Civ 1

DIVISION
[ GR No. 206103, Mar 29, 2017 ]
LYDIA LAVAREZ v. ANGELES S. GUEVARRA +
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals (CA) dated August
15, 2012 and its Resolution[2] dated February 25, 2013 in CA-G.R. CV No. 95543 which partly granted the
appeal from the Decision[3] of the Regional Trial Court (RTC) of Lucena City, Branch 53, dated May 26, 2010 in
Civil Case No. 1996-159.
The facts of the case at bar, as shown in the records, are as follows:
Rebecca Zaballero, Romulo Zaballero, Amando Zaballero, Raquel Zaballero-Sevilla, and Ramon Lavarez are
siblings, the latter being a son from a former marriage. On June 7, 1996, Rebecca died intestate and without
any issue, leaving several properties to be settled among her nearest kins – the sons and daughters of her
siblings – who later became the parties in this case.
On October 16, 1996, Lydia Lavarez, Godofredo Lavarez, Lourdes Lavarez, Guido Lavarez, Norlie Bibiera,
Gregorio Lavarez, Leticia Lavarez, Margarita Lavarez, Wilfredo Lavarez, Luis Lavarez, Remedios V. Zaballero,
Josephine V. Zaballero, Fernando V. Zaballero, Valenta V. Zaballero, Milagros Z. Vergara, Valeta Z. Reyes,
Amado R. Zaballero, Emmanuel R. Zaballero, and Florentino Zaballero filed an action for reconveyance,
partition, accounting, and nullification of documents, with damages, against respondents Angeles S. Guevarra,
Augusto Sevilla, Jr., Asteria S. Yra, Antonio Sevilla, Alberto Sevilla, Adelina S. Alvarez, and Aristeo Sevilla.
For their defense, respondents alleged that there was nothing to partition since they were not aware of any real
or personal properties which their aunt Rebecca had left behind. Said properties which were included in the
complaint had already been validly donated to them by Rebecca, resulting to new Certificates of Title being
issued in their names. Also, Guevarra claimed that she never took over the management and administration of
Rebecca's properties so she could not be compelled to render an accounting of the income of said properties.
On May 26, 2010, the Lucena RTC granted the complaint, thus:
WHEREFORE, of the foregoing, the Court orders:
1. Defendant Angeles S. Guevarra, as the administratrix of the late Rebecca Zaballero's property, to render an
accounting how she managed the said properties of her principal, including but not limited, to income and
expenses therefrom, bank deposits, from the time it came to her possession up to the filing of this case in
Court on October 16, 1996.
2. Declaring the deeds of donation enumerated under page 3 of this decision, executed by Rebecca Zaballero,
in favor of the defendants, a nullity for being tainted with vices of consent and reverting the same to the estate
of the late Rebecca Zaballero.
3. Defendant Register of Deeds of Lucena City to cancel the said titles thereon under the names of the
defendants to be partitioned by and between the parties in this case in accordance with law.
SO ORDERED.[4]
Therefore, respondents elevated the case to the CA. On August 15, 2012, the appellate court partly granted
the appeal and sustained the validity of the subject Deeds of Donation, to wit:
WHEREFORE, premises considered, the instant appeal is PARTLY GRANTED. The assailed Deeds of
Donation executed in May 1993 by deceased Rebecca Zaballero in favor of defendants-appellants are
declared valid.
Defendant-appellant Angeles S. Guevarra is ordered to render an accounting on how she managed the real
and personal properties of Rebecca Zaballero, from the time she took possession of the same up to the filing
of the case on October 16, 1996.
SO ORDERED.[5]
Petitioners filed a motion for partial reconsideration, but the same was denied.[6] Of the original plaintiffs, only
Lydia Lavarez, Margarita Lavarez, Wilfredo Lavarez, Gregorio Lavarez, Lourdes Lavarez-Salvacion, Norlie
Lavarez, G.J. Lavarez, Gil Lavarez, and Gay Natalie Lavarez filed the instant petition.
The sole question in the instant case is whether or not Rebecca, on May 12, 1993, possessed sufficient
mentality to make the subject deeds of donation which would meet the legal test regarding the required
capacity to dispose.
Basic is the rule of actori incumbit onus probandi, or the burden of proof lies with the plaintiff. In other words,
upon the plaintiff in a civil case, the burden of proof never parts. Therefore, petitioners must establish their
case by a preponderance of evidence, that is, evidence that has greater weight, or is more convincing than that
which respondents offered in opposition to it. In civil cases, the one who alleges a fact has the burden of
proving it and a mere allegation is not evidence.[7]
A donation is an act of liberality whereby a person disposes a thing or right gratuitously in favor of another,
who, in turn, accepts it. Like any other contract, agreement between the parties must exist. Consent in
contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter
to which it refers; (2) it should be free; and (3) it should be spontaneous. The parties' intention must be clear
and the attendance of a vice of consent, like any contract, renders the donation voidable. In order for a
donation of property to be valid, what is crucial is the donor's capacity to give consent at the time of the
donation. Certainly, there lies no doubt in the fact that insanity or unsoundness of the disposing mind impinges
on consent freely given. However, the burden of proving such incapacity rests upon the person who alleges it.
If no sufficient proof to this effect is presented, capacity will be presumed.[8] Here, however, petitioners
succeeded in discharging said heavy burden.
It is the contention of respondents that Rebecca still had full control of her mind during the execution of the
deeds. The fact that she was already of advanced age at that time or that she had to rely on respondents' care
did not necessarily prove that she could no longer give consent to a contract.
To determine the intrinsic validity of the deed of donation subject of the action for annulment, Rebecca's
mental state/condition at the time of its execution must be taken into account. Factors such as age, health, and
environment, and the intricacy of the document in question, among others, should be considered. Rebecca's
doctor during her lifetime, Dr. Bernardo Jorge Conde, who was presented as an expert witness, testified that
Rebecca had been suffering from dementia, which was more or less permanent, and had been taking
medications for years. The records would show that Rebecca lived in the family's ancestral house with
respondents, and the old lady was dependent on their care, specifically that of Guevarra. During the execution
of the deeds in question on May 12, 1993, Rebecca was already 75 years old, and was confined at the
Philippine Heart Center in Quezon City. On June 7, 1996, she finally passed away.
The Deeds of Donation in favor of respondents likewise cover several properties of varying sizes, to wit:
1. a land (483 square meters) at Barangay (Brgy.) Gulang Gulang, Lucena under Transfer Certificate of
Title (TCT) No. T-79056;
2. a property (33,424 square meters) at Brgy. Dumacaa, Lucena under TCT No. T-80090;
3. a land (4,611 square meters) in Lucena under TCT No. T-80091;
5. a property (34,376 square meters) in Lucena under TCT No. T-80086;
6. a property (17,448 square meters) under TCT No. T-80087;
9. a property (36,677 square meters) in Lucena under TCT No. T-80093;and
10. a land (13,488 square meters) in Lucena under TCT No. T-82430.
Putting together the abovementioned circumstances, that at the time of the execution of the Deeds of Donation
covering numerous properties, Rebecca was already at an advanced age of 75, afflicted with dementia, not
necessarily in the pinkest of health since she was then, in fact, admitted to the hospital, it can be reasonably
assumed that the same had the effects of impairing her brain or mental faculties so as to considerably affect
her consent, and that fraud or undue influence would have been employed in order to procure her signature on
the questioned deeds. The correctness of the trial court's findings therefore stands untouched, since
respondents never provided any plausible argument to have it reversed, the issue of the validity of donation
being fully litigated and passed upon by the trial court.[9]
Petitioners claim, as confirmed by Dr. Conde, that the unsoundness of the mind of the donor was the result of
senile dementia. This is the form of mental decay of the aged upon which wills or donations are most often
contested. Senile dementia, usually called childishness, has various forms and stages. To constitute complete
senile dementia, there must be such failure of the mind as to deprive the donor of intelligent action. In the first
stages of the disease, a person may still possess reason and have will power.[10] It is a form of mental disorder
in which cognitive and intellectual functions of the mind are prominently affected; impairment of memory is
early sign. Total recovery is not possible since organic cerebral disease is involved.[11] It is likewise the loss,
usually progressive, of cognitive and intellectual functions, without impairment of perception or consciousness,
caused by a variety of disorders including severe infections and toxins, but most commonly associated with
structural brain disease. It is characterized by disorientation, impaired memory, judgment and intellect, and a
shallow labile effect.[12]
As to Dr. Conde's expert opinion, it is settled that the testimony of expert witnesses must be construed to have
been presented not to sway the court in favor of any of the parties, but to assist the court in the determination
of the issue before it.[13] Although courts are not ordinarily bound by expert testimonies, they may place
whatever weight they may choose upon such testimonies in accordance with the facts of the case. The relative
weight and sufficiency of expert testimony is peculiarly within the province of the trial court to decide,
considering the ability and character of the witness, his actions upon the witness stand, the weight and process
of the reasoning by which he has supported his opinion, his possible bias in favor of the side for whom he
testifies, the fact that he might be a paid witness, the relative opportunities for study and observation of the
matters about which he testifies, and any other matters which deserve to illuminate his statements. The opinion
of the expert may not be arbitrarily rejected; it is to be considered by the court in view of all the facts and
circumstances in the case and when common knowledge utterly fails, the expert opinion may be given
controlling effect. The problem of the credibility of the expert witness and the evaluation of his testimony is left
to the discretion of the trial court whose ruling on such is not reviewable in the absence of abuse of
discretion.[14]
To support its ruling in favor of the validity of the deeds of donation, the CA cited the cases of Catalan v.
Basa[15] and Carrillo v. Jaojoco.[16] In Catalan, the Court upheld the validity of the donation although the donor
had been suffering from schizophrenia. In Carrillo, the contract of sale was upheld despite the seller having
been declared mentally incapacitated after only nine (9) days from the execution of said contract. It is important
to note, however, that in both cases, the Court merely sustained the rulings of the trial courts, which had been
in a better position to appreciate the weight and value of the evidence and testimonies of the witnesses who
had personally appeared before them.[17]
Findings of fact made by a trial court are accorded the highest degree of respect by an appellate tribunal and,
without a clear disregard of the evidence before it that can otherwise affect the results of the case, those
findings should not be ignored. Absent any clear showing of abuse, arbitrariness, or capriciousness committed
by the lower court, its findings of facts are binding and conclusive upon the Court.[18]Settled is the rule that in
assessing the credibility of witnesses, the Court gives great respect to the evaluation of the trial court for it had
the unique opportunity to observe the demeanor of witnesses and their deportment on the witness stand, an
opportunity that is unavailable to the appellate courts, which simply rely on the cold records of the case. The
assessment by the trial court is even conclusive and binding if not tainted with arbitrariness or oversight of
some fact or circumstance of weight and influence.[19] Here, the CA failed to show any presence of abuse,
arbitrariness, or any clear disregard of evidence on the part of the trial court when it gave full credence to Dr.
Conde's expert opinion.
Thus, after an extensive examination of the records of the instant case, the Court finds no cogent reason to
depart from the lower court's conclusion that Rebecca Zaballero, on May 12, 1993, could not have had full
control over her mental faculties so as to render her completely capable of executing a valid Deed of Donation.
WHEREFORE, IN VIEW OF THE FOREGOING, the Court GRANTS the petition and REINSTATES the
Decision of the Regional Trial Court of Lucena City, Branch 53, dated May 26, 2010 in Civil Case No. 1996-
159.
SO ORDERED.
Carpio (Chairperson), Leonen, and Martires, JJ., concur.
Mendoza, J., on wellness leave.
[*]
Named "Norlie Bibiera in the Complaint dated September 20, 1996 received by the RTC, Quezon City on
October 16, 1996; rollo, pp. 71-84.
[1]
Penned by Associate Justice Mariflor P. Punzalan Castillo, with Associate Justices Amy Lazaro-Javier and
Rodil V. Zalameda; concurring; rollo, pp. 35-49.
[2]
Id. at 63-64.
[3]
Penned by Judge Rodolfo D. Obnamia, Jr.; id. at 195-209.
[4]
Id. at 209.
[5]
Id. at 48-49. (Emphasis in the original)
[6]
Id. at 63-64.
[7]
Heirs of Cipriano Reyes v. Calumpang, et al., 536 Phil. 795, 811 (2006).
[8]
Catalan v. Basa, 555 Phil. 602, 611 (2007).
[9]
Heirs of Dr. Favis v. Gonzales, 724 Phil. 465, 479 (2014).
[10]
Torres v. Lopez, 48 Phil. 772 (1926).
[11]
Black's Law Dictionary (5th ed., 1979), p. 387.
[12]
RTC Decision; rollo, p. 205; citing Stedman's Medical Dictionary for the Health Professions and Nursing (5th
ed.), p. 389.
[13]
People v. Basite, 459 Phil. 197, 206 (2003).
[14]
Judge Paje v. Hon. Casiño, G.R. No. 207257, February 3, 2015, 749 SCRA 39, 118.
[15]
Supra note 8.
[16]
46 Phil. 957 (1924).
[17]
People v. CA, G.R. No. 183652, February 25, 2015, 751 SCRA 675, 708.
[18]
Uyboco v. People, G.R. No. 211703, December 10, 2014, 744 SCRA 688, 692.
[19]
Cosme v. People, 538 Phil. 52, 66 (2006).
THIRD DIVISION
[ G.R. No. 193887, March 29, 2017 ]
SPOUSES DENNIS ORSOLINO AND MELODY ORSOLINO, PETITIONERS, V. VIOLETA FRANY,

RESPONDENT.
DECISION
REYES, J.:
Assailed in this petition for review on certiorari[1] under Rule 45 of the Rules of Court are the Decision[2] dated
March 30, 2010 and Resolution[3] dated September 1, 2010 of the Court of Appeals (CA) in CA-G.R. SP No.
108220, which reversed and set aside the Decision[4] dated March 5, 2009, of the Regional Trial Court (RTC)
of Quezon City, Branch 98, in Civil Case No. Q-07-61602, and reinstated the Decision[5] dated September 19,
2007 of the Metropolitan Trial Court (MeTC) of Quezon City, Branch 39, in Civil Case No. 35190 for Unlawful
Detainer.
The Facts
This petition stemmed from a complaint for ejectment over a house and lot located at No. 37 Ilang-Ilang Street
corner Camias Street, Barangay Capri, Novaliches, Quezon City, filed by Spouses Noel and Violeta Frany
(respondent) (Spouses Frany) against petitioners Spouses Dennis and Melody Orsolino (Spouses Orsolino),
and all persons claiming rights under them.[6]
Spouses Frany claimed that Carolina Orsolino (Carolina), the mother of petitioner Dennis, authorized her other
son Sander Orsolino (Sander), to sell the subject property as evidenced by a Special Power of
Attorney[7] (SPA) dated November 20, 2004. On the same date, Sander sold the subject property to Spouses
Frany for the sum of P200,000.00, evidenced by a Deed of Sale.[8] The respondent said that it was agreed
upon that Spouses Orsolino, who are the current occupants of the subject property, shall vacate and peacefully
surrender the possession of the same to Spouses Frany on or before the end of November 2004. However,
despite repeated demands to vacate the subject property, the petitioners failed to do so. The said matter was
also brought before the barangay for conciliation but no settlement was reached. [9]
For their part, the Spouses Orsolino claimed that the subject property is a government property which is being
used as a relocation site. They said that they had been occupying the subject property since May 2000 and
they derived their right to stay therein from their mother Carolina, who has bought her right to the subject
property from Julieta Guaniso in August of 1998. The Spouses Orsolino also alleged that: a) they were not
aware of the sale made in favor of Spouses Frany; b) petitioner Dennis has no brother by the name of Sander;
c) the signature of Carolina appearing in the SPA and Deed of Sale is a forgery; d) the SPA and the Deed of
Sale are spurious documents; e) they did not receive any demand letter from Spouses Frany; and f) there was
no real confrontation before the barangay.[10]
On September 19, 2007, the MeTC rendered its judgment [11] in favor of Spouses Frany and declared the sale
of the subject property as valid upon finding that there was no forgery and, thereby dismissing the complaint in
the following wise:
In view of the foregoing, judgment is hereby rendered ordering [Spouses Orsolino], and all those claiming
rights under them, to vacate and peacefully surrender possession over the subject premises to [Spouses
Frany]; and pay [Spouses Frany] the following:
1. the sum of P5,000.[00], representing reasonable compensation for the use and compensation of the
premises, reckoned from July 29, 2005, until the subject premises is finally vacated; and
2. cost of suit.
SO ORDERED.[12]
The MeTC took note of the fact that petitioner Dennis admitted to having a brother by the name of Lysander
Wilson Ray Orsolino (Lysander), and that petitioner Dennis did not categorically deny that the one who signed
under the name of Sander in the Deed of Sale was not his brother Lysander. The MeTC ruled that the
presumption that the Deed of Sale was duly executed exists, same with the SPA, since there was no evidence
to overturn the presumption as to the authenticity and due execution of the said documents.[13]
Aggrieved the Spouses Orsolino filed an appeal before the RTC.[14]
Ruling of the RTC
In a Decision[15] dated March 5, 2009, the RTC granted the appeal and set aside the MeTC's ruling, to wit:
WHEREFORE, premises considered, the instant appeal filed by [Spouses Orsolino] is hereby GRANTED.
Accordingly, the assailed Decision dated September 19, 2007 issued by the [MeTC] of Quezon City, Branch
39, is hereby REVERSED and SET ASIDE, and a new one is rendered ordering the instant Complaint for
Unlawful Detainer filed by [Spouses Frany] to be [DISMISSED] for no transfer of rights was conveyed between
the parties herein.
SO ORDERED.[16]
Contrary to the findings of the MeTC, the RTC concluded that both the SPA and Deed of Sale showed patent
irregularities and alterations which render it null and void ab initio. According to the RTC, these glaring and
strange circumstances overcome the presumption of the authenticity and due execution of the said documents
since there has been no explanation on the said alterations. The RTC also said that nothing was adduced in
this case to reconcile the variance in the place of execution of the subject documents and the place where it
was acknowledged before the notary public.[17]
Ruling of the CA
On appeal,[18] the CA granted the petition in its Decision[19] dated March 30, 2010 and reinstated the MeTC's
judgment. In overturning the RTC ruling, the CA said that:
The courts a quo failed to appreciate the documentary evidence marked as Exhibits "F" and "G" which is an
acknowledgment receipt executed by [Sander] and [Lysander], acknowledging his receipt of the amounts of
P6,000.00 and P194,000.00, respectively, representing full payment of the rights over the property, subject
matter of this case. This acknowledgment receipt was attested to not just by [the respondent], as shown in
Exhibit "F", but also by Leynardo T. Tiston, as shown in Exhibit "G". This showed that [Sander] and [Lysander]
are one and the same person, who received the amount of P200,000.00 from [the respondent], for he signed
as a vendor in Exhibit "F" and as an attorney-in-fact in Exhibit "G". This gives credence to [the respondent's]
assertion that [Sander] and/or [Lysander] was the attorney-in-fact of [Carolina], who sold the property, and
negates the claim of [Spouses Orsolino] that no [Sander] exists but admits that one [Lysander] is his brother.
Moreover, a perusal of the [SPA] executed on November 20, 2004 and authorization dated November 1, 2004,
shows that the two documents were witnessed by one Leynardo T. Tiston who was also the witness in the
document marked as Exhibit "G". Thus, it cannot be said that the signature of [Carolina] on the said [SPA] is
forged.[20] (Citations omitted)
According to the CA, Spouses Orsolino failed to present any evidence to prove the forgery except to point to
the alterations in the place of execution in the SPA and Deed of Sale. They did not present evidence of the fact
of forgery which can be established by comparing the alleged false signature with the authentic or genuine
signature of Carolina. The CA upheld the validity of the SPA and Deed of Sale which were duly notarized since
the same carry evidentiary weight with respect to their due execution and this presumption was not rebutted by
clear and convincing evidence to the contrary by Spouses Orsolino.[21]
Upset by the foregoing disquisition, the Spouses Orsolino moved for reconsideration,[22] but it was denied by
the CA, in its Resolution[23] dated September 1, 2010. Hence, the present petition for review on certiorari.
The Issue
WHETHER OR NOT THE AUTHENTICITY AND DUE EXECUTION OF THE SPA AND DEED OF ABSOLUTE
SALE HAVE BEEN SUFFICIENTLY ESTABLISHED.
Ruling of the Court
The petition is bereft of merit.
At the outset, it is definite that the issues raised in this petition are mainly factual which calls for the
reassessment of the evidence presented by the parties and is beyond the ambit of the Court's review.
However, this petition is properly given due course because of the contradictory findings of facts and rulings of
the MeTC and the CA on one hand, and the RTC on the other. But even if the Court were to re-evaluate the
evidence presented, considering the divergent positions of the courts below, the petition would still fail.
The bone of contention in the instant case lies on the divergent evaluation of the SPA and the Deed of Sale
submitted as evidence by the respondent. Spouses Orsolino mainly dispute said documents by alleging that
the signatures of Carolina on the said documents were falsified. To bolster their argument, they presented
the Panunumpa sa Katungkulan,[24] Statement of Assets, Liabilities and Networth (SALN),[25] and Performance
Appraisal Report[26] of Carolina from her previous employer to prove that Carolina's alleged genuine signature
which when compared to the signature in the SPA and the Deed of Sale, showed some difference. Spouses
Orsolino also question the authenticity and due execution of the said documents inasmuch as it is marred by
unexplained erasures and alterations.
To begin with, it bears to emphasize that both trial courts and the CA are unison in finding that no forgery was
proven. The RTC even declared that there is no sufficient basis to ascertain the authenticity of Carolina's
signature since the allegation of Spouses Orsolino that comparison of the forged and genuine signatures of
Carolina showed patent dissimilarities is not substantiated by the evidence made available in this case.
Evidently, the CA and the trial courts found that Spouses Orsolino have failed to overcome the burden of
proving their allegation of forgery.
Basic is the rule that forgery cannot be presumed and must be proved by clear, positive and convincing
evidence, thus, the burden of proof lies on the party alleging forgery. One who alleges forgery has the burden
to establish his case by a preponderance of evidence.[27]
The Court sustains the findings of the lower courts that the bases presented by Spouses Orsolino were
inadequate to sustain their allegation of forgery. Mere variance of the signatures cannot be considered as
conclusive proof that the same were forged. The Spouses Orsolino failed to prove their allegation and simply
relied on the apparent difference of the signatures. Moreso, they were not able to establish that the signatures
on the said documents were not Carolina's signatures since there had never been an accurate examination of
the questioned signatures.
In imputing discrepancy in the signatures appearing in the SPA and the Deed of Sale, Spouses Orsolino
should have conducted an examination of the signatures before the court. Evidently, the foregoing testimonial
and documentary evidence adduced by Spouses Orsolino does not suffice the requirement needed to show
the genuineness of handwriting as set forth by Section 22[28] of Rule 132 of the Rules of Court. A comparison of
both the differences and similarities in the questioned signatures should have been made to satisfy the
demands of evidence.[29]
In this case, the Court cannot accept the claim of forgery where no comparison of Carolina's signatures were
made and no witness except for Spouses Orsolino themselves were presented to testify on the same, much
less an expert witness called. All that was presented were Spouses Orsolino's testimonies and the following
documentary evidence: Panunumpa sa Katungkulan, SALN, and Performance Appraisal Report of Carolina
from her previous employer. Aside from these, no other evidence was submitted by Spouses Orsolino to prove
their allegation of forgery.
As to the main issue of this case on whether the authenticity and due execution of the SPA and Deed of Sale
have been sufficiently established, the Court agrees with the conclusion of the CA and the MeTC that the
validity of the said documents must be upheld on the ground that it enjoys the presumption of regularity of a
public document since the same carry evidentiary weight with respect to their due execution. Furthermore, the
fact of forgery is not established by the patent irregularities and alterations in the said documents, such as the
changing of names of the places and the date written thereon.
A review of the records of this case would show that, notwithstanding, the unexplained erasures and
alterations in the said documents after it was signed by Carolina, no sufficient allegation indicates that the
alleged alterations had changed the meaning of the documents, or that the details differed from those intended
by Carolina at the time that she signed it. Thus, it can only be concluded that Carolina had voluntarily executed
the subject documents, with the intention of giving effect thereto. Spouses Orsolino's bare allegation that the
said alterations invalidated the sale does not equate with the necessary allegation that the alterations were
false or had changed the intended meaning of the documents.
As to the unexplained erasures and alterations in the said documents, the findings of the CA on this matter are
informative:
The RTC was referring to the alterations on the date and place of execution of the [SPA] and the Deed of Sale
from November 20, 2004 to December 2004 and intercalating therein Catarman, N. Samar. This Court
scrutinized Exhibits "F" and "G", wherein the partial payment of P6,000.00 was made on November 16, 2004
while the balance of P194,000.00 representing full payment for the house and lot was made on December 29,
2004. Although the RTC stated that no explanation was made as to the alterations on the date and place of
execution of the Deed of Sale, it did not however consider Exhibits "F" and "G", regarding the payments
received by [Spouses Orsolino], particularly the date of receipt of the payments. This is the reason why the
Deed of Sale was signed on November 20, 2004 and notarized only in December 2004, after full payment was
received by the attorney-in-fact. The said evidence was never rebutted by [Spouses Orsolino].[30]
The Court also took note of the fact that Sander, the person who prepared the said documents, was never
confronted during the trial nor was any affidavit from him presented by Spouses Orsolino.
Lastly, the Court does not agree with the RTC's finding that the sale was void because the subject property
was conjugal at the time Carolina sold it to the respondent. Article 160 of the Civil Code provides that all
property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains
exclusively to the husband or to the wife. However, the presumption under said article applies only when there
is proof that the property was acquired during the marriage. Proof of acquisition during the marriage is an
essential condition for the operation of the presumption in favor of the conjugal partnership.[31]
Here the RTC's conclusion that the subject property was conjugal was not based on evidence since Spouses
Orsolino failed to present any evidence to establish that Carolina acquired the subject property during her
marriage. Consequently, there is no basis for applying the presumption under Article 160 of the Civil Code to
the present case.
The Court has also observed that Spouses Orsolino presented nothing to support their claim of their right to
possess the subject property. There is no dispute with the fact that Spouses Orsolino were not even the
registered owners of the subject property. Spouses Orsolino were not able to prove by preponderance of
evidence that they are now the new owners and the rightful possessors of the subject property since they have
not presented any solid proof to bolster their claim. The sad truth is that they were merely allowed to stay on
the subject property by mere tolerance of Carolina. Thus, their unsubstantiated arguments are not, by
themselves, enough to offset the respondent's right as the new owner of the subject property.
Lastly, the other issues raised by Spouses Orsolino, specifically their failure to receive the demand letter and
the lack of prior conciliation proceeding before the barangay, are contradicted by the evidence on record. As
found by the MeTC, the respondent tried to have a copy of the demand letter personally delivered to Spouses
Orsolino on August 5, 2005 but the latter refused to receive the same, thus, the respondent left a copy of the
demand letter in the premises.[32] Similarly, the Certificate to File Action issued by the Punong Barangay
suffices to prove that the case was referred to the barangay for possible conciliation.
In sum, the Court finds no cogent reason to annul the findings and conclusions of the CA. Since the SPA and
Deed of Sale are valid, the respondent is deemed as recognized owner of the subject property and
consequently has the better right to its possession:
WHEREFORE, the petition is DENIED. The Decision dated March 30, 2010 and Resolution dated September
1, 2010 of the Court of Appeals in CA-G.R. SP No. 108220 are AFFIRMED.
SO ORDERED.
Velasco, Jr., (Chairperson), Bersamin, Jardeleza, and Tijam, JJ., concur.
April 25, 2017
NOTICE OF JUDGMENT
Sirs / Mesdames:
Please take notice that on March 29, 2017 a Decision, copy attached hereto, was rendered by the Supreme
Court in the above-entitled case, the original of which was received by this Office on April 25, 2017 at 9:45 a.m.
Very truly yours,
WILFREDO V. LAPITAN
Division Clerk of Court
By:
(SGD) MISAEL DOMINGO C. BATTUNG III
Deputy Division Clerk of Court
[1]
Rollo, pp. 18-41.
[2]
Penned by Associate Justice Magdangal M. De Leon, with Associate Justices Romeo F. Barza and Stephen
C. Cruz concurring; id. at 45-55.
[3]
Id. at 59-60.
[4]
Rendered by Presiding Judge Evelyn Corpus-Cabochan; id. at 70-80.
[5]
Rendered by Presiding Judge Luis Zenon Q. Maceren; id. at 82-85.
[6]
Id. at 87-91.
[7]
Id. at 92.
[8]
Id. at 93-94.
[9]
Id. at 87-88.
[10]
Id. at 97-98.
[11]
Id. at 82-85.
[12]
Id. at 84-85.
[13]
Id. at 83.
[14]
Id. at 154-155.
[15]
Id. at 70-80.
[16]
Id. at 80.
[17]
Id. at 78-79.
[18]
Id. at 62-68.
[19]
Id. at 45-55.
[20]
Id. at 51-52.
[21]
Id. at 53.
[22]
Id. at 429-440.
[23]
Id. at 59-60.
[24]
Id. at 100.
[25]
Id. at 148-149.
[26]
Id. at 103.
[27]
Gepulle-Garbo y Garabato, G.R. No. 200013, January 14, 2015, 746 SCRA 189, 198.
Section 22. How genuineness of handwriting proved. — The handwriting of a person may be proved by any
[28]
witness who believes it to be the handwriting of such person because he has seen the person write, or has
seen writing purporting to be his upon which the witness has acted or been charged, and has thus acquired
knowledge of the handwriting of such person. Evidence respecting the handwriting may also be given by a
comparison, made by the witness or the court, with writings admitted or treated as genuine by the party against
whom the evidence is offered, or proved to be genuine to the satisfaction of the judge.
[29]
Ladignon v. Court of Appeals, 390 Phil. 1161, 1172 (2000), citing American Express International, Inc. v.
CA, 367 Phil. 333, 341-342 (1999).
[30]
Rollo, pp. 52-53.
[31]
Manongsong v. Estimo, 452 Phil. 862, 878 (2003).
[32]
Rollo, pp. 95-96.
SECOND DIVISION
[ G.R. No. 205657, March 29, 2017 ]
INTERNATIONAL EXCHANGE BANK NOW UNION BANK OF THE PHILIPPINES, PETITIONER, V.

