Republic of the Philippines
M-731, which (P)laintiff-appellee's assertion that ownership
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 133140 August 10, 1999
JOSE MA. T. GARCIA, petitioner,
vs.
COURT OF APPEALS, SPS. LUISITO & MA. LUISA
MAGPAYO AND PHILIPPINE BANK OF
COMMUNICATIONS, respondents.
PUNO, J.:
This is a petition for review under Rule 45 of the
Rules of Court to set aside the decision
rendered by the Court of Appeals in CA-G.R.
No. 44707 entitled "Jose Ma. T. Garcia, Plaintiff-
Appellee versus Spouses Luisito and Ma. Luisa
Magpayo and Sheriff of Makati, Defendants,
Philippine Bank of Communications,
Defendant-Appellant".1
The facts are as succinctly summarized by the
appellate court, viz.:
Atty. Pedro V. Garcia, in whose name TCT No.
S-31269 covering a parcel of land identified as
Lot 17 situated at Bel Air II Village, Makati, was
registered, sold with the consent of his wife
Remedios T. Garcia, the same to their
daughter Ma. Luisa Magpayo and her
husband Luisito Magpayo (the Magpayos).
On March 5, 1981, the Magpayos mortgaged
the land to the Philippine Bank of
Communications (PBCom) to secure a loan,
Five Hundred Sixty Four Thousand (P564,000.00)
Pesos according to them, One Million Two
Hundred Thousand (P1,200,000.00) Pesos
according to PBCom.1âwphi1.nêt
On March 9, 1981, Atty. Garcia's Title was
cancelled and in its stead Transfer Certificate
of Title No. S-108412/545 was issued in the
name of the Magpayos.
The Deed of Real Estate Mortgage was
registered at the Makati Register of Deeds and
annotated on the Magpayos title.
The Magpayos failed to pay their loan upon its
maturity, hence, the mortgage was
extrajudicially foreclosed and at the public
auction sale, PBCom which was the highest
bidder bought the land.
The redemption period of the foreclosed
mortgage expired without the Magpayos
redeeming the same, hence, title over the
land was consolidated in favor of PBCom
which cancelled the Magpayo's title and
Transfer Certificate of Title No. 138233 was
issued in its name.
On October 4, 1985, the Magpayos filed at the
RTC of Makati a complaint seeking the
nullification of the extrajudicial foreclosure of
mortgage, public auction sale, and PBCom's
title docketed as Civil Case No. 11891. This
complaint was dismissed for failure to
prosecute.
On October 15, 1985, PBCom filed at the
Regional Trial Court (RTC) of Makati a petition
for the issuance of a writ of possession over the
1|P r o p e r t y C a s e s - P o s s e s s i o n
land, docketed as LRC Case No.
Branch 148 thereof granted.
Upon service of the writ of possession, Mrs.
Magpayo's brother, Jose Ma. T. Garcia
(Garcia), who was in possession of the land,
refused to honor it and filed a motion for
Intervention in the above-said PBCom petition,
which motion was denied.
Garcia thereupon filed against PBCom, the
Magpayos, and the RTC Sheriff the instant suit
for recovery of realty and damages wherein
he alleged, inter alia, that he inherited the
land as one of the heirs of his mother Remedios
T. Garcia, and that PBCom acquired no right
thereover.
In its answer, PBCom averred, inter alia, that
Garcia's claim over the land is belied by the
fact that it is not among the properties owned
by his mother listed in the Inventory of Real
Estate filed at the then CFI of Pasay City,
Branch 27, in SP Proc. No. 2917-P, "In the Matter
of the Intestate Estate of Remedios T. Garcia
Petition for Letters of Administration, Pedro V.
Garcia Petitioner-Administrator.
The Magpayos, on the other hand, asserted
that title over the land was transferred to them
by Mrs. Magpayo's parents to enable them
(Magpayos) to borrow from PBCom.
Garcia filed a Motion for Summary Judgment
praying that judgment be rendered in his favor
to which PBCom counter-motioned that
judgment should be rendered in its favor.
The court a quo denied the motion for
summary judgment on the ground that PBCom
raised in its answer both factual and legal
issues which could only be ventilated in a full-
blown trial.
The court a quo, however, later issued a
summary judgment.2
In its summary judgment, the lower court held
that the mortgage executed by the Magpayo
spouses in favor of PBCom was void. It found
that:
. . . [A]t the time that the defendants Magpayo
spouses executed the mortgage in favor of
the defendant PBCom on March 5, 1981, the
said spouses were not yet the owners of the
property. This finding is evident from the other
undisputed fact that a new Torrens title was
issued to the defendants Magpayo spouses
only on March 9, 1981 . . . . The Magpayo
spouses could not have acquired the said
property merely by the execution of the Deed
of Sale because the property was in the
possession of the plaintiff. The vendor, Pedro V.
Garcia, was not in possession and hence
could not deliver the property merely by the
execution of the document (MANALILI V.
CESAR, 39 PHIL. 134). The conclusion is
therefore inescapable that the said mortgage
is null and void for lack of one of the essential
elements of a mortgage as required by Art.
2085 of our Civil Code . . . .3
Thus, it invalidated the foreclosure sale and
nullified TCT No. 138233 issued to PBCom.
Dissatisfied, PBCom appealed. In reversing the
trial court, the Court of Appeals held:
over the disputed property was not
transmitted to his sister and her husband-
Magpayo spouses at the time of the execution
of the Deed of Sale as he was still in actual and
adverse possession thereof does not lie.
For in his complaint, plaintiff-appellee alleged
that he entered into possession of the disputed
property only upon the demise of his mother,
from whom he alleges to have inherited it but
who was not the registered owner of the
property, that is, on October 31, 1980
(Certificate of Death, p. 17, Records), by which
admission he is bound. Since the execution of
the deed of sale by Atty. Pedro V. Garcia in
favor of the Magpayos took place earlier or on
August 1, 1980, then contrary to his claim,
plaintiff-appellee was not in possession of the
property at the time of the execution of said
public instrument.
Furthermore, it appearing that the vendor
Atty. Garcia had control of the property which
was registered in his name and that the deed
of sale was likewise registered, then the sale
was consummated and the Magpayos were
free to exercise the attributes of ownership
including the right to mortgage the land.
When the land is registered in the vendor's
name, and the public instrument of sale is also
registered, the sale may be considered
consummated and the buyer may exercise
the actions of an owner (Tolentino,
Commentaries and Jurisprudence on the Civil
Code of the Philippines, 1992 Ed., p. 55).
That the Magpayos' title, TCT No. S-108412, was
issued four (4) days following the execution of
the deed of real estate mortgage is of no
moment, for registration under the Torrens
system does not vest ownership but is intended
merely to confirm and register the title which
one may already have on the land
(Municipality of Victorias v. Court of Appeals,
149 SCRA 32, 44-45 [1987]).
Petitioner Garcia moved for a reconsideration
of above decision which was denied. He now
comes before us raising the following errors
committed by the Court Appeals:
I
The respondent Court of Appeals has
departed from the accepted and usual
course of proceedings when it decided the
appeal subject of this case based on issues
which were raised neither in the trial court nor
in the appellant's brief.
II
The Court of Appeals decided the appeal in a
manner not in accord with applicable
jurisprudence when it disregarded the
admissions of the private respondents and,
despite ruling that Summary Judgment was
proper, made its own findings of facts which
were contrary to the said admissions.
III
The Decision of the respondent Court of
Appeals was not in accord with established
jurisprudence and even contradicts itself, as
far as the issue of the propriety of the Summary
Judgment is concerned.
The petition has no merit.
Anent the first assignment of error, petitioner
alleged that the Court of Appeals resolved the
issues "ownership" and "possession" though
they were not raised by PBCom in its
appellant's brief. The allegation is belied by
page 17 of PBCom's appellate brief, viz.:
Due to the wrong cited case, the trial court
opined erroneously that "Magpayo Spouses
could not have acquired the property merely
by the execution of the deed of sale because
the property was in the possession of the
plaintiff" (Order, p. 10).
Again, the trial court could not distinguish
ownership from possession. Ownership and
possession are two entirely different legal
concepts.
Plaintiff-appellee's possession as found by the
trial court, started only "at the time of the filing
of the complaint in this present case up to the
present." (page 2, Summary Judgment).
Assuming that to be true, plaintiff-appellee's
possession which started only in 1986 could not
ripen into ownership. He has no valid title
thereto. His possession in fact was that of an
intruder, one done in bad faith (to defeat
PBCom's Writ of Possession). His possession is
certainly not in the concept of an owner. This
is so because as early as 1981, title thereto was
registered in the name of the Magpayo
Spouses which title was subsequently
cancelled when the property was purchased
by PBCom in a public auction sale resulting in
the issuance of title in favor of the latter in 1985.
Anent the second-assignment of error,
petitioner contends that the following facts
were admitted by the parties in the trial court:
Petitioner's third assignment of error that he
alone as plaintiff in the trial court is entitled to
a summary judgment merits scant attention. A
summary judgment is one granted by the
court, upon motion by either party, for an
expeditious settlement of the case, there
appearing from the pleadings, depositions,
admissions, and affidavits that no important
questions or issues of fact are involved (except
the determination of the amount of damages)
and that therefore the moving party is entitled
to a judgment as a matter of law.6 Under Rule
34, either party may move for a summary
judgment — the claimant by virtue of Section
1 and the defending party by virtue of Section
2, viz.:
Sec. 1. Summary judgment for claimant. — A
party seeking to recover upon a claim,
counter-claim, or cross-claim or to obtain a
declaratory relief may, at any time after the
pleading in answer thereto has been served,
move with supporting affidavits for a summary
judgment in his favor upon all or any part
thereof.
Sec. 2. Summary judgment for defending
party. — A party against whom a claim,
counterclaim, or cross-claim is asserted or a
declaratory relief is sought may, at any time,
move with supporting affidavits for a summary
judgment in his favor as to all or any part
thereof.
It is true that petitioner made the initial move
for summary judgment. Nonetheless, PBCom
likewise moved for a summary judgment with
supporting affidavit and documentary
exhibits, to wit:
COUNTER-MOTION FOR SUMMARY JUDGMENT
PBCom Is Entitled To A Summary Judgment
concept of an owner and possession of a
holder.11 "A possessor in the concept of an
owner may be the owner himself or one who
claims to be so."12 On the other hand, "one
who possesses as a mere holder
acknowledges in another a superior right
which he believes to be ownership, whether
his belief be right or wrong."13 The records show
that petitioner occupied the property not in
the concept of an owner for his stay was
merely tolerated by his parents. We held
in Caniza v. Court of Appeals 14 that an
owner's act of allowing another to occupy his
house, rent-free does not create a permanent
and indefeasible right of possession in the
latter's favor. Consequently, it is of no moment
that petitioner was in possession of the
property at the time of the sale to the
Magpayo spouses. It was not a hindrance to a
valid transfer of ownership. On the other hand,
petitioner's subsequent claim of ownership as
successor to his mother's share in the conjugal
asset is belied by the fact that the property
was not included in the inventory of the estate
submitted by his father to the intestate court.
This buttresses the ruling that indeed the
property was no longer considered owned by
petitioner's parents. We also uphold the Court
of Appeals in holding that the mortgage to
PBCom by the Magpayo spouses is valid
notwithstanding that the transfer certificate of
title over the property was issued to them after
the mortgage contract was entered into.
Registration does not confer ownership, it is
merely evidence of such ownership over a
particular property.15 The deed of sale
operates as a formal or symbolic delivery of
the property sold and authorizes the buyer to
use the document as proof of ownership.16 All
said, the Magpayo spouses were already the
owners when they mortgaged the property to
PBCom.17

1. The petitioner is a compulsory heir of the late
spouses Atty. Pedro V. Garcia and Remedios
Tablan Garcia;
2. The property subject of this dispute was
previously the conjugal property of the said
spouses;
3. The petitioner and his family have been and
are continuously to the present in actual
physical possession of the property. At the time
of the alleged sale to the Magpayo spouses,
petitioner was in possession of the property;
4. When his mother Remedios Tablan (sic)
Garcia died, sometime in October, 1980, he
became, by operation of law, a co-owner of
the property;
5. Atty. Pedro V. Garcia, at the time of the
execution of the instrument in favor of the
Magpayo spouses was not in possession of the
subject property.4
We reject the contention of petitioner for a
perusal of the records shows that these
alleged admitted facts are his own
paraphrased portions of the findings of fact
listed by the trial court in the summary
judgment.5 Indeed petitioner did not cite any
page number of the records or refer to any
documentary Exhibit to prove how and who
admitted the said facts.
The procedure for summary judgment may be IN VIEW WHEREOF, the decision of the Court of
availed of also by the defending parties who Appeals in CA-G.R. No. 44707 is AFFIRMED.
may be the object of unfounded claims as Costs against petitioner.1âwphi1.nêt
clearly shown in Sections 1 and 2 of Rule 34.
SO ORDERED.
xxx xxx xxx
Davide, Jr., C.J., Kapunan, Pardo and Ynares-
WHEREFORE, it is respectfully prayed of this Santiago, JJ., concur.
Honorable Court to render summary judgment
in PBCom's favor by DISMISSING plaintiff's
Complaint as well as Sps. Magpayo's Cross-
Claim for being sham and frivolous.7
Needless to state, there was no error on the
part of the appellate court in resorting to
summary judgment as prayed for by both
parties.
We stress again that possession and ownership
are distinct legal concepts. Ownership exists
when a thing pertaining to one person is
completely subjected to his will in a manner
not prohibited by law and consistent with the
rights of others.8 Ownership confers certain
rights to the owner, one of which is the right to
dispose of the thing by way of sale.9 Atty.
Pedro Garcia and his wife Remedios exercised
their right to dispose of what they owned when
they sold the subject property to the Magpayo
spouses. On the other hand, possession is
defined as the holding of a thing or the
enjoyment of a right.10 Literally, to possess
means to actually and physically occupy a
thing with or without right. Possession may be
had in one of two ways: possession in the

2|P r o p e r t y C a s e s - P o s s e s s i o n
[ GR No. 42859, Mar 17, 1938 ]
GABRIEL LASAM v. DIRECTOR OF LANDS +
DECISION
G65 Phil. 367
LAUREL, J.:
On January 24, 1930, Gabriel Lasam filed
with the Court of First Instance of Cagayan
an application for the registration of 152
parcels of land containing a total area of
24,723,436 square meters, situated in the
municipality of Solana, Province of
Cagayan, described in the plan Exhibit K
attached to the application. These 152
parcels include the parcel No. 9 here
involved.
According to the lower court, the portions
of said parcel No. 9 which were opposed
during the time of survey were delimited
and marked on its plan Psu-67516 attached
to the record as lots A to Z, AA to HH, MM to
ZZ, AAA to ZZZ, AAAA to ZZZZ, AAAAA, to
FFFFF, NNNNN, 35 to 38, and 111 to 143, all
inclusive. (Decision of the lower court, Bill of
Exceptions of the Government, p. 35.)
The Director of Lands opposed the
application on the ground that it is not
supported by any title fit for registration and
that the land sought to be registered is
public land. The brothers Felipe, Jose, and
Salvador, all surnamed Narag, who are first
cousins to the applicant Lasam, also filed
opposition on the ground that they are the
owners of parcel No. 9. Oppositions were
also filed by Tomas Furigay and 35 other
persons as homesteaders; by the provincial
fiscal, representing the Director of Forestry,
on the ground that portions thereof are
public forests; by Francisco Caronan and
some 71 other parties, claiming the parcels
occupied by them as their exclusive
properties; by Jose Chan Hong Hin, on the
ground that the application includes his
property of about 22 hectares and 50 ares;
and by Mauro Antonio, on the ground that
the application includes the portion
occupied by him and belonging to him.
Pablo Soriano succeeded in having the
order of general default set aside as to him
and was allowed to register his opposition
at a later date. Amended applications and
oppositions by the parties were
subsequently permitted to be filed.
After a protracted hearing, the lower court
rejected all the oppositions filed, declared
the applicant, Gabriel Lasam, the owner of
parcel No. 9, as indicated in the plan Psu-
67516 (Exhibit K), and decreed the
registration of said parcel in his favor.
On September 10, 1934, counsel for various
oppositors, after excepting to the decision,
filed a motion for new trial which was
denied, and the case was brought before
this court by bill of exceptions.
3|P r o p e r t y C a s e s - P o s s e s s i o n
The Narag brothers and the Director of
Forestry appear to have abandoned their
opposition. They made no attempt to
substantiate their claims at the trial.
Counsel for the Director of Lands, et al. and
for Jose Chan Hong Hin, et al. make various
assignments of error in their respective
briefs. It is not believed necessary however,
to consider each and every assignment
made as the questions presented may, in
our opinion, be reduced to the following
propositions: (a) Whether or not the
applicant, Gabriel Lasam, is entitled to the
registration of parcel No. 9 on the basis of
the document presented as Exhibit L,
hereinafter to be referred to, or in the
alternative, whether or not he is entitled to
registration on the basis of public,
continuous, and adverse possession under
a claim of ownership during the time
prescribed by law (par. 9, application); and
in the negative, (b) whether or not the
numerous oppositors excluding the
homesteaders are entitled to the parcels
which they allege are included in the
controverted parcel No. 9. The rights of the
homesteaders necessarily depend on the
resolution of these two propositions.
Exhibit L purports to be an application,
dated June 27, 1873, addressed by
Domingo Narag 1.º to the Alcalde Mayor,
in which the former stated that he had
been in possession of the land above
described and asked that informacion
testifical be admitted. The informacion
testifical was had before the Alcalde
Mayor and appears to have been
approved by the Judge of the Court of First
Instance without objection on the part of
the fiscal. It is the theory of the applicant
that Domingo Narag 1.º, the original owner
of parcel No. 5, described in Exhibit L, owed
P1,000 from the applicant's father, which
amount Narag needed for his candidacy
as gobernadorcillo of Tuguegarao,
Cagayan, in 1880; that the original of
Exhibit L was turned over by the applicant
to his lawyer, Vicente Marasigan, who lost
it, and for this reason, only a certified copy
of the document marked Exhibit L was
presented; and that the fifth parcel
mentioned in the document, Exhibit L, is the
same parcel No. 9 described in the plan,
Exhibit E. The Government contends that
Exhibit L is not a valid title and does not
confer ownership and that even if it were
valid, it does not cover so extensive an area
as that appearing on the plan, Exhibit K.
The land designated as the fifth parcel is
described in Exhibit L as follows:
"5.ª Un terreno o pasto de ganados
vacunos llamado Maguirig o Cagguban
que linda al poniente con el estero Pangul,
al oriente con el pueblo de la Solana al
norte con el sitio llamado Maasim y
Calabbacao y al sur con el sitio llamado
Atayao el cual tiene un cabida de siete mil
brazas y herede de mis Padres hace veinte
y dos años y en la actualidad es donde
posee mis ganados de procreacion."
Parcel No. 9, the registration of which is
applied for in these proceedings, is
described thus (brief of claimant-appellee,
p. 61):
"'Por el norte con los barrios de Iraga,
Bauan y Bangag;
"Por el este con el Centro y los barrios de
Basi, Natapian y Lanna;
"Por el sur con la carretera provincial; y
"Por el oeste barrios de Maguirig,
Cagguban y estero Pangul."
We are of the opinion that the court below
committed no error in receiving Exhibit L as
evidence for the claimant, but its admission
by the court below does not necessarily
entitle the applicant, Gabriel Lasam, to the
registration of the parcel claimed by him in
these proceedings. It is apparent that
parcel No. 9, as indicated in the plan,
Exhibit K, is not the same parcel No. 5
described in document Exhibit L. Whereas
Exhibit L gives as boundaries on the north
the sitios of Maasin and Calabbacao,
Exhibit E gives the barrios of Iraga, Bauan,
and Bangag; on the east Exhibit L gives the
pueblo of Solana, whereas Exhibit E gives
"el Centro y los barrios de Basi, Natappian y
Lanna"; on the west Exhibit L gives estero
Pangul, whereas Exhibit E gives the barrios
of Maguirig, Cagguban and estero Pangul;
on the south Exhibit L gives the sitio of
Atayao, whereas Exhibit E gives
the carretera provincial. While there may
be partial identity as to boundaries on the
east and west, such identity is lacking as to
the boundaries on the north and south. This
discrepancy is accentuated by the
admission of the applicant that the parcel
whose registration is sought is much smaller
than that described in paragraph 6 of
Exhibit L. The explanation given by the
surveyor, Jose Mallanao, presented as
witness by the claimant, is as follows:
"Because on the north side when we went
around the lot and I asked for the barrios of
Maasin and Calabbacao, the applicant
pointed to me a place very far from where
he was at the time and where he actually
occupied the land, and on the south side
he indicated to me the provincial road. I
asked why he should not take the actual
land indicated by this title and he told me
that he was not occupying that portion.
That is the reason why I took up the
boundary on the south as provincial road.
On the east side he indicated to me the
center of the municipality of Solana, barrios
of Basi, Nangalisan and Lanna, and on the
west is a public land partly bounded by the
barrios of Maguirig, and Cagguban and
estero Pangul."
An applicant for registration of land, if he
relies on a document evidencing his title
thereto, must prove not only the
genuineness of his title but the identity of
the land therein referred to. The document
in such a case is either a basis of his claim
for registration or not at all. If, as in this case,
he only claims a portion of what is included
in his title, he must clearly prove that the
property sought to be registered is included
in that title. The surveyor, Jose Mallannao,
did not actually check up the boundaries
of parcel No. 5 as described in Exhibit L, and
in testifying that parcel No. 9, in Exhibit K, is
smaller than that described as parcel No. 5
in Exhibit L, he relied mostly on hearsay. For
instance, when asked whether north of
barrios Iraga, Bauan, and Bangag of the
land described in plan Exhibit X, he would
locate the sitiosof Maasin and
Calabbacao, he replied: "They said that
Calabbacao is north of that barrio Iraga
yet." (Underscoring ours.)
Aside from what has been said with
reference to discrepancies in the
boundaries, we cannot overlook the fact
that the area in Exhibit L is vaguely given as
7,000 brazas. The surveyor for the applicant,
Jose Mallannao, calculated the area of the
property described in paragraph 5 of
Exhibit L on the basis of 7,000
square brazas or 49,000,000 square brazas
as 15,695,500 hectares more or less (s. n. pp.
820-822). The area claimed here according
to the amended application of February
26, 1930, and plan Exhibit K is 24,723,437
square meters. According to the applicant,
before his occupation of the land ceded
by Domingo Narag 1.º, only about 2
hectares were cultivated. (s. n. p. 56,
Gabriel Lasam.) And, with reference to the
payment of land tax, the Solicitor-General
in his brief (p. 12) makes the following
observation:
"The property appears to have been
declared for taxation purposes as
evidenced by revisions of tax declarations,
Exhibits G-20 and G-21 (pp. 136,137,
record). There had been previous
declarations with an area of about 294
hectares (id.) but, according to Exhibit G-
22 (p. 138, record), the area which was not
previously declared contains 1,685
hectares.
"With the exception of a statement in which
it appears that land tax was paid in 1902 (p.
140, id.) there appears in the record no tax
receipts evidencing the payment of taxes
continuously from 1902 up to this time."
It is not necessary to pass upon the
contention of the Solicitor-General that
the informacion testifical (Exhibit L) is of no
legal effect because of failure
subsequently to solicit composition title
pursuant to the Royal Decree of June 25,
1880 (Fuster vs. Director of Lands, G. R. No.
40129, Dec 29,1934), or to convert
possession into a registration of ownership in
accordance with article 393 of the
Mortgage Law (Fernandez
Hermanos vs. Director of Lands (57 Phil.,
929), for even if we were to accord all the
4|P r o p e r t y C a s e s - P o s s e s s i o n
legal force to this document (Exhibit L), it
would not serve as a basis for the
registration of 24,723,437 square meters.
Having arrived at this conclusion as to
Exhibit L, is the applicant entitled to
registration because of the required
possession during the time prescribed by
law? We have examined the evidence on
this point both testimonial and
documentary, and while there is evidence
showing that the claimant might have
possessed a portion of the parcel claimed
by him and the registration of which is
sought, we find the evidence lacking in
certainty as to the particular portion
occupied and the extent thereof. Counsel
for the applicant invokes the doctrine laid
down by us in Ramos vs. Director of Lands
(39 Phil., 175, 180). (See
also Roales vs. Director of Lands, 51 Phil.,
302, 304.) But it should be observed that the
application of the doctrine of constructive
possession in that case is subject to certain
qualifications, and this court was careful to
observe that among these qualifications is
"one particularly relating to the size of the
tract in controversy with reference to the
portion actually in possession of the
claimant." While, therefore, "possession in
the eyes of the law does not mean that a
man has to have his feet on every square
meter of ground before it can be said that
he is in possession", possession under
paragraph 6 of section 54 of Act No. 926,
as amended by paragraph (b) of section
45 of Act No. 2874, is not gained by mere
nominal claim. The mere planting of a sign
or symbol of possession cannot justify a
Magellan-like claim of dominion over an
immense tract of territory. Possession as a
means of acquiring ownership, while it may
be constructive, is not a mere fiction. In the
present case, upon the description of
7,000 brazas as the area of the land said to
have been originally possessed by
Domingo Narag 1.º and conveyed to the
applicant, only two hectares of which were
according to the applicant himself
cultivated at the time of such transfer, the
applicant would, on the basis of the
computation hereinabove referred to and
given at the trial by surveyor Jose
Mallannao, be entitled under Exhibit L to
more than 13,000 hectares, although only
2,432 odd hectares are now being sought
for registration in these proceedings. The
fact, however, that he is claiming only a
portion of the land claimed by him to be
included in his title, the further fact that
according to his own testimony he has
given up more than 1,000 hectares to the
Bureau of Forestry, the discrepancies in the
boundaries, his tax declarations, and the
existence of numerous homesteaders and
claimants are significant and tend to show
that his possession over the entire portion of
the land sought to be registered is not "such
as to apprise the community and the world
that the entire land was for his enjoyment".
(Ramos vs. Director of Lands, supra.)
Our attention is next directed to the
decision of this court in Pamittan vs. Lasam
and Mallonga (60 Phil., 908) which,
according to counsel for the claimant
Lasam, is determinative of the ownership of
the property now sought to be registered.
Said case refers to an action for partition
between the heirs of Sofia Pamittan, wife of
Gabriel Lasam, originally brought in the
Court of First Instance and appealed to this
court. The trial court in that case found that
parcel No. 7 which is said to correspond to
parcel No. 9 sought to be registered in
these proceedings "although acquired
during the existence of the conjugal
partnership, was proven to be the exclusive
property of the husband Gabriel Lasam".
This court could not have passed upon the
question whether parcel No. 7 was the
same parcel No. 9 in these proceedings;
nor could it have passed upon the
conflicting claims with reference to parcel
No. 9, now sought to be registered.
Whatever was said in that case could not
bind the oppositors in the present case,
who were not parties thereto.
The grounds for opposition of the various
oppositors are divergent and are based on
(a) possession from time immemorial; (b)
acquisition by inheritance, purchase and
donations propter nuptias and inter vivos;
(c) payment of land taxes from 1906, 1915,
and 1918 up to the filing of oppositions; and
(d) acquisition "a titulo de composicion"
with the State. These oppositors denied
being tenants of the applicant Lasam. After
perusal of the evidence presented by
them, we are constrained to accept the
conclusion of the lower court that none of
the portions or lots claimed by them or any
one of them has been sufficiently identified,
either by the oral or documentary
evidence which they presented. In view
thereof, and because of the insufficiency of
the evidence presented, we are of the
opinion that the lower court committed no
error in dismissing their oppositions.
In view of the foregoing, the judgment of
the lower court is reversed, without
prejudice to the filing by the applicant,
Gabriel Lasam, of a new application and
plan covering the portion of the land
actually occupied by him since July 25,
1894. Upon the determination of that
portion by the lower court, let judgment be
rendered accordingly. The remaining
portion or portions of lot No. 9 as indicated
on plan Psu-67516 (Exhibit K) are hereby
declared public lands, to be disposed of or
otherwise dealt with in accordance with
law. Without pronouncement as to costs.
So ordered.
Avanceña, C. J., Villa-Real, Abad Santos,
Imperial, Diaz and Concepcion, JJ.,
concur.
G.R. No. 79688 February 1, 1996
PLEASANTVILLE DEVELOPMENT
CORPORATION, petitioner,
vs.
COURT OF APPEALS, WILSON KEE, C.T. TORRES
ENTERPRISES, INC. and ELDRED
JARDINICO, respondents.
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on
the wrong property erroneously delivered by
the owner's agent, a builder in good faith? This
is the main issue resolved in this petition for
review on certiorari to reverse the Decision1of
the Court of Appeals2 in CA-G.R. No. 11040,
promulgated on August 20, 1987.
By resolution dated November 13, 1995, the
First Division of this Court resolved to transfer
this case (along with several others) to the
Third Division. After due deliberation and
consultation, the Court assigned the writing of
this Decision to the undersigned ponente.
The Facts
The facts, as found by respondent Court, are
as follows:
Edith Robillo purchased from petitioner a
parcel of land designated as Lot 9, Phase II
and located at Taculing Road, Pleasantville
Subdivision, Bacolod City. In 1975, respondent
Eldred Jardinico bought the rights to the lot
from Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico
secured from the Register of Deeds of Bacolod
City on December 19, 1978 Transfer Certificate
of Title No. 106367 in his name. It was then that
he discovered that improvements had been
introduced on Lot 9 by respondent Wilson Kee,
who had taken possession thereof.
It appears that on March 26, 1974, Kee bought
on installment Lot 8 of the same subdivision
from C.T. Torres Enterprises, Inc. (CTTEI), the
exclusive real estate agent of petitioner. Under
the Contract to Sell on Installment, Kee could
possess the lot even before the completion of
all installment payments. On January 20, 1975,
Kee paid CTTEI the relocation fee of P50.00
and another P50.00 on January 27, 1975, for
the preparation of the lot plan. These amounts
were paid prior to Kee's taking actual
possession of Lot 8. After the preparation of the
lot plan and a copy thereof given to Kee, CTTEI
through its employee, Zenaida Octaviano,
accompanied Kee's wife, Donabelle Kee, to
inspect Lot 8. Unfortunately, the parcel of land
pointed by Octaviano was Lot 9. Thereafter,
Kee proceeded to construct his residence, a
store, an auto repair shop and other
improvements on the lot.
After discovering that Lot 9 was occupied by
Kee, Jardinico confronted him. The parties
tried to reach an amicable settlement, but
failed.
On January 30, 1981, Jardinico's lawyer wrote
Kee, demanding that the latter remove all
improvements and vacate Lot 9. When Kee
refused to vacate Lot 9, Jardinico filed with the
Municipal Trial Court in Cities, Branch 3,
Bacolod City (MTCC), a complaint for
ejectment with damages against Kee.
5|P r o p e r t y C a s e s - P o s s e s s i o n
Kee, in turn, filed a third-party complaint
against petitioner and CTTEI.
The MTCC held that the erroneous delivery of
Lot 9 to Kee was attributable to CTTEI. It further
ruled that petitioner and CTTEI could not
successfully invoke as a defense the failure of
Kee to give notice of his intention to begin
construction required under paragraph 22 of
the Contract to Sell on Installment and his
having built a sari-sari store without the prior
approval of petitioner required under
paragraph 26 of said contract, saying that the
purpose of these requirements was merely to
regulate the type of improvements to be
constructed on the Lot.3
However, the MTCC found that petitioner had
already rescinded its contract with Kee over
Lot 8 for the latter's failure to pay the
installments due, and that Kee had not
contested the rescission. The rescission was
effected in 1979, before the complaint was
instituted. The MTCC concluded that Kee no
longer had any right over the lot subject of the
contract between him and petitioner.
Consequently, Kee must pay reasonable
rentals for the use of Lot 9, and, furthermore,
he cannot claim reimbursement for the
improvements he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is
hereby rendered as follows:
1. Defendant Wilson Kee is ordered to vacate
the premises of Lot 9, covered by TCT No.
106367 and to remove all structures and
improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to
the plaintiff rentals at the rate of P15.00 a day
computed from the time this suit was filed on
March 12, 1981 until he actually vacates the
premises. This amount shall bear interests (sic)
at the rate of 12 per cent (sic) per annum.
3. Third-Party Defendant C.T. Torres Enterprises,
Inc. and Pleasantville Subdivision are ordered
to pay the plaintiff jointly and severally the sum
of P3,000.00 as attorney's fees and P700.00 as
cost and litigation expenses.4
On appeal, the Regional Trial Court, Branch 48,
Bacolod City (RTC) ruled that petitioner and
CTTEI were not at fault or were not negligent,
there being no preponderant evidence to
show that they directly participated in the
delivery of Lot 9 to Kee5 . It found Kee a builder
in bad faith. It further ruled that even
assuming arguendo that Kee was acting in
good faith, he was, nonetheless, guilty of
unlawfully usurping the possessory right of
Jardinico over Lot 9 from the time he was
served with notice to vacate said lot, and thus
was liable for rental.
The RTC thus disposed:
WHEREFORE, the decision appealed from is
affirmed with respect to the order against the
defendant to vacate the premises of Lot No. 9
covered by Transfer Certificate of Title No. T-
106367 of the land records of Bacolod City; the
removal of all structures and improvements
introduced thereon at his expense and the
payment to plaintiff (sic) the sum of Fifteen
(P15.00) Pesos a day as reasonable rental to
be computed from January 30, 1981, the date
of the demand, and not from the date of the
filing of the complaint, until he had vacated
(sic) the premises, with interest thereon at 12%
per annum. This Court further renders
judgment against the defendant to pay the
plaintiff the sum of Three Thousand (P3,000.00)
Pesos as attorney's fees, plus costs of litigation.
The third-party complaint against Third-Party
Defendants Pleasantville Development
Corporation and C.T. Torres Enterprises, Inc. is
dismissed. The order against Third-Party
Defendants to pay attorney's fees to plaintiff
and costs of litigation is reversed.6
Following the denial of his motion for
reconsideration on October 20, 1986, Kee
appealed directly to the Supreme Court,
which referred the matter to the Court of
Appeals.
The appellate court ruled that Kee was a
builder in good faith, as he was unaware of the
"mix-up" when he began construction of the
improvements on Lot 8. It further ruled that the
erroneous delivery was due to the negligence
of CTTEI, and that such wrong delivery was
likewise imputable to its principal, petitioner
herein. The appellate court also ruled that the
award of rentals was without basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the
appealed decision is REVERSED, and
judgment is rendered as follows:
1. Wilson Kee is declared a builder in good
faith with respect to the improvements he
introduced on Lot 9, and is entitled to the rights
granted him under Articles 448, 546 and 548 of
the New Civil Code.
2. Third-party defendants C.T. Torres
Enterprises, Inc. and Pleasantville
Development Corporation are solidarily liable
under the following circumstances:
A. If Eldred Jardinico decides to
appropriate the improvements and,
thereafter, remove these structures, the third-
party defendants shall answer for all
demolition expenses and the value of the
improvements thus destroyed or rendered
useless;
b. If Jardinico prefers that Kee buy the land,
the third-party defendants shall answer for the
amount representing the value of Lot 9 that
Kee should pay to Jardinico.
3. Third-party defendants C.T. Torres
Enterprises, Inc. and Pleasantville
Development Corporation are ordered to
pay in solidum the amount of P3,000.00 to
Jardinico as attorney's fees, as well as litigation
expenses.
4. The award of rentals to Jardinico is
dispensed with.
Furthermore, the case is REMANDED to the
court of origin for the determination of the
actual value of the improvements and the
property (Lot 9), as well as for further
proceedings in conformity with Article 448 of
the New Civil Code.7
Petitioner then filed the instant petition against
Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to
justify a review of the respondent Court's
Decision, as follows:
1. The Court of Appeals has decided the case
in a way probably not in accord with law or
the the (sic) applicable decisions of the
Supreme Court on third-party complaints, by
ordering third-party defendants to pay the
demolition expenses and/or price of the land;
2. The Court of Appeals has so far departed
from the accepted course of judicial
proceedings, by granting to private
respondent-Kee the rights of a builder in good
faith in excess of what the law provides, thus
enriching private respondent Kee at the
expense of the petitioner;
3. In the light of the subsequent events or
circumstances which changed the rights of
the parties, it becomes imperative to set aside
or at least modify the judgment of the Court of
Appeals to harmonize with justice and the
facts;
4. Private respondent-Kee in accordance with
the findings of facts of the lower court is clearly
a builder in bad faith, having violated several
provisions of the contract to sell on
installments;
5. The decision of the Court of Appeals,
holding the principal, Pleasantville
Development Corporation (liable) for the acts
made by the agent in excess of its authority is
clearly in violation of the provision of the law;
6. The award of attorney's fees is clearly
without basis and is equivalent to putting a
premium in (sic) court litigation.
From these grounds, the issues could be re-
stated as follows:
(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and
its agent, C.T. Torres Enterprises, Inc.? and
(3) Is the award of attorney's fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals
erred in reversing the RTC's ruling that Kee was
a builder in bad faith.
Petitioner fails to persuade this Court to
abandon the findings and conclusions of the
Court of Appeals that Kee was a builder in
good faith. We agree with the following
observation of the Court of Appeals:
The roots of the controversy can be traced
directly to the errors committed by CTTEI, when
it pointed the wrong property to Wilson Kee
and his wife. It is highly improbable that a
purchaser of a lot would knowingly and
willingly build his residence on a lot owned by
another, deliberately exposing himself and his
family to the risk of being ejected from the
land and losing all improvements thereon, not
6|P r o p e r t y C a s e s - P o s s e s s i o n
to mention the social humiliation that would
follow.
Under the circumstances, Kee had acted in
the manner of a prudent man in ascertaining
the identity of his property. Lot 8 is covered by
Transfer Certificate of Title No. T-69561, while
Lot 9 is identified in Transfer Certificate of Title
No. T-106367. Hence, under the Torrens system
of land registration, Kee is presumed to have
knowledge of the metes and bounds of the
property with which he is dealing. . . .
xxx xxx xxx
But as Kee is a layman not versed in the
technical description of his property, he had to
find a way to ascertain that what was
described in TCT No. 69561 matched Lot 8.
Thus, he went to the subdivision developer's
agent and applied and paid for the relocation
of the lot, as well as for the production of a lot
plan by CTTEI's geodetic engineer. Upon Kee's
receipt of the map, his wife went to the
subdivision site accompanied by CTTEI's
employee, Octaviano, who authoritatively
declared that the land she was pointing to
was indeed Lot 8. Having full faith and
confidence in the reputation of CTTEI, and
because of the company's positive
identification of the property, Kee saw no
reason to suspect that there had been a
misdelivery. The steps Kee had taken to
protect his interests were reasonable. There
was no need for him to have acted ex-
abundantia cautela, such as being present
during the geodetic engineer's relocation
survey or hiring an independent geodetic
engineer to countercheck for errors, for the
final delivery of subdivision lots to their owners
is part of the regular course of everyday
business of CTTEI. Because of CTTEI's blunder,
what Kee had hoped to forestall did in fact
transpire. Kee's efforts all went to naught.8
Good faith consists in the belief of the builder
that the land he is building on is his and his
ignorance of any defect or flaw in his title 9 .
And as good faith is presumed, petitioner has
the burden of proving bad faith on the part of
Kee 10 .
At the time he built improvements on Lot 8,
Kee believed that said lot was what he bought
from petitioner. He was not aware that the lot
delivered to him was not Lot 8. Thus, Kee's
good faith. Petitioner failed to prove
otherwise.
To demonstrate Kee's bad faith, petitioner
points to Kee's violation of paragraphs 22 and
26 of the Contract of Sale on Installment.
We disagree. Such violations have no bearing
whatsoever on whether Kee was a builder in
good faith, that is, on his state of mind at the
time he built the improvements on Lot 9. These
alleged violations may give rise to petitioner's
cause of action against Kee under the said
contract (contractual breach), but may not
be bases to negate the presumption that Kee
was a builder in good faith.
Petitioner also points out that, as found by the
trial court, the Contract of Sale on Installment
covering Lot 8 between it and Kee was
rescinded long before the present action was
instituted. This has no relevance on the liability
of petitioner, as such fact does not negate the
negligence of its agent in pointing out the
wrong lot. to Kee. Such circumstance is
relevant only as it gives Jardinico a cause of
action for unlawful detainer against Kee.
Petitioner next contends that Kee cannot
"claim that another lot was erroneously
pointed out to him" because the latter agreed
to the following provision in the Contract of
Sale on installment, to wit:
13. The Vendee hereby declares that prior to
the execution of his contract he/she has
personally examined or inspected the
property made subject-matter hereof, as to its
location, contours, as well as the natural
condition of the lots and from the date hereof
whatever consequential change therein
made due to erosion, the said Vendee shall
bear the expenses of the necessary fillings,
when the same is so desired by him/her. 11
The subject matter of this provision of the
contract is the change of the location,
contour and condition of the lot due to
erosion. It merely provides that the vendee,
having examined the property prior to the
execution of the contract, agrees to shoulder
the expenses resulting from such change.
We do not agree with the interpretation of
petitioner that Kee contracted away his right
to recover damages resulting from petitioner's
negligence. Such waiver would be contrary to
public policy and cannot be allowed. "Rights
may be waived, unless the waiver is contrary
to law, public order, public policy, morals, or
good customs, or prejudicial to a third person
with a right recognized by law." 12
The Second Issue: Petitioner's Liability
Kee filed a third-party complaint against
petitioner and CTTEI, which was dismissed by
the RTC after ruling that there was no
evidence from which fault or negligence on
the part of petitioner and CTTEI can be
inferred. The Court of Appeals disagreed and
found CTTEI negligent for the erroneous
delivery of the lot by Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI
was its agent. But it contends that the
erroneous delivery of Lot 9 to Kee was an act
which was clearly outside the scope of its
authority, and consequently, CTTEI I alone
should be liable. It asserts that "while [CTTEI]
was authorized to sell the lot belonging to the
herein petitioner, it was never authorized to
deliver the wrong lot to Kee" 13 .
Petitioner's contention is without merit.
The rule is that the principal is responsible for
the acts of the agent, done within the scope
of his authority, and should bear the damage
caused to third persons 14 . On the other hand,
the agent who exceeds his authority is
personally liable for the damage 15
CTTEI was acting within its authority as the sole
real estate representative of petitioner when it
made the delivery to Kee. In acting within its
scope of authority, it was, however, negligent.
It is this negligence that is the basis of
petitioner's liability, as principal of CTTEI, per
Articles 1909 and 1910 of the Civil Code.
Pending resolution of the case before the
Court of Appeals, Jardinico and Kee on July
24, 1987 entered into a deed of sale, wherein
the former sold Lot 9 to Kee. Jardinico and Kee
did not inform the Court of Appeals of such
deal.
The deed of sale contained the following
provision:
1. That Civil Case No. 3815 entitled "Jardinico
vs. Kee" which is now pending appeal with the
Court of Appeals, regardless of the outcome
of the decision shall be mutually disregarded
and shall not be pursued by the parties herein
and shall be considered dismissed and without
effect whatso-ever; 16
Kee asserts though that the "terms and
conditions in said deed of sale are strictly for
the parties thereto" and that "(t)here is no
waiver made by either of the parties in said
deed of whatever favorable judgment or
award the honorable respondent Court of
Appeals may make in their favor against
herein petitioner Pleasantville Development
Corporation and/or private respondent C.T.
Torres Enterprises; Inc." 17
Obviously, the deed of sale can have no
effect on the liability of petitioner. As we have
earlier stated, petitioner's liability is grounded
on the negligence of its agent. On the other
hand, what the deed of sale regulates are the
reciprocal rights of Kee and Jardinico; it
stressed that they had reached an agreement
independent of the outcome of the case.
Petitioner further assails the following holding
of the Court of Appeals:
2. Third-party defendants C.T. Torres
Enterprises, Inc. and Pleasantville
Development Corporation are solidarily liable
under the following circumstances:
a. If Eldred Jardinico decides to appropriate
the improvements and, thereafter, remove
these structures, the third-party defendants
shall answer for all demolition expenses and
the value of the improvements thus destroyed
or rendered useless;
b. If Jardinico prefers that Kee buy the land,
the third-party defendants shall answer for the
amount representing the value of Lot 9 that
Kee should pay to Jardinico. 18
Petitioner contends that if the above holding
would be carried out, Kee would be unjustly
enriched at its expense. In other words, Kee
would be able to own the lot, as buyer, without
having to pay anything on it, because the
aforequoted portion of respondent Court's
Decision would require petitioner and CTTEI
jointly and solidarily to "answer" or reimburse
Kee therefor.
We agree with petitioner.
Petitioner' s liability lies in the negligence of its
agent CTTEI. For such negligence, the
petitioner should be held liable for damages.
Now, the extent and/or amount of damages
to be awarded is a factual issue which should
be determined after evidence is adduced.
However, there is no showing that such
7|P r o p e r t y C a s e s - P o s s e s s i o n
evidence was actually presented in the trial (4) The award of rentals to Jardinico is
court; hence no damages could flow be dispensed with.
awarded.
SO ORDERED.
The rights of Kee and Jardinico vis-a-vis each
other, as builder in good faith and owner in Navasa, C.J., Davide, Jr. and Melo,
good faith, respectively, are regulated by law JJ., concur.
(i.e., Arts. 448, 546 and 548 of the Civil Code). Francisco, J., took no part.
It was error for the Court of Appeals to make a
"slight modification" in the application of such
law, on the ground of "equity". At any rate, as
it stands now, Kee and Jardinico have
amicably settled through their deed of sale
their rights and obligations with regards to Lot
9. Thus, we delete items 2 (a) and (b) of the
dispositive portion of the Court of Appeals'
Decision [as reproduced above] holding
petitioner and CTTEI solidarily liable.
The Third Issue: Attorney's Fees
The MTCC awarded Jardinico attorney's fees
and costs in the amount of P3,000.00 and
P700.00, respectively, as prayed for in his
complaint. The RTC deleted the award,
consistent with its ruling that petitioner was
without fault or negligence. The Court of
Appeals, however, reinstated the award of
attorney's fees after ruling that petitioner was
liable for its agent's negligence.
The award of attorney's fees lies within the
discretion of the court and depends upon the
circumstances of each case 19 . We shall not
interfere with the discretion of the Court of
Appeals. Jardinico was compelled to litigate
for the protection of his interests and for the
recovery of damages sustained as a result of
the negligence of petitioner's agent 20 .
In sum, we rule that Kee is a builder in good
faith. The disposition of the Court of Appeals
that Kee "is entitled to the rights granted him
under Articles 448, 546 and 548 of the New Civil
Code" is deleted, in view of the deed of sale
entered into by Kee and Jardinico, which
deed now governs the rights of Jardinico and
Kee as to each other. There is also no further
need, as ruled by the appellate Court, to
remand the case to the court of origin "for
determination of the actual value of the
improvements and the property (Lot 9), as well
as for further proceedings in conformity with
Article 448 of the New Civil Code."
WHEREFORE , the petition is partially GRANTED.
The Decision of the Court of Appeals is hereby
MODIFIED as follows:
(1) Wilson Kee is declared a builder in good
faith;
(2) Petitioner Pleasantville Development
Corporation and respondent C.T. Torres
Enterprises, Inc. are declared solidarily liable
for damages due to negligence; however,
since the amount and/or extent of such
damages was not proven during the trial, the
same cannot now be quantified and
awarded;
(3) Petitioner Pleasantville Development
Corporation and respondent C.T. Torres
Enterprises, Inc. are ordered to pay in
solidum the amount of P3,000.00 to Jardinico
as attorney's fees, as well as litigation
expenses; and
[ GR No. 3088, Feb 06, 1907 ]
EL BANCO ESPAÑOL-FILIPINO v. JAMES
PETERSON +
DECISION
7 Phil. 409
TORRES, J.:
On the 24th of October, 1905, the Spanish-
Filipino Bank, a corporation, through its
attorneys, Del-Pan, Ortigas & Fisher, filed a
complaint against the sheriff of the city of
Manila and the other defendant, Juan
Garcia, praying that judgment be
rendered against the said sheriff, declaring
that the execution levied upon the
property referred to in the complaint, to wit,
wines, liquors, canned goods, and other
similar merchandise, was illegal, and
directing the defendants to return the said
goods to the plaintiff corporation, and in
case that he had disposed of the same, to
pay the value thereof, amounting to
P30,000, Philippine currency, and further
that it be declared that the said plaintiff
corporation, under the contract of pledge
referred to in the complaint had the right to
apply the proceeds of the sale of the said
goods to the payment of the debt of
P40,000, Philippine currency, for the security
of which the said merchandise was
pledged, with preference over the claim of
the other defendant, Juan Garcia, and
that both defendants be held jointly liable
to the plaintiff for the sum of P500, Philippine
currency, as damages, and the said
defendants to pay the costs of the
proceedings, and for such other and
further relief as the plaintiff might be
entitled to under the law. Plaintiff alleges in
its complaint that under the contract
entered into on the 4th of March, 1905, by
and between the Spanish-Filipino Bank and
Francisco Reyes, the former loaned to the
latter the sum of P141,702, Philippine
currency; that on the same date Francisco
Reyes was already indebted to the bank in
the sum of P84,415.38, Philippine currency,
which, added to the amount of the loan,
made a total of P226,117.38, Philippine
currency, received by the said Reyes as a
loan from the plaintiff bank, the entire sum
at an annual interest of 8 per cent; that to
secure the payment of these two sums and
the interest thereon, the debtor, Francisco
Reyes, by a public instrument executed
before a notary on the aforesaid date
mortgaged in favor of the plaintiff bank
several pieces of property belonging to
him, and pledged to the said bank part of
his personal property, specifying the
proportion in which the said real and
personal property thus mortgaged and
pledged in favor of the plaintiff corporation
would be respectively liable for the
payment of the debt; that the property
8|P r o p e r t y C a s e s - P o s s e s s i o n
pledged by the debtor to the bank judgment rendered in favor of Juan Garcia
included a stock of merchandise, y Planas, while the debtor Reyes had not
consisting of wines, liquors, canned goods, paid to the bank the P40,000, Philippine
and other similar articles valued at currency, to secure the payment of which
P90,591.75, Philippine currency, then stored the goods mentioned in Exhibit A had been
in the warehouses of the debtor, Reyes, No. pledged to the bank, that is, to secure the
12 Plaza Moraga, in the city of Manila, payment of a sum in excess of the actual
which said goods and merchandise were value of the goods in the hands of the
liable for the payment of the said sum of sheriff.
