santiago did not secure the necessary building permit from the Municipal
Engineers Office. Teofila had also been transferring furniture to the house and sleeping there. On
20 November 1997, the Spouses Dela Rosa, through their counsel, demanded that Santiago and
Teofila demolish the house, remove their furniture and vacate the premises within ten days from
receipt of the letter. However, Santiago and Teofila did not heed the Spouses Dela Rosas demand.

In their answer, Santiago and Teofila alleged that they are the surviving heirs of the Spouses
Leonardo and Benita Carlos ("Spouses Carlos"). As heirs of the Spouses Carlos, they, along with
Lucila Dela Rosa, are co-owners of the Property. They contended that the Spouses Dela Rosa
obtained the Deed of Sale through fraud and undue influence and that their mother did not consent
to the sale of the Property which they claimed as conjugal. They maintained that the Spouses Dela
Rosa were never in possession of the Property because the latter only went there to visit their
parents, and not as owners. Insisting that they have been occupying the Property since birth,
Santiago claimed that he constructed the house on the Property in the concept of a co-owner.

After submission of the parties position papers, the MTC rendered a Decision dated 30 July 1998,
the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered declaring the Plaintiffs to be entitled to physical

possession of Lot 147-Part particularly described in Tax Declaration No. 97-0297-00342 (Exhibit F)
situated at San Roque, Paombong, Bulacan and this Court orders:

1. The Defendants, their heirs, assigns or any other persons claiming any right or interest
over the subject parcel of land under or in their names to vacate the same and surrender
peaceful possession thereof in favor of the Plaintiffs;

2. The Defendants to pay the Plaintiffs damages limited to the fair rental value for the use
and occupation of the premises in the amount of Two Thousand and Five Hundred Pesos
(2,500.00) a month from the date of the discovery of the construction of the improvement
(October 1997) until they finally vacate and restore full possession thereof to the Plaintiffs;

3. The award of Twenty Thousand Pesos (20,000.00) in favor of the Plaintiffs as and by
way of attorneys fees and costs;

4. The Defendants counter-claim is hereby dismissed for lack of merit.

SO ORDERED.6

Aggrieved, Santiago and Teofila appealed7 to the RTC which rendered a Decision8 dated 31 May
1999 affirming in toto the decision of the MTC.

Dissatisfied with the decision of the RTC, Santiago and Teofila filed a petition for review9 with the
Court of Appeals. The Court of Appeals rendered a Decision dated 20 July 2000, the dispositive
portion of which reads:

WHEREFORE, the appealed decision is REVERSED and SET ASIDE and another rendered
DISMISSING respondents complaint for forcible entry against petitioners.

SO ORDERED.10

Hence, this petition for review.

The Ruling of the Trial Courts

The MTC, in ruling in favor of the Spouses Dela Rosa, held in part:

The evidence at hand disclose [sic] that the Plaintiffs took possession of the subject premises upon
the execution of the sale on September 1, 1966 and have been in occupancy thereof since then up
to the present. Under the law, possession is transferred to the vendee by virtue of the notarized
deed of conveyance. Under Article 1498 of the Civil Code of the Philippines, "when the sale is made
through a public instrument, the execution thereof shall be equivalent to the delivery of the object of
the contract, if from the deed the contrary does not appear or cannot clearly be inferred." (Ong Ching
Po, et al. vs. Court of Appeals, 239 SCRA 341) 1awphi1.nt
In the same vein, Article 531 of the statute is explicit, thus: "Possession is acquired by the material
possession of a thing or the exercise of a right, or by the fact that it is subject to the action of our will
or by the proper acts or legal formalities established for acquiring such right." Aside from the legal
formalities as mentioned, Plaintiffs prior material occupation or possession is supported by
photographs depicting their residence (Exhibit Q) and their furnishings (Exhibits O and O-1) thereon.
Possession in the eyes of the law does not mean that a man has to have his feet on every square
meter of ground before it can be said that he is in possession. It is sufficient that petitioner (in this
case, the Plaintiffs) was able to subject the property to the action of his will (Somodio vs. Court of
Appeals, 235 SCRA 307).

x x x11

Finding that the MTCs factual findings are clear and supported by more than mere preponderance
of evidence,12the RTC affirmed in toto the decision of the MTC. Consequently, Santiago and Teofila
filed a petition for review with the Court of Appeals.

The Ruling of the Court of Appeals

The Court of Appeals held that the execution of the deed of sale did not transfer physical possession
of the Property despite Article 1498 of the Civil Code, which contemplates of constructive, not
physical possession. The appellate court also found that there was an obstacle to the delivery of
possession because the Spouses Carlos, Santiago and Teofila were residing and continued to
reside in the Property.

Noting that the Spouses Dela Rosas position paper did not attach the affidavits of witnesses
required under Section 10 of Rule 70, the appellate court ruled that the Spouses Dela Rosa failed to
prove prior possession of the Property. The appellate court pointed out that instead of proving prior
possession, the Spouses Dela Rosa admitted the contrary. In their opposition to the motion to
dismiss,13 the Spouses Dela Rosa stated that they do not actually reside in the Property but in Manila
and visit the Property only during weekends and vacations. The Court of Appeals held that this
admission confirms Santiago and Teofilas claim that they have always been in physical possession
of the Property since birth.

The Court of Appeals also held that the Spouses Dela Rosa did not verify their complaint in violation
of Section 4 of Rule 70. Neither did they attach a certification against forum shopping in violation of
Section 5 of Rule 7. Moreover, the appellate court ruled that the sale, without the consent of Benita
Carlos, is void. Since the sale is void, no title passed to the Spouses Dela Rosa.

Lastly, the Court of Appeals ruled that assuming the sale is valid, the sale would apply only to
Leonardos share in the Property. Benita retained her one-half share in the Property that her children
Santiago, Teofila, Lucila and Francisco acquired by succession on her death. Thus, Lucila Dela
Rosa may not dispossess her co-owners Santiago and Teofila of the Property.

The Issues

The Spouses Dela Rosa assail the decision of the Court of Appeals on the following grounds:

1. THE COURT OF APPEALS GRAVELY ERRED IN CONSIDERING AS ONE OF THE

GROUNDS FOR REVERSING THE DECISION OF THE REGIONAL TRIAL COURT AND
OF THE MUNICIPAL TRIAL COURT THE ERRONEOUS ASSUMPTION THAT THE
COMPLAINT APPENDED TO THE PETITION FOR REVIEW FILED BY RESPONDENTS
LACKED VERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING.
 2. THE COURT OF APPEALS GRAVELY ERRED IN ALLOWING A COLLATERAL ATTACK
ON THE VALIDITY OF THE DEED OF ABSOLUTE SALE IN AN EJECTMENT
PROCEEDING AND RULING THAT THE SAME IS VOID FOR LACK OF MARITAL
CONSENT OF BENITA CARLOS.

3. THE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT PETITIONERS

FAILED TO PROVE PRIOR PHYSICAL POSSESSION OVER THE PROPERTY DESPITE
THE OVERWHELMING EVIDENCE TO THE CONTRARY.

4. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULES OF CO-

OWNERSHIP OVER THE PROPERTY.14

The Courts Ruling

We grant the petition.

Before resolving the main issue, we shall first dispose of the procedural issues in the instant case.

There is no longer any issue on the lack of verification and certification against forum shopping of
the complaint for forcible entry. The Court of Appeals itself stated in its assailed Resolution that it
was a mere "omission"15 by Santiago and Teofila in their petition for review. Santiago and Teofila
failed to append to their petition for review with the Court of Appeals the last page of the complaint
containing the verification and certification of non-forum shopping.16 For the failure of Santiago and
Teofila to attach to their petition the page of the complaint containing the verification and certification
of non-forum shopping, the appellate court should have faulted Santiago and Teofila and not the
Spouses Dela Rosa.

Another procedural question was the alleged non-submission of affidavits of witnesses that the
Spouses Dela Rosa should have attached to their position paper. Section 10 of Rule 70 provides:

SEC. 10. Submission of affidavits and position papers. Within ten (10) days from receipt of the
order mentioned in the next preceding section, the parties shall submit the affidavits of their
witnesses and other evidence on the factual issues defined in the order, together with their position
papers setting forth the law and the facts relied upon by them.

Section 10 should be read in relation to Section 14 of the same Rule, which states:

SEC. 14. Affidavits. The affidavits required to be submitted under this Rule shall state only facts of
direct personal knowledge of the affiants which are admissible in evidence, and shall show their
competence to testify to the matters stated therein.

xxx

The Spouses Dela Rosa jointly verified their position paper by stating that all the allegations in the
position paper are true and correct of their "own personal knowledge."17 The verification itself is an
affidavit.18 Section 4 of Rule 7 states that a "pleading is verified by an affidavit." Thus, the verified
position paper constitutes the affidavit of witnesses required under Rule 70. Certainly, the Spouses
Dela Rosa qualify as witnesses to their own complaint. While there are no affidavits of other
witnesses that support the complaint, the Spouses Dela Rosa attached to their position paper
documentary evidence that bolster their claim of prior possession.
Santiago and Teofila never raised as an issue the alleged non-attachment to the complaint of
affidavits of witnesses, either in the MTC or in the RTC. In their petition for review before the Court of
Appeals, Santiago and Teofila did not also raise this issue. The MTC and RTC apparently
understood correctly that the verified complaint of the Spouses Dela Rosa constitutes the affidavit of
witnesses required under Rule 70. We rule that the Court of Appeals erred in holding that the
Spouses Dela Rosa failed to attach to their complaint the affidavits required in Sections 10 and 14 of
Rule 70.

In a forcible entry case, the principal issue for resolution is mere physical or material possession
(possession de facto) and not juridical possession (possession de jure) nor ownership of the
property involved.19 In the present case, both parties claim prior possession of the Property. The
Spouses Dela Rosa claim that they have been in possession of the Property since 1966 upon the
execution of the deed of sale by Leonardo in their favor. On the other hand, Santiago and Teofila
claim that they have been continuously occupying the Property since birth and the Spouses Dela
Rosa were never in possession of the Property. 1vv phi 1.nt

While admitting that Santiago and Teofila used to reside in the Property since birth, the Spouses
Dela Rosa contend that Santiago and Teofila moved out when they married in 1961 and 1959,
respectively. According to the Spouses Dela Rosa, Santiago and his family live in Manila (at 3500-F
Magsaysay Blvd., Sta. Mesa, Manila)20 while Teofila occupies the lot adjacent to the Property
bearing, however, the same address.21 Santiago and Teofila did not dispute these allegations by the
Spouses Dela Rosa.

On the other hand, Santiago and Teofila admit that the Spouses Dela Rosa visit the Property.
Visiting the Property on weekends and holidays is evidence of actual or physical possession. Even if
the Spouses Dela Rosa were already residing in Manila, they could continue possessing the
Property in Bulacan. The fact of their residence in Manila, by itself, does not result in loss of
possession of the Property in Bulacan. The law does not require one in possession of a house to
reside in the house to maintain his possession.

In Somodio v. Court of Appeals,22 which the Spouses Dela Rosa cited, the petitioner there began
construction of a structure on his lot. His employment, however, took him to Kidapawan, North
Cotabato, and he left the unfinished structure to the care of his uncle. He would visit the property
every three months or on weekends when he had time. The Court ruled that possession in the eyes
of the law does not mean that a man has to have his feet on every square meter of the ground
before he is deemed in possession.23 There is no cogent reason to deviate from this doctrine.

Santiago and Teofila likewise do not deny that the Spouses Dela Rosa renovated the house,
furnished the same and constructed a perimeter fence around the Property. Santiago and Teofila
contend that these acts did not include the right to possess physically the Property.24 These acts of
dominion are clear indications that the Spouses Dela Rosa were in possession of the Property.
Santiago and Teofila failed to explain convincingly how the Spouses Dela Rosa were able to
renovate, furnish the house and construct a perimeter fence around the Property without physically
possessing the Property. It is quite improbable to perform these acts without the Spouses Dela Rosa
physically possessing the Property.

Santiago and Teofila likewise challenged the validity of the sale between their father Leonardo and
the Spouses Dela Rosa. The sale transpired on 1 September 1966, before Leonardos death. The
Spouses Dela Rosa registered on 6 October 1966 the Deed of Sale under Act No. 3344 with the
Registry of Deeds of Paombong, Bulacan. If Santiago and Teofila truly believed that the Deed of
Sale is void, they should have filed an action to annul the same, but they did not. Santiago and
Teofila questioned the validity of the Deed of Sale only when the Spouses Dela Rosa filed the
forcible entry case.

However, Santiago and Teofila cannot properly challenge the validity of the Deed of Sale in the
ejectment case because ejectment cases proceed independently of any claim of
ownership.25 Santiago and Teofila claim that the Deed of Sale was executed without the consent of
Benita, Leonardos spouse. They also claim that the Deed of Sale was executed through fraud and
undue influence. However, these issues cannot properly be addressed in the present action. These
issues can only be resolved in a separate action specifically for the annulment of the Deed of Sale.
Resolution of these issues, in turn, will determine whether the surviving heirs of the Spouses Carlos
are co-owners of the Property who are likewise entitled to its possession. Co-ownership is only a
necessary consequence of the heirs successional rights to the Property, if any.

WHEREFORE, we GRANT the petition. The Decision dated 20 July 2000 and Resolution dated 23
February 2001 of the Court of Appeals in CA-G.R. SP No. 54055 are SET ASIDE. The Decision
dated 31 May 1999 of the Regional of Trial Court, Branch 22, of Malolos, Bulacan in Civil Case No.
878-M-98, affirming the Decision dated 30 July 1998 of the Municipal Trial Court of Paombong,
Bulacan in Civil Case No. 98-720, is REINSTATED. No pronouncement as to costs.

SO ORDERED.

Case Brief: Dela Rosa vs. Carlos

MAY 12, 2017JEFF REY
G.R. No. 147549 October 23, 2003

JESUS DELA ROSA and LUCILA DELA ROSA, petitioners,

vs.
SANTIAGO CARLOS and TEOFILA PACHECO, respondents.

Facts:
Dela Rosa filed a complaint for forcible entry, alleging that they are the owners of a
house and lot in Bulacan by virtue of a Deed of Absolute Sale executed between Dela
Rosa and Carlos. They also asserted that they renovated the house and occupied it
from 1996 to present, and that they built a fence to separate the property from the
road.

Subsequently however, Carlos built a house of strong materials on a vacant lot of the
property through stealth and without their knowledge and consent. On the other hand,
respondents averred that they had been occupying the lot in the concept of a co-
owner since birth.
Issue:
Whether or not Dela Rosa were in possession of property notwithstanding their
absence from the same.

Held.
Yes, Dela Rosa were in possession of property. In a forcible entry case, the principal
issue for resolution is mere physical or material possession (possession de facto) and
not juridical possession (possession de jure) nor ownership of the property involved.

In the case at bar, Dela Rosa continued visiting the property even if they resided in
Manila, and that constitutes maintenance of possession. Improving the house were
also acts of dominion indicating possession

SOMODIO VS. COURT OF

APPEALS-
Accion interdictal
Accion interdictal (forcible entry and unlawful detainer) are not remedies to obtain ownership of a
certain property rather they are remedies to determine who has a better right to possess the property
subject of dispute.

Note: What is important in ejectment cases is the issue of who is entitled to the physical or material
possession of a property and not the question of ownership.

FACTS:
Jose Ortigas executed an instrument designated as a Transfer of Rights, conveying to Wilfredo
Mangubat, the possession of a residential lot located at General Santos City. Nicanor Somodio,
petitioner, contributed one-half of the purchase price. Mabugat then executed an Affidavit of Trust
expressly recognizing the right of Somodio over undivided portion of the lot.

Somodio and Mabugat partitioned the property into two portions, with the former taking the western
part. After the partition, Somodio took possession of his portion and planted thereon ipil-ipil trees,
coconut trees, and other fruit bearing trees.

He also began construction of a structure with a dimension of 22 by 18 feet on his lot. Due to his
work, he was transferred to Kidapawan, North Cotabato, and left the unfinished structure to the care
of his uncle. Somodio allowed Ayco, respondent to transfer his hut to petitioners lot.

Somodio demanded Ayco to vacate the premises but to no avail. He then filed an action for unlawful
detainer with damages before the MTC. Another respondent, Purisima entered the land and
constructed a house thereon. Somodio then filed a complaint for forcible entry against the latter.

The MTC rendered a decision in favor of Somodio finding that Purisima built a house almost on the
spot where Somodios unfinished house stood through stealth and strategy. The MTC also held
that Somodio was the actual possessor of the lot in question.

The RTC affirmed the decision of the MTC. CA on the other hand, dismissed petition of Somodio
and held that the latter did not clearly and conclusively established physical, prior possession over
the lot.

ISSUE:
Who is entitled to the physical or material possession of the property? (only issue in ejectment
cases)

RULING:
Anyone who can prove prior possession de facto (physical possession) may recover such
possession even from the owner himself. This is true regardless of the character of a partys
possession provided he has in his favor priority of time entitling him to stay on the property until he is
lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria.
Accrdg. to Art. 531 of NCC, possession is acquired by material occupation of a thing or the exercise
of a right. Somodio then enjoyed priority of possession because Purisima entered the lot only in
1983 which is later than Somodios possession fo the property.

In addition, Somodios possession over the property is not synonymous with his right of ownership
over the same. Forcible entry is merely a quieting process and never determines the actual title to an
estate. The MTC and RTCs decision are deemed reinstated.

G.R. No. 82680 August 15, 1994

NICANOR SOMODIO, petitioner,

vs.
COURT OF APPEALS, EBENECER PURISIMA, and FELOMINO AYCO, respondents.

Jose V. Panes for petitioner.

Vencer, Purisima & Associates for private respondents.

QUIASON, J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and
set aside the Decision dated September 29, 1987 and the Resolution dated February 2, 1988 of the
Court of Appeals in CA-G.R. SP No. 11602.

On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer of Rights,
conveying to Wilfredo Mabugat the possession of a residential lot situated at Rajah Muda, Bula,
General Santos City and described in the said instrument as:

Lot No. (Unnumbered), bounded on the North by Temporary Road, on the South by
Customs Zone (Sarangani Bay), on the East by Public Land, and on the West by
Public Land.

Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On October 22,
1974, Mabugat executed an Affidavit of Trust expressly recognizing the right of petitioner over one-
half undivided portion of the lot. Later, petitioner discovered in the District Land Office that the lot
was numbered "6328-X, Csd 2281-D." Thereafter, petitioner and Mabugat partitioned the property
into two portions, with petitioner taking the western part. Immediately after the partition, petitioner
took possession of his portion and planted thereon ipil-ipil trees, coconut trees and other fruit-
bearing trees.

In 1976, petitioner began construction of a structure with a dimension of 22-by-18 feet on his lot. His
employment, however, took him to Kidapawan, North Cotabato, and he left the unfinished structure
to the case of his uncle. He would visit the property every three months or on weekened when he
had time.

Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer his hut to
petitioner's lot. About six years later, petitioner demanded that Ayco vacate the premises but such
demand proved futile. Hence, on August 23, 1983, petitioner filed an action for unlawful detainer with
damages against respondent Ayco before the Municipal Trial Court, Branch I, General Santos,
docketed as Civil Case No. 2032-II.

Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and constructed a
house thereon. Four days later, petitioner filed against respondent Purisima a complaint for forcible
entry before the same court docketed as Civil Case No. 2013-I. Said case was later consolidated
with Civil Case No. 2032-II.

In his answer, respondent Purisima averred that the lot was a portion of the land subject of his
application for miscellaneous sales patent with the Bureau of Lands. Purisima described the lot in
question as:

Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the
North by 6328-X; on the South by Sarangani Bay; on the East by a Municipal Road;
and on the West by Lot No. 6328-W, containing an area of 1,095 square meters and
covered by Tax Declaration No. 9647 (Rollo, p. 36; Emphasis supplied).

Respondent Purisima contended that his father, a geodetic engineer, had surveyed the parcel of
land comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond Association, Inc. in
February 1958, and that his father's survey plan was approved by the Director of Lands in 1960.
Respondent Ayco, on the other hand, did not present any evidence but merely anchored his right to
possess the property on the evidence of Purisima.

On April 30, 1986, the trial court rendered a decision finding that respondent Purisima built his house
"almost on the spot where Somodio's unfinished house" stood "thru stealth and strategy," not
knowing that the house was built on Lot No. 6328-X and not on Lot No. 6328-Y, the lot said
respondent was claiming (Rollo, p. 43). The court went on to state that:

. . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and had
sometimes stayed with Mrs. Maturan in Judge Purisima's house on the adjoining lots,
and could not have remained unaware of the possession of Somodio. He must have
depended on the thought that it was his father who made the subdivision survey and
had fenced an area which he had claimed. He did not exactly verify that the area
fenced by his father had an area of only 1,095 square meters, which did not include
the are Lot No. 6328-X could eventually be standing on his property, for Lot No.
6328-X is not claimed by him and has not been applied for even by his father. His
father has been abroad and has not taken steps to apply for Lot No. 6328-X. This lot
is not declared for taxation purposes in the name of any claimant-applicant. Unless
and until there would be an administrative proceedings and the title ultimately issued
in favor of an applicant, the possession of the actual claimant and occupant has to be
respected and maintained in the interest of public order . . . (Rollo, pp. 43-44).

The Municipal Trial Court further held that petitioner was the actual possessor of Lot No. 6328-X.
The court did not believe respondent Ayco's claim that the administratrix of the estate of respondent
Purisima's father authorized him to build a hut on Lot No. 6328-X in 1976. At any rate, the court said
that respondent Ayco was willing to vacate the premises provided he be given financial assistance to
do so (Rollo, pp. 43-44).

Nothing that the ocular inspection of the area showed that the houses of respondents Purisima and
Ayco were "inside Lot No. 6328-X" and not on Lot No. 6328-Y, the Municipal Trial Court held that the
case became one which entailed mere removal of the houses from the lot in question. Accordingly,
the court ordered private respondents to remove their respective houses, to deliver the land to
petitioner, and to pay attorney's fees and litigation expenses.

On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in toto the decision of
the Municipal Trial Court. Respondent then elevated the cases on a petition for review to the Court
of Appeals, which, in its decision dated September 27, 1987, set aside the decisions of the two trial
courts and ordered the dismissal of the two complaints filed by petitioner.

The Court of Appeals held that herein petitioner had not "clearly and conclusively established
physical, prior possession over Lot No. 6328-X."

Petitioner's motion for the reconsideration of the decision of the Court of Appeals having been
denied, he filed the instant petition for review on certiorari.

We grant the petition.

II

The procedural issue raised by private respondents should first be resolved. The issue is whether
the instant petition is proper considering that petitioner "merely touch(es) upon questions of fact
which had been carefully considered" by the Court of Appeals (Rollo, p. 92). As a general rule, the
findings of fact of the Court of Appeals are binding on this Court. This rule, however, is not without
exceptions, one of which is when the factual findings of the Court of Appeals and the trial court are
contrary to each other. In such a case, this Court may scrutinize the evidence on record in order to
arrive at the correct findings based on the record (Valenzuela v. Court of Appeals, 191 SCRA 1
[1990]; Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, 191 SCRA 411
[1990]).

Upon a review of the records, we are convinced that petitioner indeed enjoyed priority of possession
over Lot No. 6328-X, notwithstanding respondent Purisima's claim to the contrary.

In ejectment cases, the only issue for resolution is who is entitled to the physical or material
possession of the property involved, independent of any claim of ownership set forth by any of the
party-litigants. Anyone of them who can prove prior possession de facto may recover such
possession even from the owner himself. This rule holds true regardless of the character of a party's
possession, provided, that he has in his favor priority of time which entitles him to stay on the
property until he is lawfully ejected by a person having a better right by either accion
publiciana or accion reivindicatoria (De Luna v. Court of Appeals, 212 SCRA 276 [1992]).

Petitioner took possession of the property sometime in 1974 when he planted the property to
coconut trees, ipil- ipil trees and fruit trees. In 1976, he started the construction of a building on the
property. It is immaterial that the building was unfinished and that he left for Kidapawan for
employment reasons and visited the property only intermittently. Possession in the eyes of the law
does not mean that a man has to have his feet on every square meter of ground before it can be
said that he is in possession (Ramos v. Director of Lands, 39 Phil. 175 [1918]). It is sufficient that
petitioner was able to subject the property to the action of his will.

Article 531 of the Civil Code of the Philippines provides:

Possession is acquired by the material occupation of a thing or the exercise of a

right, or by the fact that it is subject to the action of our will, or by the proper acts and
legal formalities established for acquiring such right.

Even if the Court of Appeals is correct in its finding that petitioner started introducing improvements
on the land only in 1981, he still enjoyed priority of possession because respondent Purisima
entered the premises only in 1983.

It should be emphasized that the Court of Appeals noted that none of the parties had produced tax
declarations or applications as public land claimants. As such, what should have been scrutinized is
who between the claimants had priority of possession.

Moreover, neither is the fact that respondent Purisima's father surveyed the property of help to his
cause. As the Court of Appeals found, respondent Purisima's father surveyed the land for the Small
Farmers Fishpond Association, Inc., not for himself. Although respondent Purisima now claims that
Lot No. 6328-X was in payment of his fee for the services of his father and that he caused the
construction of a perimeter wall in the area, these facts do not mean that respondent Purisima
himself had prior possession. He did not present any proof that his father had authorized him to
enter the land as his successor-in-interest. Neither did he present proof that between 1958, when his
father allegedly took possession of the land, and 1983, when said respondent himself entered the
land, his father ever exercised whatever right of possession he should have over the property. Under
these circumstances, priority in time should be the pivotal cog in resolving the issue of possession.
The Court of Appeals opined that petitioner had not properly identified the lot he had occupied. The
matter of identification of the land, however, had been resolved by respondent Purisima's admission
in his pleadings, as well as by two ocular inspections.

In his answer to the complaint, respondent Purisima claimed possession over Lot No. 6328-Y, while
petitioner identified the lot adjacent to it, Lot
NO. 6328-X, as the area where private respondents built their houses. That these two lots are
distinct from one another was resolved by the ocular inspection conducted by a Senior Geodetic
Engineer of the Office of the City Engineer, who found that "south of lot 6328-H across a 10 meter
wide road is lot 6328-Y and from thence to the south is lot 6328-X." On June 13, 1985, the Municipal
Trial Court judge himself went to the premises in question and discovered that aside from the
houses of respondents Purisima and Ayco, five other houses had been built on Lot No. 6328-X.

Petitioner's prior possession over the property, however, is not synonymous with his right of
ownership over the same. As earlier stated, resolution of the issue of possession is far from the
resolution of the issue of ownership. Forcible entry is merely a quieting process and never
determines the actual title to an estate (German Management & Services, Inc. v. Court of Appeals,
177 SCRA 495 [1989]; Manuel v. Court of Appeals, 199 SCRA 603 [1991].

WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE and that of the
trial courts REINSTATED. Costs against private respondents.

SO ORDERED.

G.R. No. 204926 December 3, 2014

ANACLETO C. MANGASER, represented by his Attorney-in-fact EUSTAQUIO

DUGENIA, Petitioner,
vs.
DIONISIO UGAY, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the June 13, 2012
Decision1 and the December 5, 2012 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
122153, entitled "Dionisio Ugay v. Anacleto C. Mangaser, represented by his Attorney-in-fact
Eustaquio Dugenia, "a case of forcible entry and damages.

The Facts

On October 30, 2007, petitioner Anacleto Mangaser, represented by his attorney-in-fact, Eustaquio
Dugenia (petitioner), filed a complaint for Forcible Entry with Damages against respondent Dionisio
Ugay (respondent) before the Municipal Trial Court of Caba, La Union (MTC). In his complaint,
petitioner alleged that he was the registered owner and possessor of a parcel of land situated in
Santiago Sur, Caba, La Union, with an area of 10,632 square meters and covered by OCT No. RP-
174 (FP-13 787) and Tax Declaration No. 014-00707; that on October 31, 2006, petitioner,
discovered that respondent stealthy intruded and occupied a portion of his property by constructing a
residential house thereon without his knowledge and consent; that he referred the matter to the
Office of Lupong Tagapamayapa for conciliation, but no settlement was reached, hence, a
certification to file action was issued by the Lupon; and that demand letters were sent to respondent
but he still refused to vacate the premises, thus, he was constrained to seek judicial remedy.3

Respondent denied the material allegations of the complaint and put up the following defenses, to
wit: that he had been a resident of Samara, Aringay, La Union, since birth and when he reached the
age of reason, he started occupying a parcel of land in that place then known as Sta. Lucia, Aringay,
La Union; that years later, this parcel of land was designated as part of Santiago Sur, Caba, La
Union due to a survey made by the government; that he introduced more improvements on the
property by cultivating the land, and in March 2006, he put up a "bahay kubo"; that in October 2006,
he installed a fence made of "bolo" to secure the property; that in installing the fence, he was guided
by the concrete monuments which he knew to be indicators of the boundaries of petitioner's
property; that while he could not locate some of the monuments, he based the boundaries on his
recollection since he was around when these were installed; that he knew the boundaries of
petitioner's property because he knew the extent of the "iron mining" activities done by a company
on the said property; that petitioner was never in actual possession of the property occupied by him,
and it was only on October 31, 2006 when he discovered the al legccl intrusion; that it was not
correct to say that he refused to vacate and surrender the premises despite receipt of the demand
letters because in his letter-reply, he assured petitioner that he would voluntarily vacate the premises
if he would only be shown to have intruded into petitioner's titled lot after the boundaries were
pointed out to him; and that instead of shmving the boundaries to him, petitioner filed an action for
forcible entry before the MTC.4

MTC Ruling

On April 26, 2011, the MTC ruled in favor of respondent. It stated that petitioner failed to adduce any
evidence to prove that the lot occupied by respondent was within his lot titled under OCT No. RP-
174 (13 789). The MTC opined that petitioner could have presented a relocation survey, which would
have pinpointed the exact location of the house and fence put up by respondent, and resolved the
issue once and for all.6 It also explained that petitioner failed to prove his prior physical possession of
the subject property. The OCT No. RP-174(13789) registered under petitioner's name and the Tax
Declaration were not proof of actual possession of the property. The dispositive portion of which
reads:

WHEREFORE, the plaintiff (petitioner) having failed to establish his case by preponderance of
evidence, the complaint is hereby DISMISSED.7

RTC Ruling

Aggrieved, petitioner appealed to the Regional Trial Court of Bauang, La Union (RTC) and the case
was raffled to Branch 33.