SPOUSES JEROME AND QUINNIE BRIONES, AND JOHN DOE, RESPONDENTS.
DECISION
LEONEN, J.:
Upon accepting an agency, the agent becomes bound to carry out the agency and shall be held liable for the
damages, which the principal may incur due to the agent's non-performance.[1]
This resolves the Petition for Review on Certiorari[2] filed by International Exchange Bank (iBank), now Union
Bank of the Philippines, assailing the Court of Appeals' September 27, 2012 Decision[3] and February 6, 2013
Resolution[4] in CA-G.R. CV. No. 97453, which upheld the June 16, 2011 Decision[5] of Branch 138, Makati City
Regional Trial Court in Civil Case No. 04-557.
On July 2, 2003, spouses Jerome and Quinnie Briones (Spouses Briones) took out a loan of P3,789,216.00
from iBank to purchase a BMW Z4 Roadster.[6] The monthly amortization for two (2) years was P78,942.00.[7]
The Spouses Briones executed a promissory note with chattel mortgage that required them to take out an
insurance policy on the vehicle.[8] The promissory note also gave iBank, as the Spouses Briones' attorney-in-
fact, irrevocable authority to file an insurance claim in case of loss or damage to the vehicle. [9] The insurance
proceeds were to be made payable to iBank.[10]
On November 5, 2003, at about 10:50 p.m., the mortgaged BMW Z4 Roadster was carnapped by three (3)
armed men in front of Metrobank Banlat Branch in Tandang Sora, Quezon City.[11] Jerome Briones (Jerome)
immediately reported the incident to the Philippine National Police Traffic Management Group.[12]
The Spouses Briones declared the loss to iBank, which instructed them to continue paying the next three (3)
monthly installments "as a sign of good faith," a directive they complied with.[13]
On March 26, 2004, or after the Spouses Briones finished paying the three (3)-month installment, iBank sent
them a letter demanding full payment of the lost vehicle.[14]
On April 30, 2004, the Spouses Briones submitted a notice of claim with their insurance company, which
denied the claim on June 29, 2004 due to the delayed reporting of the lost vehicle.[15]
On May 14, 2004, iBank filed a complaint for replevin and/or sum of money against the Spouses Briones and a
person named John Doe.[16] The Complaint alleged that the Spouses Briones defaulted in paying the monthly
amortizations of the mortgaged vehicle.[17]
After no settlement was arrived at during the Pre-trial Conference, the case was referred to Mediation and
Judicial Dispute Resolution.[18]However, the parties still failed to agree on a compromise settlement.[19]
After pre-trial and trial on the merits, the Regional Trial Court[20] dismissed iBank's complaint. It ruled that as
the duly constituted attorney-in-fact of the Spouses Briones, iBank had the obligation to facilitate the filing of
the notice of claim and then to pursue the release of the insurance proceeds.[21]
The Regional Trial Court also pointed out that as the Spouses Briones' agent, iBank prioritized its interest over
that of its principal when it failed to file the notice of claim with the insurance company and demanded full
payment from the spouses.[22]
The dispositive portion of the Regional Trial Court Decision read:
WHEREFORE, premises considered, judgment is hereby rendered dismissing this case as the obligation of
both parties to each other has already been considered extinguished by compensation.
SO ORDERED.[23] (Emphasis in the original)
The Regional Trial Court's Decision was appealed by iBank to the Court of Appeals, which dismissed[24] it on
September 27, 2012.
The Court of Appeals ruled that the terms and stipulations of the promissory note with chattel mortgage were
clear.[25] Sections 6 and 22 of the promissory note provided that the Spouses Briones, as the mortgagors,
would insure the vehicle against loss, damage, theft, and fire with the insurance proceeds payable to iBank, as
the mortgagee.[26] Furthermore, in the event of loss or damage, Spouses Briones irrevocably appointed iBank
or its assigns as their attorney-in-fact with full power to process the insurance claim.[27]
The Court of Appeals stated that as the Spouses Briones' agent, iBank was bound by its acceptance to carry
out the agency.[28] However, instead of filing an insurance claim, iBank opted to collect the balance of Spouses
Briones' loan.[29] By not looking after the interests of its principal, the Court of Appeals ruled that iBank should
be held liable for the damages suffered by Spouses Briones.[30]
The Court of Appeals likewise upheld the Regional Trial Court's ruling that "the denial of the insurance claim
[for delayed filing] was a direct consequence of [the] bank's inaction in not filing the insurance claim."[31]
The dispositive portion of the Court of Appeals Decision read:
WHEREFORE, the instant appeal is hereby DENIED. The assailed Decision dated June 16, 2011 of the
Regional Trial Court, Branch 138, Makati City is AFFIRMED.
SO ORDERED.[32] (Emphasis in the original)
On February 6, 2013, the Court of Appeals denied[33] iBank's motion for reconsideration,[34] prompting iBank to
appeal the denial to this Court.
Petitioner iBank claims that it is entitled to recover the mortgaged vehicle or, in the alternative, to collect a sum
of money from respondents because of the clear wording of the promissory note with chattel mortgage
executed by respondents.[35] Petitioner also insists that it is entitled to the award of damages.[36]
Petitioner maintains that the insurance coverage taken on the vehicle is "only an aleatory alternative that
[respondents] are entitled [to]" if their claim is granted by the insurance company. [37] Petitioner asserts that it
was the duty of the respondents to file a claim with the insurance company. Thus, they should not be allowed
to pass on that responsibility to petitioner and they should be held accountable for the loan taken out on the
carnapped vehicle.[38]
Moreover, petitioner posits that respondent Jerome's direct dealing with the insurance company was a
revocation of the agency relationship between petitioner and respondents.[39]
Petitioner holds that respondents only shifted the blame after the insurance company denied respondents'
claim.[40]
On the other hand, respondents insist that when the mortgaged vehicle was carnapped, petitioner, as the
agent, should have asserted its right "to collect, demand and proceed against the [insurance company.]"[41]
Respondents state that after they had informed petitioner of the loss of the mortgaged vehicle, they continued
to pay the monthly installment for three (3) months as compliance with petitioner's request. Nonetheless,
despite their good faith and the insurance policy taken out on the carnapped vehicle, petitioner still demanded
full payment from them.[42]
Finally, respondents maintain that petitioner failed to exercise the "degree of diligence required [of it
considering] the fiduciary nature of its relationship with its client[s]."[43]
The issues for this Court's resolution are as follows:
First, whether an agency relationship existed between the parties;
Second, whether the agency relationship was revoked or terminated; and
Finally, whether petitioner is entitled to the return of the mortgaged vehicle or, in the alternative, payment of the
outstanding balance of the loan taken out for the mortgaged vehicle.
I
The Petition is devoid of merit.
In a contract of agency, "a person binds himself to render some service or to do something in representation or
on behalf of another, with the consent or authority of the latter."[44] Furthermore, Article 1884 of the Civil Code
provides that "the agent is bound by his acceptance to carry out the agency, and is liable for the damages
which, through his non-performance, the principal may suffer."[45]
Rallos v. Felix Go Chan & Sons Realty Corporation[46] lays down the elements of agency:
Out of the above given principles, sprung the creation an acceptance of the relationship of agency whereby
one party, called the principal (mandante), authorizes another, called the agent (mandatario), to act for and in
his behalf in transactions with third persons. The essential elements of agency are: (1) there is consent,
express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in
relation to a third person; (3) the agent acts as a representative and not for himself; and (4) the agent acts
within the scope of his authority.[47] (Emphasis in the original, citation omitted)
All the elements of agency exist in this case. Under the promissory note with chattel mortgage, Spouses
Briones appointed iBank as their attorney-in-fact, authorizing it to file a claim with the insurance company if the
mortgaged vehicle was lost or damaged.[48] Petitioner was also authorized to collect the insurance proceeds as
the beneficiary of the insurance policy.[49] Sections 6 and 22 of the promissory note state:
6. The MORTGAGOR agrees that he will cause the mortgaged property/ies to be insured against loss or
damage by accident, theft and fire . . . with an insurance company/ies acceptable to the MORTGAGEE
. . .; that he will make all loss, if any, under such policy/ies payable to the MORTGAGEE or its assigns .
. . [w]ith the proceeds thereon in case of loss, payable to the said MORTGAGEE or its assigns . . . shall
be added to the principal indebtedness hereby secured . . . [M]ortgagor hereby further constitutes the
MORTGAGEE to be its/his/her Attorney-in-Fact for the purpose of filing claims with insurance company
including but not limited to apply, sign, follow-up and secure any documents, deeds . . . that may be
required by the insurance company to process the insurance claim . . .
22. In case of loss or damage, the MORTGAGOR hereby irrevocably appoints the MORTGAGEE or its
assigns as his attorney-in-factwith full power and authority to file, follow-up, prosecute, compromise or
settle insurance claims; to sign, execute and deliver the corresponding papers, receipt and documents
to the insurance company as may be necessary to prove the claim, and to collect from the latter the
proceeds of insurance to the extent of its interest.[50] (Emphasis supplied, citation omitted)
Article 1370 of the Civil Code is categorical that when "the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its stipulations shall control." [51]
The determination of agency is ultimately factual in nature and this Court sees no reason to reverse the
findings of the Regional Trial Court and the Court of Appeals. They both found the existence of an agency
relationship between the Spouses Briones and iBank, based on the clear wording of Sections 6 and 22 of the
promissory note with chattel mortgage, which petitioner prepared and respondents signed.
II
Petitioner asserts that the Spouses Briones effectively revoked the agency granted under the promissory note
when they filed a claim with the insurance company.[52]
Petitioner is mistaken.
Revocation as a form of extinguishing an agency under Article 1924[53] of the Civil Code only applies in cases
of incompatibility, such as when the principal disregards or bypasses the agent in order to deal with a third
person in a way that excludes the agent.[54]
In the case at bar, the mortgaged vehicle was carnapped on November 5, 2003 and the Spouses Briones
immediately informed petitioner about the loss.[55] The Spouses Briones continued paying the monthly
installment for the next three (3) months following the vehicle's loss to show their good faith.[56]
However, on March 26, 2004, petitioner demanded full payment from Spouses Briones for the lost
vehicle.[57] The Spouses Briones were thus constrained to file a claim for loss with the insurance company on
April 30, 2004, precisely because petitioner failed to do so despite being their agent and being authorized to
file a claim under the insurance policy.[58] Not surprisingly, the insurance company declined the claim for
belated filing.
The Spouses Briones' claim for loss cannot be seen as an implied revocation of the agency or their way of
excluding petitioner. They did not disregard or bypass petitioner when they made an insurance claim; rather,
they had no choice but to personally do it because of their agent's negligence. This is not the implied
termination or revocation of an agency provided for under Article 1924 of the Civil Code.
While a contract of agency is generally revocable at will as it is primarily based on trust and
confidence,[59] Article 1927 of the Civil Code provides the instances when an agency becomes irrevocable:
Article 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of
fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of
partnership and his removal from the management is unjustifiable.
A bilateral contract that depends upon the agency is considered an agency coupled with an interest, making it
an exception to the general rule of revocability at will.[60] Lim v. Saban[61] emphasizes that when an agency is
established for both the principal and the agent, an agency coupled with an interest is created and the principal
cannot revoke the agency at will.[62]
In the promissory note with chattel mortgage, the Spouses Briones authorized petitioner to claim, collect, and
apply the insurance proceeds towards the full satisfaction of their loan if the mortgaged vehicle were lost or
damaged. Clearly, a bilateral contract existed between the parties, making the agency irrevocable. Petitioner
was also aware of the bilateral contract; thus, it included the designation of an irrevocable agency in the
promissory note with chattel mortgage that it prepared for the Spouses Briones to sign.
III
Petitioner asserts that the insurance coverage is only an alternative available to the Spouses Briones;[63] and
with the denial of the insurance claim, the Spouses Briones are obligated to pay the remaining balance plus
interest of the mortgaged vehicle.[64]
The petitioner is again mistaken.
As the agent, petitioner was mandated to look after the interests of the Spouses Briones. However, instead of
going after the insurance proceeds, as expected of it as the agent, petitioner opted to claim the full amount
from the Spouses Briones, disregard the established principal-agency relationship, and put its own interests
before those of its principal.
The facts show that the insurance policy was valid when the vehicle was lost, and that the insurance claim was
only denied because of the belated filing.
Having been negligent in its duties as the duly constituted agent, petitioner must be held liable for the damages
suffered by the Spouses Briones because of non-performance[65] of its obligation as the agent, and because it
prioritized its interests over that of its principal.[66]
Furthermore, petitioner's bad faith was evident when it advised the Spouses Briones to continue paying three
(3) monthly installments after the loss, purportedly to show their good faith.[67] A principal and an agent enjoy a
fiduciary relationship marked with trust and confidence, therefore, the agent has the duty "to act in good faith
[to advance] the interests of [its] principal."[68]
If petitioner was indeed acting in good faith, it could have timely informed the Spouses Briones that it was
terminating the agency and its right to file an insurance claim, and could have advised them to facilitate the
insurance proceeds themselves. Petitioner's failure to do so only compounds its negligence and underscores
its bad faith. Thus, it will be inequitable now to compel the Spouses Briones to pay the full amount of the lost
property.
WHEREFORE, premises considered, the Petition is DENIED. The Court of Appeals Decision and Resolution
dated September 27, 2012 and February 6, 2013, respectively, in CA-G.R. CV. No. 97453 are AFFIRMED.
SO ORDERED.
Carpio (Chairperson), Peralta, and Martires, JJ., concur.
Mendoza, J., on official leave.
[1]
CIVIL CODE, art. 1884.
[2]
Rollo, pp. 11-76.
[3]
Id. at 83-97. The Decision was penned by Associate Justice Ramon R. Garcia and concurred in by
Associate Justices Amelita G. Tolentino and Danton Q. Bueser of the Fourth Division, Court of Appeals,
Manila.
[4]
Id. at 122-123. The Resolution was penned by Associate Justice Ramon R. Garcia and concurred in by
Associate Justices Amelita G. Tolentino and Danton Q. Bueser of the Fourth Division, Court of Appeals,
Manila.
[5]
Id. at 77-81. The Decision was penned by Acting Presiding Judge Joselito C. Villarosa of Branch 138,
Regional Trial Court, City of Makati.
[6]
Id. at 84.
[7]
Id.
[8]
Id. at 77.
[9]
Id.
[10]
Id.
[11]
Id. at 78.
[12]
Id.
[13]
Id.
[14]
Id.
[15]
Id. at 85.
[16]
Id.
[17]
Id.
[18]
Id. at 24.
[19]
Id.
[20]
Id. at 77-81.
[21]
Id. at 78-79.
[22]
Id. at 79-80.
[23]
Id. at 81.
[24]
Id. at 83-97.
[25]
Id. at 92-93.
[26]
Id.
[27]
Id. at 94.
[28]
Id.
[29]
Id.
[30]
Id.
[31]
Id. at 95.
[32]
Id. at 97.
[33]
Id. at 122-123.
[34]
Id. at 98-121.
[35]
Id. at 31-34.
[36]
Id. at 34.
[37]
Id. at 35.
[38]
Id. at 47.
[39]
Id. at 48.
[40]
Id. at 52.
[41]
Id. at 135-136. Comment.
[42]
Id. at 136. Comment.
[43]
Id. at 143. Comment.
[44]
[45]
[46]
171 Phil 222 (1978) [Per J. Muñoz Palma, First Division].
[47]
Id. at 226-227.
[48]
Rollo, p. 77.
[49]
Id.
[50]
Id. at 93.
[51]
[52]
Rollo, p. 48.
[53]
CIVIL CODE, art. 1924 provides:
Article 1924. The agency is revoked if the principal directly manages the business entrusted to the agent,
dealing directly with third persons.
[54]
Bitte v. Spouses Jonas, G.R. No. 212256, December 9, 2015, 777 SCRA 489, 512 [Per J. Mendoza,
Second Division].
[55]
Rollo, p. 78.
[56]
Id.
[57]
Id.
[58]
Id.
[59]
Republic v. Evangelista, 504 Phil 115, 121 (2005) [Per J. Puno, Second Division].
[60]
Id.
[61]
488 Phil 236 (2004) [Per J. Tinga, Second Division].
[62]
Id. at 244-245.
[63]
Rollo, p. 35
[64]
Id. at 73-74.
[65]
Article 1884. The agent is bound by his acceptance to carry out the agency, and is liable for damages which,
through his non-performance, the principal may suffer.
He must also finish the business already begun on the death of the principal, should delay entail any danger.
[66]
Article 1889. The agent shall be liable for damages if, there being a conflict between his interests and those of
the principal, he should prefer his own.
[67]
Rollo, p. 78.
[68]
Bank of the Philippine Islands v. Laingo, G.R. No. 205206, March 16, 2016 <
http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2016/march2016/205206.pdf > [Per J.
Carpio, Second Division].
DIVISION
[ GR No. 223334, Jun 07, 2017 ]
DANILO BARTOLATA v. REPUBLIC +

DECISION
VELASCO JR., J.:

Nature of the Case
Before the Court is a Petition for Review on Certiorari assailing the Decision[1] and Resolution of the Court of
Appeals (CA) in CA-G.R. CV No. 100523, dated July 10, 2015 and March 7, 2016, respectively. The
challenged rulings denied petitioner's claim for just compensation on the ground that the portion of his
property that was used by the government was subject to an easement of right of way. Additionally, the CA
ordered petitioner to return any payment made to him by the government in relation to the enforcement of the
easement.
The Facts of the Case
Petitioner Danilo Bartolata acquired ownership over a 400 square meter parcel of land identified as Lot 5, Blk.
1, Phase 1, AFP Officer's Village, Taguig, Metro Manila by virtue of an Order of Award from the Bureau of
Lands dated December 14, 1987.[2] It appears from the Order of Award that petitioner was the sole bidder for
the property during a public auction conducted on August 14, 1987,[3] with the offer of P15 per square meter or
P6,000 total for the 400 square meter lot.[4]
Sometime in 1997, respondents acquired 223 square meters of petitioner's property for the development of the
Metro Manila Skyway Project. The parties agreed that in exchange for the acquisition, petitioner would be paid
just compensation for the appraised value of the property, fixed at P55,000 per square meter or an aggregate
of P12,265,000 for the entire affected area by the Municipal Appraisal Committee of Taguig, Metro
Manila.[5] Subsequently, on August 14, 1997, respondents appropriated P1,480,000 in favor of petitioner as
partial payment.
Since the date of initial payment, petitioner had, on numerous occasions, demanded from respondents the
balance of Php10,785,000.00, but the latter refused to settle their outstanding obligation. This prompted
petitioner to file, on September 20, 2006, a Complaint[6] for a sum of money with the Regional Trial Court
(RTC), Branch 166 in Pasig City, docketed as Civil Case No. 70969.[7]
In their Supplemental Answer, dated July 9, 2009, respondents raised that the Order of Award from the Bureau
of Lands granting title to petitioner over the subject property contained the following encumbrance:
This award shall further be subject to the provisions of the Public Land Law (Commonwealth Act No. 141, as
amended), and particularly the following conditions:
xxxx
2. The land shall be subject to the easement and servitudes provided for in Section 109-114 of
Commonwealth Act No. 141, as amended.[8](emphasis added)
Respondents then argued that pursuant to Section 112 of Commonwealth Act No. 141 (CA 141), [9] the
government is entitled to an easement of right of way not exceeding 60 meters in width, without need of
payment for just compensation, save for the value of improvements existing. The pertinent provision reads:
SECTION 112. Said land shall further be subject to a right-of-way not exceeding sixty (60) meters in
width for public highways, railroads, irrigation ditches, aqueducts, telegraph and telephone lines and similar
works as the Government or any public or quasi-public service or enterprise, including mining or forest
concessionaires, may reasonably require for carrying on their business, with damages for the improvements
only. (emphasis added)
Under the above-cited provision, any payment for the government's use of the easement, unless made to
compensate the landowner for the value of the improvements affected, is unwarranted. Consequently,
respondents prayed, by way of counterclaim, that the P1,480,000 partial payment made to petitioner for the
acquisition of the latter's property, which was well within the 60-meter threshold width, be returned to the
government.
In rebuttal, petitioner contended that Presidential Decree No. 2004 (PD 2004),[10] which amended Republic Act
No. 730 (RA 730),[11]allegedly removed the statutory lien attached to the subject property. Sec. 2 of RA 730, as
amended, now reads:
SEC. 2. Lands acquired under the provisions of this Act shall not be subject to any restrictions against
encumbrance or alienation before and after the issuance of the patents thereon.
Respondents, however, countered that petitioner could not have benefited from PD 2004 since the removal of
restrictions and encumbrances contained in PD 2004 only applies to public land sold by the government for
residential purposes without public auction, whereas petitioner was awarded the subject property through a
public auction sale.
Ruling of the RTC
On November 28, 2012, the RTC promulgated its Decision in Civil Case No. 70969 disposing the case in the
following wise:
WHEREFORE, premises considered, judgment is hereby rendered dismissing plaintiffs complaint for lack of
merit and insufficiency of evidence.
Defendant's counterclaims are likewise denied and dismissed for insufficiency of evidence.
No pronouncement as to costs.
SO ORDERED.[12]
Giving credence to respondents' postulation, the RTC ruled that PD 2004 could not have removed the
encumbrances attached to petitioner's property since the law does not cover public lands sold through auction.
The RTC, therefore, ruled that the government is entitled to a 60-meter width right of way on the property, for
which it is not entitled to pay just compensation under Sec. 112 of CA 141.[13]
Nevertheless, the RTC found no reason to grant respondents' counterclaim. In ruling that petitioner is not
under obligation to return the initial payment made, the RTC considered the fact that respondents effectively
entered into a contract of sale with petitioner for the acquisition of the piece of land to be used for the Metro
Manila Skyway Project, which contract of sale was consummated by respondents' partial payment. [14] By virtue
of this consummated contract of sale, so the RTC further ratiocinated, petitioner never opposed the taking of
his property. He was made to believe, as he did in fact believe, that he will be paid just compensation as
agreed upon by the parties. It cannot then be said that petitioner was illegally paid when he transacted with the
government in good faith and when he relied on respondents' representations that he is entitled to just
compensation.
Ruling of the CA
On appeal, the CA modified the RTC ruling thusly:
WHEREFORE, premises considered, plaintiff-appellant's appeal is DENIED. On the other hand, defendants'
appeal is GRANTED. Accordingly, the Decision dated November 28, 2012 of Branch 166, Regional Trial Court
of Pasig City in Civil Case No. 70969 is hereby AFFIRMED with the MODIFICATION that plaintiff-appellant is
ordered to return the amount of Php1,480,000.00 to the Republic of the Philippines.
SO ORDERED.[15]
The appellate court affirmed the RTC's finding that the subject property is still subject to the easement of right
of way, which is free of any compensation, except only for the value of the existing improvements that may
have been affected. Echoing the RTC's line of reasoning, the CA ruled that PD 2004 could not be extended to
benefit petitioner who acquired the subject property through an auction sale. The lot in issue is, therefore,
subject to the statutory lien embodied in Sec. 112 of CA 141.
Further upholding the government's right to enforce against petitioner's property the easement for public
highways without cost, the CA granted respondents' counterclaim on appeal. The CA noted that the portion of
petitioner's property that was used by respondents corresponds to the widths of 13.92 meters and 13.99
meters, well within the 60-meter limit under CA 141.[16] Given that respondents never exceeded the threshold
width, and that petitioner never established that there were improvements in his property that were affected,
the CA held that petitioner is not entitled to any form of compensation. Consequently, the CA ordered him to
return the P1,480,000 partial payment made, lest he be unjustly enriched by respondents' use of the legal
easement that under the law should have been free of charge.
Aggrieved, petitioner moved for reconsideration of the appellate court's Decision, which motion was denied by
the CA through its March 7, 2016 Resolution. Hence, petitioner elevated the case to this Court.
The Issues
In the instant recourse, petitioner raises the following issues:
1. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY COMMITTED AN ERROR IN LAW

AND WITH THE ESTABLISHED/ACCEPTED JURISPRUDENCE IN UPHOLDING AND SUSTAINING
THE DECISION DATED 28 NOVEMBER 2012 OF THE HONORABLE REGIONAL TRIAL COURT
BRANCH 166 OF PASIG CITY IN RULING THAT THE PROVISIONS OF PRESIDENTUIAL DECREE
NO. 2004 IS INAPPLICABLE OVER THE SUBJECT PARCEL OF LAND OF PETITIONER.

BRANCH 166 OF PASIG CITY IN RULING THAT THE PROVISIONS OF COMMONWEALTH ACT
NO. 141 APPLIES AS ENCUMBRANCE OVER THE SUBJECT PARCEL OF LAND OF PETITIONER.
xxxx
3. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY COMMITED AN ERROR IN LAW

BRANCH 166 OF PASIG CITY IN RULING THAT PETITIONER IS NOT ENTITLED TO BE PAID THE
BALANCE OF JUST COMPENSATION IN THE AMOUNT OF TEN MILLION SEVEN HUNDRED
EIGHTY-FIVE THOUSAND PESOS, (Php10,785,000.00) WITH LEGAL INTEREST COMMENCING
FROM ACTUAL TAKING OF PROPERTY ON 14 AUGUST 1997 UNTIL FULLY PAID.

BRANCH 166 OF PASIG CITY IN RULING THAT THE PARTIAL PAYMENT MADE BY RESPONDENT
IN THE AMOUNT OF ONE MILLION FOUR HUNDRED EIGHTY THOUSAND PESOS
(Php1,480,000.00), BE RETURNED BY PETITIONER TO RESPONDENT.
5. ASSUMING WITHOUT ADMITTING AND FOR THE SAKE OF ARGUMENT THAT THE SUBJECT
PARCEL OF LAND LAWFULLY OWNED BY PETITIONER IS SUBJECT TO THE PROVISIONS OF
COMMONWEALTH ACT NO. 141 WITH THE SIXTY (6) METERS ENCUMBRANCE OF RIGHT OF
WAY, PETITIONER SHOULD STILL BE ENTITLED TO THE DIFFERENCE OF ONE HUNDRED
SIXTY-THREE SQUARE METERS, (163 sq.m.), OUT OF THE TWO HUNDRED TWENTY-THREE
SQUARE METERS (223 sq.m.) TAKEN BY RESPONDENT FOR THE USE OF THE METRO MANILA
SKYWAY PROJECT, TO WHICH JUST COMPENSATION THERETO MUST AND SHOULD BE PAID
BY RESPONDENT TO PETITIONER [17]
To simplify, the Court is faced with the same issues that confronted the CA, to wit:
1. Whether or not the subject property owned by petitioner is subject easement of right of way in favor of
the government;
2. Whether or not respondents are liable to pay just compensation to petitioner; and
3. Whether or not petitioner should return the initial payment made by respondents in the amount of
P1,480,000.
Petitioner maintains that RA 730 relaxed the mode of acquiring public land, from the strict method of public
auction to the more lenient non-auction sale. Thus, petitioner postulates that the CA's interpretation of PD
2004—that only public lands sold without auction sale are covered by the decree's removal of encumbrance—
would lead to a scenario wherein properties acquired through the more stringent process would be subjected
to more restrictions than those acquired through the more relaxed means.[18] Petitioner, therefore, submits that
PD 2004 should be interpreted to cover all government sales of public land, with or without auction.
Furthermore, petitioner cites his constitutional right to just compensation in exchange for public property taken
for public use.[19] He laments that as early as August 14, 1997, respondents have deprived him of his
ownership rights over more than half of his property for the development of the Metro Manila Skyway Project.
For 19 years and counting, the government has been enjoying full use of 223 square meters of his parcel of
land, all the while denying petitioner payment for just compensation, resulting in the violation of his
constitutionally enshrined right.[20] Petitioner, therefore, prays that respondents be directed to pay the balance
of P10,785,000 pursuant to the parties' covenant, plus legal interest.
In connection with the foregoing, petitioner asserts that he could not be held liable to return the initial payment
made by respondents in the amount of P1,480,000. This amount, to petitioner, constitutes part and parcel of
the just compensation he is legally entitled to for the government's use of his private property. Respondents'
payment was then not tainted with illegality for which petitioner may be held liable for its return.
Assuming for the sake of argument that petitioner illegally obtained payment, petitioner claims that
respondents are barred from recovering the same as they themselves are in pari delicto.[21] Being the same
parties who cajoled petitioner into parting with his property in the promise of being paid the appraised value
and who did, in fact, make such payment, albeit partial, respondents could no longer recover what they have
already paid. To sustain the CA's finding that petitioner ought to return the downpayment would be tantamount
not only to allowing respondents to abscond liability for paying the balance, but also to virtually allowing the
government to rob petitioner of his property through machinations.[22]
Lastly, petitioner claims that in the alternative, even if the property awarded to him by the Bureau of Lands is
subject to the easement under Sec. 112 of CA 141, he is still entitled to just compensation in the amount of
P8,959,000, representing 163 sq.m. (223 sq.m. taken property less the 60 sq.m. easement) multiplied by the
appraised value of the property of P55,000 per square meter. Deducting the initial payment made from the
aggregate amount would leave respondents' total unpaid balance in the amount of P7,485,000, plus legal
interest, as per petitioner's computation.[23]
The Court's Ruling
The petition is partly meritorious.
The easement of right of way in

favor of the government subsists
despite the enactment of PD 2004
Resolving the first issue, the Court rejects petitioner's claim that the subject property is no longer subject to the
60-meter width easement of right of way in favor of the government.
First, no less than the Order of Award granting petitioner title over the subject property reads that the parcel of
land conferred to him is subject to the restrictions contained under Sec. 109-114 of CA 141, which necessarily
includes the easement provided in Sec. 112. Notably, petitioner was awarded the subject property in 1987,
while PD 2004, which allegedly removed all encumbrances and restrictions from awarded properties, was
signed into law much earlier in 1985. This alone raises suspicion on the applicability of PD 2004 to the subject
property.
Second, the Court finds no reversible error in the RTC and CA's interpretation of the coverage of PD 2004 and
RA 730. The title of RA 730 itself supports the rulings of the courts a quo that the laws petitioner relied upon
only cover the sale of public lands for residential purposes and to qualified applicants without public auction.
To quote:
REPUBLIC ACT NO. 730 – AN ACT TO PERMIT THE SALE WITHOUT PUBLIC AUCTION OF PUBLIC
LANDS OF THE REPUBLIC OF THE PHILIPPINES FOR RESIDENTIAL PURPOSES TO QUALIFIED
APPLICANTS UNDER CERTAIN CONDITIONS (emphasis added)
It can readily be inferred from the title of RA 730 that the definite ambit of the law could not be extended to
sales of public lands via public auction, through which mode of disposition petitioner acquired the subject
property. Consequently, when RA 730 was amended by PD 2004 to the effect of removing encumbrances and
restrictions on purchased properties without public auction, petitioner could not have benefitted from the same.
Lastly, even the contents of RA 730 belie petitioners claim. The foremost section of the law reads:
Section 1. Notwithstanding the provisions of sections sixty-one and sixty-seven of Commonwealth Act
Numbered One hundred forty-one, as amended by Republic Act Numbered Two hundred ninety-three, any
Filipino citizen of legal age who is not the owner of a home lot in the municipality or city in which he resides
and who has in good faith established his residence on a parcel of the public land of the Republic of the
Philippines which is not needed for the public service, shall be given preference to purchase at a private sale of
which reasonable notice shall be given to him not more than one thousand square meters at a price to be fixed
by the Director of Lands with the approval of the Secretary of Agriculture and Natural Resources. It shall be an
essential condition of this sale that the occupants has constructed his house on the land and actually resided
therein. Ten per cent of the purchase price shall be paid upon the approval of the sale and the balance may be
paid in full, or in ten equal annual installments. (emphasis added)
As can be gleaned, RA 730 was crafted as an exception to Sees. 61[24] and 67[25] of CA 141. These provisions
govern the mode of disposition of the alienable public lands enumerated under Sec. 59 of the same
law.[26] Synthesizing the provisions, CA 141 provides that public lands under Sec. 59 can only be disposed for
residential, commercial, industrial, and other similar purposes through lease or sale, in both cases, "to the
highest bidder." The conduct of an auction is then required under Secs. 61 and 67.
By way of exception, however, RA 730 now allows the sale of public lands without public auction to qualified
applicants.[27] It is through this exceptional case of purchase of public land without public auction wherein PD
2004 would apply.
Petitioner's assertion that both sales of public land with and without public auction are subsumed under the
coverage of PD 2004 is contrary to the very tenor of the law. Sec. 2 of RA 730, as amended by PD 2004, is
clear and unambiguous:
SEC. 2. Lands acquired under the provisions of this Act shall not be subject to any restrictions against
encumbrance or alienation before and after the issuance of the patents thereon. (emphasis added)
Under its plain meaning, only public lands acquired by qualified applicants without public auction and for
residential purposes are free from any restrictions against encumbrance or alienation. The provision is
inapplicable to petitioner's property which was awarded to petitioner not in accordance with RA 730, but
through public auction.
What is more, the easement of right of way under Sec. 112 of CA 141 is not subsumed in the
phrase "restrictions against encumbrance or alienation" appearing in the amendment introduced by PD 2004.
This becomes obvious upon examining the original text of Sec. 2 of RA 730, before PD 2004 took effect:
Sec. 2. Except in favor of the Government or any of its branches, units, or institutions, lands acquired under the
provisions of this act shall not be subject to encumbrance or alienation before the patent is issued and for a
term of ten years from the date of the issuance of such patent, nor shall they become liable to the satisfaction
of any debt contracted prior to the expiration of the said period. No transfer or alienation made after the said
period of ten years and within fifteen years from the issuance of such patent except those made by virtue of the
right of succession shall be valid unless when duly authorized by the Secretary of Agriculture and Natural
Resources and the transferee of vendee is a Filipino citizen. Every convenyance made shall be subject to
repurchase by the original purchaser or his legal heirs within a period of five years from the date of
conveyance.
Any contract or agreement made or executed in violation of this section shall be void ab initio.
Consequently, it was erroneous for petitioner to harp on Sec. 2 of RA 730, as amended by PD 2004, in his bid
to unshackle his property from its servient state, to release it from the statutory lien prescribed under Sec. 112
of CA 141.
Petitioner is not entitled to just compensation
The Court now determines how the subsisting easement of right of way in favor of the government bears on
petitioner's entitlement to just compensation. In resolving petitioner's principal claim, we apply the doctrine
in Republic v. Andaya (Andaya).[28]
The seminal case of Andaya likewise involved property subject to the statutory lien under Sec. 112 of CA 141.
As held in the case:
It is undisputed that there is a legal easement of right-of-way in favor of the Republic. Andaya's transfer
certificates of title contained the reservation that the lands covered thereby are subject to the provisions of the
Land Registration Act and the Public Land Act. Section 112 of the Public Land Act provides that lands granted
by patent shall be subject to a right-of-way not exceeding 60 meters in width for public
highways, irrigation ditches, aqueducts, and other similar works of the government or any public
enterprise, free of charge, except only for the value of the improvements existing thereon that may be
affected. In view of this, the Court of Appeals declared that all the Republic needs to do is to enforce such
right without having to initiate expropriation proceedings and without having to pay any just
compensation. Hence, the Republic may appropriate the 701 square meters necessary for the
construction of the floodwalls without paying for it.[29](emphasis added)
The Court affirmed the CA's interpretation of Sec. 112 of CA 141 and ruled that the Republic was under no
obligation to pay therein respondent Andaya just compensation in enforcing its right of way. Be that as it may
the Court did not foreclose the possibility of the property owner being entitled to just compensation if the
enforcement of the right of way resulted in the "taking" of the portions notsubject to the legal easement.
Jurisprudence teaches us that "taking, " in the exercise of the power of eminent domain, "occurs not only when
the government actually deprives or dispossesses the property owner of his property or of its ordinary use, but
also when there is a practical destruction or material impairment of the value of his property." [30] As
in Andaya, even though the Republic was not legally bound to pay just compensation for enforcing its right of
way, the Court nevertheless found that its project to be undertaken—the construction of floodwalls for Phase 1,
Stage 1 of the Lower Agusan Development Project—would prevent ingress and egress in Andayas private
property and turn it into a catch basin for the floodwaters coming from the Agusan River, effectively depriving
him of the normal use of the remainder of his property. To the mind of the Court, this resulted in a "taking" of
what was left of Andaya's property, entitling him to consequential damages, awarded by the Court in the form
of just compensation.
To demonstrate in concrete terms, the property involved in Andaya contained a total area of 10,380 square
meters, which can be divided in the following manner:
i. The 4,443 square meter portion subject to the easement of right of way, which can further be
subdivided into two:
a. The 701 square meter portion corresponding to total area of the 10-meter easement actually
utilized by the Republic; and
b. The 3,742 square meter portion corresponding to the unutilized area of the portion subject to the
60-meter width easement; and
ii. The remainder 5,937 square meter portion not subject to the government's easement of right of way.
The 701 square meter easement in Andaya was the site for the floodwall project. This was the extent of the
right of way enforced by the government. The Court affirmed the CA ruling that the Republic may acquire the
701 square meter property free of charge, save only for the value of the improvements that may be affected.
As previously discussed, the floodwall project on the 701 square meter property would have deprived Andaya
of the normal use of the remainder, i.e., both the 3,742 and the 5,937 square meter residual portions. But of
the two, the Court held that Andaya is entitled to just compensation only for the 5,937 square meter span. The
Court ratiocinated that though unutilized, the 3,742 square meter portion is still covered by Sec. 112 of CA 141
that limits the property owner's compensation to the value of the improvements, not of the value of the property
per se.
To recapitulate, two elements must concur before the property owner will be entitled to just compensation for
the remaining property under Sec. 112 of CA 141: (1) that the remainder is not subject to the statutory lien of
right of way; and (2) that the enforcement of the right of way results in the practical destruction or material
impairment of the value of the remaining property, or in the property owner being dispossessed or otherwise
deprived of the normal use of the said remainder.
This doctrine in Andaya was reiterated in the recent Republic v. Regulto.[31] We now apply the same
parameters for determining petitioner's entitlement to just compensation in the case at bar.
Recall that the subject property in this case is a 400 square meter parcel of land. The 223 square meter portion
of the subject property was traversed by respondents' Metro Manila Skyway Project. And as noted by the CA,
the subdivision plan shows that the covered area corresponds to the widths of 13.92 meters and 13.99 meters,
well within the 60-meter width threshold provided by law. Respondents are then not under any legal obligation
to pay just compensation for utilizing the 223 square meter portion pursuant to the Republic's right of way
under Sec. 112 of CA 141, and in accordance with our ruling in Andaya.
Anent the remaining 177 square meters of the 400 square meter lot, suffice it to state that it was never proved
that the said area was not subject to the statutory lien. Neither was it established that despite not having been
utilized for the Metro Manila Skyway Project, the enforcement of the easement resulted in the "taking" of the
remaining property all the same. There is then no evidentiary basis for awarding petitioner just compensation,
as correctly ruled by the RTC and the CA. However, petitioner remains the owner of the said 177 square
meters and can fully exercise all the rights of ownership over the same.
Respondents are barred by estoppel

from recovering the initial payment
of P1,480,000 from petitioner
Guilty of reiteration, Sec. 112 of CA 141 precludes petitioner from claiming just compensation for the
government's enforcement of its right of way. The contract allegedly entered by the parties for the
government's acquisition of the affected portion of the property in exchange for just compensation is then
void ab initio for being contrary to law.[32] Consequently, petitioner has no right to collect just compensation for
the government's use of the 223 square meter lot. Anent the P1,480,000 partial payment already made by
respondents, such amount paid shall be governed by the provisions on solutio indebiti or unjust enrichment.
"Solutio indebiti" arises when something is delivered through mistake to a person who has no right to demand
it. It obligates the latter to return what has been received through mistake. As defined in Article 2154 of the
Civil Code,[33] the concept has two indispensable requisites: first, that something has been unduly delivered
through mistake; and second, that something was received when there was no right to demand it.[34]
As discussed above, petitioner was never entitled to collect and receive just compensation for the
government's enforcement of its right of way, including the P1,480,000 payment made by respondents. For its
part, the government erroneously made payment to petitioner because of its failure to discover earlier on that
the portion of the property acquired was subject to a statutory lien in its favor, which it could have easily
learned of upon perusal of petitioner's Order of Award. These circumstances satisfy the requirements
for solutio indebiti to apply.
Regardless, respondents' action to compel petitioner to return what was mistakenly delivered is now barred by
the doctrine of estoppel. The doctrine is based upon the grounds of public policy, fair dealing, good faith and
justice, and its purpose is to forbid one to speak against his own act, representations, or commitments to the
injury of one to whom they were directed and who reasonably relied thereon. The doctrine of estoppel springs
from equitable principles and the equities in the case.[35]
As a general rule, the State cannot be barred by estoppel by the mistakes or errors of its officials or agents.
But as jurisprudence elucidates, the doctrine is subject to exceptions, viz:
Estoppels against the public are little favored. They should not be invoked except [in rare] and unusual
circumstances, and may not be invoked where they would operate to defeat the effective operation of a policy
adopted to protect the public. They must be applied with circumspection and should be applied only in those
special cases where the interests of justice clearly require it. Nevertheless, the government must not be
allowed to deal dishonorably or capriciously with its citizens, and must not play an ignoble part or do a
shabby thing; and subject to limitations ..., the doctrine of equitable estoppel may be invoked against public
authorities as well as against private individuals.[36]
In this case, petitioner was erroneously paid P1,480,000 on August 14, 1997 when respondents appropriated
the amount in his favor. However, because of respondents' representation that the amount was a mere
downpayment for just compensation, petitioner never objected to the taking of his land and peacefully parted
with his property, expecting to be paid in full for the value of the taken property thereafter. As the events
unfolded, respondents did not make good their guarantee. Instead, they would claim for the recovery of the
wrongful payment after almost twelve (12) years, on July 9, 2009, as a counterclaim in their Supplemental
Answer. Indubitably, respondents are barred by estoppel from recovering from petitioner the amount initially
paid. A modification of the assailed CA ruling is, therefore, in order.
WHEREFORE, premises considered, the Court resolves to PARTIALLY GRANT the petition. The award to
respondents for the recovery of the P1,480,000 initial payment is hereby DELETED as their right to a refund
has already prescribed. Petitioner Danilo Bartolata remains the owner of the 177 square meter portion and can
exercise all rights of ownership over the said lot.
SO ORDERED.
Bersamin, Reyes, Perlas-Bernabe,* and Tijam, JJ., concur.