P90,591.75, Philippine currency; that in the
aforesaid deed of pledge it was agreed by
and between the bank and the debtor,
The defendant sheriff, James J. Peterson,
Reyes, that the goods should be delivered
and Juan Garcia, his codefendant,
to Ramon Garcia y Planas for safe-keeping,
through their attorneys, Hartigan, Marple,
the debtor having actually turned over to
Rohde & Gutierrez, answering the
the said Garcia y Planas the goods in
complaint, stated that they admitted the
question by delivering to him the keys of the
allegations contained in paragraphs 1, 2, 3,
warehouse in which they were kept; that in
4, 5, 12, and 17 of the complaint, but
a subsequent contract entered into by and
denied the allegations contained in
between the debtor, Reyes, and the
paragraphs 6, 7, 8, 9, 10, 11, 14, 16, and 18.
plaintiff bank on the 29th of September,
They further denied the allegations
1905, the said contract executed on the 4th
contained in paragraph 12, with the
of March was modified so as to provide
exception that the defendant sheriff levied
that the goods then (September 29) in
upon the goods mentioned in Exhibit A
possession of the depositary should only be
attached to the complaint for the purpose
liable for the sum of P40,000, Philippine
of satisfying the judgment referred to
currency, the said contract of the 4th of
therein; and also the allegations contained
March remaining in all other respects in full
in paragraph 13 of the complaint, with the
force and effect, Luis M.a Sierra having
exception that the sheriff seized the
been subsequently appointed by
property mentioned in Exhibit A under the
agreement between the bank and the
execution referred to therein; and finally
debtor as depositary of the goods thus
defendants denied the allegations
pledged in substitution for the said Ramon
contained in paragraph 15 of the
Garcia y Planas.
complaint, with the exception of the
On the 19th of October, 1905, in an action allegation that the value of the property
brought in the Court of First Instance of the seized is P30,000. They accordingly asked
city of Manila by Juan Garcia y Planas that the action be dismissed and that it be
against Francisco Reyes and Ramon adjudged that the plaintiff had no interest
Agtarat, judgment was rendered against whatever in the property described in the
the last-mentioned two for the sum of complaint, and that the plaintiff be taxed
P15,000, Philippine currency, to be paid by with the costs of these proceedings.
them severally or jointly, upon which
judgment execution was issued against the
property of the defendants, Reyes and
The testimony introduced by the parties
Agtarap. On the aforesaid 19th day of
having been received, and the exhibits
October, for the purpose of levying upon
having been attached to the record, the
the property of the defendants, the sheriff
court below entered judgment on the 4th
at the request of Garcia, the plaintiff in that
of January, 1906, dismissing plaintiff's action
case, entered the warehouse where the
and directing that the defendant recover
goods pledged to the plaintiff bank were
from the Spanish-Filipino Bank the costs of
stored under the custody of the depositary,
this action, for which execution was duly
Sierra, and levied upon them as per list
issued. To this judgment counsel for plaintiff
attached to the complaint marked "Exhibit
excepted and announced his intention of
A." The sheriff seized the goods which had
prosecuting a bill of exceptions, and further
been pledged to the bank, depriving the
made a motion for a new trial on the
latter of the possession of the same, to
ground that the judgment of the court
which said possession the bank was entitled
below was contrary to law and that the
under and by virtue of the contract
findings of fact were plainly and manifestly
executed on the 4th of March, 1905.
contrary to the weight of the evidence.
Without the authority of the bank, Reyes
could not dispose of the said goods. The
value of the goods seized by the sheriff was
P30,000, Philippine currency, the said sheriff The decision of this case depends mainly
having refused, and still refusing, to return upon the question as to whether the
the same to the bank, notwithstanding contract of pledge entered into by and
repeated demands made upon him to this between the Spanish-Filipino Bank and
effect, and it being alleged in the Francisco Reyes to secure a loan made by
complaint that unless prohibited by the the former to the latter was valid, all the
court the sheriff would proceed to sell the requisites prescribed by the Civil Code
said goods at public auction and apply the having been complied with.
proceeds to the satisfaction of the

If so, the bank's claim had preference over
the claim of a third person not secured, as
was the bank's, by a pledge, with reference
to the property pledged to the extent of its
value, and therefore such property could
not have been legally levied upon by the
sheriff at the request of the defendant,
Juan Garcia. (Arts. 1921, 1922, Civil Code.)
The contract in question complies with all
the requisites provided in article 1857 of the
Civil Code, such as that the property was
pledged to secure a debt, the date of the
execution, the terms of the pledge, and the
property pledged, all of which appears in a
public document, and the property
pledged was placed in the hands of a third
person by common consent of the debtor
and creditor, under the supervision of an
agent of the bank. (Arts. 1863, 1865, 1866,
1869, 1871, Civil Code.) The defect alleged
to exist in the said contract is that the
debtor, Reyes, continued in possession of
the property pledged; that he never
parted with the said property, and that
neither the creditor nor the depositary
appointed by common consent of the
parties were ever in possession of the
property pledged, and for this reason, and
upon the further ground that the contract
was fraudulent, the court below dismissed
the complaint with the costs against the
plaintiff.
In the motion for a new trial it was alleged
by the plaintiff that the judgment of the
court below was contrary to law, and that
the findings of fact contained therein were
plainly and manifestly against the weight of
the evidence. If plaintiff's contention is
correct, then the judgment of the court
below should be reversed.
From the evidence introduced at the trial,
both oral and documentary, it appears
that a third person, appointed by the
common consent of the debtor and
creditor, was in possession of the goods
pledged in favor of the bank under the
direct supervision of an agent of the bank
expressly appointed for this purpose, and it
has not been shown that the said Reyes
continued in the possession of the goods
after they had been pledged to the
plaintiff bank.
Exhibit C and the testimony of Francisco
Reyes, Luis M.a Sierra, and Mariano
Rodriguez corroborate the existence and
authenticity of the contract of pledge
recorded in a public instrument and
conclusively and satisfactorily show that
the debtor, after the pledge of the
property, parted with the possession of the
9|P r o p e r t y C a s e s - P o s s e s s i o n
same, and that it was delivered to a third
person designated by common consent of
the parties. For the purpose of giving this
possession greater effect, the pledgee
appointed a person to examine daily the
property in the warehouse where the same
was kept.
The witness Matias Garcia also testified as
to the status of these goods, and informed
Juan Garcia of such status before the same
were levied upon.
The sheriff's testimony supports the
allegation that the depositary, Sierra, was
present at the place where the goods were
kept, as well as the representative of the
bank, Rodriguez, when he, the sheriff, went
there for the purpose of levying upon the
said property. He further testified that
Rodriguez, the representative of the bank,
then protested and notified him that the
property in question was pledged to the
Spanish-Filipino Bank.
The contract in question was, therefore, a
perfect contract of pledge under articles
1857 and 1863 of the Civil Code, it having
been conclusively shown that the pledgee
took charge and possession of the goods
pledged through a depositary and a
special agent appointed by it, each of
whom had a duplicate key to the
warehouse wherein the said goods were
stored, and that the pledgee, itself,
received and collected the proceeds of
the goods as they were sold.
The fact that the said goods continued in
the warehouse which was formerly rented
by the pledgor, Reyes, does not affect the
validity and legality of the pledge, it having
been demonstrated that after the pledge
had been agreed upon, and after the
depositary appointed with the common
consent of the parties had taken possession
of the said property, the owner, the
pledgor, could no longer dispose of the
same, the pledgee being the only one
authorized to do so through the depositary
and special agent who represented it, the
symbolical transfer of the goods by means
of the delivery of the keys to the warehouse
where the goods were stored being
sufficient to show that the depositary
appointed by the common consent of the
parties was legally placed in possession of
the goods. (Articles 438, 1463, Civil Code.)
The fact that the debtor, Reyes, procured
purchasers and made arrangements for
the sale of the goods pledged and that the
bills for the goods thus sold were signed by
him does not affect the validity of the
contract, for the pledgor, Reyes, continued
to be the owner of the goods, (art. 1869,
Civil Code), he being the one principally
interested in the sale of the property on the
best possible terms.
As to the reservation stipulated in
paragraph 13 of the contract executed on
the 4th of March, 1905, it could not affect
the contract in question for the reason that
that reservation referred to the rent from
the property mortgaged to the bank and
the dividends from the shares of stock also
pledged to the bank, and not to the
merchandise so pledged, and such
reservation could not have rendered the
contract of pledge null.
If the case is to be decided in accordance
with the facts alleged and established, the
defendant not having introduced any
evidence to show that the said contract of
pledge was fraudulent as to other creditors,
there was no legal ground upon which the
court below could have held that the
contract evidenced by the instrument in
question was entered into to defraud other
creditors of the pledgor.
For the reasons hereinbefore set out, and
the judgment of the court below being
contrary to the evidence, the said
judgment is hereby reversed, and it is
hereby adjudged that the plaintiff
corporation, under and by virtue of the
contract of pledge in question, had a
preferential right over that of the
defendant, Juan Garcia, to the goods
pledged or the value thereof, the value to
be applied to the payment of the debt of
P40,000, Philippine currency, for the security
of which the said property was pledged,
and the defendants are accordingly
hereby ordered to return to the plaintiff
corporation the property improperly levied
upon, or to pay its value, amounting to
P30,000, Philippine currency, without
special provision as to costs. After the
expiration of twenty days let judgment be
entered in accordance herewith, and ten
days thereafter the case be remanded to
the court below for execution. So ordered.
Arellano, C. J., Mapa, Carson, and Willard,
JJ., concur.
[ G.R. No. 9989, March 13, 1918 ]
EDUARDO CUAYCONG ET AL., PLAINTIFFS
AND APPELLEES, VS. RAMONA BENEDICTO ET
AL., DEFENDANTS AND APPELLANTS.
DECISION
FISHER, J.:
The issues in this case relate to the right of
plaintiffs to make use of two roads existing
on the Hacienda Toreno, a tract of land in
the municipality of Victorias, Negros
Occidental, the property of the
defendants, Blasa Benedicto and Ramona
Benedicto. One of these roads is referred to
in the proceedings as the Nanca-Victorias
road and the other as the Dacaman-
Toreno road. The Court of First Instance held
that those of the plaintiffs who claimed to
be entitled to make use of the Dacuman-
Toreno road had failed to establish the
asserted right, and dismissed the action as
to them. From this decision they appealed
to this court but, their brief not having been
filed within the time prescribed by the rules,
their appeal was dismissed, on motion of
defendants, by resolution dated February
14, 1916. Consequently, the issues
presented on this appeal are limited to
those which relate to the rights of the
parties with respect to the Nanca-Victorias
road, and the determination of the
correctness of the decision of the court
concerning that part of the controversy
submitted to its decision.
The allegations in the complaint with
respect to the Nanca-Victorias road are
that the appellees, Eduardo Cuaycong,
Lino Cuaycong, and Eulalio Dolor, are the
owners of a group of haciendas situated
between the southern boundary of the
Hacienda Toreno and the barrio of Nanca,
of the municipality of Saravia, and that the
appellees Silverio Ginoo, Gervasio Ascalon,
and Juan Ledesma, are the lessees of part
of said haciendas; that for more than
twenty years the appellees and their
predecessors in interest have made use of
the Nanca-Victorias road which crosses the
Hacienda Toreno, openly, publicly, and
continuously, with the knowledge of the
owners of the said hacienda, for the
purpose of conveying the products of their
haciendas to the town of Victorias and to
the landing place there situated, and for
the purpose of transporting supplies from
those points to their haciendas, making use
of the said road by means of carts,
carabaos, and other usual means of
transportation; that there is no outlet to a
public road from the hacienda occupied
by these plaintiffs, the only road and way
by which the products of the plaintiffs'
property can be taken to the town of
Victorias and to the landing place there
being across the Hacienda Toreno by the
road marked on the plan attached to the
complaint; that on the fifteenth day of
November, 1912, the defendants closed
the road in question at the point at which it
10 | P r o p e r t y C a s e s - P o s s e s s i o n
crosses the Hacienda Toreno, and refused
to permit plaintiffs to continue using it; that
plaintiffs were about to commence to grind
their crop of sugar cane, and that, if
prevented from transporting their sugar
across the Hacienda Toreno to their point
of embarcation, would suffer damages
difficult to estimate. Upon these averments
of fact the plaintiffs prayed for a judgment
that they are entitled to use the road in
question as they have been using it in the
past, and that a perpetual injunction be
issued against plaintiffs restraining them
from impeding such use. Upon the filing of
the complaint, plaintiffs moved the court to
issue a preliminary injunction restraining
defendants from interfering with the use of
the road during the pendency of the suit,
which motion was granted by the court.
Defendants in their answer put in issue all
the special averments of the complaint, as
above set forth, and by way of
counterclaim and special defense, averred
that the road crossing the Hacienda
Toreno, over which plaintiffs claim the right
of passage, is the private property of
defendants; and, further, that they have
not refused plaintiffs permission to pass over
this road but have required them to pay toll
for the privilege of doing so. Defendants
also claimed damages for the use of the
road by plaintiffs during the pendency of
the suit, alleging that the preliminary
injunction had been improvidently issued
upon false statements contained in the
verified complaint filed by plaintiffs.
The case was tried in July, 1913. The court
on December 8, 1913, rendered judgment,
dismissing the complaint with respect to the
plaintiffs Felix Suarez, Probo Jereza, Enrique
Azcona, and Melecio Pido, these being the
plaintiffs who claimed the right to use the
Dacuman-Toreno road. With respect to the
Nanca-Victorias road, the court held that it
was a public highway over which the
public had acquired a right of use by
immemorial prescription, and ordered the
issuance of a perpetual injunction against
plaintiffs, restraining them from interfering in
any manner with the use of the said road.
The conclusion of the court with respect to
the facts affecting the Nanca-Victorias
road are as follows:
"Turning to a consideration of the
evidence.relative to the Nanca-Victorias
road we find incontestable proof that it has
been in existence for at least forty years.
That the hacenderos located in the
southwestern section of Victorias and the
public generally passed over it freely and
that it was used for all purposes of
transportation of farm produce, animals,
etc. and by pedestrians as well as
carromatas and other conveyances
without break or interruption until two or
three years ago when the defendants
announced that the road was private and
that those who wished to pass over it with
sugar carts would be obliged to pay a toll
of ten centavos all other vehicles, it
appears, were permitted to pass free of
charge. This arrangement seems to have
existed during the years of 1911 and 1912
and part of 1913, the money being
collected apparently from some
hacenderos and not from others. There is
some reason to believe from the evidence
presented by defendants themselves that
the practice of making these payments to
hacienda Toreno1 originated in an attempt
to raise a fund for the repair of the road.
There is no evidence that any other
hacenderos between Nanca and Victorias
or any other person made any attempt to
close the road or to collect toll. On the
contrary the road appears to have been
Repaired by the hacenderos when it
needed repairing and everyone used it tm
equal terms until the defendants in 1910 or
1911 interposed the objection that the road
in dispute was private. This we think is a fair
deduction from the evidence and
although it is asserted that toll was
collected at an earlier date by the late
Leon Montinola, brother of the defendant
Ruperto Montinola, there is no tangible
evidence that this was so and all the
circumstances are strongly indicative of the
fact that toll has been paid only during the
years of 1911, 1912, and part of 1913."
The question presented by the assignment
of error are in effect:
(a) Is the Nanca-Victorias road at the point
at which it traverses the Hacienda Toreno a
public highway or not?
(b) If it be held that the road in question is
not a public highway, have plaintiffs
proven their acquisition of an easement of
way over the Hacienda Toreno at the point
traversed by the road in question?
The trial judge, in holding that the road in
question is public, bases his conclusion
upon the fact, which he deems to have
been proven, that the road has been in
existence "from time immemorial," and had
been "continuously used as a public road *
* * and open to public as such for thirty or
forty years * * * until * * * the defendants
undertook to claim it as private and to
collect toll for the passage of carts." (Bill of
Exceptions, p. 56.) There is no doubt that for
the past thirty or forty years a road has
existed between the former site of the town
of Victorias and the barrio of Nanca, of the
municipality of Saravia, and that this road
crosses defendants' hacienda. It is also true
that during this period the plaintiffs and
their predecessors in the ownership of the
hacienda now held by them have made
use of this road for the purpose of going
and coming from their haciendas to the
town of Victorias; but the question is
whether this use was limited to the plaintiffs,
and their tenants and employees, or
whether it was, as held by the lower court,
a use enjoyed by the public in general.
Plaintiffs produced only two witnesses,
Segundo de Leon (stet. notes, pp. 21-22)
and Eduardo Cuaycong, (stet. notes, pp.
27-33) to testify as regards the use of the
Nanca-Victorias road. Several other
witnesses testified on behalf of plaintiffs, but
their testimony relates to the Dacuman-
Toreno road, which is not involved in this
appeal. We have carefully read the
testimony of the witnesses Leon and
Cuaycong, given upon their direct and
cross examination, but we have been
unable to find that either of them has
testified that the road in question was ever
used by the public in general. These
witnesses testified with regard to the use of
the road by the present and former owners
and occupants of the estates of Bacayan,
Esperanza, Alacaigan, Pusot, and Dolores
for the transportation of the products of
these estates to the town of Victorias, and
of supplies and agricultural implements
from Victorias to the haciendas, but neither
of them testified expressly that any other
use had been made of said road.
Nevertheless, it may be reasonably inferred
from the testimony of these witnesses that
all persons having occasion to travel
between Victorias and the haciendas of
Bacayan, Esperanza, Alacaigan, Pusot,
and Dolores, whether or not they were
owners, tenants, or employees of said
estates, made use of the road now in
dispute, crossing the Hacienda Toreno, and
to this limited extent it may be said that the
public made use of the road, but there is
nothing in the evidence to indicate that the
so-called public use extended beyond this.
Apart from the fact that there is no direct
evidence to support the finding of the court
concerning the general public use of the
road in dispute, the record contains data
strongly tending to show that when the
complaint was filed plaintiffs did not
contend that the road was a public
highway, but merely contended that they
had acquired by prescription an easement
of way across the Hacienda Toreno. For
example, the action is entitled an "action
concerning a right of way." (Bill of
Exceptions, pp. 64 and 65.) It is not averred
in the complaint that the road in question
was used by the public. On the contrary, it
is averred that it was used by the plaintiffs
and their predecessors. The averment in
paragraph 8 of the complaint that the
plaintiffs have no other "outlet to a public
road" than that which they have been
accustomed to use by going across the
defendants' hacienda for the purpose of
going to the town of Victorias also shows
that when they commenced this action
they had in mind the provisions of articles
564, et seq. of the Civil Code, which relate
to the method of establishingthe
compulsory easement of way. The owners
of an existing easement, as well as those
whose properties are adjacent with a
public road, have no occasion to invoke
these provisions of the Code, which relate
to the creation of new rights, and not the
enforcement of rights already in existence.
11 | P r o p e r t y C a s e s - P o s s e s s i o n
It is true that in the opening statement consider that the following findings are
made to the court, counsel for plaintiffs, warranted:
who was not the same attorney by whom
the complaint was signed, stated that 1. The town of Victorias has always been
plaintiffs contend that the road in question the shipping point of the products of the
is public, but as no evidence was Hacienda Toreno, and of the haciendas of
introduced tending to establish this appellees, as well as the place from which
contention concerning the Nanca- supplies were brought to those properties.
Victorias road, counsel for defendants had
2. For thirty or forty years before the
no occasion to object upon the ground
commencement of the suit a wagon road,
that such testimony was not relevant to the
herein called the Nanca-Victorias road,
averments of the complaint. No evidence
has been in existence, connecting the
was taken to indicate that at any time since
haciendas of appellees with the town of
the road in question has been in existence
Victorias, and this road traverses the
any part of the expense of its upkeep has
property of defendants. Since the removal
been defrayed by the general
of the town of Victorias to a new site the
government, the province, or the
Nanca-Victorias road has been used by
municipality. The trial judge said upon this
appellees in travelling between their
subject:
properties and the provincial road which
"It is also true that whatever repairs were crosses the Hacienda Toreno from east to
made on the road were made irregularly. west.
The municipality of Victorias had no funds
3. No public funds have at any time been
to devote to the construction and repair of
expended on the construction or upkeep
roads, and the upkeep of the road
of the Nanca-Victorias road, but from time
depending entirely therefore on the
to time work has been done on it by the
initiative of the persons who used it, was
laborers employed by the present and
attended to only at such times as repairs
former owners of the Hacienda Toreno and
were absolutely necessary." (Bill of
the haciendas owned by the appellees
Exceptions, p. 49.)
and their predecessors in title.
The court also held that it appears from the
4. The Nanca-Victorias wagon road,
government grant issued in 1885 to the
including that part of it which crosses the
original owner of the hacienda adjacent to
Hacienda Toreno, has for thirty-five or forty
the Hacienda Toreno on its western
years been used by the appellees and their
boundary, that the Nanca-Victorias road at
predecessors in title for the transportation,
that time separated that estate from the
by the usual means, of the products of their
Jalbuena Hacienda, and that these facts
estates to their shipping points in or near the
constitute "circumstantial evidence that
town of Victorias, and the transportation to
the road was in existence in 1885." We have
their estates: of all supplies required by
examined the document to which the
them, and has been used by all persons
court refers, and we agree that the road in
having occasion to travel to and from all or
question existed in 1885; but we do not
any of the estates now owned by the
believe that the document in question
appellees.
proves that the said road was a public
highway.
5. The use of the Nanca-Victorias road in
the manner and by the persons above
Another circumstance established by the
mentioned was permitted without
evidence, and which is of some
objection by the owners of the Hacienda
importance in the determination of this
Toreno until the year 1911, when they
issue, is that although the defendants
closed it, and began charging a toll of 5
closed the Nanca-Victorias road in the
centavos for each cart which passed over
month of February, 1911, and since that
the road, including, carts belonging to the
time have collected toll from persons
appellants, until restrained from continuing
passing over it with carts loaded with sugar,
to do so by the preliminary injunction
including those belonging to several of the
granted in this case.
plaintiffs, nothing was done by them to
prevent the continuation of this restriction
6. The Nanca-Victorias road constitutes the
until December, 1912, when this action was
only outlet from the estates of appellants to
commenced. It is natural to assume that if
the nearest public road which is the
plaintiffs had considered that the road in
provincial road which crosses the
question was public, they would have
Hacienda Toreno from east to west.
protested immediately against the action
of the defendants, and would have either Upon these facts the questions of law to be
commenced a civil action, as they decided are;
subsequently did, or would have brought
about a prosecution under section 16 of (a) Is the Nanca-Victorias road a public
Act No. 1511. highway?
Upon the evidence taken and admissions (b) If the Nanca-Victorias road, or that part
contained in the pleadings and those of it which crosses the Hacienda Toreno, is
made during the course of the trial we not a public highway, is it subject to a
private easement of way in favor of the
appellees?
The defendants are the owners of the
Hacienda Toreno under a Torrens title
issued in accordance with the Land
Registration Act, conferring to them its
absolute ownership, subject only to the
limitations of paragraph four of section 39
of said Act. It is admitted that there is no
annotation on the certificate of title
regarding the road here in question, either
as a "public road" or as a "private way
established by law," and, therefore, the
questions presented by this appeal are to
be determined precisely as they would be
had the Hacienda Toreno not been
brought under the operation of the Land
Registration Act. The plaintiffs being the
owners of the property in question, the
presumption of law is that it is free from any
lien or encumbrance whatever, and the
burden therefore rests upon plaintiffs to
establish the contrary. As this court said in
the case of Fabie vs. Lichauco and the
children of Francisco L. Roxas (11 Phil. Rep.,
14) ;
"It is a settled doctrine of law that a
property is assumed to be free from all
encumbrance unless the contrary is
proved."
There is admittedly no evidence to show
that the land occupied by the road here in
question was at any time conveyed to the
general government or any of its political
subdivisions by the present or any of the
former owners of the Hacienda Toreno.
There is no evidence, even remotely,
tending to show that the road existed prior
to the time when the property now known
as the Hacienda Toreno passed from the
State into private ownership. The record
fails to disclose any evidence whatever
tending to show that the Government has
at any time asserted any right or title in or to
the land occupied by the road, or that it
has incurred any expense whatever in its
upkeep or construction. The Civil Code
defines as public roads those which are
constructed by the State (art. 339), and as
provincial and town roads those "the
expense of which is borne by such towns or
provinces." (Civil Code, art. 344.) While it is
not contended that this definition is
exclusive, it does show that during the
Spanish regime, under normal conditions,
roads which were public were maintained
at the public expense, and that the fact
that at no time was any expense incurred
by the Government with respect to the
road here in question tends strongly to
support the contention of the defendants
that it is private way.
During the Spanish regime the law required
each able bodied citizen not within one of
the exempted classes to work a certain
number of days in each year, his labor to
be devoted to "services of general utility" to
the municipality of his residence. (Royal
Decree of July 11, 1883, art. 5.) Under this
12 | P r o p e r t y C a s e s - P o s s e s s i o n
Decree and the Regulations for its
enforcement (Berriz, vol. 11, 258) the
greater part of the work on the public roads
of the Islands was accomplished. Had the
road here in question been a public way, it
is reasonable to assume that the polistas of
the town of Victorias would have been
employed in maintaining it. It is most
significant that no mention is made in the
testimony of the plaintiffs' witnesses of any
work of this character having been done
on the road at any time, particularly in view
of the fact that their attention was drawn
to this point. (Stet. notes, pp. 8, 10, 11, 12, 13
and 14.)
The evidence shows that the repairs were
made by the owners of the estates
benefited by the road, and by their
laborers, as a purely voluntary act for their
own convenience and interest. There being
no evidence of a direct grant to the
government of the land occupied by the
road in question or that any Government
funds or labor were expended upon it, the
question presents itself whether the use to
which the road has been put was such as
to justify the conclusion of the lower court
that it has become public property. There
being no evidence that the original use of
the road by plaintiffs' predecessors was
based upon any express grant of the fee to
the road or of an easement of way, or that
it began under the assertion of a right on
their part, the presumption must be that the
origin of the use was the mere tolerance or
license of the owners of the estates
affected.
This being so, has that merely permissive use
been converted into a title vested in the
public at large, or in the plaintiffs by reason
of their ownership of the land beneficially
affected by the use?
Had it been shown that the road had been
maintained at the public expense, with the
acquiescence of the owners of the estates
crossed by it, this would indicate such
adverse possession by the government as
in course of time would ripen into title or
warrant the presumption of a grant or of a
dedication. But in this case there is no such
evidence, and the claims of plaintiffs,
whether regarded as members of the
public asserting a right to use the road as
such, or as persons claiming a private
easement of way over the land of another
must be regarded as resting upon the mere
fact of user.
If the owner of a tract of land, to
accommodate his neighbors or the public
in general, permits them to cross his
property, it is reasonable to suppose that it
is not his intention, in so doing, to divest
himself of the ownership of the land so
used, or to establish an easement upon it,
and that the persons to whom such
permission, tacit or express, is granted, do
not regard their privilege of use as being
based upon anything more than the mere
tolerance of the owner. Clearly, such
permissive use is in its inception based upon
an essentially revocable license. If the use
continues for a long period of time, no
change being made in the relations of the
parties by any express or implied
agreement, does the owner of the property
affected lose his right of revocation ? Or,
putting the same question in another form,
does the mere permissive use ripen into title
by prescription?
It is a fundamental principle of the law in
this jurisdiction concerning the possession
Qf real property that such possession is not
affected by acts of a possessory character
which are "merely tolerated" by the
possessor, or which are due to his license
(Civil Code, arts. 444 and 1942). This
principle is applicable not only with respect
to the prescription of the dominium as a
whole, but to the prescription of right in
rem. In the case of Cortes vs. Palanca Yu-
Tibo (2 Phil. Rep., 24, 38), the Court said:
"The provision of article 1942 of the Civil
Code to the effect that acts which are
merely tolerated produce no effect with
respect to possession is applicable as much
to the prescription of real rights as to the
prescription of th3 fee, it being a glaring
and self-evident error to affirm the contrary,
as does the appellant in his motion papers.
Possession is the fundamental basis of the
prescription. Without it no kind of
prescription is possible, not even the
extraordinary. Consequently, if acts of
mere tolerance produce no effect with
respect to possession, as that article
provides, in conformity with article 444 of
the same Code, it is evident that they can
produce no effect with respect to
prescription, whether ordinary or
extraordinary. This is true whether the
prescriptive acquisition be of a fee or of
real rights, for the same reason holds in one
and the other case; that is, that there has
been no true possession in the legal sense
of the word." (See also Ayala de Roxas vs.
Maglonso, 8 Phil. Rep., 745; Municipality of
Nueva Caceres vs.Director of Lands and
Roman Catholic Bishop of Nueva Caceres,
24 Phil. Rep., 485.)
Possession, under the Civil Code, to
constitute the foundation of a prescriptive
right, must be possession under claim of title
(en concepto de dueno), or to use the
common law equivalent of the term, it must
be adverse. Acts of a possessory character.
performed by one who holds by mere
tolerance of the owner are clearly not en
concepto de dueño, and such possessory
acts, no matter how long so continued, do
not start the running of the period of
prescription.
A similar question was presented in the
case of the Roman Catholic Archbishop of
Manila vs. Roxas (22 Phil Rep., 450), in which
case it appeared that Roxas, the owner of
the Hacienda de San Pedro Macati,
claimed a right of way across the property
of the church to Calle Tejeron, a public
street of the town of San Pedro Macati. The
proof showed that the road in question had
been used by the tenants of the Hacienda
de San Pedro Macati for the passage of
carts in coming and leaving the hacienda
"from time immemorial," and further that
the road had been used for time out of
mind, not only by the tenants of the
hacienda but by many other people in
going and coming from a church half-way
between the boundary line of the
hacienda and Calle Tejeron. The court held
that the facts did not give rise to a
prescriptive right of easement in favor of
the owner of the hacienda, upon the
ground that such use "is to be regarded as
permissive and under an implied license,
and not adverse. Such a use is not
inconsistent with the only use which the
proprietor thought fit to make of the land,
and until the appellee thinks proper to
inclose it, such use is not adverse and will
not preclude it from enclosing the land
when other views of its interest render it
proper to do so. And though an adjacent
proprietor may make such use of the open
land more frequently than another, yet the
same rule will apply unless there be some
decisive act indicating a separate and
exclusive use under a claim of right. A
different doctrine would have a tendency
to destroy all neighborhood
accommodations in the way of travel; for if
it were once understood that a man, by
allowing his neighbor to pass through his
farm without objection over the pass-way
which he used himself, would thereby, after
the lapse of time, confer a right on such
neighbor to require the pass-way to be
kept open for his benefit and enjoyment, a
prohibition against all such travel would
immediately ensue."
The decisions of the supreme court of
Louisiana, a State whose jurisdiction is
based, as is our own, upon the Roman Law,
and whose Civil Code is taken, as is our
own, very largely from the Code of
Napoleon, are particularly persuasive in
matters of this character. In the case of
Torres vs. Fargoust (37 La. Ann., 497), cited
by appellants in their brief, in which the
issues were very similar to those of the
present case, the court held that
"The mere fact that for thirty or forty years
the public was permitted to pass over this
ground would not of itself constitute the
place a locus publicus * * * dedication must
be shown by evidence so conclusive as to
exclude all idea of private ownership; * * *
such dedication cannot be inferred from
mere user alone; * * * no one is presumed
to give away his property. The burden is on
him who avers a divestiture of ownership to
prove it clearly." We are, therefore, of the
opinion, and so hold, that upon the facts
established by the evidence it does not
appear that the road in question is a public
road or way. We are also of the opinion that
plaintiffs have failed to show that they have
acquired by prescription a private right of
passage over the lands of defendants. The
13 | P r o p e r t y C a s e s - P o s s e s s i o n
supreme court of Spain has decided that rights in real estate is fixed by the Code
under the law in force before the (sec. 41) at ten years. The evidence shows
enactment of the Civil Code, the that in February, 1911, before the expiration
easement of way was discontinuous, and of the term of ten years since the time the
that while such an easement might be Code of Civil Procedure took effect, the
acquired by prescription, it must be used in defendants interrupted the use of the road
good faith, in the belief of the existence of by plaintiffs by constructing and
the right, and such user must have been maintaining a toll gate on it and collecting
continuous from time immemorial. toll from persons making use of it with carts
(Judgment of December 15, 1882.) In the and continued to do so until they were
appealed decision the court below says enjoined by the granting of the preliminary
that the plaintiffs and their predecessors injunction by the trial court in December
made use of the road in question "from time 1912. Our conclusion is, therefore, that
immemorial," but there is no evidence plaintiffs have not acquired by prescription
whatever in the record to support this a right to an easement of way over the
finding, although it is true that the evidence defendants' property; that their use of the
shows the existence of the road and, its use Nanca-Victorias road across the Hacienda
by the plaintiffs and their predecessors for Toreno was due merely to the tacit license
thirty-five or forty years. Speaking of the and tolerance of the defendants and their
evidence required under the present Code predecessors in title; that the license was
of Civil Procedure to show immemorial use essentially revokable; and that, therefore,
of an easement, this court said in the case the defendants were within their rights
of Ayala de Roxas vs. Case (8 Phil. Rep., when they closed the road in 1911.
197, 198) :
While in the allegations from plaintiffs'
"The third Partida in title 31, law 15 * * * says complaint it might be inferred that it was
that discontinuous servitudes * * * must be their purpose to seek to impose upon
proved by usage or a term so long that defendants the easement to which arts.
men can not remember its 564 et seq. of the Civil Code relate, that
commencement. * * * In many judgments purpose was evidently abandoned, and
the supreme court of Spain has refused to the case was tried upon a wholly different
accept proof of any definite number of theory. Proof was offered to show that the
years as a satisfaction of this requirement of right of passage across defendants' land is
the law. * * * We are of the opinion that in necessary to enable plaintiffs to get their
order to establish a right of prescription [title products to market, but there was no offer
of prescription based upon use from time on their part to pay defendants the
immemorial] something more is required indemnity required by section 564.
than the memory of living witnesses.
Whether this something should be the For the reasons stated the judgment of the
declaration of persons long dead, court below is reversed, the injunction
repeated by those who testify, as exacted issued against defendants is dissolved, and
by the Spanish law, or should be the the action is dismissed. No costs will be
common reputation of ownership allowed on this appeal. So ordered.
recognized by the Code of Procedure, it is
Arellano, C. J., Torres, Araullo, Street,
unnecessary for us to decide. On either
Malcolm, and Avanceña, JJ., concur.
theory the appellant has failed in his proof
* * *."
Johnson, J., dissents.
The same thing may be said in this case.
Witnesses have testified that they have
known the road for a certain period of
years, beginning at a time prior to the
enactment of the Civil Code, but no
evidence has been made to prove
immemorial use by either of the means of
proof mentioned in this decision cited, nor
is immemorial user averred in the complaint
as the basis of the right. It is evident,
therefore, that no vested right by user from
time immemorial had been acquired by
plaintiffs at the time the Civil Code took
effect. Under that Code (art. 539) no
discontinuous easement could be
acquired by prescription in any event.
Assuming, without deciding, that this rule
has been changed by the provisions of the
present Code of Civil Procedure relating to
prescription, and that since its enactment
discontinuous easement may be acquired
by prescription, it is clear that this would not
avail plaintiffs. The Code of Civil Procedure
went into effect on October 1, 1901. The
term of prescription for the acquisition of
DIVISION
[ GR No. L-28066, Sep 22, 1976 ]
PEREGRINA ASTUDILLO v. BOARD OF
DIRECTORS OF PEOPLE'S HOMESITE +
DECISION
165 Phil. 19
AQUINO, J.:
Peregrina Astudillo appealed from the
"resolution" dated April 18, 1967 of the
Court of First Instance of Rizal, Quezon
City Branch V, granting the motion for
summary judgment filed by Ramon P.
Mitra and dismissing her petition
for certiorari and mandamus (Civil Case
No. Q-8741).
According to the pleadings of
respondents Mitra and the People's
Homesite and Housing Corporation
(PHHC)[*] , Mitra on December 28, 1957
applied, in behalf of his minor son,
Ramon Mitra Ocampo, for the purchase
of Lot 16, Block E-155 of the East Avenue
Subdivision of the PHHC in Piñahan,
Quezon City.
His application was approved on
January 3, 1958. He made a
downpayment of P840, an amount
equivalent to ten percent of the price of
the lot. On September 9, 1961 the PHHC
and Mitra executed a contract of
conditional sale. After Mitra had paid in
full the price, which totalled more than
nine thousand pesos, a final deed of sale
was executed in his favor on February 18,
1965. Transfer Certificate of Title No.
89875 was issued to him on March 1,
1965.
The lot in question is actually in the
possession of Peregrina Astudillo. She
constructed thereon a residential house
(a shanty, according to Mitra). She
admits that she has been squatting on
the said lot "uninterruptedly since 1957
up to the present" (p. 52, Record). She
filed with the administrative investigating
committee of the PHHC a request dated
February 24, 1963, praying for the
cancellation of the award of Lot 16 to
Congressman Mitra and asking the
committee to recommend that it be re-
awarded to her. No action was taken on
that request.
On May 3, 1965 Peregrina filed in the
lower court her aforementioned petition
against the PHHC board of directors, the
register of deeds of Quezon City and the
spouses Ramon P. Mitra and Salud O.
Mitra. She questioned the legality of the
14 | P r o p e r t y C a s e s - P o s s e s s i o n
award of Lot 16 to Mitra. She asked that
Lot 16 be sold to her.
After the respondents had filed their
answers, the Mitra spouses filed a verified
motion for summary judgment. They
assumed that there was no genuine
issue as to any material fact. Peregrina
Astudillo opposed the motion. The
parties submitted memoranda.
The lower court treated the motion for
summary judgment as a motion to
dismiss. It dismissed Peregrina's petition
on the grounds that she is a mala fide
squatter and that the sale of Lot 16 to
Mitra cannot be assailed by means
of certiorari and mandamus. Peregrina
appealed to this Court.
Her four assignments of error raise
questions of law. She contends that the
lower court erred in holding
that certiorari and mandamus do not lie
in this case and that she has no right to
question the award to Mitra, and in not
holding that the award of Lot 16 to him
was in contravention of the Anti-Graft
and Corrupt Practices Law and of the
constitutional provision that a Senator or
Representative should not directly or
indirectly be financially interested in any
contract with the government or any
subdivision or instrumentality thereof
during his term of office.
In the ultimate analysis the issue is
whether Peregrina Astudillo has a cause
of action to annul the sale of Lot 16 to
Mitra and to compel the PHHC board to
award that lot to her.
We hold that she has no cause of action
to impugn the award to Mitra and to
require that she be allowed to purchase
the lot. As a squatter, she has no
possessory rights over Lot 16. In the eyes
of the law, the award to Mitra did not
prejudice her since she was bereft of any
rights over the said lot which could have
been impaired by that award (Bañez vs.
Court of Appeals, L-30351, September
11, 1974, 59 SCRA 15, 22).
The record does not show, and
Peregrina does not claim, that she is a
member of the Piñahan Homeowners
Association some of whose members are
"deserving squatters" (Kempis vs.
Gonzales, L-31701, October 31, 1974, 60
SCRA 439).
In the familiar language of procedure,
she was not entitled to sue Mitra and the
PHHC for the enforcement or protection
of a right, or the prevention of a wrong.
Those respondents did not commit any
delict or wrong in violation of her rights
because, in the first place, she has no
right to the lot. Not being principally or
subsidiarily bound in the contract of sale
between Mitra and the PHHC, she is not
entitled to ask for its annulment (Art.
1397, Civil Code).
Peregrina invokes the PHHC charter
(erroneously referred to as section 11 of
Commonwealth Act No. 648) which
provides that the PHHC should acquire
buildings so as to provide "decent
housing for those who may be unable
otherwise to provide themselves
therewith" and that it should acquire
large estates for their resale to bona fide
occupants.
Those provisions do not sustain her action
in this case. They do not justify her act of
squatting on a government-owned lot
and then demanding that the lot be sold
to her because she does not yet own a
residential lot and house. She is not a
bona fide occupant of Lot 16.
The State is committed to promote social
justice and to maintain adequate social
services in the field of housing (Secs. 6
and 7, Art. II, New Constitution). But the
State's solicitude for the destitute and
the have-nots does not mean that it
should tolerate usurpations of property,
public or private.
"In carrying out its social readjustment
policies, the government could not
simply lay aside moral standards, and
aim to favor usurpers, squatters, and
intruders, unmindful of the lawful and
unlawful origin and character of their
occupancy. Such a policy would
perpetuate conflicts instead of attaining
their just solution" (Bernardo vs. Bernardo,
96 Phil. 202, 206).
Indeed, the government has
enunciated a militant policy against
squatters. Thus, Letter of Instruction No.
19 dated October 2, 1972 orders city and
district engineers "to remove all illegal
constructions, including buildings x x x
and those built without permits on public
or private property" and provides for the
relocation of squatters (68 O.G. 7962.
See Letter of Instruction No. 19-A). As
noted by Justice Sanchez, "since the last
global war, squatting on another's
property in this country has become a
widespread vice" (City of Manila vs.
Garcia, L-26053, February 21, 1967, 19
SCRA 413, 418).
The lower court did not err in holding that
Peregrina Astudillo cannot use the
special civil actions
of certiorari and mandamus to secure a
judicial review of the award of Lot 16 to
Mitra. Rule 65 of the Rules of Court
provides:
"SECTION 1. Petition for certiorari. - When
any tribunal, board, or officer exercising
judicial functions, has acted without or in
excess of its or his jurisdiction, or with
grave abuse of discretion and there is no
appeal, nor any plain, speedy, and
adequate remedy in the ordinary course
of law, a person aggrieved thereby may
file a verified petition in the proper court
alleging the facts with certainty and
praying that judgment be rendered
annulling or modifying the proceedings,
as the law requires, of such tribunal,
board or officer.
"The petition shall be accompanied by a
certified true copy of the judgment or
order subject thereof, together with
copies of all pleadings and documents
relevant and pertinent thereto."
"SEC. 3. Petition for mandamus. - When
any tribunal, corporation, board, or
person unlawfully neglects the
performance of an act which the law
specifically enjoins as a duty resulting
from an office, trust, or station, or
unlawfully excludes another from the use
and enjoyment of a right or office to
which such other is entitled, and there is
no other plain, speedy and adequate
remedy in the ordinary course of law, the
person aggrieved thereby may file a
verified petition in the proper court
alleging the facts with certainty and
praying that judgment be rendered
commanding the defendant,
immediately or at some other specified
time, to do the act required to be done
to protect the rights of the petitioner,
and to pay the damages sustained by
the petitioner by reason of the wrongful
acts of the defendant."
Respondent PHHC board is not the
board contemplated in section 1 of Rule
65. It does not exercise judicial functions.
The award being questioned was a
routinary corporate act that was within
the board's competence. No
jurisdictional issue was involved in that
award.Certiorari lies only for the
correction of jurisdictional errors (Gov't of
the P. I. vs. Judge of 1st Instance of Iloilo,
34 Phil. 157, 159).
Nor is the relief sought by Peregrina
Astudillo, which is to compel the PHHC
board to cancel the award of Lot 16 to
Mitra and to resell it to her, a right that
can be enforced by mandamus . What
she wants is to force the PHHC to
execute a contract of sale in her favor.
That is not within the purview of the writ
of mandamus.
Thus, it was held that "the writ
of mandamus is not an appropriate or
even admissible remedy to enforce the
15 | P r o p e r t y C a s e s - P o s s e s s i o n
performance of a private contract Barredo, Antonio, and Concepcion, Jr.,
which has not been fully performed by JJ., concur.
either party" (Quiogue vs. Romualdez, 46
Phil. 337). In Jacinto vs. Director of Lands, Fernando, J., (Chairman), in the result.
49 Phil. 853, a petition for a writ
of mandamus to compel the Director of
Lands to execute a deed of
conveyance for certain lots in favor of
the petitioner was denied. Generally,
title to property cannot be litigated in
a mandamus proceeding (City of
Manila vs. Posadas, 48 Phil. 309, 337).
It is not a ministerial duty of the PHHC
board to award Lot 16 to Peregrina.
Anyway, it has already been shown that
as a squatter she is not clothed with any
right to Lot 16 that may be enforced in a
court of justice.
The PHHC board completely ignored the
alleged demands of Peregrina for the
purchase of Lot 16. It did not render any
decision against her. Its inaction cannot
be assailed by certiorari or mandamus .
Peregrina's other assignment of error is
that the award of Lot 16 to Congressman
Mitra was a violation of section 3(h) of
the Anti-Graft and Corrupt Practices Law
and of section 17, Article VI of the 1935
Constitution, now section 11, Article VIII
of the new Constitution.
On the other hand, Mitra contends that
the PHHC performs proprietary functions.
He observed that the following high-
ranking officials were awarded PHHC
lots: Felixberto Serrano, Dominador
Aytona, Manuel Lim, Fernando Lopez,
Pacita M. Gonzales, Genaro Magsaysay,
Daniel Romualdez, Felipe A. Abrigo,
Bartolome Cabangbang, Juan Duran,
Manuel Enverga, Angel Fernandez, Jose
Nuguid, Antonio de Pio, Lorenzo Teves,
Faustino Tobia, Pedro Trono, Marcelino
Veloso and Valeriano Yancha.
We are of the opinion that that
assignment of error need not be
resolved in this case. Having shown that
Peregrina has no cause of action to
assail the award of Lot 16 to Mitra, it
follows that in this particular case she
cannot assail that award by invoking the
provisions of the Anti-Graft and Corrupt
Practices Law and the Constitution. This
is not the proper forum for the ventilation
of that question. (See Commonwealth
Act No. 626; Hernandez vs. Albano, 112
Phil. 506; Solidum and Concepcion, Jr.
vs. Hernandez, 117 Phil. 335).
WHEREFORE , the lower court's order of
dismissal is affirmed. No costs.
SO ORDERED.
DIVISION
[ GR No. L-36789, Jul 25, 1983 ]
FELIPA CORDERO MAURO OCAMPO v.
VICTORIA P. CABRAL +
DECISION
208 Phil. 456
ABAD SANTOS, J.:
Petition to review a decision of the defunct
Court of Appeals.
In Civil Case No. 2323 of the defunct Court
of First Instance of Bulacan, Felipa Cordero
and her children Mauro, Casimiro and
Elisea all surnamed Ocampo sued Victoria
Cabral, Alejandro Berboso and Dalmacio
Montaos in a Complaint which reads as
follows:
"1. That the plaintiffs are all of legal age, all
residing and with postal address at
Meycauayan, Bulacan; Felipa Cordero is a
widow while Elisea Ocampo is single; and
the defendants are all of legal age, Victoria
P. Cabral is married but she is living apart
and separate from her husband so the
latter is not included herein as party
defendant, and all of them are residing
and with postal address at Meycauayan,
Bulacan, where they may be served with
summons;
2. That Mr. Gregorio Z. Ocampo of
Meycauayan, Bulacan, husband of the
plaintiff Felipa Cordero and father of the
other plaintiffs surnamed Ocampo, died on
May 17, 1958, and that said deceased left
several properties, which were inherited by
the plaintiffs, one of which is a parcel of
land described as follows:
A parcel of land (Lot No. 5, plan Psu. 43302),
with the improvements thereon, situated in
the barrio of Saluysoy, Municipality of
Meycauayan. Bounded on the N. by Sapa
and properties of Pedro Dazo and Catalino
Exaltacion; on the NE. by property of
Trinidad Rodriguez & Mateo Mistica; on the
SE. by properties of Vicente Mistica,
Antonio Rodriguez, Hermogenes Blanco,
Lucio Sulbera and Pablo Francia; on the
SW. by properties of Concepcion Rodriguez
and Alejandro de la Cruz; and on the NW.
by a Sapa. . . .; containing an area of
Seventy-eight thousand one hundred and
eighty-one square meters (78,181), more or
less. With TRANSFER CERTIFICATE OF TITLE
NO. 14513 in the name of Gregorio Z.
Ocampo and has Tax Declaration No. 2819
and is assessed at P4,290.00.
which parcel of land was originally
registered in accordance with the Land
Registration Act on December 14, 1933,
and was registered and/or transferred in
the name of Mr. Gregorio Z. Ocampo on
July 31, 1934;
16 | P r o p e r t y C a s e s - P o s s e s s i o n
3. That after the death of the said Mr.
Gregorio Z. Ocampo the plaintiffs herein
took possession of the properties left by him,
among others is the afore-described parcel
of land which is a riceland, but they found
out that the southern portion of the same
with an area 4,303 square meters, more or
less, upon verification, was possessed by
the defendants herein, Victoria P. Cabral,
Alejandro Berboso and Dalmacio Montaos;
and that the defendant Victoria P. Cabral
claimed to be the owner of said portion
while her co-defendants co-possessed the
same as her tenants;
4. That the plaintiffs demanded of the
defendants to surrender to the former
possession of the afore-mentioned portion
of land and/or vacate it but they refused
and failed to do so, and the defendant
Victoria P. Cabral continued claiming to be
the owner of the same while her co-
defendants continued recognizing her as
the owner thereof instead of the plaintiffs;
that the plaintiffs had the afore-described
parcel of land (with T.C.T. No. 14513)
relocated in the presence of the
defendants' representatives and it was
found and/or determined that the
aforesaid portion of land with the area of
4,303 square meters, more or less, was a
part of the plaintiffs' land with T.C.T. No.
14513; that even after the said relocation
the defendant Victoria P. Cabral persisted
and still persist in her claim of ownership
over the said portion and her co-
defendants persisted and still persist in
recognizing her as the owner thereof
instead of the plaintiffs; that the defendants
continue in possession of the same; and
that the defendants still refuse and fail to
surrender and/or vacate said portion of
land inspite of demands made on them by
the plaintiffs;
5. That because of the defendants'
occupancy of the aforementioned
plaintiffs' portion of land with the area of
4,303 square meters, more or less, to the
exclusion of the latter, the said plaintiffs
failed to realize a yearly harvest of at least
ten (10) cavanes of palay at the rate of
P10.00 per cavan, from the harvest-time of
1958 up to the present;
6. That because of the defendants' refusal
to recognize plaintiffs' ownership over the
afore-mentioned portion of land and also
because of their refusal and failure to
surrender and/or vacate the same the
plaintiffs were forced to employ the
services of the undersigned counsel to
institute this action at an agreed fees of
P500.00.
WHEREFORE, premises considered, the
plaintiffs herein respectfully pray of this Hon.
Court to render judgment in favor of the
plaintiffs and against the defendants thus
ordering them:
a) To recognize the ownership of the
plaintiffs over the afore-mentioned portion
of land with an area of 4,303 square meters,
more or less, and to surrender it to the
plaintiffs or vacate the same;
b) To deliver, jointly and severally, to the
plaintiffs palay in the amount of ten (10)
cavanes or pay their market price at the
rate of P10.00 per cavan per harvest-time
beginning the year 1958 up to the time of
their delivery or payment.
c) To pay, jointly and severally, the plaintiffs'
lawyer's fees in the amount of P500.00; and
d) To pay the costs of this suit.
And to grant any remedy and relief just and
equitable in the premises." (Record on
Appeal, pp. 2-6.)
