G.R. No.

180086 July 2, 2014

AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM [AFP-RSBS], Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

LEONEN, J.:

The period of possession prior to the declaration that land is alienable and disposable agricultural land is included in the computation
of possession for purposes of acquiring registration rights over a property if the land has already been declared as such at the time of
the application for registration.

This is a Rule 45 petition of the Court of Appeals' January 10, 2007 decision and October 5, 2007 resolution. The Court of Appeals
reversed the trial court decision approving petitioner's application for registration.

On July 10, 1997, the Armed Forcesof the Philippines Retirement and Separation Benefits System (AFP-RSBS) filed an application for
original registration of parcels of land consisting of 48,151 square meters in Silang, Cavite.1The parcels of land were designated as Lot
Nos. 2969-A, 2969-B, and 2969-C, and had a total area of 48,151 square meters.2 These were allegedly acquired from Narciso Ambrad,
Alberto Tibayan, and Restituto Tibayan on March 13, 1997.3 It was also alleged that their predecessors-ininterest had been in
possession ofthe properties since June 12, 1945.4

In a decision dated July 28, 2001,the Municipal Circuit Trial Court approved AFP-RSBS’s application for original registration.5 The
Register of Deeds was directed to cause the registration of the properties in the name of AFP-RSBS.6

The Republic of the Philippines moved for the reconsideration of the decision.7 However, the motion was denied in an order dated
February 19, 2003.8

On March 14, 2003, the Republic appealed the decision and order of the trial court, alleging improper identification of the properties,
noncompliance with SC Administrative Circular No. 7-96 dated July 15, 1996 requiring that copies of a list of lots applied for be
furnished to the Bureau of Lands,9 non-submission of a tracing cloth plan, and lack of the Department of Environment and Natural
Resources certification showing that the properties were already declared alienable and disposable at the time of possession by the
predecessors-in-interest.10

On January 10, 2007, the Court ofAppeals reversed the decision of the trial court and dismissed AFP-RSBS’s application.11 The
dispositive portion of the decision reads:

WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE and another one entered DISMISSING the application for
original registration.12

The Court of Appeals found that the properties had no pending land application and that there were no overlapping lots. 13 Hence, no
person needed to be notified of the land registration proceedings.14 The Court of Appeals also found that AFP-RSBS complied with the
requirement to submit a tracing cloth plan.15

However, according to the Court of Appeals, since Lot 2969 was declared alienable and disposable only on March 15, 1982, the period
of possession of the predecessors-in-interest before that date should be excluded from the computation of the period of
possession.16 Hence, AFPRSBS’s and its predecessors-in-interest’s possessions could not ripen into ownership.17

The Court of Appeals also ruled that AFP-RSBS, as a private corporation or association, may not own alienable lands of the public
domain pursuant to Section 3, Article XII of the Constitution.18

On February 7, 2007, AFP-RSBS filed a motion for reconsideration of the Court of Appeals’ decision.19 The Court of Appeals denied this
motion in a resolution promulgated on October 5, 2007.20

Hence, this petition was filed.

The issue in this case is whether the period of possession before the declaration that land is alienable and disposable agricultural land
should be excluded from the computation of the period of possession for purposes of original registration.

AFP-RSBS argued that "[w]hat is required is that the property sought to be registered has already been declared to be alienable and
disposable land of the public domain at the time [of]the application for registration . . . before the court." 21 In support of this argument,
AFP-RSBS cited Republic v. CA and Naguit22 and Republic v. Bibonia and Manahan.23 Hence, AFPRSBS and its predecessors-in-interest’s
possession before June 12, 1945 should have ripened into a bonafide claim of ownership. 24 AFP-RSBS also argued that the land had
already been private before its acquisition in 1997 by virtue of the claim of ownership ofits predecessors-in-interest before
1945.25 Therefore, petitioner corporation may acquire the property.

In its comment, the Republic argued that the classification of land as alienable and disposable is required before possession can ripen
into ownership.26 The period of possession before declaration that the land is alienable and disposable cannot be included in computing
the period of adverse possession.27 Hence, before March 15, 1982, there could have been no possession in the concept of an
owner.28 The Republic also argued that there was no sufficient evidence of open, continuous, exclusive, and notorious possession under
a bona fide claim of ownership before June 12, 1945.

We rule for petitioner.

The requirements for the application for original registration of land based on a claim of open and continuous possession of alienable
and disposable lands of public domain are provided in Section 14(1) of Presidential Decree No. 1529 or the Property Registration
Decree. It provides:
Section 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 orthrough 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 occupationof alienable and disposable lands of the public domainunder a bona fide claim of ownership since June 12,
1945, or earlier. (Emphasis supplied)

A similar provision can be found in Commonwealth Act No. 141 or Public Land Act:

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 of the province
where the land is located for confirmation of their claims and the issuance of a certificate of title therefor under the Land Registration
Act, to wit:

....

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and notorious
possession and occupationof agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, since June
12, 1945, 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. (As amended by Presidential Decree No. 1073) (Emphasis supplied)

Based on these provisions, an applicant for original registration based on a claim of exclusive and continuouspossession or occupation
must show the existence of the following:

1) Open, continuous, exclusive,and notorious possession, by themselves or through their predecessors-in-interest, of land;

2) The land possessed or occupied musthave been declared alienable and disposable agricultural land of public domain;

3) The possession or occupation was under a bona fide claim of ownership;

4) Possession dates back to June 12, 1945 or earlier.

On one hand, petitioner argued that its and its predecessors-ininterest’s possession before the declaration that the property was
alienable and disposable agricultural land in1982 should be included in the computation of the period of possession for purposes of
registration.29 On the other hand, respondent holds the position that possession before the establishment of alienability of the land
should be excluded in the computation.30

Republic v. Naguit31 involves the similar question.In that case, this court clarified that Section 14(1) of the Property Registration Decree
should be interpreted to includepossession before the declaration of the land’s alienability as long as at the time of the application for
registration, the land has already been declared part of the alienable and disposable agricultural public lands. This court also
emphasized in that case the absurdity that would result in interpreting Section 14(1)as requiring that the alienability of public land
should have already been established by June 12, 1945. Thus, this court said in Naguit:

Besides, we are mindful of the absurdity that would result if we adopt petitioner’s position. Absent a legislative amendment, the rule
would be, adopting the OSG’s view, that all lands of the public domain which were not declared alienable or disposable before June 12,
1945 would not be susceptible to originalregistration, no matter the length of unchallenged possession by the occupant. Such
interpretation renders paragraph (1) of Section 14 virtually inoperative and even precludes the government from giving it effect even
as it decides to reclassify public agricultural lands as alienable and disposable. The unreasonableness of the situation would even be
aggravated considering that before June 12, 1945, the Philippines was not yet even considered an independent state.

Instead, the more reasonable interpretation of Section 14(1) is that it merely requires the property sought tobe registered as already
alienable and disposable at the time the application for registration of title is filed. If the State, at the time the application is made,
has not yet deemed it proper to release the property for alienation ordisposition, the presumption is that the government is still
reserving the rightto utilize the property; hence, the need to preserve its ownership in the State irrespective of the length of adverse
possession even if in good faith. However, if the property has already been classified as alienable and disposable, as it is in this case,
then there is already an intention on the part of the State to abdicate its exclusive prerogative over the property.32

However, in the later case of Republic v. Herbieto33 that was cited by respondent, this court ruled that the period of possession before
the declaration that land is alienable and disposable cannot be included in the computation of the period of possession. This court said:

Section 48(b), as amended, now requires adverse possession of the land since 12 June 1945 or earlier.In the present Petition, the
Subject Lots became alienable and disposable only on 25 June 1963. Any period of possession prior tothe date when the Subject Lots
were classified as alienable and disposable is inconsequential and should be excluded from the computation of the period of possession;
such possession can never ripen into ownership and unless the land had been classified as alienable and disposable, the rules on
confirmation of imperfect title shall not apply thereto. It is very apparent then that respondents could not have complied with the
period of possession required by Section 48(b) of the Public Land Act, as amended, to acquire imperfect or incomplete title to the
Subject Lots that may be judicially confirmed or legalized.34 This court clarified the role of the date, June 12, 1945, in computing the
period of possession for purposes of registration in Heirs of Mario Malabanan v. Republic of the Philippines. 35 In that case, this court
declared that Naguit and not Herbieto should be followed. Herbieto "has [no] precedental value with respect to Section 14(1)."36 This
court said:

The Court declares that the correct interpretation of Section 14(1) is that which was adopted in Naguit. The contrary pronouncement
in Herbieto, as pointed out in Naguit, absurdly limits the application of the provision to the point of virtual inutility since it would only
cover lands actually declared alienable and disposable prior to 12 June 1945, even if the current possessor is able to establish open,
continuous, exclusive and notorious possession under a bona fideclaim of ownership long before that date.

Moreover, the Naguitinterpretation allows more possessors under a bona fideclaim of ownership to avail ofjudicial confirmation of their
imperfect titles than whatwould be feasible under Herbieto. This balancing fact is significant, especially considering our forthcoming
discussion on the scope and reach ofSection 14(2) of the Property Registration Decree.
....

Thus, neither Herbietonor its principal discipular ruling Buenaventura has any precedental value with respect to Section 14(1). On the
other hand, the ratio of Naguitis embedded in Section 14(1), since it precisely involved situation wherein the applicant had been in
exclusive possession under a bona fideclaim of ownership prior to 12 June 1945. The Court’s interpretation of Section 14(1) therein
was decisive to the resolution of the case. Any doubt as to which between Naguitor Herbieto provides the final word of the Court on
Section 14(1) isnow settled in favor of Naguit.37

Moreover, in the resolution of the motions for reconsideration of this court’s 2009 decision in Heirs of Malabanan,38this court explained
that there was no other legislative intent thatcould be associated with the date, June 12, 1945, as written in our registration laws
except that it qualifies the requisite period of possession and occupation. The law imposes no requirement that land should have been
declared alienable and disposable agricultural land as early as June 12, 1945.

Therefore, what is important in computing the period of possession is that the land has already been declaredalienable and disposable
at the time of the application for registration. Upon satisfaction of this requirement, the computation of the period may include the
period of adverse possession prior to the declaration that land is alienable and disposable.

Persons are entitled to the registration of their titles upon satisfaction of all the requirements enumerated under our laws. No
presumption or doctrine in favor of state ownership candeprive them of their titles once all the conditions are satisfied. 39 Our
Constitution contains no such limit upon our citizens or privilege upon the state.40 Neither was this doctrine extended to our organic
acts.41

Respondent argued that "[s]ince the land subject of petitioner’s application for registration was classified alienable and disposable only
on March 15, 1982, it follows that petitioner could not have possessed the same in the concept of owner, earlier than the said date."42

Respondent is mistaken. Although adverse, open, continuous, and notorious possession in the concept of an owner is a conclusion of
law to be determined by courts, it has more to do with a person’s belief in good faith that he or she has just title to the property that
he or she is occupying. It is unrelated to the declaration that land isalienable or disposable. A possessor or occupant of property may,
therefore,be a possessor in the concept of an owner prior to the determination that the property is alienable and disposable agricultural
land. His or her rights, however, are still to be determined under the law.

Petitioner’s right to the original registration of titleover the property is, therefore, dependent on the existence of: a) a declaration that
the land is alienable and disposable at the time ofthe application for registration and b) open and continuous possession in the concept
of an owner through itself or through its predecessors-in-interest since June 12, 1945 or earlier.

In this case, there is no dispute that the properties were already declared alienable and disposable land on March 15, 1982. Hence,
the property was already alienable and disposable at the time of petitioner’s application for registration on July 10, 1997.

As to the required period of possession, petitioner was able to show that it, through itself or its predecessors-in-interest, has been in
open, continuous, exclusive, and notorious possession before 1945 through testimonies and documents.

One of petitioner’s predecessors-in-interest, Emilia Amadure, testified that as early as her birth in 1917, her family was already residing
in Barangay Biluso, Silang, Cavite. Her father, Maximo Amadure, was the properties’ previous owner. She was able to describe the
lots’ metes and bounds as well as the adjoining properties’ owners.43 She also testified that "the first time she came to know aboutsaid
lots was at the age of reason"44 at which time, she saw her father in possession of the properties. By June 12, 1945, she was already
28 years old.Tax declarations between 1948 to 1998 under Maximo’s name and other previous owners’ names were also presented.45

Maximo Amadure’s grandson, Rogelio Amadure, corroborated Emilia’s testimony. He testified thathis grandfather owned and tilled the
properties with his five children: Catalino, Dominador, Margarita, Gregonia, and Emelia Amadure. 46 They cultivated banana, corn,
papaya, and palay on the properties.47 Before the war, Rogelio’s father informed him that Maximo owned the properties.48 Maximo’s
children took possession of the properties after Maximo’s death.49

Based on the testimonies, we can already deduce that petitioner’s predecessors-in-interest had possessed the properties in the concept
of an owner even earlier than 1945.

Petitioner was, therefore, able to prove all the requisites for the grant of an original registration of title under our registration laws.

Respondent argues that although petitioner is a government-owned and -controlled corporation, it cannot acquire title through
acquisitive prescription. This argument is unmeritorious. The type of corporation that petitioner is has nothing to do with the grant of
its application for original registration. Petitioner also acquired title to the property under Section 14(1) of the Property Registration
Decree or Section 48(b) of the Public Land Act, and not through acquisitive prescription.

If respondent’s argument stems from the Court of Appeals’ ruling that petitioner cannot acquire title to the property because of Section
3, Article XII of the Constitution, which prohibits private corporations from acquiring public land, respondent is, again, mistaken. The
prohibition in Section 3, Article XII of the Constitution applies only to private corporations. Petitioner is a government corporation
organized under Presidential Decree No. 361, as amended by Presidential Decree No. 1656.

WHEREFORE, the petition is GRANTED. The Court of Appeals' decision of January 10, 2007 and resolution of October 5, 2007 are SET
ASIDE. The July 28, 2001 trial court decision is REINSTATED.

SO ORDERED.
 MERCEDES MORALIDAD, G.R. No. 152809
Petitioner,

- versus - August 3, 2006

SPS. DIOSDADO PERNES and ARLENE PERNES,

Respondents.

x ---------------------------------------------------------------------------------x
DECISION
GARCIA, J.:
Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to nullify and set aside the following
issuances of the Court of Appeals (CA) in CA-G.R. SP No. 61610, to wit:

1. Decision dated September 27, 2001,[1] affirming an earlier decision of the Regional Trial Court (RTC)
of Davao City which reversed that of the Municipal Trial Court in Cities (MTCC), Davao City, Branch 1, in an
action for unlawful detainer thereat commenced by the petitioner against the herein respondents; and
2. Resolution dated February 28, 2002,[2] denying petitioners motion for reconsideration.

At the heart of this controversy is a parcel of land located in Davao City and registered in the name of petitioner Mercedes Moralidad
under Transfer Certificate of Title (TCT) No. T-123125 of the Registry of Deeds of Davao City.
In her younger days, petitioner taught in Davao City, Quezon City and Manila. While teaching in Manila, she had the good fortune of
furthering her studies at the University of Pennsylvania, U.S.A. While schooling, she was offered to teach at the Philadelphia Catholic
Archdiocese, which she did for seven (7) years.Thereafter, she worked at the Mental Health Department of said University for the next
seventeen (17) years.

During those years, she would come home to the Philippines to spend her two-month summer vacation in her hometown
in Davao City. Being single, she would usually stay in Mandug, Davao City, in the house of her niece, respondent Arlene Pernes, a
daughter of her younger sister, Rosario.

Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at the outskirts of Davao City was infested by NPA
rebels and many women and children were victims of crossfire between government troops and the insurgents. Shocked and saddened
about this development, she immediately sent money to Araceli, Arlenes older sister, with instructions to look for a lot
in Davao City where Arlene and her family could transfer and settle down. This was why she bought the parcel of land covered by TCT
No. T-123125.

Petitioner acquired the lot property initially for the purpose of letting Arlene move from Mandug to Davao City proper but later
she wanted the property to be also available to any of her kins wishing to live and settle in Davao City. Petitioner made known this
intention in a document she executed on July 21, 1986.[3] The document reads:

I, MERCEDES VIA MORALIDAD, of legal age, single, having been born on the 29th day of January, 1923, now actually
residing at 8021 Lindbergh Boulevard, Philadelphia, Pennsylvania, U.S.A., wishes to convey my honest intention
regarding my properties situated at Palm Village Subdivision, Bajada, Davao City, 9501, and hereby declare:

1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein and stay
as long as they like;

2. That anybody of my kins who wishes to stay on the aforementioned real property should maintain
an atmosphere of cooperation, live in harmony and must avoid bickering with one another;

3. That anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof.
Provided, however, that the same is not inimical to the purpose thereof;

4. That anyone of my kins who cannot conform with the wishes of the undersigned may exercise the
freedom to look for his own;

5. That any proceeds or income derived from the aforementioned properties shall be allotted to my
nearest kins who have less in life in greater percentage and lesser percentage to those who are better of in
standing.

xxx xxx xxx

Following her retirement in 1993, petitioner came back to the Philippines to stay with the respondents on the house they build
on the subject property. In the course of time, their relations turned sour because members of the Pernes family were impervious to
her suggestions and attempts to change certain practices concerning matters of health and sanitation within their compound. For
instance, Arlenes eldest son, Myco Pernes, then a fourth year veterinary medicine student, would answer petitioner back with clenched
fist and at one time hurled profanities when she corrected him. Later, Arlene herself followed suit. Petitioner brought the matter to the
local barangay lupon where she lodged a complaint for slander, harassment, threat and defamation against the Pernes Family. Deciding
for petitioner, the lupon apparently ordered the Pernes family to vacate petitioners property but not after they are reimbursed for the
value of the house they built thereon. Unfortunately, the parties could not agree on the amount, thus prolonging the impasse between
them.

Other ugly incidents interspersed with violent confrontations meanwhile transpired, with the petitioner narrating that, at one
occasion in July 1998, she sustained cuts and wounds when Arlene pulled her hair, hit her on the face, neck and back, while her
husband Diosdado held her, twisting her arms in the process.

Relations having deteriorated from worse to worst, petitioner, on July 29, 1998, lodged a formal complaint before the Regional
Office of the Ombudsman for Mindanao, charging the respondent spouses, who were both government employees, with conduct
unbecoming of public servants. This administrative case, however, did not prosper.

Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful detainer suit against the respondent
spouses. Petitioner alleged that she is the registered owner of the land on which the respondents built their house; that through her
counsel, she sent the respondent spouses a letter demanding them to vacate the premises and to pay rentals therefor, which the
respondents refused to heed.
In their defense, the respondents alleged having entered the property in question, building their house thereon and maintaining the
same as their residence with petitioners full knowledge and express consent. To prove their point, they invited attention to her written
declaration of July 21, 1986, supra, wherein she expressly signified her desire for the spouses to build their house on her property and
stay thereat for as long as they like.

The MTCC, resolving the ejectment suit in petitioners favor, declared that the respondent spouses, although builders in good faith vis-
-vis the house they built on her property, cannot invoke their bona fides as a valid excuse for not complying with the demand to
vacate. To the MTCC, respondents continued possession of the premises turned unlawful upon their receipt of the demand to vacate,
such possession being merely at petitioners tolerance, and sans any rental. Accordingly, in its decision dated November 17, 1999,[4] the
MTCC rendered judgment for the petitioner, as plaintiff therein, to wit:

WHEREFORE, judgment is hereby rendered in favor of herein plaintiff and against the defendants, as follows:

a) Directing the defendants, their agents and other persons acting on their behalf to vacate the premises
and to yield peaceful possession thereof to plaintiff;

b) Ordering defendants to pay P2,000.00 a month from the filing of this complaint until they vacate
premises;

c) Sentencing defendants to pay the sum of P120,000.00[5] as attorneys fees and to pay the cost of suit.

Defendants counterclaim are hereby dismissed except with respect to the claim for reimbursement of necessary and
useful expenses which should be litigated in an ordinary civil actions. (sic)

Dissatisfied, the respondent spouses appealed to the RTC of Davao City.

In the meantime, petitioner filed a Motion for Execution Pending Appeal. The motion was initially granted by the RTC in its Order of
February 29, 2000, but the Order was later withdrawn and vacated by its subsequent Order dated May 9, 2000[6] on the ground that
immediate execution of the appealed decision was not the prudent course of action to take, considering that the house the respondents
constructed on the subject property might even be more valuable than the land site.

Eventually, in a decision[7] dated September 30, 2000, the RTC reversed that of the MTCC, holding that respondents possession of the
property in question was not, as ruled by the latter court, by mere tolerance of the petitioner but rather by her express
consent. It further ruled that Article 1678 of the Civil Code on reimbursement of improvements introduced is inapplicable since said
provision contemplates of a lessor-lessee arrangement, which was not the factual milieu obtaining in the case. Instead, the RTC ruled
that what governed the parties relationship are Articles 448 and 546 of the Civil Code, explaining thus:

Since the defendants-appellees [respondents] are admittedly possessors of the property by permission from
plaintiff [petitioner], and builders in good faith, they have the right to retain possession of the property subject of
this case until they have been reimbursed the cost of the improvements they have introduced on the property.

Indeed, this is a substantive right given to the defendants by law, and this right is superior to the procedural
right to [sic] plaintiff to immediately ask for their removal by a writ of execution by virtue of a decision which as we
have shown is erroneous, and therefore invalid. (Words in brackets supplied),

and accordingly dismissed petitioners appeal, as follows:

WHEREFORE, in view of the foregoing, the Decision appealed from is REVERSED and declared invalid. Consequently,
the motion for execution pending appeal is likewise denied.

Counter-claims of moral and exemplary damages claimed by defendants are likewise dismissed. However, attorneys
fees in the amount of fifteen thousand pesos is hereby awarded in favor of defendants-appellants, and against
plaintiffs.

SO ORDERED.[8]

Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.

On September 27, 2001, the CA, while conceding the applicability of Articles 448 and 546 of the Civil Code to the case, ruled
that it is still premature to apply the same considering that the issue of whether respondents right to possess a portion of petitioners
land had already expired or was already terminated was not yet resolved. To the CA, the unlawful detainer suit presupposes the
cessation of respondents right to possess. The CA further ruled that what governs the rights of the parties is the law on usufruct but
petitioner failed to establish that respondents right to possess had already ceased. On this premise, the CA concluded that the ejectment
suit instituted by the petitioner was premature. The appellate court thus affirmed the appealed RTC decision, disposing:

WHEREFORE, premises considered, the instant petition for review is hereby denied for lack of
merit. Accordingly, the petitioners complaint for Unlawful Detainer is DISMISSED.

SO ORDERED.

With the CAs denial of her motion for reconsideration in its Resolution of February 28, 2002, petitioner is now before this Court raising
the following issues:

I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE UNLAWFUL DETAINER CASE
FOR BEING PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH LAW AND JURISPRUDENCE.

II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING ARTICLES 448 AND 546 AND THE
PROVISIONS OF THE CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF THE CIVIL CODE.

The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was constituted between the parties herein is one of usufruct over a piece of land,
with the petitioner being the owner of the property upon whom the naked title thereto remained and the respondents being two (2)
among other unnamed usufructuaries who were simply referred to as petitioners kin. The Court, however, cannot go along with the
CAs holding that the action for unlawful detainer must be dismissed on ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in the following wise:
 ART. 562. Usufruct gives a right to enjoy the property of another with the obligation of preserving its form
and substance, unless the title constituting it or the law otherwise provides.

Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers property.[9] It is also defined as the right to
enjoy the property of another temporarily, including both the jus utendi and the jus fruendi,[10] with the owner retaining the jus
disponendi or the power to alienate the same.[11]

It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known her intention to give respondents and
her other kins the right to use and to enjoy the fruits of her property. There can also be no quibbling about the respondents being
given the right to build their own house on the property and to stay thereat as long as they like. Paragraph #5 of the same document
earmarks proceeds or income derived from the aforementioned properties for the petitioners nearest kins who have less in life in
greater percentage and lesser percentage to those who are better of (sic) in standing. The established facts undoubtedly gave
respondents not only the right to use the property but also granted them, among the petitioners other kins, the right to enjoy the
fruits thereof. We have no quarrel, therefore, with the CAs ruling that usufruct was constituted between petitioner and respondents.
It is thus pointless to discuss why there was no lease contract between the parties.
However, determinative of the outcome of the ejectment case is the resolution of the next issue, i.e., whether the existing
usufruct may be deemed to have been extinguished or terminated. If the question is resolved in the affirmative, then the respondents
right to possession, proceeding as it did from their right of usufruct, likewise ceased. In that case, petitioners action for ejectment in
the unlawful detainer case could proceed and should prosper.

The CA disposed of this issue in this wise:

xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides xxx

xxx xxx xxx

From the foregoing provision, it becomes apparent that for an action for unlawful detainer to prosper, the plaintiff
[petitioner] needs to prove that defendants [respondents] right to possess already expired and terminated. Now, has
respondents right to possess the subject portion of petitioners property expired or terminated? Let us therefore
examine respondents basis for occupying the same.

It is undisputed that petitioner expressly authorized respondents o occupy portion of her property on which
their house may be built. Thus it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein
and stay as long as they like. From this statement, it seems that petitioner had given the respondents the
usufructuary rights over the portion that may be occupied by the house that the latter would build, the duration of
which being dependent on how long respondents would like to occupy the property. While petitioner had already
demanded from the respondents the surrender of the premises, this Court is of the opinion that the usufructuary
rights of respondents had not been terminated by the said demand considering the clear statement of petitioner that
she is allowing respondents to occupy portion of her land as long as the latter want to. Considering that respondents
still want to occupy the premises, petitioner clearly cannot eject respondents.[12]

We disagree with the CAs conclusion of law on the matter. The term or period of the usufruct originally specified provides only
one of the bases for the right of a usufructuary to hold and retain possession of the thing given in usufruct. There are other modes or
instances whereby the usufruct shall be considered terminated or extinguished. For sure, the Civil Code enumerates such other modes
of extinguishment:

ART. 603. Usufruct is extinguished:

(1) By the death of the usufructuary, unless a contrary intention clearly appears;

(2) By expiration of the period for which it was constituted, or by the fulfillment of any
resolutory condition provided in the title creating the usufruct;

(3) By merger of the usufruct and ownership in the same person;

(4) By renunciation of the usufructuary;

(5) By the total loss of the thing in usufruct;

(6) By the termination of the right of the person constituting the usufruct;

(7) By prescription. (Emphasis supplied.)

The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and sets forth the conditions of,
the usufruct. Paragraph #3 thereof states [T]hat anyone of my kins may enjoy the privilege to stay therein and may avail
the use thereof. Provided, however, that the same is not inimical to the purpose thereof (Emphasis supplied). What may be
inimical to the purpose constituting the usufruct may be gleaned from the preceding paragraph wherein petitioner made it abundantly
clear that anybody of my kins who wishes to stay on the aforementioned property should maintain an atmosphere of cooperation,
live in harmony and must avoid bickering with one another. That the maintenance of a peaceful and harmonious relations
between and among kin constitutes an indispensable condition for the continuance of the usufruct is clearly deduced from the
succeeding Paragraph #4 where petitioner stated [T]hat anyone of my kins who cannot conform with the wishes of
the undersigned may exercise the freedom to look for his own.In fine, the occurrence of any of the following: the loss of the
atmosphere of cooperation, the bickering or the cessation of harmonious relationship between/among kin constitutes a resolutory
condition which, by express wish of the petitioner, extinguishes the usufruct.

From the pleadings submitted by the parties, it is indubitable that there were indeed facts and circumstances whereby the subject
usufruct may be deemed terminated or extinguished by the occurrence of the resolutory conditions provided for in the title creating
the usufruct, namely, the document adverted to which the petitioner executed on July 21, 1986.

As aptly pointed out by the petitioner in her Memorandum, respondents own evidence before the MTCC indicated that the
relations between the parties have deteriorated to almost an irretrievable level.[13] There is no doubt then that what impelled petitioner
to file complaints before the local barangay lupon, the Office of the Ombudsman for Mindanao, and this instant complaint for unlawful
detainer before the MTCC is that she could not live peacefully and harmoniously with the Pernes family and vice versa.

Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family and the violence and
humiliation she was made to endure, despite her advanced age and frail condition, are enough factual bases to consider the usufruct
as having been terminated.
To reiterate, the relationship between the petitioner and respondents respecting the property in question is one of owner and
usufructuary. Accordingly, respondents claim for reimbursement of the improvements they introduced on the property during the
effectivity of the usufruct should be governed by applicable statutory provisions and principles on usufruct. In this regard, we cite with
approval what Justice Edgardo Paras wrote on the matter:

If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this, the terms
of the contract and the pertinent provisions of law should govern (3 Manresa215-216; se also Montinola vs. Bantug,
71 Phil. 449).[14] (Emphasis ours.)

By express provision of law, respondents, as usufructuary, do not have the right to reimbursement for the improvements they
may have introduced on the property. We quote Articles 579 and 580 of the Civil Code:

Art. 579. The usufructuary may make on the property held in usufruct such useful improvements or
expenses for mere pleasure as he may deem proper, provided he does not alter its form or substance; but he shall
have no right to be indemnified therefor. He may, however, remove such improvements, should it be possible
to do so without damage to the property.(Emphasis supplied.)

Art. 580. The usufructuary may set off the improvements he may have made on the property against any
damage to the same.

Given the foregoing perspective, respondents will have to be ordered to vacate the premises without any right of
reimbursement. If the rule on reimbursement or indemnity were otherwise, then the usufructuary might, as an author pointed out,
improve the owner out of his property.[15] The respondents may, however, remove or destroy the improvements they may have
introduced thereon without damaging the petitioners property.

Out of the generosity of her heart, the petitioner has allowed the respondent spouses to use and enjoy the fruits of her
property for quite a long period of time. They opted, however, to repay a noble gesture with unkindness. At the end of the day,
therefore, they really cannot begrudge their aunt for putting an end to their right of usufruct. The disposition herein arrived is not only
legal and called for by the law and facts of the case. It is also right.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA are REVERSED and SET
ASIDE. Accordingly, the decision of the MTCC is REINSTATED with MODIFICATION that all of respondents counterclaims are
dismissed, including their claims for reimbursement of useful and necessary expenses.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 107132 October 8, 1999

MAXIMA HEMEDES, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES
and R & B INSURANCE CORPORATION, respondents.

G.R. No. 108472 October 8, 1999

R & B INSURANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES
and MAXIMA HEMEDES, respondents.

GONZAGA-REYES, J.:

Assailed in these petitions for review on certiorari is the decision 1 of the eleventh division of the Court of Appeals in CA-G.R. CV No.
22010 promulgated on September 11, 1992 affirming in toto the decision of Branch 24 of the Regional Trial Court of Laguna in Civil
Case No. B-1766 dated February 22, 1989, 2 and the resolution dated December 29, 1992 denying petitioner R & B Insurance
Corporation's (R & B Insurance) motion for reconsideration. As the factual antecedents and issues are the same, we shall decide the
petitions jointly.

The instant controversy involves a question of ownership over an unregistered parcel of land, identified as Lot No. 6, plan Psu-111331,
with an area of 21,773 square meters, situated in Sala, Cabuyao, Laguna. It was originally owned by the late Jose Hemedes, father of
Maxima Hemedes and Enrique D. Hemedes. On March 22, 1947 Jose Hemedes executed a document entitled "Donation Inter Vivos
With Resolutory Conditions" 3 whereby he conveyed ownership over the subject land, together with all its improvements, in favor of
his third wife, Justa Kauapin, subject to the following resolutory conditions:

(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to any of the children,
or their heirs, of the DONOR expressly designated by the DONEE in a public document conveying the property to the
latter; or

(b) In absence of such an express designation made by the DONEE before her death or remarriage contained in a
public instrument as above provided, the title to the property shall automatically revert to the legal heirs of the
DONOR in common.

Pursuant to the first condition above mentioned, Justa Kausapin executed on September 27, 1960 a "Deed of Conveyance of
Unregistered Real Property by Reversion" 4 conveying to Maxima Hemedes the subject property under the following terms —

That the said parcel of land was donated unto me by the said Jose Hemedes, my deceased husband, in a deed of
"DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS" executed by the donor in my favor, and duly accepted
by me on March 22, 1947, before Notary Public Luis Bella in Cabuyao, Laguna;

That the donation is subject to the resolutory conditions appearing in the said deed of "DONATION INTER VIVOS
WITH RESOLUTORY CONDITIONS," as follows:

(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to
any of the children, or their heirs, of the DONOR expressly designated by the DONEE in a public
document conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE before her death or remarriage
contained in a public instrument as above provided, the title to the property shall automatically
revert to the legal heirs of the DONOR in common.

That, wherefore, in virtue of the deed of donation above mentioned and in the exercise of my right and privilege
under the terms of the first resolutory condition therein contained and hereinabove reproduced, and for and in
consideration of my love and affection, I do hereby by these presents convey, transfer, and deed unto my designee,
MAXIMA HEMEDES, of legal age, married to RAUL RODRIGUEZ, Filipino and resident of No. 15 Acacia Road, Quezon
City, who is one of the children and heirs of my donor, JOSE HEMEDES, the ownership of, and title to the property
hereinabove described, and all rights and interests therein by reversion under the first resolutory condition in the
above deed of donation; Except the possession and enjoyment of the said property which shall remain vested in me
during my lifetime, or widowhood and which upon my death or remarriage shall also automatically revert to, and be
transferred to my designee, Maxima Hemedes.

Maxima Hemedes, through her counsel, filed an application for registration and confirmation of title over the subject unregistered land.
Subsequently, Original Certificate of Title (OCT) No. (0-941) 0-198 5 was issued in the name of Maxima Hemedes married to Raul
Rodriguez by the Registry of Deeds of Laguna on June 8, 1962, with the annotation that "Justa Kausapin shall have the usufructuary
rights over the parcel of land herein described during her lifetime or widowhood."

It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her husband Raul Rodriguez constituted a real estate
mortgage over the subject property in its favor to serve as security for a loan which they obtained in the amount of P6,000.00. On
February 22, 1968, R & B Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes failed to pay the loan even after
it became due on August 2, 1964. The land was sold at a public auction on May 3, 1968 with R & B Insurance as the highest bidder
and a certificate of sale was issued by the sheriff in its favor. Since Maxima Hemedes failed to redeem the property within the
redemption period, R & B Insurance executed an Affidavit of Consolidation dated March 29, 1974 and on May 21, 1975 the Register of
Deeds of Laguna cancelled OCT No. (0-941) 0-198 and issued Transfer Certificate of Title (TCT) No. 41985 in the name of R & B
Insurance. The annotation of usufruct in favor of Justa Kausapin was maintained in the new title. 6

Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa Kausapin executed a "Kasunduan" on May 27,
1971 whereby she transferred the same land to her stepson Enrique D. Hemedes, pursuant to the resolutory condition in the deed of
donation executed in her favor by her late husband Jose Hemedes. Enrique D. Hemedes obtained two declarations of real property —
in 1972, and again, in 1974, when the assessed value of the property was raised. Also, he has been paying the realty taxes on the
property from the time Justa Kausapin conveyed the property to him in 1971 until 1979. In the cadastral survey of Cabuyao, Laguna
conducted from September 8, 1974 to October 10, 1974, the property was assigned Cadastral No. 2990, Cad. 455-D, Cabuyao
Cadastre, in the name of Enrique Hemedes. Enrique Hemedes is also the named owner of the property in the records of the Ministry
of Agrarian Reform office at Calamba, Laguna.

On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and Construction Corporation (Dominium). On April
10, 1981, Justa Kausapin executed an affidavit affirming the conveyance of the subject property in favor of Enrique D. Hemedes as
embodied in the "Kasunduan" dated May 27, 1971, and at the same time denying the conveyance made to Maxima Hemedes.

On May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia Brewery) who, even before the
signing of the contract of lease, constructed two warehouses made of steel and asbestos costing about P10,000,000.00 each. Upon
learning of Asia Brewery's constructions upon the subject property, R & B Insurance sent it a letter on March 16, 1981 informing the
former of its ownership of the property as evidenced by TCT No. 41985 issued in its favor and of its right to appropriate the constructions
since Asia Brewery is a builder in bad faith. On March 27, 1981, a conference was held between R & B Insurance and Asia Brewery but
they failed to arrive at an amicable settlement.1âwphi1.nêt

On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein she asserted that she is the rightful owner
of the subject property by virtue of OCT No. (0-941) 0-198 and that, as such, she has the right to appropriate Asia Brewery's
constructions, to demand its demolition, or to compel Asia Brewery to purchase the land. In another letter of the same date addressed
to R & B Insurance, Maxima Hemedes denied the execution of any real estate mortgage in favor of the latter.

On August 27, 1981, Dominium and Enrique D. Hemedes filed a complaint 7 with the Court of First Instance of Binan, Laguna for the
annulment of TCT No. 41985 issued in favor of R & B Insurance and/or the reconveyance to Dominium of the subject property.
Specifically, the complaint alleged that Dominium was the absolute owner of the subject property by virtue of the February 28, 1979
deed of sale executed by Enrique D. Hemedes, who in turn obtained ownership of the land from Justa Kausapin, as evidenced by the
"Kasunduan" dated May 27, 1971. The plaintiffs asserted that Justa Kausapin never transferred the land to Maxima Hemedes and that
Enrique D. Hemedes had no knowledge of the registration proceedings initiated by Maxima Hemedes.

