G.R. No. 138953 June 6, 2002 Amelita assumed payment of the lot to the Bureau of Lands.
d payment of the lot to the Bureau of Lands. She paid a total amount of P282,900.6
CASTORIO ALVARICO, petitioner,
vs.
AMELITA L. SOLA, respondent.
QUISUMBING, J.:
This is a petition for review on certiorari of the decision dated March 23, 1999 of the Court of Appeals
in CA-G.R. CV No. 54624, reversing the decision of the Regional Trial Court of Cebu City, Branch
10, for reconveyance. Also sought to be reversed is the CA resolution dated June 8, 1999 denying
petitioner's motion for reconsideration.1âwphi1.nêt
The facts of this case are as follows:
Petitioner Castorio Alvarico is the natural father of respondent Amelita Sola while Fermina
Lopez is petitioner's aunt, and also Amelita's adoptive mother.
On June 17, 1982, the Bureau of Lands approved and granted the Miscellaneous Sales
Application (MSA) of Fermina over Lot 5, SGS-3451, with an area of 152 sq. m. at the
Waterfront, Cebu City.1
On May 28, 1983,2 Fermina executed a Deed of Self-Adjudication and Transfer of Rights3 over Lot 5
in favor of Amelita, who agreed to assume all the obligations, duties, and conditions imposed upon
Fermina under MSA Application No. V-81066. The document of transfer was filed with the Bureau of
Lands.4 The pertinent portions of the deed provide:
xxx
That I, FERMINA A. LOPEZ, of legal age, Filipino, widow of Pedro C. Lopez and a resident
of Port San Pedro, Cebu City, Philippines, am the AWARDEE of Lots Nos. 4, 5, 3-B, 3-C and
6-B, Sgs-3451 And being the winning bidder at the auction sale of these parcels by the Bureau
of Lands held on May 12, 1982, at the price of P150.00 per square meter taking a purchase
price of P282,900.00 for the tract; That I have made as my partial payment the sum
of P28,290.00 evidenced by Official Receipt No. 1357764-B representing ten (10%) per cent
of my bid, leaving a balance of P254,610.00 that shall be in not more than ten (10) years at an
equal installments of P25,461.00 beginning June 17, 1983 until the full amount is paid.
… the Transferee Mrs. Amelita L. Sola, agrees to assume, all the obligations, duties and
conditions imposed upon the Awardee in relation to the MSA Application No. V-81066
entered in their records as Sales Entry No. 20476.
… [I] hereby declare that I accept this Deed of Self-Adjudication and Transfer of Rights and
further agree to all conditions provided therein.5
On April 7, 1989, the Bureau of Lands issued an order approving the transfer of rights and granting the
amendment of the application from Fermina to Amelita.7 On May 2, 1989, Original Certificate of Title
(OCT) No. 3439 was issued in favor of Amelita.8
On June 24, 1993,9 herein petitioner filed Civil Case No. CEB-1419110 for reconveyance against
Amelita. He claimed that on January 4, 1984, Fermina donated the land to him11 and immediately
thereafter, he took possession of the same. He averred that the donation to him had the effect of
withdrawing the earlier transfer to Amelita.12
For her part, Amelita maintained that the donation to petitioner is void because Fermina was no longer
the owner of the property when it was allegedly donated to petitioner, the property having been
transferred earlier to her.13 She added that the donation was void because of lack of approval from the
Bureau of Lands, and that she had validly acquired the land as Fermina's rightful heir. She also denied
that she is a trustee of the land for petitioner.14
After trial, the RTC rendered a decision in favor of petitioner, the decretal portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and
against the defendant. Lot 5, Sgs-3451, is hereby declared as lawfully owned by plaintiff and
defendant is directed to reconvey the same to the former.
No pronouncement as to damages and attorney's fees, plaintiff having opted to forego such
claims.
SO ORDERED.15
On appeal, the Court of Appeals in its decision dated March 23, 1999 reversed the RTC. Thus:
WHEREFORE, foregoing considered, the appealed decision is hereby REVERSED and SET
ASIDE. The complaint filed by plaintiff-appellee against defendant-appellant is hereby
DISMISSED.
Costs against plaintiff-appellee.
SO ORDERED.16
Petitioner sought reconsideration, but it was denied by the CA. 17
Hence, the instant petition for certiorari seasonably filed on the following grounds:
I.
 THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR,
REFLECTIVE OF UNMINDFUL RECKLESSNESS WHICH IS THE VERY OPPOSITE
OF JUDICIAL CIRCUMSPECTION, IN DECLARING THAT THE DEED OF DONATION
DATED JANUARY 4, 1984 (ANNEX "C") IN FAVOR OF PETITIONER WAS
EMBODIED ONLY IN A PRIVATE DOCUMENT (Page 6, Decision, Annex "A"),
ALTHOUGH, BY A MERE CASUAL LOOK AT THE DOCUMENT, IT CAN BE
READILY DISCERNED THAT IT IS NOTARIZED;
II.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
APPLYING ON THE CASE AT BAR THE PRINCIPLE IN LAW THAT IT IS
REGISTRATION OF THE SALES PATENT THAT CONSTITUTE THE OPERATIVE
ACT THAT WOULD CONVEY OWNERSHIP OF THE LAND TO THE APPLICANT (Pp.
3-6, Decision, Annex "A") BECAUSE THE LEGAL CONTROVERSY BETWEEN
PETITIONER AND RESPONDENT DOES NOT INVOLVE CONFLICTING CLAIMS ON
SALES PATENT APPLICATIONS;
III.
THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND
COMMITTED SERIOUS ERROR IN MAKING A FINDING THAT RESPONDENT
ACQUIRED THE LAND IN QUESTION, IN GOOD FAITH (Page 7, Decision, Annex "A"),
ALTHOUGH THERE IS NO BASIS NOR NEED TO MAKE SUCH A FINDING; and
IV.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
ENUNCIATING THAT POSSESSION MENTIONED IN ARTICLE 1544 OF THE NEW
CIVIL CODE INCLUDE SYMBOLIC POSSESSION, UPON WHICH THE APPELLATE
COURT BASED ITS CONCLUSION THAT RESPONDENT WAS FIRST IN
POSSESSION BECAUSE THE DEED OF SELF-ADJUDICATION AND TRANSFER OF
RIGHTS IN FAVOR OF RESPONDENT DATED MAY 28, 1983 WAS EXECUTED
MUCH EARLIER THAN THE DEED OF DONATION IN FAVOR OF PETITIONER
DATED JANUARY 4, 1984 (Pages 7-8, Decision, Annex "A").18
The crucial issue to be resolved in an action for reconveyance is: Who between petitioner and
respondent has a better claim to the land?
To prove she has a better claim, respondent Amelita Sola submitted a copy of OCT No. 3439 in her
name and her husband's,19 a Deed of Self-Adjudication and Transfer of Rights20 over the property
dated 1983 executed by Fermina in her favor, and a certification from the municipal treasurer that she
had been declaring the land as her and her husband's property for tax purposes since 1993. 21
For his part, petitioner Castorio Alvarico presented a Deed of Donation22 dated January 4, 1984,
showing that the lot was given to him by Fermina and according to him, he immediately took
possession in 1985 and continues in possession up to the present. 23
Petitioner further contests the CA ruling that declared as a private document said Deed of Donation
dated January 4, 1984, despite the fact that a certified true and correct copy of the same was obtained
from the Notarial Records Office, Regional Trial Court, Cebu City on June 11, 1993 and
acknowledged before Atty. Numeriano Capangpangan, then Notary Public for Cebu. 24
Given the circumstances in this case and the contentions of the parties, we find that no reversible error
was committed by the appellate court in holding that herein petitioner's complaint against respondent
should be dismissed. The evidence on record and the applicable law indubitably favor respondent.
Petitioner principally relies on Articles 744 and 1544 of the New Civil Code, which provide:
Art. 744. Donations of the same thing to two or more different donees shall be governed by
the provisions concerning the sale of the same thing to two or more different persons.
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall
be transferred to the person who may have first taken possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith
was first in the possession; and, in the absence thereof, to the person who presents the oldest
title, provided there is good faith. (Emphasis supplied.)
Petitioner claims that respondent was in bad faith when she registered the land in her name and, based
on the abovementioned rules, he has a better right over the property because he was first in material
possession in good faith. However, this allegation of bad faith on the part of Amelita Sola in acquiring
the title is devoid of evidentiary support. For one, the execution of public documents, as in the case of
Affidavits of Adjudication, is entitled to the presumption of regularity, hence convincing evidence is
required to assail and controvert them.25 Second, it is undisputed that OCT No. 3439 was issued in
1989 in the name of Amelita. It requires more than petitioner's bare allegation to defeat the Original
Certificate of Title which on its face enjoys the legal presumption of regularity of issuance. 26 A
Torrens title, once registered, serves as notice to the whole world. All persons must take notice and no
one can plead ignorance of its registration.27
Even assuming that respondent Amelita Sola acquired title to the disputed property in bad faith, only
the State can institute reversion proceedings under Sec. 101 of the Public Land Act. 28 Thus:
 Sec. 101.—All actions for reversion to the Government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer acting in his
stead, in the proper courts, in the name of the Republic of the Philippines.

In other words, a private individual may not bring an action for reversion or any action which would
have the effect of canceling a free patent and the corresponding certificate of title issued on the basis
thereof, such that the land covered thereby will again form part of the public domain. Only the
Solicitor General or the officer acting in his stead may do so. 29 Since Amelita Sola's title originated
from a grant by the government, its cancellation is a matter between the grantor and the
grantee.30 Clearly then, petitioner has no standing at all to question the validity of Amelita's title. It
follows that he cannot "recover" the property because, to begin with, he has not shown that he is the
rightful owner thereof.1âwphi1.nêt

Anent petitioner's contention that it was the intention of Fermina for Amelita to hold the property in
trust for him, we held that if this was really the intention of Fermina, then this should have been clearly
stated in the Deed of Self-Adjudication executed in 1983, in the Deed of Donation executed in 1984, or
in a subsequent instrument. Absent any persuasive proof of that intention in any written instrument, we
are not prepared to accept petitioner's bare allegation concerning the donor's state of mind.

WHEREFORE, the appealed decision of the Court of Appeals in CA-G.R. CV No. 54624 is
hereby AFFIRMED. The complaint filed by herein petitioner against respondent in Civil Case No.
CEB-14191 is declared properly DISMISSED. Costs against petitioner.