The Answer of the defendants contains the
following allegations:
"I. That defendants have no knowledge or
information sufficient to form a belief as to
the truth of the allegations in paragraph 2
of the complaint;
II. That defendants admit being in
possession of the portion of land alleged in
paragraph 3 of the complaint, as said
portion of land belongs to defendant
Victoria P. Cabral;
III. That defendants deny the allegation in
paragraph 4 of the complaint to the effect
that the said portion of 4,303 square meters,
more or less, is a part of the plaintiffs' land;
IV. That defendants have no knowledge or
information sufficient to form a belief as to
the truth of the allegations in paragraph 5
of the complaint;
V. That defendants likewise have no
knowledge or information sufficient to form
a belief as to the truth of the allegations in
paragraph 6 of the complaint;
And by way of SPECIAL DEFENSE,
defendants allege:
VI. That defendant Victoria P. Cabral and
her predecessors in interest before her are
the real owners, and have been in actual,
adverse, peaceful and continuous
possession, of that portion of land claimed
by the plaintiffs in their complaint, which
portion is more particularly described as Lot
5-B of plan Psd-11496, duly approved by
the Director of Lands on December 21,
1935;
VII. That the deceased Gregorio Z.
Ocampo and/or his heirs, the herein
plaintiffs, have admitted, acknowledged
and recognized the defendant Cabral and
her predecessors in said portion of land, as
the real owners thereof;
VIII. That the deceased Gregorio Z.
Ocampo and his predecessors in interest,
as well as the defendant Cabral and her
predecessors in interest, have always
recognized as the boundary between their
respective properties, a barrio road which
has existed since the Spanish regime and
has continued to exist up to the present
time; and all the residents of the rural areas
using said barrio road know for a fact that,
with respect to the respective properties of
the parties hereto, said road is the
boundary between said properties;
IX. That the inclusion of that portion claimed
by the plaintiffs in their complaint in the
original registration of their property was
obtained thru error or fraud by the original
applicant, but was never possessed by him
nor by his successors in interest, as they
have always openly recognized the
ownership of said portion as belonging to
defendant Cabral and her predecessors in
interest before her;
And by way of COUNTERCLAIM,
defendants allege:
X. That all the foregoing paragraphs are
pleaded herein and made parts hereof;
XI. That the defendant Victoria P. Cabral is
the real owner of Lot No. 5-B, plan Psd-
11496, with an area of 4,303 square meters,
more or less, erroneously or fraudulently
included in the property described in
Transfer Certificate of Title No. 14513 of the
Register of Deeds of the Province of
Bulacan, registered in the name of the
deceased Gregorio Z. Ocampo and now
claimed by the herein plaintiffs;
XII. That defendant Cabral and her
predecessors in interest have been in
possession of said portion of land for more
than fifty years, their possession being
actual, adverse, peaceful and continuous,
as owners thereof;
XIII. That said deceased Gregorio Z.
Ocampo and/or his heirs, and their
predecessors in interest have openly
admitted, acknowledged and recognized
the defendant Victoria P. Cabral and her
predecessors in interest as the real owners
of said portion of land, Lot 5-B plan Psd-
11496, and said Gregorio Z. Ocampo
and/or his heirs and their predecessors in
interest have never been in possession of
said portion of land;
XIV. That the plaintiffs, claiming to be the
heirs of the deceased Gregorio Z.
Ocampo, are therefore under obligation to
execute a deed of transfer of said portion
of land in favor of the true owner thereof,
the herein defendant Victoria P. Cabral, in
accordance with law;
XV. That because of the present action filed
by the plaintiffs, the defendants have
suffered damages in the amount of
P1,000.00;
WHEREFORE, defendants pray that
judgment be rendered:
(a) dismissing the complaint, with costs
against the plaintiffs;
17 | P r o p e r t y C a s e s - P o s s e s s i o n
(b) declaring the defendant Victoria P.
Cabral as the owner of Lot 5-B, plan Psd-
11496, which has been erroneously
included in the property of the deceased
Gregorio Z. Ocampo covered by Transfer
Certificate of Title No. 14513, Bulacan, and
ordering the herein plaintiffs to execute a
deed of transfer of said Lot No. 5-B, plan
Psd-11496 in favor of the defendant
Victoria P. Cabral; and
(c) ordering the plaintiffs to pay to the
defendants the sum of P1,000.00.
Defendants further pray for such other
reliefs and remedies which may be proper
and just under the premises." (R.A., pp. 8-
13.)
The plaintiffs filed a Reply and Answer to
Counterclaim as follows:
"1. That the plaintiffs deny the allegation in
paragraph II of the Answer that the portion
of land now under litigation belongs to the
defendant Victoria P. Cabral, and likewise
deny the allegations in paragraphs VI and
XI of the same that the defendant Victoria
P. Cabral and her predecessors in interest
are the real owners of this portion (under
litigation) with an area of 4,303 square
meters, Lot 5-B of plan Psd-11496 with
Transfer Certificate of Title No. 14513 in the
name of Mr. Gregorio Z. Ocampo, because
the truth is that the said Mr. Ocampo and
his successors in interest, the plaintiffs
herein, are the real owners thereof; and
that said portion is a part and is included in
the plaintiffs' big parcel of land known as
Lot 5, Psu-43302, and covered by the afore-
mentioned Certificate;
That the defendant Victoria P. Cabral and
her predecessors in interest were never the
owners of the said portion of land and in
fact none of them, much less Victoria P.
Cabral, has been in possession or in
possession of any title or any document,
either public or private, showing his or her
ownership, and not even a Tax Declaration
for taxation purposes; the truth is that when
the late Mr. Antonio Rodriguez, original
owner of the land with plan Psu-100536,
adjacent to that of the plaintiffs, sold said
land to his successor Segunda Prodon he
did not include in the said sale this portion,
under litigation, Lot 5-B, of plan Psd-11496
with an area of 4,303 square meters, more
or less, knowing that it did not belong to
him; and because Segunda Prodon has not
acquired this portion of land with an area
of 4,303 square meters, more or less, it is
clear, therefore, that she could not have
transmitted it to her successors including
the herein, defendant, Victoria P. Cabral;
2. That the plaintiffs deny the defendants'
allegations in paragraphs VI and XII of their
Answer that the defendant Victoria P.
Cabral and her predecessors in interest
have been in actual, adverse, peaceful
and continuous possession of this portion of
land for a period of more than 50 years
because the truth is that, if they were ever
in possession of the same, their possession
was 'not adverse' and 'not continuous'.
When Mr. Gregorio Z. Ocampo bought the
parcel of land known as Lot 5, Psu-43302
with an area of 78,181 square meters, more
or less, in 1934, (wherein this portion under
litigation is included) the said Mr. Ocampo
took possession of this whole land. In the
year 1935 the adjoining owner of the said
property, the late Mr. Antonio Rodriguez
and predecessor of the defendant Victoria
P. Cabral, requested Mr. Ocampo to sell to
him a portion of said land with an area of
4,303 square meters, more or less, to which
Mr. Ocampo agreed. As there was already
a meeting of the mind Mr. Rodriguez
requested Mr. Ocampo that he be allowed
to possess the said portion as they were
going to make the formal deed of sale, to
which proposition Mr. Ocampo likewise
agreed. This proposed sale never
materialized so if Mr. Rodriguez ever
possessed the said portion of land, now
under litigation, he did not possess it as
owner but only as a 'prospective owner'. His
possession cannot, therefore, be termed
'adverse'. Such possession cannot also be
termed 'continuous' for 50 years because
Mr. Ocampo was in possession of the same
in 1934 before Mr. Rodriguez came in
possession of the same, first, with the
consent and later by toleration of Mr.
Ocampo.
Granting but without admitting, that the
defendant Cabral and her predecessors in
interest have been in possession of this
portion of land with an area of 4,303 square
meters, more or less for more than 50 years,
does she mean to imply now that she
acquires ownership over the same by virtue
of 'prescription'? She must remember that
this property is titled under Act 496 and,
therefore, 'imprescriptible';
3. That the plaintiffs deny the defendants'
allegations in paragraphs VI and IX of their
Answer that the plaintiffs have admitted,
acknowledged and recognized the
defendant Cabral and her predecessors in
said land as the real owners thereof,
because the truth is that the plaintiffs are
the real owners of the same, and that they
have never admitted, acknowledged nor
recognized the defendant Cabral nor any
of her predecessors in interest as the owners
of said portion of land;
4. That the plaintiffs admit the allegation in
paragraph VIII of the Answer that the
defendant Victoria P. Cabral owns an
adjoining property which is described in her
plan Psu-100536 but they deny there is a
'barrio road' between her land and that of
the plaintiffs which serves as the boundary
and that there has never been any road
much less a barrio road between their
properties.
That, if the defendants are referring to Lot
5-B, plan Psd-11496, and the rest of the land
of the plaintiffs Lot No. 5, Psu-43302, which
said Lot 5-B is a part, the plaintiffs deny the
existence of such road much less a barrio
road, and that there has never been a
road therein. With the permission of the
Hon. Court the existence or non-existence
of a road can be verified by an ocular
inspection and if need be with the aid of a
licensed surveyor;
5. That the plaintiffs deny the allegations in
paragraphs IX and XIII of the Answer that
Mr. Gregorio Z. Ocampo and his successors
in interest have never been in possession of
this portion of land now under litigation. Mr.
Gregorio Z. Ocampo took possession of
said property after he bought it in 1934 and
if the predecessors in interest of the
defendant Cabral happened to be in its
possession it was, first, with the consent of
Mr. Ocampo and later by his toleration as
we have already explained in paragraph 2
of this Reply;
6. That the plaintiffs deny the allegation in
paragraph IX of the Answer that the
inclusion of this portion of property under
litigation was 'obtained thru error or fraud'
by the original applicant, and they likewise
deny the allegation in paragraph XI of the
Answer that this portion with an area of
4,303 square meters, more or less, was
erroneously and fraudulently included in
the property described in Transfer
Certificate of Title No. 14513 of the Register
of Deeds of the Province of Bulacan,
because in truth and in fact there was no
such error or fraud. The title to this property
was granted and obtained in a regular
proceeding. If there was any error or fraud
the predecessor in interest of the
defendant Victoria P. Cabral would have
filed a petition for review or would have
sued for damages. Or the said defendant
or any of her predecessors in interest would
have resorted to some legal remedy.
The fact is that the defendant Victoria P.
Cabral or any of her predecessors in
interest did not sincerely and honestly
believe that they were the owners of this
portion of property. In fact they did not
have and do not have any kind of title or
any kind of document, either public or
private, over this property and they did not
even have this property declared in their
names for taxation purposes.
Granting, but without admitting, that the
title to this property was obtained either by
error or fraud yet the defendant Victoria P.
Cabral can have no valid claim against the
plaintiffs because she has never been the
owner of said property and also because
the plaintiffs' predecessor, Mr. Gregorio Z.
Ocampo, acquired this property as 'an
innocent purchaser, in good faith and for
value.'
7. That the plaintiffs deny the allegation in
paragraph XIV of the Answer that the
plaintiffs are under obligation to execute a
deed of transfer of the portion of land in
favor of the defendant Victoria P. Cabral
18 | P r o p e r t y C a s e s - P o s s e s s i o n
because, first, the title to this land was
obtained in a regular proceeding where
there was neither error nor fraud; second,
said defendant or her predecessors in
interest are not the owners of said land
much less said defendant Cabral who has
nothing at all in her possession to show any
kind of right over said portion of land, and
third, Mr. Gregorio Z. Ocampo, the
predecessor in interest of the plaintiffs,
acquire this property as an 'innocent
purchaser, in good faith and for value'; and
8. That the plaintiffs have no knowledge or
information sufficient to form a belief as to
the truth of the allegation in paragraph XV
of the defendants' Answer (Counterclaim).
WHEREFORE, it is respectfully prayed of this
Hon. Court to grant the plaintiffs' Petition in
their Complaint." (R.A., pp. 14-21.)
It can be seen that the thrust of the
Complaint is that a piece of land covered
by T.C.T. No. 14513 in the name of Gregorio
Z. Ocampo was illegally possessed by the
defendants. Upon the other hand, the
thrust of the Answer is that "the defendant
Victoria P. Cabral is the real owner of Lot
No. 5-B, plan Psd-11496, with an area of
4,303 square meters, more or less,
erroneously or fraudulently included in the
property described in Transfer Certificate of
Title No. 14513 of the Register of Deeds of
the Province of Bulacan, registered in the
name of the deceased Gregorio Z.
Ocampo and now claimed by the herein
plaintiffs." (Answer, par. XI.)
The decision of the trial court is not clear as
to whether or not the disputed lot is
included in T.C.T. No. 14513. However, the
decision contains the following statement:
"if it is included in their title, such title is void
insofar as the portion of the Pandayan road
is concerned." (R.A., p. 30.)
The trial court gave the following judgment:
"WHEREFORE, plaintiffs' complaint is hereby
DISMISSED, without costs. For lack of proof
that plaintiffs were in bad faith in the filing
of the present action, defendants' counter-
claim is likewise dismissed." (R.A., p. 30.)
The plaintiffs appealed to the Court of
Appeals and made the following
assignment of errors:
"I. THE LOWER COURT ERRED IN HOLDING
THAT THE PANDAYAN ROAD IS LOCATED
INSIDE THE PROPERTY DESCRIBED IN T.C.T.
NO. 14513 AND CONSEQUENTLY HOLDING
THAT THE SAME CONSTITUTES THE
BOUNDARY LINE BETWEEN THE PROPERTIES
OF PLAINTIFFS-APPELLANTS AND
DEFENDANT-APPELLEE VICTORIA CABRAL.
II. THE LOWER COURT ERRED IN HOLDING
THAT T.C.T. NO. 14513 IS 'VOID INSOFAR AS
THE PORTION FROM THE PANDAYAN ROAD
IS CONCERNED', AND IN NOT HOLDING
THAT SAID T.C.T. IS INCONTROVERTIBLE.
III. THE LOWER COURT ERRED IN GIVING
IMPORTANCE TO DEFENDANTS-APPELLEES'
ALLEGED 'OPEN, CONTINUOUS AND
ADVERSE POSSESSION' AND IN DISMISSING
PLAINTIFFS-APPELLANTS' COMPLAINT." (Brief,
pp. a-b.)
The Court of Appeals found as a fact: "That
disputed portion Lot 5-a is admittedly part
of the land originally registered in the name
of plaintiff's predecessor in interest, there
should be no question that that title had
become imprescriptible and original
registrant as well as his successors had the
right to vindicate their ownership against
any body else." (Rollo, p. 54.)
But the Court of Appeals went further.
Seizing a statement in the Reply and
Answer to Counterclaim filed by the
plaintiffs, it held that Gregorio Z. Ocampo
had by an oral contract sold the disputed
land to Antonio Rodriguez, the defendant's
predecessor in interest. The Court of
Appeals further said "that agreement oral
albeit, became binding upon Ocampo, it
was even executed in part by the actual
delivery of possession, it amounted to a
supervening fact, posterior to the title, and
the fact that Ocampo's title was not
afterwards cancelled can not at all mean
that the title could be used as a weapon to
annul that posterior agreement by
Ocampo voluntarily entered into and by
reason of which he had delivered
possession unto defendant's predecessor;
of course, no deed of sale was formalized
for a reason not clear in the evidence; but
whether or not formalized, it was a binding
personal agreement upon
Ocampo." (Rollo, pp. 56-57.)
The statement upon which the Court of
Appeals built its decision is as follows:
"When Mr. Gregorio Z. Ocampo bought the
parcel of land known as Lot 5, Psu-43302
with an area of 78,181 square meters, more
or less, in 1934, (wherein this portion under
litigation is included), the said Mr. Ocampo
took possession of this whole land. In the
year 1935 the adjoining owner of the said
property, the late Mr. Antonio Rodriguez
and predecessor of the defendant Victoria
P. Cabral, requested Mr. Ocampo to sell to
him a portion of said land with an area of
4,303 square meters, more or less, to which
Mr. Ocampo agreed. As there was already
a meeting of the mind Mr. Rodriguez
requested Mr. Ocampo that he be allowed
to possess the said portion as they were
going to make the formal deed of sale, to
which proposition Mr. Ocampo likewise
agreed. This proposed sale never
materialized so if Mr. Rodriguez ever
possessed the said portion of land, now
under litigation, he did not possess it as
owner but only as a 'prospective owner'. His
possession cannot, therefore, be termed
'adverse'. Such possession cannot also be
termed 'continuous' for 50 years because
Mr. Ocampo was in possession of the same
in 1934 before Mr. Rodriguez came to
possession of the same, first, with the
consent and later by toleration of Mr.
Ocampo." (R.A. pp. 15-16.)
It passes understanding why the plaintiffs
mentioned a non-consummated
transaction between Gregorio Z. Ocampo
and Antonio Rodriguez when the
defendants made no claim of such
transaction nor was the name of Antonio
Rodriguez even mentioned in their Answer.
Even as the Court of Appeals found that
the disputed piece of land is registered in
the name of the plaintiffs but because of
the supposed oral sale of the same to the
predecessors of the defendants, it affirmed
the judgment of the trial court dismissing
the complaint for the recovery of the land.
The instant petition assails the Court of
Appeals for rendering a decision based on
a ground which was never raised nor
discussed whether in the trial court or
before it by any of the parties. The ground
to be sure, is the supposed oral contract of
sale made to the predecessors of the
defendants covering the disputed piece of
land.
The petition is highly impressed with merit.
It is a well-settled rule that, except questions
on jurisdiction, no question will be
entertained on appeal unless it has been
raised in the court below and it is within the
issues made by the parties in their
pleadings. (See cases cited in II Moran,
Rules of Court, pp. 504-505 [1970].)
In this case, the Court of Appeals erred
when it rendered a decision based on a
ground which was not litigated in the trial
court and which could not have been
raised on appeal. That the supposed oral
contract of sale was never an issue is
demonstrated by the following:
1. The pleadings of the parties have
been purposely reproduced in
full above. It can be seen
therefrom that no issue in respect
of the supposed oral sale
actually emerged.
2. The decision of the trial court is
absolutely silent on the supposed
oral contract of sale.
3. The plaintiffs who appealed the
decision of the trial court to the
Court of Appeals did not make
an assignment of error in respect
of the supposed oral sale.
The Court of Appeals found as a fact that
the disputed piece of land is registered in
the name of the plaintiffs' predecessor.
The defendants claimed in their answer
that they and their predecessors are the
owners of the land in dispute but that the
plaintiffs' predecessor was able to register
the same in his name through error or fraud.
19 | P r o p e r t y C a s e s - P o s s e s s i o n
However, the trial court made no
categorical finding on this claim of the
defendants otherwise it would have
granted the affirmative relief which they
asked, namely: "(b) declaring the
defendant Victoria P. Cabral as the owner
of Lot 5-B, plan Psd-11496, which has been
erroneously included in the property of the
deceased Gregorio Z. Ocampo covered
by Transfer Certificate of Title No. 14513,
Bulacan, and ordering the herein plaintiffs
to execute a deed of transfer of said Lot
No. 5-B, plan Psd-11496 in favor of the
defendant Victoria P. Cabral." The Court of
Appeals did not deal with this issue
because there was no appeal made by
the defendants.
The following conclusions have to be
made:
1. The disputed land is included in
T.C.T. No. 14513 issued to
Gregorio Z. Ocampo, the
predecessor of the plaintiffs.
2. The original registration which
includes the disputed land was
not vitiated by error or fraud.
3. The Court of Appeals erred when
it held that Gregorio Z. Ocampo
had orally sold the disputed land
to the predecessors of the
defendants.
4. The defendants, by their own
admission, are in possession of
the disputed land. There is no
evidence that they were
possessors in bad faith. However,
their good faith ceased when
they were served with summons
to answer the complaint. (Art.
528, Civil Code; Tacas vs. Tobon,
53 Phil. 356 [1929].) As possessors
in bad faith from the service of
the summons they "shall
reimburse the fruits received and
those which the legitimate
possessor could have received, .
. .." (Art. 549, Civil Code.)
WHEREFORE, the judgment of the Court of
Appeals is hereby reversed and another
one rendered in that the defendants shall
vacate and surrender the land in question
to the plaintiffs; and the defendants shall
also account for the fruits thereof pursuant
to Article 549 of the Civil Code from the
service of the summons. Costs against the
defendants.
SO ORDERED.
G.R. No. L-39044 January 3, 1985
MANOTOK REALTY, INC., petitioner,
vs.
THE HON. COURT OF APPEALS and FELIPE
CARILLO, respondents.
GUTIERREZ, JR., J.:
In this petition for review, the petitioner asks that
we reverse the decision of the Court of Appeals,
now the Intermediate Appellate Court, which
declared respondent Felipe Carillo a builder in
good faith with the right to remain in the
questioned premises, free of rent, until reimbursed
by the petitioner for the necessary and useful
expenses introduced on the land.
The dispositive portion of the Court of Appeals'
decision reads:
WHEREFORE, the appealed judgment is hereby
modified in the sense that the appellant being a
builder in good faith is entitled to the right of
retention of the lot introduced thereon, and he is
not hable to pay rentals for the occupation
thereof pending payment of the indemnity for
such improvements. In all other respects, the
appealed judgment is affirmed, without
pronouncement as to costs.
The background facts of the case are found in the
decision of the respondent court as follows:
There is no dispute that herein appellee is the
registered owner of a parcel of land covered by
Tax Declaration Nos. 2455 and 2456 issued by the
City Assessor's Office of Manila with a total
assessed value of P3,059,180.00 and by TCT 55125
(Exh. A) and TCT No. 76130 of the Register of
Deeds of the City of Manila. It acquired the
aforementioned property from the Testate Estate
of Clara Tambunting de Legarda, being the
highest bidder in a sale conducted by the Probate
Court (Exhs. C-7 & C-7-A).
After having acquired said property, the appellee
subdivided it, but could not take possession
thereof because the whole area is occupied by
several houses among which is the one belonging
to the herein appellant Felipe Carillo, Lot 143,
Block 2 of the subdivision plan (Exh. A-4 Carillo).
Demands to vacate and to surrender possession
of the property were made by the appellee
verbally and by publication (Exhs. D, D-1 & D-2)
and by circulars served to the appellant. In spite
of such demands, the appellant continued to
occupy the disputed lot and refused to surrender
possession thereof to the appellee.
On the other hand, appellant's evidence tends to
show that he acquired the lot in dispute from a
certain Delfin Dayrit on September 25, 1962,
pursuant to a deed of assignment (Exh. 1-Carillo);
that Dayrit in turn had acquired the property from
the late Carla Tambunting by virtue of a Contract
of Sale on Installment Basis (EXIL 2-Carillo); that
Dayrit had religiously paid the monthly installments
as they fell due, his last payment being on May 25,
1954, in the sum of P200.00, then leaving an
unpaid balance of Pl,306.00 when the said parcel
was conveyed to defendant Carino, for which
receipts were duly issued (Exhs. 3-Carillo to 24-
Carillo); that Dayrit could not continue paying the
succeeding installments as they fen due because
Vicente Legarda, the surviving spouse of Clara
Tambunting, refused to receive any payment for
the same and that it was only lately, more
specifically on September 25, 1962, when Dayrit
conveyed the lot to appellant Carillo.
20 | P r o p e r t y C a s e s - P o s s e s s i o n
After the petitioner failed in its attempts to take
possession of the lot, it filed the reivindicatory
action against the respondent.
The trial court decided the case in favor of the
petitioner. The dispositive portion of its decision
reads:
In Civil Case No. 64578:
(1) Ordering defendant Felipe Carino to vacate
and/or surrender possession to plaintiff Manotok
Realty Inc. of the parcel of land subject matter of
the complaint described in paragraph 2 thereof;
(2) To pay plaintiff the sum of P75.50 per month
from January 21, 1961 up to the time he actually
surrenders possession of the said parcel to the
plaintiff; and
(3) To pay plaintiff the sum of Pl,000.00 as
attorney's fees and to pay costs.
On August 15, 1984, we required the parties to
show whether or not the disputed lot falls within
the area expropriated under P.D. No. 1669 and
P.D. No. 1670. It appears that the expropriated
portion of the Tambunting Estate is the area
located at the east side adjacent to the Chinese
Cemetery. The lot is on the unexpropriated and
mainly commercial portion on the west side,
across from Rizal Avenue.
In this petition, the petitioner maintains that the
appellate court erred in considering the
respondent a possessor and builder in good faith.
It argues that at the time of the execution of the
deed of assignment in favor of the respondent,
the land was already registered in its name; and
that if the respondent were really acting in good
faith, he should have verified from the Register of
Deeds of Manila who was the registered owner of
the land in question.
We agree.
A possessor in good faith is one who is not aware
that there exists in his title or mode of acquisition
any flaw which invalidates it. (Caram v. Laureta,
103 SCRA 7, Art. 526, Civil Code). One who
acquires real estate with knowledge of a defect
or lack of title in his vendor cannot claim that he
has acquired title thereto in good faith as against
the true owner of the land or of an interest therein;
and the same rule must be applied to one who
has knowledge of facts which should put a
reasonable man upon his guard, and then claims
that he acted in good faith under the belief that
there was no defect in the title of the vendor. (See
Leung Yee v. FL Strong Machinery Co., 37 Phil.
644).
The records show that when Dayrit executed the
deed of' assignment in favor of the respondent,
the disputed lot was already registered and titled
in the name of the petitioner. Such an act of
registration served as a constructive notice to the
whole world and the title issued in favor of
petitioner made his ownership conclusive upon
and against all persons including Dayrit and.
herein respondent, although no personal notice
was served on either of the latter. (See Garcia v.
Bello, 13 SCRA 769; Demontano v. Court of
Appeals, 81 SCRA 286). Therefore, the
presumption of good faith in favor of the
respondent cannot apply because as far as the
law is concerned, he had notice of the ownership
by the petitioner over said lot. It is also unthinkable
that in the big Tambunting Estate beset with one
of the most serious squatter problems in Metro
Manila, any tenant or prospective buyer would be
unaware that the petitioner acquired the estate
as highest bidder at the sale ordered by the
probate court. Furthermore, the respondent did
not even bother to inquire about the certificate of
title covering the lot in question to verify who was
the real owner thereof, despite the fact that his
transferor, Dayrit, never showed him any title
thereto; a circumstance which should have put
him upon such inquiry or investigation. His failure
to exercise that measure of precaution which was
reasonably required of a prudent man in order to
acquaint him with the defects in the title of his
vendor precludes him from claiming possession in
good faith.
We agree with the following observations of
Justice Guillermo S. Santos in his separate
concurring and dissenting opinion:
The issue now is whether appellant may be
considered as a possessor in good faith of the
property in question. Article 256 of the Civil Code
defines a possessor in good faith as one who is not
aware that there exists in his title or mode of
acquisition any flaw which invalidates it.
In this case, it was shown that under the contract
of sale on installment basis, Delfin Dayrit had only
paid a total of P4,917.30, leaving an unpaid
balance of P3,860.20 as of August 9, 1954 (Dec. RA
p. 43). The said contract specifically provides that
". . . if for some reason or other the purchaser
cannot pay a certain installment on the date
agreed upon, it is hereby agreed that said
purchaser will be given a maximum limit of two
months' grace in which to pay his arrears, after
which the property will revert to the original owner
hereof: the Clara Tambunting Subdivision, No. 50
Reina Regente St., Binondo, Manila, P.I." The
subsequent installment after August 9, 1954, not
having been paid, the property, therefore,
reverted to Clara Tambunting and therefore
formed part of her estate, which was subsequently
acquired by appellee. Thus, when appellant
purchased the parcel of land in question from
Dayrit on August 25, 1962—or eight (8) years after
the default—the latter had no more right over the
same.
It was incumbent on appellant to inquire into the
title of his vendor over the property. Had appellant
demanded from his vendor, Dayrit, the certificate
of his ownership of the property subject of the
negotiation, he would have learned that the latter
had no right, much less, title over the same
because of his default in the payment of the
monthly installments. A purchaser cannot close his
eyes to facts which should put a reasonable man
upon his guard and then claim that he acted in
good faith under the behef that there was no
defect in the title of the vendor (Leung Yee v.
Strong Machinery Co., 37 Phil. 644). Consequently,
appellant cannot be deemed a possessor in good
faith and is not, therefore, entitled to
reimbursement for the improvements he had
introduced in the property in question.
No installments and rentals have been paid for the
lot since 1954 or for more than thirty (30) years.
While Dayrit transferred to Carillo whatever rights
he may have had to the lot and its improvements
on September 25, 1962, the claim for back rentals
was from March 20, 1959 while the trial court
ordered payment as of January 21, 1961 or twenty
four (24) years ago. Considering the facts,
applicable law, and equities of this case, the
decision of the trial court appears to be correct
and is, therefore, reinstated.
WHEREFORE, the questioned decision of the Court
of Appeals is hereby SET ASIDE and another one is
entered AFFIRMING in toto the decision of the
Court of First Instance of Manila in Civil Case No.
64578.
SO ORDERED.
[ GR No. 4937, Mar 27, 1909 ]
CRISPULO SIDECO v. FRANCISCO PASCUA +
DECISION
13 Phil. 342
CARSON, J.:
This is an action to recover possession of
a caraballa and two calves. Sometime in the
year 1900 a caraballa above 5 years old
disappeared from plaintiff's hacienda. The
animal was branded with the letters "S. P.," that
being the brand used by the plaintiff on his
stock for some thirty years past and duly
registered by him as such in the municipality of
San Isidro on the 4th day of May, 1904. In the
month of July, 1907, a caraballa branded with
the letters "S. P.," and in addition thereto, the
number 23, was found in the possession of
the defendant, together with two of her
calves some 2 or 3 years old. Plaintiff claims
that this caraballa is the animal which
disappeared from his hacienda in the year
1900; and in the month of August, 1907, he
instituted these proceedings, wherein he prays
for possession of the caraballa, together with
her calves.
The evidence of the identity of
the caraballa lost by the plaintiff with
the caraballa found in the possession of the
defendant is not wholly satisfactory, but it is not
necessary for us to go into that question,
because we are of opinion that the evidence
of record conclusively establishes defendant's
title to the animal by prescription, under the
provisions of article 1955 of the Civil Code,
which provide that the title to personal
property prescribes by uninterrupted
possession for three years in good faith (con
buena fe).
Defendant proved by unimpeached
documentary and oral evidence that he
purchased the animal in question for the sum
of P110 from one Guillermo Zamora on March
9, 1903; that Zamora purchased the animal for
the sum of P110 from one Salvador
Pangangban on February 27, 1903; and that
Pangangban was the duly registered owner of
the animal on March 30, 1901. Each of these
transfers of ownership and the title of the
various owners is evidenced by the necessary
certificates of property and transfer-all
apparently executed in accordance with the
provisions of law in such cases.
It will be seen that more than the three years'
prescriptive period had elapsed from the date
when defendant purchased the animal, on
March 9, 1903, until the date when plaintiff
discovered her in the possession of defendant,
and instituted these proceedings looking to
her recovery (July-August, 1907).
The trial court was of opinion that proof of this
uninterrupted possession by the defendant
was not sufficient to establish his title by
prescription, under the provisions of the
above-cited article 1955 of the Civil Code,
because in the opinion of the trial court, he
failed to establish affirmatively that he had
acquired, and held possession of the animal in
good faith (con buena fe), as required by the
21 | P r o p e r t y C a s e s - P o s s e s s i o n
provisions of that article. Under the provisions
of article 434 of the Civil Code, however,
"good faith (la buena fe) is always presumed,
and the burden of proof is upon the party
alleging the bad faith of the possessor," and
plaintiff offered no evidence whatever which
tends to impeach the bona fides of
defendant's alleged purchase of the animal or
of his uninterrupted possession thereof from
the date of the purchase until the date when
this action was instituted; and we may add
that in the total absence of proof to the
contrary, defendant's documentary and oral
evidence affirmatively established the bona
fides of his purchase and possession.
The trial court appears also to have been of
opinion that, in any event, the period for
prescription provided in article 1955 did not
begin to run as to the caraballa in question
until the month of July, 1907, when plaintiff
discovered for the first time the whereabouts
of the animal which he claims to have lost in
1900. It is quite clear, however, from the
provisions of article 1955, that the running of
the period by virtue of which title of
prescription may be acquired is coincident
with the, period during which the thing has
been in possession of him who claims
ownership thereof by prescription, without
regard to the time when a former owner may
have lost possession or discovered the
whereabouts of the thing lost; and in this
connection, it is worthy of observation, that the
provisions of article 1962, touching the
prescription of actions for the recovery of
possession of personal property, declare in
express terms that the prescriptive period for
such actions begins to run from the moment
when the owner loses possession.
Counsel for plaintiff and appellee relies on
appeal, more especially on the provisions of
article 1956, which deny the right to acquire
ownership of stolen property by prescription to
the thief and his accomplices and accessaries
in the commission of the crime before and
after the fact. But there is not a particle of
evidence in the record which tends to prove
that this defendant was either a principal or an
accomplice in the alleged theft of the animal
from the plaintiff in 1900; the evidence upon
which counsel for plaintiff relies, as to the
alleged theft of the animal in question from the
hacienda of the plaintiff in the year 1900, is not
satisfactory, and there is no evidence
whatever to connect this defendant or his
predecessors in interest, as they appear from
the certificates of registry, with the alleged
theft, if it actually occurred. Counsel for
plaintiff, relying upon various decisions of this
court wherein we have held that the
unexplained possession of stolen property a
short time after the commission of the crime
raises a presumption of guilt of the crime of
theft against him who has the stolen property
in his possession, contends that there is a
presumption of guilt of the theft of
the caraballa from the plaintiff, against
Pangangban, arising out of his possession of
the caraballa on March 30, 1901; but while it
may be admitted that, if the proof established
the identity of the animal in question with the
animal which disappeared from plaintiff's
hacienda in 19Q0, the discovery of the animal
in Pangangban's possession early in 1901
might be sufficient to give ground for a
suspicion as to his guilt, it would be wholly
insufficient to sustain a finding of his guilt until
and unless he had an opportunity to explain
how he came into possession of the animal,
and to prove, if he could, that he was guiltless
of any crime in acquiring such possession. So
far as the record in this case discloses,
Pangangban never had any such opportunity
extended to him, and there is no ground,
therefore, upon which to base a finding that
he had any part in the alleged theft of
the caraballa; and, in any event, proof that
Pangangban had stolen the animal, would
not, in itself be sufficient to sustain a finding
that one who bought from him, for a valuable
consideration, nearly two years after the first
date at which it appears he was in possession,
was also a thief or had any part in the
commission of the crime.
The evidence of record, which discloses that
plaintiff's animal was lost in 1910, and that
defendant and his predecessors in interest
had been in uninterrupted possession of the
animal in question more than six years prior to
the date when this action was instituted,
would appear to be sufficient to sustain a
finding that defendant had acquired title
thereto by prescription, under the provisions of
article 1955 of the Civil Code, which declare
that title by prescription may be acquired in
personal property, by virtue of the
uninterrupted possession for six years, without
the necessity of any other condition; and to
sustain a further finding that plaintiff's action to
recover possession had prescribed, before the
institution of this action, by virtue of the
provisions of article 1962 of the Civil Code, as
well as by the provisions of subsection 3 of
section 43 of the Code of Civil Procedure. But
defendant being entitled to judgment in his
favor under the provisions of article 1955
hereinbefore discussed and on which he
relied, there is no need for a specific ruling on
these possible defenses.
We do not deem it necessary to discuss at
length the ruling of the trial court and the
contention of counsel, that the provisions of
the Civil Code and of the Code of Civil
Procedure, thus construed and made
applicable to the facts in this case, are in
conflict with the provisions of section 5 of the
Philippine Bill, which forbid the enactment of
any law in these Islands "which shall deprive
any person of life, liberty, or property, without
due process of law, or deny to any person
therein the equal protection of the laws."
Prescriptive rights have been recognized and
protected by the laws of all nations, and
indeed, in the language of Burke, the "solid
rock of prescription" is "the soundest, the most
general, the most recognized title between
man and man that is known in municipal, as in
public jurisprudence." (Vol. IX, p. 449.)
The judgment of the trial court is reversed
without costs in this instance, and twenty days
from the date of this decision let judgment, be
entered in accordance herewith, and ten
days thereafter let the record be returned to
the trial court where judgment will be entered
in favor of the defendant for the costs in first
instance. So ordered.
Arellano, C. J., Torres, Mapa, and Johnson, JJ.,
[ G.R. No. 3013, January 24, 1908 ]
THE ROMAN CATHOLIC APOSTOLIC
CHURCH ET AL., PLAINTIFFS, VS.
CERTAIN MUNICIPALITIES IX THE
PROVINCE OF ILOCOS SUR ET AL.,
DEFENDANTS.
DECISION
WILLARD, J.:
This is an original action brought in
this court by virtue of the provisions
of Act No. 1376. It is in all respects
similar to the case of The Roman
Catholic Church vs. The
Municipalities of the Province of
Tarlac.[1]
It is therefore by the court
adjudged and decreed that this
action be dismissed without costs as
to all of the defendants except the
municipalities of Dolores, La Paz,
Candon, and Santa Cruz, and
except as to the defendants,
Gregorio Aglipay, Rosalio
Eduarte, Elipio Blanco, Benigno de
Lara, and Candido Gironella.
It is further adjudged and decreed
that all of the property described in
the complaint be eliminated
therefrom except that which is
hereinafter described, and as to the
property thus eliminated this court
makes no determination in regard
to the. rights of the parties to this
action in relation thereto.
In reference; to the municipality of
Dolores, the evidence shows that
the plaintiffs are not entitled to
recover the building called by them
in their complaint "a convent." It is
proved to our satisfaction that this
building was erected and has been
used as a municipal building. Three
churches have been built upon the
lot originally dedicated to that
purpose1, the last one having been
constructed about two years
ago. With this construction the
plaintiffs had nothing to do. That
the plaintiffs are entitled to the
possession of the lot and land
can not be questioned. However,
the present building was
constructed by persons who have
presented no written or other
22 | P r o p e r t y C a s e s - P o s s e s s i o n
evidence of ownership. They simply
took possession of the property
when its former possessors were
compelled to abandon it by reason
of war. They can not be considered
as possessors in good faith. (Art.
433, Civil Code.) Not being
possessors in good faith, they are
not entitled to the structure erected
upon land not their own. (Art. 3(12,
Civil Code.)
We have said that the last church
was constructed upon 1 he site of
the former churches. The evidence
is in conflict upon this point, but we
think it sustains our conclusion.
However that may be, it would of
course follow that, if in fact the
present building is not upon the lot
in question, the plaintiffs
would have no interest whatever
therein.
[Here follows the formal part of the
judgment, which is omitted.]
So ordered.
Arellano. C. J., Torres,
Mapa, and Tracey, JJ., concur.
CONCURRING
CARSON, J., with whom
concurs JOHNSON, J.,
I agree with the conclusions except
in as far as they rest on the finding
that the possession of those persons
who built the newly erected church
in the municipality of Dolores was
not possession "in good faith" (de
buena fe) ; and that they, therefore,
Jose all rights which are
guaranteed to possessors in good
faith under the provisions of the Civil
Code.
It is admitted that this church was
erected within the last two years by
voluntary subscriptions of the
adherents of the Aglipayan Church;
it appears that they did so with the
consent and permission of the
municipality of Dolores, which was
at that time in actual possession of
the land on which it was built, and
that the municipality claimed the
right of possession of this land by
virtue of the treaty of Paris, and the
grant of the control of public
property in the Philippines acquired
by the United States under that
treaty, to the Government of the
Philippine Islands, for the benefit of
the people of these Islands.
I agree with the majority opinion
that this contention is not well
founded, but article 433 of the Civil
Code provides that lie shall be
deemed to be a possessor in good
faith who is not aware that there is a
defect in his title or in the mode
whereby he acquired possession
which invalidates it, and article 434
provides that in such cases good
faith must always be presumed and
the burden of proof is on him who
alleges bad faith.
There is not a scintilla of proof of
bad faith in the record, and,
indeed, that question never was
raised. I am unable to
understand on what basis the court
holds that those persons who built
the church and are now in
possession knew that
the municipality did not have the
right to possession of the laud and
the power to authorize them to build
thereon, and without proof of such
knowledge the foregoing provisions
of the Civil Code forbid the
presumption of bad faith. The
question of good faith does not rest
on the final decision of the courts as
to the soundness of the title, but, as
provided in article 433, on the
knowledge or lack of knowledge of
the party in possession of a defect in
his title.
[ GR No. 12449, Nov 13, 1918 ]
EULOGIO MASALLO v. MARIA CESAR +
DECISION
39 Phil. 134
FISHER, J.:
Plaintiff in this action, averring that he is the
owner of the tract of land in question,
brought an action of desahucio [eviction]
in the court of the justice of the- peace of
the municipality of Lezo against the
defendant, for the purpose of recovering
possession thereof. From the decision of the
justice of the peace an appeal was taken
to the Court of First Instance of Capiz, and
the case there tried de novo.
It is averred in the complaint that on or
about the 12th day of June, 1915, the
defendant by force and intimidation
deprived plaintiff of the possession of the
land in suit, and has since that time
withheld it from him to his damage in the
sum of P25. The defendant answered,
denying the averments of the complaint
regarding the alleged eviction, and
asserted, by way of defense, that the land
in question is her property and has been in
her possession without interruption for more
than twenty years. The trial court gave
judgment in favor of the plaintiff in
accordance with the prayer of his
complaint.
From the evidence taken at the trial it
appears that the defendant had been in
possession of the land in question for a long
period prior to the occurrence of the
incidents out of which this litigation arose.
On March 8, 1915, while the defendant was
in possession of the land in question, one
Matea Crispino executed a deed to the
plaintiff herein, whereby she undertook to
sell and transfer to him the land in question.
It was admitted by Matea Crispino in her
testimony at the trial that she has not been
in possession of the land which is the
subject-matter of her deed to plaintiff,
since the cessation of the Spanish
sovereignty in these Islands. (Stenographic
notes, p. 10.) She stated, however, that the
land in question had been mortgaged by
her to one Eugenia Perez, who testified on
behalf of plaintiff that she, Perez, had been
in possession of the land from 1889 until
1914.
After Matea Crispino executed her deed to
the plaintiff, the latter went upon the land
with his laborers and commenced to plow
it. This work had hardly commenced when,
according to plaintiff's testimony, the
defendant approached, accompanied by
her daughter, and insisting that the land
was hers and in her possession, ordered the
plaintiff and his men away.
23 | P r o p e r t y C a s e s - P o s s e s s i o n
Plaintiff avers that in the course of that
altercation the defendant, who is a woman
80 years of age, took a bolo and cut the
rope traces by which his carabao was
attached to the plow. The result of the
dispute was that the plaintiff and his men
withdrew and that an action was shortly
after commenced in the court of the justice
of the peace against the defendant by
plaintiff for the possession of the land.
The evidence shows conclusively that until
he went upon the land for the purpose of
plowing it, acting on the strength of his
deed from Matea Crispino, plaintiff had
never been in possession of this property.
Whether or not Eugenia Perez had been in
possession of the property at some time is,
of course, unimportant. The action admits
that the defendant is now in possession of
the property and asserting rights of
ownership over it; and the plaintiff can only
succeed upon proof of prior possession in
himself or someone to whose rights he has
succeeded.
The case involves a point which we
consider worthy of elucidation. This relates
to the possession which the plaintiff must
show in himself in order to sustain an action
of forcible entry and detainer, under
section 80 of the Code of Civil Procedure,
against an intruder who enters upon the
land by force, intimidation, threat, strategy,
or stealth. As observed by this court in
Mediran vs. Villanueva (37 Phil. Rep., 752),
the plaintiff in an action of this character
must prove a prior possession in himself,
which means that as between the two
contending parties the right 6f action is
conceded to be in the party whose actual
and peaceful possession antedates that of
the other.
In this case the defendant Maria Cesar is
shown to have had the prior peaceful
possession of the disputed parcel of ground
for an indefinite period of time in the past.
Therefore, when the plaintiff, after
acquiring a deed to the land from a third
person, entered upon the premises with his
laborers and began plowing the land, it
was he who was guilty of the wrongful
seizure of the property; and the defendant
undoubtedly then had a perfect right to
maintain an action of unlawful detainer
against the plaintiff to regain possession.
Instead of instituting such an action, as the
defendant was well entitled to do, she
warned the plaintiff off, or as he would
have us believe, ejected him by force,
intimidation, and violence. Availing himself
of the situation thus created, the plaintiff
now seeks to turn the tables, so to speak,
upon the original possessor, and founding
his right upon the transitory possession
which he had wrongfully acquired, he
would now employ against the defendant
the same remedy which might properly
have been used against himself if he had
not vacated the premises.
This confusion of the remedy cannot be
permitted. Where a dispute over possession
arises between two persons, the person first
having actual possession, as between
them, is the one who is entitled to maintain
the action granted in section 80 of the
Code of Civil Procedure. If this were not so,
a mere usurper without any right whatever,
might enter upon the property of another
and, by allowing himself to be ordered off,
could acquire the right to maintain the
action of forcible entry and detainer,
however momentary his intrusion might
have been.
The mere suggestion of such a possibility
carries its own refutation on its face. The law
discourages continued wrangling over the
possession of property, as being fraught
with danger to the peace of society; and
the purpose of the action of forcible entry
and detainer is to make the right of
possession secure. This purpose would be
totally frustrated, if a petty warfare could
be Conducted by two rival claimants who
might alternate with each other in
possession, one putting the other out
today, only to be in turn himself forcibly
ejected tomorrow. The only way to prevent
this is to hold, in conformity with the evident
intent of the statute, that the remedy of
forcible entry and detainer was intended to
be used against the usurper and not
against the person wronged. The rule thus
to be applied may be simply summed up
by saying that the plaintiff in an action of
forcible entry and detainer cannot
succeed where it appears that, as
between himself and the defendant, the
latter had a possession antedating his own;
and to ascertain this it is proper to look to
the situation as it existed before the first act
of spoliation occurred.
It is stated in the decision that "the plaintiff
had acquired possession of the parcel of
land in dispute on or about the 8th of
March, 1915, by purchase from Matea
Crispino, who sold it to him by the deed
Exhibit A."
As Matea Crispino admits, however, that
she did not have possession of the land
when she executed and delivered her
deed to plaintiff, the mere execution and
delivery of the deed did not constitute a
delivery of possession. (Addison vs. Felix
and Tioco, 38 Phil. Rep., 404.)
The decision of the trial court is reversed,
and the action dismissed, plaintiff to pay
the costs of both instances. So ordered.
Torres, Johnson, Street, Malcolm,
and Avanceña, JJ., concur.
[ GR No. 14594, Jan 29, 1920 ] been occupying and enjoying for many aforementioned, nor paid the latter for
years the land belonging to the the use, occupation, and enjoyment of
EDUARDO RIVERA v. ROMAN CATHOLIC defendant entity and described in the the land upon which said fish ponds
ARCHBISHOP OF MANILA + complaint; that said plaintiffs profited of were constructed.
the fruits and improvements on said land
DECISION
to the damage of the defendant The controversy involved is whether by
without having ever paid any rent appropriating the fish ponds in question,
or canon therefor notwithstanding the which had been constructed upon its
40 Phil. 717 demands made upon them for said land, the defendant is obliged to
purpose; and that during all the time indemnify the plaintiffs for their value or
plaintiffs were in possession and price, or whether the plaintiffs have the
enjoyment of the land and fruits thereon, right to compel the defendant, in case
TORRES, J.: said canon or rent amounts to seventy- the latter does not want to take the fish
five thousand pesos (P75,000). ponds, to sell to them said land at W.04
This case was originally instituted in the
Wherefore, defendant prayed that per square meter as fixed by them in
Court of First Instance of Rizal upon a
plaintiffs' prayer in their complaint be their brief (pages 29-30, plaintiffs' brief).
complaint dated on February 2, 1916, in
denied and that judgment be rendered
which the plaintiffs alleged that they
condemning them to pay the The parties admitting that the defendant
have been in possession, in good faith,
defendant, jointly and severally, the sum entity is the owner of the land upon
of certain parcels of land of the estate
of seventy-five thousand pesos (P75,000) which the fish ponds in question have
called "Hacienda de Sta. Clara,"
and to pay the costs. been constructed, articles 361 to 364
situated in the barrio of Dampalit of the
and 451 to 457 of the Civil Code are
municipality of Malabon, Rizal; and that
Upon plaintiffs' request the defendant perfectly applicable to the instant case.
they have been in possession and
filed a bill of particulars of the facts Said articles define the rights of the
enjoyment of several fish ponds
alleged in the counterclaim. owner of a piece of land upon which
constructed by them on said land up to
anything has been built, sown, or
the time they were defeated in said
After hearing the case and the planted by another according as
possession by the defendant entity "The
evidence submitted by both parties, the whether both acted in good or bad faith
Roman Catholic Archbishop of Manila"
court rendered judgment absolving the and whether what has been built, sown,
which was declared the absolute owner
defendant entity from plaintiffs' or planted were necessary, useful or
of the aforesaid "Hacienda de Sta.
complaint and the latter from the purely for ostentation or mere pleasure.
Clara" in the decision of this High Court
formers counterclaim, without any Therefore, in order to decide the
on August 5, 1915, in the case (R. G. No.
findings as to the costs. controversy, the first thing that will have
8719)[1] brought by said entity for the
to be determined is the nature of the fish
registration of the "Hacienda de Sta.
To this judgment counsel for the plaintiffs ponds in question.
Clara" in its name. Plaintiffs pray that said
excepted, at the same time asking for a
entity be ordered to pay them the value
new trial which was denied with his From the testimony of Ceferino Cacnio,
of the fish ponds aforesaid and that their
exception. plaintiffs' witness, it appears that fish
right of retaining said portions of the land
ponds are built by digging into the land
occupied by them be declared
He then interposed his appeal to this and putting in rows the earth that has
subsisting until they have been fully paid
court by filing the corresponding bill of been dug out in order to form with it
therefor.
exceptions which, after having been dikes or embankment for holding the
approved by the lower court, was water in which the fish will be kept (rec.,
To the foregoing complaint the
forwarded to the clerk of this court p. 5). There is nothing in the record
defendant entity interposed a demurrer
together with all the evidence taken expressly showing that the fish ponds in
which was overruled. Defendant
upon the trial. question have been built in this manner,
excepted to this ruling and afterwards
but this witness Ceferino Cacnio having
filed an answer denying generally all the
From the foregoing allegations of the been the one who made the sketch of
material averments of the complaint;
parties, from the agreed statement of said ponds appearing in the record, and
but later asked the court to order the
facts (rec., pp. 1-2), and from the who appraised their costs or value by
plaintiffs to file a bill of particulars of the
statements made at the hearing by referring to the manner of construction
facts alleged in their complaint. This
counsel for the plaintiffs (rec., pp. 4-8), it aforesaid (rec., p. 5, Exhibit B, rec., p. 44),
petition having been granted by the
appears that there is no question about it is evident that the fish ponds in
court and the bill of particulars aforesaid
the fact that prior to the year 1915, the question belong to the class mentioned
having been filed by the plaintiffs, the
plaintiffs constructed fish ponds in the by said witness. Such being the case, the
defendant filed an amended answer
"Hacienda de Sta. Clara" the registration conclusion must be that the
denying generally all the material
of which in the name of the defendant expenditures for their construction
averments of the complaint and
entity was decreed by this court in the should be classified as useful,
alleging as special defense that the
decision rendered in the Registration expenditures mentioned in the second
subject-matter of this case is res
Case No. 8719, notwithstanding plaintiffs' paragraph of article 453 of the Civil
judicata; that the plaintiffs' possession of
opposition; that ever since the Code, because since all of the
the land mentioned in the complaint
construction of the fish ponds aforesaid, expenditures of man are either useful
was never in good faith; and that if
the plaintiffs have been in possession (utiles) or useless or unnecessary
plaintiffs had made any improvements
and enjoyment thereof up to the present (inutiles), and since it is obvious that the
on said land they never did them in
time (the date of this decision); and that fish ponds in question are neither useless
good faith. Defendant alleged as
said plaintiffs had never entered into any nor purely for ostentation or mere
counterclaim that before the filing of the
contract of lease with the defendant, pleasure, then said expenditures are
complaint in question, the plaintiffs had
the absolute owner of the land useful.