In its August 23, 2011 Decision,8 the RTC reversed the MTC decision and ruled in favor of petitioner.
It relied on the cases of Barba v. Court of Appeals9 and Nunez v. SLTEAS Phoenix Solutions,
Inc.,10 which held that in ejectment cases, possession of the land did not only mean actual or physical
possession but also included the subject of the thing to the action of one's will or by the proper acts
and legal formalities established for acquiring such right. The RTC stated that petitioner had clearly
shown his possession of the property as evidenced by his OCT No. RP-174(13 789) issued in March
1987 and tax declaration, dating back as early as 1995.11 It added that the boundaries of the property
were clearly indicated in the title, thus, there was no need to conduct a survey. As the owner,
petitioner knew the exact metes and bounds of his property so that when respondent intruded
stealthily, he filed the subject suit.12 The dispositive portion of the RTC decision reads:
WHEREFORE, after a thorough perusal of the facts and evidence in this case, this Court reverses
the decision of the MTC, Caba, La Union, dated April 26, 2011 and rules in favor of plaintiffappellant
(petitioner) and against defendant-appellee (respondent), ordering the latter and all other persons
claiming rights under him to:

1. VACATE the portion of the subject property encroached by him;

2. SURRENDER actual physical possession of the subject portion peacefully to plaintiff-

appellant;

3. REMOVE all the improvements he introduced therein;

4. PAY attorney's fees in the amount Php20,000.00 to plaintiff-appellant, and pay the cost of
suit.

SO ORDERED.13

Undaunted, respondent appealed to the CA.

CA Ruling

The CA reversed and set aside the decision of the RTC. Citing Quizon v. Juan,14 it emphasized that
petitioner must allege and prove that he was in prior physical possession of the property in dispute.
The word "possession," as used in forcible entry and unlawful detainer cases, meant nothing more
than physical possession, not legal possession in the sense contemplated in civil law. The CA wrote
that petitioner was not in physical possession despite the presentation of the OCT No. RP-
174(13789) and his tax declarations.15 It reiterated that when the law would speak of possession in
forcible entry cases, it is prior physical possession or possession de facto, as distinguished from
possession de Jure. What petitioner proved was legal possession, not his prior physical possession.
Furthermore, the CA stated that the RTC misquoted Nunez v. SLTEAS Pheonix Solutions16 by giving
the wrong notion of what kind of possession was contemplated in forcible entry cases. In other
words, physical possession was the crux in forcible entry, not possession that stemmed upon
ownership.17 The dispositive portion of the assailed decision reads:

WHEREFORE, premises considered, the Petition for Review is GRANTED, accordingly, the
Decision dated August 23, 2011 and Order dated October 25, 2011, of the RTC Branch 33, Bauang,
La Union in Civil Case No. 2029-BG are REVERSED and SET ASIDE. The Decision of the MTC
dated April 26, 2011 is hereby REINSTATED.

SO ORDERED.18

Petitioner filed a motion for reconsideration,19 dated July 6, 2012, but it was subsequently denied by
the CA in a Resolution,20 dated December 5, 2012. It reads:

This Court, after a meticulous study of the arguments set forth in the Motion for Reconsideration filed
by respondent, finds no cogent reason to revise, amend, much less reverse, the assailed Decision
dated June 13, 2012. The Motion for Reconsideration is, thus, DENIED

SO ORDERED.21

Hence, this petition, anchored on the following

 STATEMENT OF ISSUES

WHETHER OR NOT THE COURT OF APPEALS FAILED TO CONSIDER THE EVIDENCE OF

OWNERSHIP OF PETITIONER WHICH MAY ESTABLISH PRIOR POSSESSION OVER THE
PROPERTY BY HEREIN PETITIONER.

II

WHETHER OR NOT THE RESOLUTION DATED DECEMBER 5, 2012 OF THE COURT OF

APPEALS, FORMER SPECIAL FOURTH DIVISION, DENYING THE MOTION FOR
RECONSIDERATION IS VALID.22

Petitioner argues that in ejectment cases, possession of the land does not only mean actual or
physical possession or occupation but also by the fact that a land is subject to the action of one's will
or by proper acts and legal formalities established for acquiring such right; that the CA should have
considered OCT No. RP-174(13789) his tax declaration as proofs of prior physical possession over
the property; and that the issuance of the same are considered to by law as proper acts and legal
formalities established for acquiring such right. Petitioner cited Tolentino, as one of the authors and
experts in Civil law, stating that the "proper acts and formalities" refer to juridical acts, or the
acquisition of possession by sufficient title, inter vivas or mortis causa, onerous or lucrative. These
are the acts which the law gives the force of acts of possession.

Petitioner also avers that the December 5, 2012 CA Resolution was not valid as it did not state the
legal basis required by the Constitution.

On May 28, 2013, respondent filed his Comment23 before this Court. He stated that the issues raised
and the arguments presented by petitioner have been thoroughly resolved and ruled upon by the
CA. The appellate court did not err in reversing the RTC decision because petitioner was never in
prior physical possession of the property in dispute. Respondent asserts that he has been in prior,
actual, continuous, public, notorious, exclusive and peaceful possession in the concept of an owner
of the property in dispute.24

On March 28, 2014, petitioner filed his Reply,25 reiterating the case of Nunez v. SLTEAS Phoenix
Solutions, Inc.,26where a party was able to demonstrate that it had exercised acts of ownership over
the property by having it titled in its name and by paying real property taxes on it. Petitioner also
laments the wrongful insistence of respondent that his possession over the property was one in the
concept of an owner. To petitioner's mind, respondent failed to adequately adduce evidence to show
proof of his right to possess the property when his possession came under attack with the filing of
the subject case.27

The Court's Ruling

The Court finds the petition meritorious.

For a forcible entry suit to prosper, the plaintiffs must allege and prove: (a) that they have prior
physical possession of the property; (b) that they were deprived of possession either by force,
intimidation, threat, strategy or stealth; and, (c) that the action was filed within one (1) year from the
time the owners or legal possessors learned of their deprivation of the physical possession of the
property.28
There is only one issue in ejectment proceedings: who is entitled to physical or material possession
of the premises, that is, to possession de facto, not possession de Jure? Issues as to the right of
possession or ownership are not involved in the action; evidence thereon is not admissible, except
only for the purpose of determining the issue of possession.29

As a rule, the word "possession" in forcible entry suits indeed refers to nothing more than prior
physical possession or possession de facto, not possession de Jure or legal possession in the sense
contemplated in civil law. Title is not the issue, and the absence of it "is not a ground for the courts to
withhold relief from the parties in an ejectment case."30

The Court, however, has consistently ruled in a number of cases31 that while prior physical
possession is an indispensable requirement in forcible entry cases, the dearth of merit in
respondent's position is evident from the principle that possession can be acquired not only by
material occupation, but also by the fact that a thing is subject to the action of one's will or by the
proper acts and legal formalities established for acquiring such right. The case of Quizon v.
Juan,32 which surprisingly was relied on by the CA, also stressed this doctrine.

Possession can be acquired by juridical acts. These are acts to which the law gives the force of acts
of possession. Examples of these are donations, succession, execution and registration of public
instruments, inscription of possessory information titles and the like.33 The reason for this exceptional
rule is that possession in the eyes of the law does not mean that a man has to have his feet on every
square meter of ground before it can be said that he is in possession.34 It is sufficient that petitioner
was able to subject the property to the action of his will.35 Here, respondent failed to show that he
falls under any of these circumstances. He could not even say that the subject property was leased
to him except that he promised that he would vacate it if petitioner would be able to show the
boundaries of the titled lot.

In the case of Nunez v. SLTEAS Phoenix Solutions, inc., 36 the subject parcel was acquired by the
respondent by virtue of the June 4, 1999 Deed of Assignment executed in its favor by Spouses Ong
Tiko and Emerenciana Sylianteng. The petitioner in the said case argued that, aside from the
admission in the complaint that the subject parcel was left idle and unguarded, the respondent's
claim of prior possession was clearly negated by the fact that he had been in occupancy thereof
since 1999. The Court disagreed with the petitioner and said: Although it did not immediately put the
same to active use, respondent appears to have additionally caused the property to be registered in
its name as of February 27, 2002 and to have paid the real property taxes due thereon alongside the
sundry expenses incidental thereto. Viewed in the light of the foregoing juridical acts, it consequently
did not matter that, by the time respondent conducted its ocular inspection in October 2003,
petitioner hml already been occupying the land since 1999.

[Emphasis and underscoring supplied]

Hence, in that case, the Court ruled that such juridical acts were sufficient to establish the
respondent's prior possession of the subject property.

The case of Habagat Grill v. DMC-Urban Property Developer, Inc.,37 also involves an action for
forcible entry. On June 11, 1981, David M. Consunji, Inc. acquired a residential lot situated in Matin
a, Davao City, which was covered by TCT No. T-82338. On June 13, 1981, it transferred the said lot
to respondent DMC. Alleging that the petitioner forcibly entered the property in December 1993, the
respondent filed on March 28, 1994 a complaint for forcible entry. One of the issues raised therein
was whether respondent DMC had prior possession of the subject property, to which the Court
answered in the affirmative. It ruled that:
Prior possession of the lot by respondent's predecessor was sufficiently proven by evidence of the
execution and registration of public instruments and by the fact that the lot was subject to its will from
then until December 1, 1993, when petitioner unlawfully entered the premises and deprived the
former of possession thereof.

[Emphasis and underscoring supplied]

In the case at bench, the Court finds that pet1t1oner acquired possession of the subject property by
juridical act, specifically, through the issuance of a free patent under Commonwealth Act No. 141
and its subsequent registration with the Register of Deeds on March 18, 1987.38

Before the Court continues any further, it must be determined first whether the issue of ownership is
material and relevant in resolving the issue of possession. The Rules of Court in fact expressly allow
this: Section 16, Rule 70 of the Rules of Court provides that the issue of ownership shall be resolved
in deciding the issue of possession if the question of possession is intertwined with the issue of
ownership. But this provision is only an exception and is allowed only in this limited instance - to
determine the issue of possession and only if the question of possession cannot be resolved without
deciding the issue of ownership.39

This Court is of the strong view that the issue of ownership should be provisionally determined in this
case. First, the juridical act from which the right of ownership of petitioner arise would be the
registration of the free patent and the issuance of OCT No. RP-174(13789). Apparently, the Torrens
title suggests ownership over the land. Second, respondent also asserts ownership over the land
based on his prior, actual, continuous, public, notorious, exclusive and peaceful possession in the
concept of an owner of the property in dispute.40 Because there are conflicting claims of ownership,
then it is proper to provisionally determine the issue of ownership to settle the issue of possession
de facto.

Returning to the case, this Court cannot agree with the CA that petitioner's OCT No. RP-174(13789)
and his tax declarations should absolutely be disregarded. The issuance of an original certificate of
title to the petitioner evidences ownership and from it, a right to the possession of the property flows.
Well-entrenched is the rule that a person who has a Torrens title over the property is entitled to the
possession thereof.41

Moreover, his claim of possession is coupled with tax declarations. While tax declarations are not
conclusive proof of possession of a parcel of land, they are good indicia of possession in the concept
of an owner, for no one in his right mind would be paying taxes for a property that is not in his actual
or constructive possession.42 Together with the Torrens title, the tax declarations dated 1995
onwards presented by petitioner strengthens his claim of possession over the land before his
dispossession on October 31, 2006 by respondent.

The CA was in error in citing the case of De Grano v. Lacaba43 to support its ruling. In that case, the
respondent tried to prove prior possession, by presenting only his tax declarations, tax receipt and a
certification from the municipal assessor attesting that he had paid real property tax from previous
years. The Court did not give credence to his claim because tax declarations and realty tax
payments are not conclusive proof of possession. The situation in the present case differs because
aside from presenting his tax declarations, the petitioner submitted OCT No. RP-174(13 789) which
is the best evidence of ownership from where his right to possession arises.

Against the Torrens title and tax declarations of petitioner, the bare allegations of respondent that he
had prior, actual, continuous, public, notorious, exclusive and peaceful possession in the concept of
an owner, has no leg to stand on. Thus, by provisionally resolving the issue of ownership, the Court
is satisfied that petitioner had prior possession of the subject property. When petitioner discovered
the stealthy intrusion of respondent over his registered prope1iy, he immediately filed a complaint
with the Lupong Tagapamayapa and subsequently filed an action for forcible entry with the MTC.
Instead of taking the law into his own hands and forcefully expelling respondent from his property,
petitioner composed himself and followed the established legal procedure to regain possession of
his land.

If the Court were to follow the ruling of the CA and disregard juridical acts to obtain prior possession,
then it would create an absurd situation. It would be putting premium in favor of land intruders
against Torrens title holders, who spent months, or even years, in order to register their land, and
who religiously paid real property taxes thereon. They cannot immediately repossess their properties
simply because they have to prove their literal and physical possession of their property prior to the
controversy. The Torrens title holders would have to resort to ordinary civil procedure by filing either
an accion publiciana or accion reinvidicatoria and undergo arduous and protracted litigation while the
intruders continuously enjoy and rip the benefits of another man's land. It will defeat the very
purpose of the summary procedure of an action for forcible entry.

The underlying philosophy behind ejectment suits is to prevent breach of the peace and criminal
disorder and to compel the party out of possession to respect and resort to the law alone to obtain
what he claims is his. Ejectment proceedings are summary in nature so the authorities can speedily
settle actions to recover possession because of the overriding need to quell social disturbances.44

As to the other requirements of an action for forcible entry, the Court agrees with the RTC that
petitioner had sufficiently complied with them. Petitioner proved that he was deprived of possession
of the property by stealth. The complaint was also filed on October 30, 2007, within the one year
1wphi1

reglementary period counted from the discovery of the stealthy entry by respondent to the property
on October 31, 2006.

The second issue raised is the validity of the CA Resolution dated December 5, 2012. Petitioner
alleges that the CA denied his reconsideration without indicating its legal basis in violation of the
mandate of Section 14, Article VIII of the Constitution, which provides that no petition for review or
motion for reconsideration of a decision of the court shall be refused due course or denied without
stating the legal basis therefor. This requirement, however, was complied with when the CA, in its
resolution denying petitioner's motion for reconsideration, stated that it "finds no cogent reason to
reverse, amend, much less reverse the assailed Decision, dated June 13, 2012."45

WHEREFORE, the petition is GRANTED. The June 13, 2012 Decision and the December 5, 2012
Resolution of the Court of Appeals in CA-G.R. SP No. 122153 are hereby REVERSED and SET
ASIDE. The August 23, 2011 Decision of the Regional Trial Court, Branch 33, Bauang, La Union, is
hereby REINSTATED.

SO ORDERED.

[G.R. No. 126863. January 16, 2003]

SPOUSES NAPOLEON L. GAZA and EVELYN GAZA, SPOUSES

RENATO PETIL and MELY PETIL, BRGY. SEC. VICTORIO A.
 CONDUCTO and BRGY. TANOD ARTURO ALAON, petitioners,
vs.RAMON J. LIM and AGNES J. LIM, respondents.

DECISION
SANDOVAL-GUTIERREZ, J.:

The present petition for review on certiorari seeks to set aside the
[1]

Decision dated April 29, 1995 and the Resolution dated October 10, 1996 of
the Court of Appeals in CA-G.R. SP No. 36997 reversing the Decision of the
[2]

Regional Trial Court, Branch 63, Calauag, Quezon in Civil Case No. C-1031
for forcible entry.
The factual milieu of this case is as follows:
On February 20, 1961, Napoleon Gaza purchased a parcel of land with an
area of 5,270 square meters located in Barangay Sta. Maria, Calauag,
Quezon, from Angeles Vda. de Urrutia. The Register of Deeds of Lucena City
then cancelled the latters title and issued Transfer Certificate of Title (TCT)
No. T-47263 in the name of Napoleon Gaza.
Thereafter, Napoleon Gaza and his wife Evelyn engaged in the lumber
and copra business. They constructed a huge lumber shed on the property
and installed engines, machinery and tools for a lumber mill. They also utilized
a portion of the property as storage for copra. In 1975, they ceased engaging
in business. They padlocked the gates of the property, leaving it to the care of
Numeriano Ernesto. When he died in 1991, spouses Gaza designated Renato
Petil as the new caretaker of the land.
On the other hand, Ramon and Agnes Lim, both half-siblings of Napoleon
Gaza, claimed that they have used the same lot for their lumber and copra
business since 1975, as shown by Lumber Certificate of Registration No.
2490, PCA Copra Business Registration No. 6265/76 and Mayor's Permit
dated December 31, 1976. Sometime in November 1993, they designated
Emilio Herrera as caretaker of the property.
On November 28, 1993, the padlock of the main gate was
destroyed. According to Napoleon Gaza, the siblings Ramon and Agnes Lim
and Emilio Herrera, entered the property by breaking the lock of the main
gate. Thereafter, they occupied a room on the second floor of the warehouse
without the consent of Renato Petil who was then outside the premises.
For their part, Ramon and Agnes Lim maintain that on November 28,
1993, spouses Gaza detained Emilio Herrera and his daughter inside the
compound and destroyed the padlocks of the gates. Thereafter, said spouses
forcibly opened Agnes Lim's quarters at the second floor of the warehouse
and occupied it.
On December 13, 1993, Ramon and Agnes Lim filed with the Municipal
Trial Court (MTC) of Calauag, Quezon an action for forcible entry against
spouses Napoleon and Evelyn Gaza, docketed as Special Civil Action No.
845.
On December 21, 1993, spouses Gaza filed with the same court their
answer with compulsory counterclaim.
On June 1, 1994, the MTC dismissed the complaint and counterclaim.
On appeal, the Regional Trial Court (RTC), Branch 63, Calauag, Quezon,
affirmed the MTC Decision with modification, thus:

"WHEREFORE, in the light of the foregoing considerations the judgment of the lower
court is hereby AFFIRMED and the appeal is DENIED with the modification that the
plaintiffs are ordered to pay the amount of P5,000.00 as moral damages and P5,000.00
by way of exemplary damages to the defendants spouses Napoleon Gaza and Evelyn
Gaza.

"SO ORDERED." [3]

On April 29, 1995, Ramon and Agnes Lim filed with the Court of Appeals a
petition for review, docketed therein as CA-G. R. SP No. 36997. In its
Decision, the Court of Appeals reversed and set aside the Decision of the
[4]

RTC, thus:

"WHEREFORE, premises considered, the petition is hereby GIVEN DUE

COURSE. The decision of the Regional Trial Court of Calauag, Quezon, Branch 63,
affirming the decision of the Municipal Trial Court, is hereby REVERSED and SET
ASIDE and a new one is rendered ordering the private respondents and all persons
claiming rights under them to vacate the premises in question and surrender its
possession to the petitioners.

"SO ORDERED."

Spouses Gaza filed a motion for reconsideration but was denied. Hence,
they filed with this Court the present petition for review on certiorari ascribing
to the Court of Appeals the following errors:
"I. THE COURT OF APPEALS ERRED IN FAILING TO RULE THAT THERE WAS NO
IMPLIED ADMISSION ON THE PART OF PETITIONERS THAT PRIVATE
 RESPONDENTS HAD BEEN IN PRIOR AND ACTUAL PHYSICAL POSSESSION
OF SUBJECT PROPERTY SINCE 1975.
"II. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN
RESOLVING THE INSTANT CASE ON MERE TECHNICALITIES AND IN
APPLYING THE RULES OF PROCEDURE IN A VERY RIGID MANNER,
THEREBY DENYING PETITIONERS SUBSTANTIAL JUSTICE.
"III. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN IGNORING
THE VOLUMINOUS EVIDENCE ADDUCED BY THE PETITIONERS IN
SUBSTANTIATING THEIR PRIORITY IN POSSESSION OF SUBJECT
PROPERTY, SAID ERROR BECOMING EVEN MORE MANIFEST IN THE LIGHT
OF THE GLARING PAUCITY OF EVIDENCE OF PRIVATE RESPONDENTS TO
SUPPORT THEIR ALLEGED POSSESSION.
"IV. THE COURT OF APPEALS ERRED IN FAILING TO TAKE INTO ACCOUNT THE
FINAL AND EXECUTORY JUDGMENT OF CONVICTION OF RESPONDENT
AGNES LIM FOR TRESPASSING INTO SUBJECT PROPERTY, CLEARLY
EVIDENCING PETITIONERS' PRIOR AND ACTUAL MATERIAL POSSESSION
AND PRIVATE RESPONDENTS' PREDISPOSITION FOR FALSEHOOD, THE
TRUTH OF THE MATTER BEING OF SAID PROPERTY AND THAT IT IS
PRIVATE RESPONDENTS WHO HAVE FORCIBLY ENTERED THE PROPERTY
IN DISPUTE
"V. THE COURT OF APPEALS ERRED IN RESOLVING THE ISSUE OF IMPLIED
ADMISSION, NOT BEING ONE OF THE ISSUES DELIMITED IN THE PRE-TRIAL
ORDER OF 17 FEBRUARY 1994."[5]

We resolve the issues jointly.

Section 11, Rule 8 of the 1997 Rules of Civil Procedure, as amended,
provides that material averments in the complaint, other than those as to the
amount of unliquidated damages, shall be deemed admitted when not
specifically denied. Section 10 of the same Rule provides the manner in which
specific denial must be made:

"Section 10. Specific Denial. A defendant must specify each material allegation of
fact the truth of which he does not admit and, whenever practicable, shall set forth the
substance of the matters upon which he relies to support his denial. Where a defendant
desires to deny only a part of an averment, he shall specify so much of it as is true and
material and shall deny only the remainder. Where a defendant is without knowledge
or information sufficient to form a belief as to the truth of a material averment made
in the complaint, he shall so state, and this shall have the effect of a denial."

Three (3) modes of specific denial are contemplated by the above

provisions, namely: (1) by specifying each material allegation of the fact in the
complaint, the truth of which the defendant does not admit, and whenever
practicable, setting forth the substance of the matters which he will rely upon
to support his denial; (2) by specifying so much of an averment in the
complaint as is true and material and denying only the remainder; (3) by
stating that the defendant is without knowledge or information sufficient to
form a belief as to the truth of a material averment in the complaint, which has
the effect of a denial.[6]

The Court of Appeals held that spouses Gaza, petitioners, failed to deny
specifically, in their answer, paragraphs 2, 3 and 5 of the complaint for forcible
entry quoted as follows:

xxx

"2. That plaintiffs are the actual and joint occupants and in prior continuous physical
possession since 1975 up to Nov. 28, 1993 of a certain commercial compound
described as follows:

A certain parcel of land situated in Bo. Sta. Maria, Calauag, Quezon. Bounded on the
N., & E., by Julian de Claro; on the W., by Luis Urrutia. Containing an area of 5,270
square meters, more or less. Declared under Ramon J. Lims Tax Dec. No. 4576 with
an Ass. Value of P26,100.00

3. That plaintiffs have been using the premises mentioned for combined lumber and
copra business. Copies of plaintiffs Lumber Certificate of Registration No. 2490 and
PCA Copra Business Registration No. 6265/76 are hereto attached as Annexes A and
B respectively; the Mayors unnumbered copra dealers permit dated Dec. 31, 1976
hereto attached as Annex C;

xxx

5. That defendants invasion of plaintiffs premises was accomplished by illegally

detaining plaintiffs caretaker Emilio Herrera and his daughter inside the compound,
then proceeded to saw the chain that held plaintiffs padlock on the main gate of the
compound and then busted or destroyed the padlock that closes the backyard gate or
exit. Later, they forcibly opened the lock in the upstairs room of plaintiff Agnes J.
Lims quarters and defendants immediately filled it with other occupants now. Copy of
the caretakers (Emilio Herrera) statement describing in detail is hereto attached as
Annex D;

x x x.[7]

The Court of Appeals then concluded that since petitioners did not deny
specifically in their answer the above-quoted allegations in the complaint, they
judicially admitted that Ramon and Agnes Lim, respondents, were in prior
physical possession of the subject property, and the action for forcible entry
which they filed against private respondents (spouses Gaza) must be decided
in their favor. The defense of private respondents that they are the registered
owners of the subject property is unavailing.
We observe that the Court of Appeals failed to consider paragraph 2 of
petitioners answer quoted as follows:

"2. That defendants specifically deny the allegations in paragraph 2 and 3 of the
complaint for want of knowledge or information sufficient to form a belief as to the
truth thereof, the truth of the matter being those alleged in the special and affirmative
defenses of the defendants;" [8]

Clearly, petitioners specifically denied the allegations contained in

paragraphs 2 and 3 of the complaint that respondents have prior and
continuous possession of the disputed property which they used for their
lumber and copra business. Petitioners did not merely allege they have no
knowledge or information sufficient to form a belief as to truth of those
allegations in the complaint, but added the following:

"SPECIAL AND AFFIRMATIVE DEFENSES

"That defendants hereby reiterate, incorporate and restate the foregoing and further
allege:

"5. That the complaint states no cause of action;

"From the allegations of plaintiffs, it appears that their possession of the subject
property was not supported by any concrete title or right, nowhere in the complaint
that they alleged either as an owner or lessee, hence, the alleged possession of
plaintiffs is questionable from all aspects. Defendants Sps. Napoleon Gaza and Evelyn
Gaza being the registered owner of the subject property has all the right to enjoy the
same, to use it, as an owner and in support thereof, a copy of the transfer certificate of
title No. T-47263 is hereto attached and marked as Annex "A- Gaza" and a copy of
the Declaration of Real Property is likewise attached and marked as Annex "B- Gaza"
to form an integral part hereof;

"6. That considering that the above-entitled case is an ejectment case, and considering
further that the complaint did not state or there is no showing that the matter was
referred to a Lupon for conciliation under the provisions of P.D. No. 1508, the
Revised Rule on Summary Procedure of 1991, particularly Section 18 thereof
provides that such a failure is jurisdictional, hence, subject to dismissal;

"7. That the Honorable Court has no jurisdiction over the subject of the action or suit;
"The complaint is for forcible entry and the plaintiffs were praying for
indemnification in the sum of P350,000.00 for those copra, lumber, tools, and
machinery listed in par. 4 of the complaint and P100,000.00 for unrealized income in
the use of the establishment, considering the foregoing amounts not to be rentals,
Section 1 A (1) and (2) of the Revised Rule on Summary Procedure prohibits recovery
of the same, hence, the Honorable Court can not acquire jurisdiction over the
same. Besides, the defendants Napoleon Gaza and Evelyn Gaza being the owners of
those properties cited in par. 4 of the complaint except for those copra and two (2) live
carabaos outside of the subject premises, plaintiffs have no rights whatsoever in
claiming damages that it may suffer, as and by way of proof of ownership of said
properties cited in paragraph 4 of the complaint attached herewith are bunched of
documents to form an integral part hereof;

"8. That plaintiffs' allegation that Emilio Herrera was illegally detained together with
his daughter was not true and in support thereof, attached herewith is a copy of said
Emilio Herrera's statement and marked as Annex "C-Gaza."

x x x x x x x x x." [9]

The above-quoted paragraph 2 and Special and Affirmative Defenses

contained in petitioners answer glaringly show that petitioners did not admit
impliedly that respondents have been in prior and actual physical possession
of the property. Actually, petitioners are repudiating vehemently respondents
possession, stressing that they (petitioners) are the registered owners and
lawful occupants thereof.
Respondents' reliance on Warner Barnes and Co., Ltd. vs. Reyes in [10]

maintaining that petitioners made an implied admission in their answer is

misplaced. In the cited case, the defendants' answer merely alleged that they
were "without knowledge or information sufficient to form a belief as to the
truth of the material averments of the remainder of the complaint" and "that
they hereby reserve the right to present an amended answer with special
defenses and counterclaim." In the instant case, petitioners enumerated their
[11]

special and affirmative defenses in their answer. They also specified therein
each allegation in the complaint being denied by them. They particularly
alleged they are the registered owners and lawful possessors of the land and
denied having wrested possession of the premises from the respondents
through force, intimidation, threat, strategy and stealth. They asserted that
respondents' purported possession is "questionable from all aspects." They
also averred that they own all the personal properties enumerated in
respondents' complaint, except the two carabaos. Indeed, nowhere in the
answer can we discern an implied admission of the allegations of the
complaint, specifically the allegation that petitioners have priority of
possession.
Thus, the Court of Appeals erred in declaring that herein petitioners
impliedly admitted respondents' allegation that they have prior and continuous
possession of the property.
We now resolve the basic substantial issue. In an action for forcible entry,
the plaintiff must prove that he was in prior possession of the land or building
and that he was deprived thereof by means of force, intimidation, threat,
strategy or stealth. It must be stressed, though, that he cannot succeed
[12]

where it appears that, as between himself and the defendant, the latter had a
possession antedating his own. To ascertain this, it is proper to look at the
[13]

situation as it existed before the first act of spoliation occurred. Such[14]

determination in this case requires a review of factual evidence, generally

proscribed in a petition like this. Considering, however, the conflicting factual
[15]

findings of the MTC and RTC on one hand, and the Court of Appeals on the
other, this Court takes exception to the general rule in order to resolve the
factual issues raised by the parties.
Petitioners possession of the property has been sufficiently established by
evidence. The title to the property (TCT No. T-47263) is in the name of
petitioner Napoleon Gaza. On record is a deed of sale showing that he bought
the land in 1961 from Angeles Vda. de Urrutia. Petitioner also presented
receipts of payment of realty taxes.
A disinterested witness, Barangay Secretary Victorio Conducto of Sta.
Maria, Calauag, Quezon, in his Affidavit attached to the instant
petition, stated that since 1968, spouses Gaza have been in possession of
[16]

the property and that respondents never occupied the property even for
business purposes. Upon the closure of their business, petitioners designated
Numeriano Ernesto and Renato Petil as caretakers of the lot. Upon the other
hand, respondents' allegation of prior possession of the premises is anchored
on spurious documents. The Lumber Certificate of Registration of Business
Name No. 78-2490, for one, does not specifically refer to the disputed
property. It was issued to them at a different address. Tax Declaration No. 35-
81-220 in the name of R. J. Lim is not a certified true copy of the
original. Also, respondents' purported PCA Certificate of Registration No.
[17]

6265/76 as copra dealer and the Mayor's Permit are expired

[18] [19]

documents. Not even their supposed caretaker, Emilio Herrera, submitted an

affidavit confirming that they are the lawful possessors of the property.
Furthermore, respondent Agnes Lim was later convicted by the MTC of
Calauag, Quezon in Criminal Case No. 7405 for trespassing into the subject
property. The MTC Decision confirms the falsity of respondents' claim of
[20]

prior possession. It bears emphasis that the MTC Decision was affirmed in
toto by the RTC of Calauag, Quezon, Branch 63 in Criminal Case No. 2725-
C.[21]

Where a dispute over possession arises between two persons, the person
first having actual possession is the one who is entitled to maintain the action
granted by law; otherwise, a mere usurper without any right whatever, might
enter upon the property of another and, by allowing himself to be ordered off,
could acquire the right to maintain the action of forcible entry and detainer,
however momentary his intrusion might have been. [22]

In this case, evidence clearly shows that the petitioners are the true
owners and, therefore, the lawful possessors of the land. Verily, respondents
allegation of actual possession and that petitioners deprived them of such
possession by means of force, intimidation and threat are clearly untenable.
WHEREFORE, the petition is GRANTED and the assailed Decision of the
Court of Appeals in CA-G. R. SP No. 36997 dated March 12, 1996
is REVERSED and SET ASIDE. The Decision of the RTC, Branch 63,
Calauag, Quezon in Civil Case No. C-1031 affirming the MTC Decision
dismissing respondents complaint is REINSTATED, with modification in the
sense that the award of moral and exemplary damages in favor of petitioners
is deleted.
SO ORDERED.