After considering the merits of the case, the trial court rendered judgment on February 22, 1989 in favor of plaintiffs Dominium and
Enrique D. Hemedes, the dispositive portion of which states —

WHEREFORE, judgment is hereby rendered:

(a) Declaring Transfer Certificate of Title No. 41985 of the Register of Deeds of Laguna null and
void and ineffective;

(b) Declaring Dominium Realty and Construction Corporation the absolute owner and possessor of
the parcel of land described in paragraph 3 of the complaint;

(c) Ordering the defendants and all persons acting for and/or under them to respect such ownership
and possession of Dominium Realty and Construction Corporation and to forever desist from
asserting adverse claims thereon nor disturbing such ownership and possession; and

(d) Directing the Register of Deeds of Laguna to cancel said Transfer Certificate of Title No. 41985
in the name of R & B Insurance Corporation, and in lieu thereof, issue a new transfer certificate of
title in the name of Dominium Realty and Construction Corporation. No pronouncement as to costs
and attorney's fees. 8

Both R & B Insurance and Maxima Hemedes appealed from the trial court's decision. On September 11, 1992 the Court of Appeals
affirmed the assailed decision in toto and on December 29, 1992, it denied R & B Insurance's motion for reconsideration. Thus, Maxima
Hemedes and R & B Insurance filed their respective petitions for review with this Court on November 3, 1992 and February 22, 1993,
respectively.

In G.R. No. 107132 9, petitioner Maxima Hemedes makes the following assignment of errors as regards public respondent's ruling —
I
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING ARTICLE 1332 OF THE NEW CIVIL CODE IN
DECLARING AS SPURIOUS THE DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION
EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER MAXIMA HEMEDES.
II
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AS VOID AND OF NO LEGAL EFFECT THE
"KASUNDUAN" DATED 27 MAY 1971 EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF RESPONDENT ENRIQUE HEMEDES
AND THE SALE OF THE SUBJECT PROPERTY BY RESPONDENT ENRIQUE HEMEDES IN FAVOR OF RESPONDENT
DOMINIUM REALTY AND CONSTRUCTION CORPORATION.
III
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING RESPONDENTS ENRIQUE AND DOMINIUM IN
BAD FAITH.
IV
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT ORIGINAL CERTIFICATE OF TITLE NO. (0-
941) 0-198 ISSUED IN THE NAME OF PETITIONER MAXIMA HEMEDES NULL AND VOID.
V
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO LOAN WAS OBTAINED BY PETITIONER MAXIMA
HEMEDES FROM RESPONDENT R & B INSURANCE CORPORATION.
VI
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO REAL ESTATE MORTGAGE OVER THE SUBJECT
PROPERTY WAS EXECUTED BY PETITIONER MAXIMA HEMEDES IN FAVOR OF RESPONDENT R & B INSURANCE
CORPORATION.
VII
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE VALID TITLE COVERING THE SUBJECT
PROPERTY IS THE ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 IN THE NAME OF PETITIONER MAXIMA
HEMEDES AND NOT THE TRANSFER CERTIFICATE OF TITLE (TCT) NO. 41985 IN THE NAME OF R & B INSURANCE
CORPORATION. 10
Meanwhile, in G.R. No. 108472 11, petitioner R & B Insurance assigns almost the same errors, except with regards to the real estate
mortgage allegedly executed by Maxima Hemedes in its favor. Specifically, R & B Insurance alleges that:

I
RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332 OF THE CIVIL CODE.
II
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE KASUNDUAN BY AND BETWEEN JUSTA
KAUSAPIN AND ENRIQUE NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN BY WAY OF A DEED OF
CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION CEDED THE SUBJECT PROPERTY TO MAXIMA
SOME ELEVEN (11) YEARS EARLIER.
III
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE AFFIDAVIT OF REPUDIATION OF JUSTA
KAUSAPIN NOTWITHSTANDING THE FACT THAT SHE IS A BIAS (sic) WITNESS AND EXECUTED THE SAME SOME
TWENTY-ONE (21) YEARS AFTER THE EXECUTION OF THE DEED OF CONVEYANCE IN FAVOR OF MAXIMA.
IV
RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE COMPLAINT OF ENRIQUE AND DOMINIUM HAS
PRESCRIBED AND/OR THAT ENRIQUE AND DOMINIUM WERE GUILTY OF LACHES.
V
RESPONDENT COURT SERIOUSLY ERRED IN FINDING R & B AS A MORTGAGEE NOT IN GOOD FAITH.
VI
RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES PRAYED FOR BY R & B IN ITS
COUNTERCLAIM AND CROSSCLAIM. 12

The primary issue to be resolved in these consolidated petitions is which of the two conveyances by Justa Kausapin, the first in favor
of Maxima Hemedes and the second in favor of Enrique D. Hemedes, effectively transferred ownership over the subject land.

The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima Hemedes on the strength of the "Deed of Conveyance
of Unregistered Real Property by Reversion" executed by Justa Kausapin. Public respondent upheld the trial court's finding that such
deed is sham and spurious and has "no evidentiary value under the law upon which claimant Maxima Hemedes may anchor a valid
claim of ownership over the property." In ruling thus, it gave credence to the April 10, 1981 affidavit executed by Justa Kausapin
repudiating such deed of conveyance in favor of Maxima Hemedes and affirming the authenticity of the "Kasunduan" in favor of Enrique
D. Hemedes. Also, it considered as pivotal the fact that the deed of conveyance in favor of Maxima Hemedes was in English and that
it was not explained to Justa Kausapin, although she could not read nor understand English; thus, Maxima Hemedes failed to discharge
her burden, pursuant to Article 1332 of the Civil Code, to show that the terms thereof were fully explained to Justa Kausapin. Public
respondent concluded by holding that the registration of the property on the strength of the spurious deed of conveyance is null and
void and does not confer any right of ownership upon Maxima Hemedes. 13

Maxima Hemedes argues that Justa Kausapin's affidavit should not be given any credence since she is obviously a biased witness as it
has been shown that she is dependent upon Enrique D. Hemedes for her daily subsistence, and she was most probably influenced by
Enrique D. Hemedes to execute the "Kasunduan" in his favor. She also refutes the applicability of article 1332. It is her contention that
for such a provision to be applicable, there must be a party seeking to enforce a contract; however, she is not enforcing the "Deed of
Conveyance of Unregistered Real Property by Reversion" as her basis in claiming ownership, but rather her claim is anchored upon
OCT No. (0-941) 0-198 issued in her name, which document can stand independently from the deed of conveyance. Also, there exist
various circumstances which show that Justa Kausapin did in fact execute and understand the deed of conveyance in favor of Maxima
Hemedes. First, the "Donation Intervivos With Resolutory Conditions" executed by Jose Hemedes in favor of Justa Kausapin was also
in English, but she never alleged that she did not understand such document. Secondly, Justa Kausapin failed to prove that it was not
her thumbmark on the deed of conveyance in favor of Maxima Hemedes and in fact, both Enrique D. Hemedes and Dominium objected
to the request of Maxima Hemedes' counsel to obtain a specimen thumbmark of Justa Kausapin. 14

Public respondent's finding that the "Deed of Conveyance of Unregistered Real Property By Reversion" executed by Justa Kausapin in
favor of Maxima Hemedes is spurious is not supported by the factual findings in this case. It is grounded upon the mere denial of the
same by Justa Kausapin. A party to a contract cannot just evade compliance with his contractual obligations by the simple expedient
of denying the execution of such contract. If, after a perfect and binding contract has been executed between the parties, it occurs to
one of them to allege some defect therein as a reason for annulling it, the alleged defect must be conclusively proven, since the validity
and fulfillment of contracts cannot be left to the will of one of the contracting parties. 15

Although a comparison of Justa Kausapin's thumbmark with the thumbmark affixed upon the deed of conveyance would have easily
cleared any doubts as to whether or not the deed was forged, the records do not show that such evidence was introduced by private
respondents and the lower court decisions do not make mention of any comparison having been made. 16 It is a legal presumption that
evidence willfully suppressed would be adverse if produced. 17 The failure of private respondents to refute the due execution of the
deed of conveyance by making a comparison with Justa Kausapin's thumbmark necessarily leads one to conclude that she did in fact
affix her thumbmark upon the deed of donation in favor of her stepdaughter.

Moreover, public respondent's reliance upon Justa Kausapin's repudiation of the deed of conveyance is misplaced for there are strong
indications that she is a biased witness. The trial court found that Justa Kausapin was dependent upon Enrique D. Hemedes for financial
assistance. 18 Justa Kausapin's own testimony attests to this fact —

Atty. Conchu:
Q: Aling Justa, can you tell the Honorable Court why you donated this particular property to Enrique
Hemedes?
A: Because I was in serious condition and he was the one supporting me financially.
Q: As of today, Aling Justa are you continuing to receive any assistance from Enrique Hemedes?
A: Yes Sir.
(TSN pp. 19 and 23, November 17, 1981) 19
Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for financial support. The transcripts state as
follows:
Atty. Mora:
Now you said that Justa Kausapin has been receiving from you advances for food, medicine & other
personal or family needs?
E. Hemedes:
A: Yes.
Q: Was this already the practice at the time this "Kasunduan" was executed?
A: No that was increased, no, no, after this document.
xxx xxx xxx
 Q: And because of these accommodations that you have given to Justa Kausapin; Justa Kausapin
has in turn treated you very well because she's very grateful for that, is it not?
A: I think that's human nature.
Q: Answer me categorically, Mr. Hemedes she's very grateful?
A: Yes she might be grateful but not very grateful.

(TSN, p. 34, June 15, 1984) 20

A witness is said to be biased when his relation to the cause or to the parties is such that he has an incentive to exaggerate or give
false color to his statements, or to suppress or to pervert the truth, or to state what is false. 21 At the time the present case was filed
in the trial court in 1981, Justa Kausapin was already 80 years old, suffering from worsening physical infirmities and completely
dependent upon her stepson Enrique D. Hemedes for support. It is apparent that Enrique D. Hemedes could easily have influenced his
aging stepmother to donate the subject property to him. Public respondent should not have given credence to a witness that was
obviously biased and partial to the cause of private respondents. Although it is a well-established rule that the matter of credibility lies
within the province of the trial court, such rule does not apply when the witness' credibility has been put in serious doubt, such as
when there appears on the record some fact or circumstance of weight and influence, which has been overlooked or the significance
of which has been
misinterpreted. 22

Finally, public respondent was in error when it sustained the trial court's decision to nullify the "Deed of Conveyance of Unregistered
Real Property by Reversion" for failure of Maxima Hemedes to comply with article 1332 of the Civil Code, which states:

When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or
fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the
former.

Art. 1332 was intended for the protection of a party to a contract who is at a disadvantage due to his illiteracy, ignorance, mental
weakness or other handicap. 23 This article contemplates a situation wherein a contract has been entered into, but the consent of one
of the parties is vitiated by mistake or fraud committed by the other contracting party. 24 This is apparent from the ordering of the
provisions under Book IV, Title II, Chapter 2, section 1 of the Civil Code, from which article 1332 is taken. Article 1330 states that —

A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.

This is immediately followed by provisions explaining what constitutes mistake, violence, intimidation, undue influence, or fraud
sufficient to vitiate consent. 25 In order that mistake may invalidate consent, it should refer to the substance of the thing which is the
object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. 26 Fraud, on
the other hand, is present when, through insidious words or machinations of one of the contracting parties, the other is induced to
enter into a contract which, without them, he would not have agreed to. 27 Clearly, article 1332 assumes that the consent of the
contracting party imputing the mistake or fraud was given, although vitiated, and does not cover a situation where there is a complete
absence of consent.1âwphi1.nêt

In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of Unregistered Real Property by Reversion" in favor
of Maxima Hemedes. In fact, she asserts that it was only during the hearing conducted on December 7, 1981 before the trial court
that she first caught a glimpse of the deed of conveyance and thus, she could not have possibly affixed her thumbmark thereto. 28 It
is private respondents' own allegations which render article 1332 inapplicable for it is useless to determine whether or not Justa
Kausapin was induced to execute said deed of conveyance by means of fraud employed by Maxima Hemedes, who allegedly took
advantage of the fact that the former could not understand English, when Justa Kausapin denies even having seen the document before
the present case was initiated in 1981.

It has been held by this Court that ". . . mere preponderance of evidence is not sufficient to overthrow a certificate of a notary public
to the effect that the grantor executed a certain document and acknowledged the fact of its execution before him. To accomplish this
result, the evidence must be so clear, strong and convincing as to exclude all reasonable controversy as to the falsity of the certificate,
and when the evidence is conflicting, the certificate will be upheld." 29 In the present case, we hold that private respondents have failed
to produce clear, strong, and convincing evidence to overcome the positive value of the "Deed Conveyance of Unregistered Real
Property by Reversion" — a notarized document. The mere denial of its execution by the donor will not suffice for the purpose.

In upholding the deed of conveyance in favor of Maxima Hemedes, we must concomitantly rule that Enrique D. Hemedes and his
transferee, Dominium, did not acquire any rights over the subject property. Justa Kausapin sought to transfer to her stepson exactly
what she had earlier transferred to Maxima Hemedes — the ownership of the subject property pursuant to the first condition stipulated
in the deed of donation executed by her husband. Thus, the donation in favor of Enrique D. Hemedes is null and void for the purported
object thereof did not exist at the time of the transfer, having already been transferred to his sister. 30 Similarly, the sale of the subject
property by Enrique D. Hemedes to Dominium is also a nullity for the latter cannot acquire more rights than its predecessor-in-interest
and is definitely not an innocent purchaser for value since Enrique D. Hemedes did not present any certificate of title upon which it
relied.

The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and his being designated as owner of the subject
property in the cadastral survey of Cabuyao, Laguna and in the records of the Ministry of Agrarian Reform office in Calamba, Laguna
cannot defeat a certificate of title, which is an absolute and indefeasible evidence of ownership of the property in favor of the person
whose name appears therein. 31 Particularly, with regard to tax declarations and tax receipts, this Court has held on several occasions
that the same do not by themselves conclusively prove title to land. 32

We come now to the question of whether or not R & B Insurance should be considered an innocent purchaser of the land in question.
At the outset, we note that both the trial court and appellate court found that Maxima Hemedes did in fact execute a mortgage over
the subject property in favor of R & B Insurance. This finding shall not be disturbed because, as we stated earlier, it is a rule that the
factual findings of the trial court, especially when affirmed by the Court of Appeals, are entitled to respect, and should not be disturbed
on appeal. 33

In holding that R & B Insurance is not a mortgagee in good faith, public respondent stated that the fact that the certificate of title of
the subject property indicates upon its face that the same is subject to an encumbrance, i.e. usufructuary rights in favor of Justa
Kausapin during her lifetime or widowhood, should have prompted R & B Insurance to ". . . investigate further the circumstances
behind this encumbrance on the land in dispute," but which it failed to do. Also, public respondent considered against R & B Insurance
the fact that it made it appear in the mortgage contract that the land was free from all liens, charges, taxes and encumbrances. 34
R & B Insurance alleges that, contrary to public respondent's ruling, the presence of an encumbrance on the certificate of title is not
reason for the purchaser or a prospective mortgagee to look beyond the face of the certificate of title. The owner of a parcel of land
may still sell the same even though such land is subject to a usufruct; the buyer's title over the property will simply be restricted by
the rights of the usufructuary. Thus, R & B Insurance accepted the mortgage subject to the usufructuary rights of Justa Kausapin.
Furthermore, even assuming that R & B Insurance was legally obliged to go beyond the title and search for any hidden defect or
inchoate right which could defeat its right thereto, it would not have discovered anything since the mortgage was entered into in 1964,
while the "Kasunduan" conveying the land to Enrique D. Hemedes was only entered into in 1971 and the affidavit repudiating the deed
of conveyance in favor of Maxima Hemedes was executed by Justa Kausapin in 1981. 35

We sustain petitioner R & B Insurance's claim that it is entitled to the protection of a mortgagee in good faith.

It is a well-established principle that every person dealing with registered land may safely rely on the correctness of the certificate of
title issued and the law will in no way oblige him to go behind the certificate to determine the condition of the property. 36 An innocent
purchaser for value 37 is one who buys the property of another without notice that some other person has a right to or interest in such
property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another
person. 38

The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes' OCT dose not impose upon R & B Insurance
the obligation to investigate the validity of its mortgagor's title. Usufruct gives a right to enjoy the property of another with the
obligation of preserving its form and substance. 39 The usufructuary is entitled to all the natural, industrial and civil fruits of the
property 40 and may personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a gratuitous
title, but all the contracts he may enter into as such usufructuary shall terminate upon the expiration of the usufruct. 41

Clearly, only the jus utendi and jus fruendi over the property is transferred to the usufructuary. 42 The owner of the property maintains
the jus disponendi or the power to alienate, encumber, transform, and even destroy the same. 43This right is embodied in the Civil
Code, which provides that the owner of property the usufruct of which is held by another, may alienate it, although he cannot alter the
property's form or substance, or do anything which may be prejudicial to the usufructuary. 44

There is no doubt that the owner may validly mortgage the property in favor of a third person and the law provides that, in such a
case, the usufructuary shall not be obliged to pay the debt of the mortgagor, and should the immovable be attached or sold judicially
for the payment of the debt, the owner shall be liable to the usufructuary for whatever the latter may lose by reason thereof. 45

Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is not sufficient cause to require R & B
Insurance to investigate Maxima Hemedes' title, contrary to public respondent's ruling, for the reason that Maxima Hemedes' ownership
over the property remained unimpaired despite such encumbrance. R & B Insurance had a right to rely on the certificate of title and
was not in bad faith in accepting the property as a security for the loan it extended to Maxima Hemedes.

Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond the certificate of title and investigate the title
of its mortgagor, still, it would not have discovered any better rights in favor of private respondents. Enrique D. Hemedes and Dominium
base their claims to the property upon the "Kasunduan" allegedly executed by Justa Kausapin in favor of Enrique Hemedes. As we have
already stated earlier, such contract is a nullity as its subject matter was inexistent. Also, the land was mortgaged to R & B Insurance
as early as 1964, while the "Kasunduan" was executed only in 1971 and the affidavit of Justa Kausapin affirming the conveyance in
favor of Enrique D. Hemedes was executed in 1981. Thus, even if R & B Insurance investigated the title of Maxima Hemedes, it would
not have discovered any adverse claim to the land in derogation of its mortgagor's title. We reiterate that at no point in time could
private respondents establish any rights or maintain any claim over the land.

It is a well-settled principle that where innocent third persons rely upon the correctness of a certificate of title and acquire rights over
the property, the court cannot just disregard such rights. Otherwise, public confidence in the certificate of title, and ultimately, the
Torrens system, would be impaired for everyone dealing with registered property would still have to inquire at every instance whether
the title has been regularly or irregularly issued. 46Being an innocent mortgagee for value, R & B Insurance validly acquired ownership
over the property, subject only to the usufructuary rights of Justa Kausapin thereto, as this encumbrance was properly annotated upon
its certificate of title.

The factual findings of the trial court, particularly when affirmed by the appellate court, carry great weight and are entitled to respect
on appeal, except under certain circumstances. 47 One such circumstance that would compel the Court to review the factual findings
of the lower courts is where the lower courts manifestly overlooked certain relevant facts not disputed by the parties and which, if
properly considered, would justify a different conclusion. 48Also, it is axiomatic that the drawing of the proper legal conclusions from
such factual findings are within the peculiar province of this Court. 49

As regards R & B Insurance's prayer that Dominium be ordered to demolish the warehouses or that it be declared the owner thereof
since the same were built in bad faith, we note that such warehouses were constructed by Asia Brewery, not by Dominium. However,
despite its being a necessary party in the present case, the lower courts never acquired jurisdiction over Asia Brewery, whether as a
plaintiff or defendant, and their respective decisions did not pass upon the constructions made upon the subject property. Courts
acquire jurisdiction over a party plaintiff upon the filing of the complaint, while jurisdiction over the person of a party defendant is
acquired upon the service of summons in the manner required by law or by his voluntary appearance. As a rule, if a defendant has not
been summoned, the court acquires no jurisdiction over his person, and any personal judgment rendered against such defendant is
null and void. 50 In the present case, since Asia Brewery is a necessary party that was not joined in the action, any judgment rendered
in this case shall be without prejudice to its rights. 51

As to its claim for moral damages, we hold that R & B Insurance is not entitled to the same for it has not alleged nor proven the factual
basis for the same. Neither is it entitled to exemplary damages, which may only be awarded if the claimant is entitled to moral,
temperate, liquidated or compensatory damages. 52 R & B Insurance's claim for attorney's fees must also fail. The award of attorney's
fees is the exception rather than the rule and counsel's fees are not to be awarded every time a party wins a suit. Its award pursuant
to article 2208 of the Civil Code demands factual, legal and equitable justification and cannot be left to speculation and
conjecture. 53 Under the circumstances prevailing in the instant case, there is no factual or legal basis for an award of attorney's fees.

WHEREFORE, the assailed decision of public respondent and its resolution dated February 22, 1989 are REVERSED. We uphold petitioner
R & B Insurance's assertion of ownership over the property in dispute, as evidenced by TCT No. 41985, subject to the usufructuary
rights of Justa Kausapin, which encumbrance has been properly annotated upon the said certificate of title. No pronouncement as to
costs.

SO ORDERED.
 MARGARITA F. CASTRO, G.R. No. 183719
Petitioner,
February 2, 2011
- versus -

NAPOLEON A. MONSOD,
Respondent.

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] dated May 25, 2007
and the Resolution[2] dated July 14, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 83973.

The antecedents of the case are as follows:

Petitioner is the registered owner of a parcel of land located on Garnet Street, Manuela Homes, Pamplona, Las Pias City, and covered
by Transfer Certificate of Title (TCT) No. T-36071, with an area of one hundred thirty (130) square meters (sq.m.). Respondent, on
the other hand, is the owner of the property adjoining the lot of petitioner, located on Lyra Street, Moonwalk Village, Phase 2, Las Pias
City. There is a concrete fence, more or less two (2) meters high, dividing Manuela Homes from Moonwalk Village.[3]

On February 29, 2000, respondent caused the annotation of an adverse claim against sixty-five (65) sq.m. of the property of petitioner
covered by TCT No. T-36071. The adverse claim was filed without any claim of ownership over the property. Respondent was merely
asserting the existing legal easement of lateral and subjacent support at the rear portion of his estate to prevent the property from
collapsing, since his property is located at an elevated plateau of fifteen (15) feet, more or less, above the level of petitioners
property.[4]Respondent also filed a complaint for malicious mischief and malicious destruction before the office of
the barangay chairman.[5]

In defiance, petitioner filed a complaint for damages with temporary restraining order/writ of preliminary injunction before the Regional
Trial Court (RTC) of Las Pias City. Petitioner also prayed that the Register of Deeds of Las Pias City be ordered to cancel the annotation
of the adverse claim on TCT No. T-36071.[6]
Prior to the filing of the case before the RTC, there were deposits of soil and rocks about two (2) meters away from the front door of
the house of
petitioner. As such, petitioner was not able to park her vehicle at the dead-end portion of Garnet Street. When petitioner noticed a
leak that caused the front portion of her house to be slippery, she hired construction workers to see where the leak was coming from.
The workers had already started digging when police officers sent by respondent came and stopped the workers from finishing their
job.[7]

Petitioner averred that when she bought the property from Manuela Homes in 1994, there was no annotation or existence of any
easement over the property. Respondent neither asked permission nor talked to her with regard to the use of 65 sq.m. of her property
as easement. Upon learning of the adverse claim, she felt disturbed and experienced sleepless nights for fear that she would not be
able to sell her property. Petitioner admitted that TCT No. 36071 does not cover the open space at the dead-end portion of Garnet
Street.[8]

For his part, respondent claimed that he and his family had been residing in Moonwalk Village since June 1984. Adjacent to his property
is the land of petitioner in ManuelaHomes. When he bought the property in 1983, the land elevation of Moonwalk Village was almost
on the same level as Manuela Homes. However, sometime in 1985 and 1986, Pilar Development Corporation, the developer
of Manuela Homes, bulldozed, excavated, and transferred portions of the elevated land to the lower portions of Manuela Homes.
Thus, Manuela Homes became lower than Moonwalk Village.[9]

Before the said excavation, respondent personally complained to Pilar

Development Corporation and was assured that, as provided by the National Building Code, an embankment will be retained at the
boundary of Manuela Homes and Moonwalk Village, which is more or less fifteen (15) feet higher than Manuela Homes.[10]

Manuela Homes retained the embankment consisting of soil and rocks. Respondent had the open space riprapped with stones as
reinforcement against any potential soil erosion, earthquake, and possible digging by any person.

Respondent asserted that the affidavit of adverse claim was for the annotation of the lateral and subjacent easement of his property
over the property of petitioner, in view of the latters manifest determination to remove the embankment left by the developer
of Manuela Homes.
On October 11, 2004, the RTC rendered a decision,[11] the dispositive portion of which reads:
WHEREFORE, premises considered, this court hereby renders judgment: (1) ordering the cancellation of
[respondents] adverse claim at the back of Transfer Certificate of Title No. T-36071 at the expense of [respondent]
Napoleon Monsod; (2) ordering the said [respondent] to pay the herein [petitioner] the amount of Php50,000.00 as
moral damages; and (3) dismissing [petitioners] claim for actual damages, attorneys fees, litigation costs and costs
of suit and [respondents] compulsory counterclaim for lack of merit.

SO ORDERED.[12]

The trial court ratiocinated that the adverse claim of respondent was non-registrable considering that the basis of his claim was an
easement and not an interest adverse to the registered owner, and neither did he contest the title of petitioner. Furthermore, the
adverse claim of respondent failed to comply with the requisites provided under Section 70 of Presidential Decree No. 1529.[13]

On appeal, the CA reversed the decision of the trial court in a Decision[14] dated May 25, 2007, the fallo of which reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. The Decision of the Regional Trial Court,
Branch 198, Las Pias City dated October 11, 2004 is REVERSED and SET ASIDE. The Court hereby orders the
retention of the annotation at the back of Transfer Certificate of Title No. T-36071, not as an adverse claim, but a
recognition of the existence of a legal easement of subjacent and lateral support constituted on the lengthwise or
horizontal land support/embankment area of sixty-five (65) square meters, more or less, of the property of
 [petitioner] Margarita Castro. The writ of preliminary injunction issued by this Court on April 18, 2006 is hereby made
permanent. [Petitioners] claim for damages is likewise DISMISSED.

SO ORDERED.[15]

The CA ruled that while respondents adverse claim could not be sanctioned because it did not fall under the requisites for registering
an adverse claim, the same might be duly annotated in the title as recognition of the existence of a legal easement of subjacent and
lateral support. The purpose of the annotation was to prevent petitioner from making injurious excavations on the subject embankment
as to deprive the residential house and lot of respondent of its natural support and cause it to collapse. Respondent only asked that
petitioner respect the legal easement already existing thereon.[16]

On June 15, 2007, petitioner filed a motion for reconsideration. However, the CA denied the same in a Resolution[17] dated July 14,
2008.

Hence, this petition.

The issue in this case is whether the easement of lateral and subjacent support exists on the subject adjacent properties and, if it does,
whether the same may be annotated at the back of the title of the servient estate.

Article 437 of the Civil Code provides that the owner of a parcel of land is the owner of its surface and of everything under it, and he
can construct thereon any works, or make any plantations and excavations which he may deem proper. However, such right of the
owner is not absolute and is subject to the following limitations: (1) servitudes or easements,[18] (2) special
laws,[19] (3) ordinances,[20] (4) reasonable requirements of aerial navigation,[21] and (5) rights of third persons.[22]

Respondent filed before the RTC an affidavit of adverse claim, the pertinent portions of which read:

5. That our adverse claim consists of rights of legal or compulsory easement of lateral and subjacent support (under
the Civil Code) over a portion of the above-described property of owner Margarita F. Castro, that is, covering the
lengthwise or horizontal land support/embankment area of sixty-five (65) square meters, more or less.

6. That said registered owner has attempted to destroy and/or remove portions of the existing lateral/subjacent land
and cement supports adjoining the said two properties. In fact, a portion of the easement was already
destroyed/removed, to the continuing prejudice of herein adverse claimant, and that a formal complaint against said
registered owner was filed by the herein adverse claimant before the Office of the Barangay Chairman of Talon V,
Las Pias City and the same proved futile.[23]

Respondents assertion that he has an adverse claim over the 65 sq.m. property of petitioner is misplaced since he does not have a
claim over the ownership of the land. The annotation of an adverse claim over registered land under Section 70 of Presidential Decree
1529[24] requires a claim on the title of the disputed land. Annotation is done 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. [25]

In reality, what respondent is claiming is a judicial recognition of the existence of the easement of subjacent and lateral support over
the 65 sq. m. portion of petitioners property covering the land support/embankment area. His reason for the annotation is only to
prevent petitioner from removing the embankment or from digging on the property for fear of soil erosion that might weaken the
foundation of the rear portion of his property which is adjacent to the property of petitioner.

An easement or servitude is an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different
owner.[26] There are two kinds of easements according to source. An easement is established either by law or by will of the
owners.[27] The courts cannot impose or constitute any servitude where none existed. They can only declare its existence if in reality it
exists by law or by the will of the owners. There are therefore no judicial easements.[28]

Article 684 of the Civil Code provides that no proprietor shall make such excavations upon his land as to deprive any adjacent land or
building of sufficient lateral or subjacent support. An owner, by virtue of his surface right, may make excavations on his land, but his
right is subject to the limitation that he shall not deprive any adjacent land or building of sufficient lateral or subjacent support. Between
two adjacent landowners, each has an absolute property right to have his land laterally supported by the soil of his neighbor, and if
either, in excavating on his own premises, he so disturbs the lateral support of his neighbors land as to cause it, or, in its natural state,
by the pressure of its own weight, to fall away or slide from its position, the one so excavating is liable. [29]
In the instant case, an easement of subjacent and lateral support exists in favor of respondent. It was established that the properties
of petitioner and respondent adjoin each other. The residential house and lot of respondent is located on an elevated plateau of fifteen
(15) feet above the level of petitioners property. The embankment and the riprapped stones have been in existence even before
petitioner became the owner of the property. It was proven that petitioner has been making excavations and diggings on the subject
embankment and, unless restrained, the continued excavation of the embankment could cause the foundation of the rear portion of
the house of respondent to collapse, resulting in the destruction of a huge part of the family dwelling.[30]

We sustain the CA in declaring that a permanent injunction on the part of petitioner from making injurious excavations is necessary in
order to protect the interest of respondent. However, an annotation of the existence of the subjacent and lateral support is no longer
necessary. It exists whether or not it is annotated or registered in the registry of property. A judicial recognition of the same already
binds the property and the owner of the same, including her successors-in-interest. Otherwise, every adjoining landowner would come
to court or have the easement of subjacent and lateral support registered in order for it to be recognized and respected.

WHEREFORE, in view of the foregoing, the Decision dated May 25, 2007 and the Resolution dated July 14, 2008 of the Court of
Appeals in CA-G.R. CV No. 83973 are hereby AFFIRMED WITH MODIFICATION that the annotation at the back of Transfer Certificate
of Title No. T-36071, recognizing the existence of the legal easement of subjacent and lateral support constituted on the lengthwise or
horizontal land support/embankment area of sixty-five (65) square meters, more or less, of the property of petitioner Margarita F.
Castro, is hereby ordered removed.

SO ORDERED.
[G.R. No. 134692. August 1, 2000]

ELISEO FAJARDO, JR., and MARISSA FAJARDO, petitioners, vs. FREEDOM TO BUILD, INC., respondent.

DECISION

VITUG, J.:

Freedom To Build, Incorporated, an owner-developer and seller of low-cost housing, sold to petitioner-spouses, a house and
lot designated Lot No. 33, Block 14, of the De la Costa Homes in Barangka, Marikina, Metro Manila. The Contract to Sell
executed between the parties, contained a Restrictive Covenant providing certain prohibitions, to wit:[1]

"Easements. For the good of the entire community, the homeowner must observe a two-meter easement in front.
No structure of any kind (store, garage, bodega, etc.) may be built on the front easement.

"x x x.............................x x x.............................x x x

"Upward expansion. A second storey is not prohibited. But the second storey expansion must be placed above the
back portion of the house and should not extend forward beyond the apex of the original building.

"x x x.............................x x x.............................x x x

"Front expansion: 2nd Storey: No unit may be extended in the front beyond the line as designed and implemented
by the developer in the 60 sq. m. unit. In other words, the 2nd floor expansion, in front, is 6 meters back from the
front property line and 4 meters back from the front wall of the house, just as provided in the 60 sq. m. units."[2]

The above restrictions were also contained in Transfer Certificate of Title No. N-115384 covering the lot issued in the name
of petitioner-spouses.

The controversy arose when petitioners, despite repeated warnings from respondent, extended the roof of their house to the
property line and expanded the second floor of their house to a point directly above the original front wall.[3] Respondent filed
before the Regional Trial Court, National Capital Judicial Region, Branch 261, Pasig City, an action to demolish the unauthorized
structures.

After trial, judgment was rendered against petitioners; thus:

"WHEREFORE, premises considered, defendant spouses Eliseo B. Fajardo, Jr., and Marissa F. Fajardo are hereby
directed to immediately demolish and remove the extension of their expanded housing unit that exceeds the
limitations imposed by the Restrictive Covenant, otherwise the Branch Sheriff of this Court shall execute this decision
at the expense of the defendants.

"As to damages and attorney's fees, it appearing from the records of this case that no evidence to sustain the same
was adduced by either of the parties, the Court deems itproper not to award any.

"SO ORDERED."[4]

On appeal to it, the Court of Appeals affirmed the decision of the trial court.

In their petition for review to this Court, the spouses contest the judgment of the courts below. Adjacent owners reportedly
have no objection to the construction, and have even expressed interest in undertaking a similar expansion in their respective
residences. Moreover, the couple's two children, a son and a daughter, might soon get married and then share, with their
families, living quarters with petitioners. The latter also assail the personality of private respondent to question the
construction which have effectively relinquished its ownership, right or interest over the subdivision upon the execution of the
Deed of Absolute Sale in favor of the individual homeowners. Per the contract between Freedom to Build Incorporated and
the De la Costa Low Income Project Homeowners' Association (hereinafter homeowners' association), petitioners aver, the
enforcement of the prohibitions contained in the "Restrictive Covenant" originally residing on respondent is now lodged in the
homeowners' association. Petitioners maintain that it is incumbent upon the homeowners' association, not on respondent, to
enforce compliance with the provisions of the covenant.

A perusal of the provisions of the covenant would show that the restrictions therein imposed were intended -

"For the protection and benefit of the De La Costa Low Income Housing Project, and of all the persons who may now,
or hereafter become owners of any part of the project, and as part of the consideration for the conveyance of the
housing unit, these restrictions are promulgated in order that; the intents and purposes for which the project was
designed shall be upheld; to wit: subsequent duly approved sale and assignments of housing units shall be made
only to low income families; a certain level of privacy shall be observed; a community spirit shall be fostered; and
an undisturbed possession and occupancy at the homeowners shall be maintained." [5]

Restrictive covenants are not, strictly speaking, synonymous with easements. While it may be correct to state that restrictive
covenants on the use of land or the location or character of buildings or other structures thereon may broadly be said to
create easements or rights, it can also be contended that such covenants, being limitations on the manner in which one may
use his own property,[6] do not result in true easements,[7] but a case of servitudes (burden), sometimes characterized to be
negative easements or reciprocal negative easements. Negative easement is the most common easement created by covenant
or agreement whose effect is to preclude the owner of the land from doing an act, which, if no easement existed, he would
be entitled to do.[8]

Courts which generally view restrictive covenants with disfavor for being a restriction on the use of one's property, have,
nevertheless, sustained them[9] where the covenants are reasonable,[10] not contrary to public policy,[11] or to law,[12] and not
in restraint of trade.[13] Subject to these limitations, courts enforce restrictions to the same extent that will lend judicial
sanction to any other valid contractual relationship.[14] In general, frontline restrictions on constructions have been held to be
valid stipulations.[15]

The provisions in a restrictive covenant prescribing the type of the building to be erected are crafted not solely for the purpose
of creating easements, generally of light and view, nor as a restriction as to the type of construction,[16] but may also be aimed
as a check on the subsequent uses of the building[17] conformably with what the developer originally might have intended the
stipulations to be. In its Memorandum, respondent states in arguing for the validity of the restrictive covenant that the -

"x x x restrictions are not without specific purpose. In a low cost-socialized housing, it is of public knowledge that
owners-developers are constrained to build as many number of houses on a limited land area precisely to
accommodate marginalized lot buyers, providing as much as possible the safety, aesthetic and decent living condition
by controlling overcrowding. Such project has been designed to accommodate at least 100 families per hectare." [18]

There appears to be no cogent reasons for not upholding restrictive covenants aimed to promote aesthetics, health, and
privacy or to prevent overcrowding.

Viewed accordingly, the statement of petitioners that their immediate neighbors have not opposed the construction is
unavailing to their cause, the subject restrictive covenant not being intended for the benefit of adjacent owners but to prescribe
the uses of the building, i.e., to ensure, among other things, that the structures built on De la Costa Homes Subdivision would
prevent overcrowding and promote privacy among subdivision dwellers. The argument then of petitioners that expansion is
necessary in order to accommodate the individual families of their two children must fail for like reason. Nor can petitioners
claim good faith; the restrictive covenants are explicitly written in the Contract To Sell and annotated at the back of the
Transfer Certificate of Title.