SO ORDERED.
 [ GR No. 172720, Sep 14, 2015 ]
ELISEO MALTOS v. HEIRS OF EUSEBIO BORROMEO
LEONEN, J.:
The sale of a parcel of agricultural land covered by a free patent during the five-year prohibitory period
under the Public Land Act is void. Reversion of the parcel of land is proper. However, reversion under
Section 101 of the Public Land Act is not automatic. The Office of the Solicitor General must first file
an action for reversion.
On February 13, 1979, Eusebio Borromeo was issued Free Patent No. 586681 over a piece of
agricultural land located in San Francisco, Agusan del Sur, covered by Original Certificate of Title No.
P-9053.[1]
On June 15, 1983, well within the five-year prohibitory period, Eusebio Borromeo sold the land to
Eliseo Maltos.[2]
Eusebio Borromeo died on January 16, 1991. His heirs claimed that prior to his death, he allegedly told
his wife, Norberta Borromeo,[3]and his children to nullify the sale made to Eliseo Maltos and have the
Transfer Certificate of Title No. T-5477 cancelled because the sale was within the five-year prohibitory
period.[4]
On June 23, 1993, Norberta Borromeo and her children (heirs of Borromeo) filed a Complaint for
Nullity of Title and Reconveyance of Title against Eliseo Maltos, Rosita Maltos, and the Register of
Deeds of Agusan del Sur.[5] The case was docketed as Civil Case No. 946.[6]
Eliseo Maltos and Rosita Maltos (Maltos Spouses) filed their Answer, arguing that the sale was made
in good faith and that in purchasing the property, they relied on Eusebio Borromeo's title. Further, the
parties were in pari delicto. Since the sale was made during the five-year prohibitory period, the land
would revert to the public domain and the proper party to institute reversion proceedings was the
Office of the Solicitor General.[7]
The Register of Deeds of Agusan del Sur also filed an Answer, arguing that the deed of sale was
presented for Registration after the five-year prohibitory period, thus, it was ministerial on its part to
register the deed.[8]
The heirs of Borromeo countered that good faith was not a valid defense because the prohibitory
period appeared on the face of the title of the property. [9]
The Regional Trial Court [10]
of Prosperidad, Agusan del Sur narrowed down the issues to the
following:
1. Whether or not the herein plaintiffs are the legal heirs of the late Eusebio Borromeo.
2. Whether or not the sale of the disputed property within the prohibitory period is valid or binding. [11]
The trial court dismissed the Complaint on the ground of failure to state a cause of action. [12] Also, the
heirs of Borromeo did not have a right of action because they were unable to establish their status as
heirs of the late Eusebio Borromeo.[13] They may have declared themselves the legal heirs of Eusebio
Borromeo, but they did not present evidence to prove their allegation. [14] Further, the determination of
their rights to succession must be established in special proceedings. [15]
The trial court also ruled that "[t]he sale was null and void because it was within the five (5) year
prohibitionary [sic] period"[16] under the Public Land Act.[17] The defense of indefeasibility of title was
unavailing because the title to the property stated that it was "subject to the provisions of Sections 118,
119, 121, 122 and 124"[18] of the Public Land Act.[19] Since the property was sold within the five-year
prohibitory period, such transfer "result[ed] in the cancellation of the grant and the reversion of the
land to the public domain."[20]
As to the defense of in pari delicto, the trial court ruled against its applicability, [21] citing Egao v. Court
of Appeals (Ninth Division).[22]
The rule of pari delicto non oritur action (where two persons are equally at fault neither party may be
entitled to relief under the law), admits of exceptions and does not apply to an inexistent contract, such
as, a sale void ab initio under the Public Land Act, when its enforcement or application runs counter to
the public policy of preserving the grantee's right to the land under the homestead law.[23] (Citation
omitted)
The trial court further held that since the sale was null and void, no title passed from Eusebio
Borromeo to Eliseo Maltos.[24] The dispositive portion of the trial court's Decision states:
WHEREFORE, for lack of merit, the complaint under consideration is hereby ordered DISMISSED.
No pronouncement as to costs.
SO ORDERED.[25]
On appeal, the heirs of Borromeo argued that they were able to prove their status as heirs through the
testimony of their mother, Norberta Borromeo.[26]
The heirs of Borromeo also argued that the trial court should have ordered the "revival of [Original
Certificate of Title] No. P-9053 in the name of the Heirs of EUSEBIO BORROMEO." [27]
The Court of Appeals[28] reversed the Decision of the trial court and held that since Eusebio Borromeo
sold his property within the five-year prohibitory period, the property should revert to the
state.[29] However, the government has to file an action for reversion because "reversion is not
automatic."[30] While there is yet no action for reversion instituted by the Office of the Solicitor
General, the property should be returned to the heirs of Borromeo. [31] The dispositive portion of the
Court of Appeals' Decision states:
WHEREFORE, premises considered, the instant Appeal is GRANTED. The Decision of the court a
quo in Civil Case No. 946 is hereby SET ASIDE and another one is entered (1) ordering Appellee
ELISEO MALTOS to reconvey the property subject matter of this litigation to Appellants upon the
refund by the latter to Appellee ELISEO MALTOS the sum of P36,863.00, all expenses for the
reconveyance to be borne by the buyer, ELISEO MALTOS, herein Appellee and (2) ordering the
Register of Deeds of Prosperidad, Agusan del Sur to cancel TCT No. T-5477 and revive OCT No. P-
9053.
Let a copy of this Decision be furnished! the Office of the Solicitor General (OSG) for its information
and appropriate action and to inform this court within a period of thirty (30) days from receipt hereof
of the action done under the premises.
SO ORDERED.[32] (Emphasis supplied)
The Maltos Spouses filed a Motion for Reconsideration, arguing that since the prohibition on transfers
of property is provided by law, only the heirs of Borromeo should be punished. [33] Punishment, in this
case, would come in the form of preventing the heirs of Borromeo from re-acquiring the
land.[34] Instead, the land should revert back to the state.[35] The Maltos Spouses also prayed that they
be reimbursed for the improvements they introduced on the land.[36] Assuming that they would be
found to be also at fault, the principle of in pari delicto should apply. [37]
The Court of Appeals[38] denied the Motion for Reconsideration,[39] reasoning that it could not rule on
the issue of who between the parties had the better right to the property.[40] Also, it was the government
who should decide whether the heirs of Borromeo "should retain ownership of the land." [41] With
regard to the applicability of the in pari delicto doctrine, the Court of Appeals held that in pari delicto
does not apply in cases where its application will violate the policy of the state. [42]
On May 10, 2006, the Maltos Spouses |filed a Petition[43] for Review before this court, questioning the
Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 77142.[44]
This court, in a Resolution[45] dated July 5, 2006, required the heirs of Borromeo to file their Comment.
The heirs of Borromeo filed their Comment,[46] which was noted by this court in a Resolution[47] dated
September 25, 2006. In the same Resolution, this court required the Maltos Spouses to file their
Reply.[48]
In a Resolution dated March 28, 2007, this court required Attys. Ma. Cherell L. De Castro and Gener
C. Sansaet, counsels for the Maltos Spouses, to show cause why they should not be disciplinarily dealt
with for their failure to file a Reply. They were also required to comply with the Resolution dated
September 25, 2006.[50]
Counsels for the Maltos Spouses filed a] Compliance,[51] together with the Reply.[52] In a
Resolution[53] dated August 15, 2007, this court noted and accepted the Compliance, and also noted the
Reply.
I
The Maltos Spouses argue that the heirs of Borromeo did not present evidence to prove that they are
indeed the heirs of Eusebio Borromeo. The heirs of Borromeo did not present the death certificate of
Eusebio Borromeo, the marriage certificate of Eusebio Borromeo and Norberta Borromeo, or any of
the birth certificates of the children of Eusebio.[54] While Norberta Borromeo and two of her children
testified,[55] their testimonies should be considered as self-serving.[56] The Maltos Spouses cite Article
172[57] of the Family Code, which enumerates how filiation may be established. [58]
The Maltos Spouses also contest the Court of Appeals' ruling stating that they did not rebut the
testimonies of the heirs of Borromeo because they continuously argued that the heirs of Borromeo
were unable to prove their status as heirs.[59]
The Maltos Spouses further argue that it was error for the Court of Appeals not to apply the in pari
delicto rule, considering that the sale violated Section 118 [60] of the Public Land Act.[61] Since both
parties are at fault, it follows that Article 1412[62] of the Civil Code applies.[63]
In addition, the Maltos Spouses pray for the reimbursement of the value of the improvements on the
property to prevent unjust enrichment on the part of the heirs of Borromeo. [64] The Maltos Spouses
enumerate the following circumstances to show why they should be reimbursed:
a. EUSEBIO has already long received and enjoyed the amount of the purchase price of the subject
land from petitioners.
b. The value of the purchase price of PHP36,863.00 paid in 1983 have since then greatly depreciated.
If petitioners had deposited that money in bank or loaned it to another person instead of purchasing
EUSEBIO's property, it would have at least earned some interest. However, the Court of Appeals
incorrectly assumed that the return of the purchase price would be sufficient compensation to the
petitioners.
c. The value of the improvements introduced by petitioners on the subject property is much greater
than the purchase price that they initially paid on the land. Petitioners estimate the value of the
improvements, including hundreds of various fruit-bearing trees and four residential houses, to be at
least PHP900,000.00. Because of these improvements, not only can respondents sell the land at a much
higher price, they can even sell the improvements and profit from them. It would be the height of
injustice if all the petitioners would receive in turning over the subject property to the respondents is
the purchase price that was previously paid EUSEBIO under the deed of sale. [65]
On the other hand, the heirs of Borromeo argue that the testimonies of Norberta Borromeo and Susan
Borromeo Morales on their relationship to Eusebio Borromeo were not refuted by the Malios Spouses.
Thus, they were able to prove their status as heirs.[66]
The heirs of Borromeo also argue that the in pari delicto rule is not applicable because in Santos v.
Roman Catholic Church of Midsayap, et al.,[67] this court stated that the in pari delicto rule does not
apply if its application will have the effect of violating public policy. [68]
With regard to the claim for reimbursements, the heirs of Borromeo argue that the Maltos Spouses did
not raise their claim for reimbursement in their Answer to the Complaint. They are now barred from
claiming reimbursement since this was not raised at the first instance. [69]
Based on the arguments of the parties, the issues for resolution are:
First, whether the Court of Appeals erred in reversing the Decision of the trial court and ordering the
reconveyance of the property from petitioners Spouses Eliseo Maltos and Rosita Maltos to respondents
heirs of Eusebio Borromeo;
Second, whether the Court of Appeals erred in not applying the doctrine of in pari delicto; and
Finally, whether the Court of Appeals erred in ruling that petitioners Spouses Eliseo Maltos and Rosita
Maltos are not entitled to reimbursement for the improvements they introduced on the land.
II
The five-year period prohibiting the sale of land obtained under homestead or free patent is provided
under Section 118 of the Public Land Act, which states:
SECTION 118. Except in favor of the Government or any of its branches, units, or institutions, or
legally constituted banking corporations, lands acquired under free patent or homestead provisions
shall not be subject to encumbrance or alienation from the date of the approval of the application and
for a term of five years from and after the date of issuance1 of the patent or grant, nor shall they
become liable to the satisfaction of any debt contracted prior to the expiration of said period; but the
improvements or crops on the land may be mortgaged] or pledged to qualified persons, associations, or
corporations.
The reason for prohibiting the alienation or encumbrance of properties covered by patent or grant was
explained in Metropolitan Bank and Trust Company v. Viray.[70]
In Metropolitan Bank, Edgardo D. Viray and his wife contracted several loans with Metrobank which
they failed to pay.[71] Metrobank filed a Complaint for sum of money before the Regional Trial Court
in Manila.[72] In 1982, during the pendency of the case, free patents over three parcels of land were
issued in favor of Viray.[73] The Complaint for sum of money was decided in 1983 in favor of
Metrobank.[74] In 1984, the trial court issued a writ of execution over the parcels of land. [75] An auction
sale was held, and Metrobank emerged as the winning bidder. [76] Viray filed an action for annulment of
sale.[77] This court ruled that the auction sale was made within the five-year prohibitory period[78] and
explained that:
[T]he main purpose in the grant of a freq patent of homestead is to preserve and keep in the family of
the homesteader that portion of public land which the State has given to him so he may have a place to
live with his family and become a happy citizen and a useful member of the society. In Jocson v.
Soriano, we held that the conservation of a family home is the purpose of homestead laws. The policy
of the state is to foster, families as the foundation of society, and thus promote general welfare. . . .
Section 118 of CA 141, therefore, is predicated on public policy. Its violation gives rise to the
cancellation of the grant and the reversion of the land and its improvements to the government at the
instance of the latter. The provision that "nor shall they become liable to the satisfaction of any debt
contracted prior to that expiration of the five-year period" is mandatory and any sale made in violation
of such provision is void and produces no effect whatsoever, just like what transpired in this case.
Clearly, it is not within the competence of any citizen to barter away what public policy by law seeks
to preserve.[79] (Citations omitted)
In Republic v. Court of Appeals,[80] Josefina L. Morato applied for free patent over a parcel which was
granted.[81] Morato mortgaged and leased a portion of the land within the five-year prohibitory
period.[82] Later on, it would also be discovered that Morato's land formed part of Calauag Bay. [83] The
Republic filed a Complaint for cancellation of title and reversion of the parcel of land. [84] This court
held that "lease" and "mortgage" were encumbrances on the parcel of land. [85] This court also discussed
the policy behind the five-year prohibitory period:
It is well-known that the homestead laws were designed to distribute disposable agricultural lots of the
State to land-destitute citizens for their home and cultivation. Pursuant to such benevolent intention the
State prohibits the sale or encumbrance of the homestead (Section 116) within five years after the grant
of the patent. After that five-year period the law impliedly permits alienation of the homestead; but in
line with the primordial purpose to favor the homesteader and his family the statute provides that such
alienation or conveyance (Section 117) shall be subject to the right of repurchase by the homesteader,
his widow or heirs within five years. This section 117 is undoubtedly a complement of Section 116. It
aims to preserve and keep in the family of the homesteader that portion of public land which the State
had gratuitously given to him. It would, therefore, be in keeping with this fundamental idea to hold, as
we hold, that the right to repurchase exists not only when the original homesteader makes the
conveyance, but also when it is made by his widow or heirs. This construction is clearly deducible
from the terms of the statute.
The effect of violating the five-year prohibitory period is provided under Section 124 of the Public
Land Act, which provides:
SECTION 124. Any acquisition, conveyance, alienation, transfer, or other contract made or executed
in violation of any of the provisions of sections one hundred and eighteen, one hundred and twenty,
one hundred and twenty-one, one hundred and twenty-two, and one hundred and twenty-three of this.
Act shall be unlawful and null and void from its execution and shall produce the effect of annulling
and cancelling the grant, title, patent, or permit originally issued, recognized or confirmed, actually or
presumptively, and cause the reversion of the property and its improvements to the State.
In this case, Section 101[87] of the Public Land Act is applicable since title already vested in Eusebio
Borromeo's name. Both the trial court and the Court of Appeals found that the sale was made within
the five-year prohibitory period. Thus, there is sufficient cause to revert the property in favor of the
state. However, this court cannot declare reversion of the property in favor of the state in view of the
limitation imposed by Section 101 that an action for reversion must first be filed by the Office of the
Solicitor General.
III
The doctrine of in pari delicto non oritur actio is inapplicable when public policy will be violated.
constitute criminal offenses.
The in pari delicto rule is provided under Articles 1411 and 1412 of the Civil Code. Article 1411
pertains to acts that constitute criminal offenses, while Article 1412 pertains to acts that do not These
provisions state:
ART. 1411. When the nullity proceeds from the illegality of the cause or object of the contract, and
the act constitutes a criminal offense, both parties being in pari delicto, they shall have no action
against each other, and both shall be prosecuted. Moreover, the provisions of the Penal Code relative to
the disposal of effects or instruments of a crime shall be applicable to the things or the price of the
contract.
This rule shall be applicable when only one of the parties is guilty; but the innocent one may claim
what he has given, and shall not be bound to comply with his promise.
ART. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal
offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may recover what he has given by
virtue of the contract, or demand the performance of the other's undertaking;
(2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason
of the contract, or ask for the fulfilment of what has been promised him. The other, who is not at fault,
may demand the return of what he has given without any obligation to comply with his promise.
Santos involved the sale of a parcel of land within the five-year prohibitory period.[88] The Roman
Catholic Church raised the defense of in pari delicto.[89] It was also argued by the Rornan Catholic
Church that the effect of the sale would be the reversion of the] property to the state. [90] This court held
that:
Section 124 of the Public Land Act indeed provides that any acquisition, conveyance or transfer
executed in violation of any of its provisions shall be null and void and shall produce the effect of
annulling and cancelling the grant or patent and cause the reversion of the property to the State, and the
principle of pari delicto has been applied by this Court in a number of cases wherein the parties to a
transaction have proven to be guilty of effected the transaction with knowledge of the cause of its
invalidity. But we doubt if these principles can now be invoked considering the philosophy and the
policy behind the approval of the Public Land Act. The principle underlying pari delicto as known here
and in the United States is not absolute in its application. It recognizes certain exceptions one of them
being when its enforcement or application runs counter to an avowed fundamental policy or to public
interest. As stated by us in the Rellosa case, "This doctrine is subject to one important limitation,
namely, [']whenever public policy is considered advanced by allowing either party to sue for relief
against the transaction[']"