July 18, 2017
NOTICE OF JUDGMENT
Sirs /Mesdames:
Please take notice that on June 7, 2017 a Decision, copy attached hereto, was rendered by the Supreme
Court in the above-entitled case, the original of which was received by this Office on July 18, 2017 at 2:20 p.m.
Very truly yours,
(SGD.) WILFREDO V. LAPITAN

*
Additional member per raffle dated February 15, 2017.
[1]
Penned by Associate Justice Maria Elisa Sempio Diy and concurred in by Associate Justices Stephen C.
Cruz and Manuel M. Barrios.
[2]
Rollo, p. 118.
[3]
Id. at 125.
[4]
Id. at 140-141.
[5]
Id. at 134.
[6]
Id. at 77.
[7]
Entitled "Danilo Bartolata, rep. by Atty. In Fact Rebecca P. Pilot & Dionisio P. Pilot vs. Republic of the
Philippines, Department of Public Works and Highways, Department of Transportation and Communications,
and Toll Regulatory Board."
[8]
Rollo, p. 141.
[9]
AN ACT TO AMEND AND COMPILE THE LAWS RELATIVE TO LANDS OF THE PUBLIC DOMAIN,
approved on November 7, 1936.
[10]
AMENDING SECTION TWO OR REPUBLIC ACT NUMBERED SEVEN HUNDRED AND THIRTY
RELATIVE TO THE SALE WITHOUT PUBLIC AUCTION OF PUBLIC LANDS OF THE REPUBLIC OF THE
PHILIPPINES FOR RESIDENTIAL PURPOSES TO QUALIFIED APPLICANTS UNDER CERTAIN
CONDITIONS, dated December 30, 1985.
[11]
AN ACT TO PERMIT THE SALE WITHOUT PUBLIC AUCTION OF PUBLIC LANDS OF THE REPUBLIC
OF THE PHILIPPINES FOR RESIDENTIAL PURPOSES TO QUALIFIED APPLICANTS UNDER CERTAIN
CONDITIONS, approved on June 18, 1952.
[12]
Rollo, p. 126.
[13]
Id. at 123.
[14]
Id. at 125.
[15]
Id. at 146.
[16]
Id. at 143-144.
[17]
Id. at 47-48.
[18]
Id. at 55.
[19]
CONSTITUTION, Art. III, Sec. 9. Private property shall not be taken for public use without just
compensation.
[20]
Rollo, pp. 57-60; citing the expropriation cases of Republic v. Lim, G.R. No. 161656, June 29, 2005, 462
SCRA 265, Republic v. Salem Investments Corporation, G.R No. 137569, June 23, 2000, 334 SCRA
320, Heirs of Saguitan v. City of Mandaluyong, G.R No. 135087, March 14, 2000, 328 SCRA 137, Landowners
in the Philippines, Inc. v. Secretary of Agrarian Reform, G.R No. 78742, July 14, 1989, 175 SCRA
343, Coscuella v. Court of Appeals, No. L-77765, August 15, 1988, 164 SCRA 393, Visayan Refining Co. v.
Camus and Paredes, 40 Phil. 550 (1919), Manila Railroad v. Velasquez, 32 Phil. 286 (1915).
[21]
Id. at 66-67.
[22]
Id. at 66-68.
[23]
Id. at 69.
[24]
SECTION 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to
private parties by lease only and not otherwise, as soon as the President, upon recommendation by the
Secretary of Agriculture and Commerce, shall declare that the same are not necessary for the public service
and are open to disposition under this chapter. The lands included in class (d) may be disposed of by sale or
lease under the provisions of this Act. (emphasis added)
[25]
SECTION 67. The lease or sale shall be made through oral bidding; and adjudication shall be made
to the highest bidder. However, where an applicant has made improvements on the land by virtue of a permit
issued to him by competent authority, the sale or lease shall be made by sealed bidding as prescribed in
section twenty-six of this Act, the provisions of which shall be applied wherever applicable. If all or part of the
lots remain unleased or unsold, the Director of Lands shall from time to time announce in the Official Gazette
or in any other newspapers of general circulation, the lease or sale of those lots, if necessary. (emphasis
added)
[26]
SECTION 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filing, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
[27]
RA 730, Sec. 1.
[28]
G.R. No. 160656, June 15, 2007, 524 SCRA 671.
[29]
Id. at 675-676.
[30]
Id. at 676; citing Republic v. Court of Appeals, G.R. No. 147245, March 31, 2005, 454 SCRA 516, 536
and Ansaldo v. Tantuico, Jr., G.R. No. 50147, August 3, 1990, 188 SCRA 300, 304.
[31]
G.R. No. 202051, April 18, 2016, 790 SCRA 1.
[32]
Article 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public
policy.
[33]
Article 2154. If something is received when there is no right to demand it, and it was unduly delivered
through mistake, the obligation to return it arises.
[34]
Metropolitan Bank & Trust Company v. Absolute Management Corporation, G.R. No. 170498, January 9,
2013, 688 SCRA 225, 238.
[35]
Megan Sugar Corporation v. Regional Trial Court of Iloilo, Branch 68, Dumangas, Iloilo, G.R. No. 170352,
June 1, 2011, 650 SCRA 100, 110.
[36]
Republic v. Court of Appeals, G.R. No. 116111, January 21, 1999, 301 SCRA 366, 377; citing 31 CJS 675-
676.
VELASCO JR., J.:

The Case
Pending before the Court is a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court,
seeking to reverse and set aside the Decision[2] dated June 28, 2016 and the Resolution[3] dated October 20,
2016 of the Court of Appeals (CA) in CA-G.R. CV No. 99908. The CA affirmed the Decision[4] dated September
30, 2011 of the Regional Trial Court (RTC) of Manila, Branch 55, in Civil Case No. 92-61716, which ordered
the partition of the subject property and the annulment and cancellation of petitioner's title over the same.
The Facts
Petitioner Jose S. Ocampo and respondent Ricardo S. Ocampo are full-blooded brothers being sons of the late
Basilio Ocampo and Juliana Sunglao.[5]
The present case arose from a complaint filed by respondent against petitioner for partition and annulment of
Transfer Certificate of Title (TCT) No. 102822 ("Subject Property").[6]
In the complaint, respondent alleged that he and petitioner are co owners of the Subject Property, which was a
conjugal property left by their parents, consisting of a 150-square meter lot and the improvements thereon
located at 2227 Romblon Street, G. Tuazon, Sampaloc, Manila. The Subject Property was originally registered
in their parents' names under TCT No. 36869.[7]
Respondent claimed that petitioner and his wife, Andrea Mejia Ocampo, conspired in falsifying his signature on
a notarized Extra-Judicial Settlement with Waiver ("ESW") dated September 1970, and effecting the transfer of
the property in the name of petitioner under TCT No. 102822, which was issued on November 24, 1970. Based
on a finding by the National Bureau of Investigation (NBI) that respondent's signature was forged, an
Information was filed against petitioner, the notary public, and two others. Respondent requested for partition
of the property, but petitioner refused to do so and secretly mortgaged the property for P200,000.00.[8]
Petitioner and his wife moved for the dismissal of the complaint, but it was denied by the trial court. Thereafter,
they filed their Answer with Motion for Preliminary Hearing on the Affirmative Defense of prescription.[9]
Based on their Answer, petitioner and his wife claimed that their parents executed a Deed of Donation Propter
Nuptias of the Subject Property in their favor as they were getting married, with a promise on their part to
demolish the old house and replace it with a new two-storey house, which they did. To build the new house,
they obtained a P10,000.00 loan from the Development Bank of the Philippines (DBP), with petitioner and his
parents as borrowers.[10]
Petitioner further alleged that his parents gave respondent several properties outside Metro Manila, which
respondent eventually lost. Petitioner and his wife then allowed respondent to stay at the second floor of the
house. Petitioner was able to pay the DBP loan through a loan secured from the Social Security System (SSS)
with the consent of his father. He claimed that on September 30, 1970, their father executed the ESW and
secured respondent's signature. By virtue of the ESW, petitioner was able to have TCT No. 36869 cancelled
and have TCT No. 102822 issued in favor of himself and his wife.[11]
Finally, petitioner argued that TCT No. 102822 became indefeasible one year after its issuance on November
24, 1971, and that the action to annul TCT No. 102822 had prescribed since it was filed only on June 29, 1992,
or 21 years and 7 months from the issuance of the title. He further claimed that the action to annul the ESW is
a collateral attack on the title, and the rule on non-prescription against a co-owner does not apply since he and
his wife had become exclusive owners of the Subject Property.[12]
In an Order dated January 21, 1994, the trial court dismissed the complaint on the ground of prescription.
Respondent filed a Motion for Reconsideration and other supplemental pleadings, but they were denied by the
trial court. Respondent thus elevated the matter to the CA, which declared the RTC's January 21, 1994 Order
null and void. Petitioner filed a motion for extension of time to file a petition for review on certiorari before this
Court, but the same was denied in a minute resolution.[13]
Thereafter, respondent filed a motion for writ of execution before the RTC. However, the motion was denied on
the ground that there is nothing to execute since the setting aside of the RTC Order dated January 21, 1994
calls for the case to be tried on the merits. Thus, the RTC set the case for pre-trial.[14]
Meanwhile, petitioner filed a Motion for Leave to File Amended Answer which was granted by the RTC. In the
Amended Answer, petitioner alleged that after their mother passed away in 1965, the P3,000.00 balance of the
DBP loan was paid through an SSS loan. Petitioner alleged that in consideration of the loan, respondent and
their father waived their rights to the property under the ESW. Petitioner further claimed that on November 19,
1970, their father executed a Deed of Absolute Sale, where he sold his interest in the Subject Property for
P9,000.00 in favor of petitioner.[15]
Pre-trial ensued and the case was twice referred to mediation, but the parties refused to mediate. Thus, trial
proceeded.[16]
Respondent presented three witnesses, as follows: 1) himself, 2) his wife, Francisca Elera Ocampo, and 3)
Rhoda B. Flores, the Officer-in-Charge of the Questioned Documents Division of the NBI.[17] On the other hand,
petitioner presented himself as the only witness for the defense.[18]
Ruling of the Regional Trial Court
In a Decision dated September 30, 2011, the RTC ruled in favor of respondent, to wit:
WHEREFORE, premises considered, judgment is hereby rendered IN FAVOR OF THE PLAINTIFF, RICARDO
S. OCAMPO and AGAINST the defendant JOSE S. OCAMPO, as follows:
1. ORDERING the property located at 2227 Romblon St. G. Tuazon, Sampaloc, Manila, including the
improvements found therein to be partitioned between the plaintiff and the defendant, each having a
share of one-half in the property;
2. ORDERING that TCT No. 102822 of the Registry of Deeds of the City of Manila be ANNULLED;
3. ORDERING the Registry of Deeds of the City of Manila to CANCEL Transfer Certificate of Title No.
102822, issued in the name of defendant, the same being null and void;
4. ORDERING the defendant to pay the costs of the suit.
SO ORDERED.[19]
Petitioner's motion for reconsideration was denied in an Order dated May 21, 2012. Thus, he filed a Notice of
Appeal, which was granted in the Order dated July 10, 2012.[20]
Ruling of the Court of Appeals
In the assailed Decision dated June 20, 2016, the CA affirmed the findings of the RTC, the dispositive portion
of which reads:
WHEREFORE, the appeal is DENIED. The September 30, 2011 Decision of the Regional Trial Court, Branch
55, Manila in Civil Case No. 92-61716 is AFFIRMED.
SO ORDERED.[21]
In dismissing the petition, the CA found that respondent was able to prove that his signature on the ESW is not
genuine, based on his and his wife's testimony, as well as the NBI report. According to the CA, this finding of
forgery was also supported by petitioner's own admission on cross-examination that he was not present when
the ESW was executed. Based on the evidence presented, the preponderance of evidence weighed in favor of
respondent and against petitioner.
As to petitioner's argument that the action is a collateral and not a direct attack on the title, the CA found it
unmeritorious and ruled that the action precisely assails the validity of petitioner's title on the ground that it is
based on a forged document, and it is also an action for reconveyance. Thus, the CA ruled that the action to
annul the ESW is imprescriptible since it is a void or inexistent contract. With this, the CA affirmed the RTC
Decision.
Petitioner filed a Motion for Reconsideration before the CA, but the same was denied in the assailed
Resolution[22] dated October 20, 2016.
Hence, this petition.
The Petition
Petitioner argues that the CA committed a reversible error in dismissing the appeal and in affirming the RTC
Decision. Petitioner claims that the ESW, being a notarized document, enjoys a prima facie presumption of
authenticity and due execution. He claims that there was no clear and convincing evidence to overcome this
presumption.
Even assuming that the ESW is void or inexistent, petitioner argues that the action filed by respondent is
barred by the doctrine of estoppel by laches. The ESW was executed and notarized on September 30, 1970.
However, it was only on July 1, 1992 that respondent filed the present case for partition and annulment of title,
claiming that the ESW was forged. Thus, petitioner argues that there was an unreasonable delay on
respondent's part to assert his rights and pursue his claims against petitioner.
In compliance with the Court's Resolution dated February 1, 2017, respondent filed his Comment dated April
20, 2017. Respondent prayed for the dismissal of the petition, arguing that the issues raised therein have
already been exhaustively and judiciously passed upon by the CA and the trial court. He argues that the CA
was correct in declaring that the action was not barred by laches since the ESW is a void or inexistent contract
which makes an action declaring it imprescriptible.
The Issue
Petitioner raises the following grounds in support of his petition:
1. The CA erred in finding that the preponderance of evidence lies in favour of the view that the signature
of the respondent is not genuine.
2. The CA erred in sustaining that the ESW is a void or inexistent contract.
3. The CA erred in ruling that the action to declare the nullity of the ESW is not barred by laches.
Essentially, the principal issue in this case is whether or not the CA committed reversible error in upholding the
RTC's findings.
The Court's Ruling
The petition is without merit.
The petition raises questions of fact
It is well settled that questions of fact are not reviewable in petitions for review on certiorari under Rule 45 of
the Rules of Court. Only questions of law distinctly set forth shall be raised in a petition and resolved.
Moreover, the factual findings of the lower courts, if supported by substantial evidence, are accorded great
respect and even finality by the courts. Except for a few recognized exceptions, this Court will not disturb the
factual findings of the trial court.[23] This Court sees no reason to overturn the factual findings of the trial court,
as affirmed by the CA, as the records show that preponderant evidence established the falsity of the ESW and
the fraudulent registration of the subject property in petitioner's name.
Prescription has not set in
We find it proper to delve into the more important issue to be resolved, that is, whether the action for
annulment of title and partition has already prescribed. It must be pointed out that the issue of prescription had
already been raised by petitioner in his Motion to Dismiss[24]dated August 5, 1992. This motion was granted by
the trial court in its Order[25] dated January 21, 1994. However, respondent appealed this Order with the Court
of Appeals in CA-G.R. CV No. 45121. The CA then rendered a Decision[26] dated March 30, 2001, nullifying the
order of dismissal of the trial court. The CA essentially ruled that the case for partition and annulment of title
did not prescribe. The CA Decision was eventually affirmed by the Second Division of this Court in G.R. No.
149287 by virtue of a minute Resolution[27] dated September 5, 2001, which became final and executory and
was entered into the Book of Entries of Judgments on October 16, 2001.
Accordingly, the resolution in G.R. No. 149287 should have written finis to the issue of prescription.
Nonetheless, to finally put to rest this bothersome issue, it behooves this Court to further elucidate why the
respondent's action and right of partition is not barred by prescription. The CA explained that prescription is
inapplicable. While the appellate court's observation is proper, it is inadequate as it fails to sufficiently explain
why the rule on the imprescriptibility and indefeasibility of Torrens titles do not apply.
In the recent case of Pontigon v. Sanchez, We explained thus:
Under the Torrens System as enshrined in P.D. No. 1529, the decree of registration and the certificate of title
issued become incontrovertible upon the expiration of one (1) year from the date of entry of the decree of
registration, without prejudice to an action for damages against the applicant or any person responsible for the
fraud. However, actions for reconveyance based on implied trusts may be allowed beyond the one-year period.
As elucidated in Walstrom v. Mapa, Jr.:
[N]otwithstanding the irrevocability of the Torrens title already issued in the name of another person, he can
still be compelled under the law to reconvey the subject property to the rightful owner. The property registered
is deemed to be held in trust for the real owner by the person in whose name it is registered. After all, the
Torrens system was not designed to shield and protect one who had committed fraud or misrepresentation and
thus holds title in bad faith. In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property, in this case the title thereof, which has
been wrongfully or erroneously registered in another person's name, to its rightful and legal owner, or to one
with a better right. This is what reconveyance is all about. Yet, the right to seek reconveyance based on an
implied or constructive trust is not absolute nor is it imprescriptible. An action for reconveyance based
on an implied or constructive trust must perforce prescribe in ten years from the issuance of the Torrens title
over the property. (Emphasis supplied)
Thus, an action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten
(10) years, the point of reference being the date of registration of the deed or the date of the issuance of the
certificate of title over the property.
By way of additional exception, the Court, in a catena of cases, has permitted the filing of an action for
reconveyance despite the lapse of more than ten (10) years from the issuance of title. The common
denominator of these cases is that the plaintiffs therein were in actual possession of the disputed land,
converting the action from reconveyance of property into one for quieting of title. Imprescriptibility is
accorded to cases for quieting of title since the plaintiff has the right to wait until his possession is disturbed or
his title is questioned before initiating an action to vindicate his right.[28] (Emphasis supplied; citations omitted)
Given the falsity of the ESW, it becomes apparent that petitioner obtained the registration through fraud. This
wrongful registration gives occasion to the creation of an implied or constructive trust under Article 1456 of the
New Civil Code.[29] An action for reconveyance based on an implied trust generally prescribes in ten years.
However, if the plaintiff remains in possession of the property, the prescriptive period to recover title of
possession does not run against him. In such case, his action is deemed in the nature of a quieting of title, an
action that is imprescriptible.[30]
In the case before us, the certificate of title over the subject property was issued on November 24, 1970. Yet,
the complaint for partition and annulment of the title was only filed on July 1, 1992, more than twenty (20) years
since the assailed title was issued. Respondent's complaint before the RTC would have been barred by
prescription. However, based on respondent's submission before the trial court, both petitioner and respondent
were residing at the subject property at the time the complaint was filed. The complaint[31] states:
That Plaintiff is of legal age, married, Filipino and presently residing at 2227 Romblon St., G. Tuazon,
Sampaloc, Manila; while defendant is likewise of legal age, married, Filipino and residing at 2227
1)
Romblon St., G. Tuazon, Sampaloc, Manila, where he may be served with summons and other
processes of this Honorable Court;[32]
This was unqualifiedly admitted by petitioner in his Amended Answer and no denial was interposed
therefrom.[33] Petitioner's failure to refute respondent's possession of the subject property may be deemed as a
judicial admission. A party may make judicial admissions in (a) the pleadings, (b) during the trial, either by
verbal or written manifestations or stipulations, or (c) in other stages of the judicial proceeding.[34] A judicial
admission conclusively binds the party making it and he cannot thereafter take a position contradictory to or
inconsistent with his pleadings. Acts or facts admitted do not require proof and cannot be contradicted, unless
it is shown that the admission was made through palpable mistake or that no such admission was made.[35]
Considering that respondent was in actual possession of the disputed land at the time of the filing of the
complaint, the present case may be treated as an action for quieting of title.
Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to
real property.[36] In Heirs of Delfin and Maria Tappa v. Heirs of Jose Bacud,[37] this Court reiterated the
requisites for an action for quieting of title:
The action filed by Spouses Tappa was one for quieting of title and recovery of possession. In Baricuatro, Jr. v.
Court of Appeals, an action for quieting of title is essentially a common law remedy grounded on equity, to wit:
x x x Originating in equity jurisprudence, its purpose is to secure "...an adjudication that a claim of title to or an
interest in property, adverse to that of the complainant, is invalid, so that the complainant and those claiming
under him may be forever afterward free from any danger of hostile claim." In an action for quieting of title, the
competent court is tasked to determine the respective rights of the complainant and other claimants, "...not
only to place things in their proper place, to make the one who has no rights to said immovable respect and not
disturb the other, but also for the benefit of both, so that he who has the right would see every cloud of doubt
over the property dissipated, and he could afterwards without fear introduce the improvementshe may desire,
to use, and even to abuse the property as he deems best. x x x." (Emphasis in the original.)
In our jurisdiction, the remedy is governed by Article 476 and 477 of the Civil Code, which state:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument,
record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any interest
therein.
Art. 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the subject-
matter of the action. He need not be in possession of said property.
From the foregoing provisions, we reiterate the rule that for an action to quiet title to prosper, two indispensable
requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in
the real property subject of the action; and (2) the deed, claim, encumbrance or proceeding claimed to be
casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance
of validity or legal efficacy.
xxxx
A cloud on a title exists when (1) there is an instrument (deed, or contract) or record or claim or encumbrance
or proceeding; (2) which is apparently valid or effective; (3) but is, in truth and in fact, invalid, ineffective,
voidable, or unenforceable or extinguished (or terminated) or barred by extinctive prescription; and (4) and may
be prejudicial to the title.
Since it was already established that respondent's signature on the ESW, which was the basis of petitioner's
title over the property, was forged, then it is only necessary for the cloud on respondent's title to be removed.
Thus, the trial court's order to cancel TCT No. 102822 and uphold the parties' co-ownership was proper.
The present action is not barred by laches
We also find no merit in petitioner's argument that the case is barred by laches.
Jurisprudence has defined laches as the failure or neglect, for an unreasonable and unexplained length of
time, to do that which-by the exercise of due diligence-could or should have been done earlier. It is the
negligence or omission to assert a right within a reasonable period, warranting the presumption that the party
entitled to assert it has either abandoned or declined to assert it.[38]
Based on the facts presented before us, it appears that respondent did not sleep on his rights, as claimed by
petitioner. It is undeniable that respondent had filed several cases to assert his rights over the property. Aside
from the present complaint, respondent also filed, on separate occasions, three criminal complaints for: 1)
falsification of public document, 2) estafa through falsification of public documents, and 3) forgery, all against
herein petitioner. To Our mind, the filing of these cases at different times negates the claim of laches. Time and
again, this Court has ruled that courts, under the principle of equity, will not be guided or bound strictly by the
statute of limitations or the doctrine of laches when to do so, manifest wrong or injustice would result. [39]
IN VIEW OF THE FOREGOING, the petition is DENIED. The Decision dated September 30, 2011 of the
Regional Trial Court, Branch 55, Manila in Civil Case No. 92-61716, as affirmed by the Court of Appeals in its
Decision dated June 28, 2016 in CA-G.R. CV No. 99908, is hereby AFFIRMED.
The Regional Trial Court shall proceed with the partition of the subject lot with dispatch.
SO ORDERED.
Bersamin, Reyes, Jardeleza, and Tijam, JJ., concur.
July 25, 2017
NOTICE OF JUDGMENT
Sirs / Mesdames:
Please take notice that on July 5, 2017 a Decision, copy attached hereto, was rendered by the Supreme Court
in the above-entitled case, the original of which was received by this Office on July 25, 2017 at 10:20 a.m.
Very truly yours,
(SGD)
WILFREDO V. LAPITAN
[1]
Petitioner indicated in the caption of the petition that respondent is Roberto S. Ocampo, Sr. However, the
body of the petition and the assailed Decision show that the correct name of respondent is Ricardo S.
Ocampo, Sr.
[2]
Rollo, pp. 28-41. Penned by Associate Justice Melchor Q.C. Sadang and concurred in by Associate Justices
Celia C. Librea-Leagogo and Amy C. Lazaro-Javier.
[3]
Id. at 43.
[4]
Id. at 133-141. Rendered by Pairing Judge Annando A. Yanga.
[5]
Id. at 5.
[6]
Id. at 28.
[7]
Id. at 28-29.
[8]
Id. at 29.
[9]
Id.
[10]
Id. at 29-30.
[11]
Id. at 30.
[12]
Id.
[13]
Id. at 30-31.
[14]
Id. at 31.
[15]
Id. at 31-32.
[16]
Id. at 32.
[17]
Id. at 133.
[18]
Id. at 136.
[19]
Id. at 140-141.
[20]
Id. at 32.
[21]
Id. at 40.
[22]
Id. at 43.
[23]
Virtucio v. Alegarbes, G.R. No. 187451, August 29, 2012, 679 SCRA 412.
[24]
Rollo, pp. 73-75.
[25]
Id. at 80-81.
[26]
Id. at 83-96.
[27]
Id. at 115-116.
[28]
G.R. No. 221513, December 5, 2016.
[29]
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.
[30]
Aniceto Uy v. Court of Appeals, Mindanao Station, Cagayan de Oro City, Carmencita Naval-Sai, rep. by her
Attorney-in-fact Rodolfo Florentino, G.R. No. 173186, September 16, 2015.
[31]
Rollo, pp. 68-72.
[32]
Id. at 68.
[33]
Id. at 123.
[34]
Adolfo v. Adolfo, G.R. No. 201427, March 18, 2015, 753 SCRA 580, citing 2 Regalado, REMEDIAL LAW
COMPENDIUM 656 (9th rev ed.).
[35]
Extraordinary Development Corporation v. Samson-Bico, G.R. No. 191090, October 13, 2014, 738 SCRA
147, 164.
[36]
Quintos v. Nicolas, G.R. No. 210252, June 16, 2014, 726 SCRA 482, 493.
[37]
G.R. No. 187633, April4, 2016, 788 SCRA 13, 25-30.
[38]
Quintos v. Nicolas, supra note 36, at 502.
[39]
Raymundo Coderias v. Estate of Juan Cidoco, G.R. No. 180476, June 26, 2013, 699 SCRA 684, 698.
SECOND DIVISION
[ G.R. No. 211170, July 03, 2017 ]
SPOUSES MAXIMO ESPINOZA AND WINIFREDA DE VERA, PETITIONERS, VS. SPOUSES ANTONIO
MAYANDOC AND ERLINDA CAYABYAB MAYANDOC, RESPONDENTS.
DECISION
PERALTA,** J.:
Before this Court is the Petition for Review on Certiorari under Rule 45, dated March 21, 2014, of petitioners-
spouses Maximo Espinoza and Winifreda De Vera, that seeks to reverse and set aside the Decision[1] dated
September 17, 2013 and Resolution dated January 28, 2014, both of the Court of Appeals (CA) which, in turn,
affirmed with modifications the Decision[2] dated February 18, 2011 of the Regional Trial Court (RTC), Branch
42, Dagupan City, in a complaint for useful expenses under Articles 448[3] and 546[4] of the New Civil Code of
the Philippines.
The facts follow.
A parcel of land located in Dagupan City was originally owned by Eusebio Espinoza. After the death of
Eusebio, the said parcel of land was divided among his heirs, namely: Pastora Espinoza, Domingo Espinoza
and Pablo Espinoza. Petitioner Maximo is the son of Domingo Espinoza, who died on November 3, 1965, and
Agapita Cayabyab, who died on August 11, 1963.
Thereafter, on May 25, 1972, Pastora Espinoza executed a Deed of Sale conveying her share of the same
property to respondents and Leopoldo Espinoza. However, on that same date, a fictitious deed of sale was
executed by petitioner Maximo's father, Domingo Espinoza, conveying the three-fourth (3/4) share in the estate
in favor of respondent Erlinda Cayabyab Mayandoc's parents; thus, TCT No. 28397 was issued in the names
of the latter.
On July 9, 1977, a fictitious deed of sale was executed by Nemesio Cayabyab, Candida Cruz, petitioners-
spouses Maximo Espinoza and Winifreda De Vera and Leopoldo Espinoza over the land in favor of
respondents-spouses Antonio and Erlinda Mayandoc; thus, TCT No. 37403 was issued under the names of the
latter.
As a result of the foregoing, petitioners filed an action for annulment of document with prayer for the
nullification of TCT No. 37403 and, on August 16, 1999, the RTC, Branch 40, Dagupan City rendered a
Decision in favor of petitioners and ordering respondents to reconvey the land in dispute and to pay attorney's
fees and the cost of the suit.
Respondents appealed, but the CA, in its Decision dated February 6, 2004, affirmed the RTC with
modifications that the award of attorney's fees and litigation expenses be deleted for lack of factual basis. The
said CA Decision became final and executory on March 8, 2004.
Thus, respondents filed a complaint for reimbursement fox useful expenses, pursuant to Articles 448 and 546
of the New Civil Code, alleging that the house in question was built on the disputed land in good faith
sometime in 1995 and was finished in 1996. According to respondents, they then believed themselves to be
the owners of the land with a claim of title thereto and were never prevented by the petitioners in constructing
the house. They added that the new house was built after the old house belonging to respondent Erlinda
Mayandoc's father was torn down due to termite infestation and would not have reconstructed the said house
had they been aware of the defect in their title. As such, they claimed that they are entitled to reimbursement of
the construction cost of the house in the amount of P800,000.00. They further asserted that at the time that
their house was constructed, they were possessors in good faith, having lived over the land in question for
many years and that petitioners questioned their ownership and possession only in 1997 when a complaint for
nullity of documents was filed by the latter.
Petitioners, in their Answer, argued that respondents can never be considered as builders in good faith
because the latter were aware that the deeds of sale over the land in question were fictitious and, therefore,
null and void; thus, as builders in bad faith, they lose whatever has been built over the land without right to
indemnity.
Respondents, on January 5, 2011, manifested their option to buy the land where the house stood, but
petitioners expressed that they were not interested to sell the land or to buy the house in question.
The RTC, on February 18, 2011, rendered its Decision with the following dispositive portion:
WHEREFORE, judgment is hereby rendered requiring the defendants to sell the land, where the plaintiffs'
house stands, to the latter at a reasonable price based on the zonal value determined by the Bureau of Internal
Revenue (BIR).
SO ORDERED.[5]
Petitioners appealed to the CA, but the latter, in its Decision dated September 17, 2013, affirmed the decision
of the RTC with modifications. The dispositive portion of the Decision reads:
WHEREFORE, the Decision dated February 18, 2011 by the Regional Trial Court, Branch 42 of Dagupan City,
in Civil Case No. 2005-0271-D is hereby AFFIRMED with MODIFICATIONS.
Let the case be REMANDED to the aforementioned trial court for further proceedings consistent with the
proper application of Articles 448, 546 and 548 of the New Civil Code and to render a complete judgment of
the case.
SO ORDERED.[6]
The motion for reconsideration of petitioners were subsequently denied by the CA in its Resolution dated
January 28, 2014.
Hence, the present petition. Petitioners raise the following issues:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONERS WERE
NOT ABLE TO PROVE BAD FAITH ON THE PART OF THE RESPONDENTS.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RES
JUDICATA DOES NOT APPLY IN THE INSTANT CASE.
According to petitioners, whether or not respondents were in bad faith in introducing improvements on the
subject land is already moot, since the judgment rendered by the RTC of Dagupan City, Branch 40 and
affirmed by the CA, that declared the two Deeds of Definite/Absolute Sale dated May 25, 1972 and July 9,
1977 as null and void, had long become final and executory on March 8, 2004. They also argue that
respondents had not successfully shown any right to introduce improvements on the said land as their claim of
laches and acquisitive prescription have been rejected by the CA on appeal; thus, it follows that the
respondents were builders in bad faith because knowing that the land did not belong to them and that they had
no right to build thereon, they still caused the house to be erected. They further insist that respondents are
deemed builders in bad faith because their house has been built and reconstructed into a bigger one after
respondent Erlinda's parents forged a fictitious sale. Finally, they claim that the principle of res judicata in the
mode of "conclusiveness of judgment" applies in this case.
The petition lacks merit.
The findings of facts of the Court of Appeals are conclusive and binding on this Court[7] and they carry even
more weight when the said court affirms the factual findings of the trial court.[8] Stated differently, the findings of
the Court of Appeals, by itself, which are supported by substantial evidence, are almost beyond the power of
review by this Court.[9] Although this rule is subject to certain exceptions, this Court finds none that is
applicable in this case. Nevertheless, the petition still fails granting that an exception obtains.
To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he
builds, i.e., that he be a possessor in the concept of owner, and that he be unaware that there exists in his title
or mode of acquisition any flaw which invalidates it.[10] The RTC, as affirmed by the CA, found respondents to
be builders in good faith, thus:
The plaintiffs are builders in good faith. As asserted by plaintiffs and not rebutted by defendants, the house of
plaintiffs was built on the lot owned by defendants in 1995. The complaint for nullity of documents and
reconveyance was filed in 1997, about two years after the subject conjugal house was constructed.
Defendants-spouses believed that at the time when they constructed their house on the lot of defendants, they
have a claim of title. Art. 526, New Civil Code, states that a possessor in good faith is one who has no
knowledge of any flaw or defect in his title or mode of acquisition. This determines whether the builder acted in
good faith or not. Surely, plaintiffs would not have constructed the subject house which plaintiffs claim to have
cost them P800,000.00 to build if they knew that there is a flaw in their claim of title. Nonetheless, Art. 527,
New Civil Code, states clearly that good faith is always presumed, and upon him who alleges bad faith on the
part of the possessor lies the burden of proof. The records do not show that the burden of proof was
successfully discharged by the defendants.
xxxx
Plaintiffs are in good faith in building their conjugal house in 1995 on the lot they believed to be their own by
purchase. They also have in their favor the legal presumption of good faith. It is the defendants who had the
burden to prove otherwise. They failed to discharge such burden until the Regional Trial Court, Br. 40,
Dagupan City, promulgated an adverse ruling in Civil Case No. 97-0187-D. Thus, Art. 448 comes in to protect
the plaintiffs-owners of their improvement without causing injustice to the lot owner. Art. 448 comes in to
protect the plaintiff-owners of their improvement without causing injustice to the lot owner. Art. 448 provided a
just resolution of the resulting "forced-ownership" by giving the defendants lot owners the option to acquire the
conjugal house after payment of the proper indemnity or to oblige the builder plaintiffs to pay for the lot. It is the
defendants-lot owners who are authorized to exercise the option as their right is older, and under the principle
of accession where the accessory (house) follows the principal. x x x.[11]
The settled rule is bad faith should be established by clear and convincing evidence since the law always
presumes good faith.[12] In this particular case, petitioners were not able to prove that respondents were in bad
faith in constructing the house on the subject land. Bad faith does not simply connote bad judgment or
negligence.[13] It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong.[14] It
means breach of a known duty through some motive, interest or ill will that partakes of the nature of
fraud.[15]For anyone who claims that someone is in bad faith, the former has the duty to prove such. Hence,
petitioners err in their argument that respondents failed to prove that they are builders in good faith in spite of
the findings of the RTC and the CA that they are.
As such, Article 448[16] of the Civil Code must be applied. It applies when the builder believes that he is the
owner of the land or that by some title he has the right to build thereon,[17] or that, at least, he has a claim of
title thereto.[18] In Tuatis v. Spouses Escol, et al.,[19]this Court ruled that the seller (the owner of the land) has
two options under Article 448: (1) he may appropriate the improvements for himself after reimbursing the buyer
(the builder in good faith) the necessary and useful expenses under Articles 546[20] and 548[21] of the Civil
Code; or (2) he may sell the land to the buyer, unless its value is considerably more than that of the
improvements, in which case, the buyer shall pay reasonable rent, thus:
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with
the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as
the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner cannot refuse
to exercise either option and compel instead the owner of the building to remove it from the land.
The raison d'etre for this provision has been enunciated thus: Where the builder, planter or sower has acted in
good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the land. In view of the impracticability of creating a
state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to
acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for
the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land
who is authorized to exercise the option, because his right is older, and because, by the principle of accession,
he is entitled to the ownership of the accessory thing.[22]
The CA, therefore, did not err in its ruling that instead of requiring the petitioners to sell the land, the RTC must
determine the option which the petitioners would choose. As aptly ruled by the CA:
The rule that the right of choice belongs to the owner of the land is in accordance with the principle of
accession. However, even if this right of choice is exclusive to the land owner, he cannot refuse to exercise
either option and demand, instead for the removal of the building.
Instead of requiring defendants-appellants to sell the land, the court a quo must determine the option which
they would choose. The first option to appropriate the building upon payment of indemnity or the second
option, to sell the land to the plaintiffs-appellees. Moreover, the court a quo should also ascertain: (a) under the
first option, the amount of indemnification for the building; or (b) under the second option, the value of the
subject property vis-a-vis that of the building, and depending thereon, the price of, or the reasonable rent for,
the subject property.
Hence, following the ruling in the recent case of Briones v. Macabagdal, this case must be remanded to the
court a quo for the conduct of further proceedings to assess the current fair market of the kind and to
determine other matters necessary for the proper application of Article 448, in relation to Articles 546 and 548
of the New Civil Code.[23]
Therefore, this Court agrees with the CA that there is a need to remand the case to the RTC for further
proceedings, specifically, in assessing the current fair market value of the subject land and other matters that
are appropriate in the application of Article 448, in relation to Articles 546 and 548 of the New Civil Code.
As to the issue of res judicata, the CA is correct in its ruling that there is no identity of subject matter and cause
of action between the prior case of annulment of document and the present case, thus:
In the instant case, res judicata will not apply since there is no identity of subject matter and cause of action.
The first case is for annulment of document, while the instant case is for reimbursement of useful expenses as
builders in good faith under article 448 in relation to Articles 546 and 548 of the New Civil Code.
Moreover, We are not changing or reversing any findings of the RTC and by this Court in Our 6 February 2004
decision. The Court is still bound by this judgment insofar as it found the Deeds of Absolute Sale null and void,
and that defendants-appellants are the rightful owners of the lot in question.
However, if the court a quo did not take cognizance of the instant case, plaintiffs-appellees shall lose
ownership of the building worth Php316,400.00 without any compensation. While, the defendant-appellants not
only will recover the land but will also acquire a house without payment of indemnity. The fairness of the rules
enunciated in Article 448 is explained by the Supreme Court in the case of Depra v. Dumlao, viz.:
Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and
it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the
land. In view of the impracticability of creating a state of forced ownership, the law has provided a just solution
by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity,
or to oblige the builder or planter to pay for the land and the sower to pay the proper rent. It is the owner of the
land who is authorized to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing.
Finally, "the decision of the court a quo should, not be viewed as a denigration of the doctrine of immutability of
final judgments, but a recognition of the equally sacrosanct doctrine that a person should not be allowed to
profit or enrich himself inequitably at another's expense."[24]
The well-settled rule is that the principle or rule of res judicata is primarily one of public policy. It is based on
the policy against multiplicity of suits,[26] whose primary objective is to avoid unduly burdening the dockets of
the courts.[27] In this case, however, such principle is inapplicable.
WHEREFORE, the Petition for Review on Certiorari under Rule 45, dated March 21, 2014, of petitioners-
spouses Maximo Espinoza and Winifreda De Vera, is DENIED. Consequently, the Decision dated September
17, 2013 and Resolution dated January 28, 2014, both of the Court of Appeals are AFFIRMED.
SO ORDERED.
Mendoza, Leonen, and Martires, JJ., on concur.