Petitioners raise the issue of the personality of respondent to enforce the provisions of the covenant. Broadly speaking, a suit
for equitable enforcement of a restrictive covenant can only be made by one for whose benefit it is intended.[19] It is not thus
normally enforceable by one who has no right nor interest in the land for the benefit of which the restriction has been
imposed.[20] Thus, a developer of a subdivision can enforce restrictions, even as against remote grantees of lots, only if he
retains part of the land.[21] There would have been merit in the argument of petitioners - that respondent, having relinquished
ownership of the subdivision to the homeowners, is precluded from claiming any right or interest on the same property - had
not the homeowners' association, confirmed by its board of directors, allowed respondent to enforce the provisions of the
restrictive covenant.

Finally, petitioners argue that for lack of a specific provision, prescribing the penalty of demolition in the "Restrictive Covenant"
in the event of a breach thereof, the prayer of respondent to demolish the structure should fail. This argument has no merit;
Article 1168 of the New Civil Code states:

"When the obligation consists in not doing and the obligor does what has been forbidden him, it shall be undone at
his expense."

This Court is not unaware of its ruling in Ayala Corporation vs. Ray Burton Development Corporation,[22] which has merely
adjudged the payment of damages in lieu of demolition. In the aforementioned case, however, the elaborate mathematical
formula for the determination of compensatory damages which takes into account the current construction cost index during
the immediately preceding 5 years based on the weighted average of wholesale price and wage indices of the National Census
and Statistics Office and the Bureau of Labor Statistics is explicitly provided for in the Deed of Restrictions entered into by the
parties. This unique and peculiar circumstance, among other strong justifications therein mentioned, is not extant in the case
at bar.

In sum, the Court holds that -

(1)....The provisions of the Restrictive Covenant are valid;

(2)....Petitioners must be held to be bound thereby; and

(3)....Since the extension constructed exceeds the floor area limits of the Restrictive Covenant, petitioner-spouses
can be required to demolish the structure to the extent that it exceeds the prescribed floor area limits.

WHEREFORE, the assailed decision, dated 13 July 1998, of the Court of Appeals in CA-G.R. CV No. 50085, sustaining that of
the court a quo, is AFFIRMED. No costs.

SO ORDERED.
WOODRIDGE SCHOOL, INC., G.R. No. 157285

and MIGUELA JIMENEZ-JAVIER,

Petitioners,

-versus-

ARB CONSTRUCTION CO., INC.,

Respondent.

February 16, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

Petitioners Woodridge School, Inc. (Woodridge) and Miguela JimenezJavier come to us assailing the decision[1] dated
September 30, 2002 and resolution[2] dated February 14, 2003 of the Court of Appeals in CAG.R. CV No. 515333 which, in turn,
modified the ruling of the Regional Trial Court (RTC) of Imus, Cavite awarding P500,000to respondent ARB Construction Co., Inc. (ARB)
as reasonable indemnity for the use of ARBs road lot.[3]

Woodridge is the usufructuary of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-363902 in the name
of spouses Ernesto T. Matugas and Filomena U. Matugas. Its co-petitioner, Miguela JimenezJavier, is the registered owner of the
adjacent lot under TCT No. T-330688.

On the other hand, ARB is the owner and developer of Soldiers Hills Subdivision in Bacoor, Cavite, which is composed of four
phases. Phase I of the subdivision was already accessible from the Marcos Alvarez Avenue. To provide the same accessibility to the
residents of Phase II of the subdivision, ARB constructed the disputed road to link the two phases.

As found by the appellate court, petitioners properties sit right in the middle of several estates: Phase I of Soldiers Hills
Subdivision in the north, a creek in the east and Green Valley Subdivision the farther east, a road within Soldiers Hills Subdivision IV
which leads to the Marcos Alvarez Avenue in the west and Phase III of Soldiers Hills Subdivision in the south.

Initially, petitioners offered to pay ARB P50,000 as indemnity for the use of the road. Adamant, ARB refused the offer and
fenced the perimeter of the road fronting the properties of petitioners. By doing so, ARB effectively cut off petitioners access to and
from the public highway.

After failing to settle the matter amicably, petitioners jointly filed a complaint[4] in the RTC of Imus, Cavite to enjoin ARB from
depriving them of the use of the disputed subdivision road and to seek a compulsory right of way after payment of proper indemnity.
On November 24, 1995, the trial court rendered its decision in favor of petitioners:

The reasons why this case is not one for a right of way as an easement are not difficult to discern.

The questioned road is part and parcel of the road network of Soldiers Hills IV, Phase II. This road was constructed
pursuant to the approved subdivision plan of Soldiers Hills IV, Phase II. As such, the road has already been
withdrawn from the commerce of men as the ownership of which was automatically vested in the government
without need of any compensation, although it is still registered in the name of the [ARB], the moment the
subdivision plan was approved. While it is not yet donated to the government [,] [it] is of no moment for donating
this road to the government is a mere formality.

Differently stated, the government automatically becomes the owner of the subdivisions roads the moment the
subdivision plan is approved. From that time on, the roads are withdrawn from the commerce of men even [if] the
titles are still registered in the name of the subdivision owners and the roads are not yet donated to the
government. Thus, the subdivision owner can no longer sell or alienate the roads for they are already owned by the
government; thus, even if [petitioners] want to buy this road, and the [ARB] wants to sell the same, this transaction
cannot materialize for the above-stated reasons. Accordingly, [ARB] cannot prevent/prohibit plaintiffs from using
the road as the same belongs to the government.

xxx xxx xxx

WHEREFORE, [ARB] is ordered to cease and desist from preventing [petitioners] in using the subject road or any
other road in the subdivision.

xxx xxx xxx

SO ORDERED. [5] (citations omitted)

ARB elevated the case to the Court of Appeals.[6] Finding merit in the appeal, the appellate court reversed the decision of
the lower court. It explained that the 1991 case of White Plains Subdivision[7] did not apply to the present case which was
decided under a different factual milieu:

In the assailed Decision, the Court below relied on the ruling of the Supreme Court in White Plains Association, Inc.
vs. Legaspi (193 SCRA 765). The ruling is not applicable. In the White Plains case, the disputed area was specifically set aside by
the Quezon City Government, with the concurrence of the owner and developer of the White Plains Subdivision in Quezon City, for the
purpose of constructing a major thoroughfare open to the general public. The case was filed by the association of homeowners of White
Plains in Quezon City when the owner-developer sought to convert the disputed lot to residential lots. The Supreme Court initially held
that the disputed lot was not longer within the commerce of men, it having been segregated for a particular purpose, that of being
used as part of a mandatory open space reserved for public use to be improved into the widened Katipunan Road. It was within this
context that the Supreme Court held that ownership was automatically vested in the Quezon City government and/or the Republic of
the Philippines, without need of paying any compensation.[8]

The appellate court went on to rule that a compulsory right of way exists in favor of petitioners as [t]here is no other existing adequate
outlet to and from [petitioners] properties to the Marcos Alvarez Avenue other than the subject existing road lot designated as Lot No.
5827-F-1 belonging to [ARB].[9] In addition, it awarded P500,000 to ARB as reasonable indemnity for the use of the road lot.
Acting on petitioners motion for reconsideration, the appellate court justified the monetary award in this manner:

In [o]ur Decision, [w]e awarded the amount of P500,000.00 merely as reasonable indemnity for the use of the road
lot, not the alienation thereof. The amount was based on equitable considerations foremost of which is that, while
there is no alienation to speak of, the easement is of long-standing, that is, until a shorter and adequate outlet is
established. Moreover, [ARB] should be compensated for the wear and tear that [petitioners] use of the road would
contribute to; it is [ARB] which is solely to be credited for the completion of the road lot. Going by the conservative
valuation of the Municipality of Bacoor, Cavite presented by [petitioners], the 4,760 sq. m. road lot would
cost P1,904,000 but as stated what is compensated is the use of the road lot not its alienation.

[Petitioners] original offer cannot be considered a reasonable indemnity, there being a knotty legal question involved
and it is not [ARBs] fault that the parties had to resort to the courts for a resolution.[10]

Unsatisfied with the ruling of the appellate court, petitioners filed this petition for review on certiorari insisting that ARB is
not entitled to be paid any indemnity.

Petitioners argue that the contested road lot is a property of public dominion pursuant to Article 420[11] of the Civil Code. Specifically,
petitioners point out that the disputed road lot falls under the category others of similar character which is the last clause of Article
420 (1).[12] Hence, it is a property of public dominion which can be used by the general public without need for compensation.
Consequently, it is wrong for ARB to exclude petitioners from using the road lot or to make them pay for the use of the same.

We disagree.

In the case of Abellana, Sr. v. Court of Appeals,[13] the Court held that the road lots in a private subdivision are private property, hence,
the local government should first acquire them by donation, purchase, or expropriation, if they are to be utilized as a public
road.[14] Otherwise, they remain to be private properties of the owner-developer.

Contrary to the position of petitioners, the use of the subdivision roads by the general public does not strip it of its private
character. The road is not converted into public property by mere tolerance of the subdivision owner of the publics passage through it.
To repeat, the local government should first acquire them by donation, purchase, or expropriation, if they are to be utilized as a public
road.[15]

Likewise, we hold the trial court in error when it ruled that the subject road is public property pursuant to Section 2 of
Presidential Decree No. 1216.[16] The pertinent portion of the provision reads:

Section 2. xxx xxx xxx

Upon their completion as certified to by the Authority, the roads, alleys, sidewalks and playgrounds shall
be donated by the owner or developer to the city or municipality and it shall be mandatory for the local governments
to accept them provided, however, that the parks and playgrounds may be donated to the Homeowners Association
of the project with the consent of the city or municipality concerned

The law is clear. The transfer of ownership from the subdivision owner-developer to the local government is not automatic
but requires a positive act from the owner-developer before the city or municipality can acquire dominion over the subdivision roads.
Therefore, until and unless the roads are donated,[17] ownership remains with the owner-developer.[18]

Since no donation has been made in favor of any local government and the title to the road lot is still registered in the name
of ARB, the disputed property remains private.

This is not to say that ARB may readily exclude petitioners from passing through the property. As correctly pointed out by the
Court of Appeals, the circumstances clearly make out a case of legal easement of right of way. It is an easement which has been
imposed by law and not by the parties and it has for (its) object either public use or the interest of private persons.[19]

To be entitled to a legal easement of right of way, the following requisites must concur: (1) the dominant estate is surrounded
by other immovables and has no adequate outlet to a public highway; (2) payment of proper indemnity; (3) the isolation was not due
to acts of the proprietor of the dominant estate and (4) the right of way claimed is at the point least prejudicial to the servient estate.[20]

The appellate and trial courts found that the properties of petitioners are enclosed by other estates without any adequate
access to a public highway except the subject road lot which leads to Marcos Alvarez Avenue.[21] Although it was shown that the
shortest distance from the properties to the highway is toward the east across a creek, this alternative route does not provide an
adequate outlet for the students of the proposed school. This route becomes marshy as the creek overflows during the rainy season
and will endanger the students attending the school.

All told, the only requisite left unsatisfied is the payment of proper indemnity.

Petitioners assert that their initial offer of P50,000 should be sufficient compensation for the right of way. Further, they should not be
held accountable for the increase in the value of the property since the delay was attributable to the stubborn refusal of ARB to accept
their offer.[22]

Again, we are not persuaded.

In the case of a legal easement, Article 649 of the Civil Code prescribes the parameters by which the proper indemnity may
be fixed. Since the intention of petitioners is to establish a permanent passage, the second paragraph of Article 649 of the Civil Code
particularly applies:
 Art 649. xxx xxx xxx

Should this easement be established in such a manner that its use may be continuous for all the needs of the
dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the land
occupied and the amount of the damage caused to the servient estate. xxx. (Emphasis supplied)

On that basis, we further hold that the appellate court erred in arbitrarily awarding indemnity for the use of the road lot.

The Civil Code categorically provides for the measure by which the proper indemnity may be computed: value of the land
occupied plus the amount of the damage caused to the servient estate. Settled is the rule in statutory construction that when the law
is clear, the function of the courts is simple application.[23] Thus, to award the indemnity using factors different from that given by the
law is a complete disregard of these clear statutory provisions and is evidently arbitrary. This the Court cannot countenance. The Civil
Code has clearly laid down the parameters and we cannot depart from them. Verba legis non est recedendum.

Having settled the legal issues, we order the remand of this case to the trial court for reception of evidence and determination
of the limits of the property to be covered by the easement, the proper indemnity to be paid and the respective contributions of
petitioners.

For the guidance of the trial court, the fact that the disputed road lot is used by the general public may be taken in
consideration to mitigate the amount of damage that the servient estate is entitled to, in the sense that the wear and tear of the
subject road is not entirely attributable to petitioners.

WHEREFORE, this petition is partially GRANTED. The September 30, 2002 Decision and February 14, 2003 resolution of the
Court of Appeals in CAG.R. CV No. 515333 are ANNULLED and SET ASIDE in so far as petitioners are ordered to pay an indemnity
of P500,000. The case is hereby remanded to the trial court for reception of evidence and determination of the limits of the property
to be covered by the easement, the proper indemnity to be paid and the respective contributions of petitioners.

SO ORDERED.
BICOL AGRO-INDUSTRIAL PRODUCERS COOPERATIVE, INC. (BAPCI),
Petitioner,
- versus
EDMUNDO O. OBIAS, PERFECTO O. OBIAS, VICTOR BAGASINA, ELENA BENOSA, MELCHOR BRANDES, ROGELIO
MONTERO, PEDRO MONTERO, CLAUDIO RESARI, PILAR GALON, ANTONIO BUISON, PRUDENCIO BENOSA, JR.,
MARIA VILLAMER and ROBERTO PADUA,
G.R. No. 172077, October 9, 2009

Before this Court is a Petition for Review on certiorari[1] under Rule 65 of the Rules of Court, seeking to set aside the August
24, 2005 Decision[2] and March 28, 2006 Resolution[3] of the Court of Appeals (CA) in CA-G.R. CV No. 59016.

The facts of the case:

Sometime in 1972, the Bicol Sugar Development Corporation (BISUDECO) was established at Himaao, Pili, Camarines Sur.
In the same year, BISUDECO constructed a road (the disputed road) measuring approximately 7 meters wide and 2.9 kilometers long.
The disputed road was used by BISUDECO in hauling and transporting sugarcane to and from its mill site (Pensumil) and has thus
become indispensable to its sugar milling operations.[4]

On October 30, 1992, petitioner Bicol Agro-Industrial Producers Cooperative, Inc. acquired the assets of BISUDECO. On April
19, 1993, petitioner filed a Complaint[5]against respondents Edmundo Obias, Perfecto Obias, Victor Bagasina, Elena Benosa, Melchor
Brandes, Rogelio Montero, Pedro Montero, Claudio Resari, Pilar Galon, Antonio Buison, Prudencio Benosa, Jr., Victor Bagasina Jr., Maria
Villamer, and Roberto Padua, alleging that on March 27, 1993 and April 3, 1993, respondents unjustifiably barricaded the disputed
road by placing bamboos, woods, placards and stones across it, preventing petitioners and the other sugar planters vehicles from
passing through the disputed road, thereby causing serious damage and prejudice to petitioner. [6]

Petitioner alleged that BISUDECO constructed the disputed road pursuant to an agreement with the owners of the ricefields the road
traversed. The agreement provides that BISUDECO shall employ the children and relatives of the landowners in exchange for the
construction of the road on their properties. Petitioner contends that through prolonged and continuous use of the disputed road,
BISUDECO acquired a right of way over the properties of the landowners, which right of way in turn was acquired by it when it bought
BISUDECOs assets. Petitioner prayed that respondents be permanently ordered to restrain from barricading the disputed road and
from obstructing its free passage.[7]

In an Order[8] dated April 19, 1993, the Regional Trial Court of Pili (RTC), Camarines Sur, 5th Judicial Region, Branch 31, ordered
respondents, their agents and representatives to cease and desist from placing barricades on the disputed road. [9]

In their Answer,[10] respondents denied having entered into an agreement with BISUDECO regarding the construction and the use of
the disputed road. They alleged that BISUDECO, surreptitiously and without their knowledge and consent, constructed the disputed
road on their properties and has since then intermittently and discontinuously used the disputed road for hauling sugarcane despite
their repeated protests. Respondents claimed they tolerated BISUDECO in the construction and the use of the road since BISUDECO
was a government-owned and controlled corporation, and the entire country was then under Martial Law. Respondents likewise denied
that the road has become a public road, since no public funds were used for its construction and maintenance. Moreover, respondents
alleged that with the exception of Edmundo and Perfecto Obias, they are actual tillers of the ricelands, having acquired their rights
over said lands under Presidential Decree No. 27 (PD 27). Edmundo and Perfecto Obias are the owners of the eastern portion of the
property on which a portion of the road going to BISUDECO was constructed. Respondents denied that they barricaded the road.[11]
Jaime Manubay and Manolito Maralit, for themselves and in representation of other sugarcane planters, filed the first
complaint-in-intervention.[12]

Petitioner filed an Amended Complaint[13] and with leave of court a Re-Amended Complaint,[14] where it averred, as an
alternative cause of action in the event the lower court does not find merit in its causes of action, that it will avail of the benefits
provided for under Article 649[15] of the New Civil Code. Petitioner thus demanded from respondents a right of way over the disputed
road for its use.[16]

Respondents filed an Answer[17] to refute petitioners alternative cause of action. Respondents claimed that the road from the
sugarmill to the Maharlika Highway at Barangay Romero, Bula, Camarines Sur, which exits at the Rural Bank of Bula site, had a distance
of only about 15 kilometers; hence, respondents asserted that said road was shorter and was a more appropriate right of way than
the disputed road.[18]

On July 21, 1993, the RTC issued a Writ of Preliminary Injunction[19] ordering the respondents to desist from constructing
barricades across the road.

On June 28, 1994, nine other cooperatives[20] filed their Complaint-in-Intervention.[21]

On June 25, 1997 the RTC rendered a Decision,[22] the dispositive portion of which reads:

WHEREFORE, premises considered, a decision is hereby rendered declaring the Writ of Preliminary Injunction
issued against all the herein defendants, their agents, representatives and such other persons acting in their behalf,
permanent and perpetual BUT the plaintiff Bicol Agro-Industrial Cooperative, Inc., (BAPCI) is hereby ordered to pay
the owners of the lots affected by the road, viz: Pedro Montero P299,040.00; Pedro Galon P52,920.00; Clara
Padua P46,410.00; Antonio Buizon P35,070.00; Rogelio Montero P41,160.00; Maria Villamer P41,580.00; Melchor
Brandes P76,440.00; Prudencio Benosa P41, 650.00; Elena Benosa P39,550.00; Victor Bagasina, Jr. P39,410.00;
and Claudio Resari P40,950.00. Upon full payment thereof, the plaintiff shall be declared the absolute owner of the
road in question. Legal rate if interest is hereby imposed upon the plaintiff from the finality of this decision until fully
payment hereof. No costs.

SO ORDERED.[23]

The RTC ruled that petitioner failed to present any concrete evidence to prove that there was an agreement between
BISUDECO and respondents for the construction of the disputed road.[24] Moreover, it held that petitioner did not acquire the same by
prescription.[25] The RTC, however, also held that petitioner was entitled to a compulsory easement of right of way as provided for
under Article 649 of the New Civil Code upon payment of proper indemnity to respondents. [26]

Both parties filed a motion for reconsideration of the RTC Decision. Petitioner contended that: (1) the value of the land is
excessive; (2) the evidence is insufficient to justify the award; (3) the decision is contrary to law and jurisprudence. Respondents, on
the other hand, alleged that: (1) the trial court erred in declaring the persons mentioned in the decisions dispositive portion to be
entitled to indemnity for the construction and the use of the disputed road; (2) BAPCI should not be declared the absolute owner of
the disputed road upon full payment of the indemnity due to the defendants; and (3) the decision failed to award damages. [27]

On September 24, 1997, the RTC denied both motions for reconsideration.[28] The parties then appealed to the CA.

On August 24, 2005, the CA rendered a Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the appeal is PARTLY GRANTED. The assailed decision of the Regional
Trial Court, Branch 31, Pili, Camarines Sur, in Civil Case No. P-1899 is hereby MODIFIED as follows: the awards of
Php46,410.00 to Clara Padua and Php41,650.00 to Prudencio Benosa are hereby DELETED, and the declaration that
the plaintiff BAPCI shall become the absolute owner of the disputed road upon full payment of indemnity is REVERSED
and SET ASIDE. Accordingly, the owners of the servient estate in the easement of right of way recognized in this
Decision shall retain ownership of the lands affected by the easement in accordance with Art. 630 of the Civil Code.
We hereby AFFIRM the appeal in all other respects.

SO ORDERED.[29]

The CA affirmed the finding of the RTC that there was no conclusive proof to sufficiently establish the existence of an
agreement between BISUDECO and respondents regarding the construction of the disputed road. [30] Moreover, the CA also declared
that an easement of right of way is discontinuous and as such cannot be acquired by prescription. [31] The CA likewise affirmed the
finding of the RTC that petitioner was entitled to a compulsory easement of right of way upon payment of proper indemnity to
respondents. The CA, however, declared that ownership over the disputed road should remain with respondents, despite the grant of
a compulsory easement.[32] Lastly, the CA deleted the awards to Prudencio Benosa (Benosa) and Clara Padua (Padua), since the former
never claimed ownership of any portion of the lands affected by the disputed road and the latter was not a party to the proceedings
below.[33]

Petitioner then filed a Motion for Reconsideration alleging among others that the CA Decision failed to rule on the issue
of estoppel and laches. Moreover, Benosa and Padua filed a Motion for Reconsideration assailing the portion of the CA Decision deleting
the award of indemnity to them. On March 28, 2006, the CA issued a Resolution denying the same.

Hence, herein petition, with petitioner raising the following assignment of errors, to wit:

I.

THE HONORABLE COURT OF APPEALS ERRED SERIOUSLY IN NOT FINDING THAT THERE WAS
FORGED AN AGREEMENT BETWEEN BISUDECO MANAGEMENT AND THE PRIVATE RESPONDENTS FOR THE
CONTRUCTION OF THE ROAD IN QUESTION.

II.

THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN NOT CONSIDERING THE
PRINCIPLES OF PRESCRIPTION, LACHES AND ESTOPPEL IN THE CASE AT BAR.
III.

THE HONORABLE COURT OF APPEALS ERRED IN COMPLETELY DISREGARDING THE

CLASSIFICATION OF THE ROAD IN QUESTION AS BARANGAY ROAD.

IV.

IN THE ALTERNATIVE CAUSE OF ACTION, THE PUBLIC RESPONDENT SERIOUSLY ERRED IN

CONSIDERING THE VALUATION OF THE LANDS AFFECTED BY THE ROAD IN 1994, AND NOT IN 1974,
WHEN SAID ROAD WAS CONSTRUCTED.

V.

THE HONORABLE PUBLIC RESPONDENT ERRED SERIOUSLY WHEN IT FAILED ALSO TO CONSIDER
THE LEGAL PRINCIPLE OF UNJUST ENRIGHTMENT AT THE EXPENSE OF ANOTHER.[34]

At the outset, this Court shall address some procedural matters. Quite noticeably, herein petition is denominated as one filed
under Rule 65[35] of the Rules of Court notwithstanding that it seeks to assail the Decision and Resolution of the CA. Clearly, petitioner
had availed of the improper remedy as the appeal from a final disposition of the CA is a petition for review under Rule 45 and not a
special civil action under Rule 65 of the Rules of Court.[36]

In Active Realty and Development Corporation v. Fernandez,[37] this Court discussed the difference between petitions filed
under Rule 65 and Rule 45, viz:

A petition for certiorari under Rule 65 is proper to correct errors of jurisdiction committed by the lower court,
or grave abuse of discretion which is tantamount to lack of jurisdiction. This remedy can be availed of when there is
no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law.

Appeal by certiorari under Rule 45 of the Rules of Court, on the other hand, is a mode of appeal available
to a party desiring to raise only questions of law from a judgment or final order or resolution of the Court of Appeals,
the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law.
x x x The general rule is that the remedy to obtain reversal or modification of judgment on the merits is
appeal. Thus, the proper remedy for the petitioner should have been a petition for review
on certiorari under Rule 45 of the Rules of Court since the decision sought to be reversed is that of the
CA. The existence and availability of the right of appeal proscribes a resort to certiorari, because one of the requisites
for availment of the latter is precisely that there should be no appeal. The remedy of appeal under Rule 45 of the
Rules of Court was still available to the petitioner.[38]

Rule 45 is clear that decisions, final orders or resolutions of the Court of Appeals in any case, i.e., regardless of the nature of
the action or proceeding involved, may be appealed to this Court by filing a petition for review, which would be but a continuation of
the appellate process over the original case.[39] Moreover, it is basic that one cannot avail of the remedy provided for under Rule 65
when an appeal is still available. Hence, petitioner should have filed its petition under Rule 45.

The procedural infirmity notwithstanding and in the interest of substantial justice, this Court shall consider herein petition as
one filed under Rule 45 especially since it was filed well within the reglementary period proscribed under the said Rule. The Court also
takes notice that the assignment of errors raised by petitioner does not allege grave abuse of discretion or lack of jurisdiction on the
part of the CA.

On the Existence of an Agreement between BISUDECO and Respondents

Anent the first error raised, petitioner argues that the CA erred in not finding that BISUDECO and respondents forged an
agreement for the construction of the road in dispute. Petitioner thus asserts its entitlement to an easement of right of way over the
properties of respondents by virtue of said agreement.

An easement of right of way was succinctly explained by the CA in the following manner, to wit:

Easement or servitude is an encumbrance imposed upon an immovable for the benefit of another immovable
belonging to a different owner. By its creation, easement is established either by law (in which case it is a legal
easement) or by will of the parties (a voluntary easement). In terms of use, easement may either be continuous or
discontinuous. The easement of right of way the privilege of persons or a particular class of persons to
pass over anothers land, usually through one particular path or linen is characterized as a discontinuous
easementbecause its use is in intervals and depends on the act of man. Because of this character, an
easement of a right of way may only be acquired by virtue of a title.[40]

Article 622 of the New Civil Code is the applicable law in the case at bar, viz:

Art. 622. Continuous non-apparent easements, and discontinuous ones, whether apparent or not, may
be acquired only by virtue of a title.

Based on the foregoing, in order for petitioner to acquire the disputed road as an easement of right-of-way, it was incumbent
upon petitioner to show its right by title or by an agreement with the owners of the lands that said road traversed.
While conceding that they have no direct evidence of the alleged agreement, petitioner posits that they presented
circumstantial evidence which, if taken collectively, would prove its existence.[41] Specifically, petitioner cites the following
circumstances, to wit:

a. The agreement was of public knowledge.[42] Allegedly BISUDECO and respondents entered into an agreement
for the construction of the road provided that the latter, their children or relatives were employed with
BISUDECO.
b. The road was continuously used by BISUDECO and the public in general.[43]
c. There was no protest or complaint from respondents for almost a period of two decades.[44]
d. The portions of the land formerly belonging to respondents affected by the road were already segregated and
surveyed from the main lots.[45]
e. The road in dispute is already a barangay road.

The well-entrenched rule in our jurisdiction is that only questions of law may be entertained by this Court in a petition for review
on certiorari. This rule, however, is not iron-clad and admits certain exceptions, such as when (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 findings of absence of facts are 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.[46]

After a painstaking review of the records, this Court finds no justification to warrant the application of any exception to the general
rule.

Crucial to the petitioners cause was its burden of proving the existence of the alleged agreement between BISUDECO and respondents
for the construction of the road. In this regard, the RTC found that petitioner failed to prove its existence, to wit:

It is clear that the plaintiff failed to present any concrete evidence to prove that there was such an
agreement between BISUDECO and defendants. Hereunder quoted are the testimonies of plaintiffs witnesses
regarding the alleged agreement.

Romeo Deveterbo, Transportation Superintendent of BISUDECO testified

Cross Examination by Atty. Pejo

Q: You also mentioned that there was an agreement between Senator Cea, Mr. Obias and some of the
tenants?
A: Yes.

Q: You mentioned that this was not in writing, am I right?

A: Yes.

Q: How did you know about it that it was not in writing, who told you, Senator Cea?
A: It was commonly known to all original employees of the BISUDECO.

Q: You know it from the management?

A: From co-employees.

Q: You learned about that agreement from you co-employees?

A: Yes.

Q: In other words, therefore, that is why you said you are confused between Edmundo Cea and Perfecto
Obias because you just learned it from other employees and you were never present when they talked about
it, am I right?
A: Yes. x x x

To this effect also is the testimony of Angel Lobo, head of the agricultural Department of BAPCI, to wit:
 A: Yes, your Honor?
COURT: From where did you learn?
A: From people whom I talked with at that time and it is a public common knowledge at that time.
xxx

Atty. Carandang: I repeat my question, Your Honor.

You said you acquired it from or because of common knowledge and you mentioned some people. Who are
those people you are referring to whom you acquired that knowledge?
A: Most of all, the late Benjamin Bagasina, Barangay Captain at that time who was our employee in
consideration of this agreement, then we have also a Civil Engineering Head, Civil Engineering Department
who is responsible for the maintenance of this road. I learned from him that this arrangement established
the fact why this road was constructed.

Q: Who is the head of the Engineering Dept?

xxx

COURT: May answer.

A: Engineer Pablo Tordilla who was then the head of our Civil Engineering Dept.

But this Engineer Pablo Tordilla, Lobos alleged source of the information, was never presented in Court.
And, according to the Chief Accountant of BAPCI, David Severo:

A: When I was interviewing Mrs. Alma Montero Penaflor she filed to me a certain arrangement related to
the used of the land to Himaao as road going to the central.
COURT: You mean Himaao Millsite road?
A: Yes, sir.

Atty. Carandang:
Q: What arrangement is that supposedly filed to you?
A: She told me in exchange for the use of the road, the relatives or owners or tenants of the land will be
hired by the sugar Central?

COURT:
Q: So, only the tenants not the owners?
A: The tenants children the road belongs.
xxx

Finally, intervenor Antonio Austria, in trying to show you that there was consent and approval on the part
of the defendant Edmundo Obias to give the right of way to BISUDECO at the time to be used in hauling the sugarcane
of the planters to the Central, averred the following uncertain statements:

A: Well, he has (sic) having a case against PENSUNIL, regarding the property I think the right of way going
to PENSUMIL right now we discuss it and he said he is allowing it anymore but then I reminded him wayback
in 1974 to 1980 he was one of the biggest planters in the part of Partido so he consented to the late I think
Edmundo Cea, the owner ofBISUDECO at that time to pass his property since he is also milling a lot of things
at that time and many other things one of the concession mill was I think some of the tenants there in
Himaao will be employed in the mill.
xxx

These aforequoted testimonies of the plaintiffs witnesses failed to satisfactorily establish the
plaintiffs contention that there was such an agreement. Likewise, the list of the Employees of Defendants
relatives, son/daughter employed by the BISUDECO (Exhibit H) does not in any manner prove the alleged
agreement.[47]

For its part, the CA also ruled that petitioner failed to prove the existence of the said agreement, to wit:

Like the lower court, we found no conclusive proof to sufficiently establish the existence of an agreement
between BISUDECO and the defendants-appellants regarding the construction and the use of the
disputed road. The lower court correctly disbelieved the plaintiffs-appellants contention that an agreement existed
because there is simply no direct evidence to support this allegation. BAPCI submitted purely circumstantial evidence
that are not sufficiently adequate as basis for the inference than an agreement existed. By themselves, the
circumstances the plaintiffs-appellants cited i.e., the employment of sixteen (16) relatives of the defendants-
appellants; the defendants-appellants unjustified silence; the fact that the existence of the agreement is known to
everyone, etc. are events susceptible of diverse interpretations and do not necessarily lead to BAPCIs desired
conclusion. Additionally, the testimonies that the plaintiffs-appellants presented are mainly hearsay, as
not one among the witnesses had personal knowledge of the agreement by reason of direct participation
in the agreement or because the witness was present when the agreement was concluded by the parties.
Thus, given the defendants-appellants categorical denial that an agreement existed, we sustain the lowers conclusion
that no agreement existed between BISUDECO and the defendants-appellants.[48]

Based on the foregoing, the inability of petitioner to prove the existence of an agreement militates its allegations in herein petition. On
this score, both the RTC and the CA are one in ruling that petitioner had failed to prove the existence of the agreement between
BISUDECO and the respondents for the construction of the road. Also, well-established is the rule that "factual findings of the Court of
Appeals are conclusive on the parties and carry even more weight when the said court affirms the factual findings of the trial
court."[49] Hence, this Court finds no reason to reverse such findings.

On Acquisition by Prescription

Petitioner would have this Court re-examine Costabella Corporation v. Court of Appeals[50] (Costabella) where the Court held that, It is
already well-established that a right ofway is discontinuous and, as such,
cannot be acquired by prescription.[51] Petitioner contends that some recognized authorities[52] share its view that an easement of right
of way may be acquired by prescription.
Be that as it may, this Court finds no reason to re-examine Costabella. This Court is guided by Bogo-Medellin Milling Co., Inc. v. Court
of Appeals[53] (Bogo-Medellin), involving the construction of a railroad track to a sugar mill. In Bogo-Medellin, this Court discussed the
discontinuous nature of an easement of right of way and the rule that the same cannot be acquired by prescription, to wit:

Continuous and apparent easements are acquired either by virtue of a title or by prescription of ten years.
The trial court and the Court of Appeals both upheld this view for the reason that the railroad right of way was,
according to them, continuous and apparent in nature. The more or less permanent railroad tracks were
visually apparent and they continuously occupied the subject strip of land from 1959 (the year the easement granted
by Feliciana Santillan to petitioner expired).Thus, with the lapse of the 10-year prescriptive period in 1969, petitioner
supposedly acquired the easement of right of way over the subject land.

Following the logic of the courts a quo, if a road for the use of vehicles or the passage of persons is
permanently cemented or asphalted, then the right of way over it becomes continuous in nature. The
reasoning is erroneous.

Under civil law and its jurisprudence, easements are either continuous or discontinuous according
to the manner they are exercised, not according to the presence of apparent signs or physical indications
of the existence of such easements. Thus, easement is continuous if its use is, or may be, incessant without the
intervention of any act of man, like the easement of drainage; and it is discontinuous if it is used at intervals
and depends on the act of man, like the easement of right of way.

The easement of right of way is considered discontinuous because it is exercised only if a person
passes or sets foot on somebody elses land. Like a road for the passage of vehicles or persons, an
easement of right of way of railroad tracks is discontinuous because the right is exercised only if and
when a train operated by a person passes over another's property. In other words, the very exercise of
the servitude depends upon the act or intervention of man which is the very essence of discontinuous
easements.

The presence of more or less permanent railroad tracks does not, in any way, convert the nature of
an easement of right of way to one that is continuous. It is not the presence of apparent signs or physical
indications showing the existence of an easement, but rather the manner of exercise thereof, that
categorizes such easement into continuous or discontinuous.The presence of physical or visual signs only classifies
an easement into apparent or non-apparent. Thus, a road (which reveals a right of way) and a window (which
evidences a right to light and view) are apparent easements, while an easement of not building beyond a certain
height is non-apparent.

In Cuba, it has been held that the existence of a permanent railway does not make the right of way a continuous
one; it is only apparent. Therefore, it cannot be acquired by prescription. In Louisiana, it has also been held that a
right of passage over another's land cannot be claimed by prescription because this easement is discontinuous and
can be established only by title.

In this case, the presence of railroad tracks for the passage of petitioners trains denotes the existence of an
apparent but discontinuous easement of right of way. And under Article 622 of the Civil Code, discontinuous
easements, whether apparent or not, may be acquired only by title. Unfortunately, petitioner Bomedco never
acquired any title over the use of the railroad right of way whether by law, donation, testamentary succession or
contract. Its use of the right of way, however long, never resulted in its acquisition of the easement because, under
Article 622, the discontinuous easement of a railroad right of way can only be acquired by title and not by
prescription.[54]
Applying Bogo-Medellin to the case at bar, the conclusion is inevitable that the road in dispute is a discontinuous easement
notwithstanding that the same may be apparent. To reiterate, easements are either continuous or discontinuous according to the
manner they are exercised, not according to the presence of apparent signs or physical indications of the existence of such easements.
Hence, even if the road in dispute has been improved and maintained over a number of years, it will not change its discontinuous
nature but simply make the same apparent. To stress, Article 622 of the New Civil Code states that discontinuous easements, whether
apparent or not, may be acquired only by virtue of a title.

On Laches and Estoppel

Petitioner argues that estoppel and laches bar respondents from exercising ownership rights over the properties traversed by
the road in dispute. In support of said argument, petitioner posits that BISUDECO had been peacefully and continuously using the road
without any complaint or opposition on the part of the respondents for almost twenty years. Respondents, on the other hand, claim
that they merely tolerated the use of their land as BISUDECO was a government-owned and controlled corporation and considering
that the disputed road was constructed during the time of Martial Law.
There is no absolute rule on what constitutes laches. It is a rule of equity and applied not to penalize neglect or sleeping on
ones rights, but rather to avoid recognizing a right when to do so would result in a clearly unfair situation. The question of laches is
addressed to the sound discretion of the court and each case must be decided according to its particular circumstances. [55] It is the
better rule that courts, under the principle of equity, should not be guided or bound strictly by the statute of limitations or the doctrine
of laches if wrong or injustice will result.[56]

In herein petition, the CA denied petitioners argument in the wise:

As previously explained in our Decision, the applicable law is Article 622 of the Civil Code of the Philippines,
which provides:

Art. 622. Continuous non-apparent easements, and discontinuous ones, whether apparent
or not, may be acquired only by virtue of a title.