The case under consideration comes within the exception above adverted to. Here appellee desires to
nullify a transaction which was done in violation of the law. Ordinarily the principle of pari delicto
would apply to her because her predecessor-in-interest has carried out the sale with the presumed
knowledge of its illegality, but because the subject of the transaction is a piece of public land, public
policy requires that she, as heir, be not prevented from re-acquiring it because it was given by law to
her family for her home and cultivation. This is the policy on which our homestead law is predicated.
This right cannot be waived. "It is not within the competence of any citizen to barter away what public
policy by law seeks to preserve." We are, therefore, constrained to hold that appellee can maintain the
present action it being in furtherance of this fundamental aim of our homestead law. [91] (Emphasis
supplied, citations omitted)
The non-application of the in pari delicto rule where public policy would be violated has also been
applied in other cases.
In Pajuyo v. Court of Appeals,[92] this court held that in pari delicto "is not [applicable to [e]jectment
[c]ases"[93] and cited Drilon v. Gaurana,[94] which discussed the policy behind ejectment cases:
It must be stated that the purpose of an action of forcible entry and detainer is that, regardless of the
actual condition of the title to the property, the party in peaceable quiet possession shall not be turned
out by strong hand, violence or terror. In affording this remedy of restitution the object of the statute is
to prevent breaches of the peace and criminal disorder which would ensue from the withdrawal of the
remedy, and the reasonable hope such withdrawal would create that some advantage must accrue to
those persons who, believing themselves entitled to the possession of property, resort to force to gain
possession rather than to some appropriate action in the courts to assert their claims.[95]
This court elucidated that:
Clearly, the application of the principle of pari delicto to a case of ejectment between squatters is
fraught with danger. To shut out relief to squatters on the ground of pari delicto would openly invite
mayhem and lawlessness. A squatter would oust another squatter from possession of the lot that the
latter had illegally occupied, emboldened by the knowledge that the courts would leave them where
they are. Nothing would then stand in the way of the ousted squatter from re-claiming his prior
possession at all cost.
Petty warfare over possession of properties is precisely what ejectment cases or actions for recovery of
possession seek to prevent. Even the owner who has title over the disputed property cannot take the
law into his own hands to regain possession of his property. The owner must go to court.[96] (Citation
omitted)
In Loria v. Muñoz, Jr.,[97] Carlos Loria asked Ludolfo Muñoz, Jr. "to advance [P]2,000,000.00 for a
subcontract of a [P]50,000,000.00 river-dredging project in Guinobatan." [98] Loria informed Muñoz
that the project would be awarded to Sunwest Construction and Development Corporation, and
Sunwest would subcontract to Muñoz.[99] Muñoz agreed to Loria's proposal.[100] When the river-
dredging project was finished, Loria did not return the P2,000,000.00 despite Muñoz's
demand.[101] Complaint for sum of money.[102]Loria raised the argument that Muñoz "should not be
allowed to recover the money"[103] since they were in pari delicto.[104] This court held that under the
principle of unjust enrichment, the sum of money should be returned.[105] In so ruling, this court
cited Gonzalo v. Tarnate, Jr.[106] where it was explained that:
. . . the application of the doctrine of in pari delicto is not always rigid. An accepted exception arises
when its application contravenes well-established public policy. In this jurisdiction, public policy has
been defined as "that principle of the law which holds that no subject or citizen can lawfully do that
which has a tendency to hi injurious to the public or against the public good."
Unjust enrichment exists, according to Hulst v. PR Builders, Inc., "when a person unjustly retains a
benefit at the loss of another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience." The prevention of unjust enrichment is
a recognized public policy of the State, for Article 22 of the Civil Code explicitly provides that
"[e]very person who through an act of performance by another, or any other meins, acquires or comes
into possession of something at the expense of the latter without just or legal ground, shall return the
same to him." It is wel I to note that Article 22 "is part of the chapter of the Civil Code on Human
Relations, the provisions of which were formulated as basic principles to be observed for the rightful
relationship between human beings and for the stability of the social order; designed to indicate certain
norms that spring from the fountain of good conscience; guides for human conduct that should run as
golden threads through society to the end that law may approach its supreme ideal which is the sway
and dominance of justice."[107]
As the in pari delicto rule is not applicable, the question now arises as to who between the parties have
a better right to possess the subject parcel of land. This issue was addressed in Santos:
What is important to consider now is who of the parties is the better entitled to the possession of the
land while the government does not take steps to assert its title to the homestead. Upon annulment of
the sale, the purchaser's claim is reduced to the purchase price and its interest. As against the vendor
or his heirs, the purchaser is no more entitled to keep the land than any intruder. Such is the situation
of the appellants. Their right to remain in possession of the land is no better than that of appellee and,
therefore, they should not be allowed to remain in it to the prejudice of appellee during and until the
government takes steps toward its reversion to the State.[108] (Emphasis supplied, citation omitted)
In Binayug v. Ugaddan,[109] which involved the sale of two properties covered by a homestead
patent,[110] this court cited jurisprudence showing that in cases involving the sale of a property covered
by the five-year prohibitory period, the property should be returned to the grantee. [111]
Applying the ruling in Santos and Binayug, this court makes it clear that petitioners have no better
right to remain in possession of the property against respondents.
Hence, the Court of Appeals did not err in ruling that while there is yet no action for reversion filed by
the Office of the Solicitor General, the property should be conveyed by petitioners to respondents.
III
Petitioners' argument that respondents failed to establish their status as heirs is belied by their
admissions during trial and in their pleadings. Petitioners t know the identity of Eusebio Borromeo's
wife. As quoted in the trial court's Decision, petitioners alleged in their Answer that:
[I]t was the late Eusebio Borromeo and his wife who came along in Bayugan 2, San Francisco, Agusan
del Sur, requesting the said defendants to purchase their land because they badly need money and
notwithstanding the fact that they have a little amount and out of pity bought the said land.[112]
In the Reply, respondents alleged:
The allegation that the late Eusebio Borrjomeo and his wife went to Bayugan II, San Francisco,
Agusan del Sur in order to sell the land to the defendant Eliseo Maltos has no factual basis, the truth of
the matter is that the late Eusebio Borromeo, together with defendant Eliseo Maltos went to Esperanza,
Sultan Kudarat to secure the signature of the wife.[113]
In addition, when petitioner Eliseo Maltos was presented in court, he identified the signatures of the
witnesses on the deed of sale as the signatures of Eusebio Borromeo's children, namely, Susan, Ana,
and Nicolas Borromeo.[114]
Respondents' allegation that they are the heirs of Borromeo is admitted by petitioners. Thus, the Court
of Appeals did not err in ruling that "the fact that Appellants [referring to respondents] are the spouse
and children of the late EUSEBIO remains unrebutted." [115]
IV
With regard to the claim for reimbursement, respondents argue that it was not raised as a counterclaim
in the Answer to the Complaint.
During trial, petitioner Eliseo Maltos testified that when he entered the land, there were around 100
trees, including coconut trees and a few banana trees. He then planted additional coconut trees which,
at the time of the trial, were already bearing fruit.[116] Petitioner Eliseo Maltos' testimony was not
rebutted by respondents.
The general rule is that "[a] compulsory counterclaim . . . not set up shall be barred." [117] Further, the
computation of the value of the improvements on the land entails findings of fact.
In any case, the Court of Appeals did not err when it stated in its Resolution dated April 7, 2006 that:
With respect to Appellees' claim for the reimbursement of the improvements on the land in question,
they are hereby declared to have lost and forfeited the value of the necessary improvements that they
made thereon in the same manner that Appellants should lose the value of the products gathered by the
Appellees from the said land.[118]
The Court of Appeals cited Angeles, et at v. Court of Appeals, et al.[119] and Arsenal v. Intermediate
Appellate Court.[120] In Angeles, this court discussed that:
The question that now poses is whether the return of the value of the products gathered from the land
by the defendants and the expenses incurred in the construction of the dike—all useful and necessary
expenses—should be ordered to be returned by the defendants to the plaintiffs. While we believe that
the rule of in pari delicto should not apply to the sale of the homestead, because such sale is contrary to
the public policy enunciated in the homestead law, the loss of the products realized by the defendants
and the value of the necessary improvements made by them on the land should not be excepted from
the application of the said rule because no cause or reason can be cited to justify an exception. It has
been held that the rule of in pari delicto is inapplicable only where the same violates a well-established
public policy.
....
We are constrained to hold that the heirs of the homesteader should be declared to have lost and
forfeited the value of the products gathered from the land, and so should the defendants lose the value
of the necessary improvements that they have made thereon. [121]
[122]
In Arsenal, the property covered by a homestead patent had been sold to Suralta in 1957, while the
Complaint was filed before the trial court in 1974.[123] The case was decided by this court in
1986.[124] Thus, Suralta had been in possession of the property for approximately 17 years before a
Complaint was filed. This court held that:
The value of any improvements made on the land and the interests on the purchase price are
compensated by the fruits the respondent Suralta and his heirs received from their long possession of
the homestead.[125]
Angeles and Arsenal both involved the sale of a parcel of land covered by a homestead patent within
the five-year prohibitory period. These cases also involved the introduction of improvements on the
parcel of land by the buyer.
Restating the rulings in Angeles and Arsenal, this court finds that while the rule on in pari delicto does
not apply policy, if its effect is to violate public policy it is applicable with regard to value of the
improvements introduced by petitioner Eliseo Maltos. Petitioners had been in possession of the land
for 20 years before the heirs of Borromeo filed a Complaint. The expenses incurred by petitioners in
introducing improvements on the land for which they seek reimbursement should already be
compensated by the fruits they received from the improvements.
V
Reversion is a remedy provided under Section 101 of the Public Land Act:
SECTION 101. All actions for the reversion to the Government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor-General or the officer acting in his stead, in
the proper courts, in the name of Commonwealth of the Philippines.
The purpose of reversion is "to restore public land fraudulently awarded and disposed of to private
individuals or corporations to the mass of public domain." [126]
The general rule is that reversion of lands to the state is not automatic, and the Office of the Solicitor
General is the proper party to file an action for reversion.
In Villacorta v. Ulanday,[127] defendant-appellee Vicente Ulanday admitted that his purchase of a
parcel of land covered by a homestead patent was made within the five-year prohibitory period, but
argued that since the sale was in violation of law,[128] the property should automatically revert to the
state.[129] This court held that reversion was not automatic, and government must file an appropriate
action so that the land may be reverted to the state.[130]
Ortega v. Tan[131] involved the sale and mortgage of a parcel of land covered by a free patent.[132] The
series of transactions for the sale and mortgage of the property had been initiated within the five-year
prohibitory period but was finalized after the prohibitory period. [133]This court held that the sale and
mortgage violated Section 118 of the Public Land Act and that reversion was proper. [134] This court
also clarified that:
[Reversion] is not automatic. The government has to take action to cancel the patent and the certificate
of title in order that the land involved may be reverted to it. Correspondingly, any new transaction
would be subject to whatever steps the government may take for the reversion to it. [135] (Citation
omitted)
Alvarico v. Solau[136] involved a miscellaneous sales application over a parcel of land by Fermina
Lopez.[137] Subsequently, Lopez executed a deed of self-adjudication and transfer of rights in favor of
Amelita Sola.[138] The Bureau of Lands approved the transfer of rights, and title was issued in Sola's
name.[139] Castorio Alvarico then filed an action for reconveyance, claiming that the parcel of land was
donated to him.[140] He also alleged that Sola acquired the property in bad faith. [141] This court held that
Alvarico's allegation of bad faith was not supported by evidence and that in any case, "only the State
can institute reversion proceedings under Sec[tion] 101 of the Public Land Act." [142] This court restated
Section 101 of the Public Land Act:
[A] private individual may not bring an action for reversion or any action which would have the effect
of canceling a free patent and the corresponding certificate of title issued on the basis thereof, such that
the land covered thereby will again form part of the public domain. Only the Solicitor General or the
officer acting in his stead may do so. Since [the] title originated from a grant by the government, its
cancellation is a matter between the grantor and the grantee. [143] (Citations omitted)
The rule in Alvarico was cited in Cawis, et al. v. Hon. Cerilles, et al.[144] In Cawis, the validity of a
sales patent and original certificate of title over a parcel of land in Baguio was questioned. [145] This
court denied the Petition[146] and ruled that the Complaint was actually a reversion suit, which can be
filed only by the Office of the Solicitor General or a person acting in its stead. [147]
It was also discussed in Cawis that:
The objective of an action for reversion of public land is the cancellation of the certificate of title an|l
the resulting reversion of the land covered by the title to the State| This is why an action for reversion
is oftentimes designated asj an annulment suit or a cancellation suit. [148]
We clarify that the remedy of reversion is not the same as the remedy of declaration of nullity of free
patents and certificate of title. In reversion, the "allegations in the complaint would admit State
ownership of the disputed land[,]" [149] while in an action for the declaration of nullity of free patent and
certificate of title, the allegations would include "plaintiffs ownership of the contested lot prior to the
issuance of [the] free patent and certificate of title[.]" [150]
Since an action for reversion presupposes that the property in dispute is owned by the state, it is proper
that the action be filed by the Office of the Solicitor General, being the real party-in-interest.
There is, however, an exception to the rule that reversion is not automatic. Section 29 of the Public
Land Act provides:
SECTION 29. After the cultivation of the land has begun, the purchaser, with the approval of the
Secretary of Agriculture and Commerce, may convey or encumber his rights to any person,
corporation, or association legally qualified under this Act to purchase agricultural public lands,
provided such conveyance or encumbrance does not affect any right or interest of the Government in
the land: And provided, further, That the transferee is not delinquent in the payment of any installment
due and payable. Any sale and encumbrance made without the previous approval of the Secretary of
Agriculture and Commerce shall be null and void and shall produce the effect of annulling the
acquisition and reverting the property and all rights to the State, and all payments on the purchase
price theretofore made to the Government shall be forfeited. After the sale has been approved, the
vendor shall not lose his right to acquire agricultural public lands under the provisions of this Act,
provided he has the necessary qualifications. (Emphasis supplied)
In Francisco v. Rodriguez, et al,[151] this court differentiated reversion under Sections 29 and 101 of the
Public Land Act.[152] This court explained that reversion under Section 29 is self-operative, unlike
Section 101 which requires the Office of the Solicitor General to institute reversion
proceedings.[153] Also, Section 101 applies in cases where "title has already vested in the
individual[.]"[154] The Director of Lands sought to execute the Decision in Francisco v.
Rodriguez which petitioner Ursula Francisco opposed, arguing that only 29 hectares were reverted to
the state since she was in possession of the remaining four hectares.[155] This court held that the entire
property reverted to the state.[156] This court also explained why Francisco v. Rodriguez was covered
by Section 29 and not Section 101 of the Public Land Act:
By transgressing the law, i.e., allowing herself to be a dummy in the acquisition of the land and selling
the same without the previous approval of the Secretary of Agriculture and Natural Resources,
plaintiff-appellant herself [referring to Ursula Francisco] has eliminated the very source (Sales
Application) of her claim to Lot No. 595, as a consequence of which, she cannot later assert any right
or interest thereon. This is the imperative import of the pronouncements in G.R. No. L-8263 and in
G.R. No. L-15605 that the invalidity of the conveyance by plaintiff-appellant "produced as a
consequence the reversion of the property with all rights thereto to the State." As a matter of fact,
Section 29 of the Public Land Law (Commonwealth Act No. 141) expressly ordains that any sale and
encumbrance made without the previous approval of the Secretary of Agriculture and Natural
Resources "shall be null and void and shall produce the effect of annulling the acquisition and
reverting property and all rights thereto to the State, and all payments on the purchase price theretofore
made to the Government shall be forfeited." . . . .
In fact, even if a sales application were already given due course by the Director of Lands, the
applicant is not thereby conferred any right over the land covered by the application. It is the award
made by the Director to the applicant (if he is the highest bidder) that confers upon him a certain right
over the land, namely, "to take possession of the land so that he could comply with the requirements
prescribed by law." It is at this stage, when the award is made, that the land can be considered
"disposed of by the Government," since the aforestated right of the applicant has the effect of
withdrawing the land from the public domain that is "disposable" by the Director of Lands under the
provisions of the Public Land Act. . . . However, the disposition is merely provisional because the
applicant has still to comply with the requirements prescribed by law before . . . . any patent is issued.
After the requisites of the law are complied with by the applicant to the satisfaction of the Director [of]
Lands, the patent is issued. It is then that the land covered by the application may be considered
"permanently disposed of by the Government." [157] (Citations omitted)
In this case, a free patent over the subject parcel of land was issued to Eusebio Borromeo. This shows
that he already had title to the property when he sold it to petitioner Eliseo Maltos. Thus, Section 101
of the Public Land Act applies.