G.R. No. 160145 November 11, 2005

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
PEDRO O. ENCISO, Respondent.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, as amended,
assailing the Decision1 of the Court of Appeals (CA) dated September 26, 2003, which affirmed the
Decision2 of the Regional Trial Court (RTC), Iba, Zambales, Branch 71, promulgated on July 31,
2001 in LRC Case No. RTC-N-75-I. The CA and the trial court adjudicated Lot No. 2278-A, Cad.
652-D, Masinloc Cadastre in favor of respondent Pedro O. Enciso, pursuant to Section 29 of
Presidential Decree (P.D.) No. 1529.

The facts, as culled from the records of the case, show that on April 24, 2000, the respondent,
alleging to be the owner in fee simple of a parcel of residential land located in Barangay South
Poblacion, Masinloc, Zambales, filed a petition for land registration before the RTC of Iba, Zambales.
The lot is described as follows:

A parcel of land (Lot 2278-A of the subdivision plan Csd-03-012562-D being a portion of Lot 2278,
Cad. 652-D L.R.C. Rec. No.), situated in the Barrio of South Poblacion, Municipality of Masinloc,
Province of Zambales. Bounded on the NW., along line 1-2 by Sta. Lucia Street; on the NE., along
line 2-3 by Capt. Albright Street; on the SE. & SW. along line 3-4-1 by Lot 2278-B of the subd. plan.
Beginning at a point marked "1" on plan being N. 39 deg. 35E., 12.05 m. from BLLM.1,

Cad. 652-D.

thence N. 16 deg. 13E., 32.48 m. to point. 2;

thence S. 75 deg. 05E., 44.83 m. to point. 3;

thence S. 16 deg. 19W., 33.36 m. to point. 4;

thence N. 73 deg. 57W., 44.76 m. to point. of;

beginning; containing an area of ONE THOUSAND FOUR HUNDRED SEVENTY-FIVE (1,475)

square meters. All points referred to are indicated on the plan and are marked on the ground by P.S.
cyl. conc. mons. 15 x 40 cms. Bearings; true; date of original survey; Sept. 1927-July 1928 and that
of the subdivision survey; July 22, 1999 and was approved on Jan. 20, 2000.3

The respondent averred, inter alia, that he acquired title to the said lot by virtue of an extrajudicial
settlement of estate and quitclaim on March 15, 1999; the said property is not tenanted or occupied
by any person other than the respondent and his family who are in actual physical possession of the
same; and the respondent and his predecessors-in-interest have been in continuous, peaceful,
open, notorious, uninterrupted and adverse possession of the land in the concept of an owner for not
less than 30 years immediately preceding the filing of the application.4

Petitioner Republic of the Philippines, through the Office of the Solicitor General (OSG), opposed the
application on the following grounds: (a) neither the respondent nor his predecessors-in-interest
have been in open, continuous, exclusive, and notorious possession and occupation of the subject
land since June 12, 1945 or prior thereto; (b) the respondent failed to adduce any muniment of title
and/or the tax declaration with the application to prove bona fideacquisition of the land applied for or
its open, continuous, exclusive and notorious possession and occupation thereof in the concept of
owner since June 12, 1945 or prior thereto; (c) the alleged tax declaration adverted to in the
application does not appear to be genuine and the tax declarations indicate such possession to be of
recent vintage; (d) the claim of ownership in fee simple on the basis of Spanish title or grant can no
longer be availed of by the respondent considering that he failed to file an appropriate application for
registration within the period of six months from February 16, 1976 as required by P.D. No. 892; and
(e) the subject land is a portion of the public domain belonging to the Republic of the Philippines
which is not subject to private appropriation.5

After ascertaining that the jurisdictional requirements for the application were done in accordance
with the law during the initial hearing6 on November 9, 2000, the trial court issued an Order of
Default7 on January 3, 2001 against all persons with the exception of the government.

The respondent presented tax receipts to show that the property was declared for taxation purposes
in his name. He also testified that he acquired the property by inheritance from his deceased father,
Vicente Enciso, who died on May 18, 1991. He then immediately took possession of the property
and constructed a house thereon in 1991. On March 15, 1999, he and his siblings executed an
extrajudicial settlement of estate where the land was adjudicated in his favor.

The respondent further narrated that the property was originally owned by the Municipality of
Masinloc, Zambales. On October 5, 1968, the municipality passed Resolution No. 71,8 undertaking
to construct a road along the shoreline of the poblacion, but requiring landowners adjoining the
roads to share in the expenses for an inner wall adjacent to their lots. In view of this, the same
resolution provided that:

WHEREAS, where the above landowners share in the construction of the roads, the same may be
given the priority to acquire such additional available areas by purchase, if such additional areas are
not needed by the government for public use, the advances of the landowners as a result of his [sic]
construction (inner wall) be considered as price of the land, provided that the cost and value of the
inner wall exceeds the assessed value of the land, and if the cost of the inner wall is less than the
assessed value of the land, the landowners will have to pay the corresponding balance to the
government; 9

On March 8, 1969, the Municipality of Masinloc, Zambales passed supplementary Resolution No.
102,10 which stated that in consideration of the financial assistance extended by the abutting property
owners, and because the government no longer needed the additional areas for public use, the
municipality was authorizing the Municipal Mayor to enter into and sign deeds of purchase between
the municipality and the landowners concerned. Consequently, the Municipal Council of Masinloc,
Zambales unanimously approved Resolution No. 102-A11 dated March 15, 1969, authorizing its
mayor to execute a deed of sale in favor of Honorato Edao, covering a portion of the reclaimed lots
no longer needed for public use. Honorato was thus entitled to buy the lot for his help in carrying out
the project envisioned in Resolution No. 71, and after the submission of an itemized statement of the
cost of the construction of the inner wall along Sta. Lucia Street.

Immediately thereafter, the Municipality of Masinloc, Zambales, represented by its Mayor, P.A.
Edao, executed a Deed of Absolute Sale12 covering a piece of reclaimed land containing more or
less 2,790 square meters in favor of Honorato Edao. The deed stated that the vendee constructed
the inner wall needed to facilitate the fabrication of a portion of Sta. Lucia Street, which was opposite
his lot, and the extensions of Magsaysay and Capt. Albright Streets at a total expense of 1,683.80.
Considering that the assessed value of the lot was 2,092.50, or 408.70

more than the vendee spent for the construction of the inner wall, the vendee paid 408.70 to the
vendor.

The respondent admitted that Honorato was his uncle, being his fathers half-brother.13 He further
narrated that on December 9, 1980, the spouses Honorato and Esperanza Edao sold the lot to
Vicente B. Enciso for 2,092.50 viaa Deed of Absolute Sale.14 On January 17, 1981, Vicente Enciso,
Natividad Edao Asuncion and Thelma A. Edao entered into a Deed of Partition15 involving the
same parcel of land. Vicente was awarded one-half of the total area of the property, 1,398 square
meters, more or less; Natividad and Thelma got one-fourth each, or approximately 697.5 square
meters individually.

No cross-examination was conducted and no evidence was adduced by the government to

controvert the application for registration.

On May 8, 2001, Director Felino M. Cortez of the Department on Registration submitted the
Report16 of the Land Registration Authority, informing the trial court that it was not in a position to
verify whether the parcel of land subject of registration was already covered by a land patent and
previously approved isolated survey. Acting on this report, the trial court directed the Lands
Management Bureau, the Community Environment and Natural Resources Office of Iba, Zambales,
and the

Department of Environment and Natural Resources Regional Executive Director for Region III, San
Fernando, Pampanga, to submit a report on the status of the parcel of land.17

Without waiting for the final report, the trial court granted the application for registration on July 31,
2001, the dispositive portion of the decision reads:

WHEREFORE, this Court, after confirming the Order of General Default entered into the record of
this case on January 3, 2001 hereby adjudicates Lot No. 2278-A, Cad. 652-D, Masinloc Cadastre,
containing an area of 1,475 square meters, situated at Brgy. South Poblacion, Masinloc, Zambales,
Philippines, as appearing on the approved Plan No. Csd-03-012562-D (Exhibit "M") and also in the
Technical Description of said lot (Exhibit "K") in favor of the applicant whose address is at Brgy.
South Poblacion, Masinloc, Zambales, Philippines, in accordance with Section 29 of Presidential
Decree No. 1529. This adjudication however is subject to the various easements/reservations
provided for under pertinent laws, Presidential Decree and/or Presidential Letters of Instruction,
which should be annotated/projected in the title to be issued.

Once this decision becomes final, let the corresponding decree and title be issued.

SO ORDERED.18

The trial court ruled that the respondent satisfactorily proved his ownership in fee simple, as well as
the identity of the land sought to be titled. Likewise, the trial court found that the respondent, as well
as his predecessors-in-interest, had been in open, peaceful, continuous, public, adverse, and under
a bona fide claim of ownership. According to the trial court, there was no evidence that the subject
parcel of land was within any government reservation, or that the applicant was disqualified from
owning real property under the Constitution.19

The Republic of the Philippines appealed the case before the CA, contending that the trial court
erred in granting the application despite his failure to prove registrable title over Lot No. 2278-A.

The CA disposed of the appeal on September 26, 2003 and affirmed the decision of the trial court.
The fallo of the decision reads:

WHEREFORE, premises considered, the assailed decision dated July 31, 2001 of the RTC, Branch
71 of Iba, Zambales in LRC Case No. RTC-N-75-1 is hereby AFFIRMED.

SO ORDERED.20

The petitioner dispensed with the filing of a motion for reconsideration and forthwith filed the instant
petition.

The OSG assigned the following error to the appellate court:

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN GRANTING RESPONDENTS

PETITION FOR REGISTRATION SANS ANY SHOWING THAT THE SUBJECT PROPERTY WAS
PREVIOUSLY DECLARED ALIENABLE AND DISPOSABLE LANDS OF THE PUBLIC DOMAIN.21
The petitioner contends that the first and primordial element in order to warrant the registration of
title is to show that the land must be an alienable and disposable land of the public domain. On this
note, the petitioner believes that the respondent failed to adduce any evidence to show that the
subject land was already previously declared part of such alienable and disposable land of the public
domain. Furthermore, the petitioner adds that under the Regalian doctrine, all lands of the public
domain belong to the State, and those not otherwise appearing to be clearly within private ownership
are presumed to belong to it.

In his comment to the petition, the respondent asserts that the CA was correct in affirming the
decision of the land registration court. The respondent cites the following justification of the CA in
supporting his claim over Lot No. 2278-A:

Records reveal that subject land is a residential land owned by the Municipality of Masinloc,
Zambales. The Municipality of Masinloc, through Resolutions 71, 102 and 102-A-29 sold the subject
land to Honorato Edao as evidenced by the Deed of Absolute Sale dated March 31, 1969 executed
by the Municipal Mayor.

Article 423 of the Civil Code provides that:

"Art. 423. The property of provinces, cities, and municipalities is divided into property for public use
and patrimonial property."

Properties of political subdivision[s] which are patrimonial in character may be alienated. By analogy,
when a municipalitys properties for public use are no longer intended for such use, the same
become patrimonial and may be the subject of a contract. Thus, the Deed of Absolute Sale executed
by and between the Municipal Mayor of Masinloc and Honorato Edao was a valid contract. Subject
land was likewise sold by Honorato Edao to petitioner-appellees father, Vicente Enciso, by virtue of
a Deed of Absolute Sale. From then, subject land changed hand until it was acquired by petitioner-
appellee when his siblings executed an Extrajudicial Partition assigning said land to him. It was
declared for taxation purposes in his name under Tax Declaration No. 007-0700R.

Subject land was reclassified as residential. It was already segregated from the public domain and
assumed the character of private ownership. It was reclaimed by the Municipality of Masinloc and
eventually adjudicated to Honorato Edao. The Municipality of Masinloc must have been in
possession of the subject land even before 1969 considering that it was originally surveyed way
back in 1927-1928. In the exercise of its proprietary right, the Municipality of Masinloc validly
conveyed the subject land to petitioner-appellees predecessors-in-interest. Petitioner-appellees
possession and occupation of the subject land is continuous, public, adverse and uninterrupted and
in the concept an owner and no other person claimed possession and ownership of the same. Article
1137 of the Civil Code provides:

"Art. 1137. Ownership and other real rights over immovables also prescribed (sic) through
uninterrupted adverse possession thereof for thirty years, without need of titles or of good faith."

Parenthetically, petitioner-appellees possession tacked with that of his predecessors-in-interest

already complied with the thirty (30)-year requirement of open, continuous, exclusive and notorious
possession required under the law.
Prescinding from the foregoing, petitioner-appellee sufficiently and satisfactorily proved his real and
absolute ownership in fee simple; that he has a registrable title over the subject land and that he
complied with the requirements under the law to warrant registration of title over the subject land.22

The petition is meritorious.

While it is the rule that findings of fact of appellate courts are conclusive upon this Court, among the
recognized exceptions is where the findings of fact are not supported by the record or are
conspicuously erroneous as to constitute a serious abuse of discretion.23 This is the situation in this
case.

Section 14(1) of P.D. No. 1529, otherwise known as the Property Registration Decree, provides:

SEC. 14. Who may apply. The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through their duly authorized
representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable lands of
the public domain under a bona fideclaim of ownership since June 12, 1945, or earlier.

Applicants for registration of title must therefore prove the following: (a) that the land forms part of
the disposable and alienable lands of the public domain; and (b) that they have been in open,
continuous, exclusive,

and notorious possession and occupation of the same under a bona fide claim of ownership either
since time immemorial, or since June 12, 1945. It is not disputed that the land sought to be
registered was originally part of the reclamation project undertaken by the Municipality of Masinloc,
Zambales. The prevailing rule is that reclaimed disposable lands of the public domain may only be
leased and not sold to private parties. These lands remained sui generis, as the only alienable or
disposable lands of the public domain which the government could not sell to private parties except if
the legislature passes a law authorizing such sale. Reclaimed lands retain their inherent potential as
areas for public use or public service.24 The ownership of lands reclaimed from foreshore areas is
rooted in the Regalian doctrine, which declares that all lands and waters of the public domain belong
to the State.25On November 7, 1936, the National Assembly approved Commonwealth Act No. 141,
also known as the Public Land Act, compiling all the existing laws on lands of the public domain.
This remains to this day the existing and applicable general law governing the classification and
disposition of lands of the public domain. The State policy prohibiting the sale of government
reclaimed, foreshore and marshy alienable lands of the public domain to private individuals
continued under the 1935 Constitution.

Indeed, there is nothing to support the respondents claim that the property "was reclassified as
residential already segregated from the public domain and assumed the character of private
ownership." At the

moment, it is not clear as to when the proper authorities classified the subject as alienable and
disposable. It must be stressed that incontrovertible evidence must be presented to establish that
the land subject of the application is alienable or disposable.26

According to the CA, "the Municipality of Masinloc must have been in possession of the subject land
even before 1969 considering that it was originally surveyed way back in 1927-1928." This is not the
kind of possession and occupation contemplated under the law. While the subject property was still
in the hands of the municipality, it was undeniably part of the public domain. The municipality cannot
then be considered a predecessor-in-interest of the applicant from whom the period of possession
and occupation required by law may be reckoned with. Any other interpretation would be
dangerously detrimental to our national patrimony.

Even assuming that Honorato Edao, the respondents earliest predecessor-in-interest, possessed
the property as early as 1969, the respondents claim must still fail, as he was unable to prove open,
continuous, exclusive, and notorious possession and occupation of the subject land under a bona
fide claim of acquisition of ownership. As the Court ruled in Republic v. Alconaba:27

The law speaks of possession and occupation. Since these words are separated by the
conjunction and, the clear intention of the law is not to make one synonymous with the other.
Possession is broader than occupation because it includes constructive possession. When,
therefore, the law adds the word occupation, it seeks to delimit the all encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and notorious,
the word occupation serves to highlight the fact that for an applicant to qualify, his possession must
not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion
over it of such a nature as a party would naturally exercise over his own property.

The respondents possession and that of his "predecessors-in-interest" will not suffice for purposes
of judicial confirmation of title. What is categorically required by law is open, continuous,
exclusive, and notorious possession and occupation under a bona fide claim of ownership
since June 12, 1945 or earlier.

The evidence on record shows that a house was constructed on the subject property only in 1991.
Certain discrepancies likewise surround the application for registration: Honorato Edao sold a
parcel of land consisting of 2,790 square meters on December 9, 1980 to Vicente Enciso alone; on
January 17, 1981, Vicente Enciso, Natividad Edao Asuncion and Thelma Edao executed a deed
of partition covering the same lot. Why was there a need to partition the property if the entire land
had already been sold to Vicente? The Court also notes that in the said deed of partition, one-half of
the total area of the land, which was 1,398 square meters, was adjudicated in favor of Vicente;
however, in the respondents application for registration, the land sought to be registered consists
of 1,475 square meters.

Well-entrenched is the rule that the burden of proof in land registration cases rests on the applicant
who must show clear, positive and convincing evidence that his alleged possession and occupation
were of the nature and duration required by law. Bare allegations, without more, do not amount to
preponderant evidence that would shift the burden to the oppositor.28

Evidently, the respondent failed to prove that (1) Lot No. 2278-A was classified as part of the
disposable and alienable land of the public domain; and (2) he and his predecessors-in-interest have
been in open, continuous, exclusive, and notorious possession and occupation thereof in the
concept of owners since time immemorial, or from June 12, 1945.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated September
26, 2003 in CA-G.R. CV No. 72859 is REVERSED and SET ASIDE. Respondent Pedro O. Encisos
application for registration and issuance of title to Lot No. 2278-A, Cad. 652-D, Masinloc Cadastre, is
hereby DISMISSED for lack of merit.

SO ORDERED.
G.R. No. 137944 April 6, 2000

FERNANDA MENDOZA CEQUEA and RUPERTA MENDOZA LIRIO, petitioners,

vs.
HONORATA MENDOZA BOLANTE, respondent.

PANGANIBAN, J.:

Tax receipts and declarations are prima facie proofs of ownership or possession of the property for
which such taxes have been paid. Coupled with proof of actual possession of the property, they may
become the basis of a claim for ownership. By acquisitive prescription, possession in the concept of
owner public, adverse, peaceful and uninterrupted may be converted to ownership. On the
other hand, mere possession and occupation of land cannot ripen into ownership.

The Case

Before us is a Petition for Review on Certiorari of the March 19, 1999 Decision 1 of the Court of
Appeals 2 (CA) in CA-GR CV No. 43423. The assailed Decision disposed as follows: 3

WHEREFORE, for all the foregoing, the decision of the trial court appealed from is REVERSED and
SET ASIDE. In lieu thereof, judgment is hereby rendered declaring . . . Honorata Mendoza Bolante
the rightful owner and possessor of the parcel of land which is the subject of this appeal.

The Facts

The Petition herein refers to a parcel of land situated in Barangay Bangad, Binangonan, Province of
Rizal, having an area of 1,728 square meters and covered by Tax Declaration No. 26-0027. The
undisputed antecedents of this case are narrated by the Court of Appeals as follows: 4

The facts not disputed revealed that prior to 1954, the land was originally declared for taxation
purposes in the name of Sinforoso Mendoza, father of [respondent] and married to Eduarda Apiado.
Sinforoso died in 1930. [Petitioners] were the daughters of Margarito Mendoza. On the basis of an
affidavit, the tax declaration in the name of Sinforoso Mendoza of the contested lot was cancelled
and subsequently declared in the name of Margarito Mendoza. Margarito and Sinforoso are
brothers. [Respondent] is the present occupant of the land. Earlier, on October 15, 1975,
[respondent] and Miguel Mendoza, another brother of [petitioners], during the cadastral survey had a
dispute on [the] ownership of the land. 1wphi1.nt

During the pre-trial conference, parties stipulated the following facts:

1) The land subject of the case was formerly declared for taxation purposes in the name of
Sinforoso Mendoza prior to 1954 but is now declared in the name of Margarito Mendoza.

2) The parties agree[d] as to the identity of the land subject of instant case.

3) [Petitioners] are the daughters of Margarito Mendoza while the [respondent] is the only
daughter of Sinforoso Mendoza.
 4) Margarito Mendoza and Sinforoso Mendoza [were] brothers, now deceased.

5) During the cadastral survey of the property on October 15, 1979 there was already a
dispute between Honorata M. Bolante and Miguel Mendoza, brother of [petitioners].

6) [Respondent was] occupying the property in question.

The only issue involved [was] who [was] the lawful owner and possessor of the land subject of the
case.

After trial, the court a quo rendered its judgment in favor of [petitioners], the dispositive portion of
which reads as follows:

Wherefore, in view of the foregoing considerations, judgment is hereby rendered for the [petitioners]
and against the [respondent]:

1. Declaring that the parcel of land situated in Bangad, Binangonan, Rizal covered by tax
declaration no. 26-0027 in the name of Margarito Mendoza belong to his heirs, the
[petitioners] herein;

2. Ordering [respondent] to vacate the property subject of the case and deliver possession
thereof to the heirs of Margarito Mendoza.

3. Ordering the [respondent] to indemnify the [petitioners] in the sum of P10,000.00, as

actual damages.

4. Ordering the [respondent] to pay the costs.

Ruling of the Court of Appeals

The Court of Appeals reversed the trial court because the genuineness and the due execution of the
affidavit allegedly signed by the respondent and her mother had not been sufficiently established.
The notary public or anyone else who had witnessed the execution of the affidavit was not
presented. No expert testimony or competent witness ever attested to the genuineness of the
questioned signatures.

The CA further ruled that the affidavit was insufficient to overcome the denial of respondent and her
mother. The former testified that the latter, never having attended school, could neither read nor
write. Respondent also said that she had never been called "Leonor," which was how she was
referred to in the affidavit.

Moreover, the appellate court held that the probative value of petitioners' tax receipts and
declarations paled in comparison with respondent's proof of ownership of the disputed parcel.
Actual, physical, exclusive and continuous possession by respondent since 1985 indeed gave her a
better title under Article 538 of the Civil Code.

Hence, this Petition. 5

Issues
Insisting that they are the rightful owners of the disputed land, the petitioners allege that the CA
committed these reversible errors: 6

1. . . . [I]n not considering the affidavit as an exception to the general rule that an affidavit is
classified as hearsay evidence, unless the affiant is placed on the witness stand;

2. . . . [I]n holding that respondent has been in actual and physical possession, coupled with .
. . exclusive and continuous possession of the land since 1985, which are evidence of the
best kind of circumstance proving the claim of the title of ownership and enjoys the
presumption of preferred possessor.

The Court's Ruling

The Petition has no merit.

First Issue:

Admissibility of the Affidavit

Petitioners dispute the CA's ruling that the affidavit was not the best evidence of their father's
ownership of the disputed land, because the "affiant was not placed on the witness stand." They
contend that it was unnecessary to present a witness to establish the authenticity of the affidavit
because it was a declaration against respondent's interest and was an ancient document. As a
declaration against interest, it was an exception to the hearsay rule. As a necessary and trustworthy
document, it was admissible in evidence. And because it was executed on March 24, 1953, it was a
self-authenticating ancient document.

We quote below the pertinent portion of the appellate court's ruling: 7

While it is true that the affidavit was signed and subscribed before a notary public, the
general rule is that affidavits are classified as hearsay evidence, unless affiants are placed
on the witness stand (People's Bank and Trust Company vs. Leonidas, 207 SCRA 164).
Affidavits are not considered the best evidence, if affiants are available as witnesses
(Vallarta vs. Court of Appeals, 163 SCRA 587). The due execution of the affidavit was not
sufficiently established. The notary public or others who saw that the document was signed
or at least [could] confirm its recitals [were] not presented. There was no expert testimony or
competent witness who attested to the genuineness of the questioned signatures. Worse,
[respondent] denied the genuineness of her signature and that of her mother . . .
[Respondent] testified that her mother was an illiterate and as far as she knew her mother
could not write because she had not attended school (p. 7, ibid). Her testimony was
corroborated by Ma. Sales Bolante Basa, who said the [respondent's] mother was illiterate.

The petitioners allegations are untenable. Before a private document offered as authentic can be
received in evidence, its due execution and authenticity must be proved first. 8 And before a
document is admitted as an exception to the hearsay rule under the Dead Man's Statute, the offeror
must show (a) that the declarant is dead, insane or unable to testify; (b) that the declaration
concerns a fact cognizable by the declarant; (c) that at the time the declaration was made, he was
aware that the same was contrary to his interest; and (d) that circumstances render improbable the
existence of any motive to falsify. 9
In this case, one of the affiants happens to be the respondent, who is still alive and who testified that
the signature in the affidavit was not hers. A declaration against interest is not admissible if the
declarant is available to testify as a witness. 10 Such declarant should be confronted with the
statement against interest as a prior inconsistent statement.

The affidavit cannot be considered an ancient document either. An ancient document is one that is
(1) more than 30 years old, (2) found in the proper custody, and (3) unblemished by any alteration or
by any circumstance of suspicion. 11 It must on its face appear to be genuine. The petitioners herein
failed, however, to explain how the purported signature of Eduarda Apiado could have been affixed
to the subject affidavit if, according to the witness, she was an illiterate woman who never had any
formal schooling. This circumstance casts suspicion on its authenticity.

Not all notarized documents are exempted from the rule on authentication. Thus, an affidavit does
not automatically become a public document just because it contains a notarial jurat. Furthermore,
the affidavit in question does not state how the ownership of the subject land was transferred from
Sinforoso Mendoza to Margarito Mendoza. By itself, an affidavit is not a mode of acquiring
ownership.

Second Issue:

Preference of Possession

The CA ruled that the respondent was the preferred possessor under Article 538 of the Civil Code
because she was in notorious, actual, exclusive and continuous possession of the land since 1985.
Petitioners dispute this ruling. They contend that she came into possession through force and
violence, contrary to Article 536 of the Civil Code.