The eminent jurist, former Senator Arturo M. Tolentino, opines that this provision seeks to prevent the imposition of
a burden on a tenement based purely on the generosity, tolerance and spirit of neighborliness of the owners thereof.

We applied the cited provision to the case in ruling that no easement of right of way was acquired; based
on the evidence presented, the plaintiff-appellant failed to satisfactorily prove the existence of an agreement
evidencing any right or title to use the disputed road. We additionally rejected the plaintiff-appellants position that it
had acquired the easement of right of way through acquisitive prescription, as settled jurisprudence states that an
easement of right of way cannot be acquired by prescription.

We hold the same view on the issue of acquisition of an easement of right of way by laches. To our mind,
settled jurisprudence on the application of the principle of estoppel by laches militates against the acquisition of an
easement of right of way by laches.
 Laches is a doctrine in equity and our courts are basically courts of law and not courts of equity; equity,
which has been aptly described as justice outside legality, should be applied only in the absence of, and never against,
statutory law; Aeguetas nunguam contravenit legis. Based on this principle, we find that the positive mandate of
Article 622 of the Civil Code the statutory provision requiring title as basis for the acquisition of an easement of a
right of way precludes the application of the equitable principle of laches.[57]

This Court agrees with the CA. The fact that the law is categorical that discontinuous easements cannot be acquired by prescription
militates against petitioners claim of laches. To stress, discontinuous easements can only be acquired by title. More
importantly, whether or not the elements of laches are present is a question involving a factual determination by the trial
court.[58] Hence, the same being a question of fact, it cannot be the proper subject of herein petition. On the other hand, as to the
issue of estoppel, this Court likewise agrees with the finding of the CA that petitioner did not present any evidence that would show an
admission, representation or conduct by respondents that will give rise to estoppel.[59]

Classification of the Road in Dispute as a Barangay Road

Petitioner argues that the CA erred when it disregarded the classification of the road in question as a barangay road. In support of said
argument, petitioner presented Exhibit Q, a Tax Declaration or Field Appraisal and Assessment Sheet[60] (1991 FAAS) with Survey
Number 1688-40 and PIN No. 026-01-009-08-037, dated April 30, 1991, which they claim proves that the road in dispute is already
a barangay road.

The same is again a question of fact which cannot be the proper subject of herein petition. Petitioner cannot have this Court re-examine
the evidentiary value of the documents it presented before the RTC as the same is not a function of this Court. In any case, after a
closer scrutiny of the 1991 FAAS, this Court holds that the same is insufficient to prove petitioners claim.

Respondents, in their Comment,[61] argue against the classification of the road in dispute as a barangay road in the wise:

Petitioner also stated that the Honorable Court of Appeals fails to consider the fact that the owner of the road in
question is the Municipality of Pili in the Province of Camarines Sur and as proof of such claim they presented and
marked as Exhibit Q, tax declaration no. 009-756 or Annex D of their Petition. However, private respondents wish
to call the attention of this Honorable Court to the following:

a. Tax Declaration No. 009-828 attached as Annex C-6 of the Verified Petition declared in the name of Edmundo
Obias (one of the private respondents);
b. Actual Use portion of said Annex C-6 marked as Exh. No. N-6-a-1 which states Road Lot (BISUDECO
Road); and
c. The Memoranda portion in the second page of Annex C-6 which states: Revised to declare the property
in The name of the rightful owner, Edmundo Obias based from the approved subdivision plan, Bsd-05-000055
(OLT) & technical descriptions. Likewise area was made to conform with the said subdivision plan from 4,773 sq.m.
to 11,209 sq.m.

Obviously, the alleged Exhibit Q of the Petitioner is an erroneous tax declaration, thus, negates the claim
of the Petitioner that the same is owned by the Municipality of Pili and has been declared a barangay road. Private
respondents cannot understand why the herein Petitioner alleged this matter and used it as a proof to support their
claim when they are already in possession of a tax declaration correcting the same and even attached the same as
part of their Petition.[62]
In its Reply,[63] petitioner counters:

II. While Petitioners claim that the road belongs to the Municipal Government of Pili, yet what they attached to the
Petition as Annex C-7 is a tax declaration of Edmundo Obias. Petitioners have the following observations:

xxxx

(b) That land of Edmundo Obias covered by Annex C-6 to the Petition is not included or involved in this case at bar.
His name does not appear to be awarded in the Decision of the Honorable Court of Appeals and also in the list of
beneficiaries to receive monetary considerations made by Mr. Angel Lobo.[64]
After a painstaking review of the records, this Court is more inclined to believe the claim of respondents. The claim of petitioner to the
effect that the land of Edmundo Obias is not included in the case at bar is misleading. It may be true that Edmundo was not awarded
indemnity by the lower courts, however, the same does not mean that his lands do not form part of the subject matter of herein
petition.
It bears to stress that Edmundo claimed in the CA that he was the owner of the affected ricelands and that respondents were merely
his tenants-beneficiaries under PD 27, otherwise known as the Tenant Emancipation Decree.[65] The CA, however, dismissed said claim
because it was raised for the first time on appeal. It also held that the averments in the documents submitted by Edmundo in the RTC
described respondents as "owners" of the land they till; hence, the same constituted binding judicial admissions.[66]
Based on the foregoing, petitioner's attempt to refute the contents of the 1995 FAAS by claiming that the lands of Edmundo are not
involved in the case at bar must fail. It is clear that respondents are the tenant-beneficiaries of the lands of Edmundo under PD 27;
hence, contrary to the claim of petitioner, the lands of Edmundo are the subject matter of herein petition.

In addition, it is curious that petitioner relies on the 1991 FAAS yet finds exception to the contents of the 1995 FAAS. After a
closer scrutiny of both documents, it appears to this Court that the land described in the 1991 FAAS is also the same land described in
the 1995 FAAS. Both FAAS involve land measuring 4,773 square meters. Likewise, both FAAS have the same PIN Number (026-01-
009-08-037) and Survey Number (1688-40). Accordingly, the annotation contained in the 1995 FAAS, to the effect that a BISUDECO
road does not belong to the Municipality of Pili, serves to weaken petitioners claim.

The Court also considers portions of the RTC Decision where it can be gathered that the road in dispute is not a barangay road, to wit:

At this point, it is important to note that defendants admitted the identity of the road and the area of the
same as reflected in the Commissioners Report, during the Pre-trial held last September 19, 1995.

Engr. Roberto Revilla testified that a portion of the road inside the property of Edmundo Obias,
is a barangay road which are lots A-52 sq.m., B-789 sq.m. and C-655 sq.m. or a total of 1,497 sq.m. which
starts from the intersection of the National Road and the road to Pensumil up to Corner 9 of Lot 37, Bsc-05-000055
(OCT) in the name of Pedro O. Montero. Engr. Revilla concluded that the actual area occupied by the road in
question is the sum of areas of Lots D-2042 sq.m., E-2230 sq.m., F-756 sq.m., G-663 sq.m., H-501 sq.m.
, I-588 sq.m., J-594 sq.m., K-l092 sq.m., L-595 sq.m., M-459 sq.m., N-106 sq.m., O-585 sq.m. and P-563
sq.m., or a total of 10,774 square meters. Said road starts from corner 9 of the lot of Pedro Montero which is
equivalent to corner 25 of Lot 40 Bsd-05-000055 (OCT) going to the Southern Direction and ending at corner 25 of
 Lot 1688 Cad. 291 Pili Cadastre covered by OCT No. 120-217 (1276) in the name of spouses Edmundo Obias and
Nelly Valencia and spouses Perfecto Obias and Adelaida Abenojar.[67]

The RTC findings of fact thus shows that while certain portions of the property of Edmundo is a barangay road, the same only pertains
to Lots A, B and C, or a total of 1,497 square meters, which is distinct from the road in dispute which pertains to different lots (lots E
to P) and covers a total area of 10,774 square meters.

In light of the foregoing, considering that the contents of the 1991 FAAS is disputable, it was incumbent on petitioner to
present documents which would evidence the expropriation of the road in dispute by the local government as a barangay road. Under
the prevailing circumstances, the documents of the expropriation proceedings would have been the best evidence available and the
absence thereof is certainly damaging to petitioners cause.

Amount of Indemnity Due & On Unjust Enrichment

Petitioner manifested in the RTC its desire, in the alternative, to avail of a compulsory easement of right of way as provided
for under Article 649 the New Civil Code. Said relief was granted by the RTC because of the unavailability of another adequate outlet
from the sugar mill to the highway. Despite the grant of a compulsory easement of right of way, petitioner, however, assails both the
RTC and CA Decision with regard to the amount of indemnity due respondents.

Petitioner likens the proceedings at bar to an expropriation proceeding where just compensation must be based on the value of the
land at the time of taking.[68] Petitioner thus maintains that the compensation due to respondents should have been computed in 1974
when the road was constructed.[69]

This Court does not agree. Article 649 of the New Civil Code states:

The owner, or any person who by virtue of a real right may cultivate or use any immovable, which is
surrounded by other immovables pertaining to other persons and without adequate outlet to a public highway, is
entitled to demand a right of way through the neighboring estates, after payment of the proper indemnity.

Should this easement be established in such a manner that its use may be continuous for all the needs of the
dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the land
occupied and the amount of the damage cause to the servient estate.

Based on the foregoing, it is clear that the law does not provide for a specific formula for the valuation of the land. Neither does the
same state that the value of the land must be computed at the time of taking. The only primordial consideration is that the same
should consist of the value of the land and the amount of damage caused to the servient estate.Hence, the same is a question of fact
which should be left to the sound discretion of the RTC. In this regard, the RTC ruled:

The market value per hectare in 1974 or at the time of taking or prior to its conversion to road is P6,500/hectare,
the same being a first class riceland irrigated therefore the total market value is P6,864.31. The 1994 Market Value
of P1,292,880.00 is the value assigned to the property in question after it was already developed as a road lot where
the unit value applied per square meter is P120.00 for 5th class residential lot.

It has to be remembered however that the cost of transforming the land to road was entirely borne by BISUDECO
including its maintenance, repair and the cost of the improvements and by plaintiff after its acquisition. Thus,
the P120.00 unit value is exorbitant while the 1974 valuation of P6,500/hectare is low and unreasonable.

In fine, this Court will adopt the unit value of P70.00 per square meter as shown by Exhibit Q, the Real Property Field
Assessment Sheet No. 009-756.[70]

In addition, the CA ruled:

We stress that the amount of proper indemnity due to the landowners does not only relate to the market value of
their property but comprehends as well the corresponding damage caused to the servient estate. It is undisputed
that the BISUDECO began the construction and used of the disputed road in 1974. While the maintenance was borne
by BISUDECO and now by BAPCI who principally used the disputed road for their sugar milling operations, the
defendants-appellants have been deprived of the use do their ricefields because of the roads construction since 1974.
Thus, it is but proper to compensate them for this deprivation, over and above the prevailing market value of the
affected property. To our mind, in light of the circumstances surrounding the acquisition of the affected ricelands and
the construction of the disputed road, particularly the absence of a definitive agreement to show that the defendants-
appellants consented to the roads construction, we find the P70.00 per square meter indemnity awarded by the lower
court in accordance with the Real Property Field Assessment Sheet No. 009-756, to be fair and reasonable under the
circumstances.[71]

Withal, this Court finds no error as to the proper amount of indemnity due respondents as the findings of both the RTC and the CA
appear to be fair and reasonable under the prevailing circumstances and in accordance with the provisions of Article 649 of the New
Civil Code.

WHEREFORE, premises considered, the petition is DENIED. The August 24, 2005 Decision and October 27, 2005 Resolution
of the Court of Appeals in CA-G.R. CV No. 59016 are hereby AFFIRMED.

SO ORDERED.
ST. MICHAEL SCHOOL OF G.R. No. 166301
CAVITE, INC. and SPOUSES
CRISANTO S. CLAVERIA and Present:
GLORIA M. CLAVERIA,
Petitioners, QUISUMBING, J.,*
- versus -
MASAITO DEVELOPMENT Promulgated:
CORPORATION and REXLON
REALTY GROUP, INC.,
Respondents. February 29, 2008
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The core issue in this petition for review under Rule 45 is what constitutes a sufficient cause of action for a complaint for easement of
right-of-way. Petitioners assail the August 13, 2004 Resolution[1] of the Court of Appeals (CA) in CA-G.R. SP No. 85558, dismissing
their petition for defective verification and certification of non-forum shopping, and the November 23, 2004 CA Resolution[2] rejecting
their plea for reconsideration. In effect, the dismissal of petitioners complaint in Civil Case No. BCV-2001-60 before the Bacoor, Cavite
Regional Trial Court (RTC), Branch 19 was upheld by the CA.

Petitioner St. Michael School of Cavite, Inc. (St. Michael) is a duly registered non-stock corporation[3] owned by petitioners-
spouses Crisanto S. Claveria and Gloria M. Claveria. It is represented by petitioner Gloria M. Claveria. Respondents Masaito
Development Corporation (Masaito) and Rexlon Realty Group, Inc. (Rexlon) are domestic corporations that own, operate, and manage
Citihomes Molino IV, Bacoor, Cavite (Citihomes). St. Michael is located outside the northern perimeter fence of Citihomes. Its
passageway occupies a portion of the 61-square meter lot described as Lot 4, Block 7, Phase 1 of Citihomes. The gate to the school is
located at the subdivisions northern perimeter fence and is the only entrance and exit for the entire school population.

On July 28, 1998, Rexlon informed petitioners that the value of the Citihomes lots when fully developed was PhP 3,872 per square
meter as appraised by the Home Insurance and Guarantee Corporation.[4] In a letter dated January 29, 2001, Masaito advised
petitioners to purchase Lots 1-9, Block 7, Phase 1, fronting the school at PhP 3,579,000.[5] On April 6, 2001, Masaito sent another offer
to sell Lot 4, Block 7 of the subdivision with the right-of-way through the private roads/drainage facilities of Citihomes at the price of
PhP 2 Million. Petitioners refused both proposals, reasoning that the school did not need the entire area mentioned in the first proposal.
St. Michael also said that the second offer was grossly overpriced.
Petitioners, with four other homeowners, filed a complaint against respondents before the Bacoor, Cavite RTC, Branch 19 entitled St.
Michael School of Cavite, Inc., Spouses Crisanto S. Claveria and Gloria M. Claveria, Pancho R. Navo, Vivencio B. Asuncion, Isaurito S.
Hernandez and Elias Namit v. Masaito Development Corporation and Rexlon Realty Group, Inc. for easement of right-of-way with
damages under Article 649 of the Civil Code and preliminary injunction and/or temporary restraining order (TRO).

The trial court issued a TRO on June 5, 2001[6] for 72 hours which was extended to June 24, 2001 through the June 13,
2001[7] Order enjoining respondents from blocking the passageway and school gate of St. Michael. On July 17, 2001, respondents filed
a motion to dismiss on the ground that petitioners failed to state a cause of action against them.

On July 29, 2002, the RTC issued an order,[8] dismissing for lack of cause of action the complaint as to Pancho R. Navo,
Vivencio Asuncion, Isaurito S. Hernandez, and Elias Namit, as plaintiffs a quo, and denying petitioners application for issuance of a writ
of preliminary injunction.

On October 9, 2002, respondents filed a motion for partial reconsideration of the July 29, 2002 RTC Order, on the grounds
that (1) St. Michael was not a real party in interest; and (2) petitioners-spouses failed to state a cause of action.

On September 25, 2003, the trial court granted respondents partial motion for reconsideration and likewise dismissed the complaint
of St. Michael and spouses Claverias for failure to state a cause of action.[9] Petitioners filed an omnibus motion/motion for
reconsideration on December 18, 2003, reiterating their defenses, which the RTC denied on May 5, 2004 for lack of merit.[10]

Petitioners filed before the CA a petition for certiorari with prayer for issuance of a TRO and/or writ of preliminary injunction under
Rule 65, seeking to annul and set aside the May 5, 2004 RTC Order. The CA dismissed the petition. In its August 13, 2004 Resolution,
the CA held that the petition for certiorari was dismissible for the following infirmities:

1. The verification and certification of non-forum shopping [did] not fully comply with [Section 4, Rule 7] of the Rules
of Court, because it failed to give the assurance that the allegations of the petition are true and correct based
on authentic records.

2) [S]aid verification and certification was signed by petitioner Gloria M. Claveria in behalf of her co-petitioners
without the accompanying special power of attorney or board resolution authorizing her to sign the same x x x;
and

3) Counsel for petitioners failed to indicate his Roll of Attorneys Number x x x.[11]

On September 6, 2004, petitioners filed an Urgent Motion for Reconsideration,[12] which the CA denied.[13] Hence, we have this petition
that raises the following issues:
(a)

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS INTERPRETATION AND APPLICATION OF SECTION
4, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE WHICH, ACCORDING TO ITS INTERPRETATION, REQUIRES
PETITIONERS TO STILL SUBMIT AN AMENDED VERIFICATION STATING THEREIN THAT THE ALLEGATIONS OF THE
PETITION ARE TRUE AND CORRECT NOT ONLY OF THEIR PERSONAL KNOWLEDGE BUT ALSO BASED ON AUTHENTIC
RECORDS DESPITE CLEAR COMPLIANCE BY PETITIONERS OF THE SAID PROCEDURAL REQUIREMENT THROUGH THE
SUBMISSION OF THE THREE (3) DOCUMENTS ATTACHED TO THEIR URGENT MOTION FOR RECONSIDERATION
DATED SEPTEMBER 6, 2004.

(b)

THE HONORABLE COURT OF APPEALS ERRED IN ITS FINDINGS THAT THE COURT A QUO DID NOT COMMIT GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION; THAT THE PETITION IS PATENTLY
WITHOUT MERIT; AND THE QUESTIONS RAISED THEREIN ARE TOO [UNSUBSTANTIAL] TO REQUIRE
CONSIDERATION, THE SAID FINDINGS BEING MERE CONCLUSIONS OF LAW UNSUPPORTED BY ANY STATEMENT OR
FINDINGS OF FACT AND CONTRADICTED BY THE PERTINENT PLEADINGS AND MOTIONS OF THE CASE WHICH, IF
 PROPERLY CONSIDERED, WILL JUSTIFY A DIFFERENT CONCLUSION AND DEMONSTRATE THAT PETITIONERS ARE
NOT ONLY REAL PARTIES IN INTEREST BUT HAVE VALID CAUSES OF ACTION AGAINST RESPONDENTS.[14]

In sum, the twin issues for our consideration are: (1) Did the CA err in dismissing the petition and ruling that Section 4, Rule 7 of the
1997 Rules of Civil Procedure still requires petitioners to submit an amended verification that the allegations in the petition are true
and correct not only from their personal knowledge but also based on authentic records, even if they had already submitted three
other documents attached to their September 6, 2004 motion for reconsideration?; and (2) Did the CA err in finding that the trial court
did not commit grave abuse of discretion when it ruled that the petition has no merit, that the questions raised were unsubstantial,
and that the findings were conclusions of law unsupported by facts and contradicted by the records?
On the first issue, petitioners aver that Gloria M. Claveria is expressly authorized by her co-petitioners to represent them in
filing the petition for certiorari with the CA, evidenced by her Affidavit,[15] a Special Power of Attorney, and Secretarys Certificate. They
claim that there was no need for them to submit an Amended Verification as the three aforementioned documents satisfied the
requirement.

In its November 23, 2004 Resolution, the CA stated:

Considering that petitioners did not cure the first deficiency mentioned in Our August 13, 2004 Resolution
dismissing the petition by submitting an amended verification and stating therein that the allegations in the
petition are true and correct not only of their personal knowledge but also based on authentic records,
the Court is constrained to deny their Motion for Reconsideration of said Resolution (emphasis supplied.)

The CA erred.
Petitioners correctly point out that paragraph 3 of Sec. 4, Rule 7 of the Rules of Court uses the conjunction or not and:

A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein
are true and correct of his personal knowledge or based on authentic records x x x .A pleading required to be verified
which contains a verification based on information and belief, or lacks a proper verification, shall be treated as an
unsigned pleading.

Moreover, petitioners, in their September 6, 2004 Urgent Motion for Reconsideration, attached the following:

(1) Affidavit executed by petitioner Gloria M. Claveria, stating:

1. That I am one of the petitioners in C.A.- G.R. SP [No.] 85558 for Certiorari with Preliminary Injunction
and Temporary Restraining Order pending before the Special Tenth Division of the Court of Appeals;

2. That I hereby certify that I am duly authorized by my husband Crisanto S. Claveria and the St. Michael School of
Cavite, Inc. who are my co-petitioners in the said case, to sign for all petitioners, to file said petition and represent
them in the proceedings;

3. That I further certify that I am one of the Incorporators, a Trustee the incumbent Treasurer and the Directress of
the Saint Michael School of Cavite, Inc.;

4. That I am also the registered owner together with my husband Crisanto S. Claveria, of the two (2) parcels of land
upon which the said school stands and is a direct party in interest in the case;

5. That I am the Founder of the said school, managed, supervised and oversaw its operation from its opening up to
the present and I have received, read and understood all the documents annexed to the said petition;

6. That I also participated in the collation and completion of all the documents attached as Annexes to the Petition
for Certiorari filed before the Honorable Court of Appeals and which were ALL previously submitted to the Regional
Trial Court, Branch 19 of Bacoor, Cavite and verified the truth and correctness of the contents of the Petition from
the records and files in my possession. Thus, I attest to the truth and correctness of the allegations of the said
Petition of my own personal knowledge and based on authentic documents.[16]
(2) Special Power of Attorney[17] executed by petitioner Crisanto S. Claveria, authorizing his spouse, Gloria M. Claveria, to
represent him in the petition for certiorari with the CA, make, sign, execute for and in his behalf all documents necessary to the case;
appear in court; and enter into a compromise agreement or alternative mode of dispute settlement; and

(3) Secretarys Certificate[18] signed by Sanett M. Claveria, Corporate Secretary of St. Michael, attesting that Mrs. Gloria M.
Claveria is authorized to represent St. Michael as approved in a special meeting of the board of directors dated September 1, 2004.

We have held that the requirement regarding verification of a pleading is intended to assure that the pleadings allegations
are accurate, filed in good faith, and not the product of the imagination or a matter of speculation.[19] While courts and litigants alike
are directed to abide strictly by the procedural rules,[20] we have relaxed these rules on the basis of justifiable circumstances and
substantial compliance.[21]

Although petitioners did not file their amended pleading to include the special power of attorney or board resolution authorizing
Gloria M. Claveria to represent her co-petitioners, they, however, attached to their Urgent Motion for Reconsideration the special power
of attorney; authorization signed by Crisanto S. Claveria for Gloria M. Claveria to make, sign, and execute all documents pertaining to
the case; and the Board Resolution authorizing Gloria M. Claveria to represent the corporation. The submission of authorization, special
power of attorney and certification issued by the corporate secretary is considered substantial compliance of the requirements under
Rule 7, Sec. 4 of the Revised Rules of Court. We thus hold that petitioners were able to substantially comply with the requirements
under the Rules of Court.

On the second issue. In its July 29, 2002 Order, the RTC resolved respondents Motion to Dismiss by holding that plaintiffs
Pancho Navo, Vivencio Asuncion, Isaurito Hernandez, and Elias Namit, as parents of some of the students in petitioners school, have
no cause of action to file the complaint for right-of-way. It ruled that the claimant in such an action must be the owner of a dominant
estate and as such, the parents were not real parties-in-interest.

In its September 25, 2003 Order, the RTC resolved respondents Motion for Reconsideration by ruling that St. Michael is not a
registered owner of any property that is the subject matter of the easement case, hence not a real party-in-interest. It thus dismissed
the case because petitioners failed to state a cause of action against respondents.
 Petitioners claim that the lower courts orders are baseless. They argue that concrete evidence is necessary for a reliable
judgment on the merits.

Respondents, on the other hand, contend that the initiatory pleading does not aver the first two basic requisites for the
establishment of a legal easement of right-of-way: (1) that the dominant property is surrounded by estates of others and (2) there is
no adequate outlet to a public highway. The rest of the co-plaintiffs, they point out, did not even allege if they are co-owners or
possessors of any real right over the estate of the petitioners-spouses which is a requisite for the right to demand the establishment
of a legal easement of right-of-way over a servient estate.

We held in Dabuco v. Court of Appeals that what is determinative in a dismissal for failure to state a cause of action is the sufficiency,
not the veracity, of the material allegations.[22] These allegations, hypothetically speaking, must aver ultimate facts that constitute
plaintiffs cause of action which may entitle plaintiff to an advantageous decision as a matter of law. [23]

An examination of petitioners Complaint is necessary to determine if the lower courts orders were in accordance with the law.
Petitioners allegations in support of plaintiffs demand for an easement of right-of-way read:

10. That the students, their parents, school teachers and school staff who reside within Citihomes (nearly 50%
of the school population) including the four (4) plaintiffs namely Pancho R. Navo, Vivencio B. Asuncion, Isaurito S.
Hernandez and Elias Namit who are parents of certain school children of St. Michael School of Cavite have
incontrovertibly the full right of passage as well as the free right to use the roads, lanes and pathways
of Citihomes including those leading to and from the school;

11. That, for the last five (5) years, apart from the major access road shown in the Subdivision Plan, Annex A, the
land area actually used by the school population to and from the school, inclusive of the passageway and the school
gate is only a portion of a SIXTY-ONE (61) SQUARE METERS LOT described as Lot 4, Block 7 of Citihomes owned
and/or operated and managed by defendants;

12. That the school has only one (1) gate which serves as both entry and exit points for the entire school population
which defendants threaten to fence off and to close;

13. That, other than the right of way fronting the school and shown in the Subdivision plan, Annex A, there are no
other developed nor practical entry and exit points at the rear and at the two sides of the school site readily and
immediately accessible for use by the school population as right of way and/or entrance to and exit from the school
especially by those who reside within Citihomes including the four (4) plaintiffs/parents abovementioned which
constitute almost 50% of the total school population;

xxxx

15. That through an appraisal report/letter dated October 16, 1997 and July 28, 1998 respectively, [plaintiffs]
were advised by defendant Rexlon Realty Group, Inc. that the appraisal value of lots at Citihomes when fully
developed is P3,872.00 per square meter x x x;

16. That through a letter dated June 16, 1998, defendant Rexlon Realty Group, Inc. approved the use of the 61
square meters property described as Lot 4, Block 7 of Citihomes as a right of way for plaintiff St. Michael School of
Cavite x x x;

17. That, however, under a letter dated January 29, 2001, [plaintiffs] were advised by defendant Masaito
Development Corporation that instead of the sixty-one (61) square meter property, Lot 4, Block 7, plaintiffs
should instead purchase Lot 1-9, Block 7, phase I, of Citihomes with a total lot area of one thousand and seventy-
four (1,074) square meters at a total contract price of P3,759,000.00 which lots are all fronting the school x x x;

18. That, despite Annexes D and D-1 of the complaint, on April 6, 2001, [plaintiffs] again received a new proposal
from defendant Masaito Development Corporation proposing that plaintiff should pay the sum of P2,000.000.00 for
the puchase of the sixty-one (61) square meters property, Lot 4, Block 7, Phase I, of Citihomes, plus the right to
pass through the private roads/drainage facilities of said school x x x;

19. That plaintiffs do not need the entire 1,074 lot area covered by Lot 1-9, Block 7, Phase I, Citihomes which
exceeds the requirements for the schools right of way; while plaintiffs find unacceptable defendant Masaito
Development Corporations proposal for plaintiffs to pay the sum of P2,000,000.00 for the sixty-one (61) square
meter property, Lot 4, Block 7 of Phase I, Citihomes which amount is clearly unconscionable, excessive,
unreasonable and unjust;

20. That plaintiffs and the school population only require a portion of the sixty-one (61) square meters property Lot
4, Block 7 of Phase I, Citihomes for their permanent right of way and accept the price of P3,872.00 per square
meter as reasonable as quoted in the Home Insurance and Guaranty Corporations appraisal report/letter, x x x;

21. That in support of plaintiffs application for the [above-described] right of way plaintiffs further state:

21-A. That the St. Michael School of Cavite is surrounded by immovable properties belonging to other persons
including Citihomes owned and/or operated and managed by herein defendants such that plaintiffs and the school
population have at present no immediate and adequate outlet to a public highway other than the major Access Road
and the sixty-one (61) square meters lot of Citihomes described in the Subdivision Plan, x x x;

21-B. That plaintiffs are willing and able to pay the proper indemnity to defendants pursuant to the provisions of the
Civil Code;

21-C That the isolation of plaintiffs property is not due to plaintiffs own acts but was caused by the expansion of the
land area owned by Citihomes and the rapid increase in the number of homeowners which now has reached more
than a thousand residents[.][24]

Three elements must be present for a complaint to state a cause of action: (1) the legal right of the plaintiff, (2) the correlative
obligation of the defendant, and (3) the act or omission of the defendant violating said legal right. [25] For a complaint to state a cause
of action in an easement case, more specifically, Art. 649 of the Civil Code has laid down the following requirements: (1) the dominant
estate is surrounded by other immovables and has no adequate outlet to a public highway; (2) there is payment of proper indemnity;
and (3) the isolation is not due to the acts of the proprietor of the dominant estate.
 We rule that the Complaint satisfies these three elements and thus sufficiently alleges a cause of action. The Complaint, first,
asserts that petitioners have a right to an easement of right-of-way that cuts across respondents property; second, it refers to
respondents correlative obligation not to fence off and close the single gate which is used as the only entry and exit points of the school
population; and third, it refers to respondents expansion and excessive terms and conditions, constituting the acts violating petitioners
right. We thus hold that the Complaints material allegations are enough to entitle petitioners to a favorable judgment if these are
assumed to be true.

The four corners of the initiatory pleading do not reveal any averment that the properties in question are bounded by public
roads and there is an adequate access to a public highway. On the contrary, par. 13 of the Complaint alleges that other than the right
of way fronting the school and shown in the Subdivision Plan, Annex A,[26] there are no other developed nor practical entry and exit
points at the rear and at the two (2) sides of the school site readily and immediately accessible for use by the school population x x
x.[27]

Pars. 11 and 21-A of the Complaint as aforequoted confusingly refer both to a major access road and the sixty-one (61)
square meter lot (Lot 4, Block 7 of Citihomes) as an immediate and adequate outlet to the public highway. The paragraphs are not
equivocal about petitioner schools lack of an adequate outlet to a public highway and give the impression that such road is an adequate
outlet to a public highway.

A complete examination of the Complaint, however, unmistakably shows petitioners sufficient cause of action. To be more
precise, Annexes A, A-1, and A-2 plainly demonstrate that the requisites for a legal easement of right-of-way under Art. 649 of the
Code have been met.

Annex A of the Complaint which is the location plan of Citihomes clearly shows that the schools only access to the public
highway is Lot 4, Block 7 that abuts the major access road of Citihomes which in turn is connected to the public highway. The
photographs (Annexes A-1[28] and Annex A-2[29] of the Complaint) showing the school building and adjoining areas easily reveal that it
is bounded by other immovable properties, which explains why it only has one entry and exit point. Without the right-of-way on Lot 4,
Block 7 of Citihomes, the school has no adequate access to a public highway. Annex A, as well as Annexes A-1 and A-2 of the Complaint,
supports petitioners averments as these show that the school has a lone entry and exit point which is the right-of-way in front of the
school. The reference to a major access road, therefore, must be understood in the context of all the allegations of fact contained in
the Complaint. Petitioners cause of action is not solely found in the paragraphs referred to. The annexes cited likewise form part of the
material allegations of the Complaint. Pars. 11 and 21-A of the Complaint and Annexes A, A-1, and A-2 read together, the
averments of the Complaint amply show a sufficient cause of action as prescribed by Art. 649 of the Code.
However, in the September 25, 2003 Order dismissing the case, the RTC made the following findings:

Finding the Motion for Partial Reconsideration filed by the defendants to be well taken, it appearing that
indeed the properties (the alleged dominant estates) of plaintiffs Sps. Crisanto S. Claveria and Gloria M. Claveria are
bounded by public roads, hence, they have adequate outlet to a public highway. Likewise, insofar as plaintiff St.
Michael School of Cavite, Inc., it is not a real party in interest considering that it is not the registered owner of any
property subject matter of the instant case.[30]

It is settled that a motion to dismiss hypothetically admits the truth of the facts alleged in the complaint. [31] Such being the
case, the RTC erred when it apparently considered matters not embodied in the Complaint. The Complaint, contrary to the lower courts
Order, does not aver that the properties of petitioners-spouses are bounded by public roads. The location plan and photographs of the
subject lot and the school building appended to the Complaint, without doubt, demonstrate that the lot and school building are enclosed,
not by public roads, but by other lots in the subdivision.

The Court has previously held that it is not for the trial court to inquire into the truth or falsity of a complaints allegations
before a hearing on its merits.[32] In ordering the dismissal, it is apparent that the trial court relied on matters not encompassed by
the Complaint. This is proscribed by the rules and jurisprudence. The dismissal of the Complaint has thus no leg to stand on.

In the same matter, the trial court erred when it ruled that the school, not being the registered owner of the subject lot, is
not a real party-in-interest.

It will suffice under Art. 649 of the Civil Code that any person who by virtue of a real right may cultivate or use any immovable
which is surrounded by other immovables pertaining to other persons and without adequate outlet to a public highway, is entitled to
demand a right of way. Clearly, the school is a real party-in-interest since it has established a right to use the passageway for the
benefit of its students. More importantly, the records reveal that petitioners-spouses are the owners of the lot where the school is
located and they are the incorporators, trustees, and officers of St. Michael.[33] They are also authorized to represent the corporation
in the complaint and subsequent actions.Thus, petitioners are real parties-in-interest and we rule that the dismissal of the complaint
is patently erroneous and bereft of any legal basis. Petitioners must be allowed to pursue their case before the trial court.

WHEREFORE, the petition is GRANTED. The assailed August 13, 2004 and November 23, 2004 CA Resolutions in CA-G.R. SP No.
85558 and the July 29, 2002 and September 25, 2003 Orders of the Bacoor, Cavite RTC, Branch 19 are REVERSED and SET
ASIDE. The RTC is directed to reinstate petitioners complaint and conduct further proceedings in Civil Case No. BCV-2001-60.

SO ORDERED.
G.R. No. 184282 April 11, 2012

FRANCISCO SORIANO AND DALISAY SORIANO, Petitioners,

vs.
REPUBLIC OF THE PHILIPPINES, (Represented by the Office of the Solicitor General), Respondent.

DECISION

VILLARAMA, JR., J.:

Before us is a Rule 45 petition assailing the October 26, 2007 Decision1 and July 29, 2008 Resolution2 of the Court of Appeals (CA) in
CA-G.R. SP No. 80551. The appellate court had set aside the Order3 of the Tagum City Regional Trial Court (RTC), Branch 2, acting as
Special Agrarian Court (SAC), which denied the motion to dismiss of the Department of Agrarian Reform (DAR).

The facts, as culled from the records, follow:

The Spouses Francisco and Dalisay Soriano were the registered owners of two parcels of agricultural land located in Hijo, Maco,
Compostela Valley Province. The first parcel had an area of 5.2723 hectares and was covered by TCT No. (T-8935) T-3120, while the
second parcel had an area of 4.0887 hectares and was covered by TCT No. (T-2906) T-749.4

In October 1999, the two parcels of land were compulsorily acquired by the government pursuant to Republic Act (R.A.) No. 6657 or
the Comprehensive Agrarian Reform Law. The Land Bank of the Philippines (LBP) made a preliminary determination of the value of the
subject lands in the amount of ₱351,169.34 for the first parcel and ₱70,729.28 for the second parcel. Petitioners, however, disagreed
with the valuation and brought the matter before the Department of Agrarian Reform Adjudication Board (DARAB) for a summary
administrative proceeding to fix the just compensation.5

On September 30, 2000, the DARAB rendered its decisions6 in DARAB Case No. LV-XI-0071-DN-2000 (for the first parcel) and DARAB
Case No. LV-XI-0073-DN-2000 (for the second parcel), affirming the LBP’s preliminary determination. As evidenced by the return
cards,7 notices of the two decisions were received by counsel for petitioners on March 8, 2001 and February 22, 2001, respectively.
However, it was only on April 6, 2001 that petitioners filed a petition8 before the RTC of Tagum City, acting as SAC, for the fixing of
just compensation. Thus, the DAR, through the Provincial Agrarian Reform Office (PARO) of Tagum City, filed a motion9 to dismiss the
petition. The DAR argued that the petition was filed beyond the 15-day reglementary period provided in Section 11, Rule XIII of
the 1994 DARAB Rules of Procedure.10 Section 11 reads:

Section 11. Land Valuation and Preliminary Determination and Payment of Just Compensation. – The decision of the Adjudicator on
land valuation and preliminary determination and payment of just compensation shall not be appealable to the Board but shall be
brought directly to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice
thereof. Any party shall be entitled to only one motion for reconsideration.

On June 27, 2001, the RTC denied the motion to dismiss Agrarian Case No. 64-2001 and declared that the "DARAB Rules of Procedure
must give way to the laws on prescription of actions as mandated by the Civil Code."11 The DAR sought reconsideration of the order,
but its motion was denied on September 24, 2001.12 Thus, the DAR lodged a petition for certiorari with the CA, alleging grave abuse
of discretion on the part of the trial court.