WHEREFORE, the Petition is denied, and the Decision and Resolution of the Court of Appeals in CA-
G.R. CV No. 77142 are AFFIRMED, without prejudice to the appropriate institution of a case for
reversion.

Let a copy of this Decision be furnished the Office of the Solicitor General for its appropriate action
with respect to the reversion of the land in question.

SO ORDERED.
 G.R. No. 147148 January 13, 2003
PILAR Y. GOYENA, petitioner,
vs.
AMPARO LEDESMA-GUSTILO, respondent.
CARPIO MORALES, J.:
From the Court of Appeals June 19, 2000 Decision which affirmed that of the Regional Trial Court
(RTC) of Makati, Branch 149 in Special Proceeding No. N-4375 appointing herein respondent Amparo
Ledesma Gustilo as guardian over the person and property of her sister Julieta Ledesma, Pilar Y.
Goyena, Julieta's close friend and companion of more than 60 years, comes to this Court on petition for
review on certiorari.
On July 8, 1996, respondent filed at the RTC of Makati a "PETITION FOR LETTERS OF
GUARDIANSHIP"1 over the person and properties of her sister Julieta, the pertinent allegations of
which read:
2. That for the most part during the year 1995 and 1996, Julieta Ledesma has been a patient in
the Makati Medical Center where she is under medical attention for old age, general debility,
and a "mini"-stroke which she suffered in the United States in early 1995;
3. That Julieta Ledesma is confined to her bed and can not get up from bed without outside
assistance, and she has to be moved by wheel chair;
4. That Julieta Ledesma owns real estate and personal properties in Metro Manila and in
Western Visayas, with an aggregate estimated assessed and par value of P1 Million Pesos[;]
5. That Julieta Ledesma is not in a position to care for herself, and that she needs the
assistance of a guardian to manage her interests in on-going corporate and agricultural
enterprises;
6. That the nearest of kin of Julieta Ledesma are her sisters of the full blood, namely,
petitioner Amparo Ledesma Gustilo, Teresa Ledesma (aka. Sister Cristina of the Religious of
the Assumption, and Loreto Ledesma Mapa, all of whom have given their consent to the filing
of this petition as shown by their signatures at the bottom of this petition[;]
7. That petitioner has extensive experience in business management of commercial,
agricultural and corporate enterprises, many of which are in the same entities where Julieta
Ledesma holds an interest, and that she is in a position to monitor and supervise the delivery
of vitally needed medical services to Julieta Ledesma whether in the Metro Manila area, or
elsewhere.
Petitioner filed an Opposition to the petition for letters of guardianship. She later filed an Amended
Opposition on August 15, 1996 reading in part:
2.03 The petition lacked factual and legal basis in that Julieta Ledesma is competent and sane
and there is absolutely no need to appoint a guardian to take charge of her person/property.
She is very able to take charge of her affairs, and this is clearly evident from her letters to the
petitioner. Copies of her recent letters are herewith attached as Annexes "A" to "E."
xxx xxx xxx
2.05 Petitioner is not fit to be appointed as the guardian of Julieta Ledesma since their
interests are antagonistic (Sudler v. Sudler, 121 Md. 46. 49 L.R.A. 800, as cited in vol. V-B
Francisco Revised Rules of Court, Rule 93, Section 4, p. 414).
xxx xxx xxx
3.01 The above captioned petition should be dismissed for utter lack of legal and/or factual
basis.
3.02 In the remote event that this Honorable Court should find that Julieta Ledesma is
incompetent and resolve that there is need to appoint a guardian over her person and property,
this Honorable Court should appoint as such guardian:
1. Oppositor Goyena;
2. Bart Lacson;
3. Fely Montelibano;
4. Jose T. Revilla; or
5. a qualified and reputable person as may be determined fit by this Honorable Court.
By Decision2 of October 4, 1996, the trial court found Julieta "incompetent and incapable of taking
care of herself and her property" and appointed respondent as guardian of her person and properties,
ratiocinating as follows:
A perusal of the records shows that petitioner (Amparo) is 72 years of age, the youngest sister
of Julieta. Admittedly, the Oppositor Pilar Goyena, 90 years of age has been the close friend
and companion of Julieta for 61 years. Julieta was with Oppositor when she suffered her first
stroke in Makati in 1991 which was the reason why Julieta had to give up the management of
their hacienda in Bacolod. It is also not disputed that Julieta was with Pilar when she had her
second stroke in the U.S. In short, the special bond of friendship existing between Julieta and
the Oppositor cannot be denied. Now that Julieta is unable to manage her personal life and
 business concerns due to senility and "vascular dementia," the oppositor wants to be
appointed her guardian or else Bart Lacson, Fely Montelibano and Jose T. Revilla.
It is interesting to note that the oppositor has interposed her objection to the appointment of
Amparo as guardian because she thinks that the latter dislikes her. She further added that
there were a number of letters allegedly written by Julieta to Amparo which showed Julieta's
sentiments regarding certain matters. Nevertheless, not one of the nearest of kin of Julieta
opposed the petition. As a matter of fact, her sisters signified their conformity thereto. Thus,
Ms. Goyena's mere conjecture that Amparo dislikes her is no sufficient reason why the
petition should be denied. Neither does it make Amparo unsuitable and unfit to perform the
duties of a guardian. On the contrary, it is Ms. Goyena who could be considered as to have an
adverse interest to that of Julieta if it is true that 50% of Julieta's holdings at the Makati
Medical Center has been transferred to her as alleged in Exhibit 1 and Exhibit A.
By and large, the qualification of Amparo to act as guardian over the person and properties of
Julieta has been duly established. As a sister, she can best take care of Julieta's concerns and
well being. Now that Julieta is in the twilight of her life, her family should be given the
opportunity to show their love and affection for her without however denying Pilar Goyena
access to her considering the special bond of friendship between the two. Needless to say, the
oppositor at 90 years of age could not be said to be physically fit to attend to all the needs of
Julieta.
WHEREFORE, petitioner Amparo Gustilo, is hereby appointed guardian over the person and
property of Julieta Ledesma, an incompetent with all the powers and duties specified under
the law.
Accordingly, let letters of guardianship issue to petitioner upon her filing of a bond in the
amount of P200,000.00 to guarantee the performance of the obligations prescribed for general
guardians.
SO ORDERED. (Emphasis supplied)
Petitioner's Motion for Reconsideration of the trial court's decision was, by Order of November 4,
19963 , denied in this wise:
Acting on the Motion for Reconsideration filed by the Oppositor thru counsel, and finding no
merits on the ground stated therein, considering that petitioner appears to be most qualified
and suitable to act as Julieta Ledesma's guardian after taking into consideration the
qualifications of the oppositor and her other recomendees [sic], aside from the fact that
petitioner's appointment as such was not objected to by any of her nearest kin, in contrast to
the hostile interest of oppositor, the same is hereby DENIED.
SO ORDERED.
On appeal of petitioner, the Court of Appeals affirmed the trial court's decision on the following
ratiocination:4
Indeed, oppositor-appellant (Pilar) has not shown the authenticity and due execution of the
letters which purport to show the existence of a rift between Julieta and her family and
dissatisfaction as to how the businesses were managed. At any rate, while it is correct to say
that no person should be appointed guardian if his interest conflict with those of the ward
(Guerrero vs. Teran, 13 Phil. 212), there are really no antagonistic interests to speak of
between petitioner [Amparo] and Julieta, they being co-owners of certain properties. There is
also no showing that petitioner's business decisions in the past had resulted in the prejudice of
Julieta.
While the oppositor may have been very close to Julieta, there is no sufficient showing that
petitioner is hostile to the best interests of the latter. On the contrary, it was the petitioner
who, realizing the need for the appointment of a person to guard her sister's interests, initiated
the petition for guardianship. We see no indication that petitioner is animated by a desire
to prejudice Julieta's health as well as financial interests. In point of fact, it was
oppositor-appellant who had initially concealed the deteriorating state of mind of Julieta
from the court. Oppositor's advanced age of 90 years also militate against her assuming the
guardianship of the incompetent. The oppositor has declared that she is not interested to
be appointed legal guardian (p. 21[,] Appellant's Brief, Rollo, p. 59). But the persons that
she points to as being better choices as Julieta's guardian over the appellee have not acted, nor
even indicated, their desire to act as such. In any case, We see no cogent reason why We
should reverse the well-reasoned disquisition of the trial court.
WHEREFORE, finding no error in the appealed decision, the same is hereby AFFIRMED.
SO ORDERED. (Emphasis supplied)
Petitioner's Motion for Reconsideration of the Court of Appeals decision having been denied, she filed
the present petition which proffers that:
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY
NOT IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THIS HONORABLE
COURT.
THE COURT OF APPEALS HAS DEPARTED FROM THE ACCEPTED AND USUAL
COURSE OF JUDICIAL PROCEEDINGS IN AFFIRMING THE TRIAL COURT'S
DECISION DATED OCTOBER 4, 1996 AND IN ISSUING THE RESOLUTIONS DATED
JUNE 29, 2000 AND FEBRUARY 9, 2001.
The petition fails.
It is well-entrenched doctrine that questions of fact are not proper subjects of appeal by certiorari under
Rule 45 of the Rules of Court as this mode of appeal is confined to questions of law. 5 The test of
whether the question is one of law or of fact is whether the appellate court can determine the issue
raised without reviewing or evaluating the evidence, in which case it is a question of law; otherwise,
it is question of fact.6
In the case at bar, the only issue before this Court is whether or not the appellate court and the trial
court erred in finding that respondent is not unsuitable for appointment as guardian of the person and
properties of Julieta. In support of an affirmative answer, petitioner posits as follows:
1. The Court of Appeals' basis for its decision that there are no antagonistic interests between
[her] and [respondent] is contrary to the evidence on record, 7
2. The Court of Appeals' erred in holding that there is no showing that [respondent] is hostile
to the best interest of Julieta,8 and
3. Julieta Ledesma's appointed representatives are most suitable to be appointed as her
guardian.9
Clearly, the issues raised and arguments in support of petitioner's position require a review of the
evidence, hence, not proper for consideration in the petition at bar. This Court cannot thus be tasked to
go over the proofs presented by the parties and analyze, assess, and weigh them to ascertain if the trial
court and appellate court were correct in according them superior credit. 10
That the issues raised are factual is in fact admitted by petitioner in her Reply dated August 30, 2001: 11
Although the general rule is that this Honorable Court is not a trier of facts, its jurisdiction
being limited to reviewing and revising only errors of law, it is nonetheless subject to the
following exceptions which have been laid down in a number of decisions of this Honorable
Court:
(1) When the conclusion is a finding grounded entirely on speculation, surmises and
conjectures; (2) When the inference made is manifestly mistaken, absurd or
impossible; (3) When there is grave abuse of discretion; (4) When the judgment is
based on a misapprehension of facts; (5) When the findings of facts are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellants and appellee; (7)
When the findings of the Court of Appeals are contrary to those of the trial court;
(8) When the findings of facts are conclusions without citation of specific evidence
on which they are based; (9) When the facts set forth in the petition as well as in the
petitioners' main and reply briefs are not disputed by the respondents; and (10) When
the findings of fact of the Court of Appeals is premised on the supposed absence of
evidence and is contradicted by the evidence on record (Emphasis supplied); (Rollo,
350–351)
Petitioner claims that "there is no doubt that the instant petition falls within the above-stated exceptions
because the findings of the Court of Appeals are clearly belied by the evidence on record."12
In the selection of a guardian, a large discretion must be allowed the judge who deals directly with the
parties.13 As this Court said:
As a rule, when it appears that the judge has exercised care and diligence in selecting the guardian, and
has given due consideration to the reasons for and against his action which are urged by the interested
parties, his action should not be disturbed unless it is made very clear that he has fallen into
grievous error.14
In the case at bar, petitioner has not shown that the lower courts committed any error.
Petitioner cannot rely on Garchitorena v. Sotelo15 with respect to the existence of antagonistic interests
between respondent and Julieta. In that case, the interest of Perfecto Gabriel as creditor and mortgagee
of the minor-wards' properties (a house and lot) is antagonistic to the interest of the wards as
mortgagors, hence, Gabriel's appointment as guardian was erroneous. For while he sought to foreclose
the wards' properties as creditor and mortgagee on one hand, he had to, on the other hand, endeavor to
retain them for the wards as their guardian. Added to that was Gabriel's appointment as guardian
without him informing the guardianship court that he held a mortgage on the properties. Furthermore,
he deliberately misinformed the said court that the first mortgagee was the Santa Clara Monastery
when it was him. None of the said circumstances obtain in the present case.
Petitioner can neither rely on certain letters of Julieta to establish her claim that there existed16 a rift
between the two which amounts to antagonistic interests. The first letter 17 sent by Julieta to respondent
which reads:
x x x So if you (appellee) do not agree with me (Julieta) my decision is right to let us divide as
soon as possible, so we will have capital each of us to work, and keep the Hda, for [sic]
generation to generation.
xxx xxx xxx
For the last time I will repeat even if I have to kneel before you and Carlos I have no interest
anymore in any future investment due to my age and being single and alone in life. I would
like to be able to enjoy whatever monies that correspond to me. I would like to have enough
money as a reserve for any future need that I might have like hospitalization, travel, buying
whatever I like, etc. etc. (Letter to appellee; Exhibit "2")
merely shows Julieta's lack of interest in future investments, not necessarily a business disagreement,
and certainly not per se amounting to antagonistic interests between her and respondent to render the
latter unsuitable for appointment as guardian.
The second letter18 which reads:
My mind is still clear to tell you about Fortuna when I had my stroke I was confined in
MMC for one month. If I am not mistaken you did not visit me. One day Carlos came to
 visit me and asked me this question. Do you think you will be able to continue managing the The claim that respondent is hostile to the best interests of Julieta also lacks merit. That respondent
Hda? I answered him I don't know it all depends on my sickness. Carlos said who do you removed Julieta from the Makati Medical Center where she was confined after she suffered a stroke
want to take your place? I said I want Cheling Zabaljauregui. Then Carlos said O.K. He asked does not necessarily show her hostility towards Julieta, given the observation by the trial court, cited in
Pilar can you contact Cheling? Tell him to call me or see me. The nephew of Cheling was a the present petition, that Julieta was still placed under the care of doctors 22 after she checked out and
resident in MMC through him Pilar was able to contact Cheling and gave him Carlo's was returned to the hospital when she suffered another stroke.
message. So I thought all the time it was agreeable. I left for USA for treatment. To my
surprise when I came back from USA it was not Cheling, but you (appellee) took over Finally, this Court notes two undisputed facts in the case at bar, to wit: 1) Petitioner opposed the
the management as you requested. Carlos did not tell me but decided in your favor. . . . petition for the appointment of respondent as guardian before the trial court because, among other
(Letter to appellee; Exhibit "3"; emphasis supplied) reasons, she felt she was disliked by respondent,23 a ground which does not render respondent
unsuitable for appointment as guardian, and 2) Petitioner concealed the deteriorating state of mind of
shows that: 1) respondent did not visit Julieta when she was confined at the Makati Medical Center on Julieta before the trial court, 24 which is reflective of a lack of good faith.
account of her stroke, 2) there was disagreement as to who should run the hacienda, with Julieta
favoring a certain Cheling Zabaljaurigue, and 3) respondent took over management of the hacienda Discussion of the third argument is unnecessary, the suitability of Amparo for appointment as guardian
with their brother Carlos (Ledesma) supporting her. No inference as to the existence of antagonistic not having been successfully contested.
interests between respondent and Julieta can thus be made.
ACCORDINGLY, for lack of merit, the petition is hereby DISMISSED.
The third letter19 which reads:
SO ORDERED.
. . . Carlos went to the house before I left and asked from me twenty thousand (20,000) shares
of San Carlos Milling which you gave because I wanted to sell all. . . . If he does not sell or
cannot sell, just arrange to send them back to me. Amparing since I came here to America and
Vancouver my requests have been ignored. Everyone is suspecting that Pilar is the one
ordering or commanding me that is not true. What I asked from Julio is just to report to me or
send me reports so I can follow up from here. But up to now he has ignored my requests x x x
. (Letter to appellee Exhibit "4")

has no relevance to the issue of whether or not the lower courts erred in finding that respondent is not
unsuitable for appointment as guardian. The letter in fact discloses, that it was Julieta's nephew Julio
Ledesma, and not respondent, who ignored the "request."

As for the fourth letter20 which reads:

I want all of you to know that whatever decision now and in the future I want to do nobody
can stop me especially regarding my properties, money, etc. I will be the only one to dispose
of it because it is mine. You said to Raul you are going to court, you are most welcome x x x .
(Letter to Connie, Exhibit "5")

it has also no relevance to the issue in the case at bar. The letter is not even addressed to respondent but
to a certain Connie (a sister-in-law of Julieta).

Petitioner's assertion that respondent's intent in instituting the guardianship proceedings is to take
control of Julieta's properties and use them for her own benefit21 is purely speculative and finds no
support from the records.
 G.R. No. 110427 February 24, 1997
The Incompetent, CARMEN CAÑIZA, represented by her legal guardian, AMPARO
EVANGELISTA, petitioner,
vs.
COURT OF APPEALS (SPECIAL FIRST DIVISION), PEDRO ESTRADA and his wife,
LEONORA ESTRADA, respondents.
NARVASA, C.J.:
On November 20, 1989, being then ninety-four (94) years of age, Carmen Cañiza, a spinster, a retired
pharmacist, and former professor of the College of Chemistry and Pharmacy of the University of the
Philippines, was declared incompetent by judgment1 of the Regional Trial Court of Quezon City,
Branch 107,2 in a guardianship proceeding instituted by her niece, Amparo A. Evangelista.3 She was so
adjudged because of her advanced age and physical infirmities which included cataracts in both eyes
and senile dementia. Amparo A. Evangelista was appointed legal guardian of her person and estate.
Cañiza was the owner of a house and lot at No. 61 Tobias St., Quezon City. On September 17, 1990,
her guardian Amparo Evangelista commenced a suit in the Metropolitan Trial Court (MetroTC) of
Quezon City (Branch 35) to eject the spouses Pedro and Leonora Estrada from said premises. 4 The
complaint was later amended to identify the incompetent Cañiza as plaintiff, suing through her legal
guardian, Amparo Evangelista.
The amended Complaint5 pertinently alleged that plaintiff Cañiza was the absolute owner of the
property in question, covered by TCT No. 27147; that out of kindness, she had allowed the Estrada
Spouses, their children, grandchildren and sons-in-law to temporarily reside in her house, rent-free;
that Cañiza already had urgent need of the house on account of her advanced age and failing health,
"so funds could be raised to meet her expenses for support, maintenance and medical treatment;" that
through her guardian, Cañiza had asked the Estradas verbally and in writing to vacate the house but
they had refused to do so; and that "by the defendants' act of unlawfully depriving plaintiff of the
possession of the house in question, they . . (were) enriching themselves at the expense of the
incompetent, because, while they . . (were) saving money by not paying any rent for the house, the
incompetent . . (was) losing much money as her house could not be rented by others." Also alleged was
that the complaint was "filed within one (1) year from the date of of first letter of demand dated
February 3, 1990."
In their Answer with Counterclaim, the defendants declared that they had been living in Cañiza's house
since the 1960's; that in consideration of their faithful service they had been considered by Cañiza as
her own family, and the latter had in fact executed a holographic will on September 4, 1988 by which
she "bequeathed" to the Estradas the house and lot in question.
Judgment was rendered by the MetroTC on April 13, 1992 in Cañiza's favor, 6 the Estradas being
ordered to vacate the premises and pay Cañiza P5,000.00 by way of attorney's fees.
But on appeal,8 the decision was reversed by the Quezon City Regional Trial Court, Branch 96. 9 By
judgment rendered on October 21, 1992, 10 the RTC held that the "action by which the issue of
defendants' possession should be resolved is accion publiciana, the obtaining factual and legal
situation . . demanding adjudication by such plenary action for recovery of possession cognizable in
the first instance by the Regional Trial Court."
Cañiza sought to have the Court of Appeals reverse the decision of October 21, 1992, but failed in that
attempt. In a decision 11 promulgated on June 2, 1993, the Appellate Court 12 affirmed the RTC's
judgment in toto. It ruled that (a) the proper remedy for Cañiza was indeed an accion publiciana in the
RTC, not an accion interdictal in the MetroTC, since the "defendants have not been in the subject
premises as mere tenants or occupants by tolerance, they have been there as a sort of adopted family of
Carmen Cañiza," as evidenced by what purports to be the holographic will of the plaintiff; and (b)
while "said will, unless and until it has passed probate by the proper court, could not be the basis of
defendants' claim to the property, . . it is indicative of intent and desire on the part of Carmen Cañiza
that defendants are to remain and are to continue in their occupancy and possession, so much so that
Cañiza's supervening incompetency can not be said to have vested in her guardian the right or authority
to drive the defendants out." 13
Through her guardian, Cañiza came to this Court praying for reversal of the Appellate Court's
judgment. She contends in the main that the latter erred in (a) holding that she should have pursued
an accion publiciana, and not an accion interdictal; and in (b) giving much weight to "a xerox copy of
an alleged holographic will, which is irrelevant to this case." 14
In the responsive pleading filed by them on this Court's requirement, 15 the Estradas insist that the case
against them was really not one of unlawful detainer; they argue that since possession of the house had
not been obtained by them by any "contract, express or implied," as contemplated by Section 1, Rule
70 of the Rules of Court, their occupancy of the premises could not be deemed one "terminable upon
mere demand (and hence never became unlawful) within the context of the law." Neither could the suit
against them be deemed one of forcible entry, they add, because they had been occupying the property
with the prior consent of the "real owner," Carmen Cañiza, which "occupancy can even ripen into full
ownership once the holographic will of petitioner Carmen Cañiza is admitted to probate." They
conclude, on those postulates, that it is beyond the power of Cañiza's legal guardian to oust them from
the disputed premises.
Carmen Cañiza died on March 19, 1994, 16 and her heirs — the aforementioned guardian, Amparo
Evangelista, and Ramon C. Nevado, her niece and nephew, respectively — were by this Court's leave,
substituted for her. 17
Three issues have to be resolved: (a) whether or not an ejectment action is the appropriate judicial
remedy for recovery of possession of the property in dispute; (b) assuming desahucio to be proper,
whether or not Evangelista, as Cañiza's legal guardian had authority to bring said action; and (c)
assuming an affirmative answer to both questions, whether or not Evangelista may continue to
represent Cañiza after the latter's death.
I
It is axiomatic that what determines the nature of an action as well as which court has jurisdiction over
it, are the allegations of the complaint and the character of the relief sought. 18 An inquiry into the
averments of the amended complaint in the Court of origin is thus in order. 19
The amended Complaint alleges: 20
6. That the plaintiff Carmen Cañiza, is the sole and absolute owner of a house and lot
at No. 61 Scout Tobias, Quezon City, which property is now the subject of this
complaint;
xxx xxx xxx
9. That the defendants, their children, grandchildren and sons-in-law, were allowed
to live temporarily in the house of plaintiff Carmen Cañiza, for free, out of her
kindness;
10. That the plaintiff, through her legal guardian, has duly notified the defendants,
for them to vacate the said house, but the two (2) letters of demand were ignored and
the defendants refused to vacate the same. . .
11. That the plaintiff, represented by her legal guardian, Amparo Evangelista, made
another demand on the defendants for them to vacate the premises, before Barangay
Captain Angelina A. Diaz of Barangay Laging Handa, Quezon City, but after two (2)
conferences, the result was negative and no settlement was reached. A photocopy of
the Certification to File Action dated July 4, 1990, issued by said Barangay Captain
is attached, marked Annex "D" and made an integral part hereof;
12. That the plaintiff has given the defendants more than thirty (30) days to vacate
the house, but they still refused to vacate the premises, and they are up to this time
residing in the said place;
13. That this complaint is filed within one (1) year from the date of first letter of
demand dated February 3, 1990 (Annex "B") sent by the plaintiff to the defendants,
by her legal guardian — Amparo Evangelista;
14. By the defendants' act of unlawfully depriving the plaintiff of the possession of
the house in question, they are enriching themselves at the expense of the
incompetent plaintiff because, while they are saving money by not paying any rent
for the house, the plaintiff is losing much money as her house could not be rented by
others;
15. That the plaintiff's health is failing and she needs the house urgently, so that
funds could be raised to meet her expenses for her support, maintenance and medical
treatment;
16. That because of defendants' refusal to vacate the house at No. 61 Scout Tobias,
Quezon City, the plaintiff, through her legal guardian, was compelled to go to court
for justice, and she has to spend P10,000.00 as attorney's fees.
Its prayer 21 is quoted below:
WHEREFORE, in the interest of justice and the rule of law, plaintiff, Carmen
Cañiza, represented by her legal guardian, Amparo Evangelista, respectfully prays
to this Honorable Court, to render judgment in favor of plaintiff and against the
defendants as follows:
1. To order the defendants, their children, grandchildren, sons-in-law and other
persons claiming under them, to vacate the house and premises at No. 6 1 Scout
Tobias, Quezon City, so that its possession can be restored to the plaintiff Carmen
Cañiza; and
2. To pay attorney's fees in the amount of P10,000.00;
3. To pay the costs of the suit.
In essence, the amended complaint states:
1) that the Estradas were occupying Cañiza's house by tolerance — having been
"allowed to live temporarily . . (therein) for free, out of . . (Cañiza's) kindness;"
2) that Cañiza needed the house "urgently" because her "health . . (was) failing and
she . . (needed) funds . . to meet her expenses for her support, maintenance and
medical treatment;"
3) that through her general guardian, Cañiza requested the Estradas several times,
orally and in writing, to give back possession of the house;
4) that the Estradas refused and continue to refuse to give back the house to Cañiza,
to her continuing prejudice; and
5) that the action was filed within one (1) year from the last demand to vacate.
Undoubtedly, a cause of action for desahucio has been adequately set out. It is settled that in an action
for unlawful detainer, it suffices to allege that the defendant is unlawfully withholding possession from
the plaintiff is deemed sufficient, 22 and a complaint for unlawful detainer is sufficient if it alleges that
the withholding of possession or the refusal to vacate is unlawful without necessarily employing the
terminology of the law. 23
The Estradas' first proffered defense derives from a literal construction of Section 1, Rule 70 of the
Rules of Court which inter alia authorizes the institution of an unlawful detainer suit when "the
possession of any land or building is unlawfully withheld after the expiration or termination of the
right to hold possession, by virtue of any contract, express or implied." They contend that since they
did not acquire possession of the property in question "by virtue of any contract, express or implied"
— they having been, to repeat, "allowed to live temporarily . . (therein) for free, out of . . (Cañiza's)
kindness" — in no sense could there be an "expiration or termination of . . (their) right to hold
possession, by virtue of any contract, express or implied." Nor would an action for forcible entry lie
against them, since there is no claim that they had "deprived (Cañiza) of the possession of . . (her
property) by force, intimidation, threat, strategy, or stealth.
The argument is arrant sophistry. Cañiza's act of allowing the Estradas to occupy her house, rent-free,
did not create a permanent and indefeasible right of possession in the latter's favor. Common sense,
and the most rudimentary sense of fairness clearly require that that act of liberality be implicitly, but no
less certainly, accompanied by the necessary burden on the Estradas of returning the house to Cañiza
upon her demand. More than once has this Court adjudged that a person who occupies the land of
another at the latter's tolerance or permission without any contract between them is necessarily bound
by an implied promise that he will vacate upon demand, failing which a summary action for ejectment
is the proper remedy against him. 24 The situation is not much different from that of a tenant whose
lease expires but who continues in occupancy by tolerance of the owner, in which case there is deemed
to be an unlawful deprivation or withholding of possession as of the date of the demand to vacate. 25 In
other words, one whose stay is merely tolerated becomes a deforciant illegally occupying the land or
property the moment he is required to leave. 26 Thus, in Asset Privatization Trust vs. Court of
Appeals, 27 where a company, having lawfully obtained possession of a plant upon its undertaking to
buy the same, refused to return it after failing to fulfill its promise of payment despite demands, this
Court held that "(a)fter demand and its repudiation, . . (its) continuing possession . . became illegal and
the complaint for unlawful detainer filed by the
. . (plant's owner) was its proper remedy.
It may not be amiss to point out in this connection that where there had been more than one demand to
vacate, the one-year period for filing the complaint for unlawful detainer must be reckoned from the
date of the last demand, 28the reason being that the lessor has the option to waive his right of action
based on previous demands and let the lessee remain meanwhile in the premises. 29 Now, the complaint
filed by Cañiza's guardian alleges that the same was "filed within one (1) year from the date of the first
letter of demand dated February 3, 1990." Although this averment is not in accord with law because
there is in fact a second letter of demand to vacate, dated February 27, 1990, the mistake is
inconsequential, since the complaint was actually filed on September 17, 1990, well within one year
from the second (last) written demand to vacate.
The Estradas' possession of the house stemmed from the owner's express permission. That permission
was subsequently withdrawn by the owner, as was her right; and it is immaterial that the withdrawal
was made through her judicial guardian, the latter being indisputably clothed with authority to do so.
Nor is it of any consequence that Carmen Cañiza had executed a will bequeathing the disputed
property to the Estradas; that circumstance did not give them the right to stay in the premises after
demand to vacate on the theory that they might in future become owners thereof, that right of
ownership being at best inchoate, no transfer of ownership being possible unless and until the will is
duly probated.
Thus, at the time of the institution of the action of desahucio, the Estradas had no legal right to the
property, whether as possessors by tolerance or sufferance, or as owners. They could not claim the
right of possession by sufferance; that had been legally ended. They could not assert any right of
possession flowing from their ownership of the house; their status as owners is dependent on the
probate of the holographic will by which the property had allegedly been bequeathed to them — an
event which still has to take place; in other words, prior to the probate of the will, any assertion of
possession by them would be premature and inefficacious.
In any case, the only issue that could legitimately be raised under the circumstances was that involving
the Estradas' possession by tolerance, i.e., possession de facto, not de jure. It is therefore incorrect to
postulate that the proper remedy for Cañiza is not ejectment but accion publiciana, a plenary action in
the RTC or an action that is one for recovery of the right to possession de jure.
II
The Estradas insist that the devise of the house to them by Cañiza clearly denotes her intention that
they remain in possession thereof, and legally incapacitated her judicial guardian, Amparo Evangelista,
from evicting them therefrom, since their ouster would be inconsistent with the ward's will.
A will is essentially ambulatory; at any time prior to the testator's death, it may be changed or
revoked; 30 and until admitted to probate, it has no effect whatever and no right can be claimed
thereunder, the law being quite explicit: "No will shall pass either real or personal property unless it is
proved and allowed in accordance with the Rules of Court" (ART. 838, id.). 31 An owner's intention to
confer title in the future to persons possessing property by his tolerance, is not inconsistent with the
former's taking back possession in the meantime for any reason deemed sufficient. And that in this
case there was sufficient cause for the owner's resumption of possession is apparent: she needed to
generate income from the house on account of the physical infirmities afflicting her, arising from her
extreme age.
Amparo Evangelista was appointed by a competent court the general guardian of both the person and
the estate of her aunt, Carmen Cañiza. Her Letters of Guardianship 32 dated December 19, 1989 clearly
installed her as the "guardian over the person and properties of the incompetent CARMEN CANIZA
with full authority to take possession of the property of said incompetent in any province or provinces
in which it may be situated and to perform all other acts necessary for the management of her
properties . . " 33 By that appointment, it became Evangelista's duty to care for her aunt's person, to
attend to her physical and spiritual needs, to assure her well-being, with right to custody of her person
in preference to relatives and friends. 34 It also became her right and duty to get possession of, and
exercise control over, Cañiza's property, both real and personal, it being recognized principle that the
ward has no right to possession or control of his property during her incompetency. 35 That right to
manage the ward's estate carries with it the right to take possession thereof and recover it from anyone
who retains it, 36 and bring and defend such actions as may be needful for this purpose. 37
Actually, in bringing the action of desahucio, Evangelista was merely discharging the duty to attend to To be sure, an ejectment case survives the death of a party. Cañiza's demise did not extinguish
"the comfortable and suitable maintenance of the ward" explicitly imposed on her by Section 4, Rule the desahucio suit instituted by her through her guardian. 42 That action, not being a purely personal
96 of the Rules of Court, viz.: one, survived her death; her heirs have taken her place and now represent her interests in the appeal at
bar.
Sec. 4. Estate to be managed frugally, and proceeds applied to maintenance of ward.
— A guardian must manage the estate of his ward frugally and without waste, and WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals promulgated on June
apply the income and profits thereof, so far as maybe necessary, to the comfortable 2, 1993 — affirming the Regional Trial Court's judgment and dismissing petitioner's petition
and suitable maintenance of the ward and his family, if there be any; and if such for certiorari — is REVERSED and SET ASIDE, and the Decision dated April 13, 1992 of the
income and profits be insufficient for that purpose, the guardian may sell or Metropolitan Trial Court of Quezon City, Branch 35, in Civil Case No. 3410 is REINSTATED and
encumber the real estate, upon being authorized by order to do so, and apply to such AFFIRMED. Costs against private respondents.
of the proceeds as may be necessary to such maintenance.
SO ORDERED.
Finally, it may be pointed out in relation to the Estradas's defenses in the ejectment action, that as the
law now stands, even when, in forcible entry and unlawful detainer cases, the defendant raises the
question of ownership in his pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts nevertheless have the undoubted competence to resolve "the issue of ownership . .
only to determine the issue of possession." 38