We concede that despite their dispossession in 1985, the petitioners did not lose legal possession
because possession cannot be acquired through force or violence. 12 To all intents and purposes, a
possessor, even if physically ousted, is still deemed the legal possessor.13 Indeed, anyone who can
prove prior possession, regardless of its character, may recover such possession. 14

However, possession by the petitioners does not prevail over that of the respondent. Possession by
1w phi1

the former before 1985 was not exclusive, as the latter also acquired it before 1985. The records
show that the petitioners' father and brother, as well as the respondent and her mother were
simultaneously in adverse possession of the land.

Before 1985, the subject land was occupied and cultivated by the respondent's father (Sinforoso),
who was the brother of petitioners' father (Margarito), as evidenced by Tax Declaration No.
26425. 15 When Sinforoso died in 1930, Margarito took possession of the land and cultivated it with
his son Miguel. At the same time, respondent and her mother continued residing on the lot.

When respondent came of age in 1948, she paid realty taxes for the years 1932-1948. 16 Margarito
declared the lot for taxation in his name in 1953 17 and paid its realty taxes beginning 1952. 18 When
he died, Miguel continued cultivating the land. As found by the CA, the respondent and her mother
were living on the land, which was being tilled by Miguel until 1985 when he was physically ousted
by the respondent. 19

Based on Article 538 of the Civil Code, the respondent is the preferred possessor because,
benefiting from her father's tax declaration of the subject lot since 1926, she has been in possession
thereof for a longer period. On the other hand, petitioners' father acquired joint possession only in
1952.
 Third Issue:

Possession of Better Right

Finally, the petitioners challenge the CA ruling that "actual and physical coupled with the exclusive
and continuous possession [by respondent] of the land since 1985" proved her ownership of the
disputed land. The respondent argues that she was legally presumed to possess the subject land
with a just title since she possessed it in the concept of owner. Under Article 541 of the Code, she
could not be obliged to show or prove such title.

The respondent's contention is untenable. The presumption in Article 541 of the Civil Code is merely
disputable; it prevails until the contrary is proven. 20 That is, one who is disturbed in one's possession
shall, under this provision, be restored thereto by the means established by law. 21 Article 538 settles
only the question of possession, and possession is different from ownership. Ownership in this case
should be established in one of the ways provided by law.

To settle the issue of ownership, we need to determine who between the claimants has proven
acquisitive prescription. 22

Ownership of immovable property is acquired by ordinary prescription through possession for ten
years.23 Being the sole heir of her father, respondent showed through his tax receipt that she had
been in possession of the land for more than ten years since 1932. When her father died in 1930,
she continued to reside there with her mother. When she got married, she and her husband
engaged in kaingin inside the disputed lot for their livelihood. 24

Respondent's possession was not disturbed until 1953 when the petitioners' father claimed the land.
But by then, her possession, which was in the concept of owner public, peaceful, and
uninterrupted 25 had already ripened into ownership. Furthermore she herself, after her father's
demise, declared and paid realty taxes for the disputed land. Tax receipts and declarations of
ownership for taxation, when coupled with proof of actual possession of the property, can be the
basis of a claim for ownership through prescription. 26

In contrast, the petitioners, despite thirty-two years of farming the subject land, did not acquire
ownership. It is settled that ownership cannot be acquired by mere occupation. 27 Unless coupled with
the element of hostility toward the true owner, 28 occupation and use, however long, will not confer
title by prescription or adverse possession. Moreover, the petitioners cannot claim that their
possession was public, peaceful and uninterrupted. Although their father and brother arguably
acquired ownership through extraordinary prescription because of their adverse possession for
thirty-two years (1953-1985), 29 this supposed ownership cannot extend to the entire disputed lot, but
must be limited to the portion that they actually farmed.

We cannot sustain the petitioners' contention that their ownership of the disputed land was
established before the trial court through the series of tax declarations and receipts issued in the
name of Margarito Mendoza. Such documents prove that the holder has a claim of title over the
property. Aside from manifesting a sincere desire to obtain title thereto, they announce the holder's
adverse claim against the state and other interested parties. 30

However, tax declarations and receipts are not conclusive evidence of ownership. 31 At most, they
constitute mere prima facie proof of ownership or possession of the property for which taxes have
been paid. 32 In the absence of actual public and adverse possession, the declaration of the land for
tax purposes does not prove ownership.33 In sum, the petitioners' claim of ownership of the whole
parcel has no legal basis. 1wphi 1.nt
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs
against petitioners.

SO ORDERED.

G.R. No. 124658 December 15, 1999

PHILIPPINE TRUST COMPANY, petitioner,

vs.
HONORABLE COURT OF APPEALS and SIMEON POLICARPIO SHIPYARD AND
SHIPBUILDING COMPANY, respondents.

YNARES-SANTIAGO, J.:

The petition before us has its origins in a decision rendered by this Court on August 25, 1969 entitled
"Philippine Trust Company vs. Simeon Policarpio, Modesta Reyes and Iluminada ("Lumen") R.
Policarpio." 1

Sometime in 1958, Iluminada "Lumen" Policarpio, obtained a loan from Philippine Trust Company
(Philtrust, for short) in the sum of P300,000.00. As security for the loan, Lumen's parents, as
sureties, executed a deed of mortgage to the bank over some parcels of land, including all the
improvements thereon, covered by Transfer Certificate of Title No. 4144 (now 51668) of the Register
of Deeds of the City of Manila and Transfer Certificate of Title No. 24182 of the Register of Deeds of
Rizal. Upon failure of Lumen Policarpio to pay the loan when it fell due, Philtrust initiated foreclosure
proceedings before the Court of First Instance (CFI) of Manila. The trial court rendered judgment for
foreclosure on October 14, 1963, which this Court affirmed on August 25, 1969. 2

On October 15, 1970, Philtrust purchased the properties at the auction sale. The sale was confirmed
by the trial court in 1971. That same year, the bank was able to consolidate ownership over the
property. On March 13, 1972, a Transfer Certificate of Title was issued in the name of the bank.
Lumen Policarpio filed a complaint in the Court of First Instance of Rizal on March 23, 1972 to
declare the auction sale void for lack of merit, however, the trial court decided in favor of Philtrust.
Lumen Policarpio elevated the case to this Court on certiorari but the petition was dismissed on July
23, 1973 for lack of merit.

In February 1974, the ancestral house of the Policarpios situated in the same property already
owned by the bank was destroyed by a typhoon. Lumen Policarpio sent letters to the bank officers
informing them of the destruction and her plan to rebuild the house. Philtrust, however, never acted
on any of the letters. Thus, Lumen Policarpio proceeded to construct the house, purportedly to
provide shelter for her ailing mother. Meanwhile, on October 10, 1976, Philtrust filed a motion for the
issuance of a writ of possession of said properties. On February 28, 1977, the trial court issued an
order declaring that the bank was entitled to the possession of the properties but allowed the
previous owners, the Policarpios, to adduce evidence showing that they built the house in good faith.
Despite having been given several opportunities to do so, the Policarpios failed to introduce any
evidence in their behalf, prompting the trial court to issue on May 29, 1979 the writ of possession.
Upon the denial of a subsequent motion for reconsideration, Lumen Policarpio filed a petition
for certiorari with the Court of Appeals, asking for leave to present evidence that she was a builder in
good faith. The case was consolidated with CA-G.R. S.P. No. 10129, entitled "Ricardo Policarpio,
Petitioner versus Hon. Elvirio Peralta, Respondent," since the two cases arose from the same facts.
On August 29, 1980, the Court of Appeals dismissed the two petitions and upheld the writ of
possession issued by the trial court. Lumen Policarpio filed a petition for review with this Court but
the same was denied for lack of merit. On motion for reconsideration, however, this Court set aside
its earlier resolution and remanded the case to the Court of Appeals to allow Lumen Policarpio to
adduce evidence showing that she was a builder in good faith. Meanwhile, on December 29, 1980,
the bank sold the properties to the present owner, Alto Industrial Enterprises, Inc. which, on
September 17, 1984, was allowed to intervene by the court a quo. In a resolution dated January 11,
1985, the Court of Appeals granted Philtrusts' motion for issuance of a writ of partial possession of
the properties involved except the portion of 1,000 square meters wherein Lumen Policarpio's house
stood. On August 31, 1987, the Court of Appeals rendered a decision, the dispositive portion of
which reads as follows:

WHEREFORE, in consequence of our conclusion that petitioner was not a builder in

good faith entitled to the right of reimbursement with the right of retention, the
submission and prayer that the writ of possession issued in this case be annulled
and set aside, should in view of the facts disclosed after hearing of this appellate
court, be as it is hereby, rejected and denied. It follows that the court a quo may now
proceed without further delay to implement the questioned writ of possession and
take such other steps and proceedings consistent with this judgment.

SO ORDERED. 3

The decision of the Court of Appeals was affirmed by the Supreme Court on September 2, 1988,
and the subsequent motion for reconsideration was denied with finality on February 15, 1989 for lack
of merit. Pursuant to the affirmed decision of the Court of Appeals, the trial court issued an alias writ
of execution and possession on August 8, 1989. The writ was served on Lumen Policarpio on
September 22, 1989. Meanwhile, she filed a motion for reconsideration on September 13, 1989
which was subsequently denied. In February 1990, the implementation of the first alias writ of
possession was ordered. When the life of the first alias writ of possession expired, Philtrust moved
for the issuance of a second alias writ of possession. On October 30, 1990, the second alias writ of
possession was received by Jose Policarpio, brother of the private respondent, at her residence on
1064 M. Naval Street, Navotas, Metro Manila.

It was only on November 14, 1990, or after eleven (11) years and six (6) months, that Philtrust was
finally placed in possession of the foreclosed properties, and thirty-one (31) years and two (2)
months from the time the case for foreclosure proceeding was instituted in the Court of First Instance
on September 29, 1959.

Thereafter, Simeon Policarpio, Modesta Reyes and Iluminada "Lumen" Policarpio fried a petition for
prohibition with preliminary mandatory injunction with the Court of Appeals alleging grave abuse of
discretion on the part of the trial court in ordering the premature implementation of the
second alias writ of possession dated October 15, 1990 alleging that when the writ of possession
was issued, the motion for reconsideration of the order of October 15, 1990 had not yet been
resolved. A motion for intervention was filed by third party claimants Concordia Ysmael, Gladys
Ysmael, and Leonila Policarpio. Another motion for intervention had been filed by Simeon Policarpio
Shipyard and Shipbuilding Corporation and R.M. Dried Fish Product. The Court of Appeals,
however, dismissed the petition saying that the Policarpios had been fully heard on the issues
involved. As to the motions for intervention filed by third party claimants, the court ruled that the
supposed intervenors are not really third party claimants but successors-in-interest of spouses
Policarpio against whom the writ is likewise enforceable since the sale of the property to Simeon
Policarpio Shipyard and Shipbuilding Corporation and the new house built on a portion of the subject
property by the Ysmaels, as well as the other transactions entered into by the Policarpios, were
made after title to the land had been consolidated in the name of the bank. On appeal to this Court,
the aforesaid decision was affirmed and declared to be immediately executory on August 26, 1991. 4

On November 11, 1992, herein private respondent Simeon Policarpio Shipyard and Shipbuilding
Corporation (SPSSC for short) filed a complaint for Damages, Injunction, and Mandamus against
petitioner Philtrust and RTC Malabon Sheriff Augusto Castro and Deputy Gallardo C. Tolentino,
alleging that on November 14, 1990, by virtue of an alias writ of execution and possession issued by
Branch 12, Regional Trial Court (RTC) of Manila on October 15, 1990, the defendant Sheriff,
together with Philtrust counsel Atty. Antonio Sikat, Justice Guillermo Santos and Maria C. Noche,
with the use of trickery and fraudulent machination, in the absence of the owner of the shipyard
shipbuilding corporation, opened the gates of the shipyard without notice to the owners and took
possession of it despite the fact that it was not one of the properties mortgaged to the bank. 5

Petitioner Philtrust filed a motion to dismiss on the grounds of res judicata and failure on the part of
private respondent SPSSC to state a cause of action. Petitioner alleged that the issues raised by
private respondent involved the same parties and the same properties which have already been
passed upon by the courts including the Supreme Court. Petitioner further alleged that the complaint
states no cause of action since the property covered by OCT-R-165 is no longer owned by private
respondent but by the Land Bank of the Philippines. It appears that the property has been
mortgaged by private respondent to the said bank in an instrument dated April 30, 1982 to guarantee
payment of a loan in the sum of Four Million Five Hundred Twenty Nine Thousand Pesos
(P4,529,000.00). 6

The trial court denied the motion to dismiss filed by petitioner Philtrust on the ground that the
doctrine of res judicatais inapplicable as to
OCT-R-165. 7 On motion for reconsideration filed by petitioner Philtrust, the trial court ruled that the
case was one for damages anchored on the alleged improper implementation by the defendant
Sheriff of the alias writ of possession subjecting thereto the property covered by OCT-R-165, which
is entirely separate and distinct from the property subject of the writ. Since the corporation was the
one in possession of the property at the time of the implementation of the writ, it is the real party in
interest as it was the one prejudiced by the alleged improper implementation of the writ of
possession. 8

Petitioner Philtrust appealed to the Court of Appeals reiterating its claim that private respondent's
complaint states no cause of action since private respondent failed to redeem its mortgaged property
covered by OCT-R-165 to Landbank within the one year period of redemption and, hence, is not a
real party in interest.

On July 30, 1995, the Court of Appeals affirmed the ruling of the trial court, stating that as far as the
parcels of land covered by TCT 234088 and TCT 24182 are concerned, there is identity of subject
matter. But as to the property covered by OCT-R-165, the doctrine of res judicata is inapplicable.
The Court of Appeals also ruled that although the property covered by OCT-R-165 had been
foreclosed by Landbank as early as April 27, 1987, and private respondent failed to redeem it within
the one year period of redemption, since there was no showing that a second or final deed of sale
has been executed in favor of Landbank, there could not have been a resulting transfer of title
covering said property in favor of Landbank. 9 Their motion for reconsideration having been denied
by the Court of Appeals, Philtrust has instituted the present petition.

Petitioner reiterates its claim that res judicata is applicable as to OCT-R-165 and that private
respondent's complaint states no cause of action.

We find no merit in the petition.

The litigation over the properties of the Policarpios subject to foreclosure by Philtrust has spanned
almost 40 years since its inception. Atty. Lumen Policarpio has instituted a number of petitions
before us, in an apparent attempt to forestall foreclosure of the properties mentioned in Case No. L-
228685 entitled, "Philippine Trust Company vs. Simeon Policarpio, Modesta Reyes, and Iluminada
(Lumen) R. Policarpio," rendered by this Court on August 25, 1969. The said decision specifically
identified the parcels of land subject of the deed of mortgage executed by spouses Policarpio to
secure the loan of Lumen Policarpio to be those "covered by Transfer Certificate of Title No. 41144
(now 51668) of the Register of Deeds of the City of Manila, and Transfer Certificate of Title No.
24182 of the Register of Deeds of Rizal." 10

The same properties were the subject of litigation between the same parties before this Court in the
following cases:

1. G.R. No. L-22685 On August 25, 1969, this Court affirmed the
judgment of foreclosure by the trial court in favor of Philtrust.

2. G.R. No. L-37143 On July 20, 1973, this Court dismissed the
petition for review on certiorari filed by the Policarpios which sought
to declare the auction sale void for lack of notice.

3. G.R. No. 55900 Initially, this Court denied the petition filed by
Lumen Policarpio, but on a motion for reconsideration, we remanded
the case to the Court of Appeals to determine whether petitioner was
a builder in good faith.

4. G.R. No. 81142 On February 10, 1989, this Court resolved with
finality to uphold its resolution of September 28, 1988 and the
decision of the Court of Appeals dated August 31, 1987 that Lumen
Policarpio was a builder in bad faith and the writ of possession in
favor of Philtrust be implemented without further delay. 11

5. G.R. No. 97963 On August 26, 1991, this Court again dismissed
the petition of Simeon Policarpio, Modesta Reyes and Iluminada
"Lumen" Policarpio questioning the propriety of the implementation of
the second alias writ of possession alleging that when the writ of
possession had been implemented, a motion for reconsideration had
not yet been resolved. 12

The complaint for damages filed by private respondent SPSSC with the Regional Trial Court of
Malabon, Metro Manila, Branch 170, on November 19, 1992, however, was predicated on the
alleged improper implementation of the alias writ of execution involving two parcels of land covered
by TCT 234088 and OCT-R-165. Respondent Court of Appeals noted that TCT 234088 is actually a
consolidation of lots sold to Simeon Policarpio Shipyard and Shipbuilding Corporation by spouses
Simeon Policarpio and Modesta Reyes after title to the properties subject of foreclosure has already
been consolidated in the name of petitioner Philtrust. Among the parcels of land sold was the lot
covered by TCT No. 24182 of the Register of Deeds of Rizal, which property had been identified by
this Court as one of the properties mortgaged to Philtrust on May 23, 1958. 13 Hence, insofar as the
parcel of land covered by TCT 24182 included in TCT 234088 is concerned, there is an identity of
parties, subject matter and cause of action. Consequently, the trial court and the Court of Appeals
did not err in declaring that res judicata is applicable as to the complaint for damages based on the
improper implementation of the writ of possession involving TCT 24182 included in TCT 234088
because all the elements of res judicata are present, to wit: (a) the former judgment is final; (b) the
court which rendered it had jurisdiction over the subject matter and the parties; (c) it was a judgment
on the merits; and (d) there must be, between the first and second actions, identity of parties, subject
matter and causes of
action. 14

With regard to the parcel of land covered by OCT-R-165, however, there is no showing, and there is
nothing on the records, to indicate that it has ever been mortgaged by the Policarpios or their
successors in interest to petitioner Bank. In fact, the aforesaid parcel of land could not have been the
subject of litigation between the said parties considering that the Original Certificate of Title No. R-
165 was only issued in the name of private respondent, Simeon Policarpio Shipyard and
Shipbuilding Corporation, on October 14, 1981, more than twelve years after the rendition of the
afore-stated Supreme Court judgment. 15 Hence, res judicata is not applicable as regards OCT-R-165
because there is no identity of the subject matter.

Petitioner makes much issue of the fact that private respondent has failed to redeem the foreclosed
property covered by OCT-R-165 from Landbank and hence, not being the owner of the property in
question, private respondent's complaint for damages states no cause of action.

This contention deserves scant consideration. Rule 3, Section 2 of the 1997 Rules of Civil Procedure
requires that every action "must be prosecuted and defended in the name of the real party in
interest." This means that the action must be brought by the person who, by substantive law,
possesses the right sought to be enforced and not necessarily the person who will ultimately benefit
from the recovery.

Private respondent SPSSC does not dispute that the parcel of land covered by OCT R-165 has been
mortgaged to the Landbank of the Philippines to secure a loan in the sum of Four Million Five
Hundred Twenty Nine Thousand Pesos (P4,529,000.00) on April 30, 1982. The property was
foreclosed as early as April 27, 1987 as evidenced by a certificate of sale issued by the ex-
officio sheriff of Malabon. The certificate of sale was inscribed in the Register of Deeds on
September 21, 1987, giving private respondent one year to redeem it. However, private respondent
failed to redeem the said property within the one year redemption period. Nevertheless, despite
failure of private respondent to redeem the property within the one year period following its
foreclosure, the bank has deferred consolidation of title and has given private respondent the option
to re-acquire the property subject to certain terms under negotiation. A certification issued by the
bank dated October 18, 1994 reads:

This is to certify that a certain property located in Navotas, Rizal owned by Simeon
Policarpio Shipyard and Building Corporation and covered by OCT-R-165 was
foreclosed by the bank per certificate of sale dated April 29, 1994. The said
corporation, represented by Atty. Lumen Policarpio, was given the option to re-
acquire the property under the terms presently being negotiated with Landbank.

Although the one year period of redemption had expired on September 21, 1988, this
bank has deferred the consolidation of title in view of the report that said property is
fully submerged in water. 16

Since private respondent was in possession of the aforesaid parcel of land when the writ of
possession was improperly implemented by the sheriff, it is not correct therefore to say that private
respondent does not have a cause of action, simply because it was no longer the owner of the
property in question when the writ of possession was implemented. It is elementary that a lawful
possessor of a thing has the right to institute an action should he be disturbed in its enjoyment.
Verily, Article 539 of the Civil Code states that
 Every possessor has a right to be respected in his possession; and should he be
disturbed therein, he shall be restored to said possession by the means established
by the laws and rules of court. . . .

The phrase "every possessor" in the article indicates that all kinds of possession, from that of the
owner to that of a mere holder, except that which constitutes a crime, should be respected and
protected by the means established and the laws of procedure. 17 Consequently, private respondent
having been in lawful possession of the property covered by OCT-R-165 at the time the writ of
possession was implemented, may institute an action for having been disturbed in its enjoyment.

WHEREFORE, the decision rendered by the Court of Appeals, in C.A. G.R. SP No. 39342,
dismissing the instant petition for certiorari filed by Philippine Trust Company is AFFIRMED in toto.

SO ORDERED.

G.R. No. L-43345 July 29, 1976

JOSEFINA S. DE LAUREANO, petitioner,

vs.
HON. MIDPANTAO L. ADIL, in his capacity as Presiding Judge, Court of First Instance of
Iloilo, Branch II, and ONG CU, respondents.

Celso Ed. T. Unson for petitioner.

Rolando Magbanua Antiquiera for private respondent.

AQUINO, J.:

Josefina S. de Laureano in this special civil action of certiorari assails the interlocutory orders of the
Court of First Instance of Iloilo, denying her motions for execution and for a preliminary mandatory
injunction in an ejectment suit which was decided in her favor by the city court of Iloilo City and
which was appealed by the lessee, Ong Cu (Civil Case No. 10370).

Mrs. Laureano is the registered owner of Lots 996 and 1004-B with a total area of 3,107 square
meters located at the corner of Iznart and Solis Streets, Iloilo City. The lots were leased to Ong Cu
for fifteen year period which allegedly expired on August 31, 1974.

In view of Ong Cu's failure to vacate the lots and remove his improvements thereon. Mrs. Laureano
filed against him an ejectment suit in October, 1974 in the city court of Iloilo City.

After trial, the city court on September 23, 1975 rendered a judgment ordering Ong Cu to vacate the
lots, to restore their possession to Mrs. Laureano, to remove his buildings and other improvements
thereon and to pay P12,428 monthly as compensation for the use and occupation of the lots from
September 1, 1974 up to the time he vacates them, with interest at twelve percent per annum from
the date of accrual plus P10,000 as moral and exemplary damages and attorney's fees.

Ong Cu appealed to the Court of Fist Instance of Iloilo. Instead of filing a supersedeas bond based
on the findings of the city court in its decision, Ong Cu asked the city court ex parte to approve his
supersedeas bond in the sum of P22,000 and to fix the rental value of the two lots at P1,200 a
month. The city court granted that ex parte motion in its order of October 8, 1975. Thereafter, the
record was elevated to the Court of First Instance. The case was assigned to the sala of respondent
Judge.

On November 4 Mrs. Laureano received a notice from the clerk of court that Ong Cu's appeal had
been docketed. On November 13 she filed a motion in the lower court praying for a preliminary
mandatory injunction to restore her to the possession of the said lots. Invoking article 1674 of the
Civil Code and section 9, Rule 70 of the Rules of Court, she alleged that Ong Cu's appeal was
frivolous and dilatory.

She also asked for immediate execution of the city court's judgment on the ground that Ong Cu's
supersedeas bond was inadequate and that he had failed to deposit the sum of P12,428 monthly as
reasonable value of the use and occupation of the lots adjudged by the city court.

Ong Cu opposed the two motions. The lower court in its order of December 9, 1975 upheld the city
court's order fixing the supersedeas bond and the amount to be deposited by Ong Cu.

After the lower court's attention was called to its failure to resolve Mrs. Laureano's other motion for a
mandatory injunction, it ruled in its order of February 12, 1976 that the writ could not be granted
because it had already sanctioned Ong Cu's supersedeas bond, the purpose of which was to stay
execution pending appeal. The lower court reasoned out that it would be absurd to stay execution
and at the same time restore possession to the plaintiff by granting the mandatory injunction. It
regarded Ong Cu as a possessor in good faith entitled to reimbursement of his necessary and useful
expenses.

The instant certiorari action was filed on March 25, 1976. The issue is whether the lower court acted.
with grave abuse of discretion in denying Mrs. Laureano's motions for execution and a mandatory
injunction.

The motion for execution. Rule 70 of the Rules of Court provides:

SEC. 8. Immediate execution of judgment. Haw to stay same. If judgment is

rendered against the defendant, execution shall issue immediately, unless an appeal
has been perfected and the defendant to stay execution files a sufficient bond,
approved by the municipal or city court and executed to the plaintiff to enter the
action in the Court of First Instance and to pay the rents, damages, and costs
accruing down to the time of the judgment appealed from, and unless, during the
pendency of the appeal, he deposits with the appellate court the amount of rent due
from time to time under the contract, if any, as found by the judgment of the
municipal or city court to exist. In the absence of a contract, he shall deposit with the
court the reasonable value of the use and occupation of the premises for the
preceding month or period at the rate determined by the judgment, on or before the
tenth day of each succeeding month or period. The supersedeas bond shall be
transmitted by the municipal or city court, with the other papers, to the clerk of the
Court of First Instance to which the action is appealed.

All moneys so paid to the appellate court shall be deposited in the provincial or city
treasury, and shall be held there until the final disposition of the appeal, unless the
court, by agreement of the interested parties, or in the absence of reasonable
grounds of opposition to a motion to withdraw, or for justifiable reasons, shall decree
otherwise. Should the defendant fail to make the payments above prescribed from
time to time during the pendency of the appeal, the appellate court, upon motion of
 the plaintiff, of which the defendant shall have notice, and upon proof of such failure,
shall order the execution of the judgment appealed from with respect to the
restoration of possession, but such execution shall not be a bar to the appeal taking
its course until the final disposition thereof on its merits.

xxx xxx xxx

As explicitly provided in section 8, the judgment of tile inferior court in plaintiff's favor in an ejectment
case is immediately executory. Thus, where the city court on the day it rendered the judgment
ordered the execution thereof and the defendant did not perfect his appeal and did not post a
supersedeas bond, it was held that certiorari would not lie to set aside the execution. Section 8 of
Rule 70 is an exception to the general rule as to the execution of the judgment of an inferior court
which is found in section 18, Rule 5 of the Rules of Court (Pascua vs. Nable, 71 Phil. 186).

The inferior court's judgment is immediately executory in order to prevent further damages to the
plaintiff should the defendant continue to deprive him of the possession of the premises in litigation
(Yu Tiong Tay vs. Barrios, 79 Phil. '597, 601).

The defendant may stay execution by (a) perfecting an appeal and filing a supersedeas bond and (b)
paying from time to time either to the plaintiff or to the Court of First Instance during the pendency of
the appeal the rentals or the reasonable value Of the use and occupation of the property as fixed by
the inferior in its judgment (Sison vs. Hon. Bayona, 109 Phil. 567, 561; Vda. de Palanca vs. Chua
Keng Kian, L-26430, March 11, 1969, 27 SCRA 356).

The reasonable value of the use and occupation of the premises is that fixed by the inferior court in
its judgmentbecause the rental stipulated in the lease contract that had expired might no longer be
the reasonable value for the use and occupation of the premises by the reason of the change or rise
in value (Aylon vs. Jugo, 78 Phil. 816).

The purpose of the supersedeas bond is to secure payment of the rents and damages adjudged in
the appealed judgment. Hence, the bond is not n if the defendant deposits in court the amount of
back rentals as fixed in the judgment. In other words, the supersedeas bond answers only for rentals
was in the judgment and not for those that may accrue during the pendency of the appeal which are
guaranteed by the periodical deposits to be made by the defendant. (Sison vs. Hon. Bayona, supra).
The appeal bond answers for the costs (Sanchez vs. Zosa, L-27043, November 28, 1975, 68 SCRA
171, 174; Contreras vs. Dinglasan 79 Phil. 42).

The damages contemplated in section 8 of Rule 70 refer to the reasonable compensation for the use
and occupation of the property which is generally measured by its fair rental value. It cannot refer to
other damages which are foreign to the enjoyment or material possession of the property.
Consequently attorney's fees cannot be considered as damages (Castueras vs. Bayona, 106 Phil.
340).

In the instant case, the city court found that Ong Cu's lease expired on August 31, 1974 and that the
reasonable value of the use and occupation of the two lots is four pesos a square meter or P12,428
monthly. To stay execution, Ong Cu should have filed, and the city court should have required, a
supersedeas bond in the total amount of the reasonable value of the use and occupation of the two
lots for the period from September 1, 1974 to September, 1975, or for thirteen months, at the rate
fixed in the city court's judgment which is P12,428.
The supersedeas bond should be in the total sum of P161,564.00. And the amount to be deposited
monthly beginning October, 1975 is that same amount of P12,428. The deposit should be made on
or before the tenth day of the succeeding month.

The city court erred in issuing ex parte an order granting Ong Cu's motion fixing the supersedeas
bond at P22,000 and the monthly deposit at P1,200 which was the rental stipulated in the lease
contract that had already expired. The city court should not have allowed Ong Cu to dictate the
amount of the supersedeas bond and the amount of the monthly payments to be deposited in court.

The reasonable value of the use and occupation of the two lots was already fixed in its judgment.
That value is the value to be deposited in court. Ong Cu's motion that it be fixed at P1,200 was
uncalled for and was in contravention of the mandatory provisions of section 8 of Rule 70.