Carpio, (Chairperson), J., on wellness leave.
**
Acting Chairperson, per Special Order No. 2445 dated June 16, 2017.
[1]
Penned by Associate Justice Danton Q. Bueser, with the concurrence of Associate Justices Amelita G.
Tolentino and Ramon R. Garcia; rollo, pp. 34-43.
[2]
Penned by Presiding Judge A. Florentino R. Dumlao, Jr.; id. at 118-125.
[3]
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree
upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
[4]
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith
may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the expenses or
of paying the increase in value which the thing may have acquired by reason thereof.
[5]
Rollo, p. 125.
[6]
Id. at 42-43.
[7]
Security Bank and Trust Company v. Triumph Lumber and Construction Corporation, 361 Phil. 463, 474
(1999); American Express International, Inc. v. Court of Appeals, 367 Phil. 333, 339 (1999).
[8]
Borromeo v. Sun, 375 Phil. 595, 602 (1999); Boneng v. People, 363 Phil. 594, 600 (1999).
[9]
Pimentel v. Court of Appeals, 366 Phil. 494, 501 (1999).
[10]
Department of Education v. Delfina C. Casibang, et al., G.R. No. 192268, January 27, 2016, citing Heirs of
Victorino Sarili v. Lagrosa, 724 Phil. 608, 623 (2014).
[11]
Id. at 120-121. (Citations omitted)
[12]
Ford Philippines, Inc. v. Court of Appeals, 335 Phil. 1, 9-10 (1997).
[13]
Id. at 9.
[14]
Id.
[15]
Id.
[16]
Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of
the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree
upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (36la)
[17]
Rosales v. Castelltort, 509 Phil. 137, 147 (2005).
[18]
Briones v. Macabagdal, 640 Phil. 343, 352 (2010).
[19]
619 Phil. 465, 483 (2009), cited in Communities Cagayan, Inc. v. Spouses Arsenio and Angelas Nanol, et
al., 698 Phil. 648 663-664 (2012).
[20]
ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith
may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the expenses or
of paying the increase in value which the thing may have acquired by reason thereof.
[21]
ART. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith;
but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury
thereby, and if his successor in the possession does not prefer to refund the amount expended.
[22]
Tuatis v. Spouses Escol, et al., supra note 19, at 488-489. (Citations omitted)
[23]
Rollo, p. 40. (Citation omitted).
[24]
Id. at 41-42. (Italics in the original)
[26]
Cruz v. Court of Appeals, 369 Phil. 161, 170-171 (1999).
[27]
Riviera Golf Club, Inc. v. CCA Holdings, B.V., G.R. No. 173783, June 17, 2015, 758 SCRA 691, 707.
REYES, J.:
Before the Court are two consolidated petitions for review on certiorari – G.R. Nos. 203287[1] and 207936[2] –
under Rule 45 of the Rules of Court seeking to annul and set aside the Decision[3] dated August 31, 2012 in
CA-G.R. SP No. 122054 and the Decision[4] dated June 28, 2013 in CA-G.R. CV No. 98026, both issued by the
Court of Appeals (CA).
Facts
The spouses Macario C. Domingo (Macario) and Felicidad S.D. Domingo (Felicidad) (Spouses Domingo) ate
the parents of respondent Engracia D. Singson (Engracia) and petitioners Renato S.D. Domingo (Renato) and
his co-heirs whom he represents herein, namely: Consolacion D. Romero (Consolacion), Josefina D. Borja,
and Rafael, Ramon, and Rosario, all surnamed Domingo (collectively, the petitioners). [5]
During their lifetime, the Spouses Domingo owned a parcel of land, situated in F. Sevilla Street, San Juan,
Metro Manila, covered by Transfer Certificate of Title (TC1) No. 32600 (23937) 845-R,[6] and the house built
thereon (subject property). Macario died on February 22, 1981, while Felicidad died on September 14, 1997.[7]
It appears that on September 26, 2006, Engracia filed with the Metropolitan Trial Court of Manila a
complaint[8] for ejectment/unlawful detainer, docketed as Civil Case No. 9534, against Consolacion, Rosario,
Rafael, and Ramon. Engracia claimed that she is the absolute owner of the subject property, having bought the
same from the Spouses Domingo as evidenced by an Absolute Deed of Sale[9] dated June 6, 2006. She
likewise averred that TCT No. 32600 (23937) 845-R was already cancelled and TCT No. 12575[10] covering the
subject property was already issued under her name. The petitioners only learned of the supposed sale of the
subject property when they received the summons and a copy of Engracia's complaint in Civil Case No. 9534.
Consequently, on July 31, 2006, the petitioners filed a complaint[11] with the Regional Trial Court (RTC) of
Pasig City, which sought the nullity of the sale. They alleged that the Absolute Deed of Sale dated June 6,
2006, upon which Engracia bases her ownership of the subject property, was a nullity since the signatures of
their parents appearing thereon as the supposed vendors were forged.[12] The case was docketed as Civil
Case No. 70898 and was raffled to Branch 160 of the RTC.
Meanwhile, on February 28, 2007, Renato, Consolacion, and Ramon filed a Joint Affidavit Complaint[13] with
the Office of the City Prosecutor (OCP) of Pasig City, claiming that Engracia falsified the signatures of their
parents in the Absolute Deed of Sale and, thus, charging her with the crimes of falsification of public document,
estafa, and use of falsified documents. Consequently, on May 6, 2008, the OCP filed an Information[14] with the
RTC, charging Spouses Engracia and Manuel Singson (Spouses Singson) with the crime of estafa through
falsification of public documents. The case was docketed as Criminal Case No. 137867 and was raffled to
Branch 264 of the RTC.
On July 11, 2008, the Spouses Singson filed a Motion to Suspend Proceedings Due to Prejudicial
Question[15] with the RTC in Criminal Case No. 137867. They alleged that the validity and genuineness of the
Absolute Deed of Sale, which is the subject of Civil Case No. 70898 then still pending with the RTC Branch
160, are determinative of their guilt of the crime charged.[16] Accordingly, they prayed that the proceedings in
Criminal Case No. 137867 be suspended pursuant to Section 6 of Rule 111 of the Rules of Court. [17] The
private prosecutor filed an opposition to the motion, stating that Criminal Case No. 137867 can proceed
independently from Civil Case No. 70898 pursuant to Article 33 of the Civil Code, in relation to Section 3
ofRule 111 of the Rules of Court.[18]
On February 12, 2010, the RTC Branch 264, issued an Order[19] in Criminal Case No. 137867, which granted
the motion to suspend the proceedings filed by the Spouses Singson. The private prosecutor sought a
reconsideration[20] of the Order dated February 12, 2010, but it was denied by the RTC in its Order[21] dated
June 7, 2011.
Unperturbed, the petitioners filed a petition for certiorari[22] with the CA, docketed as CA-G.R. SP No. 122054,
claiming that the RTC gravely abused its discretion when it directed the suspension of the proceedings in
Criminal Case No. 137867 on the ground of prejudicial question. They pointed out that the bases of their
respective claims in both Civil Case No. 70898 and Criminal Case No. 137867 are the forged signatures of
their deceased parents.[23] They claimed that where both a civil and criminal case arising from the same facts
are filed in court, the criminal case takes precedence.[24]
On August 31, 2012, the CA rendered a Decision[25] in CA-G.R. SP No. 122054, which denied the petition
for certiorari. The CA opined that all the elements of a prejudicial question under Sections 6 and 7 of Rule 111
of the Rules of Court are present; hence, the RTC did not abuse its discretion when it directed the suspension
of Criminal Case No. 137867.[26]
Meanwhile, Civil Case No. 70898 was initially set for pre-trial conference on February 7, 2008.[27] However,
upon motion[28] of Engracia, the pre-trial was reset on March 6, 2008.[29] During the pre-trial conference on
March 6, 2008, Engracia moved that Rafael be substituted by his heirs since he had already died on October
15, 2007.[30] Thus, the RTC issued an Order[31] dated March 6, 2008 directing the petitioners to comment on
Engracia's motion to substitute Rafael as plaintiff in the case below. On April 8, 2008, Engracia filed a Motion
to Dismiss[32] the case on the ground that the petitioners failed to substitute the heirs of Rafael as plaintiff in the
case. The motion to dismiss was consequently denied by the RTC in its Order[33] dated November 12, 2008 for
lack of merit.
The continuation of the pre-trial conference, which has been sidelined pending the resolution of Engracia's
motion to dismiss, was then set on March 19, 2009.[34] On March 12, 2009, Engracia's counsel, with her
conformity, withdrew his appearance as counsel in the case.[35]During the pre-trial conference on March 19,
2009, the petitioners and their counsel appeared. Engracia was likewise present although without her new
counsel. Accordingly, pre-trial was again reset on June 1, 2009 to afford Engracia time to secure the services
of a new counsel.[36]
Thereafter, Atty. Tristram B. Zoleta entered his appearance for Engracia and moved that the pre-trial
conference on June 1, 2009 be reset on July 13 or 20, 2009.[37] However, Judge Amelia A. Fabros (Judge
Fabros) was reassigned to Muntinlupa City and Judge Myrna V. Lim-Verano (Judge Lim-Verano) was named
to replace Judge Fabros as Presiding Judge of Branch 160.[38] On June 17, 2010, Judge Lim-Verano, having
previously presided over Criminal Case No. 137867, recused herself from adjudicating Civil Case No.
70898.[39] Civil Case No. 70898 was subsequently raffled to Branch 264 of the RTC then presided by Judge
Leoncio M. Janolo, Jr. (Judge Janolo). On July 15, 2010, Judge Janolo issued an Order,[40] setting the pre-trial
of the case on August 25, 2010.
On August 12, 2010, the petitioners' counsel moved to reset the pre-trial on September 15, 2010 due to
previously scheduled hearings in the trial courts of Malolos City and Parañaque City.[41] Accordingly, the pre-
trial was reset on October 6, 2010.[42] On October 6, 2010, the respective counsels of the parties jointly agreed
to reset the pre-trial on December 9, 2010.[43]
However, the pre-trial scheduled on December 9, 2010 was again reset on January 24, 2011.[44]
On December 27, 2010, the petitioners filed a motion,[45] which sought to exclude Rafael as being represented
by Renato. They averred that they were unable to effect a substitution of the heirs of Rafael as plaintiffs in the
case since they could not locate them.
On January 27, 2011, the petitioners' counsel failed to appear and the pre-trial was reset on March 24,
2011.[46] In the morning of March 23, 2011, the petitioners' counsel informed Renato that he would not be able
to attend the pre-trial conference since he was indisposed and asked the latter to go to the RTC and request
for a resetting of the hearing. When the case was called, the petitioners and their counsel failed to appear,
which thus prompted Engracia's counsel to move for the dismissal of the complaint.and be given time to file the
proper pleading. Thus, the RTC gave Engracia's counsel 10 days within which to file a motion to dismiss. The
continuation of the pre-trial was reset on May 26, 2011.[47]
On April 5, 2011, Engracia filed a motion to dismiss[48] in compliance with the RTC's directive.[49] During the
pre-trial on May 26, 2011, the RTC gave the parties' respective counsels, upon their request, five days to file a
comment on the motion to dismiss and a reply to such comment, after which time the motion to dismiss is
deemed submitted for resolution.[50]
On July 29, 2011, the RTC Branch 264 issued an Order[51] in Civil Case No. 70898, dismissing the petitioners'
complaint due to their and their counsel's repeated failure to appear during the scheduled pre-trial hearing
dates.
The petitioners then filed an appeal with the CA, docketed as CA-G.R. CV No. 98026, insisting that the RTC
erred in dismissing their complaint on a mere technicality. They also claimed that Engracia's motion to dismiss
is but a mere scrap of paper since the same did not comply with Sections 4, 5 and 6 of Rule 15 of the Rules of
Court. The CA, in its Decision[52] dated June 28, 2013 in CA-G.R. CV No. 98026, affirmed the RTC's dismissal
of the petitioners' complaint.
Issues
Essentially, the issues set forth for the Court's resolution are: first, whether the proceedings in Criminal Case
No. 137867 were properly suspended on the ground of prejudicial question; and second, whether the dismissal
of the petitioners' complaint in Civil Case No. 70898 due to failure to prosecute was proper.
Ruling of the Court
The petitions are denied.
First Issue: Suspension of the