III

As already stated, Carmen Cañiza passed away during the pendency of this appeal. The Estradas
thereupon moved to dismiss the petition, arguing that Cañiza's death automatically terminated the
guardianship, Amaparo Evangelista lost all authority as her judicial guardian, and ceased to have legal
personality to represent her in the present appeal. The motion is without merit.

While it is indeed well-established rule that the relationship of guardian and ward is necessarily
terminated by the death of either the guardian or the ward, 39 the rule affords no advantage to the
Estradas. Amparo Evangelista, as niece of Carmen Cañiza, is one of the latter's only two (2) surviving
heirs, the other being Cañiza's nephew, Ramon C. Nevado. On their motion and by Resolution of this
Court 40 of June 20, 1994, they were in fact substituted as parties in the appeal at bar in place of the
deceased, in accordance with Section 17, Rule 3 of the Rules of Court, viz.: 41

Sec. 18. Death of a party. — After a party dies and the claim is not thereby
extinguished, the court shall order, upon proper notice, the legal representative of the
deceased to appear and be substituted for the deceased within a period of thirty (30)
days, or within such time as may be granted. If the legal representative fails to appear
within said time, the court may order the opposing party to procure the appointment
of a legal representative of the deceased within a time to be specified by the court,
and the representative shall immediately appear for and on behalf of the interest of
the deceased. The court charges involved in procuring such appointment, if defrayed
by the opposing party, may be recovered as costs. The heirs of the deceased may be
allowed to be substituted for the deceased, without requiring the appointment of an
executor or administrator and the court may appoint guardian ad litemfor the minor
heirs.
 G.R. No. 194366 October 10, 2012
NAPOLEON D. NERI, ALICIA D. NERI-MONDEJAR, VISMINDA D. NERI-CHAMBERS,
ROSA D. NERI-MILLAN, DOUGLAS D. NERI, EUTROPIA D. ILLUT-COCKINOS AND
VICTORIA D. ILLUT-PIALA, Petitioners,
vs.
HEIRS OF HADJI YUSOP UY AND JULPHA* IBRAHIM UY, Respondents.
DECISION
PERLAS-BERNABE, J.:
In this Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, petitioners Napoleon D.
Neri (Napoleon), Alicia D. Neri-Mondejar (Alicia), Visminda D. Neri-Chambers (Visminda), Rosa D.
Neri-Millan (Rosa), Douglas D. Neri (Douglas), Eutropia D. Illut-Cockinos (Eutropia), and Victoria D.
Illut-Piala (Victoria) seek to reverse and set aside the April 27, 2010 Decision 2 and October 18, 2010
Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 01031-MIN which annulled the October
25, 2004 Decision4 of the Regional Trial Court (RTC) of Panabo City, Davao del Norte and instead,
entered a new one dismissing petitioners’ complaint for annulment of sale, damages and attorney’s
feesagainst herein respondents heirs of spouses Hadji Yusop Uy and Julpha Ibrahim Uy (heirs of Uy).
The Facts
During her lifetime, Anunciacion Neri (Anunciacion) had seven children, two (2) from her first
marriage with Gonzalo Illut (Gonzalo), namely: Eutropia and Victoria, and five (5) from her second
marriage with Enrique Neri (Enrique), namely: Napoleon, Alicia, Visminda, Douglas and Rosa.
Throughout the marriage of spouses Enrique and Anunciacion, they acquired several homestead
properties with a total area of 296,555 square meters located in Samal, Davao del Norte, embraced by
Original Certificate of Title (OCT) Nos. (P-7998) P-21285 , (P-14608) P-51536and P-20551 (P-
8348)7 issued on February 15, 1957, August 27, 1962 and July 7, 1967, respectively.
On September 21, 1977, Anunciacion died intestate. Her husband, Enrique, in his personal capacity
and as natural guardian of his minor children Rosa and Douglas, together with Napoleon, Alicia, and
Vismindaexecuted an Extra-Judicial Settlement of the Estate with Absolute Deed of Sale 8 on July 7,
1979, adjudicating among themselves the said homestead properties, and thereafter, conveying themto
the late spouses Hadji Yusop Uy and Julpha Ibrahim Uy (spouses Uy)for a consideration of ₱
80,000.00.
On June 11, 1996, the children of Enrique filed a complaint for annulment of saleof the said homestead
properties against spouses Uy (later substituted by their heirs)before the RTC, docketed as Civil Case
No.96-28, assailing the validity of the sale for having been sold within the prohibited period.
Thecomplaint was later amended to include Eutropia and Victoriaas additional plaintiffs for having
been excluded and deprived of their legitimes as childrenof Anunciacion from her first marriage.
In their amended answer with counterclaim, the heirs of Uy countered that the sale took place beyond
the 5-year prohibitory period from the issuance of the homestead patents. They also denied knowledge
of Eutropia and Victoria’s exclusionfrom the extrajudicial settlement and sale of the subject properties,
and interposed further the defenses of prescription and laches.
The RTC Ruling
On October 25, 2004, the RTC rendered a decision ordering, among others, the annulment of the
Extra-Judicial Settlement of the Estate with Absolute Deed of Sale. It ruled that while the sale occurred
beyond the 5-year prohibitory period, the sale is still void because Eutropia and Victoria were deprived
of their hereditary rights and that Enrique had no judicial authority to sell the shares of his minor
children, Rosa and Douglas.
Consequently, it rejected the defenses of laches and prescription raised by spouses Uy, who claimed
possession of the subject properties for 17 years, holding that co-ownership rights are imprescriptible.
The CA Ruling
On appeal, the CAreversed and set aside the ruling of the RTC in its April 27, 2010 Decision and
dismissed the complaint of the petitioners. It held that, while Eutropia and Victoria had no knowledge
of the extrajudicial settlement and sale of the subject properties and as such, were not bound by it, the
CA found it unconscionable to permit the annulment of the sale considering spouses Uy’s possession
thereof for 17 years, and thatEutropia and Victoriabelatedlyfiled their actionin 1997, ormore than two
years fromknowledge of their exclusion as heirs in 1994 when their stepfather died. It, however, did
not preclude the excluded heirs from recovering their legitimes from their co-heirs.
Similarly, the CA declared the extrajudicial settlement and the subsequent saleas valid and binding
with respect to Enrique and hischildren, holding that as co-owners, they have the right to dispose of
their respective shares as they consider necessary or fit.While recognizing Rosa and Douglas to be
minors at that time, they were deemed to have ratified the sale whenthey failed to question it upon
reaching the age of majority.Italso found laches to have set in because of their inaction for a long
period of time.
The Issues
In this petition, petitioners imputeto the CA the following errors:
I. WHEN IT UPHELDTHE VALIDITY OF THE "EXTRA JUDICIAL SETTLEMENT OF THE
ESTATE WITH ABSOLUTE DEED OF SALE" AS FAR AS THE SHARES OF EUTROPIA AND
VICTORIA WERE CONCERNED, THEREBY DEPRIVING THEM OF THEIR INHERITANCE;
II. WHEN IT DID NOT NULLIFY OR ANNUL THE "EXTRA JUDICIAL SETTLEMENT OF THE
ESTATE WITH ABSOLUTE DEED OF SALE" WITH RESPECT TO THE SHARESOF ROSA
AND DOUGLAS, THEREBY DEPRIVING THEM OF THEIR INHERITANCE; and
III. WHEN IT FOUND THAT LACHES OR PRESCRIPTION HAS SET IN.
The Ruling of the Court
The petitionis meritorious.
It bears to stress that all the petitioners herein are indisputably legitimate children of Anunciacion from
her first and second marriages with Gonzalo and Enrique, respectively, and consequently, are entitled
to inherit from her in equal shares, pursuant to Articles 979 and 980 of the Civil Code which read:
ART. 979. Legitimate children and their descendants succeed the parents and other ascendants, without
distinction as to sex or age, and even if they should come from different marriages.
xxx
The fact of the extrajudicial settlement or administration shall be published in a newspaper of general
circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall
be binding upon any person who has not participated therein or had no notice thereof. (Underscoring
added)
The effect of excluding the heirs in the settlement of estate was further elucidated in Segura v.
Segura,10 thus:
It is clear that Section 1 of Rule 74 does not apply to the partition in question which was null and void
as far as the plaintiffs were concerned. The rule covers only valid partitions. The partition in the
present case was invalid because it excluded six of the nine heirs who were entitled to equal shares in
the partitioned property. Under the rule "no extrajudicial settlement shall be binding upon any person
who has not participated therein or had no notice thereof." As the partition was a total nullity and did
not affect the excluded heirs, it was not correct for the trial court to hold that their right to challenge
the partition had prescribed after two years from its execution…

ART. 980. The children of the deceased shall always inherit from him in their own right, dividing the
inheritance in equal shares.
As such, upon the death of Anunciacion on September 21, 1977, her children and Enrique acquired
their respective inheritances,9 entitling them to their pro indiviso shares in her whole estate, as follows:
However, while the settlement of the estate is null and void, the subsequent sale of the subject
propertiesmade by Enrique and his children, Napoleon, Alicia and Visminda, in favor of the
respondents isvalid but only with respect to their proportionate shares therein.It cannot be denied that
these heirs have acquired their respective shares in the properties of Anunciacion from the moment of
her death11 and that, as owners thereof, they can very well sell their undivided share in the estate. 12

Enrique 9/16 (1/2 of the conjugal assets + 1/16) With respect to Rosa and Douglas who were minors at the time of the execution of the settlement and
sale, their natural guardian and father, Enrique, represented them in the transaction. However, on the
Eutropia 1/16 basis of the laws prevailing at that time, Enrique was merely clothed with powers of administration and
Victoria 1/16 bereft of any authority to dispose of their 2/16 shares in the estate of their mother, Anunciacion.