Also contrary to the peremptory provisions of section 8 was Ong Cu's act of fixing his supersedas
bond at P22,000 instead of at the amount equivalent to the total compensation or rentals Is that had
accumulated up to the rendition of the city court's judgment. That is the amount of the supersedeas
bond unalterably fixed in section 8.

The lower court theorized that the city court's order of October 8, 1975 approving Ong Cu's
supersedeas bond in the sum of P22,000 and provisionally fixing the monthly rental deposited at
P1,200 was a valid amendment of the city court's decision of September 23. That theory is
untenable. It distorts the meaning of an amendment. Ong Cu did not move. that the decision be
amended. The order according to its letter and tenor can in no sense be interpreted as amendment
of the city court's decision. It makes no reference to the decision.

At the time the order was issued, Ong Cu had already riled his notice of appeal. He did not rile a new
notice of appeal by indicating therein that he was appealing from the city court's ,decision as
supposedly amended by its order of October 8. He could not have done so because the October 8
order in its face does not purport to amend the decision.

It results that Ong Cu's supersedeas bond was inadequate and that he did not deposit the
compensation for the use and occupation of the two lots which wits fixed in the city court judgment.
His supersedeas bond and his deposits were not sufficient to stay execution.

If this were a case where the defendant did not file any supersedeas bond or did not make any
monthly deposit, then Mrs. Laureano would be entitled as a matter of right to the immediate
execution of the city court's judgment both as to the restoration of possession and the payment of
the accrued rentals or compensation for the use and occupation of the premises (De Pages and
Vda. de Rodriguez vs. Hon. Canonoy, 116 Phil. 898, 901; Paulino, Sr. vs. Hon. Surtida, 109 Phil.
621, 626).

In such a case ' the execution is mandatory. The only exceptions are the existence of fraud,
accident, mistake or execusable negligence which prevented the defendant from posting the
supersedeas bond or making the monthly deposit, or the occurrence of supervening events which
brought about a material change in the situation of the parties and which would make the execution
inequitable (Cunanan vs. Rodas, 78 Phil. 800; Laurel vs. Abalos, L-26098, October 31, 1969, 30
SCRA 281).

This is a case where there was a supersedeas bond and where monthly de sits were made but the
bond and the deposit were inadequate or were not in conformity with the city court's judgment. Ong
Cu committed a mistake because he followed the erroneous order of the city court which fixed the
supersedeas bond and the monthly deposit in contravention of its own decision and, consequently,
in violation of section 8 of Rule 70. Because of that mistake, immediate execution under Rule 70
would not be warranted (See Yu Phil. Khim vs. Amparo, 86 Phil. 441, 445, Bantug vs. Montinola, 73
Phil. 13, 20; Kraut vs. Encarnacion, 96 Phil. 986; Tagulimot vs. Makalintal, 85 Phil. 40; De la Cruz
vs. Burgos, L-28095, July 30, 1969, 28 SCRA 977). The Court of First Instance has discretion to
order the execution of a new supersedeas bond to replace a defective one (Zamora vs. Dinglasan
and Hilario, 77 Phil. 46, 53).

Ong Cu should be given a thirty-day period from notice within which to file a new supersedeas bond
in the sum of P161,564 and to deposit the value of the use and occupation of the two lots at the rate
of P12,428 beginning October, 1975 less the amounts already deposited by him. Execution should
issue if he fails to file a new supersedeas bond and to make up for the deficiency in his monthly
deposits.

Motion for mandatory injunction. The Civil Code provides:

ART. 1674. In ejectment cases where an appeal is taken the remedy granted in
article 539, second paragraph, shall also apply, if the higher court is satisfied that the
lessee's appeal is frivolous or dilatory, or that the lessor's appeal is prima
facie meritorious. The period of ten days referred to in said article shall be counted
from the time the appeal is perfected. (n)

Article 1674 is reproduced in section 9 of Rule 70. Article 539 of the Civil Code in its second
paragraph grants to the possessor, who was deprived of the possession of his real property through
forcible entry, the right to secure from an inferior court in the action for forcible entry a writ of
preliminary mandatory injunction to restore him in his possession.

Article 1674 gives to the plaintiff in an unlawful detainer case originating in the inferior court and
appealed to the Court of First Instance the remedy which article 539 gives to the plaintiff in a forcible
entry case. It is designed to eliminate the injustice of the old rule which allowed the lessee to
continue in possession during an appeal even if the owner or plaintiff has an immediate right to the
premises in litigation (pp. 98,143, Report of Code Commission).

Article 1674 is in consonance with the summary character of an ejectment suit which is an
expeditious means for recovering possession of real property (Deveza vs. Montecillo, L-23942,
March 28, 1969, 27 SCRA 822; Mara, Inc. vs. Estrella, L40511, July 25, 1975, 65 SCRA 471) but the
effectiveness of which was often frustrated by defendant's dilatory tactics which were tolerated by
inferior courts (Vda. de Palanca vs. Chua Keng Kian L-26430, March 11, 1969, 27 SCRA 3.56, 365-
6).

The decisive issue is whether the pleadings, the city court's decision and Ong Cu's contentions show
that his appeal is manifestly frivolous and dilatory.

There is no question that Mrs. Laureano is the registered owner of the two lots and that they were
leased to Ong Cu for a fifteen year period counted from September 1, 1959 and expiring on August
31, 1974. Ong Cu in his answer to the ejectment complaint unmistakably admitted that the lease
expired on that date. He alleged that there were negotiations for his purchase of the two lots.

His defenses were that the ejectment action was premature because he was still considering Mrs.
Laureano's proposal to sell the lots; that the removal of his buildings and iniprovements allegedly
worth P1,800,000 would prejudice him and entail considerable expenses; that there is difficulty in
looking for another site during the short period granted to him by Mrs. Laureano; that he is willing to
buy the lots at a reasonable price, and that the price fixed by Mrs. Laureano is excessive.
Those defenses cannot defeat the ejectment suit. The expiration of lease and Mrs. Laureano's
refusal to renew it made Ong Cu a deforciant or an unlawful with holder of the possession of the lots.
He has become a possessor in bad faith. The Civil Code provides:

ART. 1669. If the lease was made for a determinate time, it ceases upon the day
fixed, without the need of a demand. (1565)

ART. 1671. If the lessee continues enjoying the thing after the expiration of the
contract over the lessor's objection, the former shall be subject to the responsibilities
of a possessor in bad faith. (n)

ART. 1673. The lessor may judicially eject the lessee for any of the following causes:

(1) When the period agreed upon, ... has expired.

xxx xxx xxx

(1569a)

The rule is that if after the termination of the lease contract the lessee prolongs his occupation of the
premises, there is unlawful detainer and article 1674 applies. For the purpose of that article, it is
enough that the plaintiff is the owner of the land and that the defendant is in temporary occupation
thereof whether under a lease contract or on mere tolerance or under a temporary permit. (De la
Cruz vs. Bocar, 99 Phil. 491).

The lower court assumed that Ong Cu in constructing his building on the leased lots is a possessor
in good faith entitled to reimbursement of the necessary and useful expenses incurred by him and
with a right of retention, as contemplated in articles 546 and 547 of the Civil Code.

That assumption is erroneous. As a lessee, who constructed a building on the leased land, Ong Cu
cannot be characterized as a builder in good faith. Under article 448 of the Civil Code the owner of
the land on which anything has been built in good faith may appropriate the building after payment of
the indemnity provided in articles 546 and 548 of the Civil Code.

Article 448 applies to a case where one builds on land of which he honestly claims to be the owner
and not to lands wherein one's only interest is that of a lessee under a rental contract. A contrary
rule would place it within the power of the lessee "to improve his landlord out of his property" (Alburo
vs. Villanueva, 7 Phil. 277, 280; Cortes vs. Ramos, 46 Phil. 184; Fojas vs. Velasco, 51 Phil. 520;
Bantug vs. Montinola, 73 Phil. 13).

In other words, article 448 refers to a possessor who occupied the land in the belief that he was the
owner thereof. It does not apply to the lessee because the lessee knows at the outset that he is not
the owner of the land (Lopez, Inc. vs. Philippine & Eastern Traiding Co., Inc., 98 Phil. 348). The
tenant has no pretension to being the owner of the land (Rivera vs. Trinidad, 48 Phil. 396, 401).

As noted by the city court, Ong Cu's rights with respect to the improvements made by him on the
leased land are governed by the following provisions of the Civil Code:

ART 1678. If the lessee makes, in good faith, useful improvements which are
suitable to the use for which the lease is intended, without altering the form or
substance of the property leased, the lessor upon the termination of the lease shall
 pay the lessee one-half of the value of the improvements at that time. Should the
lessor refuse to reimburse said amount, the lessee may remove the improvements,
even though the principal thing may suffer damage thereby, He shall not, however,
cause any more impairment upon the property leased than is necessary.

With regard to ornamental expenses, the lessee shall not be entitled to any
reimbursement, but he may remove the ornamental objects, provided no damage is
caused to the principal thing, and the lessor does not choose to retain them by
paying their value at the time the lease is extinguished. (n)

Under article 1678 it is the lessor who has the option to pay for one-half of the value of the
improvements which the lessee has made in good faith, which are suitable for the use for which the
lease is intended and which have not altered the form and substance of the land (Philippine National
Bank vs. Pineda, L-29748, August 29, 1969, 29 SCRA 262; Lapea and Pineda vs. Morfe, 101 Phil.
997; Sto. Domingo vs. Chua Man, 105 Phil. 220; Bacaling vs. Laguda, 70 O. G. 2694, 54 SCRA
243).

Contrary to the lower courts impression, the lessee has no right of retention because article 546 of
the Civil Code does not apply to the improvements made by him. Only the possessor in good faith
has a right of retention under article 546. As already noted, article 1671 regards an overstaying
lessee as a possessor in bad faith.

The lower court discerned an absurdity or incongruency in allowing a defendant in an ejectment

case to stay execution of the inferior court's decision, by filing a supersedeas bond and making
monthly deposits, and at the same time granting a mandatory injunction to restore possession on the
theory that the defendant's appeal is frivolous and mandatory.

The absurdity is more apparent than real. The execution in an ejectment case has two espects: (a)
possession and (b) the rentals or reasonable value of the use of the premises, The mandatory
injunction refers to the possession of the premises in litigation.

On the other hand, the supersedeas bond and the monthly deposits are primarily designed to insure
that the plaintiff would be paid the back rentals or the compensation for the use and occupation of
the premises should the inferior court's decision in his favor be affirmed on appeal. Hence, if no bond
was filed or no monthly deposit was made, the plaintiff is entitled to the possession of the premises.
To allow the defendant to continue his possession without any security for the rentals would be
prejudicial to the plaintiff. He might not be able to recover the back rentals when the judgment in his
favor becomes final and executory. In that event, his claim for rentals would be illusory or ineffectual.

If the mandatory injunction is granted, defendant's possession would cease but the supersedeas
bond and the deposits already made would subsist as security for the accrued pecuniary liability of
the defendant to the plaintiff. The execution as to the rentals or compensation for the use of the
premises would be stayed.

It results that the lower court gravely abused its discretion in not granting the writ of mandatory
injunction. Its questioned orders were predicated on erroneous assumptions.

Generally, certiorari does not lie to question the propriety of an interlocutory order of the trial court.
Interlocutory orders ordinarily should be reviewed when an appeal is taken from the trial court's
judgment. Not every procedural error or erroneous legal or factual conclusion amounts to a grave
abuse of discretion. An error of judgment is not necessarily a jurisdictional error.
But when a grave abuse of discretion was patently committed, such as when the lower court acted
capriciously and whimsically, or petitioner's contention appears to be clearly tenable, or the broader
interests of justice or public policy require the setting aside of the interlocutory order, then it devolves
upon this Court in a certiorari proceeding to exercise its supervisory authority and to correct the error
committed which in such a case is equivalent to lack of jurisdiction (Sanchez vs. Zosa, L-27043,
November 28, 1975, 68 SCRA 171, 175; Pacheco vs. Tumangday and Fernando, 108 Phil. 238;
Manila Electric Co. and Sheriff of Quezon City vs. Hon. Enriquez, etc. and Espinosa, 110 Phil. 499).

The immediate possession to be granted to Mrs. Laureano under the writ of mandatory injunction
would embrace the portions of the two lots not occupied by Ong Cu's improvements.

As to the portions of the lots occupied by Ong Cu's improvements, their demolition would be
necessary in order to deliver the possession thereof to Mrs. Laureano. In such a case, the provisions
of section 14, Rule 39 of the Rules of Court should be observed. A special order of demolition should
be issued only after r notice and hearing a. c g and after giving Ong Cu a reasonable time effect the
removal.

The disposition of the appeal in the lower court should proceed in accordance. with section 45 of the
Judiciary Law as amended. The grant of the mandatory injunction constitutes a prejudgment of the
appeal with respect to the possession of the two lots. The main point to be resolved in the lower
court's disposition of the appeal is the correctness of the city court's finding on the reasonable value
of the use and occupation of the two lots after the lease expired on August 31, 1974.

In filing the ejectment suit Mrs. Laureano opted not to reimburse Ong Cu for his improvements.
Consequently, there is no issue as to the reimbursement to be made under article 1678. What period
should be given to Ong Cu for the removal of his improvements is a matter that should be judiciously
resolved by the lower court in the light of the evidence introduced in the city court and the evidence
that will be presented during the hearing on the petition for a special order of demolition. Ong Cu's
rights under the law should be respected. Nothing oppressive or arbitrary should be perpetrated in
connection with the removal of his improvements.

WHEREFORE, the lower court's orders of December 9, 1975 and February 12, 1976 are set aside.

(1) The lower court is directed to require Ong Cu (a) to file within thirty (30) days from
notice a new supersedeas bond in the amount of P161,564 representing the
reasonable compensation for the use and occupation of the two lots, at the rate
found by the city court, from September 1, 1974 to September, 1975, when the city
court rendered its judgment, and (b) to deposit in court within the same period the
compensation for the use and occupation of the lots for the period from October 1,
1975 to June, 1976 at the rate of P12,428 a month, the amount fixed in the inferior
court's judgment, less the amounts already deposited by Ong Cu at the rate of
P1,200 a month.

(2) If after June, 1976 he has not restored to Mrs. Laureano the portions of the two
lots not occupied by his buildings, then h should deposit in court on or before the
tenth day of each month, as prescribed in section 8, Rule 70 of the Rules of Court,
the same sum of P12,428 until he has complied with the mandatory injunction
decreed herein.

(3) The lower court is further directed to issue a writ of preliminary mandatory
injunction requiring Ong Cu to vacate the two lots in question, to deliver the
 possession thereof to Mrs. Laureano and to remove his buildings and improvements
after the court has passed upon the corresponding petition for demolition.

(4) After Ong Cu has complied with the mandatory injunction with respect to the
portions of the lots not occupied by his buildings and improvements, he should
deposit in court the value of the use and occupation of the portions of the two lots
occupied by his buildings at the rate of four pesos a square meter. Costs against
respondent Ong Cu.

SO ORDERED.

G.R. No. L-40511 July 25, 1975

MARA, INC., petitioner,

vs.
HON. JUSTINIANO C. ESTRELLA, City Judge of Quezon City, Branch V, and JOSE DE
LEON, respondents.

Araneta, Mendoza and Papa for petitioner.

Onofre K. Quizon for respondent Jose de Leon.

AQUINO, J.:

On May 4, 1973 Mara, Inc. filed in the City Court of Quezon City a complaint for forcible entry
against Jose de Leon. It alleged that on or about April 5, 1973 De Leon through force, intimidation,
threat, strategy and stealth occupied Lots 7, 9, 11 and 13, located at G. Araneta Avenue, Sta. Mesa
Heights Subdivision, Barrio Santol, Quezon City with a total area of four thousand square meters,
registered in the name of Mara, Inc. as shown in Transfer Certificates of Title Nos. 127719, 127720,
127721 and 127722 of the Registry of Deeds of Quezon City. Mara, Inc. further alleged that it had
prior possession of the four lots (Civil Case No. V-23366).

On May 8, 1973 or four days after the filing of the complaint, Mara, Inc. asked the City Court to issue
a writ of preliminary mandatory injunction for the purpose of restoring to it the possession of the said
lots.

De Leon opposed the motion on the grounds that Mara, Inc. was never in possession of the lots; that
its titles were derived from Original Certificate of Title No. 735 which was allegedly void, and that the
said lots were covered by Original Certificate of Title No. 56 which was being reconstituted in the
Court of First Instance of Rizal, Quezon City Branch IX and which is in the name of the spouses Blas
Fajardo and Pantaleona Santiago.

Judge Justiniano C. Estrella in his order of October 3, 1973 deferred the resolution of the said
motion until the trial of the case because of the jurisdictional issue raised by De Leon. In his order of
February 1, 1974 Judge Estrella denied De Leon's motion to dismiss the complaint on the ground of
lack of jurisdiction. However, he later reaffirmed his prior order to hold in abeyance the resolution of
plaintiff's motion for the issuance of a preliminary mandatory injunction (Order of February 25,
1974).1wph1.t
After Judge Estrella's attention was called to this Court's decision in Benin vs. Tuason, L-26127,
Alcantara vs. Tuason, L-26128 and Pili vs. Tuason, L-26129, June 28, 1974, 57 SCRA 531, which
upheld the validity and incontestability of TCT No. 735, to which the titles of Mara, Inc. to the four
lots in question could be traced, he granted the writ of preliminary mandatory injunction on condition
that Mara, Inc. should file a bond in the sum of P10,000 (Order of November 20, 1974).

De Leon moved for the reconsideration of that order. He alleged that the preliminary mandatory
injunction would cause irreparable injury to him because it would result in the demolition of his
improvements. He contended that OCT No. 56 was not nullified by this Court in the Benin, Alcantara
and Pili cases. Judge Estrella denied the motion in his order of December 20, 1974.

Mara, Inc. filed on December 6, 1974 its bond for P10,000. On February 10, 1975 Judge Estrella
issued the writ of preliminary mandatory injunction. De Leon filed a motion dated February 28, 1975
for the dissolution of the injunction. He manifested that he was willing to file a counterbond in the
same amount. Mara, Inc. opposed the motion.

Judge Estrella in his order of April 1, 1975 granted the motion for the dissolution of the injunction
provided that De Leon filed "a surety bond in the sum of P10,000 to answer for all damages which
the plaintiff may suffer".

On April 22, 1975 Mara, Inc. instituted in this Court the instant special civil action of certiorari for the
purpose of annulling Judge Estrella's order dissolving the injunction.

De Leon in his comment insisted that he had a right to occupy the four lots because of OCT No. 56
which allegedly was issued earlier than OCT No. 735. That was the same defense which he had
pleaded in his answer to the ejectment suit and which was eroded by this Court's decision in
the Benin, Alcantara and Pili cases upholding the validity of TCT No. 735 from which the titles of
Mara, Inc. were derived.

The issue is whether Mara, Inc. is entitled to the writ of preliminary mandatory injunction to recover
possession of the four lots during the pendency of the ejectment suit or whether the City Court acted
with grave abuse of discretion in dissolving the injunction.

At first we denied the petition for certiorari. We acted on the assumption that De Leon had posted
the surety bond required in Judge Estrella's order of April 1, 1975. It turned out that he did not file
any such bond. He merely submitted a check for that amount. Then he later filed a motion that he be
allowed to substitute cash for the said check.

Section 8, Rule 58 of the Rules of Court provides that a copy of the bond for the dissolution of the
injunction should be served on the other party. That requirement, which is intended to enable the
opposing party to object to the sufficiency of the bond, was not observed in this case. The City Court
acted with grave abuse of discretion in dissolving the injunction and in suspending its
implementation on the basis of De Leon's insufficient bond.

Mara, Inc. filed a motion for reconsideration. After further consideration of the facts of the case, we
came to the conclusion that its petition for certiorari is meritorious.

The Civil Code provides:

 ART. 539. Every possessor has a right to be respected in his possession: and should
he be disturbed therein he shall be protected in or restored to said possession by the
means established by the laws and the Rules of Court.

A possessor deprived of his possession through forcible entry may within ten days
from the filing of the complaint present a motion to secure from the competent court,
in the action for forcible entry, a writ of preliminary mandatory injunction to restore
him in his possession. The court shall decide the motion within thirty (30) days from
the filing thereof. (446a).

Mara, Inc. based its petition for a writ of preliminary mandatory injunction on the second paragraph
of article 539 which was incorporated as the second paragraph of section 3, Rule 70 of the Rules of
Court dealing with forcible entry and detainer. The Code Commission noted that there had been
"prolonged litigations between the owner and the usurper" and that the owner had been frequently
deprived of his possession even when he had an immediate right thereto (p. 98 of Report).

The urgency of the remedy of injunction is underscored by the fact that the court is given only thirty
days within which to decide the motion for the issuance of the writ of preliminary mandatory
injunction. It is deplorable that in this case it took the City Court more than nineteen months to
decide the motion of Mara, Inc.

As expressed by Justice Moreland in his flamboyant rhetoric, "it is the undisputed policy of every
people which maintains the principle of private ownership of property that he who owns a thing shall
not be deprived of its possession or use except for the most urgent and imperative reasons and then
only so long as is necessary to make the rights which underlie those reasons effective. It is principle
of universal acceptance which declares that one has the instant right to occupy and use that which
he owns, and it is only in the presence of reasons of the strongest and most urgent nature that that
principle is prevented from accomplishing the purpose which underlies it. The force which gave birth
to this stern and imperious principle is the same force which destroyed the feudal despotism and
created the democracy of private owners" (McMicking vs. Sy Conbieng, 21 Phil. 211, 219). 1wph1.t

The injunction contemplated in article 539 is an exception to the general rule that the writ of
injunction is not proper where its purpose is to take property out of the possession or control of one
person and place it in the hands of another whose title has not clearly been established by law (3
Moran's Comments on the Rules of Court, 1970 Ed. pp. 72-73).

Therefore, if the petitioner asking for an injunction is the registered owner and the oppositor is an
interloper or squatter who has no possessory right to the land in litigation, a writ of preliminary
mandatory injunction may be issued pendente lite (See De Garcia vs. Santos, 79 Phil. 365, Rodulfa
vs. Alfonso, 76 Phil. 225; Torre vs. Querubin, 101 Phil. 53).

In the instant case, the Torrens titles of Mara, Inc. to the four lots appear to be unassailable. De
Leon in his answer to the complaint for ejectment merely pretended lack of knowledge of the said
titles. He has not shown in his answer any indubitable right to possess the four lots in question.

It results that the City Court, after finding that OCT No. 735, from which the four titles of Mara, Inc.
were derived, is incontestable and after denying De Leon's motion for the reconsideration of the
order granting the injunction, made a capricious and whimsical exercise of discretion in dissolving
the injunction and in allowing De Leon to file a counterbond. As already noted, he filed in court a
check for P10,000 instead of a surety bond. He did not apprise Mara, Inc. of that fact.
WHEREFORE, the petition for certiorari is granted, the City Court's order of April 1, 1975 is set
aside, and its order of November 20, 1974 is affirmed. Costs against respondent De Leon.

SO ORDERED.

G.R. No. 166854 December 6, 2006

SEMIRARA COAL CORPORATION (now SEMIRARA MINING CORPORATION), petitioner,

vs.
HGL DEVELOPMENT CORPORATION and HON. ANTONIO BANTOLO, Presiding Judge,
Branch 13, Regional Trial Court, 6th Judicial Region, Culasi, Antique, respondents.

DECISION

QUISUMBING, J.:

Before us is a petition for review on certiorari assailing the Decision1 dated January 31, 2005, of the
Court of Appeals in CA G.R. CEB SP No. 00035 which affirmed the Resolution2 dated September
16, 2004 of the Regional Trial Court of Culasi, Antique, Branch 13.

The facts are as follows:

Petitioner Semirara Mining Corporation is a grantee by the Department of Energy (DOE) of a Coal
Operating Contract under Presidential Decree No. 9723 over the entire Island of Semirara, Antique,
which contains an area of 5,500 hectares more or less. 4

Private respondent HGL Development Corporation is a grantee of Forest Land Grazing Lease
Agreement (FLGLA) No. 184 by the then Ministry of Environment and Natural Resources,5 over 367
hectares of land located at the barrios of Bobog and Pontod, Semirara, Caluya, Antique. The FLGLA
No. 184 was issued on September 28, 19846for a term of 25 years, to end on December 31, 2009.
Since its grant, HGL has been grazing cattle on the subject property.

Sometime in 1999, petitioner's representatives approached HGL and requested for permission to
allow petitioner's trucks and other equipment to pass through the property covered by the FLGLA.
HGL granted the request on condition that petitioner's use would not violate the FLGLA in any way.
Subsequently, however, petitioner erected several buildings for petitioner's administrative offices and
employees' residences without HGL's permission. Petitioner also conducted blasting and excavation;
constructed an access road to petitioner's minesite in the Panaan Coal Reserve, Semirara; and
maintained a stockyard for the coal it extracted from its mines. Thus, the land which had been used
for cattle grazing was greatly damaged, causing the decimation of HGL's cattle.

On September 22, 1999, HGL wrote petitioner demanding full disclosure of petitioner's activities on
the subject land as well as prohibiting petitioner from constructing any improvements without HGL's
permission. Petitioner ignored the demand and continued with its activities.
On December 6, 2000, the Department of Environment and Natural Resources (DENR) unilaterally
cancelled FLGLA No. 184 and ordered HGL to vacate the premises. The DENR found that HGL
failed to pay the annual rental and surcharges from 1986 to 1999 and to submit the required Grazing
Reports from 1985 to 1999 or pay the corresponding penalty for non-submission thereof.7

HGL contested the findings and filed a letter of reconsideration on January 12, 2001, which was
denied by DENR Secretary Heherson Alvarez in a letter-order dated December 9, 2002. The DENR
stated that it had coordinated with the DOE, which had jurisdiction over coal or coal deposits and
coal-bearing lands, and was informed that coal deposits were very likely to exist in Sitios Bobog and
Pontod. Hence, unless it could be proved that coal deposits were not present, HGL's request had to
be denied.8

HGL sent a letter dated March 6, 2003 to DENR Secretary Alvarez seeking reconsideration. The
DENR did not act on the letter and HGL later withdrew this second letter of reconsideration in its
letter of August 4, 2003.

On November 17, 2003, HGL filed a complaint against the DENR for specific performance and
damages with prayer for a temporary restraining order and/or writ of preliminary injunction, docketed
as Civil Case No. 20675 (2003) with the Regional Trial Court of Caloocan City. A writ of preliminary
injunction was issued by the Caloocan City RTC on December 22, 2003, enjoining the DENR from
enforcing its December 6, 2000 Order of Cancellation.

Meanwhile, HGL had also filed on November 17, 2003, a complaint against petitioner for Recovery
of Possession and Damages with Prayer for TRO and/or Writ of Preliminary Mandatory Injunction,
docketed as Civil Case No. C-146 with the Regional Trial Court of Culasi, Antique, Branch 13.9

On December 1, 2003, the Antique trial court heard the application for Writ of Preliminary Mandatory
Injunction in Civil Case No. C-146. Only HGL presented its evidence. Reception for petitioner's
evidence was set to March 23-24, 2004. Petitioner was notified. But, on March 19, 2004, petitioner's
President wrote the court asking for postponement since its counsel had suddenly resigned. The trial
court refused to take cognizance of the letter and treated it as a mere scrap of paper since it failed to
comply with the requisites for the filing of motions and since it was not shown that petitioner's
President was authorized to represent petitioner. Because of petitioner's failure to attend the two
scheduled hearings, the trial court, in an Order dated March 24, 2004, deemed the application for
issuance of a Writ of Preliminary Mandatory Injunction submitted for decision. Meanwhile, petitioner
had filed its Answer dated February 26, 2004, raising among others the affirmative defense that HGL
no longer had any right to possess the subject property since its FLGLA has already been cancelled
and said cancellation had already become final.

On April 14, 2004, petitioner filed a verified Omnibus Motion praying that the trial court reconsider its
Order of March 24, 2004, since petitioner's failure to attend the hearing was due to an accident.
Petitioner also prayed that the trial court admit as part of petitioner's evidence in opposition to the
application for injunction, certified copies of the DENR Order of Cancellation dated December 6,
2000; HGL's letter of reconsideration dated January 12, 2001; letter of DENR Secretary Alvarez
dated December 9, 2002 denying reconsideration of the order; and registry return receipt showing
HGL's receipt of the denial of reconsideration. In the alternative, petitioner prayed that the case be
set for preliminary hearing on its affirmative defense of lack of cause of action and forum-
shopping.10 Public respondent denied the Omnibus Motion in a Resolution dated June 21, 2004.

Petitioner filed a motion for reconsideration of the said resolution. Upon HGL's opposition, the motion
was declared submitted for resolution in accordance with the trial court's Order of August 5, 2004.11
On September 16, 2004, the trial court granted the prayer for issuance of a Writ of Preliminary
Mandatory Injunction.12 Petitioner did not move for reconsideration of the order. The Writ of
Preliminary Mandatory Injunction was accordingly issued by the trial court on October 6, 2004.13 The
writ restrained petitioner or its agents from encroaching on the subject land or conducting any
activities in it, and commanded petitioner to restore possession of the subject land to HGL or its
agents.