24 | P r o p e r t y C a s e s - P o s s e s s i o n

In dealing with the foregoing point the
litigants in their respective briefs talked
about improvements, their permanent
and temporary character, the accretion
of the soil through the work of man, the
greater or less usefulness of the land for
one purpose or another, and the
increase or decrease in its value, and
cited several decisions. But it does not
appear that they ever tried to inquire
and investigate, with the aid of the
science of logic and hermeneutic the
true meaning of article 453 of the Civil
Code, the only article decisive upon the
foregoing controverted point.
The foregoing article 453 speaks of
necessary and useful expenditures and
not of improvements, nor the increase in
value, nor the accretion of something
new, nor any thing of those mentioned in
the briefs of the parties. A thing may be
an improvement or an accretion of
something new upon the land; may
increase the value of said land; and still
it may not be comprised under any of
the phrases "necessary expenditures"
and "useful expenditure" employed in
article 453 of the Civil Code, because it
is not impossible that said thing may be
constructed purely for ostentation or
mere pleasure since constructions of this
nature as well as those which are
necessary and useful can be considered
as improvements and can increase the
value of the land.
In trying to adjust the rights of the owner
and the possessor in good faith of a
piece of land, the learned Spanish
legislator knew very, well that, in order to
administer complete justice to both of
them in such a way as neither the one
nor the other may enrich himself of that
which does not belong to him, nor
remain prejudiced by the vagueness
and casuistry of the rules he was going
to enact, it was necessary to use the
right epithets which, in a clear aifd
unmistakable manner, would describe
and define the different characters
regulating their respective rights. Hence,
in writing articles 453 and 454 of the Civil
Code, the legislator correctly employed
the expressions "necessary expenditures"
("gastos necesarios") "useful
expenditures" ("gastos utiles") and
"expenditures purely for ostentation and
mere pleasure" ("gastos de puro lujo o
mero recreo").
If the owner of land has any interest
therein, it is undoubtedly because said
land produces for him some benefit or
fruit which may be great or small
according as the expenses incurred by
the possessor thereof may have been
25 | P r o p e r t y C a s e s - P o s s e s s i o n
the cause of the land producing all kinds
of fruits of great importance: natural,
industrial and civil, or only one or two of
these kinds which are of little
importance; and, consequently, the
indemnity to be refunded the possessor
in good faith will also be great or small
according as the expenses incurred by
him may have resulted in the production
of all said kinds of fruits or only part of
them. Hence, the Civil Code gives the
possessor in good faith greater
indemnity in case he has incurred
necessary expenditures than in case
said expenditures are only useful or
purely for ostentation and mere
pleasure, and also greater indemnity in
case said expenditures are useful than in
case they are purely for ostentation and
mere pleasure. Why? Because
necessary expenditures, inasmuch as
they redound to the preservation of the
realty, render said realty capable of
continually producing the natural,
industrial and civil fruits it ordinarily
produces fruits which the owner would
not be able to gather if the land would
be rendered unproductive. Useful
expenditures also give rise to all these
kinds of fruits, but the law considers them
rather inferior than necessary
expenditures for the reason that the
latter preserve the realty and are
therefore the source of the producing
agency and its fruits, while the former
(useful expenditures) are only the source
of the fruits.
Expenditures purely for ostentation and
mere pleasure are considered by the
Civil Code of little importance for the
reason that they do not have nor will
have to do with the production of all the
three kinds of fruits we have been
speakingabout, but only of the civil fruits.
That such is the fundamental reason of
article 454 of the Civil Code not the least
doubt can be entertained, for the words
"purely for ostentation and mere
pleasure" ("de puro lujo o mero recreo")
employed by the code are so clear and
unmistakable that they absolutely
negative the capacity to produce
industrial and natural fruits. Thus, in laying
down a rule to distinguish useful
expenditures from those purely for
ostentation and mere pleasure, the
great commentator Manresa has truly
said that "expenditures purely for
ostentation and mere pleasure either
cannot influence the production of
natural and industrial fruits or do diminish
them; they can, however, influence the
production of the civil fruits." (Manresa's
Com. of Civil Code, vol. 4, p. 262.)
Applying the foregoing considerations to
the instant case, it clearly appears that
the land in this case on which the fish
ponds in question are built, gives its
owner benefits called industrial fruits
which it would not give without the fish
ponds aforesaid. True it is that without
the fish ponds the owner of the land
could have utilized it for agricultural
purposes. But then the owner would
have to incur some and costly
expenditures, while with the fish ponds
already built he would not have to do
anything more than to reap its fruits
without having incurred any
expenditures. And it is this which the law
considers unjust, to wit, that the owner of
the land would enrich himself with the
industrial fruits thereof, produced by the
useful expenditures disbursed by the
possessor in good faith.
Having shown that the fish ponds
presuppose the disbursement of useful
expenditures payable to the possessor in
good faith, we pass on to elucidate the
question whether or not the plaintiffs
have been possessors in good faith.
Plaintiffs have presented in evidence
Exhibit A (rec., p. 20), which is the
decision rendered by this Court in the
registration case No. 8719 of August 5,
1915, declaring the defendant entity
owner of the lands on which the fish
ponds in question were built. But from this
exhibit it appears that the plaintiffs have
never been in possession of these lands
in good faith in order that they can claim
the right of indemnity for the
expenditures incurred in the construction
of these fish ponds.
In fact, the defendant entity herein was
the petitioner in said registration
proceeding and the plaintiffs herein
were the oppositors then. These plaintiffs
in that registration case alleged having
been in possession of the fish ponds now
in question under all the conditions
required by law for the prescription of
title (p. 29, Exhibit A). But this Court said
that said allegation had not been duly
proven (pp. 29-30, 36, 41 and 43, Exhibit
A) and consequently dismissed their
opposition.
Moreover, in the same decision it was
held that the defendant entity has been
in possession of the lands of "La
Hacienda de Sta. Clara" publicly and
under claim of ownership from time
immemorial (pp. 31-32, Exhibit A) without
having ever been interrupted thereon
except once, whereby it had to institute
in 1905 the corresponding action of
revindication against the persons
unlawfully withholding its possession,
three of whom were the plaintiff herein,
Eduardo Rivera, Rufino Salaw, and
Anacleto Aguinaldo, and that said
defendant entity has always exercised
over said lands acts of ownership, (p. 35,
Exhibit A).
It follows, therefore, that the same
decision presented by the plaintiffs
proves that the defendant has been in
possession of the lands on which the fish
ponds in question are built, publicly and
under claim of ownership, and that the
plaintiffs, if they have once possessed
certain parcels of these lands, did not do
so under claim of ownerships In truth, if
the plaintiffs had been in possession of
these lands under claim of ownership,
this Court would not have decreed their
registration in the name of the
defendant entity.
Now then, if the plaintiffs did not possess
the lands on which the fish ponds are
built under claim of ownership, it is
evident that at most they did possess
them as mere usufructuaries, and
inasmuch as in the present case counsel
for the plaintiffs admit that neither these
plaintiffs nor their constituents entered
into a contract of lease with, nor paid
rent to, the defendant, it follows that the
plaintiffs took possession of these lands
only to profit thereby without the
consent of their true owner an act
evidently illegal, which constitutes a real
bad faith.
Moreover, according to article 445 of
the Civil Code, "possession de
facto cannot be recognized in favor of
two different persons." Hence, if this
Court recognized the defendant's
possession and not plaintiffs' possession,
it was because the latter, if it really
existed, was illegal, i. e., was a possession
in bad faith.
What remains for us to determine is
whether the defendant entity also acted
in bad faith by knowingly permitting the
construction of the fish ponds in
questions (article 364 of the Civil Code).
Regarding this point (defendant's bad
faith) the record does not show any
proof. The appellants pretend to infer it
from the fact that the fish ponds have
been in existence for many years, and
argue that the defendant could not
have ignored their existence during that
long period of time.
But the foregoing argument is unfruitful.
If the appellants want to deduce the
foregoing conclusion (defendant's bad
faith) from the fact that it would have
been impossible for the defendant to
ignore the existence of the fish ponds,
then said inference is not supported by
26 | P r o p e r t y C a s e s - P o s s e s s i o n
law; because according to article 364 of
the Civil Code, bad faith on the part of
the owners is deemed to exist not in
permitting or tolerating the existence of
a construction on his land this is merely
an act of kindness for which the
possessor should be thankful but in
permitting the possessor to commence
or begin and to carry out said
construction. If the latter is what the
appellants mean, then they do not have
any support upon evidence; because it
has not been shown that at the moment
the construction of the fish ponds were
commenced, the defendant had
knowledge thereof and, knowing it, did
not oppose said construction. This fact
cannot be deduced from the
circumstances surrounding the case,
inasmuch as the construction of said fish
ponds could have been commenced
and finished during the time the
defendant entity could not have notice
thereof, and it has not been shown that
there are facts pointing out to the
contrary. The plaintiffs did not even try to
prove the year and month when said fish
ponds were built or indicate some
circumstances which might have
accompanied in the construction
thereof, suggestive of the idea that the
defendant entity knew or must have
known that the fish ponds were being
built.
In any way, it is therefore evident that
the instant action is absolutely devoid of
any foundation, and is so devoid that
from the plaintiffs' own evidence,
specially Exhibit A upon which they have
relied and do rely so much, it appears
that their contention is untenable. We
have examined with great care plaintiffs'
Exhibit A with their brief before us, looking
in said Exhibit A for any phrase, word, or
sign indicative, at least indirectly, of the
good faith plaintiffs allege to have been
established in the aforesaid decision, but
we have not found any thing favorable
to but all against the plaintiffs;
For the foregoing consideration whereby
all the as signments of errors, alleged to
have been committed in the judgment
appealed from, have been refuted, we
arrive at the conclusion that plaintiffs'
contentions have not been fully
established; and that the defendant not
having insisted upon its counterclaim,
the judgment appealed from is affirmed,
as we do hereby affirm it, with the costs
of this instance 'against the plaintiffs-
appellants. So ordered.
Arellano, C. J., Johnson, Araullo, Street,
Malcolm, and Avanceña, JJ., concur.
DIVISION
[ GR No. L-32974, Jul 30, 1979 ]
BARTOLOME ORTIZ v. UNION C. KAYANAN +
DECISION
180 Phil. 579
ANTONIO, J.:
Petition for Certiorari and Prohibition with
Preliminary Injunction to nullify the Order of
respondent Judge directing the execution of the
final judgment in Civil Case No. C-90, entitled
"Bartolome Ortiz vs. Secretary of Agriculture and
Natural Resources, et al.", and the Writ of
Execution issued to implement said Order,
allegedly for being inconsistent with the judgment
sought to be enforced.
Civil Case No. C-90 was filed by Bartolome Ortiz
who sought the review and/or annulment of the
decision of the Secretary of Agriculture and
Natural Resources, giving preference to the sales
applications of private
respondents Quirino Comintan and Eleuterio Zam
ora over Lot No. 5785, PLS-45, located at
Barrio Cabuluan, Calauag, Quezon.
I defendant Quirino Comintan,
The factual background of the case, as found by
respondent Court, is as follows:
"* * * The lot in controversy was formerly the subject
of Homestead Application No. 122417 of
Martin Dolorico II, plaintiff's ward who died on
August 20, 1931; that since then it was plaintiff who
continued the cultivation and possession of the
property, without however filing any application
to acquire title thereon; that in the Homestead
Application No. 122417, Martin Dolorico II named
his uncle, Martin Dolorico I as his heir and
successor in interest, so that in 1951
Martin Dolorico I executed an affidavit
relinquishing his rights over the property in favor of
defendants Quirino Comintan and Eleuterio Zam
ora, his grand son and son-in-law, respectively,
and requested the Director of Lands to cancel the
homestead application; that on the strength of
the affidavit, Homestead Application No. 122417
was cancelled and thereafter,
defendants Comintan and Zamora filed their
respective sales applications Nos. 8433 and 9258;
that plaintiff filed his protest on November 26, 1951
alleging that he should be given preference to
purchase the lot inasmuch as he is the actual
occupant and has been in continuous possession
of the same since 1931; and in spite of plaintiff's
opposition, 'Portion A' of the property was sold at
public auction wherein defendant Comintan was
the only bidder; that on June 8, 1957, investigation
was conducted on plaintiff's protest by Assistant
Public Lands Inspector Serapion Bauzon who
submitted his report to the Regional Land Officer,
and who in turn rendered a decision on April 9,
1958, dismissing plaintiff's claim and giving due
course to defendants' sales applications on the
ground that the relinquishment of the homestead
rights of Martin Dolorico I in favor
of Comintan and Zamora is proper, the former
having been designated as successor in interest of
the original homestead applicant and that
because plaintiff failed to participate in the public
auction, he is forever barred to claim the property;
that plaintiff filed a motion for reconsideration of
this decision which was denied by the Director of
Lands in his order dated June 10, 1959; that finally,
on appeal to the Secretary of Agriculture and
27 | P r o p e r t y C a s e s - P o s s e s s i o n
Natural Resources, the decision rendered by the
Regional Land Officer was affirmed in toto."[1]
On March 22, 1966, respondent Court rendered
judgment in the afore-mentioned civil case,
the dispositive portion of which reads as follows:
"IN VIEW OF THE FOREGOING CONSIDERATIONS,
judgment is hereby rendered awarding Lot No.
5785-A of PLS-45, (CalauagPublic Land
Subdivision) one-half portion of the property in
litigation located at
Bo. Cabuluan, Calauag, Quezon, in favor of
defendant QUIRINO COMINTAN, being the
successful bidder in the public auction conducted
by the Bureau of Lands on April 18, 1955, and
hereby giving due course to the Sales Application
No. 9258 of defendant Eleuterio Zamora over the
other half, Lot No. 5785-B of PLS-45, Calauag,
without prejudice to the right of plaintiff
BARTOLOME ORTIZ to participate in the public
bidding of the same to be announced by the
Bureau of Lands, Manila. However, should
plaintiff Bartolome Ortiz be not declared the
successful bidder thereof,
defendants Quirino Comintan and Eleuterio Zam
ora are ordered to reimburse jointly said plaintiff
the improvements he has introduced on the
whole property in the amount of THIRTEEN
THOUSAND SIX HUNDRED THIRTY-TWO (P13,632.00)
PESOS, the latter having the right to retain the
property until after he has been fully paid therfor,
without interest since he enjoys the fruits of the
property in question, with prejudice and with costs
against the plaintiff."[2]
Plaintiff appealed the decision to the Court of
Appeals.
Two (2) years after the rendition of the judgment
by the court a quo, while the case was pending
appeal and upon petition of private
respondents Quirino Comintan and Eleuterio Zam
ora, respondent Court appointed respondent
Vicente Ferro, Clerk of Court, as Receiver to
collect tolls on a portion of the property used as a
diversion road. On August 19, 1969, the Court of
Appeals issued a Resolution annulling the Order
appointing the Receiver. Subsequently, on
February 19, 1970, the Appellate Court affirmed
the decision of the trial court. A petition for review
on certiorari of the decision of the Court of
Appeals was denied by this Court on April 6,
1970. At this point, private respondents filed a
petition for appointment of a new receiver with
the court a quo. This petition was granted and
the receiver was reappointed. Petitioner sought
the annulment of this Order with the Court of
Appeals, but said Court ruled that its decision had
already become final and that the records of the
case were to be remanded to the trial court.
Not satisfied with such denial, petitioner filed a
petition for certiorari, prohibition
and mandamus with preliminary injunction before
this Court,[3] praying for the annulment of the
Order reappointing the Receiver. On July 13,
1970, the petition was dismissed by this Court on
the ground of insufficient showing of grave abuse
of discretion.
II
The judgment having become final
and executory, private respondents filed a motion
for the execution of the same, praying as follows:
"WHEREFORE, it is respectfully prayed of this
Honorable Court to order the issuance of a writ of
execution in accordance with the judgment of
this Honorable Court, confirmed by the Court of
Appeals and the Supreme Court, commanding
any lawful officer to deliver to
defendants Comintan and Zamora the land
subject of the decision in this case but allowing
defendants to file a bond in such amount as this
Honorable Court may fix, in lieu of the P13,632.00
required to be paid to plaintiff, conditioned that
after the accounting of the tolls collected by
plaintiff, there is still an amount due and payable
to said plaintiff, then if such amount is not paid on
demand, including the legal interests, said bond
shall be held answerable.
"Ordering further the plaintiff to render an
accounting of the tolls he collected from March
of 1967 to December 31, 1968 and from
September 1969 to March 31, 1970, and deliver
said tolls collected to the receiver and if judgment
is already executed, then
to QuirinoComintan and Eleuterio Zamora; and,
"Finally, to condemn plaintiff to pay moral
damages for withholding the tolls which belong to
your movant in an amount this Court may deem
just in the premises." [4]
Acting upon the foregoing motion, respondent
Judge issued an Order, dated September 23,
1970, stating, among others, the following:
"The records further disclosed that from March
1967 to December 31, 1968,
plaintiff Bartolome Ortiz collected tolls on a
portion of the property in question wherein he has
not introduced any improvement particularly on
Lot No. 5785-A, PLS-45 awarded to
thru which
vehicular traffic was detoured or diverted, and
again from September 1969 to March 31, 1970, the
plaintiff resumed the collection of tolls on the
same portion without rendering any accounting
on said tolls to the Receiver, who was reappointed
after submitting the required bond and
specifically authorized only to collect tolls leaving
the harvesting of the improvements to the plaintiff.
*** *** ***
"In virtue of the findings of this Court as contained
in the dispositive portion of its decision, the
defendants are jointly obligated to pay the
plaintiff in the amount of Pl3,632.00 as reasonable
value of the improvements he introduced on the
whole property in question, and that he has the
right of retention until fully paid. It can be gleaned
from the motion of the defendants that if plaintiff
submits an accounting of the tolls he collected
during the periods above alluded to, their
damages of about P25,000.00 can more than
offset their obligation of P13,362.00 in favor of the
plaintiff, thereafter the possession of the land be
delivered to the defendants since the decision of
the Supreme Court has already become final
and executory, but in the interregnum pending
such accounting and recovery by the Receiver of
the tolls collected by the plaintiff, the defendants
pray that they be allowed to put up a bond in lieu
of the said P13,632.00 to answer for damages of
the former, if any.
"On the other hand, plaintiff contends in his
opposition, admitting that the decision of the
Supreme Court has become final and executory;
(1) the offer of a bond in lieu of payment of
P13,632.00 does not, and cannot, satisfy the
condition imposed in the decision of this Court
which was affirmed in toto; (2) the public sale of
Portion 'B' of the land has still to take place as
ordained before the decision could be executed;
and, (3) that whatever sums plaintiff may derive
from the property cannot be set off against what
is due him for the improvements he made, for
which he has to be reimbursed as ordered.
*** *** ***
"Let it be known that plaintiff does not dispute his
having collected tolls during the periods from
March 1967 to December 31, 1968 and from
September 1969 to March 31, 1970. The Supreme
Court affirmed the decision of this Court in its
findings that said tolls belong to the defendants,
considering that the same were collected on a
portion of the land in question where the plaintiff
did notintroduce any improvement. The
reimbursement to the plaintiff pertains only to the
value of the improvements, like coconut trees and
other plants which he introduced on the whole
property. The tolls collected by the plaintiff on an
unimproved portion naturally belong to the
defendants, following the doctrine on
accretion. Further, the reappointment of a
Receiver by this Court was upheld by the Supreme
Court when it denied the petition
for certiorari filed by the plaintiff, bolstering the
legal claim of defendants over said tolls. Thus, the
decision of the Supreme Court rendered the
decision of this Court retroactive from March 22,
1966 although pending appeal its implementation
was suspended. It is our honest conviction,
therefore, that the putting up of a bond by the
defendants pending accounting of the tolls
collected by the plaintiff is justified and will not
prejudice anybody, but certainly would
substantially satisfy the conditions imposed in the
decision. However, insofar as the one-half portion
'B' of the property, the decision may be executed
only after public sale by the Bureau of Lands shall
be accomplished.
"WHEREFORE, finding Motion for Execution filed by
the defendants to be meritorious, the same is
granted; provided, however, that they put up a
bond equal the adjudicated amount of
P13,632.00 accruing in favor of the plaintiff, from a
reputable or recognized bonding or surety
company, conditioned that after an accounting
of the tolls collected by the plaintiff should there
be found out any balance due and payable to
him after reckoning said obligation of P13,632.00
the bond shall be held answerable therefor."[5]
Accordingly, a Writ of Execution was issued after
private respondent Quirino Comintan had filed
the required bond. The writ directed the Sheriff to
enforce the decision of the Court, and stated, in
part, the following:
"But should there be found any amount collectible
after accounting and deducting the amount of
P13,632.00, you are hereby ordered that of the
goods and chattels of Bartolome Ortiz of
Bo. Kabuluan, Calauag, Quezon, be caused to
be made any excess in the above-mentioned
amount together with your lawful fees and that
you render same to
defendant Quirino Comintan. If sufficient
personal property cannot be found thereof to
satisfy this execution and lawful fees thereon, then
you are commanded that of the lands and
buildings of the said BARTOLOME ORTIZ you make
the said excess amount in the manner required by
the Rules of Court, and make return of your
proceedings within this Court within sixty (60) days
from date of service.
"You are also ordered to cause Bartolome Ortiz to
vacate the property within fifteen (15) days after
service thereof the
defendant Quirino Comintan having filed the
required bond in the amount of THIRTEEN
THOUSAND SIX HUNDRED THIRTY-TWO (P13,632.00)
PESOS."[6]
On October 12, 1970, petitioner filed a Motion for
Reconsideration of the aforesaid Order and Writ
of Execution, alleging:
"(a) That the respondent judge has no authority to
place respondents in possession of the property;
28 | P r o p e r t y C a s e s - P o s s e s s i o n
"(b) That the Supreme Court has never affirmed
any decision of the trial court that tolls collected
from the diversionary road on the property, which
is public land, belong to said respondents;
"(c) That to assess petitioner a P25,000.00 liability
for damages is purely punitive imposition without
factual or legal justification."
The foregoing Motion for Reconsideration was
denied by respondent Judge per Order dated
November 18, 1970. Said Order states, in part:
"It goes without saying that
defendant Comintan is entitled to be placed in
possession of Lot No. 5785-A of PLS-45
(Calauag Public Land Subdivision) and
enjoyment of the tolls from March, 1967 to March,
1968 and from September, 1969 to March 31, 1970
which were received by plaintiff Bartolome Ortiz,
collected from the property by reason of the
diversion road where vehicular traffic was
detoured. To defendant Comintan belongs the
tolls thus collected from a portion of the land
awarded to him used as a diversionary road by
the doctrine of accretion and his right over the
same is ipso jure, there being no need of any
action to possess said addition. It is so because as
consistently maintained by the Supreme Court, an
applicant who has complied with all the terms
and conditions which entitle him to a patent for a
particular tract of public land, acquires a vested
right therein and is to be regarded as equitable
owner thereof so that even without a patent, a
perfected homestead or sales application is a
property right in the fullest sense, unaffected by
the fact that the paramount title is still in the
Government and no subsequent law can deprive
him of that vested right. The question of the actual
damages suffered by defendant Comintan by
reason of the unaccounted tolls received by
plaintiff had already been fully discussed in the
order of September 23, 1970 and the Court is
honestly convinced and believes it to be proper
and regular under the circumstances.
"Incidentally, the Court stands to correct itself
when in the same order, it directed the execution
of the decision with respect to the one-half portion
'B' of the property only after the public sale by the
Bureau of Lands, the same being an oversight, it
appearing that the Sales Application of
defendant Eleuterio Zamora had already been
recognized and fully confirmed by the Supreme
Court.
"In view thereof, finding the motion filed by plaintiff
to be without merit, the Court hereby denies the
same and the order of September 23, 1970 shall
remain in full force subject to the amendment that
the execution of the decision with respect to the
one-half portion 'B' shall not be conditioned to the
public sale by the Bureau of Lands.
"SO ORDERED."[7]
III
Petitioner thus filed the instant petition,
contending that in having issued the Order and
Writ of Execution, respondent Court "acted
without or in excess of jurisdiction, and/or with
grave abuse of discretion, because the said order
and writ in effect vary the terms of the judgment
they purportedly seek to enforce." He argued that
since said judgment declared the petitioner a
possessor in good faith, he is entitled to the
payment of the value of the improvements
introduced by him on the whole property, with
right to retain the land until he has been fully paid
such value. He likewise averred that no payment
for improvements has been made and, instead, a
bond therefor had been filed by defendants
(private respondents), which, according to
petitioner, is not the payment envisaged in the
decision which would entitle private respondents
to the possession of the property. Furthermore,
with respect to portion "B", petitioner alleges that,
under the decision, he has the right to retain the
same until after he has participated and lost in the
public bidding of the land to be conducted by
the Bureau of Lands. It is claimed that it is only in
the event that he loses in the bidding that he can
be legally dispossessed thereof.
It is the position of petitioner that all the fruits of the
property, including the tolls collected by him from
the passing vehicles, which according to the trial
court amounts to P25,000.00, belongs to petitioner
and not to defendant/private
respondent Quirino Comintan, in accordance
with the decision itself, which decreed that the
fruits of the property shall be in lieu of interest on
the amount to be paid to petitioner as
reimbursement for improvements. Any contrary
opinion, in his view, would be tantamount to an
amendment of a decision which has long
become final and executory and, therefore,
cannot be lawfully done.
Petitioner, therefore, prayed that: (1) a Writ of
Preliminary Injunction be issued enjoining the
enforcement of the Orders of September 23, 1970
and November 18, 1970, and the Writ of Execution
issued thereto, or restoring to petitioner the
possession of the property if the private
respondents had been placed in possession
thereof; (2) annulling said Orders as well as the Writ
of Execution, dissolving the receivership
established over the property; and (3) ordering
private respondents to account to petitioner all
the fruits they may have gathered or collected
from the property in question from the time of
petitioner's illegal dispossession thereof.
On January 29, 1971, this Court issued the Writ of
Preliminary Injunction. On January 30, 1971,
private respondents filed a Motion for
Reconsideration and/or Modification of the Order
dated January 29, 1971. This was followed by a
Supplemental Motion for Reconsideration and
Manifestation on February 3, 1971. In the latter
motion, private respondents manifested that the
amount of P14,040.96, representing the amount
decreed in the judgment as reimbursement to
petitioner for the improvements, plus interest for six
months, has already been deposited by them in
court, "with the understanding that said amount
shall be turned over to the plaintiff after the
court a quo shall have determined the
improvement on Lot 5785-A, and subsequently the
remaining balance of the deposit shall be
delivered to the petitioner (plaintiff therein) in the
event he loses the bid for Lot 5785-B in favor of
private respondent Eleuterio Zamora."[8] The
deposit is evidenced by a certification made by
the Clerk of the Court a quo.[9] Contending that
said deposit was a faithful compliance with the
judgment of the trial court, private
respondent Quirino Comintan prayed for the
dissolution of the Writ of Injunction.
It appears that as a consequence of the deposit
made by private respondents, the Deputy Sheriff
of Calauag, Quezon ousted petitioner's
representative from the land in question and put
private respondents in possession thereof.[10]
On March 10, 1971, petitioner filed a "Comment
on Respondents' 'Motion for Reconsideration'
dated January 29, 1971' and 'Supplemental
Motion for Reconsideration and Manifestation'",
contending that the tender of deposit mentioned
in the Supplemental Motion was not really and
officially made, "inasmuch as the same
is not supported by any official receipt from the
lower court, or from its clerk or cashier, as required
by law"; that said deposit does not constitute
sufficient compliance with the judgment sought to
be enforced, neither was it legally and validly
made because the requisites for consignation
had not been complied with; that the tender of
legal interest for six months cannot substitute
petitioner's enjoyment of the fruits of the property
as long as the judgment in Civil Case No. C-90 has
not been implemented in the manner decreed
therein; that contrary to the allegations of private
respondents, the value of the improvements on
the whole property had been determined by the
lower court, and the segregation of the
improvements for each lot should have been
raised by them at the opportune moment by
asking for the modification of the decision before
it became final and executory; and that the tolls
on the property constituted "civil fruits" to which
the petitioner is entitled under the terms of the
decision.
IV
The issue decisive of the controvery is -- after the
rendition by the trial court of its judgment in Civil
Case No. C-90 on March 22, 1966 confirming the
award of one-half of the property
to Quirino Comintan -- whether or not petitioner is
still entitled to retain for his own exclusive benefit
all the fruits of the property, such as the tolls
collected by him from March 1967 to December
1968, and September 1969 to March 31, 1970,
amounting to about P25,000.00. In other words,
petitioner contends that so long as the aforesaid
amount of P13,632.00 decreed in the judgment
representing the expenses for clearing the land
and the value of the coconuts and fruit trees
planted by him remains unpaid, he can
appropriate for his exclusive benefit all the fruits
which he may derive from the property, without
any obligation to apply any portion thereof to the
payment of the interest and the principal of the
debt.
We find this contention untenable.
There is no question that a possessor in good faith
is entitled to the fruits received before the
possession is legally interrupted.[11]Possession in
good faith ceases or is legally interrupted from the
moment defects in the title are made known to
the possessor, by extraneous evidence or by the
filing of an action in court by the true owner for the
recovery of the property.[12] Hence, all the fruits
that the possessor may receive from the time he is
summoned in court, or when he answers the
complaint, must be delivered and paid by him to
the owner or lawful possessor.[13]
However, seven after his good faith ceases, the
possessor in fact can still retain the property,
pursuant to Article 546 of the New Civil Code, until
he has been fully reimbursed for all the necessary
and useful expenses made by him on the
property. This right of retention has been
considered as one of the conglomerate of
measures devised by the law for the protection of
the possessor in good faith. Its object is to
guarantee the reimbursement of the expenses,
such as those for the preservation of the
property,[14] or for the enhancement of its utility or
productivity.[15] It permits the actual possessor to
remain in possession while he has not been
reimbursed by the person who defeated him in
the possession for those necessary expenses and
useful improvements made by him on the thing
possessed. The principal characteristic of the right
of retention is its accessory character. It is
accessory to a principal obligation. Considering
that the right of the possessor to receive the fruits
terminates when his good faith ceases, it is
necessary, in order that this right to retain may be
useful, to concede to the creditor the right to
secure reimbursement from the fruits of the
property by utilizing its proceeds for the payment
29 | P r o p e r t y C a s e s - P o s s e s s i o n
of the interest as well as the principal of the debt
while he remains in possession. This right of
retention of the property by the creditor,
according to Scaevola, in the light of the
provisions of Article 502 of the Spanish Civil
Code,[16] is considered not a coercive measure to
oblige the debtor to pay, depriving him
temporarily of the enjoyment of the fruits of his
property, but as a means of obtaining
compensation for the debt. The right of retention
in this case is analogous to a contract
of antichresis and it can be considered as a
means of extinguishing the obligation, inasmuch
as the right to retain the thing lasts only for the
period necessary to enable the creditor to be
reimbursed from the fruits for the necessary and
useful expenses.[17]
According to Manresa, the right of retention is,
therefore, analogous to that of a pledge, if the
property retained is a movable, and to that
of antichresis, if the property held is
immovable.[18] This construction appears to be in
harmony with similar provisions of the civil law
which employs the right of retention as a means
or device by which a creditor is able to obtain the
payment of a debt. Thus, under Article 1731 of the
New Civil Code, any person who has performed
work upon a movable has a right to retain it by
way of pledge until he is paid. Similarly, under
Article 1914 of the same Code, the agent may
retain in pledge the things which are the object of
the agency until the principal effects
reimbursement of the funds advanced by the
former for the execution of the agency, or he is
indemnified for all damages which he may have
suffered as a consequence of the execution of
the agency, provided he is free from fault. To the
same effect, the depositary, under Article 1994 of
the same Code, may retain the thing in pledge
until the full payment of what may be due him by
reason of the deposit. The usufructuary, pursuant
to Article 612 of the same Code, may retain the
property until he is reimbursed for the amount paid
for taxes levied on the capital (Article 597) and for
extraordinary repairs (Article 594).
In all of these cases, the right of retention is used
as a means of extinguishing the obligation. As
amply observed by Manresa:
"El derechode retencion,
lo hemos dicho, es el derecho de prenda o el
de anticresis constituido por la ley con independ
encia de la voluntad de laspartes." In[19] a modified to conform to the foregoing
pledge, if the thing pledged earns or produces
fruits, income, dividends or interests, the creditor
shall compensate what he receives with those
which are owing him.[20] In the same manner, in a
contract of antichresis, the creditor acquires the
right to receive the fruits of an immovable of his
debtor with the obligation to apply them to the
payment of the interest, if owing, and thereafter
to the principal of his credit.[21] The debtor can not
reacquire enjoyment of the immovable until he
has actually paid what he owes the creditor.[22]
Applying the afore-cited principles to the case at
bar, petitioner cannot appropriate for his own
exclusive benefit the tolls which he collected from
the property retained by him. It was his duty
under the law, after deducting the necessary
expenses for his administration, to apply such
amount collected to the payment of the interest,
and the balance to the payment of the principal
of the obligation.
We hold, therefore, that the disputed tolls, after
deducting petitioner's expenses for
administration, belong to Quirino Comintan,
owner of the land through which the toll road
passed, further considering that the same was on
portions of the property on which petitioner had
not introduced any improvement. The trial court
itself clarified this matter when it placed the toll
road under receivership. The omission of any
mention of the tolls in the decision itself may be
attributed to the fact that the tolls appear to have
been collected after the rendition of the
judgment of the trial court.
The records further reveal that earnest efforts have
been made by private respondents to have the
judgment executed in the most practicable
manner. They deposited in court the amount of
the judgment in the sum of P13,632.00 in cash,
subject only to the accounting of the tolls
collected by the petitioner so that whatever is due
from him may be set off with the amount of
reimbursement. This is just and proper under the
circumstances and, under the law, compensation
or set off may take place, either totally or
partially. Considering that petitioner is the
creditor with respect to the judgment obligation
and the debtor with respect to the tolls
collected, Comintan being the owner thereof,
the trial court's order for an accounting and
compensation is in accord with law.[23]
With respect to the amount of reimbursement to
be paid by Comintan, it appears that
the dispositive portion of the decision was lacking
in specificity, as it merely provided
that Comintan and Zamora are jointly
liable therefor. When two persons are liable
under a contract or under a judgment, and no
words appear in the contract or judgment to
make each liable for the entire obligation, the
presumption is that their obligation is joint
or mancomunada, and each debtor is liable only
for a proportionate part of the obligation.[24] The
judgment debt of P13,632.00 should, therefore, be
pro-rated in equal shares to Comintan and
Zamora.
Regarding Lot 5785-B, it appears that no public
sale has as yet been conducted by the Bureau of
Lands and, therefore, petitioner is entitled to
remain in possession thereof. This is not disputed
by respondent Eleuterio Zamora.[25] After public
sale is had and in the event that Ortiz is not
declared the successful bidder, then he should be
reimbursed by respondent Zamora in the
corresponding amount for the improvements on
Lot 5785-B.
WHEREFORE, in view hereof, the Order of
respondent Court of November 18, 1970 is hereby
judgment. The Writ of Preliminary Injunction,
dated January 29, 1971, is hereby
dissolved. Without special pronouncement as to
costs.
Barredo, (Chairman), Guerrero, Concepcion,
Jr., and Guerrero, JJ., concur.
Aquino, J., in the result.
Santos and Abad Santos, JJ., on official leave.
THIRD DIVISION
[ G.R. No. 111737, October 13, 1999 ]
DEVELOPMENT BANK OF THE PHILIPPINES,
PETITIONER, VS. THE HONORABLE COURT
OF APPEALS AND SPOUSES TIMOTEO AND
SELFIDA S. PIÑEDA, RESPONDENTS.
DECISION
GONZAGA-REYES, J.:
Before us is a Petition for Review on
Certiorari of the decision of the Court of
Appeals[1] in CA-G.R. CV No. 28549
entitled "SPOUSES TIMOTEO PIÑEDA, ET.
AL. vs. DEVELOPMENT BANK OF THE
PHILIPPINES" which affirmed the decision
of the Regional Trial Court (RTC), Branch
16[2] , Roxas City in Civil Case No. V-4590,
for cancellation of certificate of title
and/or specific performance,
accounting and damages with a prayer
for the issuance of a writ of preliminary
injunction.
The records show that respondent
spouses Piñeda (PIÑEDAS) are the
registered owners of a parcel of land
(Lot 11-14-1-14) situated at barangay
Astorga Dumarao, Capiz containing an
area of 238,406 square meters, more or
less, and covered by Homestead Patent
No. 0844 and Original Certificate of Title
No. P-1930. On March 7, 1972, the
PIÑEDAS mortgaged the above
described parcel of land to petitioner,
Development Bank of the Philippines
(DBP) to secure their agricultural loan in
the amount of P20,000.00. The PIÑEDAS
failed to comply with the terms and
conditions of the mortgage compelling
DBP to extrajudicially foreclose on
February 2, 1977. In the foreclosure sale,
DBP was the highest bidder and a Sheriff
Certificate of Sale was executed in its
favor. In the corresponding Certificate of
Sale, the sheriff indicated that "This
property is sold subject to the
redemption within five (5) years from the
date of registration of this instrument and
in the manner provided for by law
applicable to this case". The certificate
of sale was registered in the Register of
Deeds of Capiz on April 25, 1977. On
March 10, 1978, after the expiration of
the one-year redemption period
provided for under Section 6, ACT 3135,
DBP consolidated its title over the
foreclosed property by executing an
Affidavit of Consolidation of Ownership.
Subsequently, a Final Deed of Sale was
executed in DBP's favor, which was
registered together with the Affidavit of
Consolidation of Ownership with the
Register of Deeds of Capiz on May 30,
1978. Consequently, Original Certificate
of Title No. P-1930 was cancelled and
30 | P r o p e r t y C a s e s - P o s s e s s i o n
TCT No. T-15559 was issued in the name
of DBP. Thereafter, DBP took possession
of the foreclosed property and
appropriated the produce thereof.
On July 5, 1978, the Ministry of Justice
issued Opinion No. 92, Series of
1978[3] which declared that lands
covered by P.D. No. 27[4] , like the herein
subject property, may not be the object
of foreclosure proceedings after the
promulgation of said decree on Oct. 21,
1972.
On August 24, 1981, the PIÑEDAS offered
to redeem the foreclosed property by
offering P10,000.00 as partial redemption
payment. This amount was accepted by
DBP who issued O.R. No. 1665719 and
through a letter, conditionally approved
the offer of redemption considering the
P10,000.00 as down
payment.[5] However, on November 11,
1981, DBP sent the PIÑEDAS another
letter informing them that pursuant to
P.D. 27, their offer to redeem and/or
repurchase the subject property could
not be favorably considered for the
reason that said property was
tenanted.[6] On November 16, 1981, in
deference to the above-mentioned
opinion, DBP through Ramon Buenaflor
sent a letter to the Acting Register of
Deeds of Capiz requesting the latter to
cancel TCT No. T-15559 and to restore
Original Certificate of Title No. P-1930 in
the name of the PIÑEDAS. The Acting
Register of Deeds, in reply to such
request, suggested that DBP file a
petition in court pursuant to Section 108
of Presidential Decree 1529[7] . In
compliance with said suggestion, DBP
petitioned for the cancellation of TCT
No. T-15559 with then Court of First
Instance of Capiz, Branch II, docketed as
Special Case No. 2653. The petition was
favorably acted upon on February 22,
1982. Thus, the foreclosure proceeding
conducted on February 2, 1977 was
declared null and void and the Register
of Deeds of Capiz was ordered to
cancel TCT No. 15559; OCT No. 1930 was
ordered revived.
Meanwhile, on December 21, 1981, the
PIÑEDAS filed the instant complaint
against DBP for cancellation of
certificate of title and/or specific
performance, accounting and
damages with a prayer for the issuance
of a writ of preliminary injunction averring
that DBP, in evident bad faith, caused
the consolidation of its title to the parcel
of land in question in spite of the fact
that the 5-year redemption period
expressly stated in the Sheriff's Certificate
of Sale had not yet lapsed and that their
offer to redeem the foreclosed property
was made well within said period of
redemption.[8]
After trial, the RTC ruled in favor of the
PIÑEDAS stating that DBP violated the
stipulation in the Sheriff's Certificate of
Sale which provided that the
redemption period is five (5) years from
the registration thereof in consonance
with Section 119[9] of CA No. 141[10] . DBP
should therefore assume liability for the
fruits that said property produced from
said land considering that it prematurely
took possession thereof. The dispositive
portion of the decision reads:
"WHEREFORE, judgment is hereby
rendered in favor of plaintiffs and
against the defendant Development
Bank of the Philippines as follows:
1. Condemning the defendant DBP to
pay the plaintiffs P201,138.28 less
whatever amount the plaintiffs still have
to pay the said defendant DBP as
balance of their loan account reckoned
up to the date of this decision;
P20,000.00 as attorney's fees; P5,000.00
as litigation expenses and costs.
SO ORDERED."[11]
DBP appealed to the Court of Appeals,
which affirmed the decision of the RTC.
The Court of Appeals stated that since
DBP was in evident bad faith when it
unlawfully took possession of the
property subject of the dispute and
defied what was written on the Sheriff's
Certificate of Sale, the PIÑEDAS were
entitled to recover the fruits produced
by the property or its equivalent valued
at P72,000.00 per annum or a total of
P216,000.00 for the three-year period.
Respondent court stated that said
amount was not rebutted by DBP and
was fair considering the size of the land
in question. The court added that any
discussion with respect to the
redemption period was of little
significance since the foreclosure
proceeding was declared null and void
in Special Civil Case No. 2653[12] on
February 22, 1982. Thus, the right of the
PIÑEDAS to redeem the property has
become moot and academic. Finally,
the award of attorney's fees amounting
to P10,000.00[13] was justified considering
that the PIÑEDAS were compelled to
protect their interests.[14]
DBP's Motion for Reconsideration[15] was
denied; hence this petition where it
assigns the following errors:
"Ground No. 1 The Honorable Court Of
Appeals Gravely Erred In Affirming The
Court A Quo's Decision Awarding Actual
Damages In The Amount Of P216,000.00
In Favor Of The Private Respondents
Notwithstanding The Absence Of
Evidence Substantiating Said Award.
Thus, The Honorable Court Of Appeals
Had Decided This Instant Case In A Way
Not In Accord With Applicable Law And
Jurisprudence.
2. Ground No. 2 - The Honorable Court
Of Appeals Gravely Erred In Affirming
The Court A Quo's Finding That DBP Was
In Bad Faith When It Took Possession Of
The Property In Question
Notwithstanding the Contrary Evidence
Adduced By Petitioner DBP. Thus, The
Honorable Court Of Appeals Departed
From The Accepted And Usual Course of
Judicial Proceedings.
3. Ground No. 3 - The Honorable Court
Of Appeals Gravely Erred In Affirming
The Court A Quo's Decision Awarding
Attorney's Fees And Litigation Costs In
Favor Of The Private Respondents
Notwithstanding Absence Of Evidence
Proving the Same. Clearly, The Lower
Court Committed Misapprehension Of
Facts That Can Be Considered A
Question Of Law."[16]
DBP maintains that the valuation of the
income derived from the property in
dispute allegedly amounting to
P216,000.00 was not proven by the
PIÑEDAS. DBP argues that they granted
the PIÑEDAS a loan of P20,000.00 in
March 7, 1972 and up to the time of the
foreclosure of the property, the PIÑEDAS
have paid only P2,000.00 on their
principal. The failure of the PIÑEDAS to
pay this loan is attributable to the fact
that said property did not produce
income amounting to P72,000.00 per
annum. According to DBP, in the
absence of receipts or other evidence
to support such a claim, the Court of
Appeals should not have granted said
amount considering that the PIÑEDAS
had the burden of proving actual
damages. Furthermore, Selfida Piñeda
herself admitted that the property never
produced income amounting to
P72,000.00 per annum. At any rate, the
actual amount earned by the property
in terms of rentals turned over by the
tenant-farmers or caretakers of the land
were duly receipted and were duly
accounted for by the DBP.
DBP also alleges that the mere fact that
DBP took possession and administration
of the property does not warrant a
finding that DBP was in bad faith. First,
records show that the PIÑEDAS
consented to and approved the
takeover of DBP. Second, Sec. 7[17] of Act
No. 3135[18]allows the mortgagee-buyer
to take possession of the mortgaged
property even during the redemption
31 | P r o p e r t y C a s e s - P o s s e s s i o n
period. Third, DBP's act of consolidating
the title of the property in its name does
not constitute bad faith as there is no law
which prohibits the purchaser at public
auction from consolidating title in its
name after the expiration of the one (1)
year redemption period reckoned from
the time the Certificate of Sale was
registered; and neither is there any law
or jurisprudence which prohibits the
PIÑEDAS from exercising their right of
redemption over said property within
five (5) years even if title is consolidated
in the name of the purchaser. When DBP
consolidated title over the property in its
name, the new TCT issued in its favor was
subject to the lien i.e. the right of
redemption of the PIÑEDAS; if there was
a failure to register this in the TCT, DBP
should not be faulted. Besides, even if
the five (5) year period of redemption
was not indicated therein, Sec. 44[19] and
46[20] of Presidential Decree No.
1529[21] attaches such lien by operation
of law even in the absence of an
annotation in the title. Moreover, Sec.
119 of CA No. 141 also makes said right
of redemption a statutory lien, which
subsists and binds the whole world
despite the absence of registration.
DBP also could not have been in bad
faith when it denied the PIÑEDAS' offer to
redeem the property since the denial
was premised on Opinion No. 92 of the
Minister of Justice series of 1978 which
stated that said land was covered under
P.D. 27 and could not be the subject of
foreclosure proceedings. For this reason,
DBP immediately filed a petition to nullify
the foreclosure proceedings which was
favorably acted upon prior to the
service of summons and the complaint in
the present case on DBP on June
30,1982. If DBP was really in bad faith, it
would not have filed said petition for said
petition was against its own interests.
Further, DBP asserts that PIÑEDAS
appointed DBP as their attorney-in-fact
or agent in case of foreclosure of the
property under Section 4 of the
mortgage contract, which provides:
"4. xxx In case of foreclosure, the
Mortgagor hereby consents to the
appointment of the mortgagee or any
of its employees as receiver, without any
bond, to take charge of the mortgage
property at once, and to hold possession
of the case and the rents and profits
derived from the mortgaged property
before the sale. xxx"[22]
DBP was therefore entitled to take
possession of the property pursuant to
the mortgage contract.
Finally, considering that DBP lawfully had
material possession of the property after
it consolidated its title, DBP was entitled
to the fruits and income thereof pursuant
to Section 34, Rule 39 of the Rules of
Court:
"Sec. 34. Rents and Profits Pending
Redemption. Statement thereof and
credit therefor on redemption. The
purchaser, from the time of the sale until
a redemption, and a redemptioner,
from the time of his redemption until
another redemption, is entitled to
receive the rents of the property sold or
the value of the use or occupation
thereof when such property is in the
possession of a tenant. xxx"
Taking all this into consideration, DBP
cannot be faulted for taking over
possession of the property in question.
The core issue in this case is whether DBP
was in bad faith when it took possession
of the disputed lot.
We rule in the negative and find DBP's
contentions meritorious.
A possessor in good faith is one who is
not aware that there exists in his title or
mode of acquisition any flaw, which
invalidates it.[23]Good faith is always
presumed, and upon him who alleges
bad faith on the part of a possessor rests
the burden of proof.[24] It was therefore
incumbent on the PIÑEDAS to prove that
DBP was aware of the flaw in its title i.e.
the nullity of the foreclosure. This, they
failed to do.
Respondent PIÑEDAS argue that DBP's
bad faith stems from the fact that DBP
consolidated title over the disputed
property despite the statement in the
Sheriff's Certificate of Sale to the effect
that said land was subject to a five year
redemption period. The period of
redemption of extrajudicially foreclosed
land is provided under Section 6 of ACT
No. 3135 to wit:
"Sec. 6. In all cases in which an
extrajudicial sale is made under the
special power hereinbefore referred to,
the debtor, his successors in interest or
any judicial creditor or judgment
creditor of said debtor, or any person
having a lien on the property
subsequent to the mortgage or deed of
trust under which the property is sold,
may redeem the same at any time
within the term of one year from and
after the date of sale; and such
redemption shall be governed by the
provisions of section four hundred and
sixty-four to four hundred and sixty-six,
inclusive, of the Code of Civil
Procedure[25] , in so far as these are not
inconsistent with the provisions of this
Act."
If no redemption is made within one
year, the purchaser is entitled as a
matter of right to consolidate[26] and to
possess[27] the property.[28] Accordingly,
DBP's act of consolidating its title and
taking possession of the subject property
after the expiration of the period of
redemption was in accordance with
law. Moreover, it was in consonance
with Section 4 of the mortgage contract
between DBP and the PIÑEDAS where
they agreed to the appointment of DBP
as receiver to take charge and to hold
possession of the mortgage property in
case of foreclosure. DBP's acts cannot
therefore be tainted with bad faith.
The right of DBP to consolidate its title
and take possession of the subject
property is not affected by the PIÑEDAS'
right to repurchase said property within
five years from the date of conveyance
granted by Section 119 of CA No. 141. In
fact, without the act of DBP
consolidating title in its name, the
PIÑEDAS would not be able to assert
their right to repurchase granted under
the aforementioned section.
Respondent PIÑEDAS are of the
erroneous belief that said section
prohibits a purchaser of homestead land
in a foreclosure sale from consolidating
his title over said property after the one-
year period to redeem said property has
expired. Section 119 does not contain
any prohibition to convey homestead
land but grants the homesteader, his
widow or legal heirs a right to repurchase
said land within a period of five years in
the event that he conveys said land. This
is in consonance with the policy of
homestead laws to distribute disposable
agricultural lands of the State to land-
destitute citizens for their home and
cultivation.[29] The right to repurchase
under Section 119 aims to preserve and
keep in the family of the homesteader
that portion of public land which the
State had gratuitously given him.[30] Such
right is based on the assumption that the
person under obligation to reconvey the
property has the full title to the property
because it was voluntarily conveyed to
him or that he consolidated his title
thereto by reason of a redemptioner's
failure to exercise his right of
redemption.[31] It is also settled that "the
five-year period of redemption fixed in
Section 119 of the Public Land Law of
homestead sold at extrajudicial
foreclosure begins to run from the day
after the expiration of the one-year
period of repurchase allowed in an
extrajudicial foreclosure".[32] Thus DBP's
32 | P r o p e r t y C a s e s - P o s s e s s i o n
consolidation of title did not derogate SO ORDERED.
from or impair the right of the PIÑEDAS to
redeem the same under C.A. No. 141. Melo, (Acting Chief Justice) Vitug,
Panganiban, and Purisma, JJ., concur.