On October 26, 2007, the CA granted the petition and dismissed Agrarian Case No. 64-2001. The CA held:

Public respondent erred in denying petitioner’s motion to dismiss. An action to fix just compensation for lands placed under R.A. No.
6657 is outside the purview of the ordinary rules on prescription as contained in Article 1146 of the Civil Code. The rule implementing
R.A. No. 6657 is clear and unequivocal that after a preliminary determination by the board of the just compensation, a petition should
be filed before the SAC within 15 days from receipt of the board’s decision. Considering that the petition was filed beyond the 15-day
period provided by the rules, public respondent committed grave abuse of discretion amounting to lack of jurisdiction in taking
cognizance of spouses Soriano’s petition. The court a quo did not acquire jurisdiction over the petition which was filed out of time. 13

Later, the CA likewise denied petitioners’ motion for reconsideration. Hence, petitioners filed the present petition alleging that the CA
committed serious errors of law, as follows:
I.

THE 1994 DARAB PROCEDURAL RULES PROVIDING FOR A 15-DAY REGLEMENTARY PERIOD TO BRING THE DECISION OF THE
ADJUDICATOR DIRECTLY TO THE SPECIAL AGRARIAN COURT (SAC) ARE NOT HARD AND FAST, AND ADMIT OF CERTAIN
LEGALLY-RECOGNIZED EXCEPTIONS. AMONG OTHERS, STRONG COMPELLING REASONS SUCH AS SERVING THE ENDS OF
JUSTICE AND PREVENTING A GRAVE MISCARRIAGE THEREOF, APART FROM STRONG CONSIDERATIONS OF SUBSTANTIAL
JUSTICE, WARRANT THE SUSPENSION OF THE RULES IN THE EXERCISE BY THE COURTS OF EQUITY JURISDICTION.

II.

THE PROVISION IN THE 1994 DARAB RULES [OF PROCEDURE] PROVIDING FOR A MODE OF APPEAL AND A STRINGENT
REGLEMENTARY PERIOD OF 15 DAYS TO BRING THE DECISION OF THE DARAB IN A PRELIMINARY DETERMINATION OF LAND
VALUATION DIRECTLY TO THE SPECIAL AGRARIAN COURT (SAC) HAS NO STATUTORY BASIS. THUS, IT IS VOID FOR BEING
ULTRA VIRES.14

Essentially, the issues for our resolution are whether the CA erred in setting aside the June 27, 2001 Order of the SAC which denied
the DAR’s motion to dismiss, and in finding that the trial court committed grave abuse of discretion in not dismissing Agrarian Case
No. 64-2001 on the ground that it was filed late.

Petitioners admit that their petition was filed late but insist that there exist special and compelling reasons to relax the otherwise
stringent application of the 15-day reglementary period to file the petition for the fixing of just compensation. They allege that the
failure to file the petition in time was due to the fault or negligence of their former counsel, and that the unconscionably low valuation
of the LBP, if not rectified, would unjustly result in the confiscatory deprivation of their lands through no fault of their own.15 They
likewise contend that there is no statutory basis for the promulgation of the DARAB procedure providing for a mode of appeal, let alone
for a reglementary period to appeal.
The petition lacks merit.

The appellate court correctly granted the writ of certiorari and nullified the June 27, 2001 Order of the RTC acting as SAC, as the RTC
gravely abused its discretion when it denied the motion to dismiss filed by the DAR. Rule XIII, Section 11 of the 1994 DARAB Rules of
Procedure, which was then applicable, explicitly provides that

Section 11. Land Valuation and Preliminary Determination and Payment of Just Compensation. – The decision of the Adjudicator on
land valuation and preliminary determination and payment of just compensation shall not be appealable to the Board but shall be
brought directly to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice
thereof. Any party shall be entitled to only one motion for reconsideration. [Emphasis supplied.]

In Phil. Veterans Bank v. Court of Appeals,16 we explained that the consequence of the said rule is that the adjudicator’s decision on
land valuation attains finality after the lapse of the 15-day period. Considering that Agrarian Case No. 64-2001, filed with the SAC for
the fixing of just compensation, was filed 29 days after petitioners’ receipt of the DARAB’s decision in DARAB Case No. LV-XI-0071-
DN-2000 for the lot covered by TCT No. (T-8935) T-3120 and 43 days after petitioners’ receipt of the DARAB’s decision in DARAB Case
No. LV-XI-0073-DN-2000, for the lot covered by TCT No. (T-2906) T-749, the DARAB’s decisions had already attained finality.

Petitioners contend that there is no statutory basis for the promulgation of the DARAB procedure providing for a mode of appeal and
a reglementary period to appeal. On the matter of whether the DARAB Rules of Procedure laid out an appeal process and the validity
of the 15-day reglementary period has already been laid to rest, the Court, in Republic v. Court of Appeals17 and subsequent cases18 has
clarified that the determination of the amount of just compensation by the DARAB is merely a preliminary administrative determination
which is subject to challenge before the SACs which have original and exclusive jurisdiction over all petitions for the determination of
just compensation under Section 57, R.A. No. 6657. In Republic v. Court of Appeals, we ruled

[U]nder the law, the Land Bank of the Philippines is charged with the initial responsibility of determining the value of lands placed
under land reform and the compensation to be paid for their taking. Through notice sent to the landowner pursuant to §16(a) of R.A.
No. 6657, the DAR makes an offer. In case the landowner rejects the offer, a summary administrative proceeding is held and afterward
the provincial (PARAD), the regional (RARAD) or the central (DARAB) adjudicator as the case may be, depending on the value of the
land, fixes the price to be paid for the land. If the landowner does not agree to the price fixed, he may bring the matter to the RTC
acting as Special Agrarian Court. This in essence is the procedure for the determination of compensation cases under R.A. No. 6657.
In accordance with it, the private respondent’s case was properly brought by it in the RTC, and it was error for the latter court to have
dismissed the case. In the terminology of §57, the RTC, sitting as a Special Agrarian Court, has "original and exclusive jurisdiction over
all petitions for the determination of just compensation to landowners." It would subvert this "original and exclusive" jurisdiction of the
RTC for the DAR to vest original jurisdiction in compensation cases in administrative officials and make the RTC an appellate court for
the review of administrative decisions.

Consequently, although the new rules speak of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian
Courts, it is clear from §57 that the original and exclusive jurisdiction to determine such cases is in the RTCs. Any effort
to transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into appellate
jurisdiction would be contrary to §57 and therefore would be void.What adjudicators are empowered to do is only to determine
in a preliminary manner the reasonable compensation to be paid to landowners, leaving to the courts the ultimate power to decide this
question.19 (Emphasis supplied.)

The above ruling was reiterated in Philippine Veterans Bank v. Court of Appeals. In that case, petitioner landowner who was dissatisfied
with the valuation made by LBP and DARAB, filed a petition for determination of just compensation in the RTC (SAC). However, the
RTC dismissed the petition on the ground that it was filed beyond the 15-day reglementary period for filing appeals from the orders of
the DARAB. On appeal, the CA upheld the order of dismissal. When the case was elevated to this Court, we likewise affirmed the CA
and declared that

To implement the provisions of R.A. No. 6657, particularly §50 thereof, Rule XIII, §11 of the DARAB Rules of Procedure provides:

Land Valuation and Preliminary Determination and Payment of Just Compensation.—The decision of the Adjudicator on land valuation
and preliminary determination and payment of just compensation shall not be appealable to the Board but shall be brought directly to
the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party
shall be entitled to only one motion for reconsideration.

As we held in Republic v. Court of Appeals, this rule is an acknowledgment by the DARAB that the power to decide just compensation
cases for the taking of lands under R.A. No. 6657 is vested in the courts. It is error to think that, because of Rule XIII, §11, the original
and exclusive jurisdiction given to the courts to decide petitions for determination of just compensation has thereby been transformed
into an appellate jurisdiction. It only means that, in accordance with settled principles of administrative law, primary jurisdiction is
vested in the DAR as an administrative agency to determine in a preliminary manner the reasonable compensation to be paid for the
lands taken under the Comprehensive Agrarian Reform Program, but such determination is subject to challenge in the courts.

The jurisdiction of the Regional Trial Courts is not any less "original and exclusive" because the question is first passed
upon by the DAR, as the judicial proceedings are not a continuation of the administrative determination. For that matter,
the law may provide that the decision of the DAR is final and unappealable. Nevertheless, resort to the courts cannot be foreclosed on
the theory that courts are the guarantors of the legality of administrative action.1âwphi1

Accordingly, as the petition in the Regional Trial Court was filed beyond the 15-day period provided in Rule XIII, §11 of the Rules of
Procedure of the DARAB, the trial court correctly dismissed the case and the Court of Appeals correctly affirmed the order of
dismissal.20 (Emphasis supplied.)

The Court notes that although the petition for determination of just compensation in Republic v. Court of Appeals was filed beyond the
15-day period, Republic v. Court of Appeals does not serve as authority for disregarding the 15-day period to bring an action for judicial
determination of just compensation. Republic v. Court of Appeals, it should be noted, was decided at a time when Rule XIII, Section
11 was not yet present in the DARAB Rules. Further, said case did not discuss whether the petition filed therein for the fixing of just
compensation was filed out of time or not. The Court merely decided the issue of whether cases involving just compensation should
first be appealed to the DARAB before the landowner can resort to the SAC under Section 57 of R.A. No. 6657. In any event, any
speculation as to the validity of Rule XIII, Section 11 was foreclosed by our ruling in Philippine Veterans Bank where we affirmed the
order of dismissal of a petition for determination of just compensation for having been filed beyond the 15-day period under said
Section 11. In said case, we explained that Section 11 is not incompatible with the original and exclusive jurisdiction of the SAC. In
Land Bank of the Philippines v. Martinez,21 we reaffirmed this ruling and stated for the guidance of the bench and bar that "while a
petition for the fixing of just compensation with the SAC is not an appeal from the agrarian reform adjudicator’s decision but an original
action, the same has to be filed within the 15-day period stated in the DARAB Rules; otherwise, the adjudicator’s decision will attain
finality."

Notwithstanding the foregoing rulings, we noted in Land Bank of the Philippines v. Umandap22 that "[s]ince the SAC statutorily
exercises original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, it cannot be
said that the decision of the adjudicator, if not appealed to the SAC, would be deemed final and executory, under all circumstances."
In certain cases, the Court has adopted a policy of liberally allowing petitions for determination of just compensation even though the
procedure under DARAB rules have not been strictly followed, whenever circumstances so warrant.23 Thus, we allowed a petition refiled
by LBP within 5 days from the denial of the motion for reconsideration of the order dismissing the original petition, during which time
said dismissal could still be appealed to the CA:

x x x The SAC even expressly recognized that the rules are silent as regards the period within which a complaint dismissed without
prejudice may be refiled. The statutorily mandated original and exclusive jurisdiction of the SAC, as well as the above
circumstances showing that LBP did not appear to have been sleeping on its rights in the allegedly belated refiling of the
petition, lead us to assume a liberal construction of the pertinent rules. To be sure, LBP’s intent to question the RARAD’s
valuation of the land became evident with the filing of the first petition for determination of just compensation within the period
prescribed by the DARAB Rules. Although the first petition was dismissed without prejudice on a technicality, LBP’s refiling of essentially
the same petition with a proper non-forum shopping certification while the earlier dismissal order had not attained finality should have
been accepted by the trial court.

In view of the foregoing, we rule that the RTC acted without jurisdiction in hastily dismissing said refiled Petition. Accordingly, the
Petition for Certiorari before the Court of Appeals assailing the dismissal should be granted.24(Emphasis supplied.)

In the case at bar, petitioners argue that there exists compelling reason to relax the application of the rules because the offered
compensation package by the LBP for the expropriated lands is unconscionably low.

We find no merit in petitioners’ submission considering that in the valuation of petitioners’ lands in the two cases, the PARAD applied
the formula laid down in DAR AO No. 06, series of 1992 as amended by DAR AO No. 11, series of 1994 and further amended by DAR
AO No. 05, series of 1998. It likewise found that petitioners’ computed value of their property was unsubstantiated and hence cannot
prevail over LBP’s valuation which was determined pursuant to the aforesaid guidelines then in force.

Petitioners have not shown any exceptional circumstance warranting a relaxation of the prescribed period for the filing of a petition for
judicial determination of just compensation. Their petition before the SAC assailing the separate valuations by the PARAD was filed 29
days (from receipt of the first decision) and 43 days (from receipt of the second decision) late, and without any justifiable reason
given for the delay. Consequently, no grave abuse of discretion was committed by the CA in granting DAR’s petition for certiorari and
dismissing Agrarian Case No. 64-2001.

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated October 26, 2007, and Resolution dated July 29, 2008,
of the Court of Appeals in CA-G.R. SP No. 80551 are AFFIRMED and UPHELD.

Costs against petitioners.

SO ORDERED.
[G.R. No. 112331. May 29, 1996]
ANASTACIA QUIMEN, petitioner, vs. COURT OF APPEALS and YOLANDA Q. OLIVEROS, respondents.

DECISION

BELLOSILLO,J.:

IN EASEMENT OF RIGHT OF WAY that easement where the way is shortest and will cause least prejudice shall be chosen. However,
if the two circumstances do not concur in a single tenement, the way where damage will be least shall be used even if not the shortest
route.[1] This is so because least prejudice prevails over shortest distance. This means that the court is not bound to establish what is
the shortest distance; a longer way may be adopted to avoid injury to the servient estate, such as when there are constructions or
walls which can be avoided by a round about way, or to secure the interest of the dominant owner, such as when the shortest
distance would place the way on a dangerous decline.

Thus we conclude from the succeeding facts: Petitioner Anastacia Quimen together with her brothers Sotero, Sulpicio, Antonio
and sister Rufina inherited a piece of property situated in Pandi, Bulacan. They agreed to subdivide the property equally among
themselves, as they did, with the shares of Anastacia, Sotero, Sulpicio and Rufina abutting the municipal road. The share of Anastacia,
located at the extreme left, was designated as Lot No. 1448-B- 1. It is bounded on the right by the property of Sotero designated as
Lot. No. 1448-B-2. Adjoining Soteros property on the right are Lots Nos. 1448-B-3 and 1448-B-4 originally owned by Rufina and
Sulpicio, respectively, but which were later acquired by a certain Catalina Santos. Located directly behind the lots of Anastacia and
Sotero is the share of their brother Antonio designated as Lot No. 1448-B-C which the latter divided into two (2) equal parts, now Lots
Nos. 1448-B-6-A and 1448-B-6-B, each with an area of 92 square meters. Lot No. 1448-B-6-A is located behind Anastacias Lot No.
1448-B-1, while Lot No. 1448-B-6-B is behind the property of Sotero, father of respondent Yolanda.

In February 1982 Yolanda purchased Lot No. 1448-B-6-A from her uncle Antonio through her aunt Anastacia who was then acting
as his administratrix. According to Yolanda, when petitioner offered her the property for sale she was hesitant to buy as it had no
access to a public road. But Anastacia prevailed upon her to buy the lot with the assurance that she would give her a right of way on
her adjoining property for P200.00 per square meter.

Thereafter, Yolanda constructed a house on the lot she bought using as her passageway to the public highway a portion of
Anastacia s property. But when Yolanda finally offered to pay for the use of the pathway Anastacia refused to accept the payment. In
fact she was thereafter barred by Anastacia from passing through her property.[2]

In February 1986 Yolanda purchased the other lot of Antonio Quimen, Lot No. 1448-B-6-B, located directly behind the property
of her parents who provided her a pathway gratis et amore between their house, extending about nineteen (19) meters from the lot
of Yolanda behind the sari-sari store of Sotero, and Anastacias perimeter fence. The store is made of strong materials and occupies
the entire frontage of the lot measuring four (4) meters wide and nine meters (9) long. Although the pathway leads to the municipal
road it is not adequate for ingress and egress. The municipal road cannot be reached with facility because the store itself obstructs the
path so that one has to pass through the back entrance and the facade of the store to reach the road.

On 29 December 1987 Yolanda filed an action with the proper court praying for a right of way through Anastacia s property. An
ocular inspection upon instruction of the presiding judge was conducted by the branch clerk of court. The report was that the proposed
right of way was at the extreme right of Anastacias property facing the public highway, starting from the back of Soteros sari-sari
store and extending inward by one (1) meter to her property and turning left for about five (5) meters to avoid the store of Sotero in
order to reach the municipal road[3]and the way was unobstructed except for an avocado tree standing in the middle. [4]

But on 5 September 1991 the trial court dismissed the complaint for lack of cause of action, explaining that the right of way
through Soteros property was a straight path and to allow a detour by cutting through Anastacias property would no longer make the
path straight. Hence the trial court concluded that it was more practical to extend the existing pathway to the public road by removing
that portion of the store blocking the path as that was the shortest route to the public road and the least prejudicial to the parties
concerned than passing through Anastacias property.[5]

On appeal by respondent Yolanda, the Court of Appeals reversed the lower court and held that she was entitled to a right of way
on petitioners property and that the way proposed by Yolanda would cause the least damage and detriment to the servient estate.[6] The
appellate court however did not award damages to private respondent as petitioner did not act in bad faith in resisting the claim.

Petitioner now comes to us imputing ERROR to respondent Court of Appeals: (a) in disregarding the agreement of the parties;
(b) in considering petitioners property as a servient estate despite the fact that it does not abut or adjoin the property of private
respondent; and, (c) in holding that the one-meter by five-meter passage way proposed by private respondent is the least prejudicial
and the shortest distance to the public road.

Incidentally, petitioner denies having promised private respondent a right of way. She claims that her agreement with private
respondent was to provide the latter with a right of way on the other lot of Antonio Quimen under her administration when it was not
yet sold to private respondent. Petitioner insists that passing through the property of Yolandas parents is more accessible to the public
road than to make a detour to her property and cut down the avocado tree standing thereon.

Petitioner further argues that when Yolanda purchased Lot No. 1448-B-6-B in 1986 the easement of right of way she provided
her (petitioner) was ipso jure extinguished as a result of the merger of ownership of the dominant and the servient estates in one
person so that there was no longer any compelling reason to provide private respondent with a right of way as there are other
surrounding lots suitable for the purpose. Petitioner strongly maintains that the proposed right of way is not the shortest access to the
public road because of the detour and that, moreover, she is likely to suffer the most damage as she derives a net income of P600.00
per year from the sale of the fruits of her avocado tree, and considering that an avocado has an average life span of seventy (70)
years, she expects a substantial earning from it.[7]

But we find no cogent reason to disturb the ruling of respondent appellate court granting a right of way to private respondent
through petitioners property. In fact, as between petitioner Anastacia and respondent Yolanda their agreement has already been
rendered moot insofar as it concerns the determination of the principal issue herein presented. The voluntary easement in favor of
private respondent, which petitioner now denies but which the court is inclined to believe, has in fact become a legal easement or an
easement by necessity constituted by law.[8]

As defined, an easement is a real right on anothers property, corporeal and immovable, whereby the owner of the latter must
refrain from doing or allowing somebody else to do or something to be done on his property, for the benefit of another person or
tenement.[9] It is jus in re aliena, inseparable, indivisible and perpetual, unless extinguished by causes provided by law. A right of way
in particular is a privilege constituted by covenant or granted by law [10] to a person or class of persons to pass over anothers property
when his tenement is surrounded by realties belonging to others without an adequate outlet to the public highway. The owner of the
dominant estate can demand a right of way through the servient estate provided he indemnifies the owner thereof for the beneficial
use of his property.[11]

The conditions sine qua non for a valid grant of an easement of right of way are: (a) the dominant estate is surrounded by other
immovables without an adequate outlet to a public highway; (b) the dominant estate is willing to pay the proper indemnity; (c) the
isolation was not due to the acts of the dominant estate; and, (d) the right of way being claimed is at a point least prejudicial to the
servient estate.[12]

A cursory examination of the complaint of respondent Yolanda for a right of way [13] readily shows that

[E]ven before the purchase of the said parcels of land the plaintiff was reluctant to purchase the same for they are enclosed with
permanent improvements like a concrete fence and store and have (sic) no egress leading to the road but because of the assurance
of the defendant that plaintiff will be provided one (1) meter wide and five (5) meters long right of way in the sum of P200.00 per
square meter to be taken from Anastacias lot at the side of a concrete store until plaintiff reach(es) her fathers land, plaintiff was
induced to buy the aforesaid parcels of land x x x. That the aforesaid right of way is the shortest, most convenient and the least
onerous leading to the road and being used by the plaintiffs predecessors-in-interest from the very inception x x x.

The evidence clearly shows that the property of private respondent is hemmed in by the estates of other persons including that
of petitioner; that she offered to pay P200.00 per square meter for her right of way as agreed between her and petitioner; that she
did not cause the isolation of her property; that the right of way is the least prejudicial to the servient estate. [14]These facts are
confirmed in the ocular inspection report of the clerk of court, more so that the trial court itself declared that [t]he said properties of
Antonio Quimen which were purchased by plaintiff Yolanda Quimen Oliveros were totally isolated from the public highway and there
appears an imperative need for an easement of right of way to the public highway.[15]

Petitioner finally insists that respondent court erroneously concluded that the right of way proposed by private respondent is the
least onerous to the parties. We cannot agree. Article 650 of the New Civil Code explicitly states that the easement of right of way
shall be established at the point least prejudicial to the servient estate and, insofar as consistent with this rule, where the distance
from the dominant estate to a public highway may be the shortest. The criterion of least prejudice to the servient estate must prevail
over the criterion of shortest distance although this is a matter ofjudicial appreciation. While shortest distance may ordinarily
imply least prejudice, it is not always so as when there are permanent structures obstructing the shortest distance; while on the other
hand, the longest distance may be free of obstructions and the easiest or most convenient to pass through. In other words, where the
easement may be established on any of several tenements surrounding the dominant estate, the one where the way is shortest and
will cause the least damage should be chosen. However, as elsewhere stated, if these two (2) circumstances do not concur in a single
tenement, the way which will cause the least damage should be used, even if it will not be the shortest.[16] This is the test.

In the trial court, petitioner openly admitted -

Q. You testified during your direct examination about this plan, kindly go over this and please point to us in what portion of this plan
is the house or store of the father of the (plaintiff)?

A. This one, sir (witness pointed a certain portion located near the proposed right of way).

xxx xxx xxx

Q. Now, you will agree with me x x x that this portion is the front portion of the lot owned by the father of the plaintiff and
which was (sic) occupied by a store made up of strong materials?

A. It is not true, sir.

Q. What materials does (sic) this store of the father of the plaintiff made of?

A. Hollow blocks and the side is made of wood, sir.

xxx xxx xxx

Q. Just before your brother disposed that 1/2 portion of the lot in question, what right of way does (sic) he use in reaching
the public road, kindly point to this sketch that he is (sic) using in reaching the public road?

A. In my property, sir.

Q. Now you will agree with me x x x the main reason why your brother is (sic) using this property is because there was a
store located near this portion?

A. Yes, and according to the father of Yolanda there is no other way than this, sir.[17]

The trial court found that Yolandas property was situated at the back of her fathers property and held that there existed an
available space of about nineteen (19) meters long which could conveniently serve as a right of way between the boundary line and
the house of Yolanda s father; that the vacant space ended at the left back of Soteros store which was made of strong materials; that
this explained why Yolanda requested a detour to the lot of Anastacia and cut an opening of one (1) meter wide and five (5) meters
long to serve as her right of way to the public highway. But notwithstanding its factual observations, the trial court concluded, although
erroneously, that Yolanda was not entitled to a right of way on petitioners property since a detour through it would not make the line
straight and would not be the route shortest to the public highway.

In applying Art. 650 of the New Civil Code, respondent Court of Appeals declared that the proposed right of way of Yolanda, which
is one (1) meter wide and five (5) meters long at the extreme right of petitioners property, will cause the least prejudice and/or
damage as compared to the suggested passage through the property of Yolanda s father which would mean destroying the sari-sari
store made of strong materials. Absent any showing that these findings and conclusion are devoid of factual support in the records, or
are so glaringly erroneous, this Court accepts and adopts them. As between a right of way that would demolish a store of strong
materials to provide egress to a public highway, and another right of way which although longer will only require an avocado tree to
be cut down, the second alternative should be preferred. After all, it is not the main function of this Court to analyze or weigh the
evidence presented all over again where the petition would necessarily invite calibration of the whole evidence considering primarily
the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to each other, and the
probabilities of the situation.[18] In sum, this Court finds that the decision of respondent appellate court is thoroughly backed up by law
and the evidence.

WHEREFORE, no reversible error having been committed by respondent Court of Appeals, the petition is DENIED and the decision
subject of review is AFFIRMED. Costs against petitioner.

SO ORDERED.
[G.R. No. 148339. February 23, 2005]

LUCENA GRAND CENTRAL TERMINAL, INC., petitioner, vs. JAC LINER, INC., respondent.

DECISION

CARPIO MORALES, J.:

Respondent, JAC Liner, Inc., a common carrier operating buses which ply various routes to and from Lucena City, assailed, via a
petition for prohibition and injunction[1] against the City of Lucena, its Mayor, and the Sangguniang Panlungsod of Lucena before the
Regional Trial Court (RTC) of Lucena City, City Ordinance Nos. 1631 and 1778 as unconstitutional on the ground that, inter alia, the
same constituted an invalid exercise of police power, an undue taking of private property, and a violation of the constitutional prohibition
against monopolies. The salient provisions of the ordinances are:

Ordinance No. 1631[2]

AN ORDINANCE GRANTING THE LUCENA GRAND CENTRAL TERMINAL, INC., A FRANCHISE TO CONSTRUCT, FINANCE, ESTABLISH,
OPERATE AND MAINTAIN A COMMON BUS-JEEPNEY TERMINAL FACILITY IN THE CITY OF LUCENA
xxx
SECTION 1. There is hereby granted to the Lucena Grand Central Terminal, Inc., its successors or assigns, hereinafter referred to as
the grantee, a franchise to construct, finance, establish, operate, and maintain a common bus-jeepney terminal facility in the City of
Lucena.
SECTION 2. This franchise shall continue for a period of twenty-five years, counted from the approval of this Ordinance, and renewable
at the option of the grantee for another period of twenty-five (25) years upon such expiration.
xxx
SECTION 4. Responsibilities and Obligations of the City Government of Lucena. During the existence of the franchise, the City
Government of Lucena shall have the following responsibilities and obligations:
xxx
(c) It shall not grant any third party any privilege and/or concession to operate a bus, mini-bus and/or jeepney terminal.
xxx
Ordinance No. 1778[3]
AN ORDINANCE REGULATING THE ENTRANCE TO THE CITY OF LUCENA OF ALL BUSES, MINI-BUSES AND OUT-OF-TOWN PASSENGER
JEEPNEYS AND FOR THIS PURPOSE, AMENDING ORDINACE NO. 1420, SERIES OF 1993, AND ORDINANCE NO. 1557, SERIES OF 1995

xxx

SECTION 1. The entrance to the City of Lucena of all buses, mini-buses and out-of-town passenger jeepneys is hereby regulated as
follows:

(a) All buses, mini-buses and out-of-town passenger jeepneys shall be prohibited from entering the city and are hereby directed
to proceed to the common terminal, for picking-up and/or dropping of their passengers.

(b) All temporary terminals in the City of Lucena are hereby declared inoperable starting from the effectivity of this ordinance.

xxx

SECTION 3. a) Section 1 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
Buses, mini-buses, and jeepney type mini-buses from other municipalities and/or local government units going to Lucena City are
directed to proceed to the Common Terminal located at Diversion Road, Brgy. Ilayang Dupay, to unload and load passengers.
xxx
c) Section 3 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities and/or local government units shall utilize
the facilities of the Lucena Grand Central Terminal at Diversion Road, Brgy. Ilayang Dupay, this City, and no other terminals shall
be situated inside or within the City of Lucena;
d) Section 4 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:
Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities and/or local government units shall avail
of the facilities of the Lucena Grand Central Terminal which is hereby designated as the officially sanctioned common terminal for the
City of Lucena;
e) Section 5 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:

The Lucena Grand Central Terminal is the permanent common terminal as this is the entity which was given the exclusi
ve franchise by the Sangguniang Panglungsod under Ordinance No. 1631;(Emphasis and underscoring supplied)

These ordinances, by granting an exclusive franchise for twenty five years, renewable for another twenty five years, to one entity
for the construction and operation of one common bus and jeepney terminal facility in Lucena City, to be located outside the city
proper, were professedly aimed towards alleviating the traffic congestion alleged to have been caused by the existence of various bus
and jeepney terminals within the city, as the Explanatory Note-Whereas Clause adopting Ordinance No. 1778 states:

WHEREAS, in line with the worsening traffic condition of the City of Lucena, and with the purpose of easing and regulating the flow of
the same, it is imperative that the Buses, Mini-Buses and out-of-town jeepneys be prohibited from maintaining terminals within the
City, but instead directing to proceed to the Lucena Grand Central Terminal for purposes of picking-up and/or dropping off their
passengers;[4]

Respondent, who had maintained a terminal within the city, was one of those affected by the ordinances.
 Petitioner, Lucena Grand Central Terminal, Inc., claiming legal interest as the grantee of the exclusive franchise for the operation
of the common terminal,[5] was allowed to intervene in the petition before the trial court.

In the hearing conducted on November 25, 1998, all the parties agreed to dispense with the presentation of evidence and to
submit the case for resolution solely on the basis of the pleadings filed.[6]

By Order of March 31, 1999,[7] Branch 54 of the Lucena RTC rendered judgment, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered, as follows:

1. Declaring City Ordinance No. 1631 as valid, having been issued in the exercise of the police power of the City Government of
Lucena insofar as the grant of franchise to the Lucena Grand Central Terminal, Inc., to construct, finance, establish, operate and
maintain common bus-jeepney terminal facility in the City of Lucena;

2. But however, declaring the provision of Sec. 4(c) of Ordinance No. 1631 to the effect that the City Government shall not grant any
third party any privilege and/or concession to operate a bus, mini-bus and/or jeepney terminal, as illegal and ultra vires because it
contravenes the provisions of Republic Act No. 7160, otherwise known as The Local Government Code;

3. Declaring City Ordinance No. 1778 as null and void, the same being also an ultra vires act of the City Government of Lucena arising
from an invalid, oppressive and unreasonable exercise of the police power, more specifically, declaring illegal [sections 1(b), 3(c) and
3(e)];

4. Ordering the issuance of a Writ of Prohibition and/or Injunction directing the respondents public officials, the City Mayor and the
Sangguniang Panglungsod of Lucena, to cease and desist from implementing Ordinance No. 1778 insofar as said ordinance
prohibits or curtails petitioner from maintaining and operating its own bus terminal subject to the conditions provided for in
Ordinance No. 1557, Sec. 3, which authorizes the construction of terminal outside the poblacion of Lucena City; and likewise, insofar
as said ordinance directs and compels the petitioner to use the Lucena Grand Central Terminal Inc., and furthermore,
insofar as it declares that no other terminals shall be situated, constructed, maintained or established inside or within
the City of Lucena; and furthermore,

5. The Motion to Dismiss filed by the Intervenor, Lucena Grand Central Terminal Inc., dated October 19, 1998, is hereby DENIED for
lack of merit.

SO ORDERED. (Emphasis and underscoring supplied)[8]

Petitioners Motion for Reconsideration[9] of the trial courts order having been denied by Order of August 6, 1999,[10] it elevated it
via petition for review under Rule 45 before this Court.[11] This Court, by Resolution of November 24, 1999,[12] referred the petition to
the Court of Appeals with which it has concurrent jurisdiction, no special and important reason having been cited for it to take
cognizance thereof in the first instance.

By Decision of December 15, 2000,[13] the appellate court dismissed the petition and affirmed the challenged orders of the trial
court. Its motion for reconsideration[14] having been denied by the appellate court by Resolution dated June 5, 2001,[15] petitioner once
again comes to this Court via petition for review,[16] this time assailing the Decision and Resolution of the Court of Appeals.

Decision on the petition hinges on two issues, to wit: (1) whether the trial court has jurisdiction over the case, it not having
furnished the Office of the Solicitor General copy of the orders it issued therein, and (2) whether the City of Lucena properly exercised
its police power when it enacted the subject ordinances.

Petitioner argues that since the trial court failed to serve a copy of its assailed orders upon the Office of the Solicitor General, it
never acquired jurisdiction over the case, it citing Section 22, Rule 3 of the Rules which provides:

SEC. 22. Notice to the Solicitor General.In any action involving the validity of any treaty, law, ordinance, executive order, presidential
decree, rules or regulations, the court in its discretion, may require the appearance of the Solicitor General who may be heard in
person or through representative duly designated by him. (Emphasis and underscoring supplied)

Furthermore, petitioner invokes Sections 3 and 4 of Rule 63 which respectively provide:

SEC. 3. Notice on Solicitor General. In any action which involves the validity of a statute, executive order or regulation, or any other
governmental regulation, the Solicitor General shall be notified by the party assailing the same and shall be entitled to be heard upon
such question.

SEC. 4. Local government ordinances. In any action involving the validity of a local government ordinance, the corresponding
prosecutor or attorney of the local government unit involved shall be similarly notified and entitled to be heard. If such ordinance is
alleged to be unconstitutional, the Solicitor General shall also be notified and entitled to be heard. (Emphasis and underscoring
supplied)

Nowhere, however, is it stated in the above-quoted rules that failure to notify the Solicitor General about the action is a
jurisdictional defect.

In fact, Rule 3, Section 22 gives the courts in any action involving the validity of any ordinance, inter alia, discretion to notify the
Solicitor General.

Section 4 of Rule 63, which more specifically deals with cases assailing the constitutionality, not just the validity, of a local
government ordinance, directs that the Solicitor General shall also be notified and entitled to be heard. Who will notify him, Sec. 3 of
the same rule provides it is the party which is assailing the local governments ordinance.

More importantly, however, this Court finds that no procedural defect, fatal or otherwise, attended the disposition of the case.
For respondent actually served a copy of its petition upon the Office of the Solicitor General on October 1, 1998, two days after it was
filed. The Solicitor General has issued a Certification to that effect.[17] There was thus compliance with above-quoted rules.

Respecting the issue of whether police power was properly exercised when the subject ordinances were enacted: As with the
State, the local government may be considered as having properly exercised its police power only if the following requisites are met:
(1) the interests of the public generally, as distinguished from those of a particular class, require the interference of the State, and (2)
the means employed are reasonably necessary for the attainment of the object sought to be accomplished and not unduly oppressive
upon individuals. Otherwise stated, there must be a concurrence of a lawful subject and lawful method.[18]
 That traffic congestion is a public, not merely a private, concern, cannot be gainsaid. In Calalang v. Williams[19] which involved a
statute authorizing the Director of Public Works to promulgate rules and regulations to regulate and control traffic on national roads,
this Court held:

In enacting said law, therefore, the National Assembly was prompted by considerations of public convenience and welfare. It was
inspired by a desire to relieve congestion of traffic, which is, to say the least, a menace to public safety. Public welfare, then, lies at
the bottom of the enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty,
with property, and with business and occupations.[20] (Emphasis supplied)

The questioned ordinances having been enacted with the objective of relieving traffic congestion in the City of Lucena, they
involve public interest warranting the interference of the State. The first requisite for the proper exercise of police power is thus
present.

Respondents suggestion to have this Court look behind the explicit objective of the ordinances which, to it, was actually to benefit
the private interest of petitioner by coercing all bus operators to patronize its terminal does not lie. [21] Lim v. Pacquing[22] instructs:

. . . [T]his Court cannot look into allegations that PD No. 771 was enacted to benefit a select group which was later given authority to
operate the jai-alai under PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v. Thompson, 403
U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, in the first place, absolute lack of evidence to support ADCs allegation of
improper motivation in the issuance of PD No. 771. In the second place, as already averred, this Court cannot go behind the expressed
and proclaimed purposes of PD No. 771, which are reasonable and even laudable. (Underscoring supplied)[23]

This leaves for determination the issue of whether the means employed by the Lucena Sangguniang Panlungsod to attain its
professed objective were reasonably necessary and not unduly oppressive upon individuals.

With the aim of localizing the source of traffic congestion in the city to a single location,[24] the subject ordinances prohibit the
operation of all bus and jeepney terminals within Lucena, including those already existing, and allow the operation of only one common
terminal located outside the city proper, the franchise for which was granted to petitioner. The common carriers plying routes to and
from Lucena City are thus compelled to close down their existing terminals and use the facilities of petitioner.

In De la Cruz v. Paras,[25] this Court declared unconstitutional an ordinance characterized by overbreadth. In that case, the
Municipality of Bocaue, Bulacan prohibited the operation of all night clubs, cabarets and dance halls within its jurisdiction for the
protection of public morals. Held the Court:

It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under the term reasonable. The object
ive of fostering public morals, a worthy and desirable end can be attainedby a measure that does not encompass too wide a field. Ce
rtainly the ordinance on its face is characterized by overbreadth. The purpose sought to be achieved could have been attained by rea
sonablerestrictions rather than by an absolute prohibition. The admonition in Salaveria should be heeded: The Judiciary should not
lightly set aside legislative action when there is not a clear invasion of personal or property rights under the guise of police regulation.
It is clear that in the guise of a police regulation, there was in this instance a clear invasion of personal or property rights, personal in
the case of those individuals desirous of patronizing those night clubs and property in terms of the investments made and salaries to
be earned by those therein employed. (Underscoring supplied)[26]

In Lupangco v. Court of Appeals,[27] this Court, in declaring unconstitutional the resolution subject thereof, advanced a similar
consideration. That case involved a resolution issued by the Professional Regulation Commission which prohibited examinees from
attending review classes and receiving handout materials, tips, and the like three days before the date of examination in order to
preserve the integrity and purity of the licensure examinations in accountancy. Besides being unreasonable on its face and violative of
academic freedom, the measure was found to be more sweeping than what was necessary, viz:

Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the licensure examinations will
be eradicated or at least minimized. Making the examinees suffer by depriving them of legitimate means of review or preparation on
those last three precious days when they should be refreshing themselves with all that they have learned in the review classes and
preparing their mental and psychological make-up for the examination day itself would be like uprooting the tree to get rid of a
rotten branch. What is needed to be done by the respondent is to find out the source of such leakages and stop it right
there. If corrupt officials or personnel should be terminated from their loss, then so be it. Fixers or swindlers should be flushed out.
Strict guidelines to be observed by examiners should be set up and if violations are committed, then licenses should be suspended or
revoked. x x x (Emphasis and underscoring supplied)[28]

As in De la Cruz[29] and Lupangco,[30] the ordinances assailed herein are characterized by overbreadth. They go beyond what is
reasonably necessary to solve the traffic problem. Additionally, since the compulsory use of the terminal operated by petitioner would
subject the users thereof to fees, rentals and charges, such measure is unduly oppressive, as correctly found by the appellate
court. [31] What should have been done was to determine exactly where the problem lies and then to stop it right there.