Petitioner questioned the Resolution dated September 16, 2004, and the Writ of Preliminary
Mandatory Injunction dated October 6, 2004 before the Court of Appeals in a petition for certiorari,
raising eight issues. On January 31, 2005, however, the appellate court dismissed the petition. The
Court of Appeals in its decision by Justice Magpale ruled on the issues posed before the appellate
court:

1. PRIVATE RESPONDENT HAS NO LEGAL RIGHT OR CAUSE OF ACTION UNDER THE

PRINCIPAL ACTION OR COMPLAINT, MUCH LESS, TO THE ANCILLARY REMEDY OF
INJUNCTION;

2. PRIVATE RESPONDENT DID NOT COME TO COURT WITH "CLEAN HANDS";

3. RESPONDENT JUDGE UNJUSTIFIABLY AND ARBITRARILY DEPRIVED PETITIONER

OF ITS FUNDAMENTAL RIGHT TO DUE PROCESS BY NOT GIVING IT AN
OPPORTUNITY TO PRESENT EVIDENCE IN OPPOSITION TO THE MANDATORY
INJUNCTION;

4. RESPONDENT JUDGE IMMEDIATELY GRANTED THE APPLICATION FOR THE

ISSUANCE OF A WRIT OF MANDATORY INJUNCTION WITHOUT FIRST RESOLVING
THE PENDING MOTION FOR RECONSIDERATION DATED JULY 12, 2004 OF
PETITIONER;

5. RESPONDENT JUDGE DID NOT CONSIDER OR ADMIT THE CERTIFIED TRUE

COPIES OF THE OFFICIAL RECORDS OF THE DENR CANCELLING PRIVATE
RESPONDENT'S FLGLA AS EVIDENCE AGAINST THE MANDATORY INJUNCTION
PRAYED FOR;

6. RESPONDENT JUDGE SHOULD HAVE GRANTED PETITIONER'S MOTION FOR

PRELIMINARY HEARING ON ITS AFFIRMATIVE DEFENSE THAT PRIVATE
RESPONDENT UNDER ITS COMPLAINT HAS NO CAUSE OF ACTION AGAINST
PETITIONER;

7. RESPONDENT JUDGE SHOULD HAVE DISMISSED THE COMPLAINT OUTRIGHT

FOR VIOLATION OF THE RULES ON FORUM SHOPPING BY PRIVATE RESPONDENT;

8. THE MANDATORY INJUNCTION ISSUED IN THE INSTANT CASE IS VIOLATIVE OF

THE PROVISIONS OF PRESIDENTIAL DECREE 605.14

The Court of Appeals in the assailed Decision dated January 31, 2005, opined and ruled as follows
(which we quote verbatim):

Anent the first issue, WE rule against the petitioner.

Perusal of the allegations in the Complaint filed by the private respondent with the court a
quo show that its cause of action is mainly anchored on the Forest Land Grazing Lease
Agreement ("FLGLA") executed by and between said private respondent and the
Department of Environment and Natural Resources (DENR) which became effective on
August 28, 1984 and to expire on December 31, 2009.

Under the said lease agreement, the private respondent was granted permission to use and
possess the subject land comprising of 367-hectares located at the barrios of Bobog and
Pontod, Semirara Island, Antique for cattle-grazing purposes.

However, petitioner avers that the "FLGLA" on which private respondent's cause of action is
based was already cancelled by the DENR by virtue of its Orders dated December 6, 2000
and December 9, 2002.

While it is true that the DENR issued the said Orders cancelling the "FLGLA", the same is
not yet FINAL since it is presently the subject of Civil Case No. 20675 pending in the
Regional Trial Court (RTC) of Caloocan City. Thus, for all intents and purposes, the "FLGLA"
is still subsisting.

The construction of numerous buildings and the blasting activities thereon by the petitioner
undertaken without the consent of the private respondent blatantly violates the rights of the
latter because it reduced the area being used for cattle-grazing pursuant to the "FLGLA".

From the foregoing it is clear that the three (3) indispensable requisites of a cause of action,
to wit: (a) the right in favor of the plaintiff by whatever means and under whatever law it
arises or is created; (b) an obligation on the part of the named defendant to respect or not to
violate such right; (c) an act or omission on the part of such defendant is violative of the right
of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the
latter may maintain an action for recovery of damages, are PRESENT.

Hence, having established that private respondent herein has a cause of action under the
principal action in Civil Case No. C-146, necessarily it also has a cause of action under the
ancillary remedy of injunction.

Anent the third issue, WE rule against the petitioner.

This Court finds that the petitioner was not deprived of due process.

It appears from the records of the instant case that the petitioner was given two (2) settings
for the reception of its evidence in support of its opposition to the prayer of herein private
respondent for the issuance of a writ of preliminary mandatory injunction. Unfortunately, on
both occasions, petitioner did not present its evidence.

Petitioner claims that its failure to attend the hearings for the reception of its evidence was
excusable due to the sudden resignation of its lawyer and as such, nobody can attend the
hearings of the case.

WE are not persuaded.

Scrutiny of the pleadings submitted by both parties shows that petitioner's lawyer, Atty. Mary
Catherine P. Hilario, affiliates herself with the law firm of BERNAS SAN JUAN &
ASSOCIATE LAW OFFICES with address at 2nd Floor, DMCI Plaza 2281 Pasong Tamo
Extension, Makati City, by signing on and in behalf of the said law office. This Court takes
judicial notice of the fact that law offices employ more than one (1) associate attorney aside
from the name partners. As such, it can easily assign the instant case to its other lawyers
who are more than capable to prepare the necessary "motion for postponement" or
personally appear to the court a quo to explain the situation.

Even assuming arguendo that Atty. Hilario is the only one who is knowledgeable of the facts
of the case, still, petitioners cannot claim that there was violation of due process because the
"ESSENCE of due process is reasonable opportunity to be heard x x x. What the law
proscribed is lack of opportunity to be heard." In the case at bar, petitioner was given two (2)
settings to present its evidence but it opted not to.

Lastly, a prayer for the issuance of a writ of preliminary mandatory injunction demands
urgent attention from the court and as such, delay/s is/are frowned upon due to the
irreparable damage/s that can be sustained by the movant.

Anent the fourth issue, WE rule against the petitioner.

Petitioner claims that the court a quo gravely erred when it issued the writ of preliminary
injunction without first resolving its Motion for Reconsideration dated July 12, 2004.

WE rule that the public respondent cannot be faulted for not resolving the Motion for
Reconsideration dated July 12, 2004 because the same partakes of the nature of a second
motion for reconsideration of the Order dated March 24, 2004.

Records readily disclose that a prior motion for reconsideration was filed by the petitioner
herein assailing the Order dated March 24, 2004. Although captioned as "Omnibus Motion"
the same was really a motion for reconsideration. Said "Omnibus Motion" was resolved by
the court a quo in its Order dated June 21, 2004.

Hence, the public respondent is no longer duty bound to resolve the subsequent, reiterative
and second motion for reconsideration.

Anent the fifth issue, WE rule against the petitioner.

The court a quo was correct in disregarding the documentary evidence submitted by the
petitioner in support of its opposition to the prayer for the issuance of a writ of preliminary
mandatory injunction.

The documentary evidence submitted by the petitioner herein with the court a quo were
merely attached to an "Omnibus Motion" and was not properly identified, marked and
formally offered as evidence which is a blatant disregard and violation of the Rules on
Evidence.

Considering the above discussions, this Court finds that the public respondent did not abuse
his discretion in issuing the assailed resolution.

Anent the eighth issue, WE likewise rule against the petitioner.

 Presidential Decree (PD) 605 is the law "Banning the Issuance by Courts of Preliminary
Injunctions in Cases Involving Concessions, Licenses, and Other Permits Issued by Public
Administrative Officials or Bodies for the Exploitation of Natural Resources."

Section 1 thereof provides that "No court of the Philippines shall have jurisdiction to issue
any restraining order, preliminary injunction or preliminary mandatory injunction in any case
involving or growing out of the issuance, suspension, revocation, approval or disapproval of
any concession, license, permit, patent or public grant of any kind for the disposition,
exploitation, utilization, exploration and development of the natural resources of the country."

The instant case is not within the purview of the above-cited law because the issue/s raised
herein does not involve or arise out of petitioner's coal operation contract.

The case filed with the court a quo is principally based on the alleged encroachment by the
petitioner of the subject land over which private respondent claims it has authority to occupy
or possess until December 31, 2009 pursuant to FLGLA No. 184.

As such, the preliminary mandatory injunction issued by the court a quo did not in any way
affect the efficacy of the petitioner's coal concession or license.

WHEREFORE, the instant petition for certiorari is DENIED and consequently, the assailed
Resolution is hereby AFFIRMED.

SO ORDERED.15

Hence, this instant petition. On February 23, 2005, this Court issued a TRO enjoining the
implementation and enforcement of the Court of Appeals Decision dated January 31, 2005.16

Petitioner submits in the petition now the following grounds:

THE RESOLUTION DATED 16 SEPTEMBER 2004 AND THE WRIT OF PRELIMINARY

MANDATORY INJUNCTION DATED 6 OCTOBER 2004 ISSUED BY PUBLIC
RESPONDENT ARE A PATENT NULLITY AS PRIVATE RESPONDENT CLEARLY HAS
NO LEGAL RIGHT OR CAUSE OF ACTION UNDER ITS PRINCIPAL ACTION OR
COMPLAINT, MUCH LESS, TO THE ANCILLARY REMEDY OF PRELIMINARY
MANDATORY INJUNCTION;

II

A WRIT OF PRELIMINARY MANDATORY INJUNCTION CANNOT BE USED TO TAKE

PROPERTY OUT OF THE POSSESSION OF ONE PARTY AND PLACE IT INTO THAT OF
ANOTHER WHO HAS NO CLEAR LEGAL RIGHT THERETO;

III

PRIVATE RESPONDENT'S COMPLAINT IN CIVIL CASE NO. C-146 IS IN THE NATURE

OF AN ACCION PUBLICIANA, NOT FORCIBLE ENTRY; HENCE, A WRIT OF
PRELIMINARY MANDATORY INJUNCTION IS NOT A PROPER REMEDY;
 IV

PETITIONER WAS UNJUSTIFIABLY AND ARBITRARILY DEPRIVED OF ITS

FUNDAMENTAL RIGHT TO DUE PROCESS WHEN IT WAS DENIED THE RIGHT TO
PRESENT EVIDENCE IN OPPOSITION TO THE APPLICATION FOR PRELIMINARY
MANDATORY INJUNCTION;

THE PUBLIC RESPONDENT DELIBERATELY WITHHELD THE RESOLUTION OF

PETITIONER'S MOTION FOR RECONSIDERATION DATED 12 JULY 2004 AND
PROCEEDED TO PREMATURELY ISSUE THE PRELIMINARY MANDATORY
INJUNCTION IN VIOLATION OF PETITIONER'S RIGHT TO FAIR PLAY AND JUSTICE;

VI

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN:

1) HE REFUSED OR FAILED TO ADMIT AND/OR CONSIDER THE CERTIFIED DENR

RECORDS OF THE DENR ORDER CANCELLING PRIVATE RESPONDENT'S FLGLA;

2) HE REFUSED OR FAILED TO CONDUCT A HEARING ON THESE CERTIFIED PUBLIC

DOCUMENTS WHICH CONCLUSIVELY PROVE PRIVATE RESPONDENT'S LACK OF
CAUSE OF ACTION UNDER THE PRINCIPAL ACTION; AND

3) HE REFUSED OR FAILED TO DISMISS THE COMPLAINT OUTRIGHT FOR VIOLATING

THE RULES ON FORUM SHOPPING BY PRIVATE RESPONDENT.17

Before this Court decides the substantive issues raised herein, certain procedural issues that were
raised by the parties must first be addressed.

Petitioner contends that it was improper for the Regional Trial Court of Antique to issue the writ of
preliminary mandatory injunction (and for the Court of Appeals to affirm the same) without giving it
an opportunity to present evidence and without first resolving the Motion for Reconsideration dated
July 12, 2004. But as borne by the records of the case, it is evident that petitioner had the
opportunity to present evidence in its favor during the hearing for the application of the writ of
preliminary mandatory injunction before the lower court. However, petitioner's failure to present its
evidence was brought by its own failure to appear on the hearing dates scheduled by the trial court.
Thus, petitioner cannot complain of denial of due process when it was its own doing that prevented it
from presenting its evidence in opposition to the application for a writ of preliminary mandatory
injunction. It must be pointed out that the trial court correctly refused to take cognizance of the letter
of petitioner's President which prayed for the postponement of the scheduled hearings. Said letter
was not a proper motion that must be filed before the lower court for the stated purpose by its
counsel of record. Moreover, there was absolutely no proof given that the sender of the letter was
the duly authorized representative of petitioner.

Second, the filing of the motion for reconsideration dated July 12, 2004, which essentially
reproduced the arguments contained in the previously filed and denied Omnibus Motion dated April
14, 2004, renders the said motion for reconsideration dated July 12, 2004, a mere pro forma motion.
Moreover, the motion for reconsideration dated June 12, 2004, being a second motion for
reconsideration, the trial court correctly denied it for being a prohibited motion.18
Third, it must be stated that the petition for certiorari before the Court of Appeals should not have
prospered because petitioner failed to file a motion for reconsideration from the assailed resolution
of the Regional Trial Court of Antique, granting the writ of preliminary mandatory injunction. Well
settled is the rule that before a party may resort to the extraordinary writ of certiorari, it must be
shown that there is no other plain, speedy and adequate remedy in the ordinary course of law. Thus,
it has been held by this Court that a motion for reconsideration is a condition sine qua non for the
grant of the extraordinary writ of certiorari.19 Here, a motion for reconsideration was an available
plain, speedy and adequate remedy in the ordinary course of law, designed to give the trial court the
opportunity to correct itself.

Now on the merits of the instant petition.

The pivotal issue confronting this Court is whether the Court of Appeals seriously erred or committed
grave abuse of discretion in affirming the September 16, 2004 Resolution of the Regional Trial Court
of Antique granting the writ of preliminary mandatory injunction.

Under Article 539 of the New Civil Code, a lawful possessor is entitled to be respected in his
possession and any disturbance of possession is a ground for the issuance of a writ of preliminary
mandatory injunction to restore the possession.20 Thus, petitioner's claim that the issuance of a writ
of preliminary mandatory injunction is improper because the instant case is allegedly one for accion
publiciana deserves no consideration. This Court has already ruled in Torre, et al. v. Hon. J.
Querubin, et al.21 that prior to the promulgation of the New Civil Code, it was deemed improper to
issue a writ of preliminary injunction where the party to be enjoined had already taken complete
material possession of the property involved. However, with the enactment of Article 539, the plaintiff
is now allowed to avail of a writ of preliminary mandatory injunction to restore him in his possession
during the pendency of his action to recover possession.22

It is likewise established that a writ of mandatory injunction is granted upon a showing that (a) the
invasion of the right is material and substantial; (b) the right of complainant is clear and
unmistakable; and (c) there is an urgent and permanent necessity for the writ to prevent serious
damage.23

In the instant case, it is clear that as holder of a pasture lease agreement under FLGLA No. 184,
HGL has a clear and unmistakable right to the possession of the subject property. Recall that under
the FLGLA, HGL has the right to the lawful possession of the subject property for a period of 25
years or until 2009. As lawful possessor, HGL is therefore entitled to protection of its possession of
the subject property and any disturbance of its possession is a valid ground for the issuance of a writ
of preliminary mandatory injunction in its favor. The right of HGL to the possession of the property is
confirmed by petitioner itself when it sought permission from HGL to use the subject property in
1999. In contrast to HGL's clear legal right to use and possess the subject property, petitioner's
possession was merely by tolerance of HGL and only because HGL permitted petitioner to use a
portion of the subject property so that the latter could gain easier access to its mining area in the
Panaan Coal Reserve.

The urgency and necessity for the issuance of a writ of mandatory injunction also cannot be denied,
considering that HGL stands to suffer material and substantial injury as a result of petitioner's
continuous intrusion into the subject property. Petitioner's continued occupation of the property not
only results in the deprivation of HGL of the use and possession of the subject property but likewise
affects HGL's business operations. It must be noted that petitioner occupied the property and
prevented HGL from conducting its business way back in 1999 when HGL still had the right to the
use and possession of the property for another 10 years or until 2009. At the very least, the failure of
HGL to operate its cattle-grazing business is perceived as an inability by HGL to comply with the
demands of its customers and sows doubts in HGL's capacity to continue doing business. This
damage to HGL's business standing is irreparable injury because no fair and reasonable redress can
be had by HGL insofar as the damage to its goodwill and business reputation is concerned.

Petitioner posits that FLGLA No. 184 had already been cancelled by the DENR in its order dated
December 6, 2000. But as rightly held by the Court of Appeals, the alleged cancellation of FLGLA
No. 184 through a unilateral act of the DENR does not automatically render the FLGLA invalid since
the unilateral cancellation is subject of a separate case which is still pending before the Regional
Trial Court of Caloocan City. Notably, said court has issued a writ of preliminary injunction enjoining
the DENR from enforcing its order of cancellation of FLGLA No. 184.

The Court of Appeals found that the construction of numerous buildings and blasting activities by
petitioner were done without the consent of HGL, but in blatant violation of its rights as the lessee of
the subject property. It was likewise found that these unauthorized activities effectively deprived HGL
of its right to use the subject property for cattle-grazing pursuant to the FLGLA. It cannot be denied
that the continuance of petitioner's possession during the pendency of the case for recovery of
possession will not only be unfair but will undeniably work injustice to HGL. It would also cause
continuing damage and material injury to HGL. Thus, the Court of Appeals correctly upheld the
issuance of the writ of preliminary mandatory injunction in favor of HGL.

WHEREFORE, the instant petition is DENIED. The Decision dated January 31, 2005, of the Court of
Appeals in CA G.R. CEB SP No. 00035, which affirmed the Resolution dated September 16, 2004 of
the Regional Trial Court of Culasi, Antique, Branch 13, as well as the Writ of Preliminary Mandatory
Injunction dated October 6, 2004 issued pursuant to said Resolution, is AFFIRMED. The temporary
restraining order issued by this Court is hereby lifted. No pronouncement as to costs.

SO ORDERED.

G.R. No. 149117 December 16, 2004

HEIRS OF CERILA GAMOS and RICARDO GALAG, Namely, FELICITAS G. GARCERA,

ENCARNACION G. FORTE, NARCISA G. GALAN; and DOMINGO, EDILBERTO, ROBERTO,
HELEN, VIRGILIO, RICARDO, CONSTANTINO and VIOLETA, All Surnamed GALAG,
Represented by VIOLETA GALAG as Their Attorney-in-Fact; AMBROCIO GUATAO, MIGUEL
FUNGO and The DIRECTOR, BUREAU OF LANDS, petitioners,
vs.
HEIRS OF JULIANO FRANDO, Namely, PACIENCIA GALLANOSA FUELLAS; and RODOLFO,
NERI, JUAN and ANTONIO, All Surnamed GIMPES, respondents.

DECISION

PANGANIBAN, J.:

A sales patent applicant who has complied with all the legal requirements is entitled to a grant of the
disposable land of the public domain applied for. The execution and formal delivery of the patent
becomes merely ministerial. Under these circumstances, the property applied for is, for all purposes,
considered segregated from the public domain. Hence, the subsequent issuance to a third person of
a free patent covering the same property is null and void. The government can no longer convey the
ownership of a parcel of land it no longer owns.

The Case

Before the Court is a Petition for Review1 under Rule 45, seeking to nullify the August 23, 2000
Decision2 and the July 12, 2001 Resolution3 of the Court of Appeals (CA) in GR CV No. 61230. The
decretal portion of the assailed Decision reads:

"WHEREFORE, upon the premises, the appealed decision is AFFIRMED in toto."4

The challenged Resolution denied petitioners Motion for Reconsideration.

The Facts

The subject of the present controversy is a parcel of agricultural land located in Sta. Magdalena,
Sorsogon, particularly described as follows:

"Location: Poblacion, Sta. Magdalena, Sorsogon

"Area: 2.4969 hectares

"Boundaries: N-R. Frando & P. Frilles

E-I. Gallanosa & P. Frilles

S-I. Gallanosa & P. Frilles

W. Marcela de Galag"5

Juliana Frando, respondents predecessor-in-interest, was in possession of the above-described

property. Since 1925, she had planted several trees and other plants thereon, including
coconuts, pili, bananas and cacao.6Sometime in 1946, the property was traversed by a national road
that effectively divided it into two portions, denominated as Lot Nos. 7 and 1855, respectively.7 The
latter, Lot No. 1855, is the subject of the present controversy.

Evident from certified copies of existing records of the Bureau of Lands introduced in evidence is the
fact that on February 14, 1952, Frando filed Insular Government Property Sales (IGPS) Application
No. 162 for the parcel in question. Pursuant thereto, a representative of the Bureau of Lands
inspected the area and found it to be inside an agricultural zone, free from private claims and
conflicts.

After the secretary of agriculture appraised the property at P240, a notice calling for bids was
published. At the auction sale conducted on April 22, 1955, the only bidder was Frando. On even
date she deposited P24, which represented 10 percent of the appraised value, as evidenced by
Official Receipt (OR) No. 9654851 dated April 22, 1955.

Full payment of the purchase price was effected approximately a year later, on April 6, 1956, when
Frando paid the balance of P216 as evidenced by OR No. A-2675530. On the same day, an
Order/Award was made in her favor by Director of Lands Zoilo Castrillo.8 Apparent from a survey plan
executed pursuant to an Order of the Bureau was the fact that the property awarded to her covered
both Lots 7 and 1855 with an aggregate area of 4.000 hectares.

One of her two children, Salvacion Gallanosa who was married to Abdon Gimpes, continued
possession of the property. Sometime in 1940, the couple constructed their house on the
southwestern portion thereof.

The other child of Frando, Paciencia Gallanosa-Fuellas, chose to settle in Manila. The Gimpes
spouses helped her in the administration of the land. Their children -- particularly Respondents
Rodolfo, Neri, Juan and Antonio -- were born on the property, where they also grew up. After their
parents death, they continued possession of the land; and harvested and received the fruits of the
improvements for themselves and on behalf of their grandmother, Juliana Frando, even after her
death in 1971.9

Purportedly unknown to private respondents, a cadastral survey of the Municipality of Sta.

Magdalena, Sorsogon, was conducted in 1958. According to the Bureau of Lands, during the said
survey, Lot No. 1855 became the subject of Case No. P1s-611-D, Sta. Magdalena Public Land
Subdivision; as a result, Free Patent No. 45950110 dated July 24, 1969 was awarded to Defendant
Cerila Gamos on October 27, 1969. Allegedly, the free patent became the basis for the issuance of
OCT No. P-10548 in her name. Private respondents claimed to be unaware of these developments,
as neither she nor her heirs had taken possession of the disputed portion until 1981. In that year,
Ambrocio Guatno and the other petitioners, who had joined him later, entered the property, gathered
its produce and built their houses thereon.

On August 3, 1988, the heirs of Juliana Frando filed with the Regional Trial Court (RTC) a Complaint
against Cerila Gamos and the director of the Bureau of Lands. The complainants challenged the
validity of Free Patent No. 459501 and OCT No. P-10548. As the plaintiffs therein, they alleged that
the Bureau of Lands had no authority to award the patent covering an area it had earlier awarded to
Frando. They further alleged that fraud had attended the issuance of the subject OCT when Miguel
Fungo, an employee of the Office of the Provincial Assessor of Sorsogon, purportedly forged the
signature of Cerila Gamos in all the documents. Those documents were used in the transfer of the
Tax Declaration to her name, as well as in the application for the issuance of Free Patent No.
459501 and OCT No. P-10548.

In their Answer, Cerila Gamos and her co-defendants alleged that they had been in actual and open
possession of the land as early as 1952; and that the Bureau of Lands October 27, 1969 issuance in
their favor of a free patent title, which subsequently became the basis of OCT No. P-10548, was
valid and lawful. They pointed out that respondents suit to contest a title nineteen years after its
issuance was already barred by prescription.

In its Answer, the Bureau of Lands, represented by the Office of the Solicitor General (OSG),
admitted that Juliana Frando had filed an IGPS application for a parcel of land with an area of
2.4969 hectares located at Poblacion, Sta. Magdalena, Sorsogon, Sorsogon. Admittedly, she won
the public bidding and deposited the amount of P24 under OR No. 9654851 dated April 22, 1955,
but allegedly failed to pay the balance price of P216. Thus, concluded the Bureau, while the land
had previously been awarded to her, the Complaint was rendered dismissible for lack of merit, as a
consequence of her failure to pay the balance price to assert her right to perfect her title thereto, and
to controvert the subsequent cadastral survey covering a portion thereof. In its Answer, however, the
Bureau made no mention of OCT No. P-10548.
On July 7, 1998, the Sorsogon RTC rendered the following judgment in favor of respondents (the
plaintiffs therein):

"WHEREFORE, the court renders judgment:

a. Finding the defendant Cerila Gamos of having fraudulently secured a free patent
title to that portion of the property in question described in paragraph 3 of the
complaint and indicated in Exhibit "X-1" as that portion shaded by red lines;

b. Ordering the defendant Cerila Gamos or her successors-in-interest to execute a

deed of reconveyance of that portion of Lot No. 1855 under Original Certificate of
Title No. 10548 as delineated and described in Exhibit "X-1", shaded by red lines;

c. Ordering the defendants to surrender the possession of the same to the plaintiffs
and to remove whatever improvements said defendants had introduced on said
property;

d. Ordering the defendants to pay the plaintiffs the amount of P15,000.00 x x x as

damages representing attorneys fees and necessary litigation expenses, jointly and
severally and;

e. To pay the costs."

Aggrieved, petitioners appealed to the Court of Appeals.

Ruling of the Court of Appeals

Affirming the RTC, the appellate court noted that the trial courts Decision was fully supported by the
evidence on record. The CA dismissed petitioners submission that, on the basis of the Report of the
Bureau of Lands, the claim of Juliana Frando had yet to be perfected, because she had paid only 10
percent of the total value of the land covered by her application. The appellate court pointed out that
the foregoing argument was belied by the Bureaus Order/Award to her in 1956.

Further, the CA upheld the lower courts award of attorneys fees, because the appellees had been
compelled "to litigate or incur expenses to protect their interest by reason of the unjustified act of the
[appellants]." 11

Hence, this Petition.12

Issues

In their Memorandum, petitioners raise the following issues for our consideration:

"Whether or not the order award given to Juliana Frando has been perfected

II

"Whether or not Cerila Gamos free patent was secured through fraud
 III

"Whether or not action of the heirs of Juliana Frando has already been barred by
laches/prescription"13

The Courts Ruling

The Petition has no merit. However, the challenged judgment should be partly modified.

First Issue:

Perfection of Sales Patent

The Philippine Constitution provides that "all lands of the public domain x x x are owned by the
State."14 They "are classified into agricultural, forest or timber, mineral lands and national parks. x x x.
Alienable lands of the public domain shall be limited to agricultural lands."15

The origin of the foregoing provisions can be traced to the Roman law concept of dominium, the
power of the State to own or acquire property. Under this concept, which became the basis for the
regalian theory predominant during the Spanish times, all lands belonged to the Spanish Crown.16 In
our present republican form of government, the concept remains, albeit stripped of its colonial
overtones. Now, ownership of all lands of the public domain is vested in the State.17

As in ordinary ownership, dominium embraces the capacity to alienate the property owned. The
constitutional limitation on the States power to alienate agricultural lands of the public domain is
intended to prevent monopoly and foreign control of our natural resources, as well as to enable the
government to control the exploitation, development and utilization thereof for the benefit of all.

Private persons gain title to agricultural lands of the public domain by virtue of a public
grant,18 adverse possession (or prescription), accretion and -- in certain cases -- reclamation. One
who seeks to register ones title has the burden of proving that it has been acquired through any of
the foregoing modes, by virtue of which the land has effectively been segregated from the public
domain.

A perusal of the Complaint filed by private respondents before the trial court shows that their
asserted claim over the disputed portion ostensibly rested on the Order/Award issued to their
predecessor-in-interest, Juliana Frando, in 1956. The issue is now narrowed down to whether this
piece of evidence sufficiently vested private respondents with an uncontroverted and indefeasible
title over the disputed property.

Acquisition of Public Land

Through a Sales Patent

Disposal of public agricultural land through a sales patent, as in the instant case, is governed by
Commonwealth Act No. 141, the Public Land Act. Under this law, a sales patent may be granted to a
Filipino citizen who may or may not be of lawful age, provided that one who is below the age of
majority is the head of a family. The law provides that after winning the bid and paying the purchase
price, the applicant must comply with the necessary requirements -- specifically the cultivation,
occupation and introduction of improvements over at least one fifth of the land applied for.
After the applicant meets the legal requirements, the director of lands then orders the survey of the
land and the issuance of the sales patent in the applicants favor. Section 107 of Commonwealth Act
141 further requires the registration of the patent under the Land Registration Act by furnishing the
registrar of deeds a certified copy thereof, after which the corresponding certificate of title would
accordingly be issued to the patentee.