Napoleon 1/16
Articles 320 and 326 of the Civil Code, the laws in force at the time of the execution of the settlement
Alicia 1/16 and sale, provide:
Visminda 1/16
ART. 320. The father, or in his absence the mother, is the legal administrator of the property pertaining
Rosa 1/16 to the child under parental authority. If the property is worth more than two thousand pesos, the father
Douglas 1/16 or mother shall give a bond subject to the approval of the Court of First Instance.

Hence, in the execution of the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale in
favor of spouses Uy, all the heirs of Anunciacionshould have participated. Considering that Eutropia
and Victoria were admittedly excluded and that then minors Rosa and Douglas were not properly
represented therein, the settlement was not valid and binding uponthem and consequently, a total
nullity.
Section 1, Rule 74 of the Rules of Court provides:
SECTION 1. Extrajudicial settlement by agreement between heirs. – x x x
ART. 326. When the property of the child is worth more than two thousand pesos, the father or mother
shall be considered a guardian of the child’s property, subject to the duties and obligations of guardians
under the Rules of Court.
Corollarily, Section 7, Rule 93 of the Rules of Court also provides:
SEC. 7. Parents as Guardians. – When the property of the child under parental authority is worth two
thousand pesos or less, the father or the mother, without the necessity of court appointment, shall be
his legal guardian. When the property of the child is worth more than two thousand pesos, the father or
the mother shall be considered guardian of the child’s property, with the duties and obligations of
guardians under these Rules, and shall file the petition required by Section 2 hereof. For good reasons,
the court may, however, appoint another suitable persons.
Administration includes all acts for the preservation of the property and the receipt of fruits according
to the natural purpose of the thing. Any act of disposition or alienation, or any reduction in the
substance of the patrimony of child, exceeds the limits of administration. 13 Thus, a father or mother, as
the natural guardian of the minor under parental authority, does not have the power to dispose or
encumber the property of the latter. Such power is granted by law only to a judicial guardian of the
ward’s property and even then only with courts’ prior approval secured in accordance with the
proceedings set forth by the Rules of Court.14
Consequently, the disputed sale entered into by Enrique in behalf of his minor children without the
proper judicial authority, unless ratified by them upon reaching the age of majority, 15 is unenforceable
in accordance with Articles 1317 and 1403(1) of the Civil Code which provide:
ART. 1317. No one may contract in the name of another without being authorized by the latter or
unless he has by law a right to represent him.
A contract entered into in the name of another by one who has no authority or legal representation, or
who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly,
by the person on whose behalf it has been executed, before it is revoked by the other contracting party.
ART. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into the name of another person by one who has been given no authority or legal
representation, or who has acted beyond his powers;
xxx
Ratification means that one under no disability voluntarily adopts and gives sanction to some
unauthorized act or defective proceeding, which without his sanction would not be binding on him. It
is this voluntary choice, knowingly made, which amounts to a ratification of what was theretofore
unauthorized, and becomes the authorized act of the party so making the ratification. 16 Once ratified,
expressly or impliedly such as when the person knowingly received benefits from it, the contract is
cleansed from all its defects from the moment it was constituted, 17 as it has a retroactive effect.
Records, however, show that Rosa had ratified the extrajudicial settlement of the estate with absolute
deed of sale. In Napoleon and Rosa’s Manifestation18 before the RTC dated July 11, 1997,they stated:
"Concerning the sale of our parcel of land executed by our father, Enrique Neri concurred in and
conformed to by us and our other two sisters and brother (the other plaintiffs), in favor of Hadji Yusop
Uy and his spouse Hadja Julpa Uy on July 7, 1979, we both confirmed that the same was voluntary and
freely made by all of us and therefore the sale was absolutely valid and enforceable as far as we all
plaintiffs in this case are concerned;" (Underscoring supplied)
In their June 30, 1997 Joint-Affidavit,19 Napoleon and Rosa also alleged:
"That we are surprised that our names are included in this case since we do not have any intention to
file a case against Hadji Yusop Uy and Julpha Ibrahim Uy and their family and we respect and
acknowledge the validity of the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale
dated July 7, 1979;" (Underscoring supplied)
Clearly, the foregoing statements constitutedratification of the settlement of the estate and the
subsequent sale, thus, purging all the defects existing at the time of its execution and legitimizing the
conveyance of Rosa’s 1/16 share in the estate of Anunciacion to spouses Uy. The same, however, is
not true with respect to Douglas for lack of evidence showing ratification.
Considering, thus, that the extrajudicial settlement with sale is invalid and therefore, not binding on
Eutropia, Victoria and Douglas, only the shares ofEnrique, Napoleon, Alicia, Visminda and Rosa in
the homestead properties have effectivelybeen disposed in favor of spouses Uy. "A person can only
sell what he owns, or is authorized to sell and the buyer can as a consequence acquire no more than
what the sellercan legally transfer."20 On this score, Article 493 of the Civil Codeis relevant, which
provides:
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.
Consequently, spouses Uy or their substituted heirs became pro indiviso co-owners of the homestead
properties with Eutropia, Victoria and Douglas, who retained title to their respective 1/16 shares. They
were deemed to be holding the 3/16 shares of Eutropia, Victoria and Douglas under an implied
constructive trust for the latter’s benefit, conformably with Article 1456 of the Civil Code which
states:"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."
As such, it is only fair, just and equitable that the amount paid for their shares equivalent to ₱
5,000.0021 each or a total of ₱ 15,000.00 be returned to spouses Uy with legal interest.
On the issue of prescription, the Court agrees with petitioners that the present action has not prescribed
in so far as it seeks to annul the extrajudicial settlement of the estate. Contrary to the ruling of the CA,
the prescriptive period of 2 years provided in Section 1 Rule 74 of the Rules of
Court reckoned from the execution of the extrajudicial settlement finds no application to petitioners
Eutropia, Victoria and Douglas, who were deprived of their lawful participation in the subject estate.
Besides, an "action or defense for the declaration of the inexistence of a contract does not prescribe" in
accordance with Article 1410 of the Civil Code.
However, the action to recover property held in trust prescribes after 10 years from the time the cause
of action accrues,22 which is from the time of actual notice in case of unregistered deed. 23 In this case,
Eutropia, Victoria and Douglas claimed to have knowledge of the extrajudicial settlement with sale
after the death of their father, Enrique, in 1994 which spouses Uy failed to refute. Hence, the complaint
filed in 1997 was well within the prescriptive period of 10 years.

WHEREFORE, the instant petition is GRANTED. The April 27, 2010 Decision and October 18,
2010 Resolution of the Court of Appeals are REVERSED and SET ASIDE and a new judgment is
entered:

1. Declaring the Extra-Judicial Settlement of the Estate of Anunciacion

Neri NULL and VOID;

2. Declaring the Absolute Deed of Sale in favor of the late spouses Hadji Yusop Uy and
Julpha Ibrahim Uy as regards the 13/16 total shares of the late Enrique Neri, Napoleon Neri,
Alicia D. Neri-Mondejar, Visminda D. Neri-Chambers and Rosa D. Neri-Millan VALID;

3. Declaring Eutropia D. Illut-Cockinos, Victoria D. Illut-Piala and Douglas D. Neri as

the LAWFUL OWNERSof the 3/16 portions of the subject homestead properties, covered by
Original Certificate of Title Nos. (P-7998) P-2128, (P-14608) P-5153 and P-20551 (P-8348);
and

4. Ordering the estate of the late Enrique Neri, as well as Napoleon Neri, Alicia D. Neri-
Mondejar, Visminda D. Neri-Chambers and Rosa D. Neri-Millan to return to the respondents
jointly and solidarily the amount paid corresponding to the 3/16 shares of Eutropia, Victoria
and Douglas in the total amount of ₱ 15,000.00, with legal interest at 6% per annum
computed from the time of payment until finality of this decision and 12% per annum
thereafter until fully paid.

No pronouncement as to costs.