It may be argued that P.D. 27 was
already in effect when DBP foreclosed
the property. However, the legal
propriety of the foreclosure of the land
was put into question only after Opinion
No. 92 series of 1978 of the Ministry of
Justice declared that said land was
covered by P.D. 27 and could not be
subject to foreclosure proceedings. The
Opinion of the Ministry of Justice was
issued on July 5, 1978 or almost two
months after DBP consolidated its title to
the property on March 10, 1978. By law
and jurisprudence, a mistake upon a
doubtful or difficult question of law may
properly be the basis of good faith.[33]
In the case of
Maneclang vs. Baun,[34] we held that
when a contract of sale is void, the
possessor is entitled to keep the fruits
during the period for which it held the
property in good faith. Good faith of the
possessor ceases when an action to
recover possession of the property is filed
against him and he is served summons
therefore.[35] In the present case, DBP
was served summons on June 30,
1982.[36] By that time, it was no longer in
possession of the disputed land as
possession thereof was given back to the
PIÑEDAS after the foreclosure of DBP was
declared null and void on February 22,
1982. Therefore, any income collected
by DBP after it consolidated its title and
took possession of the property on May
30, 1978 up to February 22, 1982 belongs
to DBP as a possessor in good faith since
its possession was never legally
interrupted.
Finally, we delete the award for
attorney's fees. Although attorney's fees
may be awarded if the claimant is
compelled to litigate with third persons
or to incur expenses to protect his
interest by reason of an unjustified act or
omission of the party from whom it is
sought[37] , we hold that DBP's acts were
clearly not unjustified.
WHEREFORE, the instant petition is
hereby GRANTED, and the appealed
decision of the Court of Appeals is
REVERSED. The Development Bank of the
Philippines is absolved from any liability
to Timoteo and Selfida Piñeda in so far as
it orders the DBP to pay the PIÑEDAS
P216,000.00 as annual produce value of
the land; P20,000.00 in attorney's fees,
P5,000.00 in litigation expenses and the
costs of the suit. This decision is without
prejudice to whatever liability the
PIÑEDAS may still have to the DBP with
respect to their loan.
[ G R No. 34004, Sep 12, 1931 ]
APOLONIA CALMA ET AL. v. EULALIO
CALMA +
DECISION
56 Phil. 102
ROMUALDEZ, J.:
Under three causes of action the
plaintiffs pray that the defendant
be ordered to liquidate the yearly crops
of the plantation described in
paragraph II of the complaint, from the
year 1903, delivering to the
plaintiffs their share, or its value; that
said property be divided equally
into two parts and the half which, in
justice and equity, belongs to the
plaintiffs be adjudicated to them; that
the defendant be compelled to restore
to the plaintiffs the property described in
paragraph VIII of the complaint, or
its value, which is P56,300, and to pay
them P66,000 damages, and the costs.
After entering a general and specific
denial of the complaint, the defendant
set up a number of special defenses and
a counterclaim, praying that he be
absolved from the complaint and
the plaintiffs be sentenced to pay him
P13,660.40 on several counterclaims,
besides the costs.
After hearing the evidence, the Court of
First Instance of Tarlac found that both
the complaint and the counterclaim
had prescribed, and dismissed both,
without pronouncement of costs.
Both parties appealed from that
decision, the plaintiffs assigning the
following errors:
1. In finding that the plaintiffs'
cause of action petitioning for
the liquidation of the rents or
profits from lot No. 283,
cadastral survey of Gerona,
Tarlac, has prescribed.
2. In not holding that the plaintiffs,
as undivided co-owners of
one-half of said lot are entitled
to one-half of the annual
income of 450 cavanes, i. e.,
225 cavanes of palay a year,
or their cash value, according
to the current prices
during the period from 1903 to
1927;
3. In not finding that the total
value of the one-half
33 | P r o p e r t y C a s e s - P o s s e s s i o n
belonging to the plaintiffs of
said rental is P17,554; and
4. In dismissing the plaintiffs'
action and in not sentencing
the defendant to pay said
plaintiffs the aforesaid sum of
P17,554, with legal interest from
the date of the complaint,
and the costs of the trial."
The defendant, in turn, assigned the
following errors to the court below, to wit:
1. The court a quo erred in
applying the statute of
limitations to the counterclaims
of the appellant.
2. The court a quo erred in
refusing to order Facundo
Salazar, official stenographer
thereof, to transcribe his notes
on the testimony of Ernesto
Quirino."
The question raised by the plaintiffs
on appeal is summed up in their first
cause of action, with reference to the
crops grown on lot No. 283 from the year
1903, contending that the statute of
limitations invoked by the defendant in
his amended answer is not in point
because the latter has been in
possession only as a joint owner, and
because even if he were in
possession as the exclusive owner, the
running of the prescriptive period was
interrupted by the decision of the
competent court in 1927 declaring that
the defendant was only a co-owner,
and not the sole owner of the lot in
question.
The record shows that the defendant
was in possession of all the land from
1903 until 1927 not as a mere
administrator, as the complaint
alleges, nor even as a mere co-owner,
but as the sole and absolute owner, in
good faith, and adversely to the
plaintiffs. He is therefore protected by
subsection 3 of section 43 of the Code of
Civil Procedure. The interruption of his
possession in 1927 did not deprive him of
the right which, as a possessor in good
faith, he had to take for himself the
products of the land up to that year,
according to article 451 of the Civil
Code.
The plaintiffs appeal, then, is not
well taken.
As to that for the defendant, similarly
confined to item? (a), (/) and (h)of his
counterclaim, with reference to certain
sums alleged to have been disbursed by
the defendant for the benefit of Gabino
Calma, the predecessor in interest of the
plaintiffs, for P3,995 paid to
creditors, P500 paid to attorney Pedro
Liongson, and for P750 or P500 paid to
Paulo Macasaquit, which comprise the
one-half which the plaintiff's
predecessor had to pay; it is contended
that the trial court should not have
applied the statute of limitations in favor
of the plaintiffs, inasmuch as they had
not set it up as a defense. We have
indeed failed to find among the
plaintiffs' pleadings any allegation of
prescription against the defendant's
counterclaim. The statute of limitations
must be pleaded in the answer and
cannot be set up by a demurrer or
proved under a general
denial. (Domingo vs. Osorio, 7 Phil., 405;
Pelaez vs. Abreu, 26 Phil., 415; Karagdag
vs. Barado, 33 Phil., 529.) The plaintiffs
should have replied to the counterclaim
if they had desired to set up such an
affirmative defense as the statute of
limitations, because silence meant only
that they generally denied the
allegations of the defendant's
answer. (Sec. 104, Code of Civil
Procedure; Herranz & Garriz vs.
Barbudo, 12 Phil., 5; Yu Chin Piao vs. him
Tuaco, 33 Phil., 92.)
It happens, however, that the plaintiffs
are not under obligation to pay the
debts of their late father, such as items
(a), (f), and (h) of the counterclaim. It
does not appear that they personally
bound themselves to pay them, and the
mere fact that they are the deceased's
heirs does not make them answerable
for such credits against their predecessor
in interest, inasmuch as article 1003 of
the Civil Code is no longer in force,
having been abrogated by certain
provisions of the Code of Civil Procedure
(Pavia vs. De la Rosa, 8 Phil., 70).
With respect to the transcript of attorney
Quirino's testimony, which is dealt with in
the second assignment of error in the
defendant's brief, it is of no importance,
for whether or not this claim of the
defendant's is proved, the plaintiffs are
not responsible therefor, as we have
just stated.
Finding no error in the dispositive part of
the judgment appealed from, it is
hereby affirmed, without
pronouncement as to costs in this
instance. So ordered.
Avanceña, C. J., Johnson, Street,
Malcolm, Villamor, Ostrand, Villa-Real,
and Imperial, JJ., concur.
[ GR No. 12457, Jan 22, 1919 ]
SERVILLANO AQUINO v. EMETERIO
TAÑEDO +
DECISION
39 Phil.
AVANCEÃ'A, J.:
The plaintiff demands from the
defendant payment of the sum of
P1 0,000, together with legal interest
thereon from the date of the filing of
the complaint. The defendant, in a
counterclaim, demands from the
plaintiff payment of the sum of
P6,791.75 and legal interest, thereon
from March 28, 1914.
On May 5, 1913, the plaintiff
purchased from the defendant
several parcels of land for the price
of P45,000 (Exhibit X). In the contract
the defendant acknowledged
receipt of the sum of P10,000, as a
part of this price, the contracting
parties stipulating that the rest
should be paid as follows: P7,000 in
September of the same year,
P10,000 in May, 1914, and P18,000 in
1915,, By virtue of this contract the
plaintiff took possession of the lands
purchased. On March 28,1914, the
plaintiff and the defendant, by
virtue of another contract (Exhibit Z),
agreed to consider the previous
contract as rescinded and of no
value. As a result of this second
agreement, the plaintiff returned to
the defendant the lands together
with4 all the documents pertaining
thereto. The defendant, of his part,
instead of returning the price
received by him, subscribed in favor
of the plaintiff another document
(Exhibit) in which he acknowledges
that he owes the plaintiff the sum of
P12,000, of which P2,000, the
amount of the interest on P10,000 for
one year, was to be paid on or
before the 31st of May of the
following year, 1915, and, as to the
remaining P10,000, it was agreed
that the date of their payment
would be fixed upon payment of
the P2,000.
On May 28, 1915, the defendant
34 | P r o p e r t y C a s e s - P o s s e s s i o n
paid the plaintiff the P2,000, in
accordance with the contract,
Exhibit A. Upon this payment being
made no time was fixed for the
payment of the other Tl 0,000.
517 Subsequently, the plaintiff filed
against the defendant an action in
the Court of First Instance of Tarlaa
(Civil Case No. 792), wherein he
demanded of the defendant the
payment of the Pl0,000. Before this
case was decided, the plaintiff and
the defendant stipulated that, in the
event that the court should find that
the defendant's obligation was not
due, they should move the court
merely to fix the period in which this
sum should he paid, with the
understanding that, if it be not paid:
within the period fixed by the court,
the plaintiff might bring an action
against the defendant for its
collection, without prejudice to the
defenses which the defendant
might set up. It appears that this
agreement was taken into account
by the court, for the record shows
that on September 13, 1915, it
rendered judgment in that case
merely fixing a period of three
months, counting from October 1,
1915, for the payment of this sum of
P10,000 by the defendant.
There is no dispute over the fact that
the defendant owes the plaintiff the
P10,000 claimed by the latter. The
question raised by this appeal is one
that relates to the defendant's
counterclaim. The sum demanded
in this counterclaim is the value of
the product of the lands, collected
by the plaintiff during the time he
was in possession of them, by virtue
of the contract Exhibit X,
specifically, from May 5, 1913, until
the plaintiff returned the lands to the
defendant, on March 28, 1914.
The plaintiff contends that the
judgment rendered by the Court in
Civil Case No. 792 had resolved all
the issues then in controversy
between the plaintiff and the
defendant, and among them that
of the counterclaim which is now
presented in the instant case. We
believe, however, that this
contention is unfounded. The
judgment rendered by the corirt in
that Civil Case, No. 792,
undoubtedly was rendered in
consideration of the agreement
between the plaintiff and the
defendant to move the court
merely to fix the period within which
the defendant should be obliged to
pay to the plaintiff the P10,000,
without prejudice to the defenses
the defendant might set up with
respect to this obligation. Withal, we
are of the opinion that the plaintiff
should be absolved from this
counterclaim, for the very reasons
that we shall presently set forth.
The question is this: the plaintiff, on
account of having purchased the
lands from the defendant on May
15, 1913, according to Exhibit X, took
possession of the same and
collected their products. On March
28, 1914, the plaintiff and the
defendant dissolved that contract
of sale and, as a result thereof, the
plaintiff returned the lands to the
defendant, and the defendant in
turn, bound himself to return to the
plaintiff the part of the price that the
latter had paid. Is the plaintiff
obliged to return to the defendant
the products of the lands that the
plaintiff collected during his
possession?
The defendant invokes article 1295
of the Civil Code, which prescribes
that the rescission obliges the return
of the things which were the objects
of the contract, with their fruits and
the price with interest. He maintains
that, pursuant to this provision, the
plantiff is obliged to return the fruits
collected by him. But the rescission
mentioned in the contract Exhibit Z
is not the rescission referred to in this
article 1295. Although the plaintiff
and the defendant employed the
word rescind, it has not, in the
contract executed by them, either
the scope or the meaning of the
word rescission to which article 1295
refers and which takes place only in
the cases mentioned in the
preceding articles, 1291 and 1292.
Rescission, in the light of these
provisions, is a belief which the law
grants, on the premise that the
contract is valid, for the protection
of one of the contracting parties
and third persons from all injury and
damage the contract may cause,
or to protect some incompatible
and pref erent right created by the
contract. Article 1295 refers to
contracts that are rescindible in
accordance with law in the cases
expressly fixed thereby, but it does
not refer to contracts that are
rescinded by mutual consent and
for the mutual convenience of the
contracting parties. The rescission in
question was not originated by any
of the causes specified in articles
1291 and 1292, nor is it any relief for
the purposes sought by these
articles. It is simply another contract
for the dissolution of a previous one,
and its effects, in relation to the
contract so dissolved, should be
determined by the agreement
made by the parties, or by the
application of the other legal
provisions to which we shall refer
later on, but not by article 1295,
which is not applicable.
The defendant alleges that, upon
the execution of the contract of
rescission, Exhibit. Z, the plaintiff
verbally agreed to return the fruits
collected by him. The plaintiff
denies this absolutely. As the
contract of rescission wal drawn up
in writing, it must be presumed that
the document wherein this contract
appears contains all the
agreements stipulated by the
parties. Although the defendant
was permitted to introduce oral
evidence to establish that, besides
what is set forth in the written
contract, the plaintiff also agreed,
verbally, to return the fruits
collected, the plaintiff, on his part,
presented other evidence in
rebuttal. Examining the evidence
adduced by both parties on this
point, we can say that there is no
preponderance in favor of the
proof presented by the defendant.
In such conditions, the presumption
that the written contract contains all
the agreements should prevail and,
consequently, the defendant's
contention that such a verbal
agreement made by the plaintiff
existed should be rejected.
35 | P r o p e r t y C a s e s - P o s s e s s i o n
The defendant argues that, as he
bound himself to pay, and in fact
did pay, interest on the P10,000
which he received from the plaintiff
as [a part of] the price of the land, it
should be understood that the
plaintiff, reciprocally, also bound
himself to return, on his part, the fruits
which he collected from these
lands. This argument would be valid
if the interest paid by the defendant
had been paid for the time
preceding the rescission, that is,
from May 5, 1913, when the
contract of purchase and sale was
executed, until March 28,1914,
when it was rescinded. The record
shows, however, that this interest
was paid for the time subsequent to
the rescission, It will be recalled that
the defendant received from the
plaintiff P10,000 as a part of the
price of the lands; that, on
rescinding the sale in March, 1914,
the plaintiff returned the lands; and
that the defendant, on his part,
instead of returning the part of the
price, Wl0,000, received by him,
executed in favor of the plaintiff the
Exhibit A, binding himself to pay the
sum of P12,000, with interest, one
year afterwards, that is, on May 31,
1915. Both parties agree that P000 of
these P12,000 is the interest on the
P10,000 for one year, at the rate of
20 per cent per annum. According
to that, after the defendant had
been in receipt of the P10,000 tor
two years, he bound himself to pay
interest only for one year. This
necessarily supposes that this sum
did not earn interest for the other
year. If it is admitted that this interest
pertains to the first year previous to
the rescission, then it had accrued
and was due when this contract of
rescission was executed , however,
it was not deemed to be due.on
that date, inasmuch as the
defendant did not bind himself to
pay it until after the second year.
Furthermore, if it is considered that
this interest corresponds to the first
year prior to the rescission, the year
in which no interest was due would
be the following year. Thus the result
would be that, while the plaintiff
returned the lands, the defendant
did not return the price, and if he did
not even bind himself to pay interest
on this unreturned price, the
transaction would lack the same
reciprocity which the defendant
invokes to sustain the contrary. We
accept the conclusion that the
interest which the defendant bound
himself to pay, and in fact did pay,
to the plaintiff, was for the time
subsequent to the rescission.
Consequently the defendant did
not bind himself to pay, nor did he
pay, interest on the P10,000 for the
time prior to the rescission. Applying,
by inversion, the defendant's
argument, we believe that we
ought to conclude that the plaintiff
could not have bound himself to
return to the defendant the fruits of
the land that the plaintiff collected
during his possession, inasmuch as
the defendant did not pay, nor bind
himself to pay, interest during the
same time for the part of the price
which he received.
But the plaintiff held the lands by
reason of his having purchased
them from the defendant. On this
account, his possession, until the
contract of purchase and sale was
dissolved and the lands were
returned by him, was in good faith.
As such possessor in good faith, the
fruits collected by him become his
own (art. 451, Civil Code) and he is
not obliged to return them, to the
defendant. In the absence of any
convenant, this provision should be
applied to the instant case.
Aside from the foregoing
considerations, equity also lies on
the plaintiff's side, because, as the
record shows, for the improvement
of the land and in order to produce
the fruits which he collected, he
incurred expenses in an amount
such that the products collected by
him may, reasonably, be
considered equivalent to the
interest for one year on the P10,000
which he had paid to the
defendant.
Therefore, the judgment appealed
from is affirmed, with the costs
against the appellant. So ordered.
Arellano, C.J., Torres, Johnson,
Malcolm, and Street, JJ., concur.
[ GR No. 26844, Sep 27, 1927 ]
ISABEL FLORES v. TRINIDAD LIM +
DECISION
50 Phil. 738
STATEMENT
January 20, 1923, plaintiff's land was sold at
sheriff's sale to the defendant for P1.603.78.
It is in the barrio of Pinaninding, municipality
of Laguimanoc formerly Atimonan
Province of Tayabas, and is about seventy-
three hectares, on which were 164 coconut
bearing trees and 1,000 non-bearing, and
about 300 buri trees. The usual certificate of
sale was issued to the defendant under the
provisions of section 463 of the Code of Civil
Procedure. Prior to the one year period of
redemption, plaintiff made a formal
demand upon the defendant, under the
provisions of section 469 of the same Code,
for an accounting of the fruits and profits
derived by her from the land, so that the
plaintiff might have credit for the amount
received on the money required for
redemption from the sale.
The instant case is brought by the plaintiff to
redeem, and it is alleged that at the time of
the sale, the defendant took the actual,
physical possession of the property, and
has refused and still refuses to render an
account of the fruits and profits, to plaintiff's
damage in the sum of P1,000, and she
prays judgment that the defendant be
ordered to render an itemized account,
the amount of which should be deducted
from the price of the redemption; that
plaintiff have the right to redeem; and that
defendant pay her P1,000 as damages and
costs.
For answer the defendant makes a general
and specific denial, and as a special
defense alleges that her rights of ownership
over the land arise rather from a purchase
made from the Government which had
confiscated the land for a delinquency in
the payment of the land tax than from her
acquisition of it at public auction. That the
plaintiff has not repurchased the land
within one year, and the offer to redeem
was made out of time. Defendant
consented to the redemption upon the
condition only that the plaintiff should pay
the purchase price of the land, P6,371.19,
the value of the improvements, P217.07,
the amount of the land tax, and alleges
that plaintiff offered to pay only the sum of
P2,500, and promising to paythat little by
little, which offer the defendant
rejected. That the action was brought for
the purpose of delaying the matter, and to
gain time in which to obtain the money to
redeem. That the defendant has been
improving the land up to the present date,
and she prays that she be absolved from
the complaint, and in the event
36 | P r o p e r t y C a s e s - P o s s e s s i o n
redemption is allowed, that plaintiff be
required to pay her the value of the
improvements made on the land in
question. As a reply plaintiff made a
general and specific denial of all of the
new matters alleged in the answer, and as
a special defense, alleged that the
defendant had no legal right to make such
improvements, and that they were made
without her knowledge, and that she is not
liable for such improvements.
The evidence was taken upon such issues,
and the trial court rendered judgment
giving plaintiff the right to redeem the land
upon the payment to the defendant within
fifteen days from notice the following
amounts: (a) The price of the land at the
auction sale with legal interest thereon up
to this date; (b) the amount of the land tax
paid by the defendant with legal interest
up to this date; and (c) the sum of P15,000,
the value of the improvements made by
the defendant on the land, and in case
redemption is not made within that period,
the right is lost, and relieved the defendant
from rendering an account.
On appeal the plaintiff assigns the following
errors:
"ERROR NO. 1
"The trial court erred in sentencing plaintiff
to reimburse defendant in the sum of
P15,000 for improvements alleged to have
been introduced by said defendant in the
land in suit, altho said improvements were
placed thereon by defendant with
manifest bad faith.
"ERROR NO. 2
"The trial court erred in not ordering
defendant to account to plaintiff for fruits
and benefits received by said defendant
from the land, and credit plaintiff against
the amount due for its redemption the
value of said fruits and benefits.
"ERROR NO. 3
"The trial court erred in denying plaintiff's
motion for new trial on the ground of fraud
and newly discovered evidence, that
excessive indemnity was granted, and that
the decision was not justified by the
evidence and that the same was against
the law."
JOHNS, J.:
The lower court having found that the
plaintiff has a legal right to redeem, and
the defendant not having appealed from
that portion of the decision, the only
question before this court is the amount
which the plaintiff should pay to redeem.
The property was sold to the defendant at
sheriff's sale under the provisions of Chapter
XIX of the Code of Civil Procedure, section
461 of which provides:
"When the purchaser of any personal
property, capable of manual delivery, pays
the purchase money, the officer making
the sale must deliver to the purchaser the
property, and, if desired, execute and
deliver to him a certificate of sale. Such sale
conveys to the purchaser all the right which
the debtor had in such property on the day
the execution or attachment was levied."
Section 463, among other things, provides:
Upon a sale of real property, the purchaser
shall be substituted, to, and acquire all the
right, interest, title, and claim of the
judgment debtor thereto, subject to the
right of redemption as hereinafter
provided. The officer must give to the
purchaser a certificate of sale containing:
"1. A particular description of the real
property sold;
"2. The price paid for each distinct lot or
parcel;
"3. The whole price by him paid;
"4. The date when the right of redemption
expires."
Construing that section, this court in
Pabico vs. Ong Pauco (43 Phil., 572), said:
"The sheriff's action in placing the
defendant, as the purchaser at the
execution sale, in possession of the land
was absolutely without warrant of law, was
null and void ab initio, and not merely
voidable, and no special action for setting
the proceedings aside are therefore
required. In executing a judgment the
duties of the sheriff are merely ministerial;
he simply carries out the orders of the court.
If the writ of execution or other order of the
court does not command or direct him to
deliver the possession of real property to a
certain person, he has no authority
whatever to do so and in undertaking to
eject the party in possession and deliver
such possession to some one else, he
becomes a mere trespasser. In such case,
the person to whom possession is delivered
is also a trespasser and the fact that he has
been aided by another trespasser can
constitute no defense.

" 'The act of going on the property and
excluding the lawful possessor therefrom
necessarily implies the exertion of force
over the property, and this is all that is
necessary.
" 'If a trespasser enters upon land in open
daylight, under the very eyes of the person
already clothed with lawful possession, but
without the consent of the" latter, and there
plants himself and excludes such prior
possessor from the property, the action of
forcible entry and detainer can
unquestionably be maintained, even
though no force is used by the trespasser
other than such as is necessarily implied
from the mere acts of planting himself on
the ground and excluding the other party.'
" period of redemption. Being such a
Among other things, section 465 of the
Code of Civil Procedure provides:
"The judgment debtor, or redemptioner,
may redeem the property from the
purchaser, at any time within twelve
months after the sale, on paying the
purchaser the amount of his purchase, with
one per cent per month interest thereon in
addition, up to the time of redemption,
together with the amount of any
assessments or taxes which the purchaser
may have paid thereon after. purchase,
and interest on such last-named amount at
the same rate."
That is to say, the statute specifically
provides that the ¦ redemptioner may
redeem within twelve months after the sale
by paying the purchaser the amount of his
purchase, with interest thereon at one per
cent per month from the date of the
purchase to the time of redemption,
together with the amount of any
assessments or taxes which the purchaser
may have paid after the purchase, with
interest thereon at the same rate. The
statute having specified what the
redemptioner should pay to redeem, it
follows that she is not required to pay
anything not specified in the statute.
The lower court found that immediately
after the purchase, the defendant entered
upon and took possession of the premises,
and that at the time of the trial, she had
planted 8,000 coconut trees on the land at
an expense of P15,000, and that to redeem
the property it was not only necessary for
the plaintiff to pay the amounts specified in
section 465 of the Code above quoted, but
in addition thereto and in order to redeem
the property, she must pay the defendant
the further sum of P15,000, the cost and the
value of the 8,000 coconut trees planted
on the property by the defendant. That was
error. It nullifies the plain and express
provisions of the statute, and there is no
37 | P r o p e r t y C a s e s - P o s s e s s i o n
legal principle upon which it can be redemptioner "may bring an action to
sustained. compel an accounting and disclosure of
such rents and profits, and until fifteen days
The record shows that immediately after from and after the final determination of
the sale, the defendant took the actual, such action, the right of redemption is
physical possession of the property and extended to such redemptioner or
drove off the employees of the plaintiff. debtor."
A purchaser of real property at an ordinary In legal effect, the lower court held that
execution sale is not entitled to possession such a demand was made, and that by
of the land or the accruing rents and profits reason thereof, the period of redemption
until after the period of redemption has was extended. But found that "the
expired and the legal title to the land has defendant is not under obligation to render
become vested in him. a detailed account of the products of the
coconut and buri trees planted on the
The defendant had no legal right to land." Technically speaking, the defendant
possession of the land in question, and, should have been required to render an
hence, she was a trespasser from the time accounting, but under all the
she took possession during the whole circumstances, and in view of the fact that
no large amount is involved, we are not
trespasser, and under the provisions of disposed to disturb that finding.
section 465 of the Code of Civil Procedure,
the defendant cannot recover from the The judgment of the lower court, requiring
plaintiff any money which she expended the plaintiff to pay the defendant P15,000,
for the planting of the coconut trees. as one of the conditions for the redemption
of the property, is reversed, but the
It is claimed that after the sale the plaintiff judgment as to the payment of "(a) the
had said that she would not redeem, and price of said land at the auction sale with
that the defendant expended the money the legal interest thereon up to this day;"
relying upon that statement. The evidence and "(b) the amount of the land tax paid
of that nature was verbal and is more or less by the defendant with legal interest up to
hearsay, and to say the least, it is not clear this date" is in all things and respects
or convincing. We are dealing with real affirmed, with costs. So ordered.
property, the title to which is passed by
written conveyance, judicial sale, will or Johnson, Street, Malcolm, Villamor,
descent, and it would be very dangerous Romualdez, and Villa-Real, JJ., concur.
to hold that the right of redemption can be
waived by parol testimony. Be that as it
may, the evidence should be both clear
and convincing and free from any doubt.
Suffice it to say that upon that point, there
is a failure of proof. It is possible that a case
could arise where the purchaser at a
sheriff's sale pending the period of
redemption nrght be forced to make
certain improvements for the preservation
of the property, and in equity and good
conscience, he would then be entitled to
receive the reasonable cost of such
improvements as a condition precedent to
the right of redemption. But that is not this
case, and is a matter wholly outside of the
record. The alleged improvements here
were not made for the preservation of the
property, and were apparently made for
the sole purpose of preventing redemption.
Defendant's contention would nullify the
express provisions of the statute, and would
put it beyond the power of a judgment
debtor to redeem any real property sold on
execution. It is the policy of the law to aid
rather than to defeat the right of
redemption.
Under the provisions of section 469 of the
Code of Civil Procedure, the plaintiff made
a demand upon the defendant for an
accounting, and it was the legal duty of the
defendant to comply with that demand.
That section also provides that for failure to
comply with the demand, the
DIVISION
[ GR No. 109840, Jan 21, 1999 ]
JOSE L. CHUA v. CA +
DECISION
361 Phil. 308
MENDOZA, J.:
This is a petition for review on certiorari of
the decision,[1] dated October 8, 1992, of
the Court of Appeals affirming the decision
of the Regional Trial Court, Branch 59 of
Makati, Metro Manila, ordering the
ejectment of petitioners from the premises
owned by private respondent.
Petitioners were lessees of a commercial
unit at No. 3086 Redemptorist Street in
Baclaran, Parañaque, Metro Manila. The
lease was for a period of five (5) years, from
January 1, 1985 to December 31, 1989. The
contract expressly provided for the renewal
of the lease at the option of the lessees "in
accordance with the terms of agreement
and conditions set by the lessor." Prior to
the expiration of the lease, the parties
discussed the possibility of renewing
it. They exchanged proposal and
counterproposal, but they failed to reach
agreement. The dispute was referred to
the barangay captain for conciliation but
still no settlement was reached by the
parties.
On July 24, 1990, private respondent filed a
complaint for unlawful detainer against
petitioners in the Metropolitan Trial Court of
Parañaque, Metro Manila, which on
February 4, 1992 rendered a decision, the
dispositive portion of which reads:[2]
WHEREFORE, premises considered,
judgment is hereby rendered as follows:
The defendants (herein petitioners) are
hereby given a period of two (2) years
1. extension of occupancy of the subject
premises starting the date of the filing
of the instant complaint;
The defendants are hereby ordered to
pay the plaintiff (herein private
respondent) the sum of P188,806.00
representing back rentals as of the
2. year 1991 and a monthly rental of
P10,000.00 thereafter until the
expiration of the aforesaid extension of
their occupancy or until the subject
premises is actually vacated.
Defendants are hereby ordered to pay
3. the plaintiff the amount of P15,000.00
as attorney's fees; and
38 | P r o p e r t y C a s e s - P o s s e s s i o n
Defendants are hereby ordered to pay
4.
the cost of suit.
SO ORDERED
On appeal by both parties, the Regional
Trial Court, Branch 59 of Makati ruled that
the lease was for a fixed period of five (5)
years and that, upon its expiration on
January 1, 1990, petitioners' continued stay
in the premises became illegal. As
provided in Art. 1687 of the Civil Code, the
power of the courts to fix the period of lease
is limited only to cases where the period has
not been fixed by the parties
themselves. The dispositive portion of the
decision[3] states:
Premises considered, judgment is hereby
rendered modifying the appealed
decision, as follows:
1. Ordering the defendants (herein
petitioners) and all persons claiming and/or
acting for and in their behalf to vacate the
premises known as door No. 3086
Redemptorist, corner G.C. Cruz Streets,
Baclaran, Parañaque, Metro Manila and
turn over possession thereof to the plaintiff
(herein private respondent);
2. Ordering the defendants to pay the
plaintiff the following:
the amount of P42,306.00
representing accrued or back
a)
rentals from January 1, 1987 to
December 31, 1989;
a monthly rental of P7,320.50 for
the use or occupancy of the
premises starting January 1, 1990
b) until July 24, 1990 and at Ten
Thousand (P10,000.00) Pesos from
July 24, 1990 until the defendants
shall have vacated the same;
the amount of P10,000.00
c) representing reasonable
attorney's fees;
3. Dismissing defendants' counterclaim for
lack of merit; and
4. With costs against the defendants.
Petitioners appealed to the Court of
Appeals which affirmed the decision. In its
decision, dated October 8, 1992, the Court
of Appeals ordered:
WHEREFORE, except for the modification
that the monthly rental that petitioners
should pay private respondent from July 24,
1990 until the latter finally vacate the
premises in question is reduced to
P7,320.00, the decision of the respondent
court in this case is AFFIRMED in all other
respects, with costs against petitioners Jose
L. Chua and Ko Sio Eng.[4]
Petitioners' motion for reconsideration was
likewise denied. Hence, this petition for
review on certiorari. Petitioners assign
several errors as having been allegedly
committed by the Court of Appeals.
First. Petitioners allege that the Court of
Appeals erred in affirming the lower court's
finding that they owe private respondent
the amount of P42,306.00 as unpaid rentals
from January 1, 1987 to December 31, 1989
because neither the letter of demand nor
the complaint for unlawful detainer alleged
a claim for unpaid rentals. As the Court of
Appeals pointed out, however, the issue of
arrearages was raised at the pre-trial by
private respondent and evidence on this
question was presented without objection
from petitioners:[5]
First of all, while it is true that there was no
express demand in private respondent's
complaint for unlawful detainer against
petitioners for the latter's payment of rental
arrearages, private respondent in a
pleading dated December 17, 1990 filed
with the MTC (by way of comment to
petitioners' motion to admit amended
answer) stated:
That moreover the unpaid rentals from
January 1987 to December 31, 1989
amounts to FORTY TWO THOUSAND THREE
HUNDRED SIX PESOS (P42,306.00), exclusive
of rentals from January 1 to December 31,
1990 which would be one hundred eighty
thousand pesos (P180,000.00) or a total of
TWO HUNDRED TWENTY TWO THOUSAND
THREE HUNDRED SIX PESOS (222,306.00)
(p. 75, Orig. Rec).
Then, at the pre-trial of December 17, 1990,
among the issues proposed by counsel for
plaintiff (now private respondent) was
whether:
3. defendants are in arrears for the rentals
from Dec. 31, 1987 to January 1989, in
accordance with the contract;
(p. 8, tsn Dec. 17, 1990;
p. 87, id.)
Counsel for defendants (herein petitioners)
did not object to the statement of issues
made by plaintiff's counsel and instead
simply stated as their own main issue
whether plaintiff had a valid cause of
action for ejectment against them as he is
not the sole owner of the leased premises,
and then averred that "based on this
premise, the other issues raised by plaintiff
could be dependent on the resolution of
the stated issues" (id., p. 88, Orig. Rec.).
Later, at the hearing of February 12, 1990,
plaintiff Ramon Ibarra testified that
although his lease contract (Exh. "A") with
petitioners stipulated an annual ten
percent (10%) additional rental starting in
1986 (i.e., the monthly rental in 1986 was
P5,500, in 1987, it was P6,050; in 1988, it was
P6,655.00; and in 1989, it was P7,320.50),
petitioners continued to pay only the
original monthly rental of P5,000 stipulated
in their contract (Exh. "A"), so that
petitioners had incurred total rental
arrearages at the end of 1989 of P42,306.00
(pp. 6-8, tsn, op. cit.; pp. 113-115, Orig.
Rec.). . . . have made for themselves, without regard
Obviously, then, petitioners' rental
arrearages from 1986 to 1989 was an issue
raised at the pre-trial and on which issue
private respondent presented evidence
without any objection from
petitioners. And considering that the
petitioners incurred said rental arrearages
because they did not pay private
respondent the automatic 10% increase in
their monthly rental every year for the years
1986 to 1989 as agreed upon and
stipulated in their lease contract (Exh. "A",)
which contract is the law between the
parties, justice and good faith demand
that petitioners should pay said rental
arrearages. As correctly ruled by the
respondent court, "to absolve the
defendants from paying rentals in arrears
while they continue occupying and
enjoying the premises would be allowing
the defendants to enrich themselves at the
expense of the plaintiff. (p. 55, Rollo)
contract of lease provided for a fixed
period of five (5) years from January 1, 1985
to December 31, 1989. As the Court held
in Bacolod-Murcia Milling Co., Inc. v. Banco
Nacional Filipino:[12]
It is not the province of the court to alter a
contract by construction or to make a new
contract for the parties; its duty is confined
to the interpretation of the one which they
to its wisdom or folly, as the court cannot
supply material stipulations or read into
contract words which it does not contain.
Indeed, Art. 1675 of the Civil Code excludes
cases falling under Art. 1673 (which
provides among others, that the lessor may
judicially eject the lessee when the period
agreed upon or that which is fixed has
expired) from the cases wherein, pursuant
to Art. 1687, courts may fix a longer period
of lease. For these reasons, we hold that
the Court of Appeals did not err in ruling
that petitioners were not entitled to an
extension of the lease upon its expiration.
Third. The appellate court found petitioners
guilty of bad faith in refusing to leave the
premises. But petitioners contend that they
acted in good faith under the belief that
they were entitled to an extension of the
lease because they had made repairs and
improvements on the premises.
their counterclaim for damages for their
failure to enjoy the peaceful possession of
the premises because private respondent
allowed vendors to ply their trade at the
front portion of the leased
premises. Petitioners claim that, as a result,
they suffered business losses and moral
injuries. As both the Metropolitan Trial Court
and Regional Trial Court held, however,
there is no evidence to support this
claim. As the Court of Appeals said,
petitioners never complained before about
the sidewalk vendors occupying a portion
of the leased property. It was only after
negotiations for renewal of the lease had
failed and private respondent had filed a
complaint for unlawful detainer against
them did they complain about the vendors.
WHEREFORE, the decision of the Court of
Appeals, dated October 8, 1992, is
AFFIRMED.
Costs against petitioners.
SO ORDERED.
Bellosillo (Chairman), Puno,
Quisumbing, and Buena, JJ., concur.

Indeed, any objection to the admissibility of
evidence should be made at the time such
evidence is offered or as soon thereafter as
the objection to its admissibility becomes
apparent,[6] otherwise the objection will be
considered waived and such evidence will
form part of the records of the case as
competent and admissible
evidence.[7] Rule 10, §5[8] of the Rules of
Civil Procedure allows the amendment of
the pleadings in order to make them
conform to the evidence in the record.
Second. Petitioners claim that they are
entitled to an extension of time to occupy
the premises in question. This, too, is without
merit. After the lease terminated on
January 1, 1990 and without the parties
thereafter reaching any agreement for its
renewal, petitioners became deforciants
subject to ejectment from the premises.[9]
Neither did the Court of Appeals err in ruling
that petitioners are not entitled to a
reasonable extension of time to occupy the
premises on account of the fact that the
lease contract between the parties has
already expired. As there was no longer
any lease to speak of which could be
extended, the Metropolitan Trial Court was
in effect making a contract for the parties
which it obviously did not have the power
to do.[10] The potestative authority of the
courts to fix a longer term for a lease under
Art. 1687 of the Civil Code[11] applies only to
cases where there is no period fixed by the
parties. To the contrary, in this case, the
This contention is devoid of merit. The fact
that petitioners allegedly made repairs on
the premises in question is not a reason for
them to retain the possession of the
premises. There is no provision of law which
grants the lessee a right of retention over
the leased premises on that ground. Art.
448 of the Civil Code, in relation to Art. 546,
which provides for full reimbursement of
useful improvements and retention of the
premises until reimbursement is made,
applies only to a possessor in good
faith, i.e., one who builds on a land in the
belief that he is the owner thereof. In a
number of cases, the Court has held that
this right does not apply to a mere lessee,
like the petitioners, otherwise, it would
always be in his power to "improve" his
landlord out of the latter's property.[13] Art.
1678 merely grants to such a lessee making
in good faith useful improvements the right
to be reimbursed one-half of the value of
the improvements upon the termination of
the lease, or, in the alternative, to remove
the improvements if the lessor refuses to
make reimbursement.
Petitioners were thus correctly ordered to
pay attorney's fees considering that private
respondent had to go to court to protect
his interest.[14] The award of P10,000.00 is
reasonable in view of the time it has taken
this rather simple case for ejectment to be
decided.
Fourth. Petitioners contend that the Court
of Appeals erred in affirming the denial of

39 | P r o p e r t y C a s e s - P o s s e s s i o n
DIVISION
[ GR No. 132644, Nov 19, 1999 ]
ERNESTO DAVID v. CRISTITO MALAY +
DECISION
376 Phil. 825
VITUG, J.:
The instant case is an appeal from a
decision of the Court of Appeals reversing
that of the Regional Trial Court on an action
for reconveyance of property. The issues
submitted by the parties may not really be
all that novel.
The spouses Andres Adona and Leoncia
Abad, husband and wife for a good
number of years, were blessed with five
children among them being Carmen
Adona. Carmen married Filomeno Malay;
three children were begotten by the
marriage, namely, Cristito, Nora and
Dionisio (among the herein private
respondents). Following the death of
Leoncia Abad in 1923, Andres Adona
cohabited with Maria Espiritu, herself a
widow, apparently without the benefit of
marriage. Andres and Maria sired two
children, Esperanza, represented herein by
her heirs all surnamed David, and Vicente
Adona. Maria Espiritu likewise had a child
by her previous marriage, Fulgencio
Lemque, now herein represented also by
his own heirs.
During his lifetime, Andres Adona applied
for a homestead patent over a parcel of
agricultural land located at Dirita, Iba,
Zambales, containing an area of 22.5776
hectares. After Andres Adona had died,
Maria Espiritu, predecessor-in-interest of
herein petitioners, succeeded in obtaining
Original Certificate of Title No. 398 over the
land in her name. After Maria Espiritu had
died in 1945, the children, as well as
descendants of Andres Adona by his
marriage with Leoncia Abad, continued to
be in peaceful and quiet possession of the
subject land.
Sometime in 1989, petitioners executed a
deed of "Extrajudicial Settlement with Sale"
over the subject property in favor of Mrs.
Venancia Ungson. Private respondents
protested the sale claiming that they were
the true owners of the land. Ultimately, in
any event, the sale in favor of Mrs. Ungson
was rescinded in view of the latter's failure
to pay in full the consideration agreed
upon. Subsequently, petitioners executed
another deed of Extrajudicial Settlement
with Sale. In this new instrument, dated 15
December 1990, petitioners divided the
land equally among themselves and sold
their respective shares to their co-
petitioners herein, Antonio de Ubago, Jr.,
Milagros de Ubago-Umali, Felisa Guballa
40 | P r o p e r t y C a s e s - P o s s e s s i o n
de Ubago, Vanessa de Ubago-Umali and
Marietta de Ubago-Tan and Joseph
Guballa de Ubago. On 27 November 1992,
Transfer Certificate of Title No. T-42320 was
issued in favor of the de Ubagos.
Less than a month later, or on 07 December
1992, private respondents filed a "Although it is true that after the lapse of
complaint, docketed Civil Case No. RTC-
905-I, for "Annulment of Sale with
Restraining Order, Injunction and
Damages" against petitioners before
Branch 71 of the Regional Trial Court of
Zambales. In their complaint, private
respondents averred that the disputed
land sold by the heirs of Maria Espiritu to the
de Ubagos was the subject of a homestead
application by their great grandfather,
Andres Adona, but that Original Certificate
of Title No. 398 was instead fraudulently
issued to Maria Espiritu, on 04 December
1933, upon her false representation that
she was the widow of Andres Adona.
In its decision of 25 July 1995 after a hearing
on the merits of the case, the trial court
dismissed the complaint for lack of cause of
action and on the ground of prescription. It
opined that the action being one for
annulment of sale anchored on a
fraudulent titling of the subject property,
the cause of action constituted a collateral
attack on the Torrens Certificate of
Title. The court a quo added that even if
the action were to be treated as being one
for reconveyance, the suit would still have
to fail since an action for reconveyance
could only be brought within ten (10) years
counted from the date of issuance of the
certificate of title (in 1933).
On appeal, the Court of Appeals, in its
judgment of 11 February 1998,[1] set aside
the order of dismissal of the case decreed
by the trial court and directed the
cancellation of Transfer Certificate of Title
No. T-42320 in the name of the de Ubagos
and the reconveyance of the property to
the estate of Andres Adona. Petitioners
were additionally ordered to pay damages
and attorney's fees to private
respondents. The appellate court, more
particularly ruled:
"The evidence on record shows that OCT
No. 398 issued in favor of Maria Espiritu was
obtained by her fraudulent concealment
of the existence of Adona's first marriage to
Leoncia Abad, as shown by the affidavit
she executed on September 21, 1928 and
filed with the Director of Lands.
"Consequently, Maria Espiritu's fraudulent
concealment of material facts created an
implied or constructive trust in favor of the
plaintiffs, the excluded co-heirs and actual
possessors of the subject land. Article 1456
of the Civil Code reads:
"'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.'
one year, a decree of registration is no
longer open to review or attack, although
its issuance was tainted with fraud;
however, the aggrieved party is not without
a remedy at law. Notwithstanding the
irrevocability of the Torrens Title already
issued in favor of Maria Espiritu, she and her
successors-in-interest, although the
registered owner under the Torrens system,
may still be compelled under the law to
reconvey the subject property to the real
owners. The Torrens system was not
designed to shield and protect one who
had committed fraud or misrepresentation
and thus holds title in bad faith. (Amerol vs.
Bagumbaran, 154 SCRA 396, 404 [1987]);
"In an action for reconveyance, the decree
of registration is respected as
incontrovertible. What is sought instead is
the transfer of the property, which has been
wrongfully or erroneously registered in
another person's name, to its rightful and
legal owner, or to one with a better right.
(Amerol, supra.)
"However, the right to seek reconveyance
based on an implied or constructive trust is
not absolute. It is subject to extinctive
prescription. (Amerol, supra.; Caro vs.
Court of Appeals, 180 SCRA 401, 405-407
[1989]; Ramos vs. Court of Appeals, 112
SCRA 542, 550 [1982]; Ramos vs. Ramos, 61
SCRA 284, 299-300 [1974])
"An action for reconveyance of a parcel of
land based on an implied trust prescribes in
ten years, the point of reference being the
date of registration of the deed or the date
of the issuance of the certificate of title over
the property. (Amerol, supra.; Caro, supra.,
Casipit vs. Court of Appeals, 204 SCRA 684,
694 [1991]) This rule applies only when the
plaintiff or the person enforcing the trust is
not in possession of the property. If a person
claiming to be the owner thereof is in actual
possession of the property, the right to seek
reconveyance does not prescribe. The
reason for this is one who is in actual
possession of a piece of land claiming to be
the owner thereof may wait until his
possession is disturbed or his title is attacked
before taking steps to vindicate his
right. His undisturbed possession gives him
the continuing right to seek the aid of a
court of equity to ascertain the nature of
the adverse claim of third party and its
effect on his title, which right can be
claimed only by one who is in
possession. (Vda. de Cabrera vs. Court of
Appeals, G.R. 108547, February 3, 1997)
"Hence, the undisturbed possession by
plaintiffs and their predecessors-in-interest
gave them the continuing right to resort to
judicial intervention once their claim to
ownership was challenged. It was
therefore the defendant Heirs' act of
executing the `Extrajudicial Settlement of
Estate with Sale' which constituted the
express act of repudiation of the
constructive trust which gave rise to
plaintiff's cause of action."[2]
Aggrieved, petitioners have come to this
Court and seek to dispute the judgment of
the Court of Appeals ordering the
cancellation of Original Certificate of Title
No. 398 issued on 16 November 1933. It is
the contention of petitioners that to allow
private respondents to question Original
Certificate of Title No. 398 fifty-nine years
after its issuance would undermine the
Torrens system and sanctity of the
certificate of title.
Private respondents, upon the other hand,
asks this Court to sustain the decision of the
Court of Appeals on the thesis that the
property in question indubitably belongs to
the estate of Andres Adona whose
incontestable right to it is derived from the
perfected homestead application two
years prior to his death as so admitted by
Maria Espiritu herself in her affidavit
submitted to the Director of Lands.
The Court rules for the affirmance of the
challenged decision.
A certificate of title issued under an
administrative proceeding pursuant to a
homestead patent covering a disposable
public land within the contemplation of the
Public Land Law or Commonwealth Act
No. 141 is as indefeasible as a certificate of
title issued under a judicial registration
proceeding. Under the Land Registration
Act, title to the property covered by a
Torrens certificate becomes indefeasible
after the expiration of one year from the
entry of the decree of registration. Such
decree of registration is incontrovertible
and becomes binding on all persons
whether or not they were notified of, or
participated in, the in rem registration
process.[3] There is no specific provision in
the Public Land Law or the Land
Registration Act (Act 496), now Presidential
Decree 1529, fixing a similar one-year
period within which a public land patent
can be considered open to review on the
ground of actual fraud, such as that
provided for in Section 38 of the Land
Registration Act, and now Section 32 of
Presidential Decree 1529, and clothing a
public land patent certificate of title with
indefeasibility. Nevertheless, this Court has
repeatedly applied Section 32 of
Presidential Decree 1529 to a patent issued
in accordance with the law by the Director
of Lands, approved by the Secretary of
Natural Resources, under the signature of
the President of the Philippines.[4] The date
of the issuance of the patent corresponds
41 | P r o p e r t y C a s e s - P o s s e s s i o n
to the date of the issuance of the decree in
ordinary cases. Just as the decree finally
awards the land applied for registration to
the party entitled to it, so also, the patent
issued by the Director of Lands equally and
finally grants and conveys the land applied
for to the applicant.[5]
Original Certificate of Title No. 398 was
issued in the name of Maria Espiritu on 04
December 1933 and would have become
indefeasible a year thereafter had not its
issuance been attended with fraud. The
attendance of fraud created an implied
trust in favor of private respondents and
gave them the right of action to seek the
remedy of reconveyance of the property
wrongfully obtained.[6] In Javier vs. Court of
Appeals[7]this Court ruled:
"x x x The basic rule is that after the lapse of
one (1) year, a decree of registration is no
longer open to review or attack although
its issuance is attended with actual fraud.
This does not mean however that the
aggrieved party is without a remedy at
law. If the property has not yet passed to
an innocent purchaser for value, an action
for reconveyance is still available. The
decree becomes incontrovertible and can
no longer be reviewed after one (1) year
from the date of the decree so that the only
remedy of the landowner whose property
has been wrongfully or erroneously
registered in another's name is to bring an
ordinary action in court for reconveyance,
which is an action in personam and is
always available as long as the property
has not passed to an innocent third party
for value. If the property has passed into
the hands of an innocent purchaser for
value, the remedy is an action for
damages"[8]
The caption of the case before the court a
quo while denominated as being one for
"Annulment of Sale with Damages" is in
reality an action for reconveyance since
the ultimate relief sought by private
respondents would be for the property
covered by Original Certificate of Title No.
398 to be reconveyed to the estate of
Andres Adona. In this jurisdiction,
the dictum adhered to is that the nature of
an action is determined, more importantly,
by the body of the pleading or complaint
itself[9] than by its title or heading. The Court
of Appeals did not err in treating the action
brought by private respondents as one for
reconveyance or as one that seeks the
transfer of the property, wrongfully
registered by another, to its rightful and
legal owner.[10] It would seem that Andres
Adona did perfect his homestead
application prior to his death,[11] the right to
the issuance of the patent on which vests
after complying with all the requirements of
the law.[12]
The next crucial issue focuses on the ruling
of the Court of Appeals to the effect that if
a person who claims to be the owner of the
property is in actual possession thereof, the
right to seek reconveyance does not
prescribe.