In the present case, the Bureau of Lands did not issue the patent to Frando, because she had
allegedly failed to pay the P216 balance of the sale price. The Bureaus assertion is, however,
soundly disproved by evidence. Clearly appearing on the Order/Award19 issued to Frando in 1956 is
the following proviso:

"That at the auction sale of the land held on April 22, 1955, the only bid received was that of
the applicant who offered P240.00 for the whole tract and deposited the amount of P24.00
under O.R. No. 9654851 dated April 22, 1955 which is equivalent to 10% of the bid.
Subsequently, the applicant again paid the amount of P216.00 under O.R. No. A-2675530
dated April 6, 1956 to complete the full purchase price of the land."(Emphasis supplied)

Given the full payment of the purchase price as well as the compliance with all the requirements for
the grant of a sales patent, the Bureau had no reason to deny the issuance of such patent to Frando.
Her compliance with all the requirements effectively vested in her and her successors-in-interest an
equitable title to the property applied for. Applicable to the instant case is our time-honored
pronouncement in Balboa v. Farrales, which we quote:

"A party who has complied with all the terms and conditions which entitle him to a patent for
a particular tract of public land, acquires a vested interest therein, and is to be regarded as
the equitable owner thereof.

"Where the right to a patent has once become vested in a purchaser of public lands, it
is equivalent, so far as the Government is concerned, to a patent actually issued. The
execution and delivery of the patent after the right to it has become complete are the
mere ministerial acts of the officers charged with that duty. x x x. Even without a
patent, a perfected homestead is a property right in the fullest sense, unaffected by
the fact that the paramount title to the land is still in the Government. Such land may be
conveyed or inherited."20 (Emphasis supplied)

Thus, when the cadastral survey was subsequently conducted in Sta. Magdalena in 1958, the
disputed property -- already held in private ownership -- was no longer part of the public domain. The
director of lands had no more authority to grant to a third person a patent covering the same tract
that had already passed to private ownership.21Thus, the issuance of the free patent to Cerila
Gamos, insofar as it encroached the portion already granted to Frando, had no legal basis at all.

Open, Continuous, Exclusive and

Notorious Possession and Occupation
of Alienable and Disposable Lands

The denial of the sales patent notwithstanding, Juliana Frando is deemed to have acquired equitable
title to the property, because private respondents adequately proved during trial her open,
continuous, exclusive and notorious possession and occupation of alienable and disposable land of
the public domain.

Introduced in evidence was a Declaration of Real Property covering the same tract of land. The
Declaration had been issued to Basilio Frando, father of Juliana Frando, sometime in 1906.22 Witness
accounts23 of long time residents of the adjoining properties confirmed her possession for a period not
later than 1925; and her introduction thereon of various trees and other plants, including bananas,
cacao, pili and coconuts.

They also attested to the continued possession of the property by Frandos daughter, Salvacion
Gimpes; and subsequently by her children, herein private respondents. Aside from showing the
Order/Award, the children bolstered their claim by introducing in evidence several Tax Declarations,
sketch plans, survey returns and the reports of the court-appointed commissioner.

While asserting possession of the property as early as 1952, petitioners have not presented any
document or witness to prove their bare claim. Moreover, Ambrosio Guatno -- one of herein
petitioners -- testified that he had entered the property upon the permission of Ricardo Galag, an heir
of Gamos; later, he admitted that its true owner was Juliana Frando.24

In line with Susi v. Razon,25 possession of a parcel of agricultural land of the public domain for the
prescribed period of 30 years ipso jure converts the lot into private property.26 In that case, the
application of Valentin Susi for a free patent was denied by the Bureau of Lands, despite the fact
that he had been in possession of the property for a far longer period than the grantee. Still true to
this day is this Courts ruling on the matter, which we quote:

"It clearly appears from the evidence that Valentin Susi has been in possession of the land in
question openly, continuously, adversely and publicly, personally and through his
predecessors, since the year 1880, that is, for about forty-five years. x x x. When on August
15, 1914, Angela Razon applied for the purchase of the land, Valentin Susi had already been
in possession thereof personally and through his predecessors for thirty four years. x x x In
favor of Valentin Susi, there is, moreover, the presumption juris et de jure x x x that all the
necessary requirements for a grant by the Government were complied with, for he has been
in actual and physical possession personally and through his predecessors, of an agricultural
land of the public domain openly, continuously, exclusively and publicly since July 26, 1894,
with a right to a certificate of title to said land under the provisions of Chapter VIII of said Act.
So that when Angela Razon applied for a grant in her favor, Valentin Susi had already
acquired, by operation of law, not only a right to a grant, but a grant of the
government, for it is not necessary that a certificate of title should be issued in order
that a grant may be sanctioned by the courts, an application therefore is sufficient,
under the provision of Section 47 of Act No. 2874. If by a legal fiction, Valentin Susi
had acquired the land in question by a grant of the State, it had already ceased to be
of the public domain and had become the private property, at least by presumption of
Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling
the land in question to Angela Razon, the Director of Lands disposed of a land over
which he no longer had title or control, and the sale thus made was void and of no
effect and Angela Razon did not thereby acquire any right." (Emphasis supplied)

Clearly, the mere application for a patent, coupled with the fact of exclusive, open, continuous and
notorious possession for the required period is sufficient to vest in the applicant the grant applied for.
In sum, the application by Juliana Frando for a sales patent, coupled with her open, exclusive,
uninterrupted and notorious possession of the land applied for is, for all purposes, equivalent to a
patent already perfected and granted.

The subsequent entry of petitioners and their occupation of the property in question was in bad
faith,27 given the prior possession thereof by private respondents. Thus, when the former were
ordered by the RTC to remove whatever improvements they might have introduced thereon, the
court committed no error.28
Evidentiary Matters and the
Attempt to Deceive this Court

The Complaint before the Sorsogon RTC prayed mainly for the cancellation of OCT No. P-10548,
which had allegedly been issued to Cerila Gamos by the Register of Deeds of Sorsogon on October
27, 1969. An examination of the records shows that no copy of the said OCT was ever presented in
evidence at any stage of the proceedings. The complainants (herein respondents) failed to present
the document that was central to their action. That omission was in no way alleviated by the ominous
failure of the defendants themselves (herein petitioners) to present the very evidence upon which
they had based their claim of superior title. In fact, the latter never presented any documentary
evidence at all and merely adopted that of the former.

Inasmuch as neither party had presented the subject OCT in evidence and, hence, the Sorsogon
RTC never had the opportunity to examine it, there was no basis for trial courts Decision (as
affirmed by the appellate court) -- more particularly, the part ordering petitioners to "execute a deed
of reconveyance of that portion of Lot No. 1855 under Original Certificate of Title No. 10548."

As worded, the RTCs ruling may lead to mischievous consequences. For all we know, OCT No.
10548 may be in the name of a third person who is not a party to the present proceedings, or it may
cover a property different from that in dispute. On these grounds, the foregoing portion of the trial
courts Decision should be modified. The metes and bounds of the property in dispute -- the title to
and possession of which is confirmed to belong properly to private respondents -- should in no way
be defined by any reference to OCT No. 10548. Rather, such definition should be based on the
documentary evidence at hand; more particularly, the technical description in the survey plan made -
- pursuant to Frandos application for a sales patent -- as confirmed by the survey later conducted by
the court-appointed commissioner.

By subsequently attaching Free Patent No. 459501 (which was in the name of Gamos) as Annex "J"
to their Petition, petitioners are resorting to a belated remedy to a fatal omission. They should have
offered the document before the trial court, not -- as they have done -- in the last stretch of the
proceedings, when such document can no longer be considered. Time and time again, we have
pronounced that this Court is not a trier of facts.

Assuming arguendo that the patent is still admissible, it is nonetheless bereft of any evidentiary
value. While it refers to Lot No. 1855, it is -- unlike the Order/Award issued to Frando --
accompanied neither by a survey sketch duly approved by the Bureau of Lands, nor by a technical
description that would enable us to determine whether the patent refers to the property in dispute.
We also note that the said document was admittedly issued to Gamos on October 27, 1969, a mere
seventeen years after she had allegedly entered into possession of the property -- in 1952,
according to herein petitioners. Clearly then, Free Patent No. 459501 was issued despite the
applicants possession of the property for a period shorter than the 30 years required by law.29

Further compounding the procedural lapse committed by petitioners is their apparent attempt to
mislead this Court. Likewise attached to the Petition is a copy of an alleged Deed of Sale executed
between one Felipa Bongais and Cerila Gamos, as well as several copies of Tax Declarations
apparently showing that the Deed covers the contested property.

A perusal of the said documents shows that they involve a rice land situated in Adgao, Poblacion,
Sta. Magdalena, with an area of 11,300 square meters; not the property subject of the present
controversy, which covers 2.4969 to 4.0000 hectares. By introducing the alleged Deed of Sale,
petitioners obviously want to bolster their claim of ownership by impressing upon this Court that they
have purchased the property from Bongais. They are, however, thereby contradicting their prior
assertion of title on the basis of a free patent. These contradictory assertions not only cast serious
doubt on the veracity of their claim; they also constitute an apparent attempt to mislead the Court.

Second Issue:

Fraud

Petitioners argue that the trial court erred in holding that the free patent issued to Cerila Gamos had
fraudulently been secured. Both parties failed, though, to present a copy of Free Patent No. 459501.
This lapse resulted in the trial courts failure to examine the document and to appreciate the
circumstances under which it had allegedly been issued. Thus, any determination of whether fraud
indeed attended its issuance is not possible now.

Third Issue:

Prescription and Laches

In their last assignment of error, petitioners argue that private respondents action to annul the free
patent issued to Cerila Gamos has already prescribed and is barred by laches. We do not agree.

As testified to by the Gilda Bongais -- one of Juliana Frandos heirs -- when petitioners first invaded
the property in 1979 by constructing a house thereon, her aunt (Paciencia Gallenosa) filed an action
contesting such intrusion. The action was later dropped due to the financial burdens of the litigation,
definitely not because of any concession of rights by private respondents. Thus, the legal inaction on
their part was due, not to their lack of vigilance, but merely to their lack of resources to defend their
property.

On the witness stand, Guatno himself recognized Juliana Frando and her heirs as the true owners of
the property, even as he admitted that it was Galag -- one of herein petitioners -- who had given him
permission to erect a house on the land in 1980. Petitioners possession of the disputed property,
based as it was on mere tolerance, could neither ripen into ownership nor operate to bar any action
by private respondents to recover absolute possession thereof.30

WHEREFORE, the Petition is DENIED. However, paragraph (b) of the RTC decision is MODIFIED to
read as follows:

b. Ordering the successors-in-interest of Cerila Gamos to execute a deed of reconveyance of

that portion of Lot No. 1855 with an area of 1,626 square meters as delineated and
described in Exhibit "X-1", shaded by red lines.

Counsels for petitioners -- Attys. Arceli A. Rubin, Amelia C. Garchitorena, Marvin R. Osias and
Beatriz Teves de Guzman -- are hereby ordered to SHOW CAUSE, within ten days from receipt
hereof, why they should not be subjected to administrative sanction for their attempt to deceive this
Court through the introduction of misleading evidence.

Costs against petitioners.

SO ORDERED.

G.R. No. 160421 October 4, 2004

SPOUSES PHILIP RECTO and ESTER C. RECTO, represented by their Attorney-in-fact,
GENEROSO R. GENEROSO, petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, respondent.

DECISION

YNARES-SANTIAGO, J.:

This is a petition for review on certiorari challenging the January 16, 2003 decision1 of the Court of
Appeals in CA-G.R. CV No. 65407 which reversed the September 7, 1998 decision2 of the Regional
Trial Court of Tanauan, Batangas, Branch 6 in Land Registration Case No. T-320. Likewise assailed
is the appellate courts October 17, 2003 resolution3 denying petitioners motion for reconsideration.

On February 19, 1997, petitioner spouses Philip Recto and Ester C. Recto, filed with the Regional
Trial Court of Tanauan, Batangas, Branch 6, an application for registration of title over a 23,209
square meter lot,4 designated as Lot 806, Cad-424, Sto. Tomas Cadastre, Plan Ap-04-010485,
situated in Barangay San Rafael, Municipality of Sto. Tomas, Province of Batangas, under
Presidential Decree (P.D.) No. 1529, otherwise known as the Property Registration Decree. They
also prayed in the alternative that their petition for registration be granted pursuant to
Commonwealth Act (C.A.) No. 141, or the Public Land Act.5

Petitioners alleged that on June 4, 1996, they purchased Lot 806 from sisters Rosita Medrana
Guevarra and Maria Medrana Torres for the amount of P6,943,534.40.6 The two, in turn, inherited
the lot from their deceased parents, Vicente and Eufemia Medrana. Maria, born on October 22,
1917, declared that since 1945, her father was already the owner of Lot 806. She became aware of
her fathers possession of the subject lot in the concept of owner in 1930 when she was 13 years of
age. The possession of the subject lot by the Medrana family prior to 1945 was corroborated by
Rosita,7 who testified that in 1935 when she was 13 years of age, she first came to know that her
father was the owner of Lot 806. The sisters added that during the lifetime of Vicente, he planted rice
and corn on the lot with the help of their tenant. After his demise, they continued to plant the same
crops through hired farmers.8

Petitioners presented the following documentary evidences

(1) Blue Print Copy of the Plan9 and Technical Description10 of Lot 806, both certified by Land
Management Services (formerly the Bureau of Lands), of the Department of Environment
and Natural Resources (DENR);

(2) Tax Declarations11 of the lot for the years 1948, 1955, 1968, 1974, 1980, 1987, 1989 and
1994 (in the name of Vicente Medrana); 1996 (in the name of Rosita Guevarra and Maria
Torres); and 1998 (in the name of Philip and Ester Recto).

(3) Certification of Non-Delinquency for the year 1998 from the Municipal Treasurer of Sto.
Tomas, Batangas;12

(4) Report13 from the Community Environment and Natural Resources Office, Department of
Environment and Natural Resources (DENR) stating, among others, that
 (a) the entire area is within the alienable and disposable zone as classified
under Project No. 30 L.C. Map No. 582 and released and certified as such on
December 31, 1925; (Emphasis, supplied)

(b) the lot is not within a reservation area nor within the forest zone;

(c) the lot is not within a previously issued patent, decree or title.

(d) there is no public land application filed for the same land by the applicant or any
other person;

(e) the land is covered by Tax Declaration No. 021-02166-A in the name of the
predecessor-in-interest and that there is no difference in area;

(f) the lot is agricultural in nature; and

(g) the lot does not encroach upon an established watershed, riverbed and river bank
protection.

(5) Report from the Land Management Bureau that the land involved is not covered by any
land patent or by land application pending issuance of patent.14

(6) Report from the Forest Management Service, DENR that the subject lot falls within
Alienable and Disposable lands, Project No. 30 of Sto. Tomas, Batangas, per BFD LC Map
No. 582 certified on December 31, 1925.15

(7) Report from the Land Management Sector, DENR that Plan Ap-04-010485, Lot 806, Cad-
424, Sto. Tomas Cadastre, situated in the Barangay of San Rafael, Municipality of Sto.
Tomas, Province of Batangas, is not a portion of nor identical to any previously approved
isolated survey.16

There being no opposition to the petition from any private individual, an Order of General
Default was issued by the trial court.17

On September 7, 1998, the court a quo rendered a decision granting the petition for registration. The
dispositive portion thereof, reads:

WHEREFORE, and upon previous confirmation of the Order of General Default, this Court
hereby adjudicates and decrees Lot 806, Cad-424, Sto. Tomas Cadastre on plan Ap-04-
010485, situated in San Rafael, Sto. Tomas, Batangas, with an area of 23,209 square
meters, in favor of and in the names of Spouses Philip Recto and Ester C. Recto, Filipino
citizens and residents of 1322 Palm Avenue, Dasmarias Village, Makati City.

Once this Decision shall have become final let the corresponding decree of registration be
issued.

SO ORDERED.18

The Republic, represented by the Solicitor General appealed to the Court of Appeals contending that
petitioners failed to (1) offer in evidence the original tracing cloth plan of the land; (2) prove
possession of the lot for the period required by law; and (3) overthrow the presumption that subject
property forms part of the public domain.19

On January 16, 2003, the Court of Appeals reversed the decision of the trial court on the sole ground
of failure to offer in evidence the original tracing cloth plan of the land.20

Petitioners filed a motion for reconsideration praying that in view of their compliance with all the
substantive and procedural requirements for registration, save for the submission of the tracing cloth
plan, the case be remanded to the trial court for the presentation of the said tracing cloth plan. The
Solicitor General, on the other hand, interposed no objection to petitioners motion for
reconsideration.21

On October 17, 2003, the Court of Appeals denied petitioners motion for reconsideration.22 Hence,
the instant petition praying for the remand of the case before the trial court.

In its Comment, the Solicitor General manifested that in the interest of justice, he will not to oppose
the petition.23

Section 14 (1) of Presidential Decree No. 1529 states:

SEC. 14. Who may apply. The following persons may file in the proper Court of First
Instance [now the Regional Trial Court] an application for registration of title to land, whether
personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in

open, continuous, exclusive and notorious possession and occupation of alienable
and disposable lands of the public domain under a bona fide claim of ownership
since June 12, 1945, or earlier.

On the other hand, Section 48 (b) of Commonwealth Act No. 141, as amended by Section 4 of
Presidential Decree No. 1073, provides:

The provisions of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act are
hereby amended in the sense that these provisions shall apply only to alienable and
disposable lands of the public domain which have been in open, continuous, exclusive and
notorious possession and occupation by the applicant himself or thru his predecessor-in-
interest, under a bona fide claim of acquisition of ownership, since June 12, 1945.

Thus, before one can register his title over a parcel of land, the applicant must show that
(a) he, by himself or through his predecessors-in-interest, has been in open, continuous,
exclusive and notorious possession and occupation of the subject land under a bona
fide claim of ownership since June 12, 1945 or earlier; and (b) the land subject of the
application is alienable and disposable land of the public domain.24

In the instant case, Rosita and Maria the predecessors-in-interest of petitioners, categorically
testified that they, and prior to them their father, had been cultivating and possessing Lot 806 in the
concept of owners. Maria, having been born on October 22, 1917, and Rosita on October 29, 1922,
were 13 years of age when they became aware of their familys possession of Lot 806 in 1930 and
1935, respectively. At 13, they were undoubtedly capable and competent to perceive their fathers
possession of Lot 806 in the concept of owner. Moreover, the trial court found their testimonies to be
worthy of belief and credence. Considering that the judge below is in a better position to pass
judgment on the issue, having personally heard the witnesses testify and observed their deportment
and manner of testifying, her findings deserve the highest respect.25

The fact that the earliest Tax Declaration of the subject lot was for the year 1948 will not militate
against petitioners. Note that said 1948 Tax Declaration cancels a previous Tax Declaration (No.
26472),26 thus substantiating petitioners possession of Lot 806 through their predecessor-in-interest
even prior to said date. At any rate, in Republic v. Court of Appeals,27 it was held that the belated
declaration of the lot for tax purposes does not necessarily mean that possession by the previous
owners thereof did not commence in 1945 or earlier. As long as the testimony supporting possession
for the required period is credible, the court will grant the petition for registration. Pertinent portion of
the decision, reads

Petitioner questions the credibility of claimant Divinaflor who testified on the possession of
Marcial Listana for the period required by law. The issue of credibility is unavailing
considering that the judge below is in a better position to pass judgment on the issue having
personally heard the witnesses testify and observed their deportment and manner of
testifying. Being in a better position to observe the witnesses, the trial courts appreciation of
the witness testimony, truthfulness, honesty, and candor, deserves the highest respect.

xxx xxx xxx

[A] person is competent to be a witness if (a) he is capable of perceiving at the time of the
occurrence of the fact and (b) he can make his perception known. True, in 1939, Divinaflor
was not born yet, but in 1945, he was four years old, residing in Maramba, Oas, Albay,
where the subject lot is located. As his testimony goes, he and Marcial Listana were barrio
mates, and that he usually passes by the subject land. The fact that Divinaflor was only a
child at the required inception of possession does not render him incompetent to testify on
the matter. It is well-established that any child regardless of age, can be a competent witness
if he can perceive, and perceiving can make known his perception to others and that he is
capable of relating truthfully facts for which he is examined. The requirements of a childs
competence as a witness are: (a) capacity of observation; (b) capacity of recollection; and (c)
capacity of communication. There is no showing that as a child, claimant did not possess the
foregoing qualifications. It is not necessary that a witness knowledge of the fact to which he
testifies was obtained in adulthood. He may have first acquired knowledge of the fact during
childhood, that is, at the age of four, which knowledge was reinforced through the years, up
until he testified in court in 1990. There is reason to reject petitioners claim that Divinaflor is
incompetent to testify regarding Listanas possession since it appears undisputed that
Divinaflor grew up in Maramba, Oas, Albay, and had occasion to see Listana possessing the
land.

Finally, we agree with the Court of Appeals that the belated declaration of the property for tax
purposes does not necessarily lead to the conclusion that the predecessors were not in possession
of the land as required by law since 1945. Petitioner capitalizes on the fact that the earliest tax
declaration presented took effect only in 1980 while the certificate of tax payment is dated 1990.
While this Court has held in a long line of cases that tax declarations or tax receipts are good indicia
of possession in the concept of owner, it does not necessarily follow that belated declaration of the
same for tax purposes negates the fact of possession, especially in the instant case where there are
no other persons claiming any interest in Lot 10739.

So also, there is no doubt that Lot 806 is an alienable land of the public domain having been
released and certified as such on December 31, 1925. As further certified by the Community
Environment and Natural Resources Office of the DENR, the entire area of Lot 806 is an agricultural
land; within an alienable and disposable zone; not within a reservation area nor within a forest zone;
and does not encroach upon an established watershed, riverbed, and riverbank
protection.28 Petitioners were thus able to successfully meet the requisite for original registration of
title, to wit: open, continuous, exclusive and notorious possession and occupation of an alienable
and disposable land under a bona fide claim of ownership since June 12, 1945 or earlier.

Nevertheless, the Court of Appeals reversed the decision of the trial court granting the petition for
registration on the ground of petitioners failure to submit in evidence the original tracing cloth plan of
Lot 806. Indeed, the submission of the tracing cloth is a mandatory requirement for
registration.29 However, it was held that while the best evidence to identify a piece of land for
registration purposes is the original tracing cloth plan from the Bureau of Lands, blue print copies
and other evidence could also provide sufficient identification.30 In Republic v. Court of Appeals,31 the
Court ruled that the blueprint copy of the cloth plan together with the lots technical description duly
certified as to their correctness by the Bureau of Lands (Now the Land Management Bureau of the
DENR)32 are sufficient to identify the land applied for registration, thus

On the first challenge, the petitioner invokes the case of Director of Lands v. Reyes, where it
was held that "the original tracing cloth plan of the land applied for which must be approved
by the Director of Lands" was "a statutory requirement of mandatory character" for the
identification of the land sought to be registered. As what was submitted in the case at bar to
identify the subject property was not the tracing cloth plan but only the blueprint copy of the
survey plan, the respondent court should have rejected the same as insufficient.

We disagree with this contention. The Court of Appeals was correct when it observed that in that
case the applicant in effect "had not submitted anything at all to identify the subject property"
because the blueprint presented lacked the approval of the Director of Lands. By contrast

In the present case, there was considerable compliance with the requirement of the law as
the subject property was sufficiently identified with the presentation of blueprint copy of Plan
AS-06-000002 (San Pedro v. Director of Lands, CA-G.R. No. 65332-R, May 28, 1981). It
should be noted in this connection that the Bureau of Lands has certified to the
correctness of the blueprint copy of the plan including the technical description that
go with it. Hence, we cannot ignore the fact, absent in the Reyes case, that applicant
has provided ample evidence to establish the identity of the subject property.
(Emphasis supplied)

Such a view was affirmed by the Court in Republic of the Philippines v. Intermediate Appellate Court,
where we held that while the best evidence to identify a piece of land for registration purposes was
the original tracing cloth plan from the Bureau of Lands, blueprint copies and other evidence could
also provide sufficient identification. This rule was bolstered only recently in the case of Director of
Lands v. Court of Appeals, where the Court declared through Chief Justice Marcelo B. Fernan:

We affirm. No reversible error was committed by the appellate court in ruling that Exhibit "O,"
the true certified copy of the white paper plan, was sufficient for the purpose of identifying the
land in question. Exhibit "O" was found by the appellate court to reflect the land as surveyed
by a geodetic engineer. It bore the approval of the Land Registration Commission, and was
re-verified and approved by the Bureau of Lands on April 25, 1974 pursuant to the provisions
of P.D. No. 239 withdrawing from the Land Registration Commission the authority to approve
original survey plans. It contained the following material data: the barrio (poblacion),
municipality (Amadeo) and province (Cavite) where the subject land is located, its area of
379 square meters, the land as plotted, its technical descriptions and its natural boundaries.
Exhibit "O" was further supported by the Technical Descriptions signed by a geodetic
 surveyor and attested by the Land Registration Commission. In fine, Exhibit "O" contained all
the details and information necessary for a proper and definite identification of the land
sought to be registered, thereby serving the purpose for which the original tracing cloth plan
is required. The fact therefore that the original survey plan was recorded on white paper
instead of a tracing cloth should not detract from the probative value thereof. x x x.

In the case at bar, Lot 806 was sufficiently identified by the blue print copy of the plan (Exhibit
"R")33 and the technical description (Exhibit "S")34 thereof both approved by Land Management
Services, DENR. Also, per report of the Land Management Sector, Plan Ap-04-010485, Lot 806,
Cad-424, Sto. Tomas Cadastre, situated in the Barangay of San Rafael, Municipality of Sto. Tomas,
Province of Batangas, is not a portion of, nor identical to any previously approved isolated
survey.35 Petitioners also submitted before the Court of Appeals a certified true copy36of the original
tracing cloth plan as well as a certification37 from the Land Registration Authority attesting to the fact
that the original plan of Plan-Ap-04-010485 in Diazo Polyester film is on file with their office. Under
the circumstances, therefore, the Court of Appeals erred in reversing the decision of the trial court
solely on the ground that petitioners failed to present the original tracing cloth plan.

Having met all the requirements for registration of title including the presentation of sufficient
evidence to identify the land sought to be registered, there is no more need to remand the case
before the trial court for the presentation of the tracing cloth plan.

WHEREFORE, the January 16, 2003 decision and October 17, 2003 resolution of the Court of
Appeals in CA-G.R. CV No. 65407 are reversed and set aside. the September 7, 1998 decision of
the Regional Trial Court of Tanauan, Batangas, Branch 6 in Land Registration Case No. T-320,
ordering the issuance of a decree of registration over Lot 806, Cad-424, Sto. Tomas Cadastre, Plan
Ap-04-010485 in the name of petitioners is REINSTATED.

No pronouncement as to costs.

SO ORDERED.

TITONG v. CA
For one to file an action to quiet title to a parcel of land, the requisites in Art 476 of the NCC must be
complied with meaning there should be an instrument, record, claim, encumbrance setting forth the
cloud or doubt over the title. Otherwise, the action to be filed can either be ejectment, forcible entry,
unlawful detainer, accion reivindicatoria or accion publiciana.

FACTS:
A 20,592 square meter parcel of land located at Barrio Titiong, Masbate is the subject property being
disputed in this case. The property is being claimed by 2 contestants, however legal title over the
property can only be given to one of them.

The case originated from an action for quieting of title filed by petitioner Mario Titong. The RTC of
Masbate decided in favor of private respondents, Vicente Laurio and Angeles Laurio as the true and
lawful owners of the disputed land. The CA affirmed the decision of the RTC.
Titong asserts that he is the owner of an unregistered parcel of land with an area of 3.2800 hectares
and declared for taxation purposes. He claims that on three separate occasions, private resps, with
their hired laborers, forcibly entered a portion of the land containing an approximate area of 2
hectares and began plowing the same under pretext of ownership. On the other hand, private resps
denied the claim and said that the subject land formed part of the 5.5 hectare agricultural land which
they had purchased from their predecessor-in-interest, Pablo Espinosa.

Titong identified Espinosa as the his adjoining owner asserting that no controversy had sprouted
between them for 20 years until the latter sold lot 3749 to V. Laurio. The boundary between the land
sold to Espinosa and what remained of Titongs property was the old Bugsayon river. When Titong
employed Lerit as his tenant, he instructed the latter to change the course of the old river and direct
the flow of water to the lowland at the southern portion of Titongs property, thus converting the old
river into a Riceland.

Private resps, on the other hand, denied claim of Titongs, saying that the area and boundaries of
disputed land remained unaltered during the series of conveyances prior to its coming into his
hands. Accdg to him, Titong first declared land for taxation purposes which showed that the land had
an area of 5.5 hectares and was bounded on the north by the B. River; on the east by property under
ownership by Zaragoza, and on the west by property owned by De la Cruz. He also alleges that
Titong sold property to Verano. The latter reacquired the property pursuant to mutual agreement to
repurchase the same.
However, the property remained in Titongs hands only for 4 days because he sold it to Espinosa. It
then became a part of the estate of Espinosas wife, late Segundina Espinosa. Later on, her heirs
executed an Extrajudicial Settlement of Estate with Simultaneous Sale whereby the 5.5 hectares
was sold to Laurio for 5,000 pesos. In all these conveyances, the area and boundaries of the
property remained exactly the same as those appearing in the name of Titongs.