SO ORDERED.
 G.R. No. 184528 April 25, 2012
NILO OROPESA, Petitioner,
vs.
CIRILO OROPESA, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure of the
Decision1 dated February 29, 2008, as well as the Resolution2 dated September 16, 2008, both rendered
by the Court of Appeals in CA-G.R. CV No. 88449, entitled "NILO OROPESA vs. CIRILO
OROPESA." The Court of Appeals’ issuances affirmed the Order 3 dated September 27, 2006 and the
Order4 dated November 14, 2006 issued by the Regional Trial Court (RTC) of Parañaque City, Branch
260 in SP. Proc. Case No. 04-0016, which dismissed petitioner Nilo Oropesa’s petition for
guardianship over the properties of his father, respondent Cirilo Oropesa (a widower), and denied
petitioner’s motion for reconsideration thereof, respectively.
The facts of this case, as summed in the assailed Decision, follow:
On January 23, 2004, the (petitioner) filed with the Regional Trial Court of Parañaque City, a petition
for him and a certain Ms. Louie Ginez to be appointed as guardians over the property of his father, the
(respondent) Cirilo Oropesa. The case was docketed as SP Proc. No. 04-0016 and raffled off to Branch
260.
In the said petition, it is alleged among others that the (respondent) has been afflicted with several
maladies and has been sickly for over ten (10) years already having suffered a stroke on April 1, 2003
and June 1, 2003, that his judgment and memory [were] impaired and such has been evident after his
hospitalization; that even before his stroke, the (respondent) was observed to have had lapses in
memory and judgment, showing signs of failure to manage his property properly; that due to his age
and medical condition, he cannot, without outside aid, manage his property wisely, and has become an
easy prey for deceit and exploitation by people around him, particularly Ms. Ma. Luisa Agamata, his
girlfriend.
In an Order dated January 29, 2004, the presiding judge of the court a quo set the case for hearing, and
directed the court social worker to conduct a social case study and submit a report thereon.
Pursuant to the abovementioned order, the Court Social Worker conducted her social case study,
interviewing the (petitioner) and his witnesses. The Court Social Worker subsequently submitted her
report but without any finding on the (respondent) who refused to see and talk to the social worker.
On July 6, 2004, the (respondent) filed his Opposition to the petition for guardianship. On August 3,
2004, the (respondent) filed his Supplemental Opposition.
Thereafter, the (petitioner) presented his evidence which consists of his testimony, and that of his sister
Gianina Oropesa Bennett, and the (respondent’s) former nurse, Ms. Alma Altaya.
After presenting evidence, the (petitioner) filed a manifestation dated May 29, 2006 resting his case.
The (petitioner) failed to file his written formal offer of evidence.
Thus, the (respondent) filed his "Omnibus Motion (1) to Declare the petitioner to have waived the
presentation of his Offer of Exhibits and the presentation of his Evidence Closed since they were not
formally offered; (2) To Expunge the Documents of the Petitioner from the Record; and (3) To Grant
leave to the Oppositor to File Demurrer to Evidence.
In an Order dated July 14, 2006, the court a quo granted the (respondent’s) Omnibus Motion.
Thereafter, the (respondent) then filed his Demurrer to Evidence dated July 23, 2006. 5 (Citations
omitted.)
The trial court granted respondent’s demurrer to evidence in an Order dated September 27, 2006. The
dispositive portion of which reads:
WHEREFORE, considering that the petitioner has failed to provide sufficient evidence to establish that
Gen. Cirilo O. Oropesa is incompetent to run his personal affairs and to administer his properties,
Oppositor’s Demurrer to Evidence is GRANTED, and the case is DISMISSED.6
Petitioner moved for reconsideration but this was denied by the trial court in an Order dated November
14, 2006, the dispositive portion of which states:
WHEREFORE, considering that the Court record shows that petitioner-movant has failed to provide
sufficient documentary and testimonial evidence to establish that Gen. Cirilo Oropesa is incompetent
to run his personal affairs and to administer his properties, the Court hereby affirms its earlier Order
dated 27 September 2006.
Accordingly, petitioner’s Motion for Reconsideration is DENIED for lack of merit. 7
Unperturbed, petitioner elevated the case to the Court of Appeals but his appeal was dismissed through
the now assailed Decision dated February 29, 2008, the dispositive portion of which reads:
WHEREFORE, premises considered the instant appeal is DISMISSED. The assailed orders of the
court a quo dated September 27, 2006 and November 14, 2006 are AFFIRMED. 8
A motion for reconsideration was filed by petitioner but this was denied by the Court of Appeals in the
similarly assailed Resolution dated September 16, 2008. Hence, the instant petition was filed.
Petitioner submits the following question for consideration by this Court:
WHETHER RESPONDENT IS CONSIDERED AN "INCOMPETENT" PERSON AS DEFINED
UNDER SECTION 2, RULE 92 OF THE RULES OF COURT WHO SHOULD BE PLACED
UNDER GUARDIANSHIP9
After considering the evidence and pleadings on record, we find the petition to be without merit.
Petitioner comes before the Court arguing that the assailed rulings of the Court of Appeals should be
set aside as it allegedly committed grave and reversible error when it affirmed the erroneous decision
of the trial court which purportedly disregarded the overwhelming evidence presented by him showing
respondent’s incompetence.
In Francisco v. Court of Appeals,10 we laid out the nature and purpose of guardianship in the following
wise:
A guardianship is a trust relation of the most sacred character, in which one person, called a "guardian"
acts for another called the "ward" whom the law regards as incapable of managing his own affairs. A
guardianship is designed to further the ward’s well-being, not that of the guardian. It is intended to
preserve the ward’s property, as well as to render any assistance that the ward may personally require.
It has been stated that while custody involves immediate care and control, guardianship indicates not
only those responsibilities, but those of one in loco parentis as well. 11
In a guardianship proceeding, a court may appoint a qualified guardian if the prospective ward is
proven to be a minor or an incompetent.
A reading of Section 2, Rule 92 of the Rules of Court tells us that persons who, though of sound mind
but by reason of age, disease, weak mind or other similar causes, are incapable of taking care of
themselves and their property without outside aid are considered as incompetents who may properly be
placed under guardianship. The full text of the said provision reads:
Sec. 2. Meaning of the word "incompetent." – Under this rule, the word "incompetent" includes
persons suffering the penalty of civil interdiction or who are hospitalized lepers, prodigals, deaf and
dumb who are unable to read and write, those who are of unsound mind, even though they have lucid
intervals, and persons not being of unsound mind, but by reason of age, disease, weak mind, and other
similar causes, cannot, without outside aid, take care of themselves and manage their property,
becoming thereby an easy prey for deceit and exploitation.
We have held in the past that a "finding that a person is incompetent should be anchored on clear,
positive and definite evidence."12 We consider that evidentiary standard unchanged and, thus, must be
applied in the case at bar.
In support of his contention that respondent is incompetent and, therefore, should be placed in
guardianship, petitioner raises in his Memorandum13 the following factual matters:
a. Respondent has been afflicted with several maladies and has been sickly for over ten (10)
years already;
b. During the time that respondent was hospitalized at the St. Luke’s Medical Center after his
stroke, he purportedly requested one of his former colleagues who was visiting him to file a
loan application with the Armed Forces of the Philippines Savings and Loan Association, Inc.
(AFPSLAI) for payment of his hospital bills, when, as far as his children knew, he had
substantial amounts of money in various banks sufficient to cover his medical expenses;
c. Respondent’s residence allegedly has been left dilapidated due to lack of care and
management;
d. The realty taxes for respondent’s various properties remain unpaid and therefore petitioner
and his sister were supposedly compelled to pay the necessary taxes;
e. Respondent allegedly instructed petitioner to sell his Nissan Exalta car for the reason that
the former would be purchasing another vehicle, but when the car had been sold, respondent
did not procure another vehicle and refused to account for the money earned from the sale of
the old car;
f. Respondent withdrew at least $75,000.00 from a joint account under his name and his
daughter’s without the latter’s knowledge or consent;
g. There was purportedly one occasion where respondent took a kitchen knife to stab himself
upon the "orders" of his girlfriend during one of their fights;
h. Respondent continuously allows his girlfriend to ransack his house of groceries and
furniture, despite protests from his children.14
Respondent denied the allegations made by petitioner and cited petitioner’s lack of material evidence
to support his claims. According to respondent, petitioner did not present any relevant documentary or
testimonial evidence that would attest to the veracity of his assertion that respondent is incompetent
largely due to his alleged deteriorating medical and mental condition. In fact, respondent points out
that the only medical document presented by petitioner proves that he is indeed competent to run his
personal affairs and administer his properties. Portions of the said document, entitled "Report of
Neuropsychological Screening,"15 were quoted by respondent in his Memorandum16 to illustrate that
said report in fact favored respondent’s claim of competence, to wit:
General Oropesa spoke fluently in English and Filipino, he enjoyed and participated meaningfully in
conversations and could be quite elaborate in his responses on many of the test items. He spoke in a
clear voice and his articulation was generally comprehensible. x x x.
xxxx
General Oropesa performed in the average range on most of the domains that were tested. He was able
to correctly perform mental calculations and keep track of number sequences on a task of attention. He
did BEST in visuo-constructional tasks where he had to copy geometrical designs using tiles.
Likewise, he was able to render and read the correct time on the Clock Drawing Test. x x x.
xxxx
x x x Reasoning abilities were generally intact as he was able to suggest effective solutions to problem
situations. x x x.17
With the failure of petitioner to formally offer his documentary evidence, his proof of his father’s
incompetence consisted purely of testimonies given by himself and his sister (who were claiming
interest in their father’s real and personal properties) and their father’s former caregiver (who admitted
to be acting under their direction). These testimonies, which did not include any expert medical
testimony, were insufficient to convince the trial court of petitioner’s cause of action and instead lead it
to grant the demurrer to evidence that was filed by respondent.
Even if we were to overlook petitioner’s procedural lapse in failing to make a formal offer of evidence,
his documentary proof were comprised mainly of certificates of title over real properties registered in
his, his father’s and his sister’s names as co-owners, tax declarations, and receipts showing payment of
real estate taxes on their co-owned properties, which do not in any way relate to his father’s alleged
incapacity to make decisions for himself. The only medical document on record is the aforementioned
"Report of Neuropsychological Screening" which was attached to the petition for guardianship but was
never identified by any witness nor offered as evidence. In any event, the said report, as mentioned
earlier, was ambivalent at best, for although the report had negative findings regarding memory lapses
on the part of respondent, it also contained findings that supported the view that respondent on the
average was indeed competent.
In an analogous guardianship case wherein the soundness of mind of the proposed ward was at issue,
we had the occasion to rule that "where the sanity of a person is at issue, expert opinion is not
necessary [and that] the observations of the trial judge coupled with evidence establishing the person’s
state of mental sanity will suffice."18
Thus, it is significant that in its Order dated November 14, 2006 which denied petitioner’s motion for
reconsideration on the trial court’s unfavorable September 27, 2006 ruling, the trial court highlighted
the fatal role that petitioner’s own documentary evidence played in disproving its case and, likewise,
the trial court made known its own observation of respondent’s physical and mental state, to wit:
The Court noted the absence of any testimony of a medical expert which states that Gen. Cirilo O.
Oropesa does not have the mental, emotional, and physical capacity to manage his own affairs. On the
contrary, Oppositor’s evidence includes a Neuropsychological Screening Report which states that Gen.
Oropesa, (1) performs on the average range in most of the domains that were tested; (2) is capable of
mental calculations; and (3) can provide solutions to problem situations. The Report concludes that
Gen. Oropesa possesses intact cognitive functioning, except for mildly impaired abilities in memory,
reasoning and orientation. It is the observation of the Court that oppositor is still sharp, alert and
able.19 (Citation omitted; emphasis supplied.)
It is axiomatic that, as a general rule, "only questions of law may be raised in a petition for review on
certiorari because the Court is not a trier of facts." 20 We only take cognizance of questions of fact in
certain exceptional circumstances;21 however, we find them to be absent in the instant case. It is also
long settled that "factual findings of the trial court, when affirmed by the Court of Appeals, will not be
disturbed by this Court. As a rule, such findings by the lower courts are entitled to great weight and
respect, and are deemed final and conclusive on this Court when supported by the evidence on
record."22 We therefore adopt the factual findings of the lower court and the Court of Appeals and rule
that the grant of respondent’s demurrer to evidence was proper under the circumstances obtaining in
the case at bar.
Section 1, Rule 33 of the Rules of Court provides:
Section 1. Demurrer to evidence. – After the plaintiff has completed the presentation of his evidence,
the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has
shown no right to relief. If his motion is denied, he shall have the right to present evidence. If the
motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have waived
the right to present evidence.
A demurrer to evidence is defined as "an objection by one of the parties in an action, to the effect that
the evidence which his adversary produced is insufficient in point of law, whether true or not, to make
out a case or sustain the issue."23 We have also held that a demurrer to evidence "authorizes a judgment
on the merits of the case without the defendant having to submit evidence on his part, as he would
ordinarily have to do, if plaintiff’s evidence shows that he is not entitled to the relief
sought."24 1âwphi1
There was no error on the part of the trial court when it dismissed the petition for guardianship without
first requiring respondent to present his evidence precisely because the effect of granting a demurrer to
evidence other than dismissing a cause of action is, evidently, to preclude a defendant from presenting
his evidence since, upon the facts and the law, the plaintiff has shown no right to relief.
WHEREFORE, premises considered, the petition is hereby DENIED. The assailed Decision dated
February 29, 2008 as well as the Resolution dated September 16, 2008 of the Court of Appeals in CA-
G.R. CV No. 88449 are AFFIRMED.
SO ORDERED.
 G.R. No. 191993 December 5, 2012
EDUARDO T. ABAD, Petitioner,
vs.
LEONARDO BIASON and GABRIEL A. MAGNO, Respondents.
RESOLUTION
REYES, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision 1 dated August 28, 2009 and Resolution2 dated April 19, 2010 of the
Court of Appeals (CA) in CA-G.R. CV No; 90145.
The facts show that on March 19, 2007, petitioner Eduardo Abad (Abad) filed a petition for
guardianship over the person and properties of Maura B. Abad (Maura) with the Regional Trial Court
(RTC), Dagupan City, Branch 42, which was docketed as Sp. Proc. No. 2007-0050-D. In support
thereof, Abad alleged that he maintains residence at No. 14 B St. Paul Street, Horseshoe Village,
Quezon City and that he is Maura’s nephew. He averred that Maura, who is single, more than ninety
(90) years old and a resident of Rizal Street, Poblacion, Mangaldan, Pangasinan, is in dire need of a
guardian who will look after her and her business affairs. Due to her advanced age, Maura is already
sickly and can no longer manage to take care of herself and her properties unassisted thus becoming an
easy prey of deceit and exploitation.3
Finding the petition sufficient in form and substance, the RTC gave due course to the same and
scheduled it for hearing. When the petition was called for hearing on April 27, 2007, nobody entered
an opposition and Abad was allowed to present evidence ex parte. After Abad formally offered his
evidence and the case was submitted for decision, Atty. Gabriel Magno filed a Motion for Leave to
Intervene, together with an Oppositionin- Intervention. Subsequently, on June 14, 2007, Leonardo
Biason (Biason) filed a Motion for Leave to File Opposition to the Petition and attached therewith his
Opposition to the Appointment of Eduardo Abad as Guardian of the Person and Properties of Maura B.
Abad. Specifically, Biason alleged that he is also a nephew of Maura and that he was not notified of
the pendency of the petition for the appointment of the latter’s guardian. He vehemently opposed the
appointment of Abad as Maura’s guardian as he cannot possibly perform his duties as such since he
resides in Quezon City while Maura maintains her abode in Mangaldan, Pangasinan. Biason prayed
that he be appointed as Maura’s guardian since he was previously granted by the latter with a power of
attorney to manage her properties.4
On September 26, 2007, the RTC rendered a Decision, 5 denying Abad’s petition and appointing Biason
as Maura’s guardian. The RTC disposed thus:
WHEREFORE, the petition is hereby denied. Petitioner Eduardo T. Abad is found to be disqualified to
act as guardian of incompetent Maura B. Abad. Oppositor Leonardo A. Biason is established by this
Court to be in a better position to be the guardian of said incompetent Maura B. Abad.
The Court hereby fixes the guardianship bond at [P]500,000.00 and the letters of guardianship shall be
issued only upon the submission of the bond, conditioned on the following provisions of the Rule 94[,]
Section 1, of the 1997 Rules of Civil Procedure:
a. To make and return to the Court within three (3) months true and complete inventory of all
the estate, real and personal, of his ward which shall come to his possession or knowledge or
to the possession or knowledge of any other person for him;
b. To faithfully execute the duties of his trust, to manage and dispose of the estate according
to these rules for the best interests of the ward, and to provide for the proper care, custody x x
x of the ward;
c. To render a true and just account of all the estate of the ward in his hands, and of all
proceeds or interest derived therefrom, and of the management and disposition of the same, at
the time designated by these rules and such other times as the court directs, and at the
expiration of his trust to settle his accounts with the court and deliver and pay over all the
estate, effects, and moneys remaining in his hands, or due from him on such settlement, to the
person lawfully entitled thereto;
d. To perform all orders of the court by him to be performed.
SO ORDERED.6
Unyielding, Abad filed a motion for reconsideration of the foregoing decision but the RTC denied the
same in an Order dated December 11, 2007.
Abad filed an appeal to the CA. He argued that the RTC erred in disqualifying him from being
appointed as Maura’s guardian despite the fact that he has all the qualifications stated under the Rules.
That he was not a resident of Mangaldan, Pangasinan should not be a ground for his disqualification as
he had actively and efficiently managed the affairs and properties of his aunt even if he is residing in
Metro Manila. Moreover, he was expressly chosen by Maura to be her guardian. 7
Abad further averred that no hearing was conducted to determine the qualifications of Biason prior to
his appointment as guardian. He claimed that the RTC also overlooked Maura’s express objection to
Biason’s appointment.8
On August 28, 2009, the CA issued a Decision,9 affirming the decision of the RTC, the pertinent
portions of which read:
The petitioner-appellant may have been correct in arguing that there is no legal requirement that the
guardian must be residing in the same dwelling place or municipality as that of the ward or
incompetent, and that the Vancil vs. Belmes case cited by the court a quo which held that "courts
should not appoint as guardians persons who are not within the jurisdiction of our courts" pertains to
persons who are not residents of the country.
However, we do not find that the court a quo, by deciding to appoint the oppositor-appellee as
guardian, has fallen into grievous error.
For one, the oppositor-appellee, like petitioner-appellant, is also a relative, a nephew of the
incompetent. There are no vices of character which have been established as to disqualify him from
being appointed as a guardian.
xxxx
Anent the claim of the petitioner-appellant that he has been expressly chosen by her aunt to be her
guardian as evidenced by her testimony, although it could be given weight, the same could not be
heavily relied upon, especially considering the alleged mental state of the incompetent due to her
advanced age.
xxxx
WHEREFORE, premises considered, the instant petition is DISMISSED for lack of merit. The
assailed decision of the Regional Trial Court of Dagupan City, Branch 42 is AFFIRMED IN TOTO.
SO ORDERED.[10
Dissatisfied, Abad filed a motion for reconsideration but the CA denied the same in a
Resolution11 dated April 19, 2010, the dispositive portion of which reads:
WHEREFORE, premises considered, the Motion for Reconsideration is DENIED for lack of merit.
SO ORDERED. 12
On June 7, 2010, Abad filed a Petition for Review on Certiorari with this Court. Subsequently, Maura
filed a Motion for Leave to Intervene,13 together with a Petition-in-Intervention.14
The instant petition raises the following assignment of errors:
I
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT DENIED THE
PETITIONER’S APPEAL AND AFFIRMED THE TRIAL COURT’S DECISION DESPITE
VERY CLEAR VIOLATIONS OF DUE PROCESS, DISREGARD OF THE RULES, AND
IRREGULARITIES IN THE APPOINTMENT OF RESPONDENT BIASON AS
GUARDIAN;
II
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT DENIED THE
PETITIONER’S APPEAL AND ERRONEOUSLY UPHELD RESPONDENT BIASON’S
APPOINTMENT AS GUARDIAN BASED ON SOLE GROUND OF RESIDENCE, AND
FAILED TO CONSIDER THE REQUIREMENTS AND QUALIFICATIONS
PRESCRIBED BY THE SUPREME COURT FOR THE APPOINTMENT OF
GUARDIAN.15
Abad contends that that CA erred in affirming the RTC’s decision despite the fact that it did not hold
any hearing to determine whether Biason possessed all the qualifications for a guardian as provided by
law. Further, he was not given the opportunity to submit evidence to controvert Biason’s
appointment.16
Abad also bewails his disqualification as guardian on the sole basis of his residence. He emphasizes
that it is not a requirement for a guardian to be a resident of the same locality as the ward, or to be
living with the latter under the same roof in order to qualify for the appointment. The more significant
considerations are that the person to be appointed must be of good moral character and must have the
capability and sound judgment in order that he may be able to take care of the ward and prudently
manage his assets.17
Unfortunately, pending the resolution of the instant petition, Biason died. On May 11, 2012, Maura
filed a Manifestation and Motion,18 informing this Court that Biason passed away on April 3, 2012 at
SDS Medical Center, Marikina City due to multiple organ failure, septic shock, community acquired
pneumonia high risk, prostate CA with metastasis, and attached a copy of his Death
Certificate.19 Maura averred that Biason’s death rendered moot and academic the issues raised in the
petition. She thus prayed that the petition be dismissed and the guardianship be terminated.
On June 20, 2012, this Court issued a Resolution,20 requiring Abad to comment on the manifestation
filed by Maura. Pursuant to the Resolution, Abad filed his Comment 21 on August 9, 2012 and
expressed his acquiescence to Maura’s motion to dismiss the petition. He asseverated that the issues
raised in the petition pertain to the irregularity in the appointment of Biason as guardian which he
believed had been rendered moot and academic by the latter’s death. He also supported Maura’s prayer
for the termination of the guardianship by asseverating that her act of filing of a petition-in-
intervention is indicative of the fact that she is of sound mind and that she can competently manage her
business affairs.
We find Maura’s motion meritorious.
An issue or a case becomes moot and academic when it ceases to present a justiciable controversy, so
that a determination of the issue would be without practical use and value. In such cases, there is no
actual substantial relief to which the petitioner would be entitled and which would be negated by the
dismissal of the petition.22
In his petition, Abad prayed for the nullification of the CA Decision dated August 28, 2009 and
Resolution dated April 19, 2010, which dismissed his appeal from the Decision dated September 26,
2007 of the RTC and denied his motion for reconsideration, respectively. Basically, he was
challenging Biason’s qualifications and the procedure by which the RTC appointed him as guardian for
Maura. However, with Biason’s demise, it has become impractical and futile to proceed with resolving
the merits of the petition. It is a well-established rule that the relationship of guardian and ward is
necessarily terminated by the death of either the guardian or the ward. 23 The supervening event of
death rendered it pointless to delve into the propriety of Biason’s appointment since the juridical tie
between him and Maura has already been dissolved. The petition, regardless of its disposition, will not
afford Abad, or anyone else for that matter, any substantial relief.1âwphi1

Moreover, Abad, in his Comment, shared Maura’s belief that the petition has lost its purpose and even
consented to Maura’s prayer for the dismissal of the petition.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is hereby DISMISSED.