There is no doubt about the fact that an
action for reconveyance based on an
implied trust ordinarily prescribes in ten
years.[13] This rule assumes, however, that
there is an actual need to initiate that
action, for when the right of the true and
real owner is recognized, expressly or
implicitly such as when he remains
undisturbed in his possession, the statute of
limitation would yet be irrelevant. An
action for reconveyance, if nonetheless
brought, would be in the nature of a suit for
quieting of title, or its equivalent, an action
that is imprescriptible. In Faja vs. Court of
Appeals,[14] the Court has held that a
person in actual possession of a piece of
land under claim of ownership may wait
until his possession is disturbed or his title is
attacked before taking steps to vindicate
his right, and that his undisturbed possession
gives him the continuing right to seek the
aid of a court of equity to ascertain and
determine the nature of the adverse claim
of a third party and its effect on his title. In
the words of the Court -
"x x x There is settled jurisprudence that one
who is in actual possession of a piece of
land claiming to be owner thereof may
wait until his possession is disturbed or his
title is attacked before taking steps to
vindicate his right, the reason for the rule
being, that his undisturbed possession gives
him a continuing right to seek the aid of a
court of equity to ascertain and determine
the nature of the adverse claim of a third
party and its effect on his own title, which
right can be claimed only by one who is in
possession. No better situation can be
conceived at the moment for Us to apply
this rule on equity than that of herein
petitioners whose mother, Felipa Faja, was
in possession of the litigated property for no
less than 30 years and was suddenly
confronted with a claim that the land she
had been occupying and cultivating all
these years, was titled in the name of a third
person. We hold that in such a situation the
right to quiet title to the property, to seek its
reconveyance and annul any certificate of
title covering it, accrued only from the time
the one in possession was made aware of
a claim adverse to his own, and it is only
then that the statutory period of
prescription commences to run against
such possessor."[15]
The same dictum is reiterated in Heirs of
Jose Olviga vs. Court of Appeals;[16] thus -
"With regard to the issue of prescription, this
Court has ruled a number of times before
that an action for reconveyance of a
parcel of land based on implied or
constructive trust prescribes in ten years,
the point of reference being the date of
registration of the deed or the date of the
issuance of the certificate of title over the
property (Vda de Portugal vs. IAC, 159
SCRA 178) But this rule applies only when
the plaintiff is not in possession of the
property, since if a person claiming to be
the owner thereof is in actual possession of
the property, the right to seek
reconveyance, which in effect seeks to
quiet title to the property, does not
prescribe."[17]
Finally, this Court sees no cogent reasons to
disturb the finding of the Court of Appeals
that the de Ubagos may not be considered
buyers in good faith. Said the Appellate
Court.
"x x x An innocent purchaser for value is
one who buys property of another, without
notice that some other person has a right
to, or interest in, such property and pays a
full and fair price for the same, at the time
of such purchase, or before he has notice
of the claim or interest of some other
persons in the property. He buys the
property with the belief that the person
from whom he receives the thing was the
owner and could convey title to the
property. A purchaser can not close his
eyes to facts which should put a
reasonable man on his guard and still claim
he acted in good faith (Sandoval vs. Court
of Appeals, 260 SCRA 283, 296 [1996])
"It is well settled that one who deals with
property registered under the Torrens
system need not go beyond the same, but
only has to rely on the title. He is charged
with notice only of such burdens and claims
as are annotated on the title. (Sandoval,
supra., at p. 295)
"The aforestated principle admits of an
unchallenged exception: that a person
dealing with registered land has a right to
rely on the Torrens certificate of title and to
dispense with the need of inquiring
further except when the party has actual
knowledge of facts and circumstances
that would impel a reasonably cautious
man to make such inquiry or when the
purchaser has some knowledge of a
defect or the lack of title in his vendor or of
sufficient facts to induce a reasonably
prudent man to inquire into the status of the
title of the property in litigation. The
presence of anything which excites or
arouses suspicion should then prompt the
vendee to look beyond the certificate and
investigate the title of the vendor
appearing on the face of said certificate.
One who falls within the exception can
neither be denominated an innocent
purchaser for value nor a purchaser in
good faith and hence does not merit the
protection of the law. (Sandoval, supra.)
(Underscoring supplied)
42 | P r o p e r t y C a s e s - P o s s e s s i o n
the previous sale should have put
"Applying the aforequoted jurisprudence, defendant buyers on their guard.
the defendant buyers can not be
considered as innocent purchasers for "Moreover, it is unbelievable that the
value. A perusal of defendant buyers' TCT defendant buyers would not have noticed
No. 42320 reveals that it contains an entry the plaintiffs who were in possession of the
by the Register of Deeds which provides land when the defendant buyers inspected
that their ownership over the land is subject the same. Had they made further
to prospective claims by any possible heirs investigations, they would have discovered
and creditors who might have been that plaintiffs were in possession of the land
deprived of their lawful participation in the under a claim of ownership.
estate. The said entry reads as follows:
"The rule is settled that a buyer of real
property which is in the possession of
persons other than the seller must be wary
Section 4 - The property and should investigate the rights of those in
described in this certificate of possession. Otherwise, without such inquiry,
title is subject to the provisions of the buyer can hardly be regarded as a
Section 4, Rule 74 of the Rules of buyer in good faith. The buyer who has
"'Entry No.Court for the period of two years failed to know or discover that the land sold
102385 - in favor of in any other possible to him is in the adverse possession of
heir or heirs and creditors who another buyer in bad faith. (Embrado vs.
might have been deprived of his Court of Appeals, 233 SCRA 335, 347
or their lawful participations in [1994])."[18]
the said estate.
Altogether, the Court sees no reversible
`Date of instrument - December 15, 1990. error on the part of the Court of Appeals in
its assailed decision.
`Date of Inscription - November 27, 1992 at
2:00 p.m.' WHEREFORE, the decision of the Court of
Appeals is AFFIRMED. Costs against
(Exh. `E'; Rollo, p. 137) petitioners.
"Section 4, Rule 74 of the Rules of Court SO ORDERED.
reads, in part, as follows:
Melo, (Chairman), Panganiban,
Purisima, and Gonzaga-Reyes, JJ., concur.
"'Sec. 4. Liability of distributees and estate.
- If it shall appear at any time within (2)
years after the settlement and distribution of
an estate in accordance with the provisions
of either of the first two sections of this rule,
that an heir or other person has been
unduly deprived of his lawful participation
in the estate, such heir or such other person
may compel the settlement of the estate in
the courts in the manner hereinafter
provided for the purpose of satisfying such
lawful participation. x x x.'
"The record shows that the `Extrajudicial
Settlement of Estate with Sale' was
executed on December 15, 1990. Plaintiffs'
complaint for Reconveyance was filed on
December 7, 1992. Hence, the two-year
period has not yet elapsed.
"It likewise appears that the subject land
was the object of a sale between the
defendant Heirs and one Mrs. Venancia
Ungson which was subsequently aborted
due to the intervention of defendant
Vicente Adona and plaintiff Cristito
Malay. (Exhs. `K', `K-1' and `L') However,
defendant Heirs nevertheless executed
another sale in favor of defendant buyers
who are admittedly relatives of Mrs.
Venancia Ungson. (TSN, January 23, 1995,
p.14) Plaintiff Cristito Malay's intervention in
FIRST DIVISION
[G.R. No. 124658. December 15, 1999]
PHILIPPINE TRUST COMPANY, petitioner,
vs. HONORABLE COURT OF APPEALS and
SIMEON POLICARPIO SHIPYARD AND
SHIPBUILDING COMPANY, respondents.
DECISION
YNARES-SANTIAGO, J.:
The petition before us has its origins in a
decision rendered by this Court on
August 25, 1969 entitled Philippine Trust
Company vs. Simeon Policarpio,
Modesta Reyes and Iluminada (Lumen)
R. Policarpio.[1]
Sometime in 1958, Iluminada Lumen
Policarpio, obtained a loan from
Philippine Trust Company (Philtrust, for
short) in the sum of P300,000.00. As
security for the loan, Lumens parents, as
sureties, executed a deed of mortgage
to the bank over some parcels of land,
including all the improvements thereon,
covered by Transfer Certificate of Title
No. 4144 (now 51668) of the Register of
Deeds of the City of Manila and Transfer
Certificate of Title No. 24182 of the
Register of Deeds of Rizal. Upon failure of
Lumen Policarpio to pay the loan when
it fell due, Philtrust initiated foreclosure
proceedings before the Court of First
Instance (CFI) of Manila. The trial court
rendered judgment for foreclosure on
October 14, 1963, which this Court
affirmed on August 25, 1969.[2]
On October 15, 1970, Philtrust purchased
the properties at the auction sale. The
sale was confirmed by the trial court in
1971. That same year, the bank was able
to consolidate ownership over the
property. On March 13, 1972, a Transfer
Certificate of Title was issued in the name
of the bank. Lumen Policarpio filed a
complaint in the Court of First Instance of
Rizal on March 23, 1972 to declare the
auction sale void for lack of merit,
however, the trial court decided in favor
of Philtrust. Lumen Policarpio elevated
the case to this Court on certiorari but
the petition was dismissed on July 23,
1973 for lack of merit.
In February 1974, the ancestral house of
the Policarpios situated in the same
property already owned by the bank
was destroyed by a typhoon. Lumen
Policarpio sent letters to the bank officers
informing them of the destruction and
her plan to rebuild the house. Philtrust,
however, never acted on any of the
letters. Thus, Lumen Policarpio
proceeded to construct the house,
purportedly to provide shelter for her
ailing mother. Meanwhile, on October
43 | P r o p e r t y C a s e s - P o s s e s s i o n
10, 1976, Philtrust filed a motion for the
issuance of a writ of possession of said
properties. On February 28, 1977, the trial
court issued an order declaring that the
bank was entitled to the possession of
the properties but allowed the previous
owners, the Policarpios, to adduce
evidence showing that they built the
house in good faith. Despite having
been given several opportunities to do
so, the Policarpios failed to introduce
any evidence in their behalf, prompting
the trial court to issue on May 29, 1979
the writ of possession. Upon the denial of
a subsequent motion for
reconsideration, Lumen Policarpio filed a
petition for certiorari with the Court of
Appeals, asking for leave to present
evidence that she was a builder in good
faith. The case was consolidated with
CA-G.R. S.P. No. 10129, entitled Ricardo
Policarpio, Petitioner versus Hon. Elvirio
Peralta, Respondent, since the two
cases arose from the same facts. On
August 29, 1980, the Court of Appeals
dismissed the two petitions and upheld
the writ of possession issued by the trial
court. Lumen Policarpio filed a petition
for review with this Court but the same
was denied for lack of merit. On motion
for reconsideration, however, this Court
set aside its earlier resolution and
remanded the case to the Court of
Appeals to allow Lumen Policarpio to
adduce evidence showing that she was
a builder in good faith. Meanwhile, on
December 29, 1980, the bank sold the
properties to the present owner, Alto
Industrial Enterprises, Inc. which, on
September 17, 1984, was allowed to
intervene by the court a quo. In a
resolution dated January 11, 1985, the
Court of Appeals granted Philtrusts
motion for issuance of a writ of partial
possession of the properties involved
except the portion of 1,000 square
meters wherein Lumen Policarpios house
stood. On August 31, 1987, the Court of
Appeals rendered a decision, the
dispositive portion of which reads as
follows:
WHEREFORE, in consequence of our
conclusion that petitioner was not a
builder in good faith entitled to the right
of reimbursement with the right of
retention, the submission and prayer that
the writ of possession issued in this case
be annulled and set aside, should in view
of the facts disclosed after hearing of this
appellate court, be as it is hereby,
rejected and denied. It follows that the
court a quo may now proceed without
further delay to implement the
questioned writ of possession and take
such other steps and proceedings
consistent with this judgment.
SO ORDERED.[3]
The decision of the Court of Appeals was
affirmed by the Supreme Court on
September 2, 1988, and the subsequent
motion for reconsideration was denied
with finality on February 15, 1989 for lack
of merit. Pursuant to the affirmed
decision of the Court of Appeals, the trial
court issued an alias writ of execution
and possession on August 8, 1989. The
writ was served on Lumen Policarpio on
September 22, 1989. Meanwhile, she
filed a motion for reconsideration on
September 13, 1989 which was
subsequently denied. In February 1990,
the implementation of the first alias writ
of possession was ordered. When the life
of the first alias writ of possession expired,
Philtrust moved for the issuance of a
second alias writ of possession. On
October 30, 1990, the second alias writ
of possession was received by Jose
Policarpio, brother of the private
respondent, at her residence on 1064 M.
Naval Street, Navotas, Metro Manila.
It was only on November 14, 1990, or
after eleven (11) years and six (6)
months, that Philtrust was finally placed
in possession of the foreclosed
properties, and thirty-one (31) years and
two (2) months from the time the case for
foreclosure proceeding was instituted in
the Court of First Instance on September
29, 1959.
Thereafter, Simeon Policarpio, Modesta
Reyes and Iluminada Lumen Policarpio
filed a petition for prohibition with
preliminary mandatory injunction with
the Court of Appeals alleging grave
abuse of discretion on the part of the trial
court in ordering the premature
implementation of the second alias writ
of possession dated October 15, 1990
alleging that when the writ of possession
was issued, the motion for
reconsideration of the order of October
15, 1990 had not yet been resolved. A
motion for intervention was filed by third
party claimants Concordia Ysmael,
Gladys Ysmael, and Leonila
Policarpio. Another motion for
intervention had been filed by Simeon
Policarpio Shipyard and Shipbuilding
Corporation and R.M. Dried Fish
Product.The Court of Appeals, however,
dismissed the petition saying that the
Policarpios had been fully heard on the
issues involved. As to the motions for
intervention filed by third party
claimants, the court ruled that the
supposed intervenors are not really third
party claimants but successors-in-interest
of spouses Policarpio against whom the
writ is likewise enforceable since the sale
of the property to Simeon Policarpio
Shipyard and Shipbuilding Corporation
and the new house built on a portion of
the subject property by the Ysmaels, as
well as the other transactions entered
into by the Policarpios, were made after
title to the land had been consolidated
in the name of the bank. On appeal to
this Court, the aforesaid decision was
affirmed and declared to be
immediately executory on August 26,
1991.[4]
On November 11, 1992, herein private
respondent Simeon Policarpio Shipyard
and Shipbuilding Corporation (SPSSC for
short) filed a complaint for Damages,
Injunction, and Mandamus against
petitioner Philtrust and RTC Malabon
Sheriff Augusto Castro and Deputy
Gallardo C. Tolentino, alleging that on
November 14, 1990, by virtue of an alias
writ of execution and possession issued
by Branch 12, Regional Trial Court (RTC)
of Manila on October 15, 1990, the
defendant Sheriff, together with Philtrust
counsel Atty. Antonio Sikat, Justice
Guillermo Santos and Maria C. Noche,
with the use of trickery and fraudulent
machination, in the absence of the
owner of the shipyard shipbuilding
corporation, opened the gates of the
shipyard without notice to the owners
and took possession of it despite the fact
that it was not one of the properties
mortgaged to the bank.[5]
Petitioner Philtrust filed a motion to
dismiss on the grounds of res
judicata and failure on the part of
private respondent SPSSC to state a
cause of action. Petitioner alleged that
the issues raised by private respondent
involved the same parties and the same
properties which have already been
passed upon by the courts including the
Supreme Court. Petitioner further
alleged that the complaint states no
cause of action since the property
covered by OCT-R-165 is no longer
owned by private respondent but by the
Land Bank of the Philippines. It appears
that the property has been mortgaged
by private respondent to the said bank
in an instrument dated April 30, 1982 to
guarantee payment of a loan in the sum
of Four Million Five Hundred Twenty Nine
Thousand Pesos (P4,529,000.00).[6]
The trial court denied the motion to
dismiss filed by petitioner Philtrust on the
ground that the doctrine of res
judicata is inapplicable as to OCT-R-
165.[7] On motion for reconsideration
filed by petitioner Philtrust, the trial court
ruled that the case was one for
damages anchored on the alleged
improper implementation by the
defendant Sheriff of the alias writ of
44 | P r o p e r t y C a s e s - P o s s e s s i o n
possession subjecting thereto the
property covered by OCT-R-165, which is
entirely separate and distinct from the
property subject of the writ. Since the
corporation was the one in possession of
the property at the time of the
implementation of the writ, it is the real
party in interest as it was the one
prejudiced by the alleged improper
implementation of the writ of
possession.[8]
Petitioner Philtrust appealed to the Court
of Appeals reiterating its claim that
private respondents complaint states no
cause of action since private
respondent failed to redeem its
mortgaged property covered by OCT-R-
165 to Landbank within the one year
period of redemption and, hence, is not
a real party in interest.
On July 30, 1995, the Court of Appeals
affirmed the ruling of the trial court,
stating that as far as the parcels of land
covered by TCT 234088 and TCT 24182
are concerned, there is identity of
subject matter. But as to the property
covered by OCT-R-165, the doctrine
of res judicata is inapplicable. The Court
of Appeals also ruled that although the
property covered by OCT-R-165 had
been foreclosed by Landbank as early
as April 27, 1987, and private respondent
failed to redeem it within the one year
period of redemption, since there was
no showing that a second or final deed
of sale has been executed in favor of
Landbank, there could not have been a
resulting transfer of title covering said
property in favor of Landbank.[9] Their
motion for reconsideration having been
denied by the Court of Appeals, Philtrust
has instituted the present petition.
Petitioner reiterates its claim that res
judicata is applicable as to OCT-R-165
and that private respondents complaint
states no cause of action.
We find no merit in the petition.
The litigation over the properties of the
Policarpios subject to foreclosure by
Philtrust has spanned almost 40 years
since its inception. Atty. Lumen
Policarpio has instituted a number of
petitions before us, in an apparent
attempt to forestall foreclosure of the
properties mentioned in Case No. L-
228685 entitled, Philippine Trust
Company vs. Simeon Policarpio,
Modesta Reyes, and Iluminada (Lumen)
R. Policarpio, rendered by this Court on
August 25, 1969. The said decision
specifically identified the parcels of land
subject of the deed of mortgage
executed by spouses Policarpio to
secure the loan of Lumen Policarpio to
be those covered by Transfer Certificate
of Title No. 41144 (now 51668) of the
Register of Deeds of the City of Manila,
and Transfer Certificate of Title No. 24182
of the Register of Deeds of Rizal.[10]
The same properties were the subject of
litigation between the same parties
before this Court in the following cases:
1. G.R. No. L-22685 - On August 25, 1969,
this Court affirmed the judgment of
foreclosure by the trial court in favor of
Philtrust.
2. G.R. No. L-37143 - On July 20, 1973, this
Court dismissed the petition for review
on certiorari filed by the Policarpios
which sought to declare the auction sale
void for lack of notice.
3. G.R. No. 55900 - Initially, this Court
denied the petition filed by Lumen
Policarpio, but on a motion for
reconsideration, we remanded the case
to the Court of Appeals to determine
whether petitioner was a builder in good
faith.
4. G.R. No. 81142 - On February 10, 1989,
this Court resolved with finality to uphold
its resolution of September 28, 1988 and
the decision of the Court of Appeals
dated August 31, 1987 that Lumen
Policarpio was a builder in bad faith and
the writ of possession in favor of Philtrust
be implemented without further
delay.[11]
5. G.R. No. 97963 On August 26, 1991, this
Court again dismissed the petition of
Simeon Policarpio, Modesta Reyes and
Iluminada Lumen Policarpio questioning
the propriety of the implementation of
the second alias writ of possession
alleging that when the writ of possession
had been implemented, a motion for
reconsideration had not yet been
resolved.[12]
The complaint for damages filed by
private respondent SPSSC with the
Regional Trial Court of Malabon, Metro
Manila, Branch 170, on November 19,
1992, however, was predicated on the
alleged improper implementation of the
alias writ of execution involving two
parcels of land covered by TCT 234088
and OCT-R-165. Respondent Court of
Appeals noted that TCT 234088 is
actually a consolidation of lots sold to
Simeon Policarpio Shipyard and
Shipbuilding Corporation by spouses
Simeon Policarpio and Modesta Reyes
after title to the properties subject of
foreclosure has already been
consolidated in the name of petitioner
Philtrust. Among the parcels of land sold
was the lot covered by TCT No. 24182 of
the Register of Deeds of Rizal, which
property had been identified by this
Court as one of the properties
mortgaged to Philtrust on May 23,
1958.[13] Hence, insofar as the parcel of
land covered by TCT 24182 included in
TCT 234088 is concerned, there is an
identity of parties, subject matter and
cause of action. Consequently, the trial
court and the Court of Appeals did not
err in declaring that res judicata is
applicable as to the complaint for
damages based on the improper
implementation of the writ of possession
involving TCT 24182 included in TCT
234088 because all the elements of res
judicata are present, to wit: (a) the
former judgment is final; (b) the court
which rendered it had jurisdiction over
the subject matter and the parties; (c) it
was a judgment on the merits; and (d)
there must be, between the first and
second actions, identity of parties,
subject matter and causes of action.[14]
by OCT R-165 has been mortgaged to
the Landbank of the Philippines to
secure a loan in the sum of Four Million
Five Hundred Twenty Nine Thousand
Pesos (P4,529,000.00) on April 30,
1982. The property was foreclosed as
early as April 27, 1987 as evidenced by a
certificate of sale issued by the ex-officio
sheriff of Malabon. The certificate of sale
was inscribed in the Register of Deeds on
September 21, 1987, giving private
respondent one year to redeem
it. However, private respondent failed to
redeem the said property within the one
year redemption period. Nevertheless,
despite failure of private respondent to
redeem the property within the one year
period following its foreclosure, the bank
has deferred consolidation of title and
has given private respondent the option
to re-acquire the property subject to
certain terms under negotiation. A
certification issued by the bank dated
October 18, 1994 reads:
holder, except that which constitutes a
crime, should be respected and
protected by the means established
and the laws of
procedure.[17] Consequently, private
respondent having been in lawful
possession of the property covered by
OCT-R-165 at the time the writ of
possession was implemented, may
institute an action for having been
disturbed in its enjoyment.
WHEREFORE, the decision rendered by
the Court of Appeals, in C.A. G.R. SP No.
39342, dismissing the instant petition
for certiorari filed by Philippine Trust
Company is AFFIRMED in toto.
SO ORDERED.
Davide, Jr., C.J., (Chairman),
Puno, and Kapunan, JJ., concur.
Pardo, J., no part due to relation to a
party.

With regard to the parcel of land
covered by OCT-R-165, however, there is
no showing, and there is nothing on the
records, to indicate that it has ever been
mortgaged by the Policarpios or their
successors in interest to petitioner
Bank. In fact, the aforesaid parcel of
land could not have been the subject of
litigation between the said parties
considering that the Original Certificate
of Title No. R-165 was only issued in the
name of private respondent, Simeon
Policarpio Shipyard and Shipbuilding
Corporation, on October 14, 1981, more
than twelve years after the rendition of
the afore-stated Supreme Court
judgment.[15] Hence, res judicata is not
applicable as regards OCT-R-165
because there is no identity of the
subject matter.
Petitioner makes much issue of the fact
that private respondent has failed to
redeem the foreclosed property
covered by OCT-R-165 from Landbank
and hence, not being the owner of the
property in question, private
respondents complaint for damages
states no cause of action.
This contention deserves scant
consideration. Rule 3, Section 2 of the
1997 Rules of Civil Procedure requires
that every action must be prosecuted
and defended in the name of the real
party in interest. This means that the
action must be brought by the person
who, by substantive law, possesses the
right sought to be enforced and not
necessarily the person who will ultimately
benefit from the recovery.
Private respondent SPSSC does not
dispute that the parcel of land covered
This is to certify that a certain property
located in Navotas, Rizal owned by
Simeon Policarpio Shipyard and Building
Corporation and covered by OCT-R-165
was foreclosed by the bank per
certificate of sale dated April 29,
1994. The said corporation, represented
by Atty. Lumen Policarpio, was given the
option to re-acquire the property under
the terms presently being negotiated
with Landbank.
Although the one year period of
redemption had expired on September
21, 1988, this bank has deferred the
consolidation of title in view of the report
that said property is fully submerged in
water.[16]
Since private respondent was in
possession of the aforesaid parcel of
land when the writ of possession was
improperly implemented by the sheriff, it
is not correct therefore to say that
private respondent does not have a
cause of action, simply because it was
no longer the owner of the property in
question when the writ of possession was
implemented. It is elementary that a
lawful possessor of a thing has the right
to institute an action should he be
disturbed in its enjoyment. Verily, Article
539 of the Civil Code states that
Every possessor has a right to be
respected in his possession; and should
he be disturbed therein, he shall be
restored to said possession by the means
established by the laws and rules of
court. x x x
The phrase every possessor in the article
indicates that all kinds of possession,
from that of the owner to that of a mere

45 | P r o p e r t y C a s e s - P o s s e s s i o n
G.R. No. L-24490 May 29, 1968
CIRIACO LANDA, plaintiff-appellant,
vs.
FRANCISCO TOBIAS, Municipal Mayor;
EMILIANO DEL CAMPO, Municipal Treasurer;
REGIO B. SUBONG, Chief of Police;
JUANITO PECATE and JUANITO ALFARO,
Municipal Policemen, Cabatuan, Iloilo,
defendants-appellees.
Pedro Puga for plaintiff-appellant.
A. M. Bolinao, Jr. for defendants-appellees.
CONCEPCION, C.J.:
From an order of the Court of First Instance of
Iloilo dismissing the complaint in this case,
plaintiff has come directly to the Supreme
Court, upon the ground that only questions of
law would be raised in the appeal.
On June 23, 1962, defendants Juanito Pecate
and Juanito Alfaro, members of the police
force of Cabatuan, Iloilo, purporting to act
pursuant to section 538 of the Revised
Administrative Code, seized from plaintiff
Ciriaco Landa a carabao, for which he
produced a certificate of ownership in the
name of Pantaleon Elvas. Said peace officers
turned the carabao over to the municipal
treasurer of Cabatuan, defendant Emiliano
del Campo, who, on July 25, 1962, upon the
authority of section 540 of said Code, sold the
animal at public auction, which was duly
approved by the Provincial Board on July 26,
1963. In an affidavit dated June 25, 1962,
Landa tried to explain that he had acquired
the carabao, by barter with an older carabao,
from Marcelino Mayormente, who, on August
1, 1962, was charged, in the Justice of the
Peace Court of Cabatuan, with swindling; but
he has not been apprehended up to the
present.
On or about April 16, 1963, Landa
commenced in said court, the present action
against Francisco Tobias, the Municipal Mayor
of Cabatuan, its Municipal Treasurer, Emiliano
del Campo, its Chief of Police, Regio B.
Subong, and the aforementioned policemen,
Juanito Pecate and Juanita Alfaro, for the
recovery of damages with costs, upon the
ground that he (plaintiff) had been wrongfully
deprived of the possession of the carabao
above referred to. In their answer, the
defendants alleged, inter alia, that the acts
complained of had been performed by them
in accordance with law.
Said court having, in due course, rendered
judgment in favor of the defendants, plaintiff
appealed to the Court of First Instance of Iloilo,
in which the parties submitted a partial
stipulation of facts. Later on, after the
presentation of plaintiff's evidence, which
consisted of his testimony and some exhibits,
the defendants moved to dismiss the case,
which the Court of First Instance granted.
Plaintiff's subsequent motion for new trial
having been denied, he interposed the
present appeal.1ªvvphi1.nêt
46 | P r o p e r t y C a s e s - P o s s e s s i o n
Plaintiff maintains that the lower court erred in
holding that he had no title to the carabao, for
non-compliance, on his part, with the
provisions of the Revised Administrative Code,
requiring the registration of cattle, prescribing
the procedure for the transfer thereof,
regulating amendments to certificates of
ownership, and establishing the necessity of
registration and issuance of a certificate of
transfer in order that the same may be valid.
He invokes the provision of the Civil Code,
governing contracts in general, to the effect
that "contracts shall be obligatory in whatever
form they may have been entered into
provided all essential requisites for their validity
are present." 1 In addition, to the essential
requisites specified in the Civil Code, the
Revised Administrative Code prescribes,
however, another requisite, as regards the
transfer of title to cattle, namely, the
registration of said transfer and the issuance to
the transferee of the corresponding certificate
of transfer, 2 neither of which has been proven
in the case at bar.
Although plaintiff claimed to have the
aforementioned certificate of transfer, but he
did not produce the same. In fact, plaintiff
could not possibly have such certificate, for
the carabao was allegedly conveyed to him
by Marcelino Mayormente, whereas the
registered owner is Pantaleon Elvas — and
plaintiff knew this fact — and there is no
competent proof that Elvas had ever assigned
the animal to Mayormente. Again, the
complaint for swindling filed against
Mayormente indicates that the carabao did
not belong to him. Regardless of the
aforementioned provisions of the Revised
Administrative Code, the title to the carabao
could not have passed, therefore, to Landa, in
consequence of his alleged transaction with
Mayormente, who had no such title. It may not
be amiss to note that Mayormente might be
no more than a figment of the imagination, for
he has neither taken the witness stand nor
been found.
Apart from this, the certificate of ownership,
Exhibit A, produced by the plaintiff to
patrolmen Pecate and Alfaro was not in
plaintiff's name and admittedly bore sign of
tampering. Although the blank spaces in said
printed form were filled with words and figures
written in indelible pencil, the spaces for the
year of its issuance and the age of the animal
described therein have traces of erasures and
the figures 59 and 3, respectively, are written
thereon in ink, to indicate that the certificate
had been issued in 1959 and that said
carabao was then three (3) years of age. The
original record of said document shows that it
was issued in 1961 and the age of said
carabao was then one year and a half .
Under these circumstances, it is clear that the
policemen had reasonable grounds to
suspect that plaintiff's possession of the
carabao was unlawful, as well as to seize the
animal and deliver the same to the municipal
treasurer, as provided in Section 538 of the
Revised Administrative Code. 3 Pursuant
thereto and to Section 540 of the same
Code, 4 said municipal treasurer had, not only
the authority, but, also, the "duty" to issue, post
and cause to be served a notice of the seizure
or taking of said animal, and, if the owners
thereof "fail to present themselves within the
time specified in the notice and prove title to
the animals taken or seized as aforesaid,"
notice of such fact shall be given by said
officer to the provincial board, "which shall
order said animals to be sold at public
auction," after giving the notice prescribed in
said legal provision. The "purchaser at such
sale shall" — in the language of Section 540 —
"receive a good and indefeasible title to the
animal sold."
Even if plaintiff were hypothetically the true
owner of the carabao in question, his only
remedy was, accordingly, to claim it before
the municipal treasurer and prove to the latter
his (plaintiff's) title thereto, either prior to or at
the time of the auction sale. Not having done
so, plaintiff can not now make such claim
judicially and try to prove his title — which,
after all, he has failed to establish — much less
seek indemnity from the public officers who,
by reason of their official duties, had a hand in
the seizure and sale of the carabao.
Considering the stipulation of the parties
herein, to the effect that said sale had been
"duly approved by the Provincial Board," apart
from the legal presumption "that official duty
has been regularly performed" 5 we must
assume that defendants herein had complied
with the requirements of the legal provisions
above referred to, and, consequently, they
can not be held liable for the aforesaid seizure
and sale.
Plaintiff further alleges that the lower court
erred in not declaring that the public auction
of the carabao in question as "astray" is
against the law, because the animal was
taken or seized from him, not found astray. This
pretense is groundless. It is not borne out by
paragraph 3 of the partial stipulation of facts
cited by him in support thereof. The sale at
public auction was held pursuant to the
aforementioned Section 540, captioned "Sale
of unclaimed" — not astray — "animal,"
although referring to "all estray and all animals
recovered from thieves or taken by peace
officers from persons unlawfully or reasonably
suspected of being unlawfully in possession of
the same" — which are the subject-matter of
Section 538 — the owners of which "fail to
present themselves within the time fixed in the
notice and prove title to the
animals taken or seized as aforesaid." Such is
precisely, the situation obtaining in the case at
bar.
WHEREFORE, the order appealed from is
hereby affirmed, with costs against plaintiff-
appellant, Ciriaco Landa.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar,
Sanchez, Castro and Angeles, JJ., concur.
Fernando, J., took no part.
G.R. No. L-40880 October 23, 1979
ASUNCION CRUZ, ANGEL ANDAN,
ALBERTO ANDAN, CESAR ANDAN,
ROMAN ANDAN and MARINA
ANDAN, petitioners,
vs.
HON. COURT OF APPEALS, CATALINA
ARCEO and ILDEFONSO
SANTOS, respondents.
Zolilo P. Perlas for petitioners.
Pedro G. Uy & Francisco D. Bacabac for
respondents.
GUERRERO, J.:
This is a petition to review on certiorari
the judgment of the Court of
Appeals 1 rendered in CA-G.R. No.
51264-R, entitled "Catalina Arceo and
Ildefonso Santos, plaintiffs-appellants vs.
Asuncion Cruz, et al., defendants-
appellees" which reversed the decision
of the Court of First Instance of Bulacan
in favor of the defendants therein, now
the petitioners, and the resolution of the
appellate court denying the motion for
reconsideration. 2
On April 22, 1964, the spouses Catalina
Arceo and Ildefonso Santos filed a
complaint against Asuncion Cruz, widow
of the deceased Juan Andan and their
children Alberto, Cesar, Angel, Ronian,
and Marina, all surnamed Andan, for the
recovery of possession of a parcel of
residential land with an area of 1,637 sq.
meters, located in Poblacion, Pulilan,
Bulacan originally covered by Tax
Declaration No. 388 in the name of
Eustaquio Arceo, assessed at P830.00,
bounded on the north by Juan Maniego
and Dominga Santos; south by
provincial road; east by Emiliano Santos
and west by Rufino Arceo.
The complaint averred that plaintiff
Catalina Arceo inherited the property by
virtue of inheritance from her parents,
Eustaquio Arceo and Angelina Dizon,
both deceased; "that sometime in the
later part of 1952, plaintiff had agreed
with Juan Andan that the latter could
build a house on the abovedescribed
property and to pay the corresponding
tax of said property and snow her to live
with the family of Juan Andan in the
house without any other obligation; they
further agreed that Juan Andan could
build, as he did, accessories on the
property and for her to share in the
rentals which rentals she had been
sharing per their agreement at 150.00
per month since 1958 up to May 1961
(par. 5);"
47 | P r o p e r t y C a s e s - P o s s e s s i o n
The complaint further alleged that after
the death of Juan Andan on June 19,
1961, Asuncion Cruz, surviving widow of
Juan Andan, began refusing to share the
rentals with the plaintiffs insisting that the
land above-described belongs to them
because it was sold by plaintiffs' father,
Eustaquio Arceo to her husband, Juan
Andan which is not true and that despite
demands for said rentals and for the
return of possession of the property,
defendants refused. Plaintiffs pray for the
payment of rent totalling P1,750.00 plus
subsequent rentals that may accrue with
legal interest, the return of the property
and damages. 3
Answering the complaint, defendants
(now the petitioners) denied the
material averments alleged, claiming as
special defense that their predecessor-
in-interest Juan Andan, deceased
husband of Asuncion and father of the
other defendants, acquired the land
from his mother Julia Dizon and upon the
death of Juan Andan, defendants
acquired the same by operation of law;
they further claimed that they have
been in actual possession of the land by
themselves and thru their predecessors-
in-interest publicly, openly, Peacefully,
continuously, under a claim of title and
in the concept of owner exclusively and
adversely against the whole world. They
also set up a counterclaim by way of
attorney's fees and litigation expenses.
They prayed for the dismissal of the
complaint; that they be declared
owners of the land and awarded moral
damages. 4
At the pre-trial, the following were
admitted by the parties: "that previously
the land in question was declared for
taxation purposes in the name of
Eustaquio Arceo, father of plaintiff
Catalina Arceo; that Eustaquio Arceo
died on September 18, 1917; that the
only heir of Eustaquio Arceo is plaintiff
Catalina Arceo; that the said tax
declaration in the name of Eustaquio
Arceo was concelled and transferred in
the name of Juan Andan on May 29,
1953 and after his death in the names of
his heirs, defendants herein; that
defendants have been and are in
possession of the property in question
having buildings for residential purposes
and for rent; that defendants have
consistently paid the corresponding
taxes." 5
After trial, the trial court rendered
judgment in favor of the defendants and
against the plaintiffs:
1. Dismissing the complaint;
2. Declaring the defendants the real
owners of the land described in the
complaint;
3. Ordering the plaintiffs to pay to the
defendants damages by way of
attorney's fees in the amount of
P1,000.00 and the costs.
On appeal to the Court of Appeals by
the plaintiffs, the decision of the trial
court was reversed and the respondent
court ordered the return of the property
to the possession of the Arceos,
payment of back rentals due them
covering the period from June, 1961 at
the rate of P50.00 a month with legal
interest until the premises are vacated
and costs.
Upon a motion for reconsideration, the
same was denied although the
appellate court specifically made the
finding that the possession of the
petitioners "became adverse to plaintiffs'
rights in 1953, after the Civil Code had
taken effect." Hence, the present
petition for certiorari.
Petitioners submit the following
assignment of errors:
I. The Court of Appeals, on the basis of
the admitted, stipulated and established
facts, committed gross misappreciation
of facts in not affirming the decision of
the lower court that the petitioners are
the rightful owners of the property and
therefore entitled to the possession
thereof
II. The Court of Appeals, on the basis of
the proven facts, had grossly
misappreciated the same in not finding
that petitioners have acquired the
property also by acquisitive prescription
and/or that it should have found that
private respondents had no right of
action and even if they have the same
had been extinguished by prescription.
III. The Court of Appeals likewise
committed gross misapprehension of
facts and departed from the established
jurisprudence when it decided this case
solely on the fact that the house was,
"erected on the solar of Eustaquio
Arceo".
IV. That the Court of Appeals also erred
and radically departed in disregarding
the statute of frauds, parol evidence rule
and dead man's statute, disregarding
the timely objection raised therein during
the trial.
V. That the Court of Appeals gravely
erred in not dismissing the private
respondents' appeal considering that
the brief was submitted six months after
the death of the real party in interest.
VI. That the Court of Appeals similarly
committed a palpable error when it
found that petitioners should pay a
monthly rental of P50.00 a month from
1961 until they vacate the premises with
legal rate of interest, thereby radically
departing from the established
jurisprudence that a possessor in good
faith is not liable for any damage.
VII. That by and large, the decision of the
Court of Appeals reversing that of the
lower court was manifestly in error.
The main thrust of petitioners' brief is the
grave error of the respondent court in
the gross misappreciation and
misapprehension of facts that have
been admitted and stipulated by the
parties, and established on record.
We agree with the petitioners.
1. The principal bone of contention
between the parties is the nature and
concept of petitioners' possession of the
premises, which the private respondents
admit. According to the private
respondents as alleged in their
complaint, par. 5, sometime in the later
part of 1952, Catalina Arceo had
agreed with Juan Andan that the later
could build a house on the property and
to pay the corresponding tax thereon
and allow her to live with the family of
Juan Andan in the house without any
other obligation and they further agreed
that Juan Andan could build, as he did
\accesorias on the property and for her
to share in the rentals at P50.00 per
month since 1958 up to May, 1961. It is
admitted by Catalina Arceo that the
alleged lease agreement was entered
into orally, there being no document
executed between them. (t.s.n., Oct. 8,
1968, pp. 4-5). Hence, private
respondents contend that petitioners'
possession was pursuant to such oral
lease agreement.
Petitioners vigorously deny the existence
of tile alleged oral lease agreement and
they maintain that their possession and
occupancy was in concept of owner
under a claim of ownership from their
predecessor-in-interest Juan Andan by
operation of law, the latter in turn
inheriting the same from his deceased
mother, Julia Dizon. Thus, the vital issue
emerges as to whether such oral lease was
really entered into between the parties and
upon which the nature and concept of
petitioners' possesion may be determined and
resolved.
On this point, the trial court in disbelieving and
rejecting the alleged oral lease said:
48 | P r o p e r t y C a s e s - P o s s e s s i o n
It is amusing to note that Exhibits 1, I-A to I-C
are tax receipts for the years 1947 to 1950 paid
by the defendants' predecessors-in- interest on
the land in question, while plaintiffs claim that
the alleged agreement with Juan Andan
started only in the earlier part of 1952 and he
(Juan Andan) started paying the rental from
1968 up to 1961. These tax receipts belie the
pretension that Juan Andan paid the taxes on
the house and lot in question because of the
said alleged agreement. Exhibit 2 is the receipt
for the house erected therein in the name of
Julia Dizon and is dated June 4, 1948. 6
On appeal, the respondent court without
squarely deciding the issue, impliedly upheld
the oral lease agreement by ordering
petitioners to pay back rentals and
subsequent rentals at P50.00 a month with
interest. Considering the facts established on
record, We hold that the finding of the
appellate court is not supported by substantial
evidence.
We agree with the trial court that Exhibits 1, 1-
A to 1-C which are tax receipts for the years
1947 to 1950 paid by petitioners' predecessors-
in-interest on the property in dispute clearly
overthrow the contention of the private
respondents that Juan Andan agreed to pay
the taxes by reason of the alleged oral lease
agreement which was supposedly made in
1952. It is highly improbable, if not incredible
that a lessee would pay taxes due for five
years on the leased premises before he
actually begins occupancy of the same.
The records also disclose proceedings during
the pre-trial of the case wherein counsel of the
private respondents admitted the possession
of the land in question by the petitioners to
have started in 1938 when Catalina Arceo
married and she went out of the place. And
immediately thereafter, the Court said: "In this
connection, the plaintiff admits that it was only
in 1939 that the defendant possessed the
property, only in 1938 when said plaintiff left
the premises and married. The defendants
however contend that they possessed the
property even prior to 1927." 7This admission by
respondents' counsel further repudiates and
conflicts with the claim of Catalina Arceo that
petitioners' possession and occupancy of the
premises was by virtue of the oral lease
agreement made in the later part of 1952.
Private respondents are bound by their
counsel's admission. Since petitioners were
admittedly already in possession of the
property in 1938, it may be reasonably inferred
that they possessed and occupied the
property not by virtue of the alleged oral lease
agreement executed in 1952.
We also find that the testimony of Catalina
Arceo that in 1952 she delivered the lot in
question to Juan Andan under a lease
agreement of P50.00 a month is not
corroborated nor supported by any
document, writing, some note or
memorandum thereof subscribed by Juan
Andan, the alleged lessee, or by his agent.
There is absolutely no showing or explanation
whatsoever why no receipt, writing, note or
memorandum of the lease agreement exists or
is available notwithstanding the fact as she
claims that the lease had been in force from
1952 to 1961 during which time Juan Andan is
alleged to have religiously paid the monthly
rentals. Where the lessor is unable to produce
receipts of the rents paid during a period of
ten years or even a single receipt for a month
or some document, writing. note or
memorandum of the lease and does not even
explain his failure thereof, the claim of private
respondents that there was such a lease of the
property is rendered beyond belief, contrary
to human experience and practice and the
usual course of things.
The records further disclose that petitioners'
counsel, at the trial of the case, objected to
the introduction of parol evidence to prove
the oral lease agreement which the trial court
sustained. 8 Hence, there being no parol
evidence to prove the oral lease agreement,
the ruling of the appellate court upholding the
lease agreement was without legal or factual
basis. We hold that there is no competent
proof of such oral lease.
2. The Court of Appeals, in reversing the
judgment of the trial court, relied mainly on
what the former called the "silent and
eloquent proof of plaintiffs' ownership of the
land in dispute (which) is the expressed
recognition of Julia Dizon and Juan Andan of
Catalina Arceos property right. And this is best
illustrated when Julia Dizon consented to the
annotation in her tax declaration No. 5775 that
her house was "Erected on the Solar of
Eustaquio Arceo Tax No. 388" (Exhibit 1-C).
We do not agree with the respondent court for
there is no scintilla of evidence that Julia Dizon
consented to the aforestated annotation. She
had long died when the case was filed, so was
Juan Andan, her only son. There is also no
proof when such annotation was made and
by whom. At the time Tax Declaration No. 5775
was constituted by Julia Dizon on February 13,
1948, the land itself bore Tax Declaration No.
388, hence, it was merely routinary on the part
of the to indicate the taxation number of the
land on which the house was erected without
Julia Dizon's Participation much less consent
thereto, otherwise her initial or signature to
such annotation would have appeared below
the annotation, which We find none in Exhibit
C.
3. Considering that the claims of ownership of
the contending parties have arisen after the
death of Eustaquio Arceo and also after Julia
Dizon and Juan Andan had already died, the
resolution of this controversy may be sought on
the basis of who had been paying the taxes
on the land in dispute. There is no question that
Juan Andan had been paying the taxes on
the property as shown in Exhibit 1 (tax receipt
for 1947), Exhibit 1-A (tax receipt for 1948),
Exhibit 1-b (tax receipt for 1949), Exhibit 1-C
(tax receipt for 1960); that petitioners paid the
taxes for the years 1961 (Exhibit 1-d and) 1962
(Exhibit 1-E) Tax payments for 1944 and
previous years were not available on account
of the war and those from 1945 to 1947 were
destroyed by white ants. (Exhibit I ).
Private respondents, on the other hand, have
not paid any tax on the property in litigation.
The respondent Court of Appeals, however,
held that although Juan Andan paid the
taxes, the tax receipts indicated that the
name of the declared owner of the land was
E. Arceo. Hence, Juan Andan was merely the
payor. We reject this conclusion of the
appellate court not only because it is weak,
flimsy and unrealistic, but also because it is not
justified and warranted. Examining the tax
receipt for the year 1947 (Exhibit 1). it appears
thereon that the declared owners of the lot for
which the taxes were paid were "J. Dizon," "do"
(or "J. Dizon"), "do" (or "J. Dizon"), "do" (or "J.
Dizon"), "E. Arceo," and "A. Andan." For the
year 1948 (Exhibit 1-a) the declared owners of
the lots paid for were "J. Dizon," "do" (or "J.
Dizon"), "do" (or "J. Dizon"), "do" (or "J. Dizon")
and "E. Arceo. " For the year 1949 the declared
owners of the lots paid for were the same as
for the year 1948 and the same is true with
respect to the tax receipt for the year 1950. It
is significant that not one of them properties
was in the name of Juan Andan, but
considering that Juan Andan was the only son
and heir of Julia Dizon and Angel Andan and,
therefore, a claimant to these properties of
Julia Dizon and Angel Andan, there is strong
and substantial reason to conclude that Juan
Andan paid the taxes for all these properties
including that under the name of E. Arceo
under a claim of ownership. It is not fair to
conclude that Juan Andan was merely a
payor from the fact of payment of one lot
without taking into consideration the other lots
whose taxes were paid at the same time as
well as similar payments for the lots for the
succeeding years up to 1950, including other
relevant circumstances of time, persons and
relationship.
4. In denying the motion for reconsideration
filed by the defendants-appellants and now
the petitioners herein, the respondent Court of
Appeals declared that the possession of the
petitioners became adverse to that of the
plaintiffs' rights in 1953 when Juan Andan
caused the cancellation of Tax Declaration
No. 388 covering the land in the name of
Eustaquio Arceo to Tax Declaration No. 7574 in
his (Juan Andan) name.
Disputing this ruling of the Court of Appeals,
petitioners claim that they have acquired
ownership over the land thru their possession
which had been shown to be actual,
peaceful, open, public, continuous and under
a claim of title, adverse against the whole
world since the complaint was filed only in
1964 or after eleven (11) years from 1953.
Petitioners further contend that their
possession and occupation of the premises
date back to the year 1938, which the parties
have stipulated and agreed at the pre-trial
hearing of the case. This contention of the
petitioners is impressed with truth and merit as
the same is borne out by the records and the
transcript thereof which We have previously
discussed. We, therefore, find that the ruling of
the respondent court dating petitioners'
adverse possession to the year 1953 is contrary
to the admission of the private respondents
thru counsel, and since petitioners' possession
of the property in question commenced way
back in 1938 which was at the time the old Civil
Code was still in force, the prescriptive period
is governed under Section 41 of the Code of
Civil Procedure because Article 1116 of the
New Civil Code provides that "Prescription
already running before the effectivity of this
Code (August 30, 1950) shall be governed by
laws previously in force." Section 41 of the C,
C. P. states:
49 | P r o p e r t y C a s e s - P o s s e s s i o n
Sec. 41. Title to land by prescription. — Ten
years of actual adverse possession by any
person claiming to be the owner for that time
of any land or interest in land, uninterruptedly,
continuously for ten years by occupancy,
descent, grants of otherwise, in whatever way
such occupancy may have commenced or
continued, shall vest in every actual possessor
of such land a full complete title, saving to the
person under disabilities the rights, secured by
the next section.
We find the evidence for petitioners clear,
competent and substantial establishing that
they have exercised acts of dominion in
derogation of respondents' interest. They have
(constructed permanent buildings thereon
and collected the rentals. Permission was
sought and obtained from them when
another building for a drug store and later
when enlarged to include a bakery, were built
by other persons. They collected the fruits of
fruit-bearing trees planted on the land.
Questions of boundaries between adjoining
properties were consulted with them. These
acts of dominion were not rebutted by
respondents. And most importantly petitioners
have paid religiously the taxes on the property.
On the part of private respondents, their
evidence appear inconsequential, inherently
weak and unsatisfactory for it would appear
unnatural for respondent Catalina Arceo to
abandon the lot when in 1938 she married her
co-respondent Ildefonso Santos and built their
conjugal home some seven houses away and
later transferred to a house and lot purchased
and constructed by her in-laws. Her claim that
in 1952 she entered into the lease agreement
with Juan Andan on condition, among others,
that she will be allowed to live free in the house
built by Juan Andan appears to be doubtful
and dubious, considering that, as may be
gleaned from the testimony of Catalina
Arceo, she never lived in said house and there
is no showing that she attempted to live there
or that she complained or protested to Juan
Andan for not complying with this term of the
lease agreement.
We believe that the trial court made the
correct observation that:
When Catalina Arceo was placed in the stand
for the first time, she was positive on cross-
examination that she nor anyone did not
make any claim for war damage for the house
erected on the land in question which was
burned down during the Japanese
occupation.
However, after defendants had introduced
Exhibits 4, 4-A, 4-B, 4-C and 4-D documents
relating to the war damage claim and award
to Julia Dizon on said house she reversed and
contradicted herself as a rebuttal witness and
stated that she was given the sum of P300.00
by Julia Dizon, because she (Julia Dizon) was
the one who had said house repaired. If the
plaintiffs were the real owners of the land in
question, why did they not file the war
damage claim? If it is true that the land in
question belongs to the plaintiffs, why did they
not build their house on the said land when
they separated from her in-laws and instead
built their house on some other's property not
theirs? Why did Catalina Arceo not make an
assertion of her alleged rights until Julia Dizon
and Juan Andan had died and death had
sealed their lips?