proceedings in Criminal Case No.
137867 on the ground of prejudicial question
A prejudicial question is understood in law to be that which arises in a case the resolution of which is a logical
antecedent of the issue involved in said case and the cognizance of which pertains to another tribunal. The
doctrine of prejudicial question comes into play generally in a situation where civil and criminal actions are
pending and the is.sues involved in both cases are similar or so closely related that an issue must be pre-
emptively resolved in the civil case before the criminal action can proceed.[53] The rationale behind the principle
of prejudicial question is to avoid two conflicting decisions.[54]
For a civil action to be considered prejudicial to a criminal case as to cause the suspension of the criminal
proceedings until the final resolution of the civil case, the following requisites must be present: (1) the civil case
involves facts intimately related to those upon which the criminal prosecution would be based; (2) in the
resolution of the issue or issues raised in the civil action, the guilt or innocence of the accused would
necessarily be determined; and (3) jurisdiction to try said question must be lodged in another tribunal. [55]
Based on the issues raised in both Civil Case No. 70898 and Criminal Case No. 137867 against the Spouses
Singson, and in the light of the foregoing concepts of a prejudicial question, there indeed appears to be a
prejudicial question in the case at bar. The defense of the Spouses Singson in the civil case for annulment of
sale is that Engracia bought the subject property from her parents prior to their demise and that their
signatures appearing on the Absolute Deed of Sale are true and genuine. Their allegation in the civil case is
based on the very same facts, which would be necessarily determinative of their guilt or Innocence as accused
in the criminal case.
If the signatures of the Spouses Domingo in the Absolute Deed of Sale are genuine, then there would be no
falsification and the Spouses Singson would be innocent of the offense charged. Otherwise stated, a conviction
on Criminal Case No. 137867, should it be allowed to proceed ahead, would be a gross injustice and would
have to be set aside if it were finally decided in Civil Case No. 70898 that indeed the signatures of the Spouses
Domingo were authentic.
The petitioners' reliance on Section 3[56] of Rule 111 of the Rules of Court, in relation to Article 33[57] of the Civil
Code, is misplaced. Section 3 provides that a civil action for damages in cases provided under Articles 32, 33,
34 and 2176 of the Civil Code, which may also constitute criminal offenses, may proceed independently of the
criminal action. In instances where an independent civil action is permitted, the result of the criminal action,
whether of acquittal or conviction, is entirely irrelevant to the civil action.[58]
The concept of independent civil actions finds no application in this case. Clearly, Civil Case No. 70898 is very
much relevant to the proceedings in Criminal Case No. 137867. To stress, the main issue raised in Civil Case
No. 70898, i.e., the genuineness of the signature of the Spouses Domingo appearing in the Absolute Deed of
Sale, is intimately related to the charge of estafa through falsification of public document in Criminal Case No.
137867; the resolution of the main issue in Civil Case No. 70898 would necessarily be determinative of the
guilt or innocence of the Spouses Singson.
Accordingly, the RTC Branch 264 correctly suspended the proceedings in Criminal Case No. 137867 on the
ground of prejudicial question since, at the time the proceedings in the criminal case were suspended, Civil
Case No. 70898 was still pending.
Second Issue: Dismissal of the

petitioners' complaint in Civil Case
No. 70898
Under the Rules of Court, the parties and their counsel are mandated to appear at the pre-trial.[59] Pre-trial
cannot be taken for granted. It is not a mere technicality in court proceedings for it serves a vital objective: the
simplification, abbreviation and expedition of the trial, if not indeed its dispensation.[60] Thus, the failure of a
party to appear at the pre-trial has adverse consequences. If the absent party is the plaintiff, then his case shall
be dismissed, which shall be with prejudice, unless otherwise ordered by the court. If it is the defendant who
fails to appear, then the plaintiff is allowed to present his evidence ex parte and the court shall render judgment
on the basis thereof.[61]
Civil Case No. 70898 was initially set for pre-trial on February 7, 2008. In July 2010, after more than two years,
Civil Case No. 70898, which was still in the pre-trial stage, was re-raffled to Branch 264 presided by Judge
Janolo; the latter immediately scheduled the pre-trial on August 25, 2010. What transpired thereafter is a series
of resetting of the hearing due to the failure of the petitioners and/or their counsel to appear during the
scheduled pre-trial dates. During the scheduled pre-trial on March 23, 2011, the petitioners and their counsel
again failed to appear without informing the RTC of the reason for their non-appearance. Clearly, the
petitioners' wanton disregard of scheduled pre-trial indeed justified the dismissal of their complaint.
It should be stressed that procedural rules are not to be disregarded or dismissed simply because their non-
observance may have resulted in prejudice to a party's substantive rights. Like all rules they are to be followed,
except only when for the most persuasive of reasons they may be relaxed to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.[62]
The petitioners have not shown any persuasive reason, which would justify a relaxation of the rules on pre-trial.
That the petitioners' counsel was supposedly indisposed during the pre-trial on March 23, 2011 does not
excuse the petitioners themselves from attending the pre-trial. Moreover, the petitioners have failed to advance
any valid justification for their and their counsel's failure to attend the previously scheduled pre-trial hearings.
Accordingly, the trial court could not be faulted for dismissing the complaint under Section 5 of Rule 18 of the
Rules of Court.
The petitioners' claim that the motion to dismiss filed by Engracia with the RTC is a mere scrap of paper for her
failure to comply with the mandatory provisions of Sections 4, 5 and 6 of Rule 15 of the Rules of Court is
without merit. Said sections provide that:
Sec. 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of
the adverse party, every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be served in such a
manner as to ensure its receipt by the other party at least three (3) days before the date of hearing, unless the
court for good cause sets the hearing on shorter notice.
Sec. 5. Notice of hearing. The notice of hearing shall be addressed to all parties concerned, and shall specify
the time and date of the hearing which must not be later than ten (10) days after the filing of the motion.
Sec. 6. Proof of service necessary. No written motion set for hearing shall be acted upon by the court without
proof of service thereof.
The pertinent portions of the motion to dismiss filed by Engracia with the RTC read:
NOTICE
CLERK OF COURT
RTC, Branch 264
Pasig City [San Juan Station]
ATTY. EMERITO M. SALVA

Counsel for the Plaintiffs
15th Floor, Washington Tower, Asia World
Complex, Marina Bay, Pacific Avenue
Parañaque City
G r e e t i n g s:
Please submit the foregoing motion [in compliance with the order of the Honorable Court during the hearing on
March 23, 2011] for the consideration and resolution of the Honorable Court immediately upon receipt hereof.
(Sgd.)
TRISTRAM B. ZOLETA
EXPLANATION
Copy of this pleading was sent to the counsel for the plaintiffs through registered mail due to lack of messenger
at the time of service rendering personal service not possible.
(Sgd.)
TRISTRAM B. ZOLETA[63]
That the notice of hearing is addressed to the petitioners' counsel and not to the petitioners directly is
immaterial and would not be a cause to consider the same defective. The requirement under Section 4 of Rule
15 of the Rules of Court that the notice be addressed to the opposing party is merely directory; hat matters is
that adverse party had sufficient notice of the hearing of the motion.[64] Further, even if the notice of hearing in
the motion to dismiss failed to state the exact date of hearing, the defect was cured when the RTC considered
the same in the hearing that was held on May 26, 2011 and by the fact that the petitioners, through their
counsel, were notified of the existence of the said motion.[65]
Anent the supposed lack of proof of service of the motion to dismiss upon the petitioners, suffice it to state that
a copy of the said motion was served upon and received by the petitioners' counsel on April 15, 2011.[66] The
petitioners were duly given the full opportunity to be heard and to argue their case when the RTC required
them to file a comment to the motion to dismiss during the hearing on May 26, 2011, which they did on May 30,
2011.[67] "What the law really eschews is not the lack of previous notice of hearing but the lack of opportunity to
be heard"[68]
Considering, however, that the complaint in Civil Case No. 70898 had already been dismissed with prejudice
on account of the petitioners' and their counsel's persistent failure to appear during the scheduled pre-trial
hearings, the proceedings in Criminal Case No. 137867 should now proceed. There is no longer. any
prejudicial question in Criminal Case No. 137867 since the complaint in Civil Case No. 70898 had been
dismissed without definitely resolving the question of whether the signatures of the Spouses Domingo in the
Absolute Deed of Sale .are genuine. Thus, it is up for the RTC Branch 264, in Criminal Case No. 137867, to
resolve the said issue.
WHEREFORE, in view of the foregoing disquisitions, the petitions in G.R. Nos. 203287 and 207936 are
hereby DENIED. The Decision dated August 31, 2012 in CA-G.R. SP No. 122054 and the Decision dated June
28, 2013 in CA-G.R. CV No. 98026 issued by the Court of Appeals are hereby AFFIRMED. Accordingly, the
Regional Trial Court of Pasig City, Branch 264, is hereby DIRECTED to proceed with Criminal Case No.
137867 with dispatch.
SO ORDERED.
Velasco, Jr., (Chairperson), Bersamin, Jardeleza, and Tijam, JJ., concur.
NOTICE OF JUDGMENT
Sirs /Mesdames:
Please take notice that on April 5, 2017 a Decision, copy attached hereto, was rendered by the Supreme
Court in the above-entitled case, the original of which was received by this Office on June 6, 2017 at 9:11 a.m.
Very truly yours,
(SGD.) WILFREDO V. LAPITAN

[1]
Rollo (G.R. No. 203287), pp. 10-32.
[2]
Rollo (G.R. No. 207936), pp. 14-85.
[3]
Penned by Associate Justice Angelita A. Gacutan, with Associate Justices Fernanda Lampas Peralta and
Francisco P. Acosta concuning; rollo (G.R. No. 203287), pp. 212 221.
[4]
Penned by Associate Justice Normandie B. Pizzaro, with Associate Justices Remedios A. Salazar-Fernanda
and Manuel M. Barrios concurring; rollo (G.R. No. 207936), pp. 89-101.
[5]
Rollo (G.R. No. 203287), p. 12.
[6]
Id. at 84-86.
[7]
Id. at 213.
[8]
Id. at 90-92.
[9]
Id. at 95-97.
[10]
Id. at 93-94.
[11]
Id. at 98-103.
[12]
Id. at 100.
[13]
Id. at 105-108.
[14]
Id. at 119-120.
[15]
Id. at 134-136.
[16]
Id. at 134.
[17]
Id. at 135.
[18]
Id. at 137-140.
[19]
Rendered by Presiding Judge Leoncio M. Janolo, Jr.; id. at 141-143.
[20]
Id. at 145-149.
[21]
Id. at 150-151.
[22]
Id. at 35-53.
[23]
Id. at 44.
[24]
Id. at 49.
[25]
Id. at 212-221.
[26]
Id. at 217-218.
[27]
Order dated November 13, 2007 issued by Judge Amelia A. Fabros; rollo (G.R. No. 207936), pp. 133-134.
[28]
Id. at 139-141.
[29]
Id. at 142.
[30]
Id. at 26-27.
[31]
Id. at 143.
[32]
Id. at 144-146.
[33]
Id. at 156.
[34]
Id. at 157.
[35]
Id. at 158-159.
[36]
Id. at 161.
[37]
Id. at 163-166.
[38]
Id. at 30.
[39]
Id. at 171.
[40]
Id. at 172.
[41]
Id. at 174-176.
[42]
Id. at 177.
[43]
Id. at 178.
[44]
Id. at 179.
[45]
Id. at 180-182.
[46]
Id. at 190.
[47]
Id. at 199.
[48]
Id. at 201-205.
[49]
Id. at 93.
[50]
Id. at 206.
[51]
Id. at 225-228.
[52]
Id. at 89-101.
[53]
Quiambao v. Hon. Osorio, 242 Phil. 441, 444 (1988).
[54]
Ty-de Zuzuarregui v. Hon. Judge Villarosa, et al., 631 Phil. 375, 385 (2010).
[55]
Prado v. People, et al., 218 Phil. 573, 577 (1984).
Sec. 3. When civil action may proceed independently. – In the cases provided in Articles 32, 33, 34 and
[56]
2176 of the Civil Code of the Philippines, the independent civil action may be brought by the offended party. It
shall proceed independently of the criminal action and shall require only a preponderance of evidence. In no
case, however, may the offended party recover damages twice for the same act or omission charged in the
criminal action.
[57]
Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and
distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed
independently of the criminal prosecution, and shall require only a preponderance of evidence.
[58]
See Salta v. Hon. Judge De Veyra, etc., et al., 202 Phil. 527, 533 (1982), citing Dionisio, et al. v. Hon. C. G.
Aluendia, et al., 102 Phil. 443 (1957).
[59]
RULES OF COURT, Rule 18, Section 4.
[60]
See The Philippine American Life & General Insurance Company v. Enario, 645 Phil. 166, 176-177 (2010).
[61]
See Tolentino, et al. v. Laurel, et al., 682 Phil. 527, 536 (2012); RULES OF COURT, Rule 18, Section 5.
[62]
See Social Security System v. Hon. Chaves, 483 Phil. 292, 301 (2004).
[63]
Rollo (G.R. No. 207936), pp. 204-205.
[64]
See Omico Mining and Industrial Corporation v. Judge Vallejos, 159 Phil. 886 (1975).
[65]
See Un Giok v. Matusa, et al., 101 Phil. 727 (1957).
[66]
Rollo (G.R. No. 207936), p. 38.
[67]
Id. at 40.
[68]
See Patricio v. Judge Leviste, 254 Phil. 780, 786 (1989).
THIRD DIVISION
[ G.R. No. 200612, April 05, 2017 ]
RAFAEL C. UY (CABANGBANG STORE), PETITIONER, V. ESTATE OF VIPA FERNANDEZ,