The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that rights are exercised within the
framework of the law and the laws are enacted with due deference to rights. (Underscoring supplied) [32]

A due deference to the rights of the individual thus requires a more careful formulation of solutions to societal problems.

From the memorandum[33] filed before this Court by petitioner, it is gathered that the Sangguniang Panlungsod had identified the
cause of traffic congestion to be the indiscriminate loading and unloading of passengers by buses on the streets of the city proper,
hence, the conclusion that the terminals contributed to the proliferation of buses obstructing traffic on the city streets.

Bus terminals per se do not, however, impede or help impede the flow of traffic. How the outright proscription against the
existence of all terminals, apart from that franchised to petitioner, can be considered as reasonably necessary to solve the traffic
problem, this Court has not been enlightened. If terminals lack adequate space such that bus drivers are compelled to load and unload
passengers on the streets instead of inside the terminals, then reasonable specifications for the size of terminals could be instituted,
with permits to operate the same denied those which are unable to meet the specifications.

In the subject ordinances, however, the scope of the proscription against the maintenance of terminals is so broad that even
entities which might be able to provide facilities better than the franchised terminal are barred from operating at all.

Petitioner argues, however, that other solutions for the traffic problem have already been tried but proven ineffective. But the
grant of an exclusive franchise to petitioner has not been shown to be the only solution to the problem.

While the Sangguniang Panlungsod, via Ordinance No. 1557,[34] previously directed bus owners and operators to put up their
terminals outside the poblacion of Lucena City, petitioner informs that said ordinance only resulted in the relocation of terminals to
other well-populated barangays, thereby giving rise to traffic congestion in those areas.[35] Assuming that information to be true, the
Sangguniang Panlungsod was not without remedy. It could have defined, among other considerations, in a more precise manner, the
area of relocation to avoid such consequences.

As for petitioners argument that the challenged ordinances were enacted pursuant to the power of the Sangguniang Panlungsod
to [r]egulate traffic on all streets and bridges; prohibitencroachments or obstacles thereon and, when necessary in the interest of
public welfare, authorize the removal of encroachments and illegal constructions in public places:[36] Absent any showing, nay
allegation, that the terminals are encroaching upon public roads, they are not obstacles. The buses which indiscriminately load and
unload passengers on the city streets are. The power then of the Sangguniang Panlungsod to prohibit encroachments and obstacles
does not extend to terminals.

Neither are terminals public nuisances as petitioner argues. For their operation is a legitimate business which, by itself, cannot
be said to be injurious to the rights of property, health, or comfort of the community.

But even assuming that terminals are nuisances due to their alleged indirect effects upon the flow of traffic, at most they are
nuisance per accidens, not per se.

Unless a thing is nuisance per se, however, it may not be abated via an ordinance, without judicial proceedings, as was done in
the case at bar.

In Estate of Gregoria Francisco v. Court of Appeals,[37] this Court held:

Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances without judicial
proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and property and may be
summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the
quonset building is a legitimate business. By its nature, it can not be said to be injurious to rights of property, of health or of comfort
of the community. If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose. It is not per se a
nuisance warranting its summary abatement without judicial intervention. (Underscoring supplied)[38]

In Pampanga Bus Co., Inc. v. Municipality of Tarlac[39] where the appellant-municipality similarly argued that the terminal involved
therein is a nuisance that may be abated by the Municipal Council via an ordinance, this Court held: Suffice it to say that in the
abatement of nuisances the provisions of the Civil Code (Articles 694-707) must be observed and followed. This appellant failed to do.

As for petitioners claim that the challenged ordinances have actually been proven effective in easing traffic congestion: Whether
an ordinance is effective is an issue different from whether it is reasonably necessary. It is its reasonableness, not its effectiveness,
which bears upon its constitutionality. If the constitutionality of a law were measured by its effectiveness, then even tyrannical laws
may be justified whenever they happen to be effective.

The Court is not unaware of the resolutions of various barangays in Lucena City supporting the establishment of a common
terminal, and similar expressions of support from the private sector, copies of which were submitted to this Court by petitioner. The
weight of popular opinion, however, must be balanced with that of an individuals rights.

There is no question that not even the strongest moral conviction or the most urgent public need, subject only to a few notable
exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a person invoking a right guaranteed
under Article III of the Constitution is a majority of one even as against the rest of the nation who would deny him that right. [40]

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.
SPOUSES VICTOR VALDEZ AND JOCELYN G.R. No. 175510
VALDEZ, represented by their Attorney-In-Fact,
VIRGILIO VALDEZ, Present:
Petitioners,
QUISUMBING, J., Chairperson,
CARPIO MORALES,
- versus - TINGA,
VELASCO, JR., and
SPOUSES FRANCISCO TABISULA AND CARIDAD BRION, JJ.
TABISULA,
Respondents. Promulgated:
July 28, 2008

x--------------------------------------------------x

DECISION

CARPIO MORALES, J.:

Petitioner-spouses Victor and Jocelyn Valdez purchased via a January 11, 1993 Deed of Absolute Sale [1] (the deed) from
respondent-spouses Francisco Tabisula and Caridad Tabisula a 200 square meter (sq.m.) portion (the subject property) of a 380 sq.
m. parcel of land located in San Fernando, La Union, which 380 sq.m. parcel of land is more particularly described in the deed as
follows:

A parcel of land classified as residential lot, bounded on the North by Lot No. 25569, on the East, by Lot No.
247, 251, on the South, by a Creek and on the West, by Lot No. 223-A, declared under Tax Decl. No. 52820, with
an area of 380 square meters, more or less, and assessed at P 17100.00 for the current year. It is not registered
under Act 496 nor under the Spanish Mortgage Law. (Emphasis and underscoring supplied)
The pertinent portions of the deed read:

xxxx

That for and in consideration of the sum of SEVENTY THOUSAND (P70,000.00) PESOS,
Philippine Currencyp [sic] paid to us at our entire satisfaction by spouses VICTOR and JOECELYN [sic] VALDEZ, both
of legal age, Filipinos and residents of 148 P. Burgos St., San Fernando, La Union, receipt of which is hereby
acknowledged, do hereby SELL, CONVEY and TRANSFER by way of absolute sale unto the said spouses Victor
and Joecelyn Valdez, their heirs and assigns, the TWO HUNDRED (200) SQUARE METERS, EASTERN
PORTION of the parcel of land above-described, free from all liens and encumbrances.

xxxx

That now and hereinafter, said VENDEE-SPOUSES VICTOR and JOECELYN [sic] VALDEZ shall be the absolute
owners of the said 200 sq. meters, eastern portion and that we shall warrant and forever defend their ownership of
the same against the claims of all persons whomsoever; they shall be provided a 2 1/2 meters [sic] wide road
right-of-way on the western sideof their lot but which is not included in this sale.

x x x.x (Emphasis and underscoring supplied)

Respondents subsequently built a concrete wall on the western side of the subject property.[2] Believing that that side is the
intended road right of way mentioned in the deed, petitioners, through their representative, reported the matter to the barangay for
mediation and conciliation. Respondents failed to attend the conferences scheduled by the barangay, however, drawing petitioners to
file in April 1999 or more than six years after the execution of the deed a Complaint for Specific Performance with Damages [3] against
respondents before the Regional Trial Court (RTC) of San Fernando City, La Union.

In their complaint, petitioners alleged that they purchased the subject property on the strength of respondents assurance of
providing them a road right of way. They thus prayed that respondents be ordered to provide the subject property with a 2-meter wide
easement and to remove the concrete wall blocking the same.[4]

Respondents, in their Answer with Compulsory Counterclaim (for damages and attorneys fees),[5] averred that the 2 -meter easement
should be taken from the western portion of the subject property and not from theirs; [6] and petitioners and their family are also the
owners of two properties adjoining the subject property, which adjoining properties have access to two public roads or highways the
bigger one which adjoins P. Burgos St. on the north, and the smaller one which abuts an existing barangay road on the north.[7]

Respondents further averred that they could not have agreed to providing petitioners an easement on the western side of their lot as
there exists a two-storey concrete house on their lot where the supposed easement is to be located, which was erected long before
the subject property was sold to petitioners.[8] In support of this claim, respondents submitted a February 20, 2003 letter from the City
Engineers Office.[9]

Branch 26 of the RTC of San Fernando dismissed petitioners complaint and granted respondents Counterclaim by Decision[10] of March
18, 2005, the dispositive portion of which reads:

WHEREFORE, and in view of all the foregoing, judgment is hereby rendered finding the defendants as against
the plaintiffs and hereby orders the Complaint dismissed for being unmeritorious and plaintiffs are hereby ordered to
pay the defendants, the following:

1) P100,000.00 as moral damages;

2) P50,000.00 as exemplary damages;

3) P50,000.00 as attorneys fees;

4) P30,000.00 as expenses of litigation; and

5) To pay the costs.

SO ORDERED.[11] (Underscoring supplied)

On appeal by petitioners, the Court of Appeals, by Decision of May 29, 2006,[12] affirmed that of the trial court, it holding that the deed
only conveyed ownership of the subject property to petitioners, and that the reference therein to an easement in favor of petitioners
is not a definite grant-basis of a voluntary easement of right of way.[13]

The appellate court went on to hold that petitioners are neither entitled to a legal or compulsory easement of right of way as
they failed to present circumstances justifying their entitlement to it under Article 649 of the Civil Code. [14]

Petitioners motion for reconsideration[15] having been denied by the Court of Appeals by Resolution of November 15, 2006, they filed
the present petition for review on certiorari faulting the trial [sic] court

I. . . . IN RULING THAT THE RIGHT OF WAY IS NOT PART OF THE ABSOLUTE

DEED OF SALE DATED JANUARY 11, 1993;

II. . . . IN RULING THAT THE PROVISION OF THE ABSOLUTE DEED OF SALE GRANTING A RIGHT OF WAY
IS VAGUE AND OBSCURE;

III. . . . IN AWARDING MORAL AND EXEMPLARY DAMAGES TO THE RESPONDENTS.[16] (Underscoring

supplied)

An easement or servitude is a real right constituted on anothers property, corporeal and immovable, by virtue of which the owner of
the same has to abstain from doing or to allow somebody else to do something on his property for the benefit of another thing or
person.[17] The statutory basis of this right is Article 613 of the Civil Code which reads:

Art. 613. An easement or servitude is an encumbrance imposed upon an immovable for the benefit of
another immovable belonging to a different owner.

The immovable in favor of which the easement is established is called the dominant estate; that which is
subject thereto, the servient estate.

There are two kinds of easements according to source by law or by the will of the owners. So Article 619 of the Civil Code
provides:

Art. 619. Easements are established either by law or by the will of the owners. The former are called legal
and the latter voluntary easements.

From the allegations in petitioners complaint, it is clear that what they seek to enforce is an alleged grant in the deed by respondents
of an easement reading: they shall be provided a 2 meters wide road right-of-way on the western side of their lot but which is not
included in this sale.

Article 1358 of the Civil Code provides that any transaction involving the sale or disposition of real property must be in writing.[18] The
stipulation harped upon by petitioners that they shall be provided a 2 meters wide road right-of-way on the western side of their lot but
which is not included in this sale is not a disposition of real property. The proviso that the intended grant of right of way is not included
in this sale could only mean that the parties would have to enter into a separate and distinct agreement for the purpose. [19]The use of
the word shall, which is imperative or mandatory in its ordinary signification, should be construed as merely permissive where, as in
the case at bar, no public benefit or private right requires it to be given an imperative meaning. [20]

Besides, a document stipulating a voluntary easement must be recorded in the Registry of Property in order not to prejudice third
parties. So Articles 708 and 709 of the Civil Code call for, viz:

Art. 708. The Registry of Property has for its object the inscription or annotation of acts and contracts
relating to the ownership and other rights over immovable property.

Art. 709. The titles of ownership, or of other rights over immovable property, which are not duly inscribed
or annotated in the Registry of Property shall not prejudice third persons.

Petitioners are neither entitled to a legal or compulsory easement of right of way. For to be entitled to such kind of easement,
the preconditions under Articles 649 and 650 of the Civil Code must be established, viz:

Art. 649. The owner, or any person who by virtue of a real right may cultivate or use any immovable, which
is surrounded by other immovables pertaining to other persons, and without adequate outlet to a public highway, is
entitled to demand a right of way through the neighboring estates, after payment of the proper indemnity.

xxxx

This easement is not compulsory if the isolation of the immovable is due to the proprietors own
acts. (Underscoring supplied)

Art. 650. The easement of right of way shall be established at the point least prejudicial to
the servient estate, and, insofar as consistent with this rule, where the distance from the dominant estate to a public
highway may be the shortest. (Underscoring supplied)

Thus, to be conferred a legal easement of right of way under Article 649, the following requisites must be complied with: (1) the
property is surrounded by other immovables and has no adequate outlet to a public highway; (2) proper indemnity must be
paid; (3) the isolation is not the result of the owner of the dominant estates own acts; (4) the right of way claimed is at the point least
prejudicial to the servient estate; and (5) to the extent consistent with the foregoing rule, the distance from the dominant estate to a
public highway may be the shortest.[21] The onus of proving the existence of these prerequisites lies on the owner of the dominant
estate,[22] herein petitioners.

As found, however, by the trial court, which is supported by the Sketch[23] (Exhibit B; Exhibit 1) of the location of the lots of the parties
and those adjoining them, a common evidence of the parties, petitioners and their family are also the owners of two
properties adjoining the subject property which have access to two public roads or highways.[24]
Since petitioners then have more than adequate passage to two public roads, they have no right to demand the grant by respondents
of an easement on the western side of [respondents] lot.

It may not be amiss to note at this juncture that at the time the deed was executed in 1993, the barangay road-Exhibit 1-G, by which
petitioners could access Burgos Street-Exhibit 1-F, was not yet in existence; and that the Interior Street-Exhibit 1-H, which petitioners
via this case seek access to with a right of way, was still a creek,[25] as reflected in the earlier-quoted particular description of
respondents parcel of land from which the subject property originally formed part.

Respecting the grant of damages in favor of respondents by the trial court which was affirmed by the appellate court, the Court finds
the same baseless.

To merit an award of moral damages, there must be proof of moral suffering, mental anguish, fright and the like. It is not
enough that one suffers sleepless nights, mental anguish, serious anxiety as a result of the actuation of the other party.[26] Invariably,
such actuation must be shown by clear and convincing evidence[27] to have been willfully done in bad faith or with ill-motive.

In respondents case, they predicated their Counterclaim for damages on general allegations of sickness, humiliation and
embarrassment, without establishing bad faith, fraud or ill-motive on petitioners part.[28]

More importantly, respondents are precluded from filing any counterclaim in light of Article 199 of Rule XXVI of the Rules and
Regulations Implementing the Local Government Code of 1991 reading:

xxxx

ARTICLE 199. Penalty for Refusal or Failure of Any Party or Witness to Appear before
the Lupon or Pangkat. Refusal or willful failure of any party or witness to appear before the lupon or pangkat in
compliance with summons issued pursuant to this Rule may be punished by the city or municipal court as for indirect
contempt of court upon application filed therewith by the lupon chairman, the pangkat chairman, or by any of the
contending parties. Such refusal or willful failure to appear shall be reflected in the records of the lupon secretary or
in the minutes of the pangkat secretary and shall bar the complainant who fails to appear, from seeking judicial
recourse for the same course of action, and the respondent who refuses to appear, from filing any
counterclaim arising out of, or necessarily connected with the complaint.

x x x x (Emphasis and underscoring supplied)

While respondent Caridad Tabisula claimed that she always appeared, when summoned, before the barangay lupon,[29] the following
Certificate to File Action[30] belies the claim.

xxxx

This is to certify that respondents failed to appear for (2) Mediation Proceeding before our Punong Barangay thus the
corresponding complaint may now be filed in court.

Issued this 24th day of November 1998 at the Multi Purpose Hall, Barangay 1 City of San Fernando (LU).

x x x x (Underscoring supplied)

The award for moral damages being thus baseless, that for exemplary damages must too be baseless.

As for the award of attorney's fees and expenses of litigation, respondents have not shown their entitlement thereto in
accordance with Article 2208 of the Civil Code.

WHEREFORE, the May 29, 2006 Decision and November 15, 2006 Resolution of the Court of Appeals are MODIFIED in that the grant
of the Counterclaim of respondents, Spouses Francisco Tabisula and Caridad Tabisula, is reversed and set aside. In all other respects,
the challenged decision is AFFIRMED.

Costs against petitioners.

SO ORDERED.
[ G.R. NO. 166744, November 02, 2006 ]

AC ENTERPRISES, INC., PETITIONER, VS. FRABELLE PROPERTIES CORPORATION, RESPONDENT.

DECISION
CALLEJO, SR., J.:

Before the Court is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA G.R. SP No. 82166, affirming
the Order[2] of the Regional Trial Court (RTC) of Malabon City in Civil Case No. 3742-MH, which denied the Motion to Dismiss of
petitioner AC Enterprises, Inc. (ACEI), as well as the Resolution of the CA denying the motion for reconsideration thereof.

Petitioner, a corporation duly organized under domestic laws doing business in the Philippines, owns the 10-storey Feliza Building
located along Herrera Street, Legaspi Village, Makati City. The building was subdivided into commercial/office units which were leased
to private persons and entities. There are 36 blowers from 18 air-cooled type airconditioning units in the building, four blowers on each
floor, from the 2nd to the 10th floors. The blowers are aesthetically covered by vertical concrete type baffles.

Respondent Frabelle Properties Corporation (FPC), formerly FTL & Sons Development Corporation, [3] is the developer of Frabella I
Condominium (Frabella I), a 29-storey commercial/residential condominium located at 109 Rada Street, Legaspi Village, Makati City.
It owned some units in the condominium which it leased to its tenants. The building is managed by the Frabella I Condominium
Corporation (FCC).

Rada and Herrera streets lie parallel to each other such that Feliza Building is situated at the back of Frabella I. Feliza Building is at
the back of Frabella I and is separated by Rodriguez Street, a two-lane road approximately 12 meters wide[4] The street is bounded by
the Thailand Embassy on the side of the street of Frabella I. The exhaust of the blowers from the airconditioning units at the Feliza
Building were directed towards the rear of Frabella I.

On April 11, 1995, respondent wrote petitioner demanding that the latter abate the daily continuous, intense and ''unbearable noise"
and the hot air blast coming from the 36 blowers in the Feliza Building. Petitioner rejected the demand in a letter dated May 15, 1995.
Respondent reiterated its demand for ACEI to abate the nuisance in a letter dated June 6, 1995.

On June 29, 1995, respondent requested that the 36 blowers of Feliza Building be tested by the NCR Environmental Management
Bureau (EMB) of the Department of Environment and Natural Resources (DENR). On August 11, 1995, it received a report from the
EMB that the noise generated by the blowers of Feliza Building is beyond the legal allowable level under Section 78(b) of Presidential
Decree (P.D.) No. 984, as amended. FPC had the blowers tested anew by the EMB on December 8, 1995 and July 1, 1996 with the
same results. Despite repeated demands, petitioner refused to act on the matter.

On August 14, 2000, respondent again wrote petitioner, demanding that it abate the nuisance. Petitioner ignored the letter anew.
Respondent then had the blowers tested again by the EMB with same results as evidenced by its report dated August 29, 2000 and
November 4, 2000.

On March 11, 2001, Frabelle I Condominum Corporation, through counsel, Ang & Associates, as complainant, filed a complaint against
petitioner with the Pollution Adjudication Board (PAB) for the abatement of noise and/or air pollution and damages with a plea for
injunctive relief. The complainant alleged therein that it managed the Frabella 1 and that its members own units in the condominium.
It alleged, inter alia, that:

6. Feliza Building's airconditioning system is served by some 36 blowers, installed 4 blowers to each floor, all located on the
same sidedirectly facing Frabella I.
7. Everytime the Feliza Building's airconditioning system is turned on, all or a good number of the 36 blowers operate at the
same time. As a direct result of the operation of the blowers, unbearable hot air is generated and blown towards Frabella I.

8. Apart from the hot air, the blowers also generate a continuous, deafening, intolerable and irritating, vibrating noise which
makes normal conversation across the street and at the Frabella I difficult if not impossible.

9. As a consequence of such hot air, vibrating and intolerable noise, the occupants of Frabella I have been, and still are, prevented
from enjoying peaceful and comfortable use of their property thereby forcing them to vacate and/or transfer elsewhere.

10. Such intolerable noise, hot air, and vibration constitute noise and/or air pollution violative of P.D. 984, the Clean Air Act and
other related environmental laws.

11. In all good faith without any desire to cause any unnecessary inconvenience or trouble, the complainant, for the last several
years, has written and made numerous contacts with the respondent complaining about this pollution, even soliciting the help
and intercession of the Makati Commercial Estate Association, Inc. (MACEA) and the Metro Manila Development Authority
(MMDA) to try to settle the matter amicably.

12. On the other hand, the DENR, over a span of several years, has conducted several tests. As shown by the results, the noise
and vibration generated by the Feliza Building blowers exceeds the DENR and Local Government ambient noise standards
hence, it undoubtedly constitutes pollution.[5]

The complainant prayed that judgment be rendered in its favor, thus:

WHEREFORE, it is respectfully prayed that after notice and hearing, a Decision be rendered in favor of complainant and against the
respondent:

1. Declaring the intolerable noise, hot air and vibration generated by the Feliza Building blowers as a noise and/or air pollution
and ordering the respondent to abate the same and in case of failure to do so, that the establishment be closed or ordered to
cease operations.
2. After arbitration, ordering the respondent to indemnify the complaint for actual damages at not less thanP5,000,000.00 and
to reimburse it for attorney's fees and expenses of litigation at not less than P400,000.00.

3. Condemning the respondent to pay the corresponding fines and other administrative penalties for each day of continuing
pollution.

Complainant prays for other relief just and equitable in the premises.[6]
While the case was pending, respondent, through its Vice-President, wrote Dr. Maria Leonor B. Soledad, City Health Officer of Makati
City, requesting her intervention to order petitioner to abate the noise and hot air coming from the blowers of the Feliza Building. On
March 5, 2002, Dr. Soledad replied that a panel must be formed to settle the matter.
In a letter dated March 7, 2002, respondent requested Makati City Mayor Jejomar C. Binay not to renew or to cancel the Mayor's
License and Business Permits of Feliza Building and to compel petitioner to comply with the law.[7] Copies of the letter were forwarded
to Engr. Nelson B. Morales, the City Building Official, and Atty. Enrico Lainez, City Attorney.

Engr. Morales acted on the letter and wrote the EMB on April 30, 2002, requesting the investigation of the complaint relative to the
noise from the airconditioning units of the Feliza Building.[8] A panel from the EMB conducted tests on the 36 blowers of Feliza Building
from 10:30 a.m. to 12:50 p.m. on May 24, 2002. On June 28, 2002, the Panel submitted its Investigation Report, stating that the
passing of vehicles along the street and the blowers of nearby building contributed to the ambient noise quality in the area. The report
stated that since DENR Administrative Order No. 30 devolved the functions of the DENR on the abatement of noise nuisance to the
Local Government Unit, the case should be endorsed to the City Government of Makati for appropriate action.[9]

Regional Director Sixto E. Tolentino, Jr. of the EMB forwarded the report to Engr. Morales on July 2, 2002. [10] In a letter dated July 19,
2002, Engr. Morales informed respondent that based on the result of investigation conducted by the DENR Management Bureau on
Sound Pressure Levels (SPL) measured on the different sampling stations, the excess in the noise quality standard within the vicinity
does not come from the airconditioning system with 36 blowers of Feliza Building alone; there were other prevailing factors to consider,"
which is beyond the control of said building and since the final result has been rendered and resolved by the concerned government
agency, it is properly advised that further inquiry or anything involving a sound environment process which is not sanctioned by this
office, be addressed directly to the said agency. "[11]

Copies of the letter were furnished to the City Mayor, the City Attorney and petitioner. Respondent then wrote Engr. Morales seeking
clarification, wanting to find out why the matter should be referred to the EMB when the latter had already endorsed the matter to the
City of Makati. A conference was held between the executives of respondent and Engr. Morales. The latter insisted on the report of the
EMB and his July 19, 2002 letter and dared it to go to court if it was not satisfied with the report and his resolution of the matter.

Respondent then wrote another letter to the EMB relative to the May 24, 2002 Report of the Panel. The EMB conducted SPL
measurements anew on February 4, 2003. Per its Report submitted on November 24, 2003, the EMB declared that, from the table, it
is evident that the SPL measurements were high when the doors were opened compared to the readings when the doors were closed.
However, the EMB emphasized that the standards in Section 78 (b) of the Implementing Rules and Regulations of P.D. No. 984 could
not be applied since the provisions were for ambient noise. It pointed out that the SPL measurements were taken inside the building.
The EMB opined that since the nature of complaint is regarding noise nuisance generated from the firm's blowers, the SPL
measurements were not the critical factor in the resolution of the issue. It stated that the noise needs not to be high or low to annoy
or cause nuisance to the receptor, for as long as the complainant is disturbed with the level of sound coming from the firm, it was
considered a nuisance.[12]

On July 1, 2003, respondent filed a complaint for the abatement of nuisance with damages with prayer for the issuance of a writ of
preliminary and permanent injunction before the RTC of Malabon City against petitioner. The complaint alleged the following:

6. The Feliza Building's airconditioning units are served by some 36 blowers, 4 blowers to each floor located outside the windows
of the building facing directly towards the Frabella I Condominium. The 36 blowers were installed from the 2nd floor to the
10th floor of the building and these blowers are aesthetically covered by a vertical concrete sun baffles.

7. [Every time] the Feliza Building's airconditioning system is turned on, all or a good number of the 36 blowers are made to
operate simultaneously. The operation of the Feliza's blowers generates a continuous deafening unbearable vibrating and
stressful noise affecting the tenants of the Frabella I Condominium. Hot air is also blasted from the [Feliza] Building's blowers
to the direction of the Frabella 1Condominium.
8. The tenants occupying the 5th to the 16th floors of the Frabella I Condominium facing Feliza Building are directly subjected
to a daily continuous intense noise and hot air blast coming from the blowers of the[10-storey] Feliza Building. Some are
tenants of plaintiff, who have complained to plaintiff about the matter. Tenants who could not bear the nuisance any longer
have vacated their units, and as a result, many units of plaintiff have remained vacant, and unoccupied or uninhabitable,
thereby depriving plaintiff with rental income that it should have otherwise be receiving.

9. In all good faith, without any desire to cause any unnecessary inconvenience or trouble, plaintiff has written and made
numerous contacts with defendant to complain about this nuisance, even soliciting the help and intercession of the Barangay
San Lorenzo, Makati Commercial Estate Association, Inc. (MACEA), Metro Manila Development Authority (MMDA), Makati City
Government, Makati Pollution Office and Department of Environment and Natural Resources(DENR), to try to settle the matter
amicably. Several meetings have taken place, as well as many correspondences made by plaintiff to defendant. But reasonable
and lawful demands by plaintiff to abate the nuisance have been repeatedly ignored/refused by defendant. The demand
letters, and the response of defendant to these letters, are herein attached and made integral part of this Complaint as follows:

Date Remarks
Annex
11 April 1995
Demand letter to abate nuisance
"A"

15 May 1995
Response to demand letter
"B"

06 June 1995
Follow-up demand letter
"C"

14 August 2000
Follow-up demand letter
"D"

10.
11. There [are] more letters that were exchanged between plaintiff and defendant and/or their lawyers, but they will not be
attached to this Complaint at this time to simplify the facts.

12. Even the Metro Manila Development Authority (MMDA) and Makati Commercial Estate Association, Inc. (MACEA) wrote
defendant letters urging it to rectify and abate the nuisance. Copies of the letters of the MMDA dated 29 April 1996 and the
MACEA dated 10 October 1996 are herein attached and marked as Annexes - "E" and "F"[,] respectively.

13. On the other hand, the DENR, over a span of 7 years, has conducted several noise sampling tests. As shown by the results,
the unbearable noise generated by the Feliza's blowers is beyond the legally allowable level under Sec. 78(b) of P.D. 984, as
indicated in their reports, hence[,] it undoubtedly constitutes nuisance. Copies of the test results are herein attached and
made an integral part of this Complaint as follows:
 Annex
Date
29 June 1995 "G"

11 August 1995 "H"

08 December 1995 "I"

01 July 1996 "J"

04 November 1996 "K"

29 August 2000 "L"

14.
15. Please note that the testing done on 08 December 1995 (Annex - "I") was even requested by defendant.

16. On 04 February 2003, another test by the DENR was conducted, and a copy of the results are herein attached and marked as
Annex -"M." Although the latest test would seem to indicate that there was a reduction in the decibel readings as compared
with the previous tests, this is actually misleading. For one, 28 blowers were operational at the time of the testing, as opposed
to the previous testing done when all 36 blowers were functioning. This is rather exceptional because ordinarily, all 36 blowers
of the Feliza Building are in operation. The fact that only 28 blowers were operational at the time of the testing resulted in
the lower decibel reading.
17. Plaintiff will also demonstrate by expert testimony during the course of the trial that there were lapses committed during the
latest testing that materially influenced the results. But be that as it may, defendant did not perform any remedial or
rectification works to lower the noise being generated by the blowers, hence[,| it was not responsible for any imagined or
actual reduction in the decibel readings.

18. As a consequence of such unbearable, hot air and stressful noise, the occupants of the Frabella I, including the tenants of
plaintiff, have been and still are, prevented from enjoying peaceful and comfortable use of their property thereby forcing them
to vacate and or to transfer elsewhere.

19. Notwithstanding the foregoing results, repeated requests/demands from the plaintiff and recommendations of the DENR,
MACEA and MMDA to abate the pollution and nuisance, the defendant has ignored and still continues to ignore such
requests/demands/ recommendation.[13]

Respondent prayed for injunction and the following other reliefs, thus:
WHEREFORE, premises considered, it is respectfully prayed that upon the filing of this Complaint, after notice and hearing, and after
the payment of a bond in an amount to be fixed by the Honorable Court, a Writ of Preliminary Injunction be issued enjoining
defendant from operating the airconditioning system of the Feliza Building and/or turning on the blowers subject matter of this suit
while the instant case remains pending.

After trial and hearing, judgment be rendered against the defendant and for the plaintiff, ordering the former:

1. To abate the noise and air pollution being generated by all the blowers of the airconditioning system of Feliza Building,
and/or to make the Writ of Preliminary Injunction permanent;

2. To pay plaintiff the amount of P1,000,000.00 in temperate or moderate damages[;]

3. To pay the plaintiff the amount of P1,000,000.00 as and by way of exemplary damages;

4. To pay the plaintiff the amount of P500,000.00 as and by way of attorney's fees; and

5. [To pay] the cost of the suit.[14]

Petitioner moved for the dismissal of the complaint on the following grounds: (1) lack of jurisdiction of the court over the subject
matter of the complaint; (2) the complaint does not state a cause of action; and (3) the action is barred by res judicata, litis pendentia,
and forum shopping.[15]

Petitioner averred that it was the Makati City Government that had jurisdiction over the complaint pursuant to Republic Act (R.A.) No.
7160. It also pointed out that DENR Administrative Order (A.O.) No. 30 issued on June 30, 1992 devolved to the local government
units the power to determine matters pertaining to environmental management such as: (a) enforcement of pollution control and
environmental protection laws, rules and regulations; (b) abatement of noise and other forms of nuisance; and (c) implementation of
cease and desist orders issued by the PAB. It maintained that respondent had filed a similar action before the Makati City Government
concerning the same issues presented in the complaint and that the City Building Official, Engr. Morales, had ruled in his letter dated
July 19, 2002 that the excess in the noise quality standard within the vicinity was caused not only by the air-conditioning system of
Feliza Building but also by other prevailing factors which were beyond its control. Respondent had failed to appeal the resolution;
hence, the resolution of the City Building Official barred the complaint.

Petitioner further averred that, aside from the action brought before the City Government, the Frabella Condominium Corporation
(FCC) filed a case for Abatement of Noise and/or Air Pollution and Damages with Prayer for Interim Cease and Desist Order, docketed
as PAB Case No. 01-0009-NCR. As gleaned from the material averments of the two complaints, both involved the same set of facts
and issues. Consequently, the petition is barred by litis pendentia, and respondent was guilty of violating Section 5, Rule 7 of the Rules
of Court for failure to include in its certification against forum-shopping of the pendency of the PAB case or the prior resolution by the
City Government of the complaint before the City Building Official/City Engineer.

Petitioner further claimed that the complaint stated no cause of action because it failed to allege any right of respondent which it was
obliged to respect, and any act or omission of defendant in violation of such right. As gleaned from the EMB's report to the City Engineer
on May 24, 2002, the passing of vehicles along the street and blowers in the nearby building contributed to the ambient noise quality
in the area.[16]

In compliance with the order of the court, the parties submitted their respective Position Papers. Respondent averred that the provisions
of R.A. No. 7160 cited by petitioner apply not to abatements of nuisance but to pollution control cases. [17] The local government units
(LGUs) are only granted administrative and executive powers, not judicial or quasi-judicial functions to abate a nuisance. While
admitting that DENR A.O. No. 30 devolved to the LGUs the function of abating noise and other forms of nuisance as defined by law,
plaintiff posited that said A.O. is not a law and the DENR cannot deprive the court of its jurisdiction over the abatement of nuisance.
Respondent alleged that in filing a motion to dismiss, petitioner hypothetically admitted the factual allegations in the complaint and,
thus, only questions of law remained; hence, the doctrine of primary jurisdiction and the need for exhaustion of administrative remedies
do not apply. Moreover, petitioner itself had even admitted that respondent had tried to seek administrative relief before the Makati
City Government, but the City Building Official denied the same. It insisted that to require the further exhaust of administrative
remedies beyond what it had tried in the past years would be an injustice. It claimed that the proper application of P.D. No. 984 was
in issue, specifically Section 78(b) of the Rules and Regulations of the National Pollution Control Commission (NPCC) which were
adopted and promulgated pursuant to Section 6 of P.D. No. 984 and Title VIII of the Civil Code. Respondent maintained that Engr.
Morales' letter to it could not be considered as final as to constitute res judicata between the parties. It was only a reply-letter. Besides,
the City Engineer/Building Official could not exercise quasi-judicial functions. Due process was not also observed because no
proceedings were conducted. It insisted that it wrote follow-up letters to know the basis of his findings and to confirm the fact that the
Makati City Government did not issue a permit to operate its airconditioning unit. However, Engr. Morales refused to acknowledge the
same and did not reply thereto.

Respondent asserted that it did not engage in forum shopping as the complainant in the PAB case was FCC, a corporation of unit
owners of Frabella I. ft is a totally different corporate entity, the stockholders and officers of which are not similar to FPC. On petitioner's
claim that there was no cause of action for the abatement of nuisance, it declared that the material allegations of its complaint and
the answer thereto show otherwise. Petitioner had the obligation to abate the nuisance caused by the blowers of Feliza Building.
Although under the DENR Report on May 24, 2002, the DENR conducted noise sampling, and noted that the passing vehicles along the
street and blowers of nearby building contributed to the noise, the basis of its complaint was the noise generated by the blowers of
Feliza Building.

Before the RTC court could resolve the motion to dismiss of petitioner, the PAB resolved, on July 29, 2003 [18] to dismiss the complaint
filed by Frabelle. The matter was then endorsed to the LGU concerned in accordance with Section IV, Rule III of PAB Resolution 1-C,
Series of 1997, as amended. It noted that based on the pleadings of the parties, and the testimonial evidence, the case is more of a
nuisance, and "[e]xcept where such would constitute a pollution case, local government units shall have the power to abate nuisance
within their respective areas pursuant to the Republic Act No. 386 (Civil Code of the Philippines), Republic Act 7160 (the Local
Government Code), Presidential Decree 856 (the Code of Sanitation of the Philippines), DENR Department Administrative Order No.
30, Series of 1992 and other pertinent laws, rules and regulations" without prejudice to the institution of a pollution case, upon proof
that respondent had failed to comply with DENR standards and the presentation of other evidence that would warrant the PAB to take
cognizance of and assert jurisdiction over the case.[19]

Thereafter, the RTC denied petitioner's motion to dismiss in an Order[20] dated September 15, 2003. It ruled that the doctrine of primary
jurisdiction simply calls for the determination of administrative questions, which are ordinarily questions of facts and not of law.
Likewise, the trial court is not divested of its jurisdiction simply because of plaintiff's failure to observe the doctrine of exhaustion of
administrative remedies. Moreover, as gleaned from the averments of the complaint, there was an urgency of abating the noise and
air pollution generated by the blowers of petitioner's airconditioning system such that respondent prayed for injunctive relief. The RTC
took note of the allegations of respondent that it would suffer great and irreparable injury; hence, to require it to exhaust further
administrative remedies would be, in effect, a nullification of its claim.