The court found out that 2 surveys were made of the property. First survey was made by Titong,
while the second was the relocation survey ordered by the lower court. Because of which, certain
discrepancies surfaced. Contrary to Titongs allegation, he was actually claiming 5.9789 hectares,
the total areas of lot nos 3918, 3918-A and 3606. The lot 3479 pertaining to Espinosas was left with
only an area of 4.1841 hectares instead of the 5.5 hectares sold by Titong to him.

Apprised of the discrepancy, private resps filed a protest before Bureau of Lands against 1st survey,
and filing a case for alteration of boundaries before the MTC, proceedings of which were suspended
because of instant case.

Private resps. Avers that Titong is one of the four heirs of his mother, Leonida Zaragoza. In the
Extrajudicial Settlement with Sale of Estate of late Zaragoza, the heirs adjudicated unto themselves
the 3.6 hectares property of the deceased. The property was bounded by the north by Verano, on
the east by Bernardo Titong, on the south by the Bugsayon River and on the west by Benigno
Titong.
Instead of reflecting only .9000 hectares as his rightful share in the extrajud settlement, Titongs
share bloated to 2.4 hectares. It then appeared to Laurio that Titong encroached upon his property
and declared it as part of his inheritance.

The boundaries were likewise altered so that it was bounded on the north by Verano, on the east by
B. Titong, on the south by Espinosa and on the west by Adolfo Titong. Laurio also denied that Titong
diverted course of the B. river after he had repurchased the land from Verano because land was
immediately sold to Espinosa thereafter.

ISSUE:
Whether or not Titong is the rightful owner of the subject property

RULING: NO
The remedy for quieting of title may be availed of under the circumstances mentioned in Art 476 of
the NCC wherein it says that action to quiet title may be made as a remedial or preventive measure.
Under 476, a claimant must show that there is an instrument, record, claim, encumbrance or
proceeding which casts a cloud, doubt, question or shadow upon owners title to or interest in real
property. The ground for filing a complaint for quieting title must be instrument, record, claim,
encumbrance or proceeding.
In the case at bar, Titong failed to allege that there was an instrument, claim etc be clouded over his
property. Through his allegations, what Titong imagined as clouds cast on his title were Laurios
alleged acts of physical intrusion into his purported property. The grounds mentioned are for action
for forcible entry and not quieting title.

In addition, the case was considered to be a boundary dispute. The RTC and CA correctly held that
when Titong sold the 5.5 hectare land to Espinosa, his rights and possession ceased and were
transferred to Laurio upon its sale to the latter.

Thus, it is now a contract of sale wherein it is a contract transferring dominion and other real rights in
the thing sold. Titong also cannot rely on the claim of prescription as ordinary acquisitive prescription
requires possession in good faith and with just title for the time fixed by law.

G.R. No. 111141 March 6, 1998

MARIO Z. TITONG, petitioner,

vs.
THE HONORABLE COURT OF APPEALS (4th Division), VICTORICO LAURIO and ANGELES
LAURIO, respondents.

ROMERO, J.:

Like a priceless treasure coveted by many, but capable of ownership by only one, this 20,592
square-meter parcel of land located at Barrio Titong, Masbate, Masbate is claimed by two
contestants in this petition for review on certiorari. Unfortunately, legal title over the property can be
vested in only one of them.

The case originated from an action for quieting of title filed by petitioner Mario Titong. The Regional
Trial Court of Masbate, Masbate, Branch 44 1 ruled in of private respondents, Victorico Laurio and
Angeles Laurio, adjudging them the true and lawful owners of the disputed land. Affirmed on appeal
to the Court, of Appeals, petitioner comes to us for a favorable reversal.
Petitioner alleges that he is the owner of an unregistered parcel of land with an area of 3.2800
hectares, more or less, surveyed as Lot No. 3918, and declared for taxation purposes in his name.
He claims that on three separate occasions in September 1983, private respondents, with their hired
laborers, forcibly entered a portion of the land containing an area of approximately two (2) hectares;
and began plowing the same under pretext of ownership. Private respondents denied this allegation,
and averred that the disputed property formed part of the 5.5-hectare agricultural land which they
had purchased from their predecessor-in-interest, 2 Pablo Espinosa on August 10, 1981.

In his testimony, petitioner identified Espinosa as his adjoining owner 3, asserting that no
controversy had sprouted between them for twenty years until the latter sold Lot No. 3479 to private
respondent Victorico Laurio. 4 This was corroborated by Ignacio Villamor, who had worked on the
land even before its sale to Espinosa in 1962. The boundary between the land sold to Espinosa and
what of petitioner's property was the old Bugsayon river. When petitioner employed Bienvenido Lerit
as his tenant in 1962, he instructed Lerit to change the course of the old river and direct the flow of
water to the lowland at the southern of petitioner' s property, thus converting the old river into a
riceland. 5

For his part, private respondent anchors his defense on the following facts: He denied petitioner's
claim of ownership, recounting that the area and boundaries of the disputed land remained unaltered
during the series of conveyances prior to its coming into his hands. According to him, petitioner first
declared the land for taxation purposes under Tax Declaration No. 2916, 6 which showed that the
land had an area of 5.5 hectares and was bounded on the North by the Bugsayon River; on the East
by property under the ownership of Lucio Lerit; on the South by property owner by Potenciano
Zaragoza; and on the West by property owned by Agapito de la Cruz. 7 Private Respondent then
alleges that, on December 21, 1960, petitioner sold this property to Concepcion Verano vda. de
Cabug, after which Tax Declaration No. 5339 8 was issued in her favor. In compliance with their
mutual agreement to repurchase the same, petitioner reacquired the property by way of sale 9 on
August 24, 1962 and then declared it for taxation purposes in his name under Tax Declaration No.
5720. 10 However, the property remained in petitioner's hands for only four (4) days because, on
August 28, 1962, he sold it to Espinosa 11 who then declared it in his name under Tax Declaration
No. 12311. 12 Consequently, the property became a part of the estate of Pablo Espinosa's wife, the
late Segundina Liao Espinosa. On August 10, 1981, her heirs executed an instrument denominated
as "Extrajudicial Settlement of Estate with Simultaneous Sale" whereby the 5.5-hectare property
under Tax Declaration No. 12311 was sold to private respondent 13 in consideration of the amount
of P5,000.00. Thereafter, Tax Declaration No. 12738 was issued in the name of private respondent.
In all these conveyances, the area and boundaries of the property remained exactly the same as
those appearing in Tax Declaration No. 2916 under petitioner's name.

It was proved at the proceedings in the court a quo that two (2) surveys were made of the disputed
property. The first survey 14 was made for petitioner, while the second was the relocation survey
ordered by the lower court. As anticipated, certain discrepancies between the two surveys surfaced.
Thus, contrary to petitioner's allegation in his complaint that he is the owner of only 3.2800 hectares,
he was actually claiming 5.9789 hectares, the total areas of Lot Nos. 3918, 3918-A and 3606. On the
other hand, Lot No. 3479 pertaining to Espinosa, was left with only an area of 4.1841 hectares
instead of the 5.5 hectares sold by petitioner to him. Apprised of the discrepancy, private respondent
filed a protest 15 before the Bureau of Lands against the first survey, likewise filing a case for
alteration of boundaries before the municipal trial court, the proceedings of which, however, were
suspended of the instant case. 16

Private respondent testified that petitioner is one of the four heirs of his mother, Leonida Zaragoza.
In the Extrajudicial Settlement with Sale of Estate of the deceased Leonida Zaragoza, 17 the heirs
adjudicated unto themselves the 3.6-hectare property of the deceased. The property involved is
described in the instrument as having been declared under Tax Declaration No. 3301 18 and as
bounded on the North by Victor Verano, on the East by Benigno Titong, on the South by the
Bugsayon River and on the West by Benigno Titong. On September 9, 1969, Tax Declaration No.
8723 was issued to petitioner for his corresponding share in the estate.

However, instead of reflecting only .9000 hectare as his rightful share in the extrajudicial
settlement 19 petitioner's share was bloated to 2.4 hectares. It therefore appeared to private
respondent that petitioner encroached upon his (Laurio's) property and declared it a part of his
inheritance. 20 The boundaries were likewise altered so that it was bounded on the North by Victor
Verano, on the East by Benigno Titong, on the South by property owner Espinosa, and on the West
by property owner Adolfo Titong. 21 Private respondent accordingly denied that petitioner had
diverted the course of the Bugsayon River after he had repurchased the land from Concepcion
Verano vda. de Cabug 22 because the land was immediately sold to Espinosa shortly thereafter. 23

The lower court rendered a decision in favor of private respondents, declaring him as the true and
absolute owner of the litigated property and ordering petitioner to respect private respondents' title
and ownership over the property and to pay attorney's fees, litigation expenses, costs and moral
damages.

Petitioner appealed to the Court of Appeals, which affirmed the decision. On motion for
reconsideration, the same was denied for lack of merit. Hence, this petition for review on certiorari.

At the outset, we hold that the instant petition must be denied for the reason that the lower court
should have outrightly dismissed the complaint for quieting of title. The remedy of quieting of title
may be availed of under the circumstances enumerated in the Civil Code:

Art. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.

Under this provision, a claimant must show that there is an instrument, record, claim, encumbrance
or proceeding which constitutes or casts a cloud, doubt, question or shadow upon the owner's title to
or interest in real property. 24 The ground or reason for filing a complaint for quieting of title must
therefore be "an instrument, record, claim, encumbrance or proceeding." Under the maxim expresio
mius est exclusio alterius, these grounds are exclusive so that other reasons outside of the purview
of these reasons may not be considered valid for the same action. 25

Had the lower court thoroughly considered the complaint filed, it would have had no other course of
action under the law but to dismiss it. The complaint failed to allege that an "instrument, record,
claim, encumbrance or proceeding" beclouded the plaintiff's title over the property involved.
Petitioner merely alleged that the defendants (respondents herein), together with their hired laborers
and without legal justification, forcibly entered the southern portion of the land of the plaintiff and
plowed the same.

He then proceeded to claim damages and attorney's fees. He prayed that, aside from issuing a writ
or preliminary injunction enjoining private respondents and their hired laborers from intruding into the
land, the court should declare him "the true and absolute owner" thereof. Hence, through his
allegations, what petitioner imagined as clouds cast on his title to the property were private
respondents' alleged acts of physical intrusion into his purported property. Clearly, the acts alleged
may be considered grounds for an action for forcible entry but definitely not one for quieting of title.

When the issues were joined by the filing of the answer to the complaint, it would have become
apparent to the court that the case was a boundary dispute. The answer alleged, among other
matters, that petitioner, "in bad faith, surreptitiously, maliciously and fraudulently had the land in
question included in the survey of his land which extends to the south only as far as the Bugsayon
River which is the visible and natural and common boundary between the properties." 26 Moreover,
during the hearing of the case, petitioner proved that it was actually a boundary dispute by evidence
showing what he considered as the boundary of his property which private respondents perceived as
actually encroaching on their property. In this regard, the following pronouncements of the Court are
apropos:

. . . (T)he trial court (and likewise the respondent Court) cannot, in an action for
quieting of title, order the determination of the boundaries of the claimed property, as
that would be tantamount to awarding to one or some of the parties the disputed
property in an action where the sole issue is limited to whether the instrument,
record, claim, encumbrance or proceeding involved constitutes a cloud upon the
petitioners' interest or title in and to said property. Such determination of boundaries
is appropriate in adversarial proceedings where possession or ownership may
properly be considered and where evidence aliunde, other than the "instrument,
record, claim, encumbrance or proceeding" itself, may be introduced. An action for
forcible entry, whenever warranted by the period prescribed in Rule 70, or for
recovery of possession de facto, also within the prescribed period, may be availed of
by the petitioners, in which proceeding the boundary dispute may be fully threshed
out. 27

Nonetheless, even if the complaint below were to be considered as a valid one for quieting of title,
still, the instant petition for review on certiorari must fail.

As a general rule, findings of fact of the Court of Appeals are binding and conclusive upon this Court.
Such factual findings shall not be disturbed normally unless the same are palpably unsupported by
the evidence on record or the judgment itself is based on a misapprehension of facts. 28 Upon an
examination of the records, the Court finds no evident reason to depart from the general rule.

The courts below correctly held that when petitioner "sold, ceded, transferred and conveyed" the 5.5-
hectare land in favor of Pablo Espinosa, his rights of ownership and possession pertaining thereto
ceased and these were transferred to the latter. In the same manner, Espinosa's rights of ownership
over the land ceased and were transferred to private respondent upon its sale to the latter. This finds
justification in the Civil Code, as follows:

Art. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

In other words, a sale is a contract transferring dominion and other real rights in the thing sold. 29 In
the case at bar, petitioner's claim of ownership must of necessary fail because he has long
abdicated his rights over the land when he sold it to private respondent's predecessor-in-interest.
Petitioner's claim that he acquired ownership over the disputed land through possession for more
than twenty (20) years is likewise unmeritorious. While Art. 1134 of the Civil Code provides that
"(o)wnership and other real rights over immovable property are acquired by ordinary prescription
through possession of ten years," this provision of law must be read in conjunction with Art. 1117 of
the same Code. This article states that ". . . (o)rdinary acquisitive prescription of things requires
possession in good faith and with just title for the time fixed by law." Hence, a prescriptive title to real
estate is not acquired by mere possession thereof under claim of ownership for a period of tea years
unless such possession was acquired con justo tilulo y buena fe (with color of title and good
faith). 30 The good faith of the possessor consists in the reasonable belief that the person from
whom he received the thing was the owner thereof, and could transmit his ownership. 31 For
purposes of prescription, there is just title when the adverse claimant came into possession of the
property through one of the modes recognized by law for the acquisition of ownership or other real
rights but the grantor was not the owner or could not transmit any right. 32

Petitioners have not satisfactorily met the requirements of good faith and just title. As aptly observed
by the trial court, the plaintiff's admitted acts of converting boundary line (Bugsayon River) into a
ricefield and thereafter claiming ownership thereof were acts constituting deprivation of the rights of
others and therefore "tantamount to bad faith." 33 To allow petitioner to benefit from his own wrong
would run counter to the maxim ex dolo malo non oritur actio (no man can allowed to found a claim
upon his own wrongdoing). Extraordinary acquisitive prescription cannot similarly vest ownership
over the property upon petitioner. Art. 1137 of the Civil Code states that "(o)wnership and other real
rights over immovables prescribe through uninterrupted adverse possession thereof for thirty years,
without need of title or of good faith." Petitioner's alleged possession in 1962 up to September 1983
when private respondents entered the property in question spanned twenty-one (21) years. This
period of time is short of the thirty-year requirement mandated by Art. 1137.

Petitioner basically anchors his claim over the property on the survey plan prepared upon his
request, 34 the tax declaration in his name, 35 the commissioner's report on the relocation
survey, 36 and the survey plan. 37 Respondent court correctly held that these documents do not
conclusively demonstrate petitioner's title over Lot Nos. 3918-A and 3606.

A survey is the act by which the quantity of a parcel of land is ascertained and so a paper containing
a statement of courses, distances, and quantity of
land. 38 A survey under a proprietary title is not a conveyance. It is an instrument sui generis in the
nature of a partition; a customary mode in which a proprietor has set off to himself in severalty a part
of the common estate. 39Therefore, a survey, not being a conveyance, is not a mode of acquiring
ownership. A fortiori, petitioner cannot found his claim on the survey plan reflecting a subdivision of
land because it is not conclusive as to ownership as it may refer only to a delineation of
possession. 40

Furthermore, the plan was not verified and approved by the Bureau of Lands in accordance with
Sec. 28, paragraph 5 of Act No. 2259, the Cadastral Act, as amended by Sec. 1862 of Act No. 2711.
Said law ordains that private surveyors send their original field notes, computations, reports,
surveys, maps and plots regarding a piece of property to the Bureau of Lands for verification and
approval. 41 A survey plan not verified and approved by said Bureau is nothing more than a private
writing, the due execution and authenticity of which must be proven in accordance with Sec. 20 of
Rule 132 of the Rules of Court. The circumstance that the plan was admitted in evidence without any
objection as to its due execution and authenticity does not signify that the courts shall give probative
value therefor. To admit evidence and not to believe it subsequently are not contradictory to each
other. This Court cannot alter the conclusions of
the Court of Appeals on the credibility accorded to evidence presented by the parties. 42
Similarly, petitioner's tax declaration issued under his name is not even persuasive evidence of his
claimed ownership over the land in dispute. A tax declaration, by itself, is not considered conclusive
evidence of ownership. 43 It is merely an indicium of a claim of ownership. 44 Because it does not
by itself give title, it is of little value in proving one's ownership. 45 Moreover, the incompatibility in
petitioner's tax declaration and the commissioner's report as regards the area of his claimed property
is much too glaring to be ignored. Tax Declaration No. 8717 states that petitioner's property has an
area of 3.2800 hectares while the totality of his claim according to the commissioned geodetic
engineer's survey amounts to 4.1385 hectares. There is therefore a notable discrepancy of 8,585
square meters. On the other hand, private respondent's claimed property, as borne out by Tax
Declaration No. 12738, totals 5.5 hectares, a more proximate equivalent of the 5.2433-hectare
property as shown by the commissioner's report.

There is also nothing in the commissioner's report that substantiates petitioner's claim that the
disputed land was inside his property. Petitioner capitalizes on the lower court's statement in its
decision 46 that "as reflected in the commissioner's report dated May 23, 1984 (Exhibit 3-3-A), the
area claimed is inside lot 3918 of the defendants(Exhibit 2)" 47 or the private respondents. A careful
reading of the decision would show that this statement is found in the summary of defendants'
(herein private respondents) evidence. Reference to Lot No. 3918 may, therefore, be attributed to
mere oversight as the lower court even continues to state the defendants' assertion that the 2-
hectare land is part of their 5.5-hectare property. Hence, it is not amiss to conclude that either
petitioner misapprehended the lower court's decision or he is trying to contumaciously mislead or
worse, deceive this Court.

With respect to the awards of moral damages of P10,000.00 and attorney's fees of P2,000.00, the
Court finds no cogent reason to delete the same. Jurisprudence is replete with rulings to the effect
that where fraud and bad faith have been established, the award of moral damages is in
order. 48 This pronouncement finds support in Art. 2219 (10) of the Civil Code allowing the recovery
of moral damages for acts enumerated in Art. 21 of the same Code. This article states that "(a)ny
person who wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage." The moral damages are
hereby increased to P30,000.00. We agree with the respondent court in holding that the award of
attorney's fees is justified because petitioner filed a clearly unfounded civil action. 49

WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the questioned
Decision of the Court of Appeals AFFIRMED. This Decision is immediately executory. Costs against
petitioner.

SO ORDERED.

G.R. No. 109840 January 21, 1999

JOSE L. CHUA and CO SIO ENG, petitioners,

vs.
THE HONORABLE COURT OF APPEALS and RAMON IBARRA, respondents.

MENDOZA, J.:

This is a petition for review on certiorari of the decision, 1 dated October 8, 1992 of the Court of
Appeals affirming the decision of the Regional Trial Court, Branch 59 of Makati, Metro Manila,
ordering the ejectment of petitioners from the premises owned by private respondent.
Petitioners were lessees of a commercial unit at No. 3086 Redemptorist Street in Baclaran,
Paraque, Metro Manila. The lease was for a period of five (5) years, from January 1, 1985 to
December 31, 1989. The contract expressly provided for the renewal of the lease at the option of the
lessees "in accordance with the terms of agreement and conditions set by the lessor." Prior to the
expiration of the lease, the parties discussed the possibility of renewing it. They exchanged proposal
and counterproposal, but they failed to reach agreement. The dispute was referred to the barangay
captain for conciliation but still no settlement was reached by the parties.

On July 24, 1990, private respondent filed a complaint for unlawful detainer against petitioner's in the
Metropolitan Trial Court of Paraaque, Metro Manila, which on February 4, 1992 rendered a
decision, the dispositive portion of which reads:2

WHEREFORE, premises considered, judgment is hereby, rendered as follows:

1. The defendants (herein petitioners) are hereby given a period of

two (2) years extension of occupancy of the subject premises starting
the date of the filling of the instant complaint;

2. The defendants are hereby ordered to pay the plaintiff (herein

private respondent) the sum of P188,806.00 representing back
rentals as of the year 1991 and a monthly rental of P10,000.00
thereafter until the expiration of the aforesaid extension of their
occupancy or until the subject premises is actually vacated.

3. Defendants are hereby ordered to pay the plaintiff the amount of

P15,000.00 as attorney's fees; and

4. Defendants are hereby ordered to pay the cost of suit.

SO ORDERED.

On appeal by both parties, the Regional Trial Court, Branch 59 of Makati ruled that the lease was for
a fixed period of five (5) years and that, upon its expiration on January 1, 1990, petitioners' continued
stay in the premises became illegal. As provided in Art. 1687 of the Civil Code, the power of the
courts to fix the period of lease is limited only to cases where the period has not been fixed by the
parties themselves. The dispositive portion of the decision3 states:

Premises considered, judgment is hereby rendered modifying the appealed decision,

as follows:

1. Ordering the defendants (herein petitioners) and all persons claiming and/or acting
for and in their behalf to vacate the premises known as door No. 3086 Redemptorist,
corner G.C. Cruz Streets, Baclaran, Paraaque, Metro Manila and turn over
possession thereof to the plaintiff (herein private respondent);

2. Ordering the defendants to pay the plaintiff the following:

a) the amount of P42,306.00 representing accrued or

back rentals from January 1, 1987 to December 31,
1989;
 b) a monthly rental of P7,320.50 for the use or
occupancy of the premises starting January 1, 1990
until July 24, 1990 and at Ten Thousand (P10,000.00)
Pesos from July 24, 1990 until the defendants shall
have vacated the same;

c) the amount of P10,000.00 representing reasonable

attorney's fees:

3. Dismissing defendants' counterclaim for lack of merit; and

4. With costs against the defendants.

Petitioners appealed to the Court of Appeals which affirmed the decision. In its decision, dated
October 8, 1992, the Court of Appeals ordered:

WHEREFORE, except for the modification that the monthly rental that petitioners
should pay private respondent from July 24, 1990 until the latter finally vacate the
premises in question is reduced to P7,320.00, the decision of the respondent court in
this case is AFFIRMED in all other respects, with costs against petitioners Jose L.
Chua and Ko Sio Eng.

Petitioners' motion for reconsideration was likewise denied. Hence, this petition for review
for certiorari. Petitioners assign several errors as having been allegedly committed by the Court of
Appeals.

First. Petitioners allege that the Court of Appeals erred in affirming the lower court's finding that they
owe private respondent the amount of P42,306.00 as unpaid rentals from January 1, 1987 to
December 31, 1989 because neither the letter of demand nor the complaint for unlawful detainer
alleged a claim for unpaid rentals. As the Court of Appeals pointed out, however, the issue of
arrearages was raised at the pre-trial by private respondent and evidence on this question was
presented without objection from petitioners:5

First of all, while it is true that there was no express demand in private respondent's
complaint for unlawful detainer against petitioners for the latters payment of rental
arrearages, private respondent in a pleading dated December 17, 1990 filed with the
MTC (by way of comment to petitioners' motion to admit amended answer) stated:

That moreover the unpaid rentals from January 1987 to December

31, 1989 amounts to FORTY TWO THOUSAND THREE HUNDRED
SIX PESOS (P42,306,00), exclusive of rentals from January 1 to
December 31, 1990 which would be one hundred eighty thousand
pesos (P180,000.00) or a total of TWO HUNDRED TWENTY TWO
THOUSAND THREE HUNDRED SIX PESOS (222,306,00)

(p. 75 Orig. Rec).

Then, at the pre-trial of December 17, 1990, among the issues proposed by counsel
for plaintiff (now private respondent) was whether:
 3. defendants are in arrears for the rentals from Dec. 31, 1987 to
January 1989, in accordance with the contract:

(p. 8, tsn Dec. 17, 1990:

p. 87, id.)

Counsel for defendants (herein petitioners) did not object to the statement of issues
made by plaintiffs counsel and instead simply stated as their own main issue whether
plaintiff had a valid cause of action for ejectment against them as he is not the sole
owner of the leased premises, and then averred that "based on this premise, the
other issues raised by plaintiff could be dependent on the resolution of the stated
issues" (id., p. 88. Orig. Rec.). Later, at the hearing of February 12, 1990. plaintiff
Ramon Ibarra testified that although his lease contract (Exh. "A") with petitioners
stipulated an annual ten percent (10%) additional rental starting in 1986 (i.e., the
monthly rental in 1986 was P5,500, in 1987, it was P6,050; in 1988, it was
P6,655.00; and in 1989, it was P7,320.50), petitioners continued to pay only the
original monthly rental of P5,000 stipulated in their contract (Exh. "A"), so that
petitioners had incurred total rental arrearages at the end of 1989 of P42,306.00 (pp.
6-8,. tsn, op cit.: pp. 113-115. Orig. Rec.). . . .

Obviously, then, petitioners' rental arrearages from 1986 to 1989 as an issue raised
at the pre-trial and on which issue private respondent presented evidence without
any objection from petitioners. And considering that the petitioners incurred said
rental arrearages because they did not pay private respondent the automatic 10%
increase in their monthly rental every year for the years 1986 to 1989 as agreed
upon and stipulated in their lease contract (Exh. "A".) which contract is the law
between the parties, justice and good faith demand that petitioners should pay said
rental arrearages. As correctly ruled by the respondent court, "to absolve the
defendants from paying rentals in arrears while they continue occupying and
enjoying the premises would be allowing the defendants to enrich themselves at the
expense of the plaintiff. (p, 55, Rollo).

Indeed, any objection to the admissibility of evidence should be made at the time such evidence is
offered or as soon thereafter as the objection to its admissibility becomes apparent, 6 otherwise the
objection will be considered waived and such evidence will form part of the records of the case as
competent and admissible evidence. 7 Rule 10, 5 8 of the Rules of Civil Procedure allows the
amendment of the pleadings in order to make them conform to the evidence in the record.

Second. Petitioners claim that they are entitled to an estension of time to occupy the premises in
question. This, too, is without merit. After the lease terminated on January 1, 1990 and without the
parties thereafter reaching any agreement for its renewal, petitioners became deforciants subject to
ejectment from the premises.9

Neither did the Court of Appeals err in ruling that petitioners are not entitled to a reasonable
extension of time to occupy the premises on account of the fact that the lease contract between the
parties has already expired. As there was no longer any lease to speak of which could be extended,
the Metropolitan Trial Court was in effect making a contract for the parties which it obviously did not
have the power to do.10 The potestative authority of the courts to fix a longer term for a lease under
Art. 1687 of the Civil Code11 applies only to cases where there is no period fixed by the parties. To
the contrary, in this case, the contract of lease provided for a fixed period of five (5) years from
January 1, 1985 to December 31, 1989. As the Court held in Bacolod-Murcia Milling Co., Inc. v.
Banco Nacional Filipino:12

It is not the province of the court to alter a contract by construction or to make a new
contract for the parties; its duty is confined to the interpretation of the one which they
have made for themselves, without regard to its wisdom or folly, as the court cannot
supply material stipulations or read into contract words which it does not contain.

Indeed, Art. 1675 of the Civil Code excludes cases falling under Art. 1673 (which provides among
others, that the lessor may judicially eject the lessee when the period agreed upon or that which is
fixed has expired) from the cases wherein, pursuant to Art. 1687, courts may fix a longer period of
lease. For these reasons, we hold that the Court of Appeals did not err in ruling that petitioners were
not entitled to an extension of the lease upon its expiration.

Third. The appellate court found petitioners guilty of bad faith in refusing to leave the premises. But
petitioners contend that they acted in good faith under the belief that they were entitled to an
extension of the lease because they had made repairs and improvements on the premises.

This contention is devoid of merit. The fact that petitioners allegedly made repairs on the premises in
question is not a reason for them to retain the possession of the premises. There is no provision of
law which grants the lessee a right of retention over the leased premises on that ground. Art. 448 of
the Civil Code, in relation to Art. 546, which provides for full reimbursement of useful improvements
and retention of the premises until reimbursement is made, applies only to a possessor in good
faith, i.e., one who builds on a land in the belief that he is the owner thereof. In a number of cases,
the Court has held that this right does not apply to a mere lessee, like the petitioners, otherwise, it
would always be in his power to "improve" his landlord out of the latter's property.13 Art. 1678 merely
grants to such a lessee making in good faith useful improvements the right to be reimbursed one-
half of the value of the improvements upon the termination of the lease, or, in the alternative, to
remove the improvements if the lessor refuses to make reimbursement.

Petitioners were thus correctly ordered to pay attorney's fees considering that private respondent
had to go to court to protect his interest.14 The award of P10,000.00 is reasonable in view of the time
it has taken this rather simple case for ejectment to be decided.

Fourth. Petitioners contend that the Court of Appeals erred in affirming the denial of their
counterclaim for damages for their failure to enjoy the peaceful possession of the premises because
private respondent allowed vendors to ply their trade at the front portion of the leased premises.
Petitioners claim that, as a result, they suffered business losses and moral injuries. As both the
Metropolitan Trial Court and Regional Trial Court held, however, there is no evidence to support this
claim. As the Court of Appeals said, petitioners never complained before about the sidewalk vendors
occupying a portion of the leased property. It was only after negotiations for renewal of the lease had
failed and private respondent had filed a complaint for unlawful detainer against them did they
complain about the vendors.

WHEREFORE, the decision of the Court of Appeals, dated October 8, 1992, is AFFIRMED. 1w phi 1.nt

Costs against petitioners.

SO ORDERED.