Teodora Arceo, admittedly a relative of
plaintiff Catalina Arceo, was presented to
bolster the claim of the existence of the
agreement between Juan Andan and said
plaintiff over payment of rent on the land in
question, by testifying that on several
occasions man Andan had sent through him
P50.00 to Catalina Arceo. On cross-
examination, Teodoro Arceo admitted that
the distance between his house and the house
of Juan Andan and the distance of the house
of said Juan Andan from that of Catalina
Arceo were almost the same. If Juan Andan
had to go almost the same distance from the
house to Catalina's and from his house to
Teodoro's, why would he have bothered to go
to Teodoro's and not directly to Catalina's?"
It must be stated here that the house which
burned down during the Japanese
occupation was the house of Eustaquio Arceo
according to Pascual Santos, witness for the
private respondents (t.s.n., August 15, 1968, p.
15), but the fact established is that the war
damage claim for said house was claimed by
and paid to Julia Dizon, mother of Juan
Andan. which fact militates against private
respondents' claim that they owned the house
and the lot.
Respondent Court laid stress on the affidavit of
Juan Andan (Exhibit E), claiming purchase of
the lot in question from Eustaquio Arceo, and
the court declared it was utterly improbable
for Juan Andan to have bought the land
because he was only ten years old when
Eustaquio Arceo died in 1917. Conceding that
Juan Andan was then a minor, minority is only
one of the limitations on the capacity to act
and do not exempt the incapacitated person
from certain obligations, as when the latter
arise from his acts or from property relations.
Under Article 161 of the old Civil Code,
whatever the child may acquire with the
capital or property of the parents belongs to
the latter in ownership and in usufruct, which is
also the same provision in Article 324 of the
New Civil Code. In the case at bar, the
circumstances of the sale under which Juan
Andan as a minor acquired the property with
the capital of his mother, Julia Dizon, are not
improbable under the law aforementioned.
These circumstances may not be sufficiently
clear or explained since the affiant Juan
Andan had long passed away in 1961 and can
no longer be confronted therefor, whereas
private respondents chose conveniently to file
their complaint against the heirs of Juan
Andan in 1964 or 3 years thereafter.
Jurisprudence, however, is overwhelming and
well-established in support of petitioners' claim
of title acquired through acquisitive
prescription. In Ongsiaco vs. Dallo, 27 SCRA
161, the Supreme Court said: "Under the Code
of Civil Procedure formerly in force, good or
bad faith was immaterial for purposes of
acquisitive prescription. Adverse possession in
either character ripened into ownership after
the lapse of ten years. In the same manner, an
action to recover title to or possession of
immovable property prescribed in the same
period." In Narag vs. Cecilia, 48 SCRA I 1, the
Supreme Court traced the pronouncements
and rulings of the Supreme Court dating as far
back as 1908 in the case of Altman vs.
Commanding Officer, 11 Phil. 516, to the case
of Ongsiaco vs. Dallo, supra concerning the
ten-year period required by Sec. 41 of the
Code of Civil Procedure that it suffices that
there be a claim as ',owner for that time of a
piece of land [to vest] in him the full and
complete title thereto," the Court speaking
thru Justice Willard.
The Court, in the Narag vs. Cecilio case,
continued: "The same form of words was
repeated by Justice Trent for the Court
in Corporacion de PP. Agustinos Recoletos v.
Crisostomo, 32 Phil. 427 (1915). Thus: "With real
property however, it is different. Section 40
bars the owner's remedy after ten years, and
Section 41 vests in the adverse possessor after
the same period of time "a full and complete
title."' Two years later, in 1917, came this
reaffirmation of such a view from Justice
Torres: "Taking into consideration that the
applicant, Manuel Locsin Rama, is now and
has been for twenty years, in possession of the
same property, counting that of his
predecessors, it may be said that beyond a
shadow of a doubt that the ownership in the
said strip of land has prescribed, pursuant to
the provisions of section 41 of Act No. 190,
since the possession of the applicant has been
actual, open, public, and continuous, under a
claim of title exclusive of any other right and
adverse to all other claimants, ... " Nor is there
any need for a just title. justice Street made
such a point-clear as early as 1921 in Santos v.
Heirs of Crisostomo, 41 Phil. 342. Thus: "Our
opinion upon this point is that adverse
possession must be taken to have begun with
occupancy; and supposing that occupancy
of the usurped property began, as the trial
court evidently believed, with the execution of
the contract of sale ... , or soon thereafter, it
results that the petitioners had acquired title
by ten years' adverse possession, under
section 41 of the Code of Civil Procedure, prior
to the beginning of these proceedings. ... " As
a matter of fact, Justice Laurel, in Labot v.
Librada, 72 Phil. 433 (1941), in sustaining a plea
that a party was entitled to the benefits of this
provision of law. stated: "To constitute
exclusive possession, it is not necessary to
exclude every one from all entry on the land,
and the fact that another person uses the
property concurrently with the claimants by
the permission of the latter or in subordination
to their claim, does not, in a legal sense,
militate against the exclusiveness of their
possession." Moreover, in a 1950 decision,
Arboso v. Andrade, 87 Phil. 782, Justice
Bautista Angelo, for this Court, reiterated the
view that the presence of good faith,
inferentially by just title, is immaterial. ... As was
so categorically announced by Justice J.B.L.
Reyes: "Prescription lies under the said section
even in the absence of good faith and just
title." (Alvero vs. Reas, L-28337, September 30,
1970, 35 SCRA 210, 214).
In other words, the good faith and just title of
Juan Andan in the case at bar, is immaterial
for prescription lies under Section 41, C. C. P.
5. Petitioners' contention that private
respondents' cause of action had prescribed
in likewise meritorious.
To recapitulate, We have ruled herein that
petitioners' possession and occupancy of the
50 | P r o p e r t y C a s e s - P o s s e s s i o n
property commenced in 1938 when Catalina
Arceo got married and abandoned the lot.
We have also rejected as inexistent and
spurious the alleged oral lease agreement
entered into in 1952 between Catalina Arceo
and Juan Andan, petitioners' predecessor-in-
interest. We also find as established the claim
of petitioners that they have acquired
ownership of the property, thru adverse
possession for more than ten years since 1938.
Whatever right private respondents had to the
property had already prescribed by the mere
lapse of time by reason of negligence,
carelessness and abandonment and their
cause of action is barred or can no longer
prosper after more than twenty-six (26) years,
that is from 1938 when the cause of action
accrued, to 1964 when the complaint was
filed. The laws aid the vigilant, not those who
slumber on their rights. Vigilantibus sed non
dormientibus jura subveniunt .
It is appropriate to stress here the essence of
the statute of limitations. In Conspecto vs.
Fruto, 31 Phil. 144, 151, the Supreme Court said:
It is the essence of the statute of limitations
that, whether the party had a right to the
possession or not, if he entered under the claim
of such right and remained in possession for
the period (ten years) named in the statute of
limitations, the right of action of the plaintiff
who had the better title is barred by that
adverse possession. The right given by the
statute of limitations does not depend upon,
and has no necessary connection with, the
validity of the claim under which the
possession is held. Otherwise there could be no
use for the statute of stations or adverse
possession as a defense to an action, for if the
decision is made to depend upon the validity
of the respective titles set up by the plaintiff
and the defendant, there can be no place for
the consideration of the question of adverse
possession. It is because the plaintiff has a
better title that the defendant is permitted to
rely upon such uninterrupted possession,
adverse to the plaintiff's title, as the statute
prescribes, it being well understood and an
element in such cases, that the plaintiff does
have the better title, but that he has lost it by
delay in asserting it. (Probst vs. Presbyterian
Church 129 U.S., 182).
Neither is it necessary that the defendant
should have a proper title, under which he
claims possession. It is sufficient, if he asserts
ownership of the land, and that this assertion is
accompanied by an uninterrupted possession
for the period named in the statute. It is this
which constitutes adverse possession-claiming
himself to be the owner of the land. If the one
in possession asserts his right to own the land in
dispute, asserts his right to the possession, and
his possession has been adverse and
uninterrupted, it constitutes a bar which the
statute intended to give him. (Ewing vs. Burnet,
11 Peters [U.S.], 39, 52; Harvey vs. Tyler, 2
Wallace [U.S.], 328, 349; Coke's Institutes, First
Part, 153).
xxx xxx xxx
Section 40 of Act No. 190 is plain and
unambiguous. It plainly says: "An action for the
recovery of title to. or possession of, real
property, or an interest therein, can only be
brought within ten years after the cause of
such action accrues." In the present case, the
action for the recovery of the possession of the
real property in question was not brought
within ten years after the cause of action had
accrued.
Since private respondents abandoned the
property in question in 1938 and petitioners
and their predecessors-in-interest took
possession of the land from that time and have
remained therein up to the present, the action
to recover possession has clearly lapsed, firstly,
in the fight of Section 40, Act 190 quoted
above which is applicable hereto since the
possession of the predecessors-in-interest of
the petitioners commenced before the New
Civil Code took effect and thus, Article 1116 of
the New Civil Code governs, as previously
elucidated. (Development Bank of the
Philippines vs. Ozarraga 14 SCRA 653). Under
the C.C.P., an action for recovery of title to, or
possession of, real property, or an interest
therein, can only be brought within ten years
after the cause of action accrues. (Vda. de
Delima vs. Tio, 32 SCRA 516).
And secondly, whether We consider the
complaint of private respondents to recover
possession of the property in question as
an accion publiciana or accion
reivindicatoria, the same has prescribed after
the lapse of ten years. After private
respondents had abandoned for 26 years the
property which is unregistered land, the law as
well as justice and equity will not allow them
"to lie in wait and spring as in an ambush" to
dislodge and dispossess petitioners who during
said period have made and constructed
residences, buildings and other valuable
improvements thereon, and enjoying the fruits
therefrom. (Parcotilo vs. Parcotilo, 12 SCRA
435; Carino vs. De Paz, 18 SCRA 467; Narag vs.
Castillo, 48 SCRA 11).
WHEREFORE, IN VIEW OF THE FOREGOING, the
judgment of the Court of Appeals is hereby set
aside and the decision of the lower court is
reinstated, with costs against respondents.
SO ORDERED.
Teehankee (Chairman), Makasiar, Fernandez,
De Castro and Melencio-Herrera, JJ., concur.
[ GR No. L-11156, Feb 23, 1961 ]
PURA CARREON v. RUFO AGCAOILI +
DECISION
111 Phil. 119
BAUTISTA ANGELO, J.:
During the marriage of Bonifacio
Carreon and Celerina Dauag the
registered land subject of this case was
acquired. After, the death of Carreon,
his widow Celerina executed on
September 24, 1946, an affidavit
adjudicating to herself alone the said
land. She declared in said document
that she was the only heiress of her
husband. The original certificate of titles
covering the land was cancelled and a
transfer certificate was issued in her
name. There was however annotated
on her certificate a lien to the effect that
her title was subject to Section 4 of Rule
74 of the Rules of Court.
On September 25, 1946, she borrowed
P1,200.00 from the Philippine National
Bank guaranted by a mortgage on one-
half of the land. A memorandum of the
mortgage was annotated on her
transfer certificate. After the maturity of
the loan, she requested a certain Mr.
Pintang to look for a buyer of the land for
P3,000.00. One by the name of Rufo
Agcaoili was found. The latter made an
advance payment of P1,500.00 and the
balance was paid in full on October 13,
1947. The loan from the bank was paid,
the mortgage was released, and the
deed of absolute sale executed in his
favor was registered.[1] A new transfer
certificate of title was issued in the name
of Agcaoili. On February 19, 1955, the
children of Celerina with the deceased
husband filed a complaint against the
spouses Agcaoili seeking to have the
deed of sale executed by their mother
declared as one of mortgage and to
recover one-half pro-indiviso of the land
described in the complaint.
Simultaneous with the finding of said
complaint, Celerina filed an action for
intervention which was dismissed by the
trial court.
Defendants filed a motion for summary
judgment upon the plea that the main
averments of the complaint even if
admitted do not constitute a cause of
action and supported their plea with
certain documentary evidence.
Plaintiff's filed an opposition on the
ground that there was a genuine issue
which could not he determined unless a
trial is had. The trial court however
51 | P r o p e r t y C a s e s - P o s s e s s i o n
allowed the parties to submit evidence the courts in the manner hereinafter
in support of their contentions and after provided for the purpose of satisfying
a careful analysis thereof found for such lawful participation. And if within
defendants holding that plaintiffs' claim the same time of two years, it shall
has no legal basis. appear that there are debts outstanding
against the estate which have not been
As may be gleaned from the appellants' paid, or that an heir or other person has
assignments of error, the present appeal been unduly deprived of his lawful
is predicated on the arguments that participation payable in money, the
appellees were buyers in bad faith; that court having jurisdiction of the estate
there existed a trust relationship may, by order for that purpose, after
between them and appellants; and that hearing, settle the amount of such debts
such being the case, the action against or lawful participation and order how
appellees is imprescriptible. much and in what manner each
distributee shall contribute in the
There is no clear proof that when Rufo
payment thereof, and may issue
Agcaoili bought the land he knew of any
execution, if circumstances require,
flaw in the title of Celerina Dauag. The
against the bond provided in the
mere fact that he was a townmate of
preceding section or against the real
Celerina is not sufficient basis to
estate belonging to the deceased, or
conclude that he knew that she had
both. Such bond and such real estate
children by her first husband. It has been
shall remain charged with a liability to
shown that since 1920 Rufo Agcaoili has
creditors, heirs or other persons for the full
been an enlisted man in the Philippine
period of two years after such
constabulary and seldom went home to
distribution, notwithstanding any transfer
visit his relatives. A man of such a
of the real estate that may have been
situation cannot be expected to know
made."
the relatives and children of his vendor
even if they are townmates. Fraud The above lien is effective only for a
cannot be presumed. It must be period of two years. From September 28,
established by clear and sufficient 1946, when a transfer certificate of title
evidence. Here every indication is that was issued to Celerina, to September 8,
Agcaoili bought the land in all good 1949 when the deed of sale in favor of
faith oblivious of the source of its Agcaoili was issued and registered, more
acquisition. than two years had elapsed. We sustain
the lower court's opinion that
If fraud had been committed such was
thenceforth the right to have such lien
perpetrated by Celerina, appellants'
cancelled became vested on appellee
mother. By her action she induced
Agcaoili and that the same had
Agcaoili to believe that she was the
became functus oficio.[3] And there
absolute owner of the land which bore a
being no fraud in the transaction on the
torrens title. In dealing with it he merely
part of appellee, nor, proof that be knew
relied on such title. He was not required
of any legal infirmity in the title of his
to do more. He is only charged with
vendor, we find no reason to apply the
notice of the burdens which are noted
proposition that he is deemed to be
on the face of said title. So after he
holding the land in trust for the children
bought the land and a new title was
of Celerina Dauag.
issued in his name, he became a
purchaser thereof for value and a holder Wherefore, the decision appealed from
of a good and valid title.[2] is affirmed, without pronouncement as
to costs.
On the transfer certificate of title issued
to Agcaoili there was annotated a Bengzon, Acting C. J., Padilla, Labrador,
statement that it was subject to Section Concepcion, Reyes, J. B. L., Barrera,
4, Rule 74 of the Rules of Court. This was Paredes, and Dizon, JJ., concur.
an annotation carried over from
Celerina's transfer certificate. Section 4,
Rule 74, provides the following:
"Sec. 4. Liability of distributees and
estate. If it shall appear at any time
within two years after the settlement and
distribution of an estate in accordance
with the provisions of either of the first
two sections of this rule, that an heir or
other person has been unduly deprived
of his lawful participation in the estate,
such heir or such other person may
compel the settlement of the estate in
G.R. No. 69138 May 19, 1992
REPUBLIC OF THE PHILIPPINES (Bureau of
Forest Development), petitioner,
vs.
INTERMEDIATE APPELLATE COURT (First Civil
Cases Division) and HILARIO P.
RAMA, respondents.
GUTIERREZ, JR., J.:
The decision of the trial court in this case
declared the disputed parcels of land to
be forest land and, therefore, inalienable.
The appellate court sustained the factual
finding. The issue raised in this petition refers
to the propriety of awarding necessary
expenses to the alleged possessor in good
faith with right of retention until the
expenses are paid.
In May 1974, Anselmo Logronio, in his
official capacity as officer-in-charge of the
Bohol Reforestation Project of the Bureau of
Forest Development, bulldozed portions of
two (2) parcels of land which he believed
to be forest lands located at Talibon, Bohol,
occupied the same, and planted mulberry
and other trees.
Soon thereafter, respondent Hilario P.
Rama commenced in the then Court of First
Instance, now Regional Trial Court of Bohol,
a complaint for recovery of possession,
ownership and damages against Logronio
alleging that he is the absolute owner and
possessor of the two (2) parcels of land
occupied by Logronio. He specifically
described the two (2) parcels of land as
follows:
A. A parcel of land, Lot 1, Psu-218360
beginning at a point marked "1" of Lot 1, Psu
218360, being N. 41-39 E., 15391.24 m. from
B.L.L.M. No. 1, Municipality of Carmen,
Province of Bohol, thence N. 47-35 W.,
163.40 m. to point 2; S. 67-59 W., 173.82 m.
to point 3; N.5-17 E., 250.71 m. to point 4; S.
71-33 E., 168.51 m. to point 5; S. 82-11 E.,
107.55 m. to point 6; S. 0-45 W., 228.32 m. to
point 1; point of beginning . . . containing
an area of FIFTY ONE THOUSAND TWO
HUNDRED AND TWENTY SIX (51,226) square
meters . . . evidenced by Original
Certificate of Title No. 6148 (Free Patent No.
319750) Office of the Register of Deeds for
the Province of Bohol . . . also covered by
Tax Dec. No. R-3859 in the name of Plaintiff
. . . assessed at P990.00 . . .
B. A parcel of land (as shown on plant H-
154932, LRC Rec. No.), situated in the Barrio
of Malitbog, Municipality of Trinidad,
Province of Bohol. Bounded on the H., (sic)
along lines 1-2-3 by the property of Rufino
Autida (H-166571), on the E., along lines 4-
5-6-7 by Creek; on the S., along lines 7-8-9-
10, by the Marinas Creek 4.00 m. wide; on
the W., along line 10-11 by Public Land
(Forest Zone), and on the N., along lines 11-
12-1 by the property of Angel Jumawan . . .
containing an area of Ninety Six Thousand
Three Hundred Forty Three (96,343) square
52 | P r o p e r t y C a s e s - P o s s e s s i o n
meters . . . covered by Tax Dec. No. R-4019
in the name of Plaintiff . . . with an assessed
value of Pl,390.00 . . .
xxx xxx xxx
(Record on Appeal, pp. 54-56)
In his answer, Logronio claimed that the
two parcels of land are forest lands and
that the questioned acts were performed
by him in the regular and lawful
performance of his duties as officer-in-
charge of the Bohol Reforestation Project
of the Bureau of Forest Development. He
prayed for the dismissal of the complaint.
Petitioner Republic filed a motion for leave
to intervene attaching its complaint-in-
intervention.
The complaint-in-intervention alleged that
Logronio's acts were authorized by the
government through the Director of the
Bureau of Forest Development in
connection with the reforestation program
of the government; that the two (2) subject
parcels of land are located within the
timberland Block D, L. C. Project No. 33 of
Talibon, Bohol per BF Map L. C. 686 and,
therefore, are forest lands; that the said
lands were never released by the
government as alienable and disposable
lands, hence, are not susceptible of
disposition or private appropriation under
the provisions of the Public Land Act
(Commonwealth Act No. 41), as amended,
nor were the said parcels of land registered
under the provisions of the Land
Registration Law (Act No. 496), as
amended. It prayed that Free Patent No.
319750 covering the forest portion of the
first lot be declared null and void; that the
Register of Deeds be ordered to cancel
OCT No. 6148 covering the said forest
portion; that both forest lands be reverted
back to the public domain; and that the
complaint against Logronio be dismissed.
The motion was granted and the
complaint-in-intervention was admitted by
the lower court.
Rama, then, filed an answer to the
complaint-in-intervention alleging that the
Republic has no cause of action, and is
guilty of estoppel for having caused the
issuance of the certificate of title covering
the forest land. He claimed that if his title is
to be cancelled, and he is deprived of
ownership over the parcels of land, he
should be paid by the Republic for all
existing improvements plus whatever
expenses he has incurred in connection
with the improvement of said lands.
The trial of the case resulted in the following
undisputed facts stated in the decision of
the lower court:
xxx xxx xxx
1. On parcel A in the complaint. The
evidence discloses that Lot 1, Psu-218360,
as described in the complaint, and
containing an area of 51,226 square
meters, is one of the two lots covered by
OCT No. 6148 (Free Patent Title No. 319750)
in the name of Hilario Piscos Rama (Exhs. A
and A-1) and is, according to the plaintiff,
free from any liens or encumbrances.
Thus, plaintiff Hilario P. Rama, 42 testified
that of the two parcels of land mentioned
in the complaint, one parcel was covered
by title, as shown by a xerox copy of OCT
No. 6148 (Exhs. A and A-1), and by tax
declaration No. R-3859 (Exh. B); that he
secured a certification from the Office of
the District Forester, Tagbilaran City,
regarding the status of the land covered by
OCT 6148 (Exh. C); that he had a plan of the
land covered by OCT No. 6148 (Exh. D);
that in the memorandum of
encumbrances on OCT No. 6148 (Exh. A-1),
Entry No. 3382 referred to a real-estate
mortgage executed on 23 November 1967
by Hilario Piscos Rama and Socorro
Regañon in favor of the Development Bank
of the Philippines, but the obligation was
already paid, and there was a written
release of the mortgage in 1975, which was
not yet registered because when he went
to the Registry of Deeds payment was
required for registering the release and he
did not have money at that time.
As shown in OCT No. 6148 (Exh. A), the free
patent title was given on 13 January 1967,
and the certificate of title was issued on 4
May 1967. Then on 7 November 1967, the
Office of the District Forester, Tagbilaran
City, issued Certification No. 57 (Exh. C) to
the effect "that according to the records of
this Office, there is no pending case as far
as the Bureau of Forestry is concerned,
involving the validity of the title over a
parcel of land containing an area of
10.2450 hectares covered by Original
Certificate of Title No. 6148 Free Patent No.
319750 situated in barrio of Malitbog,
Municipality of Dagohoy, Province of Bohol
issued by the Register of Deeds of
Tagbilaran City on January 13, 1967 in the
name of Hilario Piscos Rama, Filipino, of
legal age, married to Socorro Riganon, and
resident in Malitbog, Dagohoy, Bohol."
Meantime, on 11 September 1967, Hipolito
Amihan, Forester in Charge of the Bohol
Reforestation Project, Dagohoy, Bohol,
addressed a letter to the Administrator,
Reforestation Administration, Diliman,
Quezon City, thru the Regional Officer,
Cebu City, (Exh. 8), stating that relative to
OCT No. 6148 in the name of Hilario Piscos
Rama —
Upon verification of the area in question it
is found out that Lot I in an area of 51,226
sq. m. is within the area of Bohol
Reforestation Project, Dagohoy, Bohol. . . .
and recommending "that Lot No. 1 under
PSU-21-8360 with an area of 51,226 sq. m.
under Free Patent No. 318750 issued in
favor of Mr. Hilario Piscos Rama be
cancelled."
On 29 October 1974, Lope D. Reyes,
Assistant OIC, Legal Staff, Bureau of Forest
Development, Diliman, Quezon City, sent a
memorandum to the OIC Silviculture
Division (Exh. 1), requesting that OCT No.
6148 issued in favor of Hilario Piscos Rama
"be verified as to whether or not the area is
inside a timberland of alienable or
disposable land." And on 22 November
1974, Primo P. Andres, Officer in Charge,
Silviculture Division, Bureau of Forest
Development, Diliman, Quezon City,
returned by first endorsement (Exh. 2) the
aforesaid memorandum with the
information that per verification and
control —
1. Lot 1, PSU-218360 is within the Timberland
Block-A of LC Project No. 33 of Talibon,
Bohol, per BF Map LC-635, and;
2. Lot 2, PSU-218360, is within the Alienable
or Disposable Block-I, of LC Project 33 of
Talibon, Bohol, certified as such on
September 7, 1927, per BF Map LC-685.
And the Commissioner's Report (Exh. A-
Commissioner) finds
that —
On Lot 1, Psu-218360 and (sic) approximate
area of 45,826 sq. m. colored green on the
sketch is inside the Timberland and 5,400 sq.
m. more or less is in the Alienable and
Disposable Area.
And the Commissioner, Emmanuel
Maboloc, 38, Junior Geodetic Engineer,
Bureau of Forest Development, Region VII,
Cebu City, testified to this effect, stating,
however, that he did not make technical
descriptions of the portion of the lot within
the Bohol Reforestation Project and the
portion outside it, so that, if required, he
would have to go to the field again to
make such technical descriptions. (Record
on Appeal, pp. 61-65)
xxx xxx xxx
2. On parcel B in the complaint.— . . .
The land is covered by TD No. R-4019 in the
name of plaintiff Hilario Piscos Rama (Exh. F)
and was surveyed for the Heirs of German
Remarata in 1952, as shown by the
technical description (Exh. G) and plan H-
154932 (Exh. H). But the land is not covered
by any certificate of title.
On 12 March 1968, the Office of the District
Forester, Tagbilaran City, issued
Certification No. 90 (Exh. I) to the effect
"that the parcel of land containing an
approximate area of 9.6345 hectares
situated in Barrio Malitbog, Municipality of
Dagohoy, Province of Bohol, described in
the Tax Declaration proposed in the name
of German Remarata, a resident of Bo.
Malitbog, Dagohoy, Bohol was verified by
a representative of this Office and was
53 | P r o p e r t y C a s e s - P o s s e s s i o n
found to be within the Alienable and
Disposable Block "1", Land Classification
Project No. 33, Talibon, Bohol, L.C. Map No.
685, certified on September 7, 1927." And
on 4 March 1970, the Office of the District
Forester, City of Tagbilaran, thru Acting
District Forester Pastor O. Ibarra, issued
Certification No. 101 (Exh. J), which is
similarly worded as Certification No. 90 (Exh.
I), except that the proposed tax
declaration is in the name of HILARIO
PISCOS RAMA.
But on 15 May 1974, the Office of the District
Forester, City of Tagbilaran, thru District
Forester Pastor O. Ibarra, sent a letter to
Hilario P. Rama (Exh. 4) informing him "that
CERTIFICATION NO. 101, issued to you on
March 4, 1970, by the District Forester of
Tagbilaran City, is hereby revoked on the
ground that after thorough (sic)
investigation by representative of this
Office the parcel of land which you claim
and the subject matter in the above-
mentioned CERTIFICATION NO. 101, is found
to be within the Bohol Reforestation
Project." And on the same date, a letter to
the same effect was sent by District Forester
Ibarra to the Provincial Assessor, City of
Tagbilaran (Exh. 5).
The Commissioner's Report (Exh.
Commissioner) inter alia states:
It was found out that on lot H-154932 an
approximate area of 94,719 Sq. M. is inside
Timberland block A, Project No. 33 a part of
Bohol Reforestation Project (colored green
on the sketch plan) and only approximately
1,624 Sq. M. is inside the Alienable and
Disposable area colored orange on the
sketch plan.
Likewise, Commissioner Maboloc declared
that he did not make technical descriptions
of the portion of said lot within the Bohol
Reforestation Project and the portion
outside it. (Record on Appeal, pp. 66-68)
In view of its findings that the two (2) subject
parcels of land are forest lands, the lower
court declared as null and void the
Certificate of Title covering the first lot in the
name of Rama and ordered him to vacate
the said parcel "upon being reimbursed by
the intervenor in the sum of SIX THOUSAND
PESOS (P6,000.00) as necessary expenses."
As regards the second parcel of land, the
lower court ordered Rama to vacate the
same parcel of land "with right to refund
from the intervenor for the necessary
expenses in the sum of THREE THOUSAND
PESOS (P3,000.00), but without rights of
retention." The dispositive portion of the
decision reads:
WHEREFORE, judgment is hereby rendered,
as follows:
1. Relative to Lot 1, Psu-218360, (parcel A in
the complaint): declaring that portion
thereof indicated in the Commissioner's
Report (Exh. A-Commissioner) as having an
"approximate area of 45,836 Sq. M. and
shown on the sketch (Exh. B-Commissioner)
as timberland and therefore part of the
public domain (colored green, Parcel B in
said sketch); declaring null and void
Original Certificate of Title No. 6148 in the
name of HILARIO PISCOS RAMA insofar as it
includes the aforesaid portion; and
ordering the plaintiff to vacate said portion
upon being reimbursed by the intervenor in
the sum of SIX THOUSAND PESOS (P6,000.00)
as necessary expenses;
2. Relative to the parcel of land shown on
plan H-154932 (parcel B in the complaint):
declaring that the portion thereof
indicated in the Commissioner's Report
(Exh. A-Commissioner) as having "an
approximate area of 94,719 Sq. M." and
shown on the sketch (Exh. B-Commissioner)
as timberland and therefore part of the
public domain (colored green, Parcel A in
said sketch); declaring null and void Tax
Declaration No. R-4019 (Exh. F) insofar as it
includes the aforesaid portion; and
ordering the plaintiff to vacate said portion,
with right to refund from the intervenor for
the necessary expenses in the sum of THREE
THOUSAND PESOS (P3,000.00), but without
right of retention;
A- 3. Dismissing the complaint as against
defendant Anselmo Logroño, both in his
private and in his official capacity;
4. Dismissing defendant Logroño's
counterclaim; and
5. Ordering the Register of Deeds of the
Province of Bohol to annotate the
judgment relative to Lot 1, Psu-2l8360 at the
back of Original Certificate of Title No. 6148.
Without pronouncement of costs.
(Record on Appeal, pp. 77-79)
Petitioner Republic appealed the lower
court's decision to the then Intermediate
Appellate Court, now Court of Appeals,
insofar as it ordered petitioner Republic to
pay Rama the necessary expenses with the
right of retention over the titled parcel of
land.
The appellate court, however, did not only
affirm the questioned decision, but
modified it by ruling that as regards the
second parcel which is not covered by any
certificate of title, Rama has also the right
of retention until the necessary expenses
awarded to him are paid by petitioner
Republic.
A motion for reconsideration was denied.
Hence, the instant petition.
In a resolution dated March 27, 1985, the
Court gave due course to the petition.
Because of the reorganization of the Court
after the 1986 political upheaval and
subsequent changes caused by retirement
of certain Justices, the case could not be
decided until its recent assignment to the
undersigned ponente.
On May 5, 1989, we issued another
resolution stating therein:
Considering the length of time that this
case has remained pending and as a
practical measure to ease the backlog of
this Court, the parties shall, within ten (10)
days from notice, MANIFEST whether or not
they are still interested in prosecuting this
case, or supervening events have
transpired which render this case moot and
academic or otherwise substantially affect
the same. (Rollo, p. 70)
In response to this resolution, the Solicitor
General, representing petitioner Republic,
filed on August 4, 1989, a manifestation
stating that he is not aware of any
supervening event that may have
transpired which would render the case
moot and academic.
As stated earlier, the only issue in this
petition is the propriety of awarding
necessary expenses with right of retention
over the two (2) parcels of land in favor of
the possessor in this case, Rama, until the
payment of the necessary expenses by
petitioner Republic on the ground that
Rama is a possessor in good faith as
defined in Article 526 of the Civil Code.
In ruling that private respondent Rama, the
possessor of the two forest lands is entitled
to payment of necessary expenses, the
appellate court cited the case of Dizon v.
Rodriguez, (13 SCRA 704 [1965]).
The background facts of the Dizon case
are as follows:
Hacienda Calatagan owned by Alfonso
and Jacobo Zobel was originally covered
by TCT No. T-722. In 1938, the Hacienda
constructed a pier, called "Santiago
Landing," about 600 meters long from the
shore into the navigable waters of the
Pagaspas Bay, to be used by vessels
loading sugar produced by the Hacienda
sugar mill. When the sugar mill ceased its
operation in 1948, the owners of the
Hacienda converted the pier into a
fishpond dike and built additional strong
dikes enclosing an area of about 30
hectares (of the Bay) and converted the
same into a fishpond. The Hacienda owners
also enclosed a similar area of about 37
hectares of the Bay on the other side of the
pier which was also converted into a
fishpond.
In 1949, the Zobels ordered the subdivision
of the Hacienda by ordering the
preparation of the subdivision plan Psd-
27941 wherein fishpond No. 1 (with 30
hectares) was referred to as Lot No. 1 and
fishpond No. 2 (with 37 hectares) was
referred to as Lot No. 49. The plan was
approved by the Director of Lands, and the
Register of Deeds issued, from TCT No. T-722,
54 | P r o p e r t y C a s e s - P o s s e s s i o n
TCT No. 2739 for lots 49 and 1 in the name
of Jacobo Zobel.
In 1950, Jacobo Zobel sold to Antonino
Dizon, et al. Lot 49 for which said
purchasers obtained at first TCT No. T-2740
and later T-4718, Lot 1, on the other hand,
was purchased by Carlos Goco, et al., who
in turn, sold one-half thereof to Manuel Sy-
Juco, et al. Transfer Certificate of Title No.
4159 was issued in the names of the Gocos
and Sy-Jucos.
On May 24, 1952, Miguel Tolentino filed with
the Bureau of Fisheries an application for
ordinary fishpond permit or lease for Lot 49,
and an application for a similar permit, for
Lot 1, was filed by his daughter Clemencia
Tolentino.
The Dizons, Sy-Jucos, and Gocos filed a
protest with the Bureau of Fisheries,
claiming the properties to be private land
covered by a certificate of title. This protest
was dismissed by the Director of Fisheries,
on the ground that the areas applied for
are outside the boundaries of TCT No. T-722
of Hacienda Calatagan. This ruling was
based upon the findings of the committee
created by the Secretary of Agriculture
and Natural Resources to look into the
matter, that Lots 1 and 49 are not originally
included within the boundaries of the
hacienda.
On October 1, 1954, the protestants Dizons,
Sy-Jucos, and Gocos filed an action in the
Court of First Instance of Manila (Civ. Case
No. 24237) to restrain the Director of
Fisheries from issuing the fishpond permits
applied for by the Tolentinos. The court
dismissed this petition for non-exhaustion of
administrative remedy, it appearing that
petitioners had not appealed from the
decision of the Director of Fisheries to the
Secretary of Agriculture and Natural
Resources. On appeal to this Court, the
decision of the lower court was sustained
(G.R. No. 8654, promulgated April 28, 1956).
The protestants then filed an appeal with
the Secretary of Agriculture and Natural
Resources. This time, the same was
dismissed for being filed out of time.
On August 16, 1956, the Dizons filed Civil
Case 135 and the Sy-Jucos and Gocos,
Civil Case 136, in the Court of First Instance
of Batangas, to quiet their titles over Lots 49
and 1. Named defendants were the
Secretary of Agriculture and Natural
Resources and applicants Tolentinos. The
Republic of the Philippines was allowed to
intervene in view of the finding by the
investigating committee created by the
respondent Secretary, that the lots were
part of the foreshore area before their
conversion into fishponds by the hacienda-
owners.
On January 30, 1958, after due hearing, the
Court of First Instance of Batangas
promulgated a joint decision making the
finding, among others, that the subdivision
plan Psd-27941 was prepared in disregard
of the technical description stated in TCT
No. T-722, because the surveyor merely
followed the existing shoreline and placed
his monuments on the southwest lateral of
Lot 49, which was the pier abutting into the
sea; and made the conclusion that Lots 1
and 49 of Psd-27941 were part of the
foreshore lands. As the certificate of title
obtained by petitioners covered lands not
subject to registration, the same were
declared null and void, and Lots 1 and 49
were declared properties of the public
domain. Petitioners appealed to the Court
of Appeals.
In its decision of October 31, 1961, as well
as the resolution of August 20, 1962, the
appellate court adopted the findings of the
lower court, that the lots in question are
part of the foreshore area and affirmed the
ruling cancelling the titles to plaintiffs.
Although in the decision of October 31,
1961, the Court of Appeals awarded to
applicants Tolentinos damages in the
amount of P200.00 per hectare from
October 1, 1954, when plaintiffs were
notified of the denial of their protest by the
Director of Fisheries, such award was
eliminated in the resolution of August 20,
1962, for reason that plaintiffs, who relied on
the efficacy of their certificates of title,
cannot be considered possessors in bad
faith until after the legality of their said titles
has been finally determined. Appellants
were thus declared entitled to retention of
the properties until they are reimbursed by
the landowner, the Republic of the
Philippines, of the necessary expenses
made on the lands, in the sums of
P40,000.00 (for Lot 49) and P25,000.00 (for
Lot 1). It is from this portion of the decision
as thus modified that defendants Tolentinos
and the intervenor Republic of the
Philippines appealed (in G.R. Nos. L-20355-
56), claiming that plaintiffs' possession
became in bad faith when their protest
against the application for lease was
denied by the Director of Fisheries. In
addition, the intervenor contends that
being such possessors in bad faith, plaintiffs
are not entitled to reimbursement of the
expenses made on the properties. (at pp.
705-708; Emphasis supplied)
The appellate court's decision was
appealed to us by both the Republic and
the Dizons, et al.
We dismissed both appeals.
A comparative study of the present case
and the Dizon case shows different
circumstances which make the Dizon case
not applicable to the instant case.
In the present case, the parcel of land titled
in the name of Hilario P. Rama is covered
by an original torrens title issued in Rama's
name on May 4, 1967. Earlier, he applied for
the issuance of title based on a patent
which was given on January 13, 1967. The
fact that he applied for a patent title shows
a recognition on his part that the parcel is
part of the public domain. True,
government officials caused the issuance
of the patent title and the original torrens
title covering the land in Rama's name.
However, the well-entrenched principle is
that the State cannot be put in estoppel by
the mistakes or errors of its officials or
agents. (Republic v. Court of Appeals, 135
SCRA 156 [1985]; and Republic v. Aquino,
120 SCRA 186 [1983])
Considering that the subject parcel of land
is forest land, the patent and original
certificate of title covering the subject
parcel issued to Rama did not confer any
validity to his possession or claim of
ownership. (Sunbeam Convenience Foods,
Inc. v. Court of Appeals, 181 SCRA 443
[1990]; Vallarta v. Intermediate Appellate
Court, 151 SCRA 679 [1987]; Republic v.
Court of Appeals, 148 SCRA 480 [1987];
Republic v. Court of Appeals, 135 SCRA 156
[1985])
The titles are void ab initio. (Heirs of
Amunategui v. Director of Forestry, 126
SCRA 69 [1983]; Republic v. Animas, 56
SCRA 499 [1974]) The titles issued cannot
ripen into private ownership. (Director of
Forestry v. Muñoz, 23 SCRA 1183 [1968];
Heirs of Amunategui v. Director of
Forestry, supra; Vallarta v. Intermediate
Appellate Court, supra) In effect, Rama's
possession of the parcel from
the beginning was fraudulent and illegal.
He was merely a squatter on the parcel.
Under these circumstances, we cannot see
any reason why Rama should be
considered a possessor in good faith as
defined in Article 526 of the Civil Code.
In the Dizon case, however, the occupants
of the parcels of land which were
adjudged as part of these ashore or
foreshore area and part of the public
domain bought the land from Alfonso and
Jacobo Zobel relying on the original
certificate of title covering the parcels.
This intervening event constitutes the
difference between the Dizon case and
the present case. Dizon, et al. buyers of the
foreshore lands were protected by the
principle that an innocent buyer of a
registered land may rely on the torrens title
of the seller. In the absence of anything to
excite suspicion, the buyer is not obligated
to look beyond the certificate to
investigate the title of the sellers appearing
on the face of the certificate. (Philippine
National Bank v. Court of Appeals, 187
SCRA 735 [1990]; Gonzales v. Intermediate
Appellate Court, 157 SCRA 587 [1988];
Philippine National Cooperative Bank v.
Carandang-Villalon, 139 SCRA 570 [1985]);
Penullar v. Philippine National Bank, 120
SCRA 171 [1983])
Another distinction between the two (2)
cases is in the degree of participation of the
parties and the public officials in the titling
of the subject parcels of land. In the present
case, respondent Rama was the one who
55 | P r o p e r t y C a s e s - P o s s e s s i o n
secured a certificate from the office of the
District Forester, Tagbilaran City as regards
the status of the parcel of land with his
representations that "he had a plan of the
land." It appears, therefore, that it was
through the representations of Rama that
the land was titled in his name. Some
months later, however, or on November 7,
1967, the Office of the District Forester
suspected that the parcel of land thus titled
was forest land. Why this angle was not
pursued is not shown in the records. It,
however, negates the good faith of Rama
who actively pursued the titling of the
parcel in his name.
Good faith which entitles the possessors to
necessary expenses with right of retention
until reimbursement was explained in
the Dizon case:
On the matter of possession of plaintiffs-
appellants, the ruling of the Court of
Appeals must be upheld. There is no
showing that plaintiffs are not purchasers in
good faith and for value. As such
titleholders, they have reason to rely on the
indefeasible character of their certificates.
On the issue of good faith of the plaintiffs,
the Court of Appeals reasoned out:
The concept of possessors in good faith
given in Art. 526 of the Civil Code and when
said possession loses this Character under
Art. 528, needs to be reconciled with the
doctrine of indefeasibility of a Torrens Title.
Such reconcialiton can only be achieved
by holding that the possessor with a Torrens
Title is not aware of any flaw in his Title which
invalidates it until his Torrens Title is declared
null and void by final judgment of the
Courts.
Even if the doctrine of indefeasibility of a
Torrens Title were not thus reconciled, the
result would be the same, considering the
third paragraph of Art. 526 which provides
that:
Art. 526. . . .
Mistake upon a doubtful or difficult
question of law may be the basis of good
faith.
The legal question whether plaintiffs-
appellants' possession in good faith, under
their Torrens Titles acquired in good faith,
does not lose this character except in the
case and from the moment their Titles are
declared null and void by the Courts, is a
difficult one. Even the members of this
Court were for a long time divided, two to
one, on the answer. It was only after several
sessions, where the results of exhaustive
researches on both sides were thoroughly
discussed, that an undivided Court finally
found the answer given in the next
preceding paragraph. Hence, even if it be
assumed for the sake of argument that the
Supreme Court would find that the law is
not as we have stated it in the next
preceding paragraph and that the
plaintiffs-appellants made a mistake in
relying thereon, such mistake on a difficult
question of law may be the basis of good
faith. Hence, their possession in good faith
does not lose this character except in the
case and from the moment their Torrens
Titles are declared null and void by the
Courts.
Under the circumstances of the case,
especially where the subdivision plan was
originally approved by the Director of
Lands, we are not ready to conclude that
the above reasoning of the Court of
Appeals on this point is a reversible error.
Needless to state, as such occupants in
good faith, plaintiffs have the right to the
retention of the property until they are
reimbursed the necessary expenses made
on the lands.
With respect to the contention of the
Republic of the Philippines that the order for
the reimbursement by it of such necessary
expenses constitutes a judgment against
the government in a suit not consented to
by it, suffice it to say that the Republic, on
its own initiative, asked and was permitted
to intervene in the case and thereby
submitted itself voluntarily to the jurisdiction
of the court. (at pp. 709-710; Emphasis
supplied)
With the foregoing findings, the appellate
court's ruling as regards the unregistered
parcel of land which is to the effect that
Rama is also entitled to necessary expenses
with right of retention until reimbursed of
the necessary expenses must be reversed.
His title over the forest land is null and void
for the same reasons. There are no special
circumstances which would warrant the
application of the Dizon case.
WHEREFORE, the petition is GRANTED. The
questioned decision and resolution of the
then Intermediate Appellate Court, now
Court of Appeals, are SET ASIDE in so far as
they ordered petitioner Republic to pay
private respondent Hilario P. Rama the
necessary expenses incurred by him, with
right of retention over the two (2) parcels of
land adjudged as forest lands until
reimbursed of the necessary expenses. The
decision of the then Court of First Instance
of Bohol (now Regional Trial Court of Bohol)
in Civil Case No. 2613 is MODIFIED in that the
portion of the decision which ordered
petitioner Republic to pay private
respondent Hilario P. Rama necessary
expenses with right of retention in parcel
number one described in the complaint is
DELETED. In all other respects, the
questioned decision and resolution are
AFFIRMED. No costs.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero,
JJ., concur.
DIVISION
[ GR No. L-42856, Jan 27, 1981 ]
REPUBLIC v. CA +
DECISION
190 Phil. 275
CONCEPCION JR., J.:
Petition for certiorari, to review the decision of
the Court of Appeals in CA-G.R. No. 40806-R,
entitled: "Republic of the Philippines, plaintiff-
appellee, versus Ricardo Ramos, et al.,
defendants-appellants," dismissing the
complaint which prays for the annulment of
Homestead Patent No. V-62617, the
cancellation of Original Certificate of Title No.
P-5619, issued in the name of Ricardo Ramos
by the Register of Deeds of Isabela, and the
reversion to the State of the homestead,
together with the improvements made
thereon.
The facts of the case, as found by the Court of
Appeals, are as follows:
"Sometime in 1928 or 1929,
appellant[1] Ricardo Ramos filed Homestead
Application No. 229645 for a 3-hectare land,
covering a portion of Cadastral Lot No. 2222
within the Municipality of Rizal, Nueva Ecija
(Exh. G, p. 10, Folder). The application was
approved and Homestead Entry No. 137238
was recorded in his name only on June 22,
1940 (Exh. H, p. 11, folder).
"Upon receipt of the approval of his
application, appellant immediately filed his
final proof papers in 1941. However, due to the
chaotic conditions during the last global war,
all the papers relative to his application were
lost and/or destroyed, necessitating their
reconstitution. As a result, the defendant had
to file anew his final proof papers.
"Pending approval of his homestead
application in Rizal, Nueva Ecija, appellant
Ramos migrated to Isabela for additional lands
to acquire and till. Fortunately for him, he
found a 14-hectare land covered by a
subsisting Homestead Application of one
Simeon Lopez, which, however, was clearly
abandoned by the said applicant. With the
assistance of the then District Land Officer,
Atty. Agustin Navarro, the appellant Ramos
initiated a protest against Simeon Lopez in
accordance with the Public Land Law,
simultaneously filing his own homestead
application therefor on September 20, 1947
(Ext. A). After due investigation, his protest was
given due course, and his homestead
application (Homestead Application No. 4-
617), accepted and approved by the District
Land Officer on November 22, 1947 (Exh. 7).
56 | P r o p e r t y C a s e s - P o s s e s s i o n
"Meanwhile, in the same year (December 27, court, an action for the cancellation of said
1947), the Bureau of Lands approved the final patent and the corresponding certificate of
proof and ordered the issuance of appellant's title issued therefor. For the purpose of the final
homestead patent in Rizal, Nueva Ecija. On disposition of the land, the District Land Officer
January 26, 1949, the corresponding of Ilagan, Isabela shall conduct an immediate
Homestead Patent No. V-1833 was finally investigation in accordance with Sections 6
issued (Exh. L, p. 15, Folder of Exh.), and and 7 of Lands Administrative Order No. 6 and
became the basis of Original Certificate of Title thereafter, submit the corresponding report to
No. P-3619 that was later registered in Ramos' the office within thirty (30) days from receipt
name. Having thus obtained an indefeasible hereof.'
title over his 3-hectare land in Rizal, Nueva
Ecija, appellant now wanted to do likewise
with his second homestead application in San
Mateo, Isabela. Hence, after the approval of
his second homestead application on
Hence, the institution of the present
November 22, 1947, he took possession of the
proceedings before the lower court.
14-hectare land in Isabela and by 1949, had
fully complied with the cultivation and
residence requirement of the homestead law.
"After the filing of the original complaint on
August 2, 1958, the plaintiff filed an amended
complaint adding another paragraph,
"Finally, on December 3, 1954, after a
alleging another supposed disqualification of
protracted litigation with the former applicant,
the appellant to own a second homestead.
Simeon Lopez, the Assistant Director of Lands
Paragraph 8-a states:
approved appellant's final proof and
subsequently issued an order for the issuance
of his patent on December 13, 1955. Then, on
December 15, 1955, Homestead Patent No. V-
62617 was ultimately issued in the name of
Ricardo Ramos, which also became the basis 'That at the time (a) Homestead Application
of Original Certificate of Title No. P-5619 that No. 4-167 E-4-610 (Exh. A) was approved on
was correspondingly issued by the Register of December 3, 1954; (b) defendant Ricardo
Deeds of Isabela. Said Original Certificate of Ramos filed his Final Proof (Exh. "D") on January
Title No. P-5619 was later used by the appellant 31, 1954; (c) Homestead Patent No. V-62617
as security for the payment of the loan which (Exh. "F") was issued on December 15, 1955;
he secured from his co-defendant, the and (d) Original Certificate of Title No. P-5619
Philippine National Bank. (Exh. "9") was issued on December 24, 1955 in
the name of defendant Ricardo Ramos, all
covering the lot involved in this case located
in San Mateo, Isabela, defendant Ricardo
"After the issuance of his second homestead
Ramos was already as of August 4, 1952 the
patent. Appellant Ramos discovered the
absolute owner of more than eighty-eight (88)
presence of several people in his land. Hence,
hectares of Friar Lands by virtue of Transfer
he filed a complaint for the recovery of
Certificate of Title No. T-3767 (Exhs. "O", "O-1" to
possession against them (Civil Case No. Br. II-
"O-7") and as such, defendant Ricardo Ramos
162 of the Court of First Instance of Isabela,
was disqualified under Sec. 12 of CA 141, for a
entitled "Ricardo Ramos v. Eleuterio Viernes et
homestead entry under the provisions of said
al.") wherein a decision ordering the
Act, and which disqualification, defendant
ejectment of the defendants were rendered.
concealed when he made his final proof (Exh.
Believing that they had a right to stay put in the
"D"), as he stated therein that he was not the
land and acquire their respective sublots,
owner of more than twenty four hectares of
defendants, led by Jose Ganadin, sent a
land in the Philippines, when in truth and in fact
petition to the Secretary of Agriculture and
as he very well knew, he was already the
Natural Resources. They alleged that Patent
owner (of more than twenty four hectares of
No. V-62617 and Original Certificate No. P-
land in the Philippines) in fee simple of more
5619 are null and void as they were obtained
than 88 hectares of agricultural lands, making
in violation of Section 19 of the Public Land
defendant Ricardo Ramos liable to the
Law, as amended by Act No. 456. They,
consequences of his concealment and/or
therefore, demanded the cancellation of said
false statement under Sec. 91,
patent and title and the reversion of the
Commonwealth Act 141.'"[2]
property through the Solicitor General. In an
order dated July 22, 1968, the Director of Lands
acted favorably on their petition and
accordingly issued the following directive to
wit:
After due trial, the lower court rendered
judgment, the dispositive portion of which
reads:
'IN THE LIGHT OF THE FOREGOING, it is ordered
that the Homestead Application No. 4-617 (E- "WHEREFORE, ALL PREMISES CONSIDERED, the
4-610) of Ricardo Ramos be, as it is hereby, court hereby renders judgment (A) declaring
cancelled and Patent No. V-62617 issued to defendant Ricardo Ramos' homestead patent
him thereunder, declared inoperative over the and title, Exhibits F and F-1, null and void ab
land in question. Accordingly, steps shall initio; (B) ordering the reversion of the five lots
forthwith be taken for the filing in the proper described in the said patent and title in favor
of the Republic of the Philippines; (C) ordering
Ricardo Ramos to reconvey the title over the
said five subdivisional lots, free of the
mortgages recorded in favor of the Republic
of the Philippines; (D) declaring the two
mortgages executed by Ricardo Ramos as to
said five lots, OCT No. P-5619, in favor of the
Philippine National Bank, Exhibits 4 and 8-Bank,
not valid as against the Republic of the
Philippines; (E) declaring the theater, stores
and other improvements introduced by
defendant Ricardo Ramos, or their agents
forfeited in favor of the Republic; and (F)
ordering the five lots described in the said
patent and title be disposed of by the
government in public bidding under Title V,
Chapter XI, Re: Town Site Reservations, giving
the seventeen defendants in Civil Case No. Br.