RESPONDENT.
DECISION
REYES, J.:
This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court seeking to annul and set aside
the Decision[2] dated November 26, 2010 and Resolution[3] dated January 24, 2012 issued by the Court of
Appeals (CA) in CA-G.R. SP No. 04481.
Facts
Vipa Fernandez Lahaylahay (Vipa) is the registered owner of a parcel of land situated in Lopez Jaena Street,
Jaro, Iloilo City covered by Transfer Certificate of Title No. T-26576 (subject property).[4] Vipa and her husband,
Levi Lahaylahay (Levi), have two children – Grace Joy Somosierra (Grace Joy) and Jill Frances Lahaylahay
(Jill Frances).[5]
Sometime in 1990, a contract of lease was executed between Vipa and Rafael Uy (Rafael) over the subject
property and the improvements thereon, pursuant to which, Rafael bound himself to pay Vipa, as consideration
for the lease of the property, the amount of P3,000.00 permonth, with a provision for a 10% increase every
year thereafter.[6]
On March 5, 1994, Vipa died leaving no will or testament whatsoever. Grace Joy became the de
facto administrator of the estate of Vipa. After Vipa's death, Levi lived in Aklan.[7]
In June 1998, Rafael stopped paying the monthly rents.[8] Consequently, on June 12, 2003, the Estate of Vipa,
through Grace Joy, filed a complaint[9] for unlawful detainer with the Municipal Trial Court in Cities (MTCC) of
Iloilo City against Rafael. It was alleged therein that, as of June 1998, Rafael was already bound to pay rent at
the amount of P3,300.00 per month and that his last payment was made in May 1998. Accordingly, at the time
of the filing of the Complaint, Rafael's unpaid rents amounted to P271,150.00.[10] The Estate of Vipa claimed
that despite repeated demands, Rafael refused to pay the rents due.[11]
In his Answer,[12] Rafael denied that he refused to pay the rent for the lease of the subject property. He claimed
that sometime in June 1998 Patria Fernandez-Cuenca (Patria), Vipa's sister, demanded for the payment of the
rents, claiming that she is the rightful heir of Vipa.[13] Since he had no idea on who is entitled to receive the rent
for the subject property, he deposited the amount of P10,000.00 with the Office of the Clerk of Court of the
Regional Trial Court (RTC) of Iloilo City on November 20, 1998 and that Grace Joy was informed of such
consignation.[14] He claimed that a case for the settlement of the Estate of Vipa was instituted by Patria with the
RTC, which was docketed as Special Proceeding No. 6910. He averred that he is willing to pay the rent on the
leased property to the rightful heirs of Vipa and that he made another consignation with the RTC in the amount
of P6,000.00.[15]
On June 12, 2008, the MTCC rendered a Decision,[16] the decretal portion of which reads:
WHEREFORE, in the light of the foregoing ratiocination, judgment is hereby rendered in favor of the [Estate of
Vipa] and against [Rafael], ordering the latter, to wit:
1. to vacate the premises subject of this case and covered by TCT No. T-26576 and to peacefully turn
over the possession of the same to the [Estate of Vipa];
2. to pay the [Estate of Vipa] the amount of Php271,150.00 as payment for the unpaid rentals with 12%
interest per annum from the last demand on May 3, 2003 until the whole amount is paid;
3. to pay the [Estate of Vipa] the amount of Php3,000.00 per month with 12% interest per annum for the
use and occupancy of the premises computed from the date of the filing of this case on June 12, 2003
until fully paid;
4. to pay the [Estate of Vipa] attorney's fees in the amount of Php20,000.00; [and]
5. to pay the costs of suit.
SO ORDERED.[17]
The MTCC found that after Vipa's death in 1994 until 1998, Rafael was paying the rent for the lease of the
subject property to Grace Joy.[18] That the real reason why Patria claimed to be the heir of Vipa is because she
owed Rafael money which she could not pay. Patria then charged the debt she owes to Rafael from the
monthly rent of the subject property, an arrangement that Rafael took advantage to avoid paying Grace Joy the
monthly rents. The MTCC further opined that the consignations made by Rafael in the total amount of
P16,000.00 are not valid since there was no prior tender of payment.[19]
On appeal, the RTC, in its Decision[20] dated April 15, 2009, reversed the MTCC's Decision dated June 12,
2008 and, thus, dismissed the complaint for unlawful detainer filed by the Estate of Vipa. Thus:
WHEREFORE, premises considered, the Decision appealed from is REVERSED and SET ASIDE; and the
herein complaint is hereby DISMISSED for lack of merit; and further DISMISSING [Rafael's] counterclaim for
failure to substantiate the same.
SO ORDERED.[21]
The RTC opined that Grace Joy was actually the plaintiff in the case and not the Estate of Vipa. It then pointed
out that Grace Joy failed to bring the dispute to the barangay for conciliation prior to filing the complaint for
unlawful detainer.[22]
The RTC further held that the MTCC erred in including the entire subject property as part of the Estate of Vipa.
The RTC explained that the subject property was acquired by Vipa during the subsistence of her marriage with
Levi and, as such, is part of their conjugal properties. That after Vipa's death, the conjugal partnership was
terminated, entitling Levi to one-half of the property.[23] The RTC then pointed out that Levi sold his share in the
subject property to Rafael, as evidenced by a Deed of Sale[24] dated December 29, 2005.[25]Accordingly, the
RTC ruled that Rafael, as co-owner of the subject property, having bought Levi's one-half share thereof, had
the right to possess the same.[26]
The Estate of Vipa sought a reconsideration[27] of the Decision dated April 15, 2009, but it was denied by the
RTC in its Order dated July 28; 2009.[28]
The Estate of Vipa then filed a Petition for Review[29] with the CA. On November 26, 2010, the CA rendered a
Decision,[30] which declared:
WHEREFORE, in view of all the foregoing, the instant petition for review is GRANTED and the April 15, 2009
Decision of the court a quo in Civil Case No. 08-29842 is hereby REVERSED and SET ASIDE. Accordingly,
the June 12, 2008 Decision of the Municipal Trial Court, Branch 4, Iloilo City, in Civil Case No. 03-208 is
hereby REINSTATED.
SO ORDERED.[31]
The CA held that there was no necessity to bring the dispute before the barangay for conciliation since the
Estate of Vipa, being a juridical person, cannot be impleaded to a barangay conciliation proceeding. The CA
likewise pointed out that any allegations against Grace Joy's authority to represent the Estate of Vipa had been
laid to rest when she was appointed as administrator of the Estate of Vipa in Special Proceedings No. 6910
pending before the RTC.[32]
Further, the CA held that Rafael raised the issue of ownership of the subject property, i.e., Levi's sale of his
one-half share in the subject property to Rafael, only for the first time in his appeal with the RTC. Accordingly, it
was error on the part of the RTC to have resolved the issue of ownership of the subject
property.[33] Furthermore, the CA agreed with the MTCC that Rafael's consignation of the rent to the RTC is
ineffective. It ruled that Rafael made the consignation only twice and the amount consigned was patently
insignificant compared to the amount of rent due.[34]
Rafael's motion for reconsideration[35] was denied by the CA in its Resolution[36] dated January 24, 2012.
Hence, the instant petition.
Rafael maintains that Grace Joy has no authority to represent the Estate of Vipa and, when she filed the
complaint for unlawful detainer with the MTCC, she did so in her personal capacity. Thus, Rafael claims that
the dispute should have been brought to the barangay for conciliation before the complaint was filed in the
MTCC.[37] He further claims that the CA erred in . reversing the RTC's ruling on the issue of ownership of the
subject property. He insists that he already purchased Levi's one-half share in the subject property.[38]
On the other hand, the Estate of Vipa, in its Comment,[39] avers that the supposed lack of authority of Grace
Joy to file the complaint for unlawful detainer and the ownership of the subject property were never raised in
the proceedings before the MTCC and, hence, could not be passed upon by the RTC in the appellate
proceedings. In any case, it pointed out that the RTC's Decision[40] dated October 28, 2005 in Special
Proceedings No. 6910, which appointed Grace Joy as the administrator of the intestate estate of Vipa,
recognized that the latter and Jill Frances are legitimate children of Vipa and Levi.
Issue
Essentially, the issue set forth for the Court's resolution is whether the CA erred in reversing the RTC's
Decision dated April 15, 2009.
Ruling of the Court
The petition is partly meritorious.
Rafael's claim that the complaint below should have been dismissed since Grace Joy has no authority to
represent the Estate of Vipa and that there was lack of prior barangay conciliation is untenable. Unlawful
detainer cases are covered by the Rules on Summary Procedure.[41] Section 5 of the 1991 Revised Rules on
Summary Procedure provides that affirmative and negative defenses not pleaded in the answer shall be
deemed waived, except lack of jurisdiction over the subject matter.
Rafael failed to plead in the answer he filed with the MTCC that Grace Joy has no authority to represent the
Estate of Vipa. Neither did he raise therein the lack of barangay conciliation between the parties herein prior to
the filing of the complaint for unlawful detainer. Accordingly, the foregoing defenses are already deemed
waived.
In any case, the issue of the supposed lack of authority of Grace Joy to represent the Estate of Vipa had
already been rendered moot with the RTC's appointment of Grace Joy as the administrator of the Estate of
Vipa in Special Proceedings No. 6910.
Also, there was no need to refer the dispute between the parties herein to the barangay for conciliation
pursuant to the Katarungang Pambarangay Law.[42] It bears stressing that only individuals may be parties to
barangay conciliation proceedings either as complainants or respondents. Complaints by or against
corporations, partnerships or other juridical entities may not be filed with, received or acted upon by the
barangay for conciliation.[43] The Estate of Vipa, which is the complainant below, is a juridical entity that has a
personality, which is separate and distinct from that of Grace Joy.[44] Thus, there is no necessity to bring the
dispute to the barangay for conciliation prior to filing of the complaint for unlawful detainer with the MTCC.
The CA, nevertheless, erred in hastily dismissing Rafael's allegation as regards the ownership of the subject
property. In disregarding Rafael's claim that he owns Levi's one-half undivided share in the subject property,
the CA ruled that the said issue was raised for the first time on appeal and should thus not have been
considered by the RTC, viz.:
On the second issue, the records show that [Rafael] raised the issue of ownership only for the first time on
appeal; hence, the [RTC] erred in deciding the appeal before it on the findings that part of the subject premises
is owned by petitioners, allegedly having bought the same from [Levi], the husband of [Vipa].
The Court is not unmindful that in forcible entry and unlawful detainer cases, the MTC may rule on the issue
[of] ownership in order to determine the issue of possession. However, the issue of ownership must be raised
by the defendant on the earliest opportunity; otherwise, it is already deemed waived. Moreover, the instant
case was covered by the Rules on Summary Procedure, which expressly provide that affirmative and negative
defenses not pleaded therein shall be deemed waived, except for lack of jurisdiction over the subject matter.
Thus, the [RTC] erred in resolving the issue of ownership for the first time on appeal.[45] (Citations omitted)
It is true that fair play, justice, and due process dictate that parties should not raise for the first time on appeal
issues that they could have raised but never did during trial. However, before a party may be barred from
raising an issue for the first time on appeal, it is imperative that the issue could have been raised during the
trial.[46] What escaped the appellate court's attention is that the sale of the one-half undivided share in the
subject property to Rafael was consummated only on December 29, 2005, more than two years after Rafael
filed with the MTCC his answer to the complaint for unlawful detainer on July 18, 2003. [47] Obviously, Rafael
could not have raised his acquisition of Levi's share in the subject property as an affirmative defense in the
answer he filed with the MTCC.
Moreover, Rafael's ownership of the one-half undivided share in the subject property would necessarily affect
the property relations between the parties herein. Thus, the CA should have exerted efforts to resolve the said
issue instead of dismissing the same on the flimsy ground that it was not raised during the proceedings before
the MTCC.
Levi and Vipa were married on March 24, 1961[48] and, in the absence of a marriage settlement, the system of
conjugal partnership of gains governs their property relations.[49] It is presumed that the subject property is part
of the conjugal properties of Vipa and Levi considering that the same was acquired during the subsistence of
their marriage and there being no proof to the contrary.[50]
When Vipa died on March 5, 1994, the conjugal partnership was automatically terminated. [51] Under Article 130
of the Family Code, the conjugal partnership property, upon its dissolution due to the death of either spouse,
should be liquidated either in the same proceeding for the settlement of the estate of the deceased or, in the
absence thereof, by the surviving spouse within one year from the death of the deceased spouse. That absent
any liquidation, any disposition or encumbrance of the conjugal partnership property is void. Thus:
Article 130. Upon the termination of the marriage by death, the conjugal partnership property shall be
liquidated in the same proceeding for the settlement of the estate of the deceased.
If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the conjugal
partnership property either judicially or extra-judicially within six months from the death of the
deceased spouse. If upon the lapse of the six-month period no liquidation is made, any disposition or
encumbrance involving the conjugal partnership property of the terminated marriage shall be void.
Should the surviving spouse contract a subsequent marriage without compliance with the foregoing
requirements, a mandatory regime of complete separation of property shall govern the property relations of the
subsequent marriage. (Emphasis ours)
Article 130 of the Family Code is applicable to conjugal partnership of gains already established between the
spouses prior to the effectivity of the Family Code pursuant to Article 105 thereof, viz.:
Article 105. In case the future spouses agree in the marriage settlements that the regime of conjugal
partnership of gains shall govern their property relations during marriage, the provisions in this Chapter shall
be of supplementary application.
The provisions of this Chapter shall also apply to conjugal partnerships of gains already established
between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in
accordance with the Civil Code or other laws as provided in Article 256. (Emphasis ours)
Rafael bought Levi's one-half share in the subject property in consideration of P500,000.00 as evidenced by
the Deed of Sale[52] dated December 29, 2005. At that time, the conjugal partnership properties of Levi and
Vipa were not yet liquidated. However, such disposition, notwithstanding the absence of liquidation of the
conjugal partnership properties, is not necessarily void.
It bears stressing that under the regime of conjugal partnership of gains, the husband and wife are co-owners
of all the property of the conjugal partnership.[53] Thus, upon the termination of the conjugal partnership of
gains due to the death of either spouse, the surviving spouse has an actual and vested one-half undivided
share of the properties, which does not consist of determinate and segregated properties until liquidation and
partition of the conjugal partnership.[54] With respect, however, to the deceased spouse's share in the conjugal
partnership properties, an implied ordinary co-ownership ensues among the surviving spouse and the other
heirs of the deceased.[55]
Thus, upon Vipa's death, one half of the subject property was automatically reserved in favor of the surviving
spouse, Levi, as his share in the conjugal partnership. The other half, which is Vipa's share, was transmitted to
Vipa's heirs – Grace Joy, Jill Frances, and her husband Levi, who is entitled to the same share as that of a
legitimate child. The ensuing implied co-ownership is governed by Article 493 of the Civil Code, which
provides:
Article 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division
upon the termination of the co-ownership. (Emphasis ours)
Although Levi became a co-owner of the conjugal partnership properties with Grace Joy and Jill Frances, he
could not yet assert or claim title to any specific portion thereof without an actual partition of the property being
first done either by agreement or by judicial decree. Before the partition of a land or thing held in common, no
individual or co-owner can claim title to any definite portion thereof. All that the co-owner has is an ideal or
abstract quota or proportionate share in the entire land or thing.[56]
Nevertheless, a co-owner could sell his undivided share; hence, Levi had the right to freely sell and dispose of
his undivided interest. Thus, the sale by Levi of his one-half undivided share in the subject property was not
necessarily void, for his right as a co-owner thereof was effectively transferred, making the buyer, Rafael, a co-
owner of the subject property. It must be stressed that the binding force of a contract must be recognized as far
as it is legally possible to do so (quando res non valet ut ago, valeat quantum valere potest).[57]
However, Rafael became a co-owner of the subject property only on December 29, 2005 – the time when Levi
sold his one-half undivided share over the subject property to the former. Thus, from December 29, 2005
Rafael, as a co-owner, has the right to possess the subject property as an incident of ownership. Otherwise
stated, prior to his acquisition of Levi's one-half undivided share, Rafael was a mere lessee of the subject
property and is thus obliged to pay the rent for his possession thereof.
Accordingly, Rafael could no longer be directed to vacate the subject property since he is already a co-owner
thereof. Nevertheless, Rafael is still bound to pay the unpaid rentals from June 1998 until April 2003 in the
amount of P271,150.00. In Nacar v. Gallery Frames, et al.,[58] the Court pointed out that pursuant to Resolution
No. 796 of the Bangko Sentral ng Pilipinas Monetary Board, the interest rate of loans or forbearance of money,
in the absence of stipulation shall be six percent (6%) effective only from July 1, 2013. Thus, prior to July 1,
2013, the rate of interest on loans or forbearance of money, in the absence of stipulation, is still 12%.
Accordingly, the amount of P271,150.00, representing the unpaid rentals shall earn interest at the rates of
12% per annum from the date of the last demand on May 3, 2003 until June 30, 2013 and 6% per annum from
July 1, 2013 until fully paid.
Further, Rafael is likewise bound to pay reasonable rent for the use and occupancy of the subject property
from May 2003 until December 28, 2005 at the rate of P3,000.00 per month with interest at the rate of 12% per
annum from the date of the last demand, i.e., the filing of the complaint with the MTCC on June 12, 2003, until
June 30, 2013 and 6% per annum from July 1, 2013 until fully paid.
The award of attorney's fees of P20,000.00 is likewise proper. Attorney's fees can be awarded in the cases
enumerated in Article 2208 of the Civil Code, specifically:
Article 2208. x x x
xxxx
(2) Where the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest[.]
Certainly, because of Rafael's unjustified refusal to pay the rents due on the lease of the subject prope1iy, the
Estate of Vipa was put to unnecessary expense and trouble to protect its interest under paragraph (2), Article
2208 of the Civil Code. In unlawful detainer cases, where attorney's fees are awarded, the same shall not
exceed P20,000.00.[59]
WHEREFORE, in view of the foregoing disquisitions, the petition for review on certiorari is PARTIALLY
GRANTED. The Decision dated November 26, 2010 and Resolution dated January 24, 2012 issued by the
Court of Appeals in CA-G.R. SP No. 04481 are hereby REVERSED and SET ASIDE. Petitioner Rafael C. Uy
is hereby directed to pay the Estate of Vipa Fernandez the following:
1. The amount of P271,150.00, representing the unpaid rentals, with interest at the rates of twelve percent
(12%) per annum from the date of the last demand on May 3, 2003 until June 30, 2013, and six percent
(6%) per annum from July 1, 2013 until fully paid;
2. Reasonable rent for the use and occupancy of the subject property from May 2003 until December 28,
2005 at the rate of P3,000.00 per month with interest at the rates of twelve percent (12%) per
annum from the date of the last demand, i.e., the filing of the complaint for unlawful detainer on June
12, 2003, until June 30, 2013, and six percent (6%) per annum from July 1, 2013 until fully paid; and
3. The amount of P20,000.00 as attorney's fees.
SO ORDERED.
Velasco, Jr. (Chairperson), Bersamin, Jardeleza, and Tijam, JJ., concur.
May 25, 2017

NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on April 5, 2017 a Decision, copy attached hereto, was rendered by the Supreme
Court in the above-entitled case, the original of which was received by this Office on May 25, 2017 at 10:16
a.m.
Very truly yours,
(SGD) WILFREDO V. LAPITAN
[1]
Rollo, pp. 14-41.
[2]
Penned by Associate Justice Agnes Reyes-Carpio, with Associate Justices Edgardo L. Delos Santos and
Eduardo B. Peralta, Jr. concurring; id. at 48-54.
[3]
Id. at 45-46.
[4]
Id. at 134.
[5]
Id. at 17-18.
[6]
Id. at 49.
[7]
ld. at 18.
[8]
Id. at 49.
[9]
Id. at 131-132.
[10]
Id. at 131.
[11]
Id. at 132.
[12]
Id. at 124-127.
[13]
Id. at 124.
[14]
Id. at 124-125.
[15]
Id. at 125.
[16]
Rendered by Presiding Judge Marie Yvette D. Go; id. at 115-123.
[17]
Id. at 123.
[18]
Id. at 119.
[19]
Id. at 120.
[20]
Rendered by Judge Antonio M. Natino; id. at 101-114.
[21]
Id. at 114.
[22]
Id. at 107.
[23]
Id. at 112-113.
[24]
Id. at 137-138.
[25]
Id. at 113.
[26]
Id. at 114.
[27]
Id. at 95-100.
[28]
Id. at 51.
[29]
Id. at 78-94.
[30]
Id. at 48-54.
[31]
Id. at 54.
[32]
Id. at 52.
[33]
Id. at 53.
[34]
Id.
[35]
Id. at 55-64.
[36]
Id. at 45-46.
[37]
Id. at 24-25.
[38]
Id. at 27-33.
[39]
Id. at 143-145.
[40]
Id. at 146-150.
[41]
The 1991 Revised Rules on Summary Procedure, Section 1(A)(1).
[42]
Sections 399 to 422, Chapter 7, Title One, Book III and Section 515, Title One, Book IV of Republic Act No.
7160 (The Local Government Code).
[43]
Universal Robina Sugar Milling Corporation v. Heirs of Teves, 438 Phil. 26, 41 (2002), citing Section 1, Rule
VI of the Katarungang Pambarangay Rules implementing the Katarungang Pambarangay Law.
[44]
See Limjoco v. Intestate of Fragante, 80 Phil. 776 (1948).
[45]
Rollo, p. 53.
[46]
See Sañado v. Court of Appeals, 408 Phil. 669 (2001).
[47]
Rollo, p. 21.
[48]
Certificate of Marriage; id. at 133.
[49]
CIVIL CODE OF THE PHILIPPINES, Article 119.
[50]
[51]
CIVIL CODE OF THE PHILIPPINES, Article 175(1).
[52]
Rollo, pp. 137-138.
[53]
[54]
See Melecio Domingo v. Spouses Genaro and Elena B. Molina, G.R. No. 200274, April 20, 2016.
[55]
See Dael v. Intermediate Appellate Court, 253 Phil. 516, 526 (1989).
[56]
Sanchez v. Court of Appeals, 452 Phil. 665, 676 (2003).
[57]
See Lopez v. Vda de Cuaycong, 74 Phil. 601 (1944).
[58]
716 Phil. 267 (2013).
[59]
1991 Revised Rules on Summary Procedure, Section 1(A)(1)
SECOND DIVISION
[ G.R. No. 207146, March 15, 2017 ]
SPOUSES LARRY AND ROSARITA WILLIAMS, PETITIONERS, VS. RAINERO A. ZERDA, RESPONDENT.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari assailing the November 28, 2012 Decision[1] and the April 16, 2013
Resolution[2] of the Court of Appeals (CA) in CA-G.R. CV No. 01115-MIN, which reversed and set aside the
September 11, 2006 Decision[3] and the February 8, 2007 Order[4] of the Regional Trial Court, Branch 30,
Surigao City, (RTC) in Civil Case No. 6285, a case for easement of right of way.
The Facts
Respondent Rainero A. Zerda (Zerda) was the owner of a parcel of land, known as Lot No. 1177-B (dominant
estate) of the Surigao Cadastre, situated in Barangay Lipata, Surigao City, with an area of 16,160 square
meters (sq. m.), and covered by Transfer Certificate of Title (TCT) No. T-18074. Immediately behind the
dominant estate was Lot No. 7298, a swampy mangrove area owned by the Republic of the Philippines. On
both sides were Lot No. 1177-C, registered under the name of Woodridge Properties, Inc. and Lot No. 1206, in
the name of Luis G. Dilag. In front was Lot No. 1201-A owned by petitioner-spouses Larry and Rosarita
Williams (Spouses Williams), where the national highway ran along.[5]
On July 28, 2004, Zerda filed a complaint against Spouses Williams for easement of right of way. The
complaint alleged that Zerda's lot was without adequate outlet to a public highway, that it could not be
accessed except by passing through Spouses Williams' property; that the isolation of Zerda's property was not
due to his own acts, as it was the natural consequence of its location; that the right of way he was claiming was
at a point least prejudicial to Spouses Williams' property; and that on January 27, 2004, Zerda wrote to
Spouses Williams formally asking them to provide him with right of way, for which he was willing to pay its
reasonable value or to swap a portion of his property, but Spouses Williams refused.[6]
Spouses Williams countered that the complaint should be dismissed for lack of cause of action because Zerda
failed to establish the requisites for the existence of right of way. They claimed that sometime in May 2003,
they were in negotiation with Agripino Sierra (Sierra), the former owner of the dominant estate, for its sale to
them but the sale did not materialize due to the intervention of Zerda. Spouses Williams further averred that
they undertook visible development projects on their property as early as May 2003 amounting to
P6,619,678.00; that the isolation of the dominant estate was Zerda's fault; and that his requested right of way
would cause great damage and prejudice to them.[7]
The RTC Ruling
In its September 11, 2006 Decision, the RTC ruled in favor of Spouses Williams. It found that the isolation of
Zerda's lot was due to his own acts because when he bought the said property, he was aware that Spouses
Williams had already started introducing improvements on their own property. It stated that Spouses Williams
were able to prove that while they were in negotiation with Sierra for the purchase of the dominant estate,
Zerda intervened and bought the land himself, knowing full well that the land was surrounded by other
immovables.[8]
The RTC also noted that the right of way requested by Zerda was not the shortest distance from the dominant
estate to the public highway. It observed that the shortest distance began "from the northeastern corner of Lot
1177-B, the dominant estate, following the northern boundary of Lot 1201-A, the servient estate, and running
across the southeastern portion of Lot 1177-C straight up to the public highway."[9]
Finally, the RTC granted the claim of Spouses Williams for moral damages and exemplary damages.
The fallo reads:
WHEREFORE, premises considered, let the herein complaint be DISMISSED without pronouncement as to
costs. However, on the compulsory counterclaim, plaintiff is hereby ordered to pay defendants moral damages
in the sum of P30,000.00 and exemplary damages of P20,000.00.
SO ORDERED.[10]
Zerda filed a motion for reconsideration. In its February 8, 2007 Order,[11] the RTC partially granted the motion
by deleting the award of moral damages.
Aggrieved, Zerda appealed before the CA.
The CA Ruling
In its assailed November 28, 2012 Decision, the CA reversed and set aside the ruling of the RTC. It explained
that the isolation of Zerda's property was not due to his own acts, and to deny the right of way to a purchaser
of an enclosed estate simply because of his prior knowledge that the same was surrounded by immovables
would render the law on easements nugatory. "In effect, the purchaser would only be filling into the shoe[s] of
the previous owner of the isolated property in the exercise of his right to demand an easement of right of way.
The new owner did not do anything that would have caused the deliberate isolation of the property."[12]
Further, the CA declared that Zerda was not in bad faith when he intervened in the negotiation for the sale of
the dominant estate between Sierra, the previous owner and Spouses Williams. It noted that Sierra himself
denied knowing Larry Williams, thereby negating the spouses' claim of a negotiation. The CA added that even
if there was a prior negotiation, Sierra could not be deprived of his right to sell his property to a buyer of his
own choosing.[13]
The CA also found that the right of way, proposed by Zerda, was the shortest distance to the national highway
and the least prejudicial to the servient estate. It laid emphasis on Spouses Williams' admission that they had
no intention to build houses in the area sought and that the 705.20 sq. m. long pathway would only affect a
small portion of their lot which had a total area of 12,200 sq. m. The dispositive portion of the CA ruling reads:
WHEREFORE, the appeal is GRANTED. The September n, 2006 Decision and February 8, 2007 Order of the
Regional Trial Court, Branch 30, Surigao City is REVERSED and SET ASIDE.
We hereby order (a) appellees to allow the right of passage by the appellant thru their Lot 1201-A; and (b)
appellant to pay private respondent the indemnity therefor to be determined by the trial court. The case is
hereby REMANDED to the trial court for the determination of the proper amount of indemnity for the easement
of right of way under Article 649.
SO ORDERED.[14]
Spouses Williams moved for reconsideration, but their motion was denied by the CA in its assailed resolution,
dated April 16, 2013.
Hence, this petition.
ISSUE
WHETHER RESPONDENT ZERDA IS ENTITLED TO AN EASEMENT OF RIGHT OF WAY.