SO ORDERED.
 G.R. No. 166884 June 13, 2012
LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
LAMBERTO C. PEREZ, NESTOR C. KUN, MA. ESTELITA P. ANGELES-PANLILIO, and
NAPOLEON O. GARCIA, Respondents.
DECISION
BRION, J.:
Before this Court is a petition for review on certiorari, 1 under Rule 45 of the Rules of Court, assailing
the decision2dated January 20, 2005 of the Court of Appeals in CA-G.R. SP No. 76588. In the assailed
decision, the Court of Appeals dismissed the criminal complaint for estafa against the respondents,
Lamberto C. Perez, Nestor C. Kun, Ma. Estelita P. Angeles-Panlilio and Napoleon Garcia, who
allegedly violated Article 315, paragraph 1(b) of the Revised Penal Code, in relation with Section 13 of
Presidential Decree No. (P.D.) 115 – the "Trust Receipts Law."
Petitioner Land Bank of the Philippines (LBP) is a government financial institution and the official
depository of the Philippines. 3 Respondents are the officers and representatives of Asian Construction
and Development Corporation (ACDC), a corporation incorporated under Philippine law and engaged
in the construction business.4
On June 7, 1999, LBP filed a complaint for estafa or violation of Article 315, paragraph 1(b) of the
Revised Penal Code, in relation to P.D. 115, against the respondents before the City Prosecutor’s
Office in Makati City. In the affidavit-complaint5 of June 7, 1999, the LBP’s Account Officer for the
Account Management Development, Edna L. Juan, stated that LBP extended a credit accommodation
to ACDC through the execution of an Omnibus Credit Line Agreement (Agreement) 6 between LBP
and ACDC on October 29, 1996. In various instances, ACDC used the Letters of Credit/Trust Receipts
Facility of the Agreement to buy construction materials. The respondents, as officers and
representatives of ACDC, executed trust receipts7 in connection with the construction materials, with a
total principal amount of ₱52,344,096.32. The trust receipts matured, but ACDC failed to return to
LBP the proceeds of the construction projects or the construction materials subject of the trust receipts.
LBP sent ACDC a demand letter,8 dated May 4, 1999, for the payment of its debts, including those
under the Trust Receipts Facility in the amount of ₱66,425,924.39. When ACDC failed to comply with
the demand letter, LBP filed the affidavit-complaint.
The respondents filed a joint affidavit9 wherein they stated that they signed the trust receipt documents
on or about the same time LBP and ACDC executed the loan documents; their signatures were
required by LBP for the release of the loans. The trust receipts in this case do not contain (1) a
description of the goods placed in trust, (2) their invoice values, and (3) their maturity dates, in
violation of Section 5(a) of P.D. 115. Moreover, they alleged that ACDC acted as a subcontractor for
government projects such as the Metro Rail Transit, the Clark Centennial Exposition and the Quezon
Power Plant in Mauban, Quezon. Its clients for the construction projects, which were the general
contractors of these projects, have not yet paid them; thus, ACDC had yet to receive the proceeds of
the materials that were the subject of the trust receipts and were allegedly used for these constructions.
As there were no proceeds received from these clients, no misappropriation thereof could have taken
place.
On September 30, 1999, Makati Assistant City Prosecutor Amador Y. Pineda issued a
Resolution10 dismissing the complaint. He pointed out that the evidence presented by LBP failed to
state the date when the goods described in the letters of credit were actually released to the possession
of the respondents. Section 4 of P.D. 115 requires that the goods covered by trust receipts be released
to the possession of the entrustee after the latter’s execution and delivery to the entruster of a signed
trust receipt. He adds that LBP’s evidence also fails to show the date when the trust receipts were
executed since all the trust receipts are undated. Its dispositive portion reads:
WHEREFORE, premises considered, and for insufficiency of evidence, it is respectfully recommended
that the instant complaints be dismissed, as upon approval, the same are hereby dismissed. 11
LBP filed a motion for reconsideration which the Makati Assistant City Prosecutor denied in his order
of January 7, 2000.12
On appeal, the Secretary of Justice reversed the Resolution of the Assistant City Prosecutor. In his
resolution of August 1, 2002,13 the Secretary of Justice pointed out that there was no question that the
goods covered by the trust receipts were received by ACDC. He likewise adopted LBP’s argument that
while the subjects of the trust receipts were not mentioned in the trust receipts, they were listed in the
letters of credit referred to in the trust receipts. He also noted that the trust receipts contained maturity
dates and clearly set out their stipulations. He further rejected the respondents’ defense that ACDC
failed to remit the payments to LBP due to the failure of the clients of ACDC to pay them. The
dispositive portion of the resolution reads:
WHEREFORE, the assailed resolution is REVERSED and SET ASIDE. The City Prosecutor of
Makati City is hereby directed to file an information for estafa under Art. 315 (1) (b) of the Revised
Penal Code in relation to Section 13, Presidential Decree No. 115 against respondents Lamberto C.
Perez, Nestor C. Kun, [Ma. Estelita P. Angeles-Panlilio] and Napoleon O. Garcia and to report the
action taken within ten (10) days from receipt hereof. 14
The respondents filed a motion for reconsideration of the resolution dated August 1, 2002, which the
Secretary of Justice denied.15 He rejected the respondents’ submission that Colinares v. Court of
Appeals16 does not apply to the case. He explained that in Colinares, the building materials were
delivered to the accused before they applied to the bank for a loan to pay for the merchandise; thus, the
ownership of the merchandise had already been transferred to the entrustees before the trust receipts
agreements were entered into. In the present case, the parties have already entered into the Agreement
before the construction materials were delivered to ACDC.
Subsequently, the respondents filed a petition for review before the Court of Appeals.
After both parties submitted their respective Memoranda, the Court of Appeals promulgated the
assailed decision of January 20, 2005.17 Applying the doctrine in Colinares, it ruled that this case did
not involve a trust receipt transaction, but a mere loan. It emphasized that construction materials, the
subject of the trust receipt transaction, were delivered to ACDC even before the trust receipts were
executed. It noted that LBP did not offer proof that the goods were received by ACDC, and that the
trust receipts did not contain a description of the goods, their invoice value, the amount of the draft to
be paid, and their maturity dates. It also adopted ACDC’s argument that since no payment for the
construction projects had been received by ACDC, its officers could not have been guilty of
misappropriating any payment. The dispositive portion reads:
WHEREFORE, in view of the foregoing, the Petition is GIVEN DUE COURSE. The assailed
Resolutions of the respondent Secretary of Justice dated August 1, 2002 and February 17, 2003,
respectively in I.S. No. 99-F-9218-28 are hereby REVERSED and SET ASIDE.18
LBP now files this petition for review on certiorari, dated March 15, 2005, raising the following error:
THE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED AND SET ASIDE THE
RESOLUTIONS OF THE HONORABLE SECRETARY OF JUSTICE BY APPLYING THE
RULING IN THE CASE OF COLINARES V. COURT OF APPEALS, 339 SCRA 609, WHICH IS
NOT APPLICABLE IN THE CASE AT BAR.19
On April 8, 2010, while the case was pending before this Court, the respondents filed a motion to
dismiss.20 They informed the Court that LBP had already assigned to Philippine Opportunities for
Growth and Income, Inc. all of its rights, title and interests in the loans subject of this case in a Deed of
Absolute Sale dated June 23, 2005 (attached as Annex "C" of the motion). The respondents also stated
that Avent Holdings Corporation, in behalf of ACDC, had already settled ACDC’s obligation to LBP
on October 8, 2009. Included as Annex "A" in this motion was a certification 21 issued by the Philippine
Opportunities for Growth and Income, Inc., stating that it was LBP’s successor-in-interest insofar as
the trust receipts in this case are concerned and that Avent Holdings Corporation had already settled
the claims of LBP or obligations of ACDC arising from these trust receipts.
We deny this petition.
The disputed transactions are not trust receipts.
Section 4 of P.D. 115 defines a trust receipt transaction in this manner:
Section 4. What constitutes a trust receipt transaction. A trust receipt transaction, within the meaning
of this Decree, is any transaction by and between a person referred to in this Decree as the entruster,
and another person referred to in this Decree as entrustee, whereby the entruster, who owns or holds
absolute title or security interests over certain specified goods, documents or instruments, releases the
same to the possession of the entrustee upon the latter's execution and delivery to the entruster of a
signed document called a "trust receipt" wherein the entrustee binds himself to hold the designated
goods, documents or instruments in trust for the entruster and to sell or otherwise dispose of the goods,
documents or instruments with the obligation to turn over to the entruster the proceeds thereof to the
extent of the amount owing to the entruster or as appears in the trust receipt or the goods, documents or
instruments themselves if they are unsold or not otherwise disposed of, in accordance with the terms
and conditions specified in the trust receipt, or for other purposes substantially equivalent to any of the
following:
1. In the case of goods or documents, (a) to sell the goods or procure their sale; or (b) to manufacture
or process the goods with the purpose of ultimate sale: Provided, That, in the case of goods delivered
under trust receipt for the purpose of manufacturing or processing before its ultimate sale, the entruster
shall retain its title over the goods whether in its original or processed form until the entrustee has
complied fully with his obligation under the trust receipt; or (c) to load, unload, ship or tranship or
otherwise deal with them in a manner preliminary or necessary to their sale[.]
There are two obligations in a trust receipt transaction. The first is covered by the provision that refers
to money under the obligation to deliver it (entregarla) to the owner of the merchandise sold. The
second is covered by the provision referring to merchandise received under the obligation to return it
(devolvera) to the owner. Thus, under the Trust Receipts Law, 22 intent to defraud is presumed when (1)
the entrustee fails to turn over the proceeds of the sale of goods covered by the trust receipt to the
entruster; or (2) when the entrustee fails to return the goods under trust, if they are not disposed of in
accordance with the terms of the trust receipts.23
In all trust receipt transactions, both obligations on the part of the trustee exist in the alternative – the
return of the proceeds of the sale or the return or recovery of the goods, whether raw or
processed.24 When both parties enter into an agreement knowing that the return of the goods subject of
the trust receipt is not possible even without any fault on the part of the trustee, it is not a trust receipt
transaction penalized under Section 13 of P.D. 115; the only obligation actually agreed upon by the
parties would be the return of the proceeds of the sale transaction. This transaction becomes a mere
loan,25 where the borrower is obligated to pay the bank the amount spent for the purchase of the goods.
Article 1371 of the Civil Code provides that "[i]n order to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally considered." Under this provision, we
can examine the contemporaneous actions of the parties rather than rely purely on the trust receipts that
they signed in order to understand the transaction through their intent.
We note in this regard that at the onset of these transactions, LBP knew that ACDC was in the
construction business and that the materials that it sought to buy under the letters of credit were to be
used for the following projects: the Metro Rail Transit Project and the Clark Centennial Exposition
Project.26 LBP had in fact authorized the delivery of the materials on the construction sites for these
projects, as seen in the letters of credit it attached to its complaint. 27 Clearly, they were aware of the
fact that there was no way they could recover the buildings or constructions for which the materials
subject of the alleged trust receipts had been used. Notably, despite the allegations in the affidavit-
complaint wherein LBP sought the return of the construction materials, 28 its demand letter dated May
4, 1999 sought the payment of the balance but failed to ask, as an alternative, for the return of the
construction materials or the buildings where these materials had been used. 29
The fact that LBP had knowingly authorized the delivery of construction materials to a construction
site of two government projects, as well as unspecified construction sites, repudiates the idea that LBP
intended to be the owner of those construction materials. As a government financial institution, LBP
should have been aware that the materials were to be used for the construction of an immovable
property, as well as a property of the public domain. As an immovable property, the ownership of
whatever was constructed with those materials would presumably belong to the owner of the land,
under Article 445 of the Civil Code which provides:
Article 445. Whatever is built, planted or sown on the land of another and the improvements or repairs
made thereon, belong to the owner of the land, subject to the provisions of the following articles.
Even if we consider the vague possibility that the materials, consisting of cement, bolts and reinforcing
steel bars, would be used for the construction of a movable property, the ownership of these properties
would still pertain to the government and not remain with the bank as they would be classified as
property of the public domain, which is defined by the Civil Code as:
Article 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth.
In contrast with the present situation, it is fundamental in a trust receipt transaction that the person who
advanced payment for the merchandise becomes the absolute owner of said merchandise and continues
as owner until he or she is paid in full, or if the goods had already been sold, the proceeds should be
turned over to him or to her.30
Thus, in concluding that the transaction was a loan and not a trust receipt, we noted in Colinares that
the industry or line of work that the borrowers were engaged in was construction. We pointed out that
the borrowers were not importers acquiring goods for resale. 31 Indeed, goods sold in retail are often
within the custody or control of the trustee until they are purchased. In the case of materials used in the
manufacture of finished products, these finished products – if not the raw materials or their
components – similarly remain in the possession of the trustee until they are sold. But the goods and
the materials that are used for a construction project are often placed under the control and custody of
the clients employing the contractor, who can only be compelled to return the materials if they fail to
pay the contractor and often only after the requisite legal proceedings. The contractor’s difficulty and
uncertainty in claiming these materials (or the buildings and structures which they become part of), as
soon as the bank demands them, disqualify them from being covered by trust receipt agreements.
Based on these premises, we cannot consider the agreements between the parties in this case to be trust
receipt transactions because (1) from the start, the parties were aware that ACDC could not possibly be
obligated to reconvey to LBP the materials or the end product for which they were used; and (2) from
the moment the materials were used for the government projects, they became public, not LBP’s,
property.
Since these transactions are not trust receipts, an action for estafa should not be brought against the
respondents, who are liable only for a loan. In passing, it is useful to note that this is the threat held
against borrowers that Retired Justice Claudio Teehankee emphatically opposed in his dissent in
People v. Cuevo,32 restated in Ong v. CA, et al.:33
The very definition of trust receipt x x x sustains the lower court’s rationale in dismissing the
information that the contract covered by a trust receipt is merely a secured loan. The goods imported
by the small importer and retail dealer through the bank’s financing remain of their own property and
risk and the old capitalist orientation of putting them in jail for estafa for non-payment of the secured
loan (granted after they had been fully investigated by the bank as good credit risks) through the fiction
of the trust receipt device should no longer be permitted in this day and age.
As the law stands today, violations of Trust Receipts Law are criminally punishable, but no criminal
complaint for violation of Article 315, paragraph 1(b) of the Revised Penal Code, in relation with P.D.
115, should prosper against a borrower who was not part of a genuine trust receipt transaction.
Misappropriation or abuse of confidence is absent in this case.
Even if we assume that the transactions were trust receipts, the complaint against the respondents still
should have been dismissed. The Trust Receipts Law punishes the dishonesty and abuse of confidence
in the handling of money or goods to the prejudice of another, regardless of whether the latter is the
owner or not. The law does not singularly seek to enforce payment of the loan, as "there can be no
violation of [the] right against imprisonment for non-payment of a debt."34
In order that the respondents "may be validly prosecuted for estafa under Article 315, paragraph 1(b)
of the Revised Penal Code,35 in relation with Section 13 of the Trust Receipts Law, the following
elements must be established: (a) they received the subject goods in trust or under the obligation to sell
the same and to remit the proceeds thereof to [the trustor], or to return the goods if not sold; (b) they
misappropriated or converted the goods and/or the proceeds of the sale; (c) they performed such acts
with abuse of confidence to the damage and prejudice of Metrobank; and (d) demand was made on
them by [the trustor] for the remittance of the proceeds or the return of the unsold goods." 36
In this case, no dishonesty or abuse of confidence existed in the handling of the construction materials.
In this case, the misappropriation could be committed should the entrustee fail to turn over the
proceeds of the sale of the goods covered by the trust receipt transaction or fail to return the goods
themselves. The respondents could not have failed to return the proceeds since their allegations that the
clients of ACDC had not paid for the projects it had undertaken with them at the time the case was
filed had never been questioned or denied by LBP. What can only be attributed to the respondents
would be the failure to return the goods subject of the trust receipts.
We do not likewise see any allegation in the complaint that ACDC had used the construction materials
in a manner that LBP had not authorized. As earlier pointed out, LBP had authorized the delivery of
these materials to these project sites for which they were used. When it had done so, LBP should have
been aware that it could not possibly recover the processed materials as they would become part of
government projects, two of which (the Metro Rail Transit Project and the Quezon Power Plant
Project) had even become part of the operations of public utilities vital to public service. It clearly had
no intention of getting these materials back; if it had, as a primary government lending institution, it
would be guilty of extreme negligence and incompetence in not foreseeing the legal complications and
public inconvenience that would arise should it decide to claim the materials. ACDC’s failure to return
these materials or their end product at the time these "trust receipts" expired could not be attributed to
its volition. No bad faith, malice, negligence or breach of contract has been attributed to ACDC, its
officers or representatives. Therefore, absent any abuse of confidence or misappropriation on the part
of the respondents, the criminal proceedings against them for estafa should not prosper.
In Metropolitan Bank,37 we affirmed the city prosecutor’s dismissal of a complaint for violation of the
Trust Receipts Law. In dismissing the complaint, we took note of the Court of Appeals’ finding that
the bank was interested only in collecting its money and not in the return of the goods. Apart from the
bare allegation that demand was made for the return of the goods (raw materials that were
manufactured into textiles), the bank had not accompanied its complaint with a demand letter. In
addition, there was no evidence offered that the respondents therein had misappropriated or misused
the goods in question.
The petition should be dismissed because the OSG did not file it and the civil liabilities have already
been settled.
The proceedings before us, regarding the criminal aspect of this case, should be dismissed as it does
not appear from the records that the complaint was filed with the participation or consent of the Office
of the Solicitor General (OSG). Section 35, Chapter 12, Title III, Book IV of the Administrative Code
of 1987 provides that:
Section 35. Powers and Functions. — The Office of the Solicitor General shall represent the
Government of the Philippines, its agencies and instrumentalities and its officials and agents in any
litigation, proceedings, investigation or matter requiring the services of lawyers. x x x It shall have the
following specific powers and functions:
(1) Represent the Government in the Supreme Court and the Court of Appeals in all criminal
proceedings; represent the Government and its officers in the Supreme Court, the Court of Appeals and
all other courts or tribunals in all civil actions and special proceedings in which the Government or any
officer thereof in his official capacity is a party. (Emphasis provided.)
In Heirs of Federico C. Delgado v. Gonzalez,38 we ruled that the preliminary investigation is part of a
criminal proceeding. As all criminal proceedings before the Supreme Court and the Court of Appeals
may be brought and defended by only the Solicitor General in behalf of the Republic of the
Philippines, a criminal action brought to us by a private party alone suffers from a fatal defect. The
present petition was brought in behalf of LBP by the Government Corporate Counsel to protect its
private interests. Since the representative of the "People of the Philippines" had not taken any part of
the case, it should be dismissed.1âwphi1
On the other hand, if we look at the mandate given to the Office of the Government Corporate
Counsel, we find that it is limited to the civil liabilities arising from the crime, and is subject to the
control and supervision of the public prosecutor. Section 2, Rule 8 of the Rules Governing the Exercise
by the Office of the Government Corporate Counsel of its Authority, Duties and Powers as Principal
Law Office of All Government Owned or Controlled Corporations, filed before the Office of the
National Administration Register on September 5, 2011, reads:
Section 2. Extent of legal assistance – The OGCC shall represent the complaining GOCC in all stages
of the criminal proceedings. The legal assistance extended is not limited to the preparation of
appropriate sworn statements but shall include all aspects of an effective private prosecution including
recovery of civil liability arising from the crime, subject to the control and supervision of the public
prosecutor.
Based on jurisprudence, there are two exceptions when a private party complainant or offended party
in a criminal case may file a petition with this Court, without the intervention of the OSG: (1) when
there is denial of due process of law to the prosecution, and the State or its agents refuse to act on the
case to the prejudice of the State and the private offended party; 39 and (2) when the private offended
party questions the civil aspect of a decision of the lower court.40
In this petition, LBP fails to allege any inaction or refusal to act on the part of the OSG, tantamount to
a denial of due process. No explanation appears as to why the OSG was not a party to the case. Neither
can LBP now question the civil aspect of this decision as it had already assigned ACDC’s debts to a
third person, Philippine Opportunities for Growth and Income, Inc., and the civil liabilities appear to
have already been settled by Avent Holdings Corporation, in behalf of ACDC. These facts have not
been disputed by LBP. Therefore, we can reasonably conclude that LBP no longer has any claims
against ACDC, as regards the subject matter of this case, that would entitle it to file a civil or criminal
action.
WHEREFORE, we DENY the petition and AFFIRM the January 20, 2005 decision of the Court of
Appeals in CA-G.R. SP No. 76588. No costs.
SO ORDERED.