According to the RTC, the doctrine of res judicata applies only to judicial and quasi-judicial proceedings and not to the exercise of
administrative powers. Thus, no forum shopping was also committed. Since the findings of the City Building Official appear to be a
complete disavowal of the previous results gathered from the numerous tests conducted by the EMB, the court could not be deprived
of its inherent power to review the factual findings of the administrative official in order to determine the regularity of the procedure
used.

On the merits of the complaint, the RTC declared that the factual allegations were sufficient in themselves to constitute a cause of
action against respondent and, if admitting the facts, the court can render valid judgment on the basis thereof in accordance with the
relief prayed for:
Undeniably, the instant complaint is one for abatement of nuisance. Plaintiff alleges that the operation of defendant's blowers generates
a continuous, deafening, unbearable, vibrating and stressful noise affecting its tenants. Some have already vacated their units while
others refused to pay rents and threaten plaintiff to be sued because of the unabated nuisance. Plaintiff has been deprived of rental
income. It had written and made numerous contacts with the defendant to complain about the nuisance and further solicited
intervention from government agencies including the Government of Makati City. Defendant allegedly failed or refused to abate the
nuisance which is in total disregard of the right of the plaintiff over its property. Contested findings of the EMB and City Building Official
of Makati City are, likewise, put in issue. These are sufficient to constitute a cause of action against the defendant and, if admitting
the facts, this Court can render valid judgment upon the same in accordance with the relief prayed for. [21]

The court denied the motion for reconsideration filed by petitioner [22] and the latter sought: relief from the CA via a petition
for certiorari. Petitioner averred that:

THE PUBLIC RESPONDENT ACTED WITHOUT JURISDICTION, OR WITH GRAVE ABUSE OF DISCRETION SO GRAVE AS TO LOSE
JURISDICTION IN ASSUMING AND EXERCISING ITS JURISDICTION IN CIVIL CASE NO. 03-3745-MN, CONSIDERING THAT:

A. THE HONORABLE COURT HAS NO JURISDICTION OVER THE SUBJECT MATTER OF THE COMPLAINT. JURISDICTION IS VESTED
WITH THE MAKATI CITY GOVERNMENT, THE LOCAL GOVERNMENT UNIT CONCERNED.

B. THE COMPLAINT IS BARRED BY RES JUDICATA. THE MAKATI CITY GOVERNMENT HAS ALREADY DECIDED A COMPLAINT FILED
BY FRABELLE. FRABELLE DID NOT ELEVATE THE SAME ON APPEAL, OR, IN ANY WAY, QUESTION SUCH DECISION. THUS, THE
DECISION BY THE MAKATI CITY GOVERNMENT IS NOW FINAL AND EXECUTORY.

C. AT THE TIME THE COMPLAINT WAS FILED, IT WAS BARRED BY LITIS PENDENTIA. A SIMILAR ACTION WAS PENDING WITH
THE POLLUTION ADJUDICATION BOARD (PAB) WHICH, SUBSEQUENTLY, FOUND NO LIABILITY ON THE PART OF AC. FRABELLE
IS CLEARLY AND UNDENIABLY GUILTY OF FORUM-SHOPPING.

D. PLAINTIFF FRABELLE HAS NO CAUSE OF ACTION AND THE COMPLAINT FAILS TO STATE A CAUSE OF ACTION AGAINST AC
ENTERPRISES.[23]

Petitioner asserted that, by express provision of law, the City of Makati has primary jurisdiction over the complaint and is the competent
authority to determine the existence of any incidence of pollution, the special standards and regulations controlling the same and the
resolution whether a party has complied with the regulations. The complaint does not fall under any of the exceptions to the rule on
exhaustion of administrative remedies. Respondent is guilty of short-circuiting the whole process without requisite justification.
Contrary to the contention of respondent, the proceedings before the City Government are quasi-judicial in nature. It pointed out that
the City Government had already made its findings, which respondent did not contest in the proper tribunal within the reglementary
period. It did not appeal the decision of the City Building Official conformably with DENR Administrative Order No. 37-45 (General
Manual of Operations for Devolved Functions from the Department of Environment and Natural Resources to the Local Government
Units); hence, the resolution became final and executory. It insisted that the complaint is but a desperate attempt to revive what is
otherwise a dead issue.
On September 21, 2004, the CA rendered judgment denying the petition.[24] The fallo of the decision reads:
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit. Accordingly, the dismissal of the petition rendered the
application for a temporary restraining order or writ of preliminary injunction moot and academic.

SO ORDERED.[25]

The CA ruled that the action of respondent was one for the abatement of a nuisance within the exclusive jurisdiction of the RTC. It
agreed with respondents' contention that, under R.A. No. 7160, the LGUs are not divested of its jurisdiction over an action for the
abatement of a nuisance. Section 17, sub-paragraphs (b)(3)(iii) in relation to (b)(4) of the law pertain to the enforcement of
pollution control law and not to the abatement of nuisance. While DENR A.O. No. 30 devolved to the LGUs the abatement of noise
and other forms of nuisance as defined by law, this does not necessarily deprive the courts to hear and decide actions pertaining
thereon. It was thus proper for respondent to bring the case before the court since it had already sought the intercession
of Barangay San Lorenzo, Makati Commercial Estate Corporation (MACEA), DENR, and the Makati City Government to no avail.

Further, the doctrine of primary jurisdiction and the principle of exhaustion of administrative remedies need not be adhered to when
the question between the parties is purely legal. In this case, petitioner, in filing a motion to dismiss, is deemed to have
hypothetically admitted all the factual averments of respondent. Hence, what is left for the court to adjudicate is only the application
of laws dealing with nuisance. The CA also declared that the filing of the case below was not barred by res judicata for the reason
that the decision adverted to by petitioner was only a letter of the City Building Official to respondent; no adversarial proceedings or
submission of evidence and position papers took place before said office. At best, the letter is only an exercise of the City
Government's administrative powers, not judicial or quasi-judicial functions which the City Building Official does not possess.
Respondent's filing of the complaint before the Malabon RTC is also not barred by litis pendentia. FCC, as complainant, initiated the
action before the PAB, while the respondent filed the pending case before the court; there is no identity of parties since FCC has a
personality separate and distinct from that of respondent.

Finally, the CA held that all the requisites for the existence of a cause of action were present in the case at bar. Due to the
unbearable noise and hot air allegedly produced by the blowers installed at petitioner's building, tenants of respondent have been
complaining, forcing them to vacate their units while others refused to pay their rent and threatened to take legal action. Respondent
had the right to abate such nuisance in order to avert future business losses. Since petitioner refused to heed its demands,
respondent was well within its right to file a case protecting its property and proprietary rights.

On January 18, 2005, the appellate court resolved to deny petitioner's motion for reconsideration [26] for lack of merit.[27]

Petitioner forthwith filed the instant petition for review on certiorari, praying for the reversal of the CA decision and resolution on the
following grounds:
I.

THE COURT OF APPEALS ERRONEOUSLY RULED THAT THE LOWER COURT HAS JURISDICTION OVER THE INSTANT CASE,
CONSIDERING THAT THE EXCLUSIVE AUTHORITY TO DETERMINE THE ISSUES INVOLVED IN THE CASE A QUOLIES WITH THE CITY
OF MAKATI.
A.
THE COURT OF APPEALS ERRED IN NOT RULING THAT THE POWER TO ABATE NUISANCES AND CONTROL NOISE POLLUTION HAS
BEEN DEVOLVED TO THE LOCAL GOVERNMENT UNIT CONCERNED IN ACCORDANCE WITH REPUBLIC ACT 7160 OTHERWISE KNOWN
AS THE LOCAL GOVERNMENT CODE.
II.

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE ISSUES INVOLVED IN THE INSTANT CASE NECESSARILY INVOLVE A
QUESTION OF FACT, AND, THEREFORE, THE DOCTRINE OF PRIMARY JURISDICTION AND THE DOCTRINE OF EXHAUSTION OF
ADMINISTRATIVE REMEDIES ARE BOTH APPLICABLE.

III.

THE COURT OF APPEALS ERRONEOUSLY RULED THAT THE COMPLAINT IS NOT BARRED BY (1) LITIS PENDENTIA; (2) RES
JUDICATA; AND (3) FORUM-SHOPPING.

IV.

THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT'S COMPLAINT STATES A CAUSE OF ACTION. [28]

Petitioner insists that, under Section 17(b)(4) in relation to Section 17(b)(3)(III) of R.A. No. 7160, the City of Makati is obliged to
enforce the Pollution Control Law, and under Section 458(4)(I) of the said law, the Sanggnniang Panghmgsod is empowered to declare,
prevent or abate any nuisance. Thus, the City of Makati has exclusive jurisdiction over respondent's complaint for the abatement of
the noise from the blowers of the airconditioning unit of the Feliza Building and of the hot air generated by the said blowers. Petitioner
avers that the issues before the trial court were factual in nature. By its motion to dismiss the complaint, it did not hypothetically admit
the allegations of respondent in its complaint that the noise and hot air emitted by the blowers of the Feliza Building constitute a
nuisance or air pollution because the allegations are mere conclusions of law and not mere statements of facts. Respondent's complaint
before the trial court and its several complaints against petitioner before quasi-judicial bodies is an implied admission of the availability
of administrative remedies under the law. Since respondent failed to pursue and exhaust all administrative remedies before filing its
complaint below, its action was premature. While there were exceptions to the requirement of exhaustion of administrative remedies,
nevertheless, respondent failed to establish any of them. Moreover, respondent's action before the RTC was barred by the letter of the
City Engineer's Office of Makati City on July 19, 2002 which ruled that there was no factual basis for respondent's complaint; hence,
respondent's complaint was barred by res judicata. The complainant in PAB Case No. 01-0009-NCR involved the same set of issues
and circumstances, and the complainant therein and respondent represented the same interests, alleged the same rights and prayed
for the same reliefs. Consequently, the RTC erred in denying its motion to dismiss the complaint on the ground of res judicata, litis
pendentia and forum shopping.

Finally, respondent had no cause of action against petitioner because, as shown by the tests conducted by the EMB on May 24, 2002,
based on noise sampling tests, the noise and air pollution did not emanate from Feliza Building but from passing cars.

In its comment on the petition, respondent maintained that the assailed orders of the RTC and decision of the CA are in accord with
law and the rulings of this Court. Respondent maintains that the only issue before the trial court was how to apply P.D. No. 984 and
Section 78(b) and the Rules and Regulations of the NPCC and the provisions of the New Civil Code governing the abatement of nuisance.
By filing a motion to dismiss the complaint on the ground that it stated no cause of action, the petitioner thereby hypothetically
admitted the factual allegations therein. The court must hear the case to be able to finally resolve the factual issues that may be raised
in the Answer of the petitioner after the denial of its motion to dismiss.

Respondent avers that it was not obliged to first exhaust all administrative remedies. It pointed out that the Building Official of Makati
City ignored its right to due process when he dismissed its complaint without conducting an investigation based solely on the July 2,
2002 Report of the EMB Panel. The issues between the parties are legal, that is, whether there is irreparable injury. It likewise points
out that to require exhaustion of administrative remedies would be unreasonable as the rule does not provide a plain, speedy and
adequate remedy. It insists that it could not have appealed the letters of the City Mayor and the Building Official of Makati because
there are no rules promulgated by the City governing appeals from said letters. It points out that the City Engineer and City Mayor did
not grant its letter requesting for a clarification of petitioner's letters denying its letter-complaint.

The petition is denied for lack of merit.

The Order of the RTC dated September 15, 2003 denying the motion to dismiss of petitioner (as defendant below) is interlocutory in
nature. The general rule is that an order denying a motion to dismiss a complaint cannot be questioned via a special civil action
forcertiorari until a final judgment on the merits of the case is rendered. A party must exhaust all remedies available before resorting
to certiorari. A writ for certiorari is not intended to correct every controversial interlocutory ruling. It is resorted only to correct a grave
abuse of discretion or a whimsical exercise of judgment equivalent to lack of jurisdiction. It is a remedy narrow in scope, limited only
to keeping an inferior court within its jurisdiction and to relieve persons from arbitrary acts which courts have no power or authority
to perform.[29] The remedy of petitioner was to go to trial and appeal from an adverse decision.

Moreover, the CA correctly ruled that the RTC did not commit grave abuse of its discretion in denying the motion to dismiss filed by
respondent. Indeed, the assailed orders of the RTC are in accord with the law and rulings of this Court, taking into account the
averments of the complaint and the answer appended thereto and the other pleadings of the parties.

The RTC Has Jurisdiction

Over the Action of the
Respondent for Abatement
Of Nuisance

It is axiomatic that the nature of an action and whether the tribunal has exclusive jurisdiction over such action are to be determined
from the material allegations of the complaint, the law in force at the time the complaint is filed, and the character of the relief
sought irrespective of whether plaintiff is entitled to all or some of the claims averred. Jurisdiction is not affected by the pleas or the
theories set up by defendant in an answer to the complaint or a motion to dismiss the same. Otherwise, jurisdiction would be
dependent almost entirely upon the whims of defendants.[30]

We agree with the ruling of the RTC, as affirmed by the CA, that as gleaned from the material averments of the complaint as well as
the character of the relief prayed for by respondent in its complaint before the RTC, the petition is one for the judicial abatement of a
private nuisance, more specifically the noise generated by the blowers of the airconditioning system of the Feliza Building owned by
petitioner, with a plea for a writ of preliminary and permanent injunction, plus damages. Such action of respondent is incapable of
pecuniary estimation because the basic issue is something other than the right to recover a sum of money. Although respondent
prayed for judgment for temperate or moderate damages and exemplary damages, such claims are merely incidental to or as a
consequence of, the principal relief sought by respondent. An action incapable of pecuniary estimation is within the exclusive
jurisdiction of the RTC as provided in Batas Pambansa Bilang (B.P. Blg.) 129, as amended by R.A. No. 7691.[31] In Tatel v.
Municipality of Virac,[32] the Court ruled that a simple suit for abatement of a nuisance is within the exclusive jurisdiction of the Court
of First Instance, now the RTC.

Article 694 of the New Civil Code defines a nuisance as follows:

Art. 694. A nuisance is any act., omission, establishment, business, condition of property, or anything else which:

(1) Injures or endangers the health or safety of others; or

(2) Annoys or offends the senses; or

(3) Shocks, defies or disregards decency or morality; or

(4) Obstructs or interferes with the free passage of any public highway or street, or any body of water; or

(5) Hinders or impairs the use of property.

The term "nuisance" is so comprehensive that it has been applied to almost all ways which have interfered with the rights of the
citizens, either in person, property, the enjoyment of his property, or his comfort.[33] According to Article 695 of the Civil Code, a
nuisance may be either public or private:

Art. 695. Nuisance is either public or private. A public nuisance affects a community or neighborhood or any considerable number of
persons, although the extent of the annoyance, danger or damage upon individuals may be unequal. A private nuisance is one that is
not included in the foregoing definition.

A private nuisance has been defined as one which violates only private rights and produces damages to but one or a few persons.[34] A
nuisance is public when it interferes with the exercise of public right by directly encroaching on public property or by causing a common
injury.[35] It is an unreasonable interference with the right common to the general public. [36]

Under Article 705 of the New Civil Code, a party aggrieved by a private nuisance has two alternative remedies: (1) a civil action; or
(2) abatement, without judicial proceedings. A person injured by a private nuisance may abate it as provided in Article 706:

Art. 706. Any person injured by a private nuisance may abate it by removing, or if necessary by destroying the thing which constitutes
the nuisance, without committing a breach of the peace or doing unnecessary injury. However, it is indispensable that the procedure
for extrajudicial abatement of a public nuisance by a private person be followed.

A private nuisance action is the remedy for an invasion of a property right. On the other hand, the action for the abatement of a public
nuisance should be commenced by the city or municipality.[37] A private person may institute an action for the abatement of a public
nuisance in cases wherein he suffered a special injury of a direct and substantial character other than that-which the general public
shares.[38] The district health officer shall determine whether or not abatement, without judicial proceedings, is the best remedy against
a public nuisance.[39]

In the present case, respondent opted to file an action in the RTC for abatement of the private nuisance complained of and damages
under Article 697 of the New Civil Code for its past existence.

One has an action to recover personal damages arising from a private nuisance. The gist of the action is the unreasonable interference
by the defendant with the use and enjoyment of properties. Indeed, petitioner may be compelled to adopt the necessary measures to
reduce or deaden the nuisance emanating from the blowers of the airconditioning system at the Feliza Building.

The PAB has no primary jurisdiction over the noise complained of by ihe respondent. The resolution of the issue before the RTC, which
is whether the noise complained of is actionable nuisance, does not require any special technical knowledge, expertise and experience
of the PAB or even of Makati City requiring the determination of technical and intricate matters of fact. Indeed, the PAB dismissed the
complaint of the Frabelle I Condominium Corporation declaring that, based on the pleadings before it and the evidence of the parties,
the case is more of an abatement of a nuisance under the New Civil Code and DENR Order No. 30, Series of 1992. It declared that it
was not a pollution case. The Resolution reads:

After considering the evidence adduced and the arguments of both parties in their pleadings, the Board, likewise giving due importance
to the technical findings giving rise to the conclusion that the nature of the case is more of a nuisance, hereby resolves toDISMISS the
pending complaint of pollution in accordance with Rule III, Section IV of PAB Resolution 1-C, Series of 1997 as amended, which
categorically states that "Except where such would constitute a pollution case, local government units shall have the power to abate a
nuisance within their respective areas pursuant to the Republic Act No. 386 (Civil Code of the Philippines), Republic Act 7160 (the Local
Government Code), Presidential Decree 856 (the Code on Sanitation of the Philippines), DENR Department Administrative Order No.
30, Series of 1992 and other pertinent laws, rules and regulations. " (underscoring supplied)

Accordingly, the issues raised by the complainant are hereby endorsed to the Local Government Unit concerned for appropriate action
consistent with above cited laws, and without prejudice to the institution of a pollution case upon definite findings that herein respondent
had failed to comply with the DENR Standards, and presentation of other evidence that would warrant the Board to take cognizance of
the matter as a pollution case.[40]

The power of the NPCC to resolve pollution cases under Section 6, paragraphs (e), (f), (g), (j), (k) and (p) of P.D. No. 984 is vested
in the Pollution Adjudication Board (PAB) under Title XIV, Chapter 2, Section 13 of the 1987 Administrative Code, which reads:

SEC. 13. Pollution Adjudication Board. - The Pollution Adjudication Board, under the Office of the Secretary, shall be composed of the
Secretary as Chairman, two Undersecretaries as may be designated by the Secretary, the Director of Environmental Management, and
three others to be designated by the Secretary as members. The Board shall assume the powers and functions of the Commission
Commissioners of the National Pollution Control Commission with respect to the adjudication of pollution cases under Republic Act
3931 and Presidential Decree 984, particularly with respect to Section 6 letters (e), (f), (g), (j), (k) and (p) of P.D. 984. The Environment
Management Bureau shall serve as the Secretariat of the Board. These powers and functions may be delegated to the regional officers
of the Department in accordance with the rules and regulations to be promulgated by the Board.

The cases referred to in Section 6 of P.D. No. 984 are as follows:

(e) Issue orders or decisions to compel compliance with the provisions of this Decree and its implementing rules and regulations only
after proper notice and hearing.

(f) Make, alter or modify orders requiring the discontinuance of pollution specifying the conditions and the time within such
discontinuance must be accomplished.

(g) Issue, renew or deny permits, under such conditions as it may determine to be reasonable, for the prevention and abatement of
pollution, for the discharge of sewage, industrial waste, or for the installation or operation of sewage works and industrial disposal
system or parts thereof: Provided, however, That the Commission, by rules and regulations, may require subdivisions, condominium,
hospitals, public buildings and other similar human settlements to put up appropriate central sewerage system and sewage treatment
works, except that no permits shall be required of any new sewage works or changes to or extensions of existing works that discharge
only domestic or sanitary wastes from a single residential building provided with septic tanks or their equivalent. The Commission may
impose reasonable fees and charges for the issuance or renewal of all permits herein required.

xxx

(j) Serve as arbitrator for the determination of reparations, or restitution of the damages and losses resulting from pollution.

(k) Deputize in writing or request assistance of appropriate government agencies or instrumentalities for the purpose of enforcing this
Decree and its implementing rules and regulations and the orders and decision of the Commission.

xxx

(p) Exercise such powers and perform such other functions as may be necessary to carry out its duties and responsibilities under this
Decree.

Section 2(a) of P.D. No. 984 defines pollution as:

(a) "Pollution" means any alteration of the physical, chemical and biological properties of any water, air and/or land resources of the
Philippines, or any discharge thereto of any liquid, gaseous or solid wastes as will or is likely to create or to render such water, air and
land resources harmful, detrimental or injuries to public health, safety or welfare or which will adversely affect their utilization for
domestic, commercial, industrial, agricultural, recreational or other legitimate purposes.

We agree with petitioner's contention that, under Section 447(a)(3)(i) of R.A. No. 7160, otherwise known as the Local Government
Code, the Sangguniang Panglungsod is empowered to enact ordinances declaring, preventing or abating noise and other forms of
nuisance. It bears stressing, however, that the Sangguniang Bayan cannot declare a particular thing as a nuisance per se and order
its condemnation. It does not have the power to find, as a fact, that a particular thing is a nuisance when such thing is not a nuisance per
se; nor can it authorize the extrajudicial condemnation and destruction of that as a nuisance which in its nature, situation or use is not
such. Those things must be determined and resolved in the ordinary courts of law. If a thing be in fact, a nuisance due to the manner
of its operation, that question cannot be determined by a mere resolution of the Sangguniang Bayan.[41]

Section 17 of R.A. No. 7160 provides that local government units shall discharge the functions and responsibilities of national agencies
and offices devolved to them pursuant to the law; and such other powers, functions and responsibilities as are necessary, appropriate
or incidental to efficient and effective provisions of the basic services and facilities in the Code. Devolution refers to the act by which
the national government confers powers and authority upon the various local government units to perform specific functions and
responsibilities.

What were devolved by the DENR to the LGUs under DENR Administrative Order No. 30 dated June 30, 1992, in relation to R.A. No.
7160, were the regulatory functions/duties of the National Pollution Control Commission (NPCC) which were absorbed and integrated
by the EMB, as provided in Title No. XIV, Chapter 2, Section 17 of the 1987 Administrative Code. However, the DENR exercises
administrative supervision and control over the LGUs. Enumerated in Chapter IV, Article 1, Sections 74 to 79 of the Rules and
Regulations promulgated by the NPCC implementing P.D. 984 are the regulations relative to noise control, specifically, the noise quality
standards.

Under Section 78 of said Rules, as amended by NPCC Memorandum Circular No. 002, dated May 12, 1980, the Environmental Quality
Standards for Noise in General Areas are:melo
Class ''A" area refers to that section or contiguous area which is primarily used for residential purposes, while Class "B" refers to that
section or contiguous area which is primarily a commercial area. Frabelle I and Feliza Buildings are located in Makati City, an area
which is classified as a commercial district.

The division of the 24-hour period shall be as follows:

Morning..............5:00 A.M. to 9:00 A.M.

Daytime............. 8:00 A.M. to 10:00 P.M.
Evening.............. 6:00 P.M. to 10:00 P.M.
Nighttime......... 10:00 P.M. to 5:00 P.M.

The LGUs may conduct inspections, at all reasonable times, without doing damage, after due notice to the owners of buildings to
ascertain compliance with the noise standards under the law; and to order them to comply therewith if they fail to do so; or suspend
or cancel any building permits or clearance certificates issued by it for said units/buildings after due hearing as required by P.D. No.
984.

However, the LGUs have no power to declare a particular thing as a nuisance unless such as thing is a nuisance per se; nor can they
effect the extrajudicial abatement of that as a nuisance which in its nature or use is not such. Those things must be resolved by the
courts in the ordinary course of law.

Whether or not noise emanating from a blower of the airconditioning units of the Feliza Building is nuisance is to be resolved only by
the court in due course of proceedings. The plaintiff must prove that the noise is a nuisance and the consequences thereof. Noise is
not a nuisance per se. It may be of such a character as to constitute a nuisance, even though it arises from the operation of a lawful
business, only if it affects injuriously the health or comfort of ordinary people in the vicinity to an unreasonable extent. Injury to a
particular person in a peculiar position or of especially sensitive characteristics will not render the noise an actionable nuisance. In the
conditions of present living, noise seems inseparable from the conduct of many necessary occupations. Its presence is a nuisance in
the popular sense in which that word is used, but in the absence of statute, noise becomes actionable only when it passes the limits
of reasonable adjustment to the conditions of the locality and of the needs of the maker to the needs of the listener. What those limits
are cannot be fixed by any definite measure of quantity or quality; they depend upon the circumstances of the particular case. They
may be affected, but are not controlled, by zoning ordinances. The delimitation of designated areas to use for manufacturing, industry
or general business is not a license to emit every noise profitably attending the conduct of any one of them.

The test is whether rights of property, of health or of comfort are so injuriously affected by the noise in question that the sufferer is
subjected to a loss which goes beyond the reasonable limit imposed upon him by the condition of living, or of holding property, in a
particular locality in fact devoted to uses which involve the emission of noise although ordinary care is taken to confine it within
reasonable bounds; or in the vicinity of property of another owner who, though creating a noise, is acting with reasonable regard for
the rights of those affected by it.[42]

Commercial and industrial activities which are lawful in themselves may become nuisances if they are so offensive to the senses that
they render the enjoyment of life and property uncomfortable. The fact that the cause of the complaint must be substantial has often
led to expressions in the opinions that to be a nuisance the noise must be deafening or loud or excessive and unreasonable. The
determining factor when noise alone is the cause of complaint is not its intensity or volume. It is that the noise is of such character as
to produce actual physical discomfort and annoyance to a person of ordinary sensibilities, rendering adjacent property less comfortable
and valuable. If the noise does that it can well be said to be substantial and unreasonable in degree; and reasonableness is a question
of fact dependent upon all the circumstances and conditions. There can be no fixed standard as to what kind of noise constitutes a
nuisance.[43]

The courts have made it clear that in every case the question is one of reasonableness. What is a reasonable use of one's property and
whether a particular use is an unreasonable invasion of another's use and enjoyment of his property so as to constitute a nuisance
cannot be determined by exact rules, but must necessarily depend upon the circumstances of each case, such as locality and the
character of the surroundings, the nature, utility and social value of the use, the extent and nature of the harm involved, the nature,
utility and social value of the use or enjoyment invaded, and the like.[44]

Persons who live or work in thickly populated business districts must necessarily endure the usual annoyances and of those trades and
businesses which are properly located and carried on in the neighborhood where they live or work. But these annoyances and
discomforts must not be more than those ordinarily to be expected in the community or district, and which are incident to the lawful
conduct of such trades and businesses. If they exceed what might be reasonably expected and cause unnecessary harm, then the
court will grant relief.[45]

A finding by the LGU that the noise quality standards under the law have not been complied with is not a prerequisite nor constitutes
indispensable evidence to prove that the defendant is or is not liable for a nuisance and for damages. Such finding is merely
corroborative to the testimonial and/or other evidence to be presented by the parties. The exercise of due care by the owner of a
business in its operation does not constitute a defense where, notwithstanding the same, the business as conducted, seriously affects
the rights of those in its vicinity.[46]

We reject petitioner's contention that respondent's complaint does not state a cause of action for abatement of a private nuisance and
for damages. Under Section 1(g), Rule 16 of the Rules of Court, a complaint may be dismissed upon motion if the complaint states no
cause of action, or that a condition precedent for filing the claim has not been complied with.[47]

A cause of action is the act or omission by which a party violates a right of another.[48] A cause of action exists if the following elements
are present: (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
violative of the right of plaintiff or constituting a breach of the obligation of defendant to plaintiff for which the latter may maintain an
action for recovery of damages.[49]

The fundamental test for failure to state a cause of action is whether, admitting the veracity of what appears on the face and within
the four corners of the complaint, plaintiff is entitled to the relief prayed for. Stated otherwise, may the court render a valid judgment
upon the facts alleged therein?[50] Indeed, the inquiry is into the sufficiency, not the veracity of the material allegations.[51] If the
allegations in the complaint furnish sufficient basis on which it can be maintained, it should not be dismissed regardless of the defenses
that may be presented by defendants.[52] As the Court emphasized:

In determining whether allegations of a complaint are sufficient to support a cause of action, it must be borne in mind that the complaint
does not have to establish or allege facts proving the existence of a cause of action at the outset; this will have to be done at the trial
on the merits of the case. To sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief
does not exist, rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain.

Equally important, a defendant moving to dismiss a complaint on the ground of lack of cause of action is regarded as having
hypothetically admitted all the averments thereof.[53]
The general rule is that the facts asserted in the complaint must be taken into account without modification although with reasonable
inferences therefrom.[54] However, all the pleadings filed may be considered, including annexes, motions and the other evidence on
record, to wit:

However, in so doing, the .trial court does not rule on the truth or falsity of such documents. It merely includes such documents in the
hypothetical admission. Any review of a finding of lack of cause of action based on these documents would not involve a calibration of
the probative value of such pieces of evidence but would only limit itself to the inquiry of whether the law was properly applied given
the facts and these supporting documents. Therefore, what would inevitably arise from such a review are pure questions of law, and
not questions of fact.[55]

Section 2, Rule 3, of the Revised Rules of Civil Procedure provides that every action must be prosecuted or defended in the name of
the real party-in-interest.

SEC. 2. Parties in interest. - A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or
the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or
defended in the name of the real party in interest. (2a)

"Interest" within the meaning of the rule means material interest, an interest in essence to be affected by the judgment as distinguished
from mere interest in the question involved, or a mere incidental interest. By real interest is meant a present substantial interest, as
distinguished from a mere expectancy or a future, contingent, subordinate or consequential interest.[56] A real party in interest-plaintiff
is one who has a legal right while a real party defendant is one who has a correlative legal obligation whose act or omission violate the
legal right of the former.[57]

A person injured by a nuisance may bring an action in his own name and in behalf of others similarly affected to abate the same.[58] One
who has an interest in the property affected such as the owner thereof or fix interest therein are proper parties as
plaintiffs.[59] Possession alone of real estate is sufficient to sustain an action to recover damages from the maintenance of a nuisance
by the adjoining property in such manner as to injure the enjoyment of the former.

In the present case, respondent made the following allegations in its complaint below:

[Every time] the Feliza Building's airconditioning system is turned on, all or a good number of the 36 blowers are made to operate
simultaneously. The operation of the Feliza's blowers generates a continuous defeaning unbearable vibrating and stressful noise
affecting the tenants of Frabella I Condominium. Hot air is also blasted from the [Feliza Building's blowers to the direction of the
Frabella 1 Condominium.

xxxx

The tenants occupying the 5th to the 16th floors of the Frabella 1 Condominium facing Feliza Building are directly subjected to a daily
continuous intense noise and hot air blast coming from the blowers of the [10-storey] Feliza Building. Some are tenants of plaintiff,
who have complained to plaintiff about the matter. Tenants who could not bear the nuisance any longer have vacated their units, and
as a result, many units of plaintiff have remained vacant, and unoccupied or uninhabitable thereby depriving plaintiff with rental income
that it should have otherwise be receiving.

xxxx

Defendant did not perform any remedial or rectification works to lower the noise being generated by the blowers;

As a consequence of such unbearable, hot air and stressful noise, the occupants of the Frabella I, including the tenants of plaintiff,
have been and still are, prevented from enjoying peaceful and comfortable use of their property thereby forcing them to vacate and
or to transfer elsewhere.

Notwithstanding the foregoing results, repeated requests/demands from the plaintiff and recommendation of the DENR, MACEA and
MMDA to abate nuisance, the defendant has ignored and still continues to ignore such requests/demands/recommendation.

Appended to respondent's complaint are its letters of demand to the petitioner for the latter to abate the nuisance complained of, as
well as the results of the tests conducted by the DENR showing that the noise generated by the blowers of the Feliza Building is beyond
the legally allowable level standards under Section 78 of P.D. No. 984.

By filing a motion to dismiss the complaint on the ground that the complaint does not state a sufficient cause of action for abatement
of nuisance and damages, petitioner hypothetically admitted the material allegations of the complaint. A plain reading of the material
averments therein and its appendages will readily show that respondent had a cause of action for abatement of a private nuisance and
for damages.

Respondent is the real party-in-interest as party plaintiff in the complaint below because it owned several units in Frabelle I and, as a
result of the defeaning and unbearable noise from the blowers of the airconditioning units of the Feliza Building owned by petitioner,
many tenants of the respondent vacated their units. The units remained unoccupied, thereby depriving respondent of income. Some
of the tenants even threatened to sue respondent on account of the noise from the Feliza Building. In fine, respondent is obliged to
maintain its tenants in the peaceful and adequate enjoyment of the units.[60]

Under Article 697 of the New Civil Code, the aggrieved party is entitled to damages for the present and past existence of a
nuisance.[61] He is entitled to actual or compensatory damages[62] or indemnification for damages inclusive of the value of the loss
suffered and profits which respondent failed to obtain.

Liability for nuisance may be imposed upon one who sets in motion the force which entirely caused the tortuous act; upon one who
sets in motion a force or a chain of events resulting in the nuisance. In an action for damages resulting from a nuisance, responsibility
arises not only from the creator of the nuisance but from its continued maintenance as well [63]. One is entitled to damages on account
of the conduct by another of his business which unreasonably and substantially interferes with the quiet enjoyment of his premises by
himself or of his tenants.[64] It is sufficient to maintain an action for abatement of a nuisance if his buildings is rendered valueless
for the purpose it was devoted.

A negligent act may constitute a nuisance. An intentional act may also constitute a nuisance. A nuisance may be formed from a
continuous, known invasion, where, after complaint, and notice of damage, the defendant continues to offend and refuses to correct
or discontinue the nuisance. In such a case, the nuisance is deemed intentional.[65] An unreasonable use, perpetrated and uncorrected
even after complaint and notice of damage is deemed intentional.[66]

In this case, as alleged in the complaint, the subject nuisance had been existing continuously since 1995 and, despite repeated demands
by respondent, petitioner intransigently refused to abate the same.

We reject petitioner's contention that considering the Report of the EMB Team dated July 2, 2002 that the noise complained of by the
respondent did not necessarily come from the blowers but also from passing cars, it follows that respondent has no cause of action
against it for abatement of nuisance. As gleaned from the Report, the panel of investigators found that the passing of vehicles along
the street and blowers of nearby buildings were merely contributory to the ambient noise quality in the area. To what extent
the passing of vehicles contributed to the noise is not indicated in the Report, nor is it stated that the noise coming from the blowers
of the airconditioning unit of the Feliza Building were at par with or lower than the Level Standards under the property Rules and
regulations of P.D. No. 984.

The July 2, 2002 Report of the EMB Panel should not be considered in isolation of other Reports of the EMB since 1995 up to 2000,
showing that the noise level from the blowers of the Feliza Building exceeded the allowable level under P.D. No. 984. The July 2, 2002
Report is not decisive on the issue of whether petitioner had abated the nuisance complained of by respondent or that the nuisance
does not exist at all. Indeed, in Velasco v. Manila Electric Company,[67] this Court cited the ruling in Kentucky & West Virginia Power
Co. v. Anderson,[68] thus:

xxx The determinating factor when noise alone is the cause of complaint is not its intensity or volume. It is that the noise
is of such character as to produce actual physical discomfort and annoyance to a person of ordinary sensibilities, rendering adjacent
property less comfortable and valuable. If the noise does that it can well be said to be substantial and unreasonable in degree; and
reasonableness is a question of fact dependent upon all the circumstances and conditions. 20 R.C.L. 445, 453; Wheat Culvert Company
v. Jenkins, supra. There can be no fixed standard as to what kind of noise constitutes a nuisance. xxx

Besides, even if it is assumed for the nonce that petitioner had abated the nuisance in 2002, still the complaint of the respondent
states a cause of action for damages based upon the past existence of the nuisance, from 1995. Where the injury from the alleged
nuisance is temporary in its nature; or is of a continuing or recurring character, the damages are ordinarily regarded as continuing
and one recovery against the wrongdoer is not a bar to sanction an action for damages thereafter accruing from the same wrong.[69]

The Complaint of the

Respondent Not Premature

Admittedly, respondent did not appeal the July 19, 2002 letter of Engr. Morales. However, the letter was not appealable. It bears
stressing that the letter-complaint of the respondent to Mayor Jejomar Binay against petitioner was referred to Engr. Morales for
investigation of the complaint; the latter was required to submit his Report thereon to the City Mayor for final disposition. Engr.
Morales did secure the July 2, 2002 Report of the EMB but failed to make a Report on his findings. Until after the City Mayor shall
have acted on the findings and recommendation of Engr. Morales an appeal therefrom would be premature.