Spouses Williams argue that the respondent caused the isolation of his property because he bought the lot
with notice that it had no access to the national highway and was surrounded by other immovables; that the
respondent was in bad faith because he was aware that they were negotiating with Sierra over the purchase of
the dominant estate when he intervened and bought the property himself; that the shortest distance from the
dominant estate to the public highway began from the northeastern corner of Lot No. 1177-B (the dominant
estate) following the northern boundary of Lot No. 1201-A, then passing through the southeastern portion of
Lot No. 1171-C; and that the right of way requested by the respondent was not the least prejudicial in view of
the developments introduced by them thereon.
Zerda was ordered by the Court to file his comment on the petition of Spouses Williams. Despite several
opportunities granted to him, he failed to file his comment. Thus, his right to file a comment on the petition for
review was deemed waived.
The Court's Ruling
The conferment of the legal easement of right of way is governed by Articles 649 and 650 of the Civil Code:
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.
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.
In case the right of way is limited to the necessary passage for the cultivation of the estate surrounded by
others and for the gathering of its crops through the servient estate without a permanent way, the indemnity
shall consist in the payment of the damage caused by such encumbrance.
This easement is not compulsory if the isolation of the immovable is due to the proprietor's own acts.
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.
In summary, an entitlement to the easement of right of way requires that the following requisites must be met.
1. The dominant estate is surrounded by other immovables and has no adequate outlet to a public
highway (Art. 649, par. 1);
2. There is payment of proper indemnity (Art. 649, par. 1);

3. The isolation is not due to the acts of the proprietor of the dominant estate (Art. 649, last par.); and
4. The right of way claimed is 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
(Art. 650).[15]
All the above requisites are present in this case.
As regards the first requisite, there is no dispute that the respondent's property was surrounded by other
immovables owned by different individuals, including Spouses Williams. The isolation was further shown in the
Sketch Plan[16] prepared by Honorato R. Bisnar, the geodetic engineer deputized by the parties. Moreover,
contrary to Spouses Williams' claim that there was a barangay road closest to the dominant estate, the RTC,
during the ocular inspection, observed that "there was no existing barangay road xxx."[17]
The second requisite of payment of indemnity was also complied with by the respondent when he wrote
Spouses Williams on January 27, 2004, formally asking them to provide him with a right of way, for which he
was in willing to pay a reasonable value or to swap a portion of his property.[18]
Anent the third requisite, the isolation of the dominant estate was not due to the respondent's own acts. The
property he purchased was already surrounded by other immovables leaving him no adequate ingress or
egress to a public highway. Spouses Williams refused to grant a right of way and averred that the isolation of
the dominant estate was attributable to the respondent's own acts. They pointed out that when the respondent
purchased the dominant estate, he knew that Sierra was in negotiation with them for the sale of the dominant
estate, thus, he was in bad faith. Nonetheless, it cannot be used to defeat the respondent's claim for a right of
way. Sierra had every right to sell his property to anybody. Further, when the respondent bought the dominant
estate there could have been no existing contract of sale yet considering that Spouses Williams and Sierra
were still in negotiation. Hence, consent, one of the essential requisites for a valid contract, was lacking.
As to the fourth requisite, the Court finds that the right of way sought by the respondent is at the point least
prejudicial to the servient estate and it is the shortest distance to the national highway. This is evident in the
Sketch Plan[19] showing that the requested right of way was alongside the perimeter of Spouses Williams'
property. Moreover, during the ocular inspection, the RTC observed that the right of way, which the respondent
was seeking was alongside a precipice.[20] Spouses Williams insisted that they intended to build structures on
the portion claimed by the respondent, but at a safe distance from the precipice, not immediately beside it. In
addition, the 705.20 sq. m long pathway would only affect a small portion of the 12,200 sq. m. property of
Spouses Williams, and for which the respondent expressed willingness to pay.
Even assuming that the right of way being claimed by the respondent is not the shortest distance from the
dominant estate to the public highway, it is well-settled that "[t]he criterion of least prejudice to the servient
estate must prevail over the criterion of shortest distancealthough this is a matter of judicial appreciation, xxx 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. If having 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."[21] As previously discussed, the right of way claimed by the
respondent is at a point least prejudicial to the servient estate.
WHEREFORE, the petition is DENIED. The November 28, 2012 Decision and the April 16, 2013 Resolution of
the Court of Appeals in CA-G.R. CV No. 01115-MIN, are AFFIRMED in toto.
SO ORDERED.
Carpio, (Chairperson), Peralta, Leonen, and Martires, JJ., concur.

[1]
Penned by Associate Justice Jhosep Y. Lopez with Associate Justice Edgardo T. Lloren and Associate
Justice Henri Jean Paul B. Inting, concurring; rollo, pp. 30-42.
[2]
Id. at 23-28.
[3]
Penned by Presiding Judge Floripinas C. Buyser; id. at 43-49.
[4]
Id. at 50-53.
[5]
Rollo, pp. 30-311.
[6]
Id. at 31.
[7]
Id. at 31-32.
[8]
Id. at 47.
[9]
Id. at 48.
[10]
Id. at 49.
[11]
Id. at 50-53.
[12]
Id. at 38-39.
[13]
Id. at 40.
[14]
Id. at 41.
[15]
Dichoso, Jr. v. Marcos, 663 Phil. 48, 55 (2011).
[16]
CA Records, p. 94.
[17]
TSN Vol. I, p. 6.
[18]
CA Records, p. 99.
[19]
CA Records, p. 94.
[20]
TSN Vol. I, p. 3.
[21]
Quimen v. CA, 326 Phil. 969, 972, 979 (1996).
BERSAMIN, J.:
An agreement to submit to voluntary arbitration for purposes of vesting jurisdiction over a construction dispute
in the Construction Industry Arbitration Commission (CIAC) need not be contained in the construction contract,
or be signed by the parties. It is enough that the agreement be in writing.
The Case
Federal Builders Inc. (Federal) appeals to reverse the decision promulgated on August 12, 2013, [1] whereby
the Court of Appeals (CA) affirmed the adverse decision rendered on May 12, 2010 by the Construction
Industry Arbitration Commission (CIAC) with modification of the total amount awarded. [2]
Antecedents
Federal was the general contractor of the Bullion Mall under a construction agreement with Bullion Investment
and Development Corporation (BIDC). In 2004, Federal engaged respondent Power Factors Inc. (Power) as its
subcontractor for the electric works at the Bullion Mall and the Precinct Building for P18,000,000.00.[3]
On February 19, 2008, Power sent a demand letter to Federal claiming the unpaid amount of P11,444,658.97
for work done by Power for the Bullion Mall and the Precinct Building. Federal replied that its outstanding
balance under the original contract only amounted to P1,641,513.94, and that the demand for payment for
work done by Power after June 21, 2005 should be addressed directly to BIDC.[4]Nonetheless, Power made
several demands on Federal to no avail.
On October 29, 2009, Power filed a request for arbitration in the CIAC invoking the arbitration clause of the
Contract of Service reading as follows:
15. ARBITRATION COMMITTEE - All disputes, controversies or differences, which may arise between the
parties herein, out of or in relation to or in connection with this Agreement, or for breach thereof shall be settled
by the Construction Industry Arbitration Commission (CIAC) which shall have original and exclusive jurisdiction
over the aforementioned disputes.[5]
On November 20, 2009, Atty. Vivencio Albano, the counsel of Federal, submitted a letter to the CIAC
manifesting that Federal agreed to arbitration and sought an extension of 15 days to file its answer, which
request the CIAC granted.
On December 16, 2009, Atty. Albano filed his withdrawal of appearance stating that Federal had meanwhile
engaged another counsel.[6]
Federal, represented by new counsel (Domingo, Dizon, Leonardo and Rodillas Law Office), moved to dismiss
the case on the ground that CIAC had no jurisdiction over the case inasmuch as the Contract of Service
between Federal and Power had been a mere draft that was never finalized or signed by the parties. Federal
contended that in the absence of the agreement for arbitration, the CIAC had no jurisdiction to hear and decide
the case.[7]
On February 8, 2010, the CIAC issued an order setting the case for hearing, and directing that Federal's
motion to dismiss be resolved after the reception of evidence of the parties.[8]
Federal did not thereafter participate in the proceedings until the CIAC rendered the Final Award dated May
12, 2010,[9] disposing:
In summary: Respondent Federal Builders, Inc. is hereby ordered to pay claimant Power Factors, Inc. the
following sums:
1. Unpaid balance on the original contract P4,276,614.75;

2. Unpaid balance on change order nos.
3,006,970.32;
1, 2, 3, 4, 5, 6, 7, 8, & 9
3. Interest to May 13, 2010 1,686,149.94;
4. Attorney's Fees 250,000.00;
5. Cost of Arbitration 149,503.86;
P9,369,238.87
The foregoing amount shall earn legal interest at the rate of 6% per annum from the date of this Final Award
until this award becomes final and executory, Claimant shall then be entitled to 12% per annum until the entire
amount is fully satisfied by Respondent.
Federal appealed the award to the CA insisting that the CIAC had no jurisdiction to hear and decide the case;
and that the amounts thereby awarded to Power lacked legal and factual bases.
On August 12, 2013, the CA affirmed the CIAC's decision with modification as to the amounts due to
Power,[10] viz.:
WHEREFORE, the CIAC Final Award dated 12 May 2010 in CIAC Case No. 31-2009 is
hereby AFFIRMED with MODIFICATION.
As modified, FEDERAL BUILDERS, INC. is ordered to pay POWER FACTORS, INC. the following:
1. Unpaid balance on the

P4,276,614.75;
original contract
2. Unpaid balance on change

2,864,113.32;
orders
3. Attorney's Fees 250,000.00;
4. Cost of Arbitration 149,503.86;

The interest to be imposed on the net award (unpaid balance on the original contract and change order)
amounting to P7,140,728.07 awarded to POWER FACTORS INC. shall be six (6%) per annum, reckoned from
4 July 2006 until this Decision becomes final and executory. Further, the total award due to POWER
FACTORS INC. shall be subjected to an interest of twelve percent (12%) per annum computed from the time
this judgment becomes final and executory, until full satisfaction.
SO ORDERED.[11]
Anent jurisdiction, the CA explained that the CIAC Revised Rules of Procedure stated that the agreement to
arbitrate need not be signed by the parties; that the consent to submit to voluntary arbitration was not
necessary in view of the arbitration clause contained in the Contract of Service; and that Federal's contention
that its former counsel's act of manifesting its consent to the arbitration stipulated in the draft Contract of
Service did not bind it was inconsequential on the issue of jurisdiction.[12]
Concerning the amounts awarded, the CA opined that the CIAC should not have allowed the increase based
on labor-cost escalation because of the absence of the agreement between the parties on such escalation and
because there was no authorization in writing allowing the adjustment or increase in the cost of materials and
labor.[13]
After the CA denied Federal's motion for reconsideration on February 19, 2004,[14] Federal has come to the
Court on appeal.
Issue
The issues to be resolved are: (a) whether the CA erred in upholding CIAC's jurisdiction over the present case;
and (b) whether the CA erred in holding that Federal was liable to pay Power the amount of P7,140,728.07.
Ruling of the Court
The appeal is bereft of merit.

1.
The parties had an effective agreement to submit to voluntary arbitration; hence, the CIAC had
jurisdiction
The need to establish a proper arbitral machinery to settle disputes expeditiously was recognized by the
Government in order to promote and maintain the development of the country's construction industry. With
such recognition came the creation of the CIAC through Executive Order No. 1008 (E.O. No. 1008), also
known as The Construction Industry Arbitration Law. Section 4 of E.O. No. 1008 provides:
Sec. 4. Jurisdiction. — The CIAC shall have original and exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in construction in the Philippines, whether the
dispute arises before or after the completion of the contract, or after the abandonment or breach thereof.
These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the
parties to a dispute must agree to submit the same to voluntary arbitration. x x x
Under the CIAC Revised Rules of Procedure Governing Construction Arbitration (CIAC Revised Rules), all that
is required for the CIAC to acquire jurisdiction is for the parties of any construction contract to agree to submit
their dispute to arbitration.[15] Also, Section 2.3 of the CIAC Revised Rules states that the agreement may be
reflected in an arbitration clause in their contract or by subsequently agreeing to submit their dispute to
voluntary arbitration. The CIAC Revised Rules clarifies, however, that the agreement of the parties to submit
their dispute to arbitration need not be signed or be formally agreed upon in the contract because it can also be
in the form of other modes of communication in writing, viz.:
RULE 4 - EFFECT OF AGREEMENT TO ARBITRATE
SECTION 4.1. Submission to CIAC jurisdiction - An arbitration clause in a construction contract or a

submission to arbitration of a construction dispute shall be deemed an agreement to submit an existing or
future controversy to CIAC jurisdiction, notwithstanding the reference to a different arbitration institution or
arbitral body in such contract or submission.
4.1.1 When a contract contains a clause for the submission of a future controversy to arbitration, it is not
necessary for the parties to enter into a submission agreement before the Claimant may invoke the jurisdiction
of CIAC.
4.1.2 An arbitration agreement or a submission to arbitration shall be in writing, but it need not be signed
by the parties, as long as the intent is clear that the parties agree to submit a present or future
eontroversy arising from a construction contract to arbitration. It may be in the form of exchange of
letters sent by post or by telefax, telexes, telegrams, electronic mail or any other mode of
communication.
The liberal application of procedural rules as to the form by which the agreement is embodied is the objective
of the CIAC Revised Rules. Such liberality conforms to the letter and spirit of E.O. No. 1008 itself which
emphasizes that the modes of voluntary dispute resolution like arbitration are always preferred because they
settle disputes in a speedy and amicable manner. They likewise help in alleviating or unclogging the judicial
dockets. Verily, E.O. No. 1008 recognizes that the expeditious resolution of construction disputes will promote
a healthy partnership between the Government and the private sector as well as aid in the continuous growth
of the country considering that the construction industry provides employment to a large segment of the
national labor force aside from its being a leading contributor to the gross national product.[16]
Worthy to note is that the jurisdiction of the CIAC is over the dispute, not over the contract between the
parties.[17] Section 2.1, Rule 2 of the CIAC Revised Rules particularly specifies that the CIAC has original and
exclusive jurisdiction over construction disputes, whether such disputes arise from or are merely connected
with the construction contracts entered into by parties, and whether such disputes arise before or after the
completion of the contracts. Accordingly, the execution of the contracts and the effect of the agreement to
submit to arbitration are different matters, and the signing or non-signing of one does not necessarily affect the
other. In other words, the formalities of the contract have nothing to do with the jurisdiction of the CIAC.
Federal contends that there was no mutual consent and no meeting of the minds between it and Power as to
the operation and binding effect of the arbitration clause because they had rejected the draft service contract.
The contention of Federal deserves no consideration.
Under Article 1318 of the Civil Code, a valid contract should have the following essential elements, namely: (a)
consent of the contracting parties; (b) object certain that is the subject matter of the contract; and (c) cause or
consideration. Moreover, a contract does not need to be in writing in order to be obligatory and effective unless
the law specifically requires so.
Pursuant to Article 1356[18] and Article 1357[19] of the Civil Code, contracts shall be obligatory in whatever form
they may have been entered into, provided that all the essential requisites for their validity are present. Indeed,
there was a contract between Federal and Power even if the Contract of Service was unsigned. Such contract
was obligatory and binding between them by virtue of all the essential elements for a valid contract being
present.
It clearly appears that the works promised to be done by Power were already executed albeit still incomplete;
that Federal paid Power P1,000,000.00 representing the originally proposed downpayment, and the latter
accepted the payment; and that the subject of their dispute concerned only the amounts still due to Power. The
records further show that Federal admitted having drafted the Contract of Services containing the following
clause on submission to arbitration, to wit:
15. ARBITRATION COMMITTEE - All disputes, controversies or differences, which may arise between the
Parties herein, out of or in relation to or in connection with this Agreement, or for breach thereof shall be settled
by the Construction Industry Arbitration Commission (CIAC) which shall have original and exclusive jurisdiction
over the aforementioned disputes.[20]
With the parties having no issues on the provisions or parts of the Contract of Service other than that
pertaining to the downpayment that Federal was supposed to pay, Federal could not validly insist on the lack of
a contract in order to defeat the jurisdiction of the CIAC. As earlier pointed out, the CIAC Revised
Rules specifically allows any written mode of communication to show the parties' intent or agreement to submit
to arbitration their present or future disputes arising from or connected with their contract.
The CIAC and the CA both found that the parties had disagreed on the amount of the downpayment. On its
part, Power indicated after receiving and reviewing the draft of the Contract of Service that it wanted 30% as
the downpayment. Even so, Power did not modify anything else in the draft, and returned the draft to Federal
after signing it. It was Federal that did not sign the draft because it was not amenable to the amount as
modified by Power. It is notable that the arbitration clause written in the draft of Federal was unchallenged by
the parties until their dispute arose.
Moreover, Federal asserted the original contract to support its claim against Power. If Federal would insist that
the remaining amount due to Power was only P1,641,513.94 based on the original contract,[21] it was really
inconsistent for Federal to rely on the draft when it is beneficial to its side, and to reject its efficacy and
existence just to to relieve itself from the CIAC's unfavorable decision.
The agreement contemplated in the CIAC Revised Rules to vest jurisdiction of the CIAC over the parties'
dispute is not necessarily an arbitration clause to be contained only in a signed and finalized construction
contract. The agreement could also be in a separate agreement, or any other form of written communication,
as long as their intent to submit their dispute to arbitration is clear. The fact that a contract was signed by both
parties has nothing to do with the jurisdiction of the CIAC, and this is the explanation why the CIAC Revised
Rules itself expressly provides that the written communication or agreement need not be signed by the parties.
Although the agreement to submit to arbitration has been expressly required to be in writing and signed by the
parties therein by Section 4[22] of Republic Act No. 876 (Arbitration Law),[23] the requirement is conspicuously
absent from the CIAC Revised Rules, which even expressly allows such agreement not to be signed by the
parties therein.[24] Brushing aside the obvious contractual agreement in this case warranting the submission to
arbitration is surely a step backward.[25] Consistent with the policy of encouraging alternative dispute resolution
methods, therefore, any doubt should be resolved in favor of arbitration.[26] In this connection, the CA correctly
observed that the act of Atty. Albano in manifesting that Federal had agreed to the form of arbitration was
unnecessary and inconsequential considering the recognition of the value of the Contract of Service despite its
being an unsigned draft.
2.
Amounts as modified by the CA are correct
We find no reversible error regarding the amounts as modified by the CA. Power did not sufficiently establish
that the change or increase of the cost of materials and labor was to be separately determined and approved
by both parties as provided under Article 1724 of the Civil Code. As such, Federal should not be held liable for
the labor cost escalation.
WHEREFORE, the Court AFFIRMS the decision promulgated on August 12, 2013; and ORDERS the
petitioner to pay the costs of suit.
SO ORDERED.
Velasco, Jr., (Chairperson), Reyes, Jardeleza, and Caguioa,* JJ., concur.
*
Designated as additional Member of the Third Division per Special Order No. 2417 dated January 4, 2017.
[1]
Rollo, pp. 32-45; penned by Associate Justice Leoncia R. Dimagiba and concurred in by Associate Justice
Rosmari D. Carandang and Associate Justice Ricardo R. Rosario.
[2]
Id. at 98-128.
[3]
Id. at 33.
[4]
Id.
[5]
Id. at 44.
[6]
Id. at 34-35.
[7]
Id. at 35.
[8]
Id.
[9]
Supra note 2.
[10]
Supra note 1.
[11]
Id. at 44-45.
[12]
Id. at 38.
[13]
Id. at 42-43.
[14]
Rollo, p. 47.
[15]
Rule 4, CIAC Revised Rules; LICOMCEN, Inc. v. Foundation Specialists, Inc., G.R. Nos. 167022 & 169678,
April 4, 2011, 647 SCRA 83, 97.
[16]
Sec perambulatory clauses of E.O. No. 1008.
[17]
National Irrigation Administration v. Court of Appeals, G.R. No. 129169, November 17, 1999, 318 SCRA
255, 269.
[18]
Article 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all
the essential requisites for their validity are present. However, when the law requires that a contract be in some
form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement
is absolute and indispensable. In such cases, the right of the parties stated in the following article cannot be
exercised.
[19]
Article 1357. If the law requires a document or other special form, as in the acts and contracts enumerated
in the following article, the contracting parties may compel each other to observe that form, once the contract
has been perfected. This right may be exercised simultaneously with the action upon the contract.
[20]
Rollo, p. 34.
[21]
Id.
[22]
Section 4. Form of arbitration agreement. - A contract to arbitrate a controversy thereafter arising between
the parties, as well as a submission to arbitrate an existing controversy, shall be in writing and subscribed by
the party sought to be charged, or by his lawful agent.
The making of a contract or submission for arbitration described in section two hereof, providing for arbitration
of any controversy, shall be deemed a consent of the parties of the province or city where any of the parties
resides, to enforce such contract of submission.
[23]
An Act to Authorize the Making of Arbitration and Submission Agreements, to Provide for the Appointment
of Arbitrators and the Procedure for Arbitration in Civil Controversies, and for Other Purposes; June 19, 1953.
[24]
Subsection 4.1.2, Rule 4 of the CIAC Revised Rules.
[25]
LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc., G.R. No. 141833, March
26, 2003, 399 SCRA 562, 569.
[26]
Id. at 570.

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DIVISION

[ GR No. 206103, Mar 29, 2017 ]

LYDIA LAVAREZ v. ANGELES S. GUEVARRA +

SPOUSES DENNIS ORSOLINO AND MELODY ORSOLINO, PETITIONERS, V. VIOLETA FRANY,

[ G.R. No. 205657, March 29, 2017 ]

INTERNATIONAL EXCHANGE BANK NOW UNION BANK OF THE PHILIPPINES, PETITIONER, V.

[ GR No. 223334, Jun 07, 2017 ]

DANILO BARTOLATA v. REPUBLIC +

VELASCO JR., J.:

The Facts of the Case

Ruling of the RTC

On appeal, the CA modified the RTC ruling thusly:

In the instant recourse, petitioner raises the following issues:

1. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY COMMITTED AN ERROR IN LAW

2. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY COMMITTED AN ERROR IN LAW

3. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY COMMITED AN ERROR IN LAW

4. THE HONORABLE COURT OF APPEALS SERIOUSLY/GRAVELY COMMITTED AN ERROR IN LAW

The Court's Ruling

The petition is partly meritorious.

The easement of right of way in

Petitioner is not entitled to just compensation

Respondents are barred by estoppel

Bersamin, Reyes, Perlas-Bernabe,* and Tijam, JJ., concur.

Very truly yours,

(SGD.) WILFREDO V. LAPITAN

(d) Lands not included in any of the foregoing classes.

VELASCO JR., J.:

Ruling of the Regional Trial Court

4. ORDERING the defendant to pay the costs of the suit.

Ruling of the Court of Appeals

Hence, this petition.

Petitioner raises the following grounds in support of his petition:

2. The CA erred in sustaining that the ESW is a void or inexistent contract.

The Court's Ruling

The petition is without merit.

The petition raises questions of fact

In the recent case of Pontigon v. Sanchez, We explained thus:

The present action is not barred by laches

Bersamin, Reyes, Jardeleza, and Tijam, JJ., concur.

July 25, 2017

[ G.R. No. 211170, July 03, 2017 ]

Hence, the present petition. Petitioners raise the following issues:

The petition lacks merit.

Mendoza, Leonen, and Martires, JJ., on concur.

Ruling of the Court

The petitions are denied.

First Issue: Suspension of the

Second Issue: Dismissal of the

ATTY. EMERITO M. SALVA

Velasco, Jr., (Chairperson), Bersamin, Jardeleza, and Tijam, JJ., concur.

(SGD.) WILFREDO V. LAPITAN

[ G.R. No. 200612, April 05, 2017 ]

RAFAEL C. UY (CABANGBANG STORE), PETITIONER, V. ESTATE OF VIPA FERNANDEZ,

May 25, 2017

[ G.R. No. 207146, March 15, 2017 ]

The RTC Ruling

Aggrieved, Zerda appealed before the CA.

Hence, this petition.

WHETHER RESPONDENT ZERDA IS ENTITLED TO AN EASEMENT OF RIGHT OF WAY.

The Court's Ruling

2. There is payment of proper indemnity (Art. 649, par. 1);

All the above requisites are present in this case.

Carpio, (Chairperson), Peralta, Leonen, and Martires, JJ., concur.