Obviously, Engr. Morales gave respondent another chance to have the EMB reverse or revise its July 2, 2002 Report. However, when
the officials of respondent sought a clarification of his Order, Engr. Morales was piqued and even dared them to go to court if they
were not satisfied with the EMB Report. Respondent then sought another test by the EMB. In its November 24, 2003, Report, the
EMB confirmed that the SPL was higher when the doors were open; as it was, the SPL readings were taken from inside the Frabelle I.
The EMB added that the noise quality standards in Section 78 of the Implementing Rules and Regulations of P.D. No. 984 could not
be applied since it is for ambient noise. It even emphasized that the SPL are not the actual factors in the resolution of the issues.
Conformably with case law, the EMB opined, noise need not be high or low to annoy or cause nuisance to the receptor; as long as
the complainant is disturbed with the level of sound coming from the firm, the same is a nuisance. Clearly, the EMB was of the view
that the EMB Reports are not decisive on the issue between petitioner and respondent, and that said issue is one beyond the
competence of the LGUs, by implying that the issue is a matter to be presented to and resolved by the ordinary courts. By returning
the records to Makati City, the EMB expected the City to dismiss the complaint and just allow respondent, as complainant, to seek
relief from the courts. Respondent then took its cue from the EMB Report and filed its complaint in the RTC. There is, thus, no basis
for the contention of petitioner that respondent failed to exhaust all administrative remedies before filing its complaint with the RTC.

Also barren of merit are the petitioner's contention that the action of respondent was barred by the decision of the PAB AM No. 01-
0009-FLC. While it is true that the Frabella 1 Condominium Corporation filed its complaint against petitioner before the PAB for and
in behalf of the tenants/owners of units of Frabella I, including those owned by respondent, however, the PAB dismissed the
complaint on the ground of lack of jurisdiction and without prejudice. The PAB ruled that respondent's action was for abatement of a
nuisance which was already devolved to the local government.

As gleaned from the Resolution, the dismissal was without prejudice. Since the PAB had no jurisdiction over the complaint and the
dismissal was without prejudice, respondent's action before the RTC was not barred by res judicata or litis pendentia[70]. The decision
of the PAB was not a decision on the merits of the case.[71] Consequently, the contention of petitioner that respondent is guilty of
forum shopping has no factual basis.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against the petitioner.

SO ORDERED.
G.R. No. 150194 March 6, 2007

ROBERT TAYABAN y CALIPLIP, FRANCISCO MADDAWAT y TAYOBAN, ARTEMIO BALANGUE* y LANGA, FRANCISCO
MAYUMIS y BAHEL and QUIRINO PANA y CUYAHEN, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES and THE HONORABLE SANDIGANBAYAN, Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before this Court is a Petition for Review on Certiorari assailing the Decision1 of the Sandiganbayan dated June 25, 2001 in Criminal
Case No. 17856; and its Resolution2 of September 28, 2001, denying petitioners’ Motion for Reconsideration.

Petitioner Robert Tayaban (Tayaban) was the Municipal Mayor of Tinoc, Ifugao. His co-petitioners, namely: Francisco Maddawat,
Artemio Balangue, Francisco Mayumis, and Quirino Pana, were Municipal Councilors of the same municipality.

The facts of the case are as follows:

Sometime in 1988, then Mayor Tayaban submitted a project proposal to provincial governor Benjamin Cappleman for the construction
of the Tinoc Public Market. Subsequently, Tayaban was informed by the Governor that his proposal was approved and that the project
shall be funded by the Cordillera Executive Board (CEB).3Subsequently, a bidding was conducted and private complainant Lopez Pugong
(Pugong) won the contract for the construction of the said public market. On March 1, 1989, a formal contract 4 was executed by and
between Pugong, as the contractor, and the CEB, as the project owner. Actual construction of the public market was commenced in
June 1989. On August 15, 1989, the Sangguniang Bayan of Tinoc adopted Resolution No. 20 which reads:

R E S O L U T I O N NO. 20

Series of 1989

WHEREAS, upon thorough discussion as regards the construction of the Public Market; it was found out that the constructors despite
the several instructions, memoranda issued by the Municipal Mayor and the negotiations made by this body they insisted to erect the
building pedestals on the site [that] pleases them and not on the site identified by this duly constituted body who has direct
administration of the municipal ground;

WHEREFORE, on motion duly seconded be it…

RESOLVED, as it is hereby done to adopt this resolution manifesting this body’s decision to uphold and maintain the trust and confidence
of the people upon this body;

RESOLVED, finally that this body agrees, and decides to demolish the erected structures for the purpose of erecting the Public Market
building as identified and decided by this body; and further resolved as it is hereby done that this be a precedent for other future
leaders.5

On that same day, Tayaban and his co-petitioners, together with some men, proceeded to the construction site and demolished the
structures and improvements introduced thereon. As a result, Pugong filed an Affidavit-Complaint6against herein petitioners.

Subsequently, in an Information dated June 26, 1992, herein petitioners were charged with violation of Section 3(e) of Republic Act
(R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act. The accusatory portion of the Information reads:

That on August 17, 1989 and for sometime prior or subsequent thereto, in the Municipality of Tinoc, Ifugao, Philippines and within the
jurisdiction of this Honorable Court, the above-named accused Robert Tayaban, Municipal Mayor of Tinoc, Francisco Maddawat, Artemio
Balangue, Francisco Mayumis and Quirino Pana, are all public officers being Municipal Councilors of Tinoc, Ifugao and in the performance
of their official functions acting in evident bad faith and conspiring with each other, did then and there, willfully and unlawfully pass
and unanimously approve Resolution No. 20, thereby vesting upon themselves powers and authority to demolish the half-finished Tinoc
Public Market construction whereby respondents themselves personally and actually demolish [sic] it, to the damage and prejudice of
the government particularly the Cordillera Executive Board, being the owner of the project.7

Upon arraignment on December 14, 1992, herein petitioners pleaded not guilty.8

After trial, the Sandiganbayan promulgated the presently assailed Decision,9 the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered convicting all the accused ROBERT TAYABAN Y CALIPLIP, FRANCISCO
MADDAWAT Y TAYOBAN, ARTEMIO BALANGUE Y LANGA, FRANCISCO MAYUMIS Y BAHEL and QUIRINO PANA Y CUYAHEN of the crime
of Violation of Section 3 (e) of Republic Act No. 3019 as amended, and in the absence of mitigating and aggravating circumstances
and applying the Indeterminate Sentence Law, herein accused are hereby sentenced to suffer the indeterminate penalty of
imprisonment of six (6) years and one (1) month as minimum to eight (8) years as maximum and are hereby ordered jointly and
severally to pay the government the amount of ₱134,632.80 without subsidiary imprisonment in case of insolvency.

SO ORDERED.10

Petitioners filed a Motion for Reconsideration but the Sandiganbayan denied it in a Resolution11 dated September 28, 2001.

Hence, herein petition for review with the following assignment of errors:

I
WITH ALL DUE RESPECT, THE HONORABLE SANDIGANBAYAN ERRED IN HOLDING THAT THE ACTS ALLEGEDLY COMMITTED BY THE
ACCUSED CONSTITUTED A VIOLATION OF SECTION 3(E) OF R.A. NO. 3019 AS AMENDED, AND THEREFORE ACCUSED SHOULD HAVE
BEEN ACQUITTED BY THE RESPONDENT COURT.
II
THE HONORABLE SANDIGANBAYAN ERRED IN NOT HOLDING THAT RESOLUTION NO. 20 IS A VALID LEGISLATION AND THAT THE
DEMOLITION OF THE FIVE POSTS WAS AN IMPLEMENTATION OF LOI NO. 19 AND AN EXERCISE OF THE POLICE POWER VESTED IN
LOCAL GOVERNMENT UNIT.
III
THE HONORABLE SANDIGANBAYAN, IN VIOLATION OF THE RULES OF EVIDENCE, LAWS AND JURISPRUDENCE ERRED IN
CONSIDERING FACTS WITHOUT REFERRING TO THE EVIDENCE ON RECORD.12

In their first assigned error, petitioners argue that one of the elements of the offense which constitutes a violation of Section 3(e) of
R.A. No. 3019 is that the government or any private party suffers undue injury by reason of the prohibited acts committed by the
public officer being charged. Petitioners argue that this element was not proved because the CEB, which was supposed to be the injured
party as alleged in the Information, did not complain or participate in the trial of the case. Petitioners go on to conclude that the
existence of undue injury cannot be proven without the alleged injured party testifying. Petitioners further contend that the itemized
list of expenses submitted in evidence by Pugong should not have been made a basis of the presently assailed Decision because such
list is not supported by receipts and, therefore, self-serving. Moreover, Pugong was never mentioned in the Information as one of the
injured parties. Petitioners assert that undue injury could only mean actual injury or damage which must be established by evidence.

Petitioners also contend that the element of bad faith on their part was not proved. On the contrary, they argue that their act of
exerting efforts to communicate with the contractor and his foreman, by sending three letters in order to remind them of the proper
site of construction, only shows that they were acting in good faith; that the eventual passage of Resolution No. 20 is also an additional
evidence of good faith on their part because it was adopted by the Sangguniang Bayan as a collective body acting within the scope of
its authority. Petitioners further contend that the CEB saw the propriety of the Sangguniang Bayan’s action to stop the construction of
the market that was why it issued an order suspending the said construction; and that the CEB, realizing its mistake in not coordinating
with petitioners, did not pursue any action against them.

In their second assigned error, petitioners argue that the Sandiganbayan erred in applying Sections 5613 and 59(a)14 of the Local
Government Code (LGC) of 1991, which provide, respectively, for the review by the Sangguniang Panlalawigan of component city and
municipal ordinances and resolutions approving local development plans and public investment programs and for the posting in
conspicuous places in the local government unit concerned of the said resolutions and ordinances.

They argue that the applicable law at the time of the passage of Resolution No. 20 is Batas Pambansa Bilang (B.P. Blg.) 337 or the
Local Government Code of 1983. Claiming that Pugong failed to obtain the requisite building permit pursuant to Presidential Decree
(P.D.) No. 1096,15 petitioners assert that their act of demolishing the structures erected on the construction site is an implementation
of the provisions of the Letter of Instruction (LOI) No. 1916which empowers certain public officials, like the municipal mayor, to remove
illegal constructions which were built, either in public places or private property, without permit. Petitioners further contend that the
demolition is a valid exercise of police power and that their act is justified by the general welfare clause under the LGC which empowers
them to enact and implement measures for the general well-being of their constituents.

In their third assigned error, petitioners argue that the Sandiganbayan erred in relying on the testimony of prosecution witness Abe
Belingan considering that he is not a disinterested witness because he is given the contract of cementing the supposed second floor of
the public market. Moreover, petitioners contend that the testimony of Belingan regarding the reason why Mayor Tayaban demolished
the structures is mere hearsay and as such should not be given any probative value. Petitioners assert that the complaint was filed
against them for purposes of political harassment considering that Pugong’s political allies who also signed Resolution No. 20 were not
included in the said complaint.

In its Comment, the Office of the Solicitor General (OSG) contends that, as properly held by the Sandiganbayan, undue injury has
been caused to the Government and that it is immaterial whether the CEB filed a complaint against herein petitioners because the real
party-in-interest is the Government of the Republic of the Philippines. The OSG also argues that private complainant Pugong also
suffered undue injury because he already incurred expenses for labor, tools, equipment, and materials for the construction project. As
to the issue of credibility of witnesses, the OSG asserts that the matter of assigning values to declarations on the witness stand is a
function most competently performed by the trial judge who had the opportunity to observe the witnesses and assess their credibility
by the various indicia available but not reflected on record.

The Office of the Special Prosecutor (OSP) also filed its Comment, contending that it is not necessary for the CEB to initiate a complaint
against herein petitioners because the real party-in-interest is the Government of the Republic of the Philippines; that there is actual
injury on the part of the Government as shown by the fact that construction was commenced and that petitioners did not deny that
they demolished the structures which were erected; and that the list of expenses presented by Pugong cannot be considered self-
serving because the latter testified thereon.

The OSP further claims that petitioners were guilty of bad faith when they demolished the erected structures as evidenced by various
acts committed by herein petitioners prior to and during the construction of the public market; and that the fact that witness Belingan
has contracted the cementing of the second floor of the supposed public market is not sufficient evidence of his bias against herein
petitioners.

As to petitioners’ contention that the criminal complaint filed against them was merely a political harassment considering that the other
members of the Sangguniang Bayan who signed the questioned Resolution but who are allies of Pugong were not included in the
complaint, the OSP avers that, while the said members of the Sangguniang Bayan signed Resolution No. 20, they were not included in
the complaint because they did not take part in the demolition of the public market.

The Court finds the petition without merit.

Section 3(e) of R.A. No. 3019 reads:

Sec. 3. Corrupt practices of public officers. - In addition to acts or omissions of public officers already penalized by existing law, the
following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:
xxxx
(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage
or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad faith or gross
inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the
grant of licenses or permits or other concessions.
The following indispensable elements must be established to constitute a violation of Section 3(e) of R.A. No. 3019, as amended:
1. The accused is a public officer discharging administrative or official functions or private persons charged in conspiracy with
them;
2. The public officer committed the prohibited act during the performance of his official duty in relation to his public position;
3. The public officer acted with manifest partiality, evident bad faith or gross inexcusable negligence; and
4. His action caused undue injury to the government or any private party, or gave any party any unwarranted benefit,
advantage or preference to such parties.17

Herein petitioners’ contention that the Sandiganbayan erred in ruling that they are guilty of bad faith and that they caused undue
injury to the Government is not plausible.

With respect to the element of bad faith, the Court, in a number of cases, held:

Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity and conscious
doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the nature of fraud. (Spiegel v. Beacon
Participations, 8 NE 2nd Series, 895, 1007). It contemplates a state of mind affirmatively operating with furtive design or with some
motive of self-interest or ill will for ulterior purposes. (Air France v. Carrascoso, 18 SCRA 155, 166-167). Evident bad faith connotes a
manifest deliberate intent on the part of the accused to do wrong or cause damage.18

The Court agrees with the findings of the Sandiganbayan that petitioners were guilty of bad faith in causing the demolition.
Evidence of this is the fact that Resolution No. 20 was implemented on the same day that it was adopted without due notice of the
planned demolition given to the CEB and the private contractor. In fact, Raymundo Madani, one of the Municipal Councilors who signed
Resolution No. 20, testified that the said Resolution was passed only in the afternoon of August 15, 1989, after the subject demolition
was conducted in the morning of the same day.19

Proof of petitioners’ bad faith is also shown by Pugong’s testimony, which was given credence by the Sandiganbayan, that the site
where his laborers began construction of the demolished public market was pointed out by petitioner Tayaban himself when the former
asked the latter where they were going to erect the said market.20
Tayaban’s letter and memorandum dated July 31, 198921 and August 3, 1989,22 respectively, addressed to the laborers of Pugong
directing them to stop construction may not be considered as evidence of good faith on the part of petitioners considering that they
know fully well that it is the CEB which implements the said project and any grievance or complaint on their part should have been
addressed to the said Board. No evidence was presented to show that petitioners made their objections known to the CEB. At the least,
petitioners should have furnished the CEB or the Governor, in his capacity as a regular member of the CEB,23 a copy of the above-
mentioned letter and memorandum. But they never did. The letter and memorandum were not even addressed to Pugong and there
is no proof to show that he was informed of the contents thereof. Moreover, even if Pugong’s men had received the letter and
memorandum, they may not be totally blamed for ignoring the letter and the memorandum because under their contract, the owner
of the project is the CEB and there is nothing therein which requires them to comply with whatever directive the Mayor or
the Sangguniang Bayan of Tinoc may issue. In fact, the contract signed on March 1, 1989 specifically states that the contractor shall
construct the Tinoc Public Market as per plan and specification provided by the CEB technical staff.24 In consonance with the said
provision in the contract, Pugong testified that the CE
B sent a representative to supervise the construction.25
The following admissions made by petitioners bolster Sandiganbayan’s finding of bad faith on their part:
First, petitioner Tayaban admitted that when he submitted the project proposal for the construction of the Tinoc Public Market, he did
not indicate the exact location where the market should be put up saying that he shall specify the location when the budget for the
project shall have been approved.26 However, despite meeting the Governor twice in 1989, and being informed by the latter that the
project had already been approved and funded, Tayaban still did not suggest to the Governor nor mention to him the specific place
where he and the Sangguniang Bayan desire to have the public market erected.27 Worse, when the construction was commenced and
petitioners discovered that the public market was being built allegedly in a place where it should not be, petitioner Tayaban even
admits that he still did not inform the Governor of such fact.28
Second, Tayaban admits that they never bothered to check with the CEB where the latter intended to put up the public market. 29 There
is no evidence to show that, when the construction was commenced, petitioners informed the CEB of the alleged mistake in the location
of the project. In fact, petitioner Tayaban testified that it was only in the first or second week of August, 1989 that he informed the
CEB regarding the supposed error,30 even when he came to know the exact site where Pugong intended to build the market as early
as April 1989.31 Moreover, when the Sangguniang Bayan convened on August 15, 1989 and passed Resolution No. 20, they did not
invite any representative from the CEB.32
Third, while petitioners aver that they have come up with a Site Development Plan wherein the exact location of the public market was
specified, Tayaban admits that the blue print of the said development plan was completed only in August 1989.33 However, the
construction of the public market was commenced as early as June 1989.
From the foregoing, it is evident that petitioners were moved by a manifest and deliberate intent to cause damage.
It is clear from the Information filed that the injured party in the instant case is the Government, as represented by the CEB. The fact
that the CEB did not initiate the filing of the instant criminal action is of no moment considering that a complaint for purposes of
preliminary investigation by the fiscal need not be filed by the "offended party".34The rule has been that, unless the subject of the
complaint is one that cannot be prosecuted de oficio, the same may be filed, for preliminary investigation purposes, by any competent
person.35 In the present case, it is sufficient that private contractor Pugong was the one who filed an affidavit-complaint for purposes
of preliminary investigation by the OSP. Moreover, the failure of the CEB to participate in the trial of the case does not necessarily
mean that the Government of the Republic of the Philippines did not suffer any injury or that such injury cannot be proven.
As to whether the Government suffered undue injury, it cannot be denied that the unceremonious demolition of the five concrete posts
and the other improvements built as part of the foundation of the supposed public market resulted in damage to the Government.
Evidence presented by the prosecution shows that, at the time of the questioned demolition, the CEB had already disbursed in favor
of Pugong the amount of ₱134,632.80.36 Any further effort to rebuild the destroyed structures or to proceed with the construction of
the market would necessarily entail additional expenses on the part of the Government. Hence, undue injury to the Government was
proven to the point of moral certainty.

Petitioners’ reliance on Llorente, Jr. v. Sandiganbayan37 is misplaced as the factual milieu in the said case is not on all fours with the
present case. In Llorente, the petitioner, a municipal mayor, was charged with violation of Section 3(e) of R.A. No. 3019 for having
allegedly delayed or withheld the salaries and other emoluments due to the private complainant who is a municipal employee, causing
her undue injury. In acquitting petitioner, this Court ruled that the prosecution failed to sufficiently establish that the private
complainant suffered undue injury after it has been proven that she subsequently received the salaries and allowances which, she
claimed, were withheld from her. The Court held that, other than the amount of the withheld salaries and allowances which were
eventually received, the prosecution failed to specify and to prove any other loss or damage sustained by the complainant. Moreover,
the Court ruled that the alleged financial stress which complainant suffered was inadequate and largely speculative and that the long
period of time that her emoluments were withheld does not constitute the kind of undue injury contemplated by law.

In the present case, it cannot be gainsaid that the destruction of the five concrete posts and the other improvements in the construction
of the Tinoc public market is clear and substantial evidence to prove that the Government suffered undue injury. Under prevailing
jurisprudence, proof of the extent or quantum of damage is not essential, it being sufficient that the injury suffered or benefits received
can be perceived to be substantial enough and not merely negligible.38
Pugong may not be made liable to answer for the injury suffered by the Government considering that it was not he who caused the
subject demolition. Neither was it alleged nor proven that he breached his contract with the CEB as to justify the destruction of the
structures which were already built.
On the other hand, the prosecution has sufficiently established the individual participation of petitioners in carrying out the
demolition.39 In fact, petitioners do not deny that, in their capacity as public officials, they caused the actual demolition of the structure
built on the project site. Hence, they should be held answerable for the injury suffered by the Government.
Anent the second assigned error, the Court agrees with the petitioners and the OSG that Sections 56 and 59(a) of the 1991 LGC (R.A.
No. 7160) are not applicable in the present case. The Sangguniang Bayan of Tinoc enacted the questioned resolution on August 15,
1989, more than two years before the effectivity of the said Code.40 The prevailing law at that time was the Local Government Code
of 1983 (B.P. Blg. 337). The Court agrees with the OSG that Sections 56 and 59(a) of the 1991 LGC have no similar or counterpart
provisions in the 1983 LGC. In addition, the Court agrees with petitioners that Sections 56 and 59(a) of the 1991 LGC find no application
in the present case because these provisions refer, specifically, to ordinances and resolutions approving the local development plans
and public investment programs formulated by the local development council.
However, the Court is not persuaded by petitioners’ reliance on the provisions of P.D. No. 1096 and LOI No. 19 as their legal bases in
conducting the questioned demolition. A careful reading of Resolution No. 20 reveals that petitioners’ only basis in deciding to carry
out the demolition was because the supposed public market was being erected in a place other than that identified by the Sangguniang
Bayan of Tinoc. There was no mention whatsoever in the said Resolution that the private contractor failed to secure the requisite
building permit. Neither was there any mention that the demolition was being conducted pursuant to the power vested upon the Mayor
by the provisions of LOI No. 19. Even the letter sent by petitioner Tayaban to the head laborer of Pugong dated July 31, 1989, the
letter to the Station Commander of the INP, Tinoc of even date,41 and the memorandum sent to the laborers of Pugong dated August
3, 1989 uniformly state that the only reason why petitioners wanted to stop the construction was because the supposed public market
was being erected in the wrong place. Hence, petitioners’ reliance on the provisions of P.D. No. 1096 and LOI No. 19 was merely an
afterthought and as a means of justification for their acts which, in the first place, were done in bad faith.

Likewise, the Court is not persuaded by petitioners’ contention that the subject demolition is a valid exercise of police power. The
exercise of police power by the local government is valid unless it contravenes the fundamental law of the land, or an act of the
legislature, or unless it is against public policy, or is unreasonable, oppressive, partial, discriminating, or in derogation of a common
right.42 In the present case, the acts of petitioner have been established as a violation of law, particularly of the provisions of Section
3(e) of R.A. No. 3019.

Neither can petitioners seek cover under the general welfare clause authorizing the abatement of nuisances without judicial
proceedings. This principle applies to nuisances per se, or those which affect the immediate safety of persons and property and may
be summarily abated under the undefined law of necessity.43 Petitioners claim that the public market would pose danger to the safety
and health of schoolchildren if it were built on the place being contested.44 However, petitioners never made known their supposed
concerns either to the Governor or to the CEB. Instead, they took the law into their own hands and precipitately demolished the subject
structures that were built without the benefit of any hearing or consultation with the proper authority, which in this case is the CEB.

As to the Sandiganbayan’s act of giving credence to the testimony of prosecution witness Abe Belingan, the settled rule is that the
assessment of the credibility of a witness is primarily the function of a trial court, which had the benefit of observing firsthand the
demeanor or deportment of the witness.45 It is well-settled that this Court will not reverse the trial court’s assessment of the credibility
of witnesses in the absence of arbitrariness, abuse of discretion or palpable error.46 It is within the discretion of the Sandiganbayan to
weigh the evidence presented by the parties, as well as to accord full faith to those it regards as credible and reject those it considers
perjurious or fabricated.47Moreover, the settled rule is that absent any evidence showing a reason or motive for prosecution witnesses
to perjure their testimonies, the logical conclusion is that no improper motive exists, and that their testimonies are worthy of full faith
and credit. In the present case, the fact that Belingan was contracted to cement the supposed second floor of the public market is not
a compelling evidence to prove that his testimony is biased. Hence, the Court finds no cogent reason to depart from the findings of
the Sandiganbayan with respect to the credibility of Belingan.

The penalty for violation of Section 3(e) of R.A. No. 3019, as provided under Section 9 of the same law, is imprisonment for not less
than six years and one month nor more than 15 years, perpetual disqualification from public office, and confiscation or forfeiture in
favor of the Government of any prohibited interest and unexplained wealth manifestly out of proportion to the salary and other lawful
income of the accused. Under the Indeterminate Sentence Law, if the offense is punished by special law, the Court shall sentence the
accused to an indeterminate penalty, the maximum term of which shall not exceed the maximum fixed by said law and the minimum
term shall not be less than the minimum prescribed by the same.48 In the present case, the Court finds no error in the penalty imposed
by the Sandiganbayan, except that the penalty of perpetual disqualification from public office should also be imposed.

It bears to reiterate that the injury suffered by the Government consists in the fact that it had already disbursed the amount of
₱134,632.80 for the purpose of commencing the construction of the Tinoc Public Market which was reduced to nothing by reason of
petitioners’ destruction of the structures built and the eventual stoppage of the project. On this basis, the Court agrees with
the Sandiganbayan that petitioners are liable to reimburse the said amount lost by the Government.

WHEREFORE, the assailed Decision and Resolution of the Sandiganbayan are AFFIRMED with MODIFICATION. The additional
penalty of perpetual disqualification from public office is imposed upon petitioners.

SO ORDERED.
CONCEPCION PARAYNO, G.R. No. 148408
Petitioner,
Present:

- v e r s u s - PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA and
GARCIA, JJ.
JOSE JOVELLANOS and the
MUNICIPALITY OF CALASIAO,
PANGASINAN,*
Respondents. Promulgated:
July 14, 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CORONA, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Court questioning the resolution of the Court of
Appeals (CA) which dismissed the petition for certiorari, mandamus and prohibition, with prayer for issuance of a preliminary and
mandatory injunction, filed by petitioner Concepcion Parayno against respondents Jose Jovellanos and the Municipality
of Calasiao, Pangasinan.
Petitioner was the owner of a gasoline filling station in Calasiao, Pangasinan. In 1989, some residents of Calasiao petitioned
the SangguniangBayan (SB) of said municipality for the closure or transfer of the station to another location. The matter was referred
to the Municipal Engineer, Chief of Police, Municipal Health Officer and the Bureau of Fire Protection for investigation. Upon their advise,
the Sangguniang Bayanrecommended to the Mayor the closure or transfer of location of petitioners gasoline station. In Resolution No.
50, it declared:

a) xxx the existing gasoline station is a blatant violation and disregard of existing law to wit:

The Official Zoning Code of Calasiao, Art. 6, Section 44,[1] the

nearest school building which is San Miguel Elementary School and church, the distances are less
than 100 meters. No neighbors were called as witnesses when actual measurements were done by
HLURB Staff, Baguio City dated 22 June 1989.

b) The gasoline station remains in thickly populated area with commercial/residential buildings, houses closed
(sic) to each other which still endangers the lives and safety of the people in case of fire. Moreover, additional
selling and storing of several LPG tanks in the station (sic).
c) The residents of our barangay always complain of the irritating smell of gasoline most of the time especially
during gas filling which tend to expose residents especially children to frequent colds, asthma, cough and the
like nowadays.

d) xxx the gasoline station violated Building and Fire Safety Codes because the station has 2nd floor storey building
used for business rental offices, with iron grilled windows, no firewalls. It also endangers the lives of people
upstairs.

e) It hampers the flow of traffic, the gasoline station is too small and narrow, the entrance and exit are closed to
the street property lines. It couldnt cope situation (sic) on traffic because the place is a congested area.[2]

Petitioner moved for the reconsideration of the SB resolution but it was denied. Hence, she filed a special civil action for
prohibition and mandamus with the Regional Trial Court (RTC) of Dagupan City, Branch 44 against respondents. The case, docketed
as SP Civil Case No. 99-03010-D, was raffled to the sala of Judge Crispin Laron.
Petitioner claimed that her gasoline station was not covered by Section 44 of the Official Zoning Code since it was not a
gasoline service station but a gasoline filling station governed by Section 21 thereof. She added that the decision of the Housing and
Land Use Regulatory Board (HLURB),[3] in a previous case filed by the same respondent Jovellanos against her predecessor
(Dennis Parayno), barred the grounds invoked by respondent municipality in Resolution No. 50. In the HLURB case,
respondent Jovellanos opposed the establishment of the gas station on the grounds that: (1) it was within the 100-meter prohibited
radius under Section 44 and (2) it posed a pernicious effect on the health and safety of the people in Calasiao.

After the hearing on the propriety of issuing a writ of preliminary prohibitory and mandatory injunction, the trial court ruled:

There is no basis for the court to issue a writ of preliminary prohibitory and mandatory injunction. Albeit, Section
44 of the Official Zoning Code of respondent municipality does not mention a gasoline filling station,
[but] following the principle of ejusdem generis, a gasoline filling station falls within the ambit of Section
44.

The gasoline filling station of the petitioner is located under the establishment belonging to the petitioner
and is very near several buildings occupied by several persons. Justice dictates that the same should not be
allowed to continue operating its business on that particular place. Further, the gasoline filling station
endangers the lives and safety of people because once there is fire, the establishment and houses nearby
will be razed to the ground.[4] (emphasis supplied)

Petitioner moved for reconsideration of the decision but it was denied by the trial court.

Petitioner elevated the case to the CA via a petition for certiorari, prohibition and mandamus,[5] with a prayer for injunctive
relief. She ascribed grave abuse of discretion, amounting to lack or excess of jurisdiction, on the part of Judge Laron who dismissed
her case.

After the CA dismissed the petition, petitioner filed a motion for reconsideration but the same was denied. Hence, this appeal.
 Before us, petitioner insists that (1) the legal maxim of ejusdem generis did not apply to her case; (2) the closure/transfer of
her gasoline filling station by respondent municipality was an invalid exercise of the latters police powers and (3) it was the principle
of res judicata that applied in this case.[6]

We find merit in the petition.

THE PRINCIPLE OF EJUSDEM GENERIS

We hold that the zoning ordinance of respondent municipality made a clear distinction between gasoline service station and
gasoline filling station. The pertinent provisions read:
xxx xxx xxx

Section 21. Filling Station. A retail station servicing automobiles and other motor vehicles with gasoline
and oil only.[7]

xxx xxx xxx

Section 42. Service Station. A building and its premises where gasoline oil, grease, batteries, tires and car
accessories may be supplied and dispensed at retail and where, in addition, the following services may be
rendered and sales and no other.

a. Sale and servicing of spark plugs, batteries, and distributor parts;

b. Tire servicing and repair, but not recapping or regrooving;
c. Replacement of mufflers and tail pipes, water hose, fan belts, brake fluids, light bulbs, fuses, floor
mats, seat covers, windshield wipers and wiper blades, grease retainers, wheel, bearing, mirrors and
the like;
d. Radiator cleaning and flushing;
e. Washing and polishing, and sale of automobile washing and polishing materials;
f. Grease and lubricating;
g. Emergency wiring repairs;
h. Minor servicing of carburators;
i. Adjusting and repairing brakes;
j. Minor motor adjustments not involving removal of the head or crankcase, or raising the motor. [8]

xxx xxx xxx

It is evident from the foregoing that the ordinance intended these two terms to be separate and distinct from each other.
Even respondent municipalitys counsel admitted this dissimilarity during the hearing on the application for the issuance of a writ of
preliminary prohibitory and mandatory injunction. Counsel in fact admitted:

1. That there exist[ed] an official zoning code of Calasiao, Pangasinan which [was] not yet
amended;
2. That under Article III of said official zoning code there [were] certain distinctions
made by said municipality about the designation of the gasoline filling station and that of
the gasoline service station as appearing in Article III, Nos. 21 and 42, [respectively];
3. That the business of the petitioner [was] one of a gasoline filling station as defined
in Article III, Section 21 of the zoning code and not as a service station as differently defined
under Article 42 of the said official zoning code;
4. That under Section 44 of the official zoning code of Calasiao, the term filling station
as clearly defined under Article III, Section 21, [did] not appear in the wordings
thereof;[9] (emphasis supplied)

The foregoing were judicial admissions which were conclusive on the municipality, the party making them.[10] Respondent
municipality thus could not find solace in the legal maxim of ejusdem generis[11] which means of the same kind, class or nature. Under
this maxim, where general words follow the enumeration of particular classes of persons or things, the general words will apply only
to persons or things of the same general nature or class as those enumerated.[12] Instead, what applied in this case was the legal
maxim expressio unius est exclusio alteriuswhich means that the express mention of one thing implies the exclusion of
others.[13] Hence, because of the distinct and definite meanings alluded to the two terms by the zoning ordinance, respondents could
not insist that gasoline service station under Section 44 necessarily included gasoline filling station under Section 21. Indeed, the
activities undertaken in a gas service station did not automatically embrace those in a gas filling station.

THE EXERCISE OF POLICE POWERS

Respondent municipality invalidly used its police powers in ordering the closure/transfer of petitioners gasoline station. While
it had, under RA 7160,[14] the power to take actions and enact measures to promote the health and general welfare of its constituents,
it should have given due deference to the law and the rights of petitioner.

A local government is considered to have properly exercised its police powers only when the following requisites are met: (1)
the interests of the public generally, as distinguished from those of a particular class, require the interference of the State and (2) the
means employed are reasonably necessary for the attainment of the object sought to be accomplished and not unduly
oppressive.[15] The first requirement refers to the equal protection clause and the second, to the due process clause of the
Constitution.[16]

Respondent municipality failed to comply with the due process clause when it passed Resolution No. 50. While it maintained
that the gasoline filling station of petitioner was less than 100 meters from the nearest public school and church, the records do not
show that it even attempted to measure the distance, notwithstanding that such distance was crucial in determining whether there
was an actual violation of Section 44. The different local offices that respondent municipality tapped to conduct an investigation never
conducted such measurement either.

Moreover, petitioners business could not be considered a nuisance which respondent municipality could summarily abate in
the guise of exercising its police powers. The abatement of a nuisance without judicial proceedings is possible only if it is a nuisance per
se. A gas station is not a nuisance per se or one affecting the immediate safety of persons and property,[17] hence, it cannot be closed
down or transferred summarily to another location.
 As a rule, this Court does not pass upon evidence submitted by the parties in the lower courts. [18] We deem it necessary,
however, to recall the findings of the HLURB which petitioner submitted as evidence during the proceedings before the trial court, if
only to underscore petitioners compliance with the requirements of law before she put up her gasoline station.

Another factor that should not be left unnoticed is the diligence exercised by [petitioner] in complying with
the requirements of the several laws prior to the actual implementation of the project as can be attested by the fact
that [petitioner] has secured the necessary building permit and approval of [her] application for authority to relocate
as per the letter of the Energy Regulatory Board xxx.[19]
On the alleged hazardous effects of the gasoline station to the lives and properties of the people of Calasiao, we again note:
Relative to the allegations that the project (gasoline station) is hazardous to life and property, the Board
takes cognizance of the respondents contention that the project is not a fire hazard since petroleum products shall
be safely stored in underground tanks and that the installation and construction of the underground tanks shall be
in accordance with the Caltex Engineering Procedures which is true to all gasoline stations in the country. xxx

Hence, the Board is inclined to believe that the project being hazardous to life and property is
more perceived than factual. For, after all, even the Fire Station Commander, after studying the plans and
specifications of the subject proposed construction, recommended on 20 January 1989, to build such buildings after
conform (sic) all the requirements of PP 1185. It is further alleged by the complainants that the proposed
location is in the heart of the thickly populated residential area of Calasiao. Again, findings of the
[HLURB] staff negate the allegations as the same is within a designated Business/Commercial Zone per
the Zoning Ordinance. xxx[20](emphasis supplied)
The findings of fact of the HLURB are binding as they are already final and conclusive vis--vis the evidence submitted by respondents.

THE PRINCIPLE OF RES JUDICATA

Petitioner points out that the HLURB decision in the previous case filed against her predecessor (Dennis Parayno) by
respondent Jovellanoshad effectively barred the issues in Resolution No. 50 based on the principle of res judicata. We agree.

Res judicata refers to the rule that a final judgment or decree on the merits by a court of competent jurisdiction is conclusive
of the rights of the parties or their privies in all later suits on all points and matters determined in the former suit.[21] For res judicata to
apply, the following elements must be present: (1) the judgment or order must be final; (2) the judgment must be on the merits; (3)
it must have been rendered by a court having jurisdiction over the subject matter and the parties and (4) there must be, between the
first and second actions, identity of parties, of subject matter and of cause of action.[22]

Respondent municipality does not contest the first, second and third requisites. However, it claims that it was not a party to
the HLURB case but only its co-respondent Jovellanos, hence, the fourth requisite was not met. The argument is untenable.

The absolute identity of parties is not required for the principle of res judicata to apply.[23] A shared identity of interests is
sufficient to invoke the application of this principle.[24] The proscription may not be evaded by the mere expedient of including an
additional party.[25] Resjudicata may lie as long as there is a community of interests between a party in the first case and a party in
the second case although the latter may not have been impleaded in the first.[26]

In the assailed resolution of respondent municipality, it raised the same grounds invoked by its co-respondent in the HLURB:
(1) that the resolution aimed to close down or transfer the gasoline station to another location due to the alleged violation of Section
44 of the zoning ordinance and (2) that the hazards of said gasoline station threatened the health and safety of the public. The HLURB
had already settled these concerns and its adjudication had long attained finality. It is to the interest of the public that there should
be an end to litigation by the parties over a subject matter already fully and fairly adjudged. Furthermore, an individual should not be
vexed twice for the same cause.[27]

WHEREFORE, the petition is hereby GRANTED. The assailed resolution of the Court of the Appeals is REVERSED and SET
ASIDE. Respondent Municipality of Calasiao is hereby directed to cease and desist from enforcing Resolution No. 50 against petitioner
insofar as it seeks to close down or transfer her gasoline station to another location.

No costs.

SO ORDERED.