II-162, Ramos vs. Manuela Lachica, et al., who
are among the fifty petitioners in the letter
Exhibit N and petition Exhibit O, praying for the
filing by the government of an action for the
annulment of the homestead patent and title
of Ricardo Ramos and the reversion of the
land to the Government, the privilege and
preference to equal the highest bid."[3]
Upon appeal to the Court of Appeals, the
decision was reversed and a new one was
entered dismissing the complaint.[4]
Hence, the instant recourse.
The Solicitor General claims that the Court of
Appeals erred:
(1) In declaring homestead patent No. V-
62617 and OCT No. P-5619 validly issued to
respondent Ricardo Ramos despite the fact
that at the time of the issuance thereof, there
was already entered in the name of said
respondent Homestead Patent No. V-1833
covering a parcel of land situated in Rizal,
Nueva Ecija with an area of 3 hectares, in
violation of Sec. 19, Com. Act No. 141, as
amended;
(2) In not considering respondent Ricardo
Ramos to have made false statements in that
he did not divulge in his application and in the
final proof for the Homestead Application
covering a parcel of land in San Mateo,
Isabela, with an area of 14 hectares, that he
has already secured an entry for a parcel of
land in Rizal, Nueva Ecija, and another 88
hectares or more of private agricultural lands
in Aurora, Isabela, in violation of Section 91 of
Commonwealth Act No. 141, as amended;
and
(3) In not declaring the respondent Philippine
National Bank in bad faith when it accepted
the land covered by OCT No. P-5619, issued
pursuant to Homestead Patent No. V-62617, as
collateral to a loan secured from it by
respondent Ricardo Ramos, thus making such
transactions null and void.
1. The principal controversy is on the
interpretation and application of the law
governing the acquisition of homesteads,
more particularly Section 19 of the Public Land
57 | P r o p e r t y C a s e s - P o s s e s s i o n
Law, Commonwealth Act No. 141, as
amended, which reads as follows:
"SEC. 19. Not more than one homestead entry
shall be allowed to any one person, and no
person to whom a homestead patent has
been issued by virtue of the provisions of this
Act regardless of the area of his original
homestead, may again acquire a allowed by law. If the homesteader has
homestead; Provided, however, That any
previous homesteader who has been
otherwise qualified to make a homestead
entry, may be issued a patent for less than
twenty-four hectares and allowed another
homestead, which, together with his previous
homestead shall not exceed an area of
twenty-four hectares."
The Solicitor General contends that said
section forbids the acquisition by a person of
another homestead regardless of the area of
his original homestead so that the respondent
Ricardo Ramos is disqualified from acquiring a
second homestead in San Mateo, Isabela
because of his original homestead in Rizal,
Nueva Ecija; and that while the law allows a
homesteader to acquire an additional
homestead, the respondent Ricardo Ramos is
not qualified to a second homestead
because he obtained the patent on his
original homestead after the effectivity of
Commonwealth Act No. 456 on June 8, 1939
which amended Section 19 of
Commonwealth Act No. 141, not prior thereto,
and the homesteads acquired by him are
located in different provinces, namely, Nueva
Ecija and Isabela, which are far apart from
each other and separated by the province of
Nueva Vizcaya. The Solicitor General argues
that a homesteader may acquire an
additional homestead provided that he
acquired his patent for an original homestead
before June 8, 1939; that the total area of both
the original and additional homesteads does
not exceed 24 hectares; and that the land
desired to be acquired as an additional
homestead should be in the same municipality
where the original homestead is located or in
an adjacent municipality. To reinforce his
argument, he cites the opinions of the late
Sen. Vicente J. Francisco, former Director of
Lands Zoilo Castrillo, and ex-Land Registration
Commissioner Antonio Noblejas.
The contention is without merit. The language
of the statute is very simple and clear. Section
19 of the Public Land Law, as amended,
enunciates the rule that a homesteader is
entitled to only one homestead and he may
not file another application for an additional
homestead if he has already been issued a
homestead patent even if its total area is less
than the maximum allowed by law. However,
a previous homesteader who is qualified to
make a homestead entry, i.e., "Any citizen of
the Philippines over the age of eighteen years,
or head of a family, who does not own more
than twenty-four hectares of land in the
Philippines or who has not had the benefits of
any gratuitous allotment of more than twenty-
four hectares of land in the Philippines since
the occupation of the Philippines by the
United States,"[5] but has not yet been issued a
patent for his homestead, may be issued a
patent for his previous homestead and
allowed another homestead which, together
with the previous homestead does not exceed
twenty-four hectares.
It is essential, in order to be allowed another
homestead, that the homesteader has not yet
been issued a homestead patent for his
previous homestead at the time he filed his
second application for an additional
homestead; and that the total area of both
homesteads does not exceed the maximum
already been issued a patent for his previous
homestead, he is disqualified from acquiring
an additional homestead regardless of the
area of his previous homestead.
In this particular case, it is not disputed that the
respondent Ricardo Ramos had not yet been
issued a patent for his homestead in Rizal,
Nueva Ecija when he filed a homestead
application for that parcel of land in San
Mateo, Isabela; and that the total area of
both homesteads does not exceed the
maximum allowed by law. Accordingly, said
respondents is not disqualified from acquiring
the additional homestead in San Mateo,
Isabela.
With respect to the claim that the original and
subsequent homestead should be located in
the same municipality or in an adjacent
municipality, it is well to note that the original
provisions of Section 19 of the Public Land Law
did, indeed, require that the land applied for
as an additional homestead should be in the
same municipality where the original
homestead is located or in an adjacent
municipality. Said section then provided, as
follows:
"SEC. 19. Not more than one homestead shall
be allowed to any person; but if a
homesteader has made final proof as
provided in this chapter and is occupying and
cultivating at least one-fifth of the land
applied for and the area thereof is less than
twenty-four hectares, he may apply
successively for additional homesteads which
must lie in the same municipality or municipal
district or in an adjacent municipality or
municipal district, until the total area of said
homesteads shall reach twenty-four hectares,
but not more, with the understanding that he
shall, with regard to the new tracts or
additional homesteads, comply with the same
conditions as prescribed by this Act for an
Original homestead entry." (Italics for
emphasis)
Similar conditions were imposed for the
purchase and lease of public agricultural
lands. Thus, Section 32 of the Public Land Law
reads, as follows:
"SEC. 32. This chapter shall be held to authorize
only one purchase of the maximum amount of
land hereunder by the same person,
corporation, association, or partnership; and
no corporation, association, or partnership,
any member of which shall have received the
benefits of this chapter or of the next following
chapter, either as an individual or as a
member of any other corporation, association,
or partnership, shall purchase any other lands
of the public domain under this chapter.
"But any purchaser of public land, after having
made the last payment upon and cultivated
at least one-fifth of the land purchased, if the
same shall be less than the maximum allowed
by this Act, may purchase successively
additional agricultural public land adjacent to
or not distant from the land first purchased,
until the total area of such purchases shall
reach the maximum established in this
chapter: Provided, That in making such
additional purchase or purchases, the same
conditions shall be complied with as
prescribed by this Act for the first purchase."
For leases of additional public agricultural
lands, Section 42 of the Public Land Law
provides, as follows:
"SEC. 42. After having paid rent for at least the
first two years of the lease, and having
complied with the requirements prescribed in
section thirty-nine, the lessee of agricultural
public land with an area less than the
maximum allowed by law, may lease
successively additional agricultural public land
adjacent to or near the land originally leased
until the total area of such leases shall reach
the maximum established in this
chapter: Provided, That in making such lease,
the same conditions shall be complied with as
prescribed by this Act for the first lease."
But, while the provisions of Sections 32 and 42
were retained, Section 19 was radically
changed by Commonwealth Act No. 456. As
amended, this section no longer requires that
the additional homestead should be in the
same municipality where the original
homestead is located or in an adjacent
municipality. It is very obvious that the
legislature purposely removed such
requirement. To give this section a limited
connotation as to retain its previous meaning
would render the amendatory act of no value.
Homestead laws, which are founded on
considerations of public policy, their purpose
being to promote the stability and welfare of
the State by encouraging property ownership,
should be construed liberally with a view to
accomplishing their beneficient object.
2. The petitioner also contends that the
homestead patent covering the homestead in
San Mateo, Isabela is void because the
respondent Ricardo Ramos made false
statements in his homestead application, as
well as in the final proof, when he denied
having filed a previous homestead
application although he had in fact filed a
homestead application for the land in Rizal,
Nueva Ecija; and stated that he is not the
owner of more than twenty-four hectares of
land in the Philippines although said
"respondent Ramos was already issued TCT
No. T-3767, covering the 88 hectare lot in
Aurora, Isabela on August 2, 1952, when (a)
Homestead Application No. 4-617 (Exh. 'H')
was approved on December 3, 1954; when (b)
Homestead Patent No. 61617 (Exh. 'F') was
issued on December 15, 1955; and when (c)
Original Certificate of Title No. P-5619, covering
58 | P r o p e r t y C a s e s - P o s s e s s i o n
the 14-hectare lot in San Mateo, Isabela, was Anyhow, the total area of the original and the
issued by the Register of Deeds of Isabela on subsequent homesteads did not exceed the
December 24, 1955, alI in the name of maximum allowed by law and no damage
respondent Ramos (see par. 8-a, Amended resulted therefrom.
Complaint in Civil Case No. Br. II-391, pp. 223-
224, Annex 'D', Printed Record on The respondent Ricardo Ramos could not
Appeal),[6] contrary to Section 91 of the Public have also made a false statement in his
Land Law which reads, as follows: application when he stated that he is not the
owner of more than 24 hectares of land in the
Philippines because he was not yet the owner
of the parcel of land situated in Aurora,
"SEC. 91. The statements made in the Isabela when he filed his homestead
application shall be considered as essential application for the land in San Mateo, Isabela,
conditions and parts of any concession, title, on November 22, 1947 since the final deed of
or permit issued on the basis of such sale for the said land in Aurora, Isabela was
application, and any false statement therein issued to him only on May 22, 1950.
or omission of facts altering, changing, or
modifying the consideration of the facts set 3. Finally, it is claimed that the respondent
forth in such statements, and any subsequent Philippine National Bank is a mortgagee in bad
modification, alteration or change of the faith because it deliberately closed its eyes to
material facts set forth in the application the constructions and occupants of the land
shall ipso facto produce the cancellation of offered as a security for a loan.
the concession, title, or permit granted. It shall
be the duty of the Director of Lands, from time The Philippine National Bank, upon the other
to time and whenever he may deem it hand, contends that there is nothing in the
certificate of title of the mortgagor Ricardo
advisable, to make the necessary
Ramos which would excite suspicion so that
investigations for the purpose of ascertaining
the bank need not look beyond the certificate
whether the material facts set out in the
and investigate the title of the mortgagor.
application are true, or whether they continue
to exist and are maintained and preserved in
In the case of Conspecto vs. Fruto,[7] the Court
good faith, and for the purposes of such
ruled: "One who purchases real property
investigation, the Director of Lands is hereby
which is in the actual possession of others
empowered to
should, at least, make some inquiry
issue subpoenas and subpoena duces
concerning the rights of those in possession.
tecum and, if necessary, to obtain
The actual possession by others than the
compulsory process from the courts. In every
vendor should, at least, put the purchaser
investigation made in accordance with this
upon inquiry. He can scarcely, in the absence
section, the existence of bad faith, fraud,
concealment, or fraudulent and illegal of such inquiry, be regarded as a bona
fide purchaser as against such possessors."
modification of essential facts shall be
There can be no doubt, therefore, that the
presumed if the grantee or possessor of the
Philippine National Bank is in bad faith. But,
land shall refuse or fail to obey
since the title of the respondent Ricardo
a subpoena or subpoena duces
Ramos over the land mortgaged is valid, the
tecum lawfully issued by the Director of Lands
mortgage constituted upon said land should
or his authorized delegates or agents, or shall
be upheld between the parties.
refuse or fail to give direct and specific
answers to pertinent questions, and on the
WHEREFORE, the petition should be, as it is
basis of such presumption, an order of
hereby, DENIED for lack of merit. Without costs.
cancellation may issue without further
proceedings."
SO ORDERED.
The contention is likewise without merit. What
Barredo, (Chairman), Fernandez*, Guerrero**,
section 91 of the Public Land Law considers as
and De Castro, JJ., concur.
fatal are false statements of material and
essential facts knowingly made by the Aquino and Abad Santos, JJ., did not take
homesteader in the application and not in the part.
final proof. In the instant case, it appears that
the respondent Ricardo Ramos had only a
primary education. He is not conversant with
the law because he is not a lawyer. When he
filed his homestead application for that parcel
of land situated in San Mateo, Isabela, he was
assisted by District Land Officer Agustin
Navarro, whom he informed of all the material
facts, and his final proof was prepared by
Public Lands Inspector Jose Abaya, who had
also knowledge of the facts necessary for its
accomplishment, and he merely affixed his
signature to the documents. Since the
erroneous information contained in the
application are the acts of persons who
prepared the documents, rather than the
wilfull and deliberate intent on the part of the
said respondent to conceal material facts and
mislead the land officers, whatever error may
be found in the application are excused.
DIVISION
[ GR No. 125683, Mar 02, 1999 ]
EDEN BALLATAN AND SPS. BETTY MARTINEZ AND
CHONG CHY LING v. CA +
DECISION
363 Phil. 408
PUNO, J.:
This is a petition for review on certiorari of the
decision of the Court of Appeals dated March
25, 1996 in CA-G.R. CV No. 32472 entitled
"Eden Ballatan, et. al., plaintiffs-appellees v.
Gonzalo Go and Winston Go, appellants and
third-party plaintiffs-appellants v. Li Ching
Yao, et.al., third-party defendants."[1]
The instant case arose from a dispute over
forty-two (42) square meters of residential land
belonging to petitioners. The parties herein are
owners of adjacent lots located at Block No. 3,
Poinsettia Street, Araneta University Village,
Malabon, Metro Manila. Lot No. 24, 414square
meters in area, is registered in the name of
petitioners Eden Ballatan and spouses Betty
Martinez and Chong Chy Ling.[2] Lots Nos. 25
and 26, with an area of 415 and 313 square
meters respectively, are registered in the
name of respondent Gonzalo Go, Sr.[3] On Lot
No. 25, respondent Winston Go, son of
Gonzalo Go, Sr., constructed his house.
Adjacent to Lot No. 26 is Lot No. 27, 417 square
meters in area, and is registered in the name
of respondent Li Ching Yao.[4]
In 1985, petitioner Ballatan constructed her
house on Lot No. 24. During the construction,
she noticed that the concrete fence and side
pathway of the adjoining house of respondent
Winston Go encroached on the entire length
of the eastern side of her property.[5] Her
building contractor informed her that the area
of her lot was actually less than that described
in the title. Forthwith, Ballatan informed
respondent Go of this discrepancy and his
encroachment on her property. Respondent
Go, however, claimed that his house,
including its fence and pathway, were built
within the parameters of his father's lot; and
that this lot was surveyed by Engineer Jose
Quedding, the authorized surveyor of the
Araneta Institute of Agriculture (AIA), the
owner-developer of the subdivision project.
Petitioner Ballatan called the attention of the
AIA to the discrepancy of the land area in her
title and the actual land area received from
them. The AIA authorized another survey of the
land by Engineer Jose N. Quedding.
In a report dated February 28, 1985, Engineer
Quedding found that the lot area of petitioner
Ballatan was less by a few meters and that of
respondent Li Ching Yao, which was three lots
away, increased by two (2) meters. Engineer
Quedding declared that he made a
verification survey of Lots Nos. 25 and 26 of
respondents Go in 1983 and allegedly found
the boundaries to have been in their proper
position. He, however, could not explain the
59 | P r o p e r t y C a s e s - P o s s e s s i o n
reduction in Ballatan's area since he was not b) P5,000.00 for plaintiffs'
present at the time respondents Go transportation;
constructed their boundary walls.[6]
On June 2, 1985, Engineer Quedding made a 4. To pay plaintiffs, jointly and
third relocation survey upon request of the severally, attorney's fees equivalent
parties. He found that Lot No. 24 lost to 25% of the current market value
of the subject matter in litigation at
approximately 25 square meters on its eastern
boundary, that Lot No. 25, although found to the time of execution; and
have encroached on Lot No. 24, did not lose
nor gain any area; that Lot No. 26 lost some
three (3) square meters which, however, were 5. To pay the costs of suit.
gained by Lot No. 27 on its western
The third-party complaint filed by third-party
boundary.[7] In short, Lots Nos. 25, 26 and 27
plaintiff Gonzalo Go and Winston Go against
moved westward to the eastern boundary of
third-party defendants Araneta Institute of
Lot No. 24.
Agriculture, Jose N. Quedding and Li Ching
Yao is hereby DISMISSED, without
On the basis of this survey, on June 10, 1985,
pronouncement as to costs.
petitioner Ballatan made a written demand on
respondents Go to remove and dismantle their
SO ORDERED."
improvements on Lot No. 24. Respondents Go
refused. The parties, including Li Ching Yao,
Respondents Go appealed. On March 25,
however, met several times to reach an
1996, the Court of Appeals modified the
agreement on the matter.
decision of the trial court. It affirmed the
dismissal of the third-party complaint against
Failing to agree amicably, petitioner Ballatan
the AIA but reinstated the complaint against Li
brought the issue before the barangay.
Ching Yao and Jose Quedding. Instead of
Respondents Go did not appear. Thus, on April
ordering respondents Go to demolish their
1, 1986, petitioner Ballatan instituted against
improvements on the subject land, the
respondents Go Civil Case No. 772-MN for
appellate court ordered them to pay
recovery of possession before the Regional
petitioner Ballatan, and respondent Li Ching
Trial Court, Malabon, Branch 169. The Go's filed
Yao to pay respondents Go, a reasonable
their "Answer with Third-Party Complaint"
amount for that portion of the lot which they
impleading as third-party defendants
encroached, the value to be fixed at the time
respondents Li Ching Yao, the AIA and
of taking. It also ordered Jose Quedding to
Engineer Quedding.
pay respondents Go attorney's fees of
P5,000.00 for his erroneous survey. The
On August 23, 1990, the trial court decided in
dispositive portion of the decision reads:
favor of petitioners. It ordered the Go's to
vacate the subject portion of Lot No. 24,
demolish their improvements and pay "WHEREFORE, premises considered, the
petitioner Ballatan actual damages, attorney's decision appealed from is hereby AFFIRMED
fees and the costs of the suit. It dismissed the insofar as the dismissal of the third-party
third-party complaint against: (1) AIA after complaint against Araneta Institute of
finding that the lots sold to the parties were in Agriculture is concerned but modified in all
accordance with the technical description other aspects as follows:
and verification plan covered by their
respective titles; (2) Jose N. Quedding, there 1) Defendants-appellants are hereby ordered
being no privity of relation between him and to pay plaintiffs-appellees the reasonable
respondents Go and his erroneous survey value of the forty-two (42) square meters of
having been made at the instance of AIA, not their lot at the time of its taking;
the parties; and (3) Li Ching Yao for failure to
prove that he committed any wrong in the 2) Third-party defendant Li Ching Yao is hereby
subject encroachment.[8] The court made the ordered to pay defendants-appellants the
following disposition: reasonable value of the thirty-seven (37)
square meters of the latter's lot at the time of
its taking; and
"WHEREFORE, judgment is hereby rendered in
favor of the plaintiffs and against the
3) Third-party defendant Jose N. Quedding is
defendants, ordering the latter:
hereby ordered to pay to defendants-
appellants the amount of P5,000.00. as
attorney's fees.
1. To demolish and remove all
improvements existing and
LET THE RECORD of the case be remanded to
encroaching on plaintiff's lot;
the Regional Trial Court of Malabon for further
proceedings and reception of evidence for
2. To clear, vacate and deliver the determination of the reasonable value of
Lots Nos. 24 and 26.
possession of the encroached area
to the plaintiffs;
SO ORDERED."[9]
Hence, this petition. Petitioners allege that:
3. To pay plaintiffs jointly and severally
the following:
"RESPONDENT COURT OF APPEALS ERRED ON
a) P7,800.00 for the expenses paid
QUESTIONS OF LAW AND GRAVELY ABUSED ITS
to the surveyors;
DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN:
1. IT APPLIED EQUITY OR EQUITABLE
SOLUTIONS TO THE INSTANT CASE IN
UTTER DISREGARD AND IN
VIOLATION OR GROSS IGNORANCE
OF EXISTING LAWS AND
JURISPRUDENCE VESTING BASIC
PROPERTY RIGHTS TO HEREIN
PETITIONERS. RESPONDENT COURT
HAS NO POWER TO APPLY/USE
EQUITY IN THE PRESENCE OF
EXISTING LAWS TO THE CONTRARY.
2. UNDER THE GUISE OF APPLYING
EQUITY BUT IN EFFECT A VERY
APPARENT PARTIALITY AND FAVOR
TO RESPONDENTS GO, IT ORDERED
PAYMENT OF THE ENCROACHED
AREA AT THE VALUE AT THE TIME OF
ITS TAKING AND NOT THE VALUE AT
THE TIME OF PAYMENT, THEREBY
ENRICHING THE GO'S BUT
DEPRIVING PETITIONERS OF THE
FRUITS OR INCREASE IN VALUE OF
THEIR PROPERTY TO WHICH THEY ARE
ENTITLED UNDER THE LAW AS THE
REGISTERED OWNERS WITH TORRENS
TITLE IN THEIR NAMES.
3. WHEN IT DID NOT DISMISS THE THIRD-
PARTY COMPLAINT DUE TO NON-
PAYMENT OF ANY FILING OR
DOCKET FEE.
4. WHEN IT DENIED PETITIONERS THE
RECOVERY OF THE NECESSARY
EXPENSES IN PROTECTING THEIR
RIGHTS IN THIS CASE."[10]
Petitioners question the admission by
respondent Court of Appeals of the third-party
complaint by respondents Go against the AIA,
Jose Quedding and Li Ching Yao. Petitioners
claim that the third-party complaint should not
have been considered by the Court of
Appeals for lack of jurisdiction due to third-
party plaintiffs' failure to pay the docket and
filing fees before the trial court.
The third-party complaint in the instant case
arose from the complaint of petitioners against
respondents Go. The complaint filed was
for accion publiciana, i.e., the recovery of
possession of real property which is a real
action. The rule in this jurisdiction is that when
an action is filed in court, the complaint must
be accompanied by the payment of the
requisite docket and filing fees. [11] In real
actions, the docket and filing fees are based
on the value of the property and the amount
of damages claimed, if any. [12] If the
complaint is filed but the fees are not paid at
the time of filing, the court acquires jurisdiction
upon full payment of the fees within a
reasonable time as the court may grant,
barring prescription.[13] Where the fees
prescribed for the real action have been paid
but the fees of certain related damages are
not, the court, although having jurisdiction
over the real action, may not have acquired
jurisdiction over the accompanying claim for
damages.[14] Accordingly, the court may
expunge those claims for damages, or allow,
60 | P r o p e r t y C a s e s - P o s s e s s i o n
on motion, a reasonable time for amendment
of the complaint so as to allege the precise
amount of damages and accept payment of
the requisite legal fees.[15] If there are
unspecified claims, the determination of
which may arise after the filing of the
complaint or similar pleading, the additional
filing fee thereon shall constitute a lien on the
judgment award.[16] The same rule also applies
to third-party claims and other similar
pleadings.[17]
In the case at bar, the third-party complaint
filed by respondents Go was incorporated in
their answer to the complaint. The third-party
complaint sought the same remedy as the
principal complaint but added a prayer for
attorney's fees and costs without specifying
their amounts, thus:
"ON THE THIRD PARTY COMPLAINT
1. That summons be issued against
Third-Party Defendants Araneta
Institute of Agriculture, Jose N.
Quedding and Li Ching Yao;
2. That after hearing, they be
sentenced to indemnify the Third-
Party Plaintiffs for whatever is
adjudged against the latter in favor
of the Plaintiffs;
3. That Third-Party Defendants be
ordered to pay attorney's fees as
may be proved during trial;
4. That Third-Party Defendants be
ordered to pay the costs.
Other just and equitable reliefs are also prayed
for."[18]
The Answer with Third-Party Complaint was
admitted by the trial court without the requisite
payment of filing fees, particularly on the Go's
prayer for damages.[19] The trial court did not
award the Go's any damages. It dismissed the
third-party complaint. The Court of Appeals,
however, granted the third-party complaint in
part by ordering third-party defendant Jose N.
Quedding to pay the Go's the sum of P5,000.00
as attorney's fees.
Contrary to petitioners' claim, the Court of
Appeals did not err in awarding damages
despite the Go's failure to specify the amount
prayed for and pay the corresponding
additional filing fees thereon. The claim for
attorney's fees refers to damages
arising after the filing of the complaint against
the Go's. The additional filing fee on this claim
is deemed to constitute a lien on the judgment
award.[20]
The Court of Appeals found that the subject
portion is actually forty-two (42) square meters
in area, not forty-five (45), as initially found by
the trial court; that this forty-two (42) square
meter portion is on the entire eastern side of
Lot No. 24 belonging to petitioners; that on this
said portion is found the concrete fence and
pathway that extends from respondent
Winston Go's house on adjacent Lot No. 25;
that inclusive of the subject portion,
respondents Go did not gain nor lose any
portion of Lots Nos. 25 and 26; that instead, Lot
No. 27, on which respondent Li Ching Yao built
his house, encroached on the land of
respondents Go, gaining in the process thirty-
seven (37) square meters of the latter's land.[21]
We hold that the Court of Appeals correctly
dismissed the third-party complaint against
AIA. The claim that the discrepancy in the lot
areas was due to AIA's fault was not proved.
The appellate court, however, found that it
was the erroneous survey by Engineer
Quedding that triggered these discrepancies.
And it was this survey that respondent Winston
Go relied upon in constructing his house on his
father's land. He built his house in the belief
that it was entirely within the parameters of his
father's land. In short, respondents Go had no
knowledge that they encroached on
petitioners' lot. They are deemed builders in
good faith[22] until the time petitioner Ballatan
informed them of their encroachment on her
property.[23]
Respondent Li Ching Yao built his house on his
lot before any of the other parties did.[24] He
constructed his house in 1982, respondents Go
in 1983, and petitioners in 1985.[25] There is no
evidence, much less, any allegation that
respondent Li Ching Yao was aware that when
he built his house he knew that a portion
thereof encroached on respondents Go's
adjoining land. Good faith is always
presumed, and upon him who alleges bad
faith on the part of a possessor rests the burden
of proof.[26]
All the parties are presumed to have acted in
good faith. Their rights must, therefore, be
determined in accordance with the
appropriate provisions of the Civil Code on
property.
Article 448 of the Civil Code provides:
"Art. 448. The owner of the land on which
anything has been built, sown or planted in
good faith, shall have the right to appropriate
as his own the works, sowing or planting, after
payment of the indemnity provided for in
Articles 546 and 548,[27] or to oblige the one
who built or planted to pay the price of the
land, and the one who sowed the proper rent.
However, the builder or planter cannot be
obliged to buy the land if its value is
considerably more than that of the building or
trees. In such case, he shall pay reasonable
rent, if the owner of the land does not choose
to appropriate the building or trees after
proper indemnity. The parties shall agree upon
the terms of the lease and in case of
disagreement, the court shall fix the terms
thereof."
The owner of the land on which anything has
been built, sown or planted in good faith shall
have the right to appropriate as his own the
building, planting or sowing, after payment to
the builder, planter or sower of the necessary
and useful expenses, and in the proper case,
expenses for pure luxury or mere pleasure. The
owner of the land may also oblige the builder,
planter or sower to purchase and pay the
price of the land. If the owner chooses to sell
his land, the builder, planter or sower must
purchase the land, otherwise the owner may
remove the improvements thereon. The
builder, planter or sower, however, is not
obliged to purchase the land if its value is
considerably more than the building, planting
or sowing. In such case, the builder, planter or
sower must pay rent to the owner of the land.
If the parties cannot come to terms over the
conditions of the lease, the court must fix the
terms thereof. The right to choose between
appropriating the improvement or selling the
land on which the improvement stands to the
builder, planter or sower, is given to the owner
of the land.[28]
Article 448 has been applied to improvements
or portions of improvements built by mistaken
belief on land belonging to the adjoining
owner.[29] The facts of the instant case are
similar to those in Cabral v. Ibanez,[30] to wit:
"[P]laintiffs Geronima Zabala and her husband
Justino Bernardo, constructed their house in
the belief that it was entirely within the area of
their own land without knowing at that time
that part of their house was occupying a 14-
square meter portion of the adjoining lot
belonging to the defendants, and that the
defendants Bernardo M. Cabral and Mamerta
M. Cabral were likewise unaware of the fact
that a portion of plaintiff's house was
extending and occupying a portion of their lot
with an area of 14 square meters. The parties
came to know of the fact that part of the
plaintiff's house was occupying part of
defendant's land when the construction of
plaintiff's house was about to be finished, after
a relocation of the monuments of the two
properties had been made by the U.S. Army
through the Bur
eau of Lands, according to their 'Stipulation of
Facts,' dated August 17, 1951.
On the basis of these facts, we held that:
"The Court, therefore, concludes that the
plaintiffs are builders in good faith and the
relative rights of the defendant Mamerta
Cabral as owner of the land and of the
plaintiffs as owners of the building is governed
by Article 361 of the Civil Code (Co Tao v.
Joaquin Chan Chico, 46 Off. Gaz.5514). Article
361 of the old Civil Code has been
reproduced with an additional provision in
Article 448 of the new Civil Code, approved
June 18, 1949."[31]
Similarly, in Grana and Torralba v. Court of
Appeals,[32] we held that:
"Although without any legal and valid claim
over the land in question, petitioners, however,
were found by the Court of Appeals to have
constructed a portion of their house thereon in
good faith. Under Article 361 of the old Civil
Code (Article 448 of the new), the owner of
the land on which anything has been built in
good faith shall have the right to appropriate
as his own the building, after payment to the
builder of necessary or useful expenses, and in
the proper case, expenses for pure luxury or
mere pleasure, or to oblige the builder to pay
the price of the land. Respondents, as owners
61 | P r o p e r t y C a s e s - P o s s e s s i o n
of the land, have therefore the choice of either
appropriating the portion of petitioners' house
which is on their land upon payment of the
proper indemnity to petitioners, or selling to
petitioners that part of their land on which
stands the improvement. It may here be
pointed out that it would be impractical for
respondents to choose to exercise the first
alternative, i.e., buy that portion of the house
standing on their land, for in that event the
whole building might be rendered useless. The
more workable solution, it would seem, is for
respondents to sell to petitioners that part of
their land on which was constructed a portion
of the latter's house. If petitioners are unwilling
or unable to buy, then they must vacate the
land and must pay rentals until they do so. Of
course, respondents cannot oblige petitioners
to buy the land if its value is considerably more
than that of the aforementioned portion of the
house. If such be the case, then petitioners
must pay reasonable rent. The parties must
come to an agreement as to the conditions of
the lease, and should they fail to do so, then
the court shall fix the same."[33]
In light of these rulings, petitioners, as owners of
Lot No. 24, may choose to purchase the
improvement made by respondents Go on
their land, or sell to respondents Go the subject
portion. If buying the improvement is
impractical as it may render the Go's house
useless, then petitioners may sell to
respondents Go that portion of Lot No. 24 on
which their improvement stands. If the Go's are
unwilling or unable to buy the lot, then they
must vacate the land and, until they vacate,
they must pay rent to petitioners. Petitioners,
however, cannot compel respondents Go to
buy the land if its value is considerably more
than the portion of their house constructed
thereon. If the value of the land is much more
than the Go's improvement, then respondents
Go must pay reasonable rent. If they do not
agree on the terms of the lease, then they may
go to court to fix the same.
In the event that petitioners elect to sell to
respondents Go the subject portion of their lot,
the price must be fixed at the prevailing
market value at the time of payment. The
Court of Appeals erred in fixing the price at the
time of taking, which is the time the
improvements were built on the land. The time
of taking is determinative of just compensation
in expropriation proceedings. The instant case
is not for expropriation. It is not a taking by the
state of private property for a public purpose
upon payment of just compensation. This is a
case of an owner who has been paying real
estate taxes on his land but has been deprived
of the use of a portion of this land for years. It is
but fair and just to fix compensation at the
time of payment.[34]
Article 448 and the same conditions
abovestated also apply to respondents Go as
owners and possessors of their land and
respondent Li Ching Yao as builder of the
improvement that encroached on thirty-seven
(37) square meters of respondents Go's land.
IN VIEW WHEREOF, the decision of respondent
Court of Appeals is modified as follows:
(1) Petitioners are ordered to exercise within
thirty (30) days from finality of this decision their
option to either buy the portion of respondents
Go's improvement on their Lot No. 24, or sell to
said respondents the portion of their land on
which the improvement stands. If petitioners
elect to sell the land or buy the improvement,
the purchase price must be at the prevailing
market price at the time of payment. If buying
the improvement will render respondents Go's
house useless, then petitioners should sell the
encroached portion of their land to
respondents Go. If petitioners choose to sell
the land but respondents Go are unwilling or
unable to buy, then the latter must vacate the
subject portion and pay reasonable rent from
the time petitioners made their choice up to
the time they actually vacate the premises.
But if the value of the land is considerably
more than the value of the improvement, then
respondents Go may elect to lease the land,
in which case the parties shall agree upon the
terms of the lease. Should they fail to agree on
said terms, the court of origin is directed to fix
the terms of the lease.
From the moment petitioners shall have
exercised their option, respondents Go shall
pay reasonable monthly rent up to the time
the parties agree on the terms of the lease or
until the court fixes such terms.
(2) Respondents Go are likewise directed to
exercise their rights as owners of Lots Nos. 25
and 26, vis-a-vis respondent Li Ching Yao as
builder of the improvement that encroached
on thirty seven (37) square meters of
respondents Go's land in accordance with
paragraph one abovementioned.
(3) The Decision of the Court of Appeals
ordering Engineer Quedding, as third-party
defendant, to pay attorney's fees of P5,000.00
to respondents Go is affirmed. The additional
filing fee on the damages constitutes a lien on
this award.
(4) The Decision of the Court of Appeals
dismissing the third-party complaint against
Araneta Institute of Agriculture is affirmed.
SO ORDERED.
Bellosillo, (Chairman), Mendoza,
Quisumbing, and Buena, JJ., concur.
[ GR No. 3326, Sep 07, 1907 ]
US v. LAURENTE EEY +
DECISION
8 Phil. 500
JOHNSON, J.:
This defendant was charged with the
crime of robbery in the Court of First
Instance of the subprovince of
Masbate, in the words and figures
following:
"The undersigned accuses Laurente
Key, as principal, of the crime of
robbery, committed as follows:
"That on or about the 26th of
September, 1905, in the municipality
of San Jacinto, subprovince of
Masbate, Philippine Islands, the
accused, Laurente Key, in company
with Hipolito Roblora, Lucio Estay, Jose
Sudueno, Demetrio Sudueno, Melecio
Hernandez, and Luis Almosara,
willfully, intentionally, maliciously, with
intent of profiting thereby, against the
will of its owner and employing force
with regard to the property, took
possession of the sum of fifteen
thousand pesos, in silver currency and
paper certificates, all in the legal
tender of the Philippine Islands; that
said amount is the property of Urrutia
&, Co. and of Munoz & Co., both
commercial firms doing business in the
city of Manila; that the above-
mentioned amount was placed by
those firms on board the steamship
Gantabria, which was totally wrecked
and lost off the Island of Mababuy,
within the municipality of San Jacinto,
subprovince of Masbate, Philippine
Islands; that said amount was packed
in several boxes; that those boxes
were reenforced with iron straps and
nails, which were broken by the
accused in order to take possession of
the said sum of money; that the
accused, once having taken
possession of the money, delivered to
Petrona Justiniano, who had
knowledge of the perpetration of the
crime, the paper certificates, which
were dried out by her with a
smoothing iron and were kept by her
with the intent of appropriating the
same. All contrary to the statute.
62 | P r o p e r t y C a s e s - P o s s e s s i o n
"Masbate, March 14, 1906."
After hearing the evidence adduced
during the trial of said cause, the lower
court found the defendant guilty of
the crime charged in the complaint
and sentenced him to be imprisoned
for a period of four years, and to
restore to the Union Insurance
Company of Canton, Limited, the sum
of 10,000 pesos and to pay the costs
of the prosecution. From this sentence
the defendant appealed and made
the following assignment of errors:
"(1) The court erred in finding that the
crime of robbery had been
committed.
"(2) The sentence of the court is
contrary to the evidence and the
law."
By these assignments of error the
defendant presents two questions,
one of law and one of fact.
An examination of the record brought
to this court shows that some facts
were admitted and some were
denied by the respective parties. The
facts admitted were substantially as
follows:
That on or about the 19th day of
September, 1905, the steamer
Gantabria sailed from the port of
Manila, destined for the pueblo of
Tabaco, in the Province of Albay, and
after remaining in quarantine at the
quarantine station of Mariveles,
continued the journey from said
quarantine station on the 24th day of
September, and on or about the 26th
day of said month said ship was totally
wrecked off the small Island of
Mababuy and all its officers,
passengers, and cargo were totally
lost.
It is proved that said ship had on
board at the time of sailing from the
city of Manila, as a part of her cargo,
three boxes containing money,
amounting to at least 25,000 pesos.
There is some confusion in the
evidence concerning the exact
amount of money. This money was
shipped by the firms of Urrutia & Co.
and Munoz & Co.
It is proved that one Jesus A. de
Sendagorta, in the month of January,
1906, recovered from the wreck of
said ship the sum of 10,000 pesos.
It is proved that of the 25,000 pesos
shipped on the said Gantabria, 20,000
of said amount belonged to Urrutia &
Co. and 5,000 belonged to Munoz &
Co.
It is admitted that on the 16th day of
October, Mr. Edward E. Hill, as agent
for the Union Insurance Company of
Canton, Limited, paid to Urrutia & Co.
the sum of 35,000 pesos for losses
which the said company incurred by
reason of the wreck of said steamer,
and that 20,000 of said amount was
for the purpose of covering the 20,000
pesos shipped by the said Urrutia &
Co. on said steamer on the 19th day
of September.
The facts charged by the fiscal and
denied by the defendant are
substantially as follows:
That the defendant, with several
others, on the 28th day of September,
1905, after having discovered the
existence and location of the
wrecked steamer, took from the said
wrecked steamer the sum of 15,000
pesos, a part of which was distributed
among his companions, the largest
portion of which was retained by the
said defendant.
The lower court made the following
finding of facts from the evidence
adduced during the trial of the cause:
"That on the 19th of September, 1905,
silver and paper money amounting to
25,000 pesos belonging to the firms of
Urrutia & Co. and Munoz & Co., of
Manila, was placed on the steamer
Gantabria at Manila by the said firms
for shipment; that 5,000 pesos of the
said money belonged to Munoz & Co.
and 20,000 pesos to Urrutia & Co.; that
on the 26th day of September the
Cantabria was totally wrecked off the
Island of Mababuy, every person on
her being drowned, the bills of lading
of said money being lost, and the
money sunk with the ship; that on the
28th day of September the
defendant, Laurente Key, with the
assistance of several men who were in
his employ, proceeded to said
wrecked steamer and willfully,
unlawfully, and with the intention of
appropriating it to his own use took
therefrom two boxes, one containing
10,000 pesos and the other 5,000
pesos; that 10,000 pesos of the said
money was the property of Urrutia &
Co. and 5,000 pesos was the property
of Muñoz & Co."
Admitting the foregoing disputed
facts to be true for the purpose of
discussing the first assignment of error
made by the appellant, the question
arises whether or not the defendant,
under these facts, is guilty of the crime
of robbery, under the provisions of the
Penal Code.
The theory of the defendant and
appellant is that the said property
which was sunk with the wrecked
steamer, the said Cantabria, was
abandoned property and therefore,
granting that he had taken possession
of said property and appropriated it
to his own use, he was not guilty of the
crime of robbery. The defendant and
appellant, in his brief, admits the
following fact:
That it was more than six weeks after
the cyclone (in which the Gantabria
was sunk) before any definite
knowledge was received in regard to
the fate of the Cantabria, thus
admitting that the owners of the
money alleged to have been robbed
had no definite knowledge of its loss
for six weeks or more after the
destruction of the said ship.
Article 400 of the Civil Code provides
how the possessor of property may
lose his possession of the same:
"(1) By abandonment of the thing.
"(2) By transfer to another for a good
and valuable consideration.
"(3) By the destruction or total loss of
the thing or by the thing becoming
unmarketable.
"(4) By the possession of another, even
against the will of the former possessor,
if the new possession has lasted more
than one year."
The evidence shows, if it can be
believed, that the defendant and his
companions entered the wrecked
ship and removed therefrom the said
money and appropriated the same to
63 | P r o p e r t y C a s e s - P o s s e s s i o n
his own use in about twenty-four hours sunken ship for the benefit of the
after the time of the sinking of the said owners of the same, he might have
ship. Can one be charged with the been entitled to compensation for his
abandonment of his property without labor, but when he entered the
even knowing that the same has sunken ship and took therefrom, by
passed out of his possession or has force, the property of another before
been lost? We are of the opinion, and actual abandonment by the owner
so hold, that this question must be and appropriated the same to his own
answered in the negative. use, he was, under the provisions of
the Penal Code in force in the
Manresa, in his Commentaries upon Philippine Islands, guilty of the crime of
the provisions of the Civil Code, says robbery.
(vol. 4, p. 291) :
Upon the question whether or not the
defendant and his companions did
"He who has a right may renounce it. actually commit the acts charged in
This act by which a thing is voluntarily the said complaint, Ave are of the
renounced constitutes an opinion, and so hold; that the
abandonment. There is no real evidence adduced during the trial in
intention to abandon a property the lower court fully shows that the
when, as in the case of a shipwreck or defendant did commit such acts in
a fire, things are thrown into the sea or the manner and form as charged in
upon the highway." said complaint. Therefore we hereby
affirm the sentence of the lower court
Certainly the owner of property can
and do hereby sentence the
not be held to have abandoned the
defendant to imprisonment for a
same until at least he has some
period of four-years of presidio
knowledge of the loss of its possession
correctional, under the provisions of
or of the loss of the thing.
paragraph 5 of article 512 of the Penal
Code, to return to Urrutia & Co. and
Property can not be considered
Munoz & Co., or the Union Insurance
abandoned under the law and the
Company of Canton, Limited, the sum
possession left vacant for the finder
of 15,000 pesos, in case of insolvency
until the spes recuperandi is gone and
to suffer subsidiary imprisonment in
the animus revertendi is finally given
accordance with paragraph 1 of
up. (The Ann L. Lockivood, 37 Fed.
article 50 of the Penal Code, and to
Rep., 233.)
pay the costs. So ordered.
The theory of abandonment on the
Arellano, C. J., Torres,
part of the owners of the money stolen
Willard, and Tracey, JJ., concur.
is fully refuted by the fact that some
weeks after the wreck of the said ship
they sent men to the place of the
wreck for the purpose of recovering
the property which belonged to them,
which was on board the ship at the
time of her sinking. The mere fact that
cargo is sunk with a ship wrecked at
sea by no means deprives the owner
of said cargo of his property therein.
The owner certainly still has the right to
reclaim such property and to recover
the same if possible. If it should be
recovered by others, the real owner
would be entitled to recover its value
less the necessary expense of
recovering the same and carrying it
ashore by the most approved
appliances for that purpose by others.
(Murphy vs. Dunham, 38 Fed. Rep.,
503.)
If the defendant and his companions
had recovered the cargo from the
GR No. L-30817, Sep 29, 1972 ]
DOMINADOR DIZON v. LOURDES G.
SUNTAY +
DECISION
150-B Phil. 861
FERNANDO, J.:
In essence there is nothing novel in this
petition for review of a decision of the
Court of Appeals affirming a lower court
judgment sustaining the right of an
owner of a diamond ring, respondent
Lourdes G. Suntay, as against the claim
of petitioner Dominador Dizon, who
owns and operates a pawnshop. The
diamond ring was turned over to a
certain Clarita R. Sison, for sale on
commission, along with other pieces of
jewelry of respondent Suntay. It was
then pledged to petitioner. Since what
was done was violative of the terms of
the agency, there was an attempt on
her part to recover possession thereof
from petitioner, who refused. She had to
file an action then for its recovery. She
was successful, as noted above, both in
the lower court and thereafter in the
Court of Appeals. She prevailed as she
had in her favor the protection
accorded by Article 559 of the Civil
Code.[1] The matter was then elevated
to us by petitioner. Ordinarily, our
discretion would have been exercised
against giving due course to such
petition for review. The vigorous plea
however, grounded on estoppel, by his
counsel, Atty. Andres T. Velarde,
persuaded us to act otherwise. After a
careful perusal of the respective
contentions of the parties, we fail to
perceive any sufficient justification for a
departure from the literal language of
the applicable codal provision as
uniformly interpreted by this Court in a
number of decisions. The invocation of
estoppel is therefore unavailing. We
affirm.
The statement of the case as well as the
controlling facts may be found in the
Court of Appeals decision penned by
Justice Perez. Thus: "Plaintiff is the owner
of a three-carat diamond ring valued at
P5,500.00. On June 13, 1962, the plaintiff
and Clarita R. Sison entered into a
transaction wherein the plaintiff's ring
was delivered to Clarita R. Sison for sale
on commission. Upon receiving the ring,
Clarita R. Sison executed and delivered
to the plaintiff the receipt * * *. The
plaintiff had already previously known
Clarita R. Sison as the latter is a close
friend of the plaintiff's cousin and they
64 | P r o p e r t y C a s e s - P o s s e s s i o n
had frequently met each other at the
place of the plaintiff's said cousin. In
fact, about one year before their
transaction of June 13, 1962 took place,
Clarita R. Sison received a piece of
jewelry from the plaintiff to be sold for
P500.00, and when it was sold, Clarita R.
Sison gave the price to the plaintiff. After
the lapse of a considerable time without
Clarita R. Sison having returned to the
plaintiff the latter's ring, the plaintiff
made demands on Clarita R. Sison for
the return of her ring but the latter could
not comply with the demands because,
without the knowledge of the plaintiff,
on June 15, 1962 or three days after the
ring above-mentioned was received by
Clarita R. Sison from the plaintiff, said ring
was pledged by Melia Sison, niece of the
husband of Clarita R. Sison, evidently in
connivance with the latter, with the
defendant's pawnshop for P2,600.00 * *
*."[2] Then came this portion of the
decision under review: "Since the
plaintiff insistently demanded from
Clarita R. Sison the return of her ring, the
latter finally delivered to the former the
pawnshop ticket * * * which is the receipt
of the pledge with the defendant's
pawnshop of the plaintiff's ring. When
the plaintiff found out that Clarita R. Sison
pledged, she took steps to file a case of
estafa against the latter with the fiscal's
office. Subsequently thereafter, the
plaintiff, through her lawyer, wrote a
letter * * * dated September 22, 1962, to
the defendant asking for the delivery to
the plaintiff of her ring pledged with
defendant's pawnshop under
pawnshop receipt serial B No. 65606,
dated June 15, 1962 * * *. Since the
defendant refused to return the ring, the
plaintiff filed the present action with the
Court of First Instance of Manila for the
recovery of said ring, with P500.00 as
attorney's fees and costs. The plaintiff
asked for the provisional remedy of
replevin by the delivery of the ring to her,
upon her filing the requisite bond,
pending the final determination of the
action. The lower court issued the writ of
replevin prayed for by plaintiff and the
latter was able to take possession of the
ring during the pendency of the action
upon her filing the requisite bond."[3] It
was then noted that the lower court
rendered judgment declaring that
plaintiff, now respondent Suntay, had
the right to the possession of the ring in
question. Petitioner Dizon, as
defendant, sought to have the
judgment reversed by the Court of
Appeals. It did him no good. The
decision of May 19, 1969, now on review,
affirmed the decision of the lower court.
In the light of the facts as thus found by
the Court of Appeals, well-nigh
conclusive on us, with the applicable
law being what it is, this petition for
review cannot prosper. To repeat, the
decision of the Court of Appeals stands.
1. There is a fairly recent restatement of
the force and effect of the governing
codal norm in De Garcia vs. Court of
Appeals.[4] Thus: "The controlling
provision is Article 559 of the Civil
Code. It reads thus: 'The possession of
movable property acquired in good
faith is equivalent to a
title. Nevertheless, one who has lost any
movable or has been unlawfully
deprived thereof may recover it from the
person in possession of the same. If the
possessor of a movable lost of which the
owner has been unlawfully deprived,
has acquired it in good faith at a public
sale, the owner cannot obtain its return
without reimbursing the price paid
therefor.' Respondent Angelina D.
Guevara, having been unlawfully
deprived of the diamond ring in
question, was entitled to recover it from
petitioner Consuelo S. de Garcia who
was found possession of the same. The
only exception the law allows is when
there is acquisition in good faith of the
possessor at a public sale, in which case
the owner cannot obtain its return
without reimbursing the price. As
authoritatively interpreted in Cruz vs.
Pahati, the right of the owner cannot be
defeated even by proof that there was
good faith in the acquisition by the
possessor. There is a reiteration of this
principle in
Aznar vs. Yapdiangco. Thus: 'Suffice it
to say in this regard that the right of the
owner to recover personal property
acquired in good faith by another, is
based on his being dispossessed without
his consent. The common law principle
that were one of two innocent persons
must suffer by a fraud perpetrated by
another, the law imposes the loss upon
the party who, by his misplaced
confidence, has enabled the fraud to
be committed, cannot be applied in a
case which is covered by an express
provision of the new Civil Code,
specifically Article 559. Between a
common law principle and a statutory
provision, the latter must prevail in this
jurisdiction.'"[5]
2. It must have been a recognition of the
compulsion exerted by the above
authoritative precedents that must have
caused petitioner to invoke the principle
of estoppel. There is clearly a
misapprehension. Such a contention is
devoid of any persuasive force.
Estoppel as known to the Rules of
Court[6] and prior to that to the Court of
Civil Procedure,[7] has its roots in
equity. Good faith is its basis.[8] It is a
response to the demands of moral right
and natural justice.[9] For estoppel to
exist though, it is indispensable that there
be a declaration, act or omission by the
party who is sought to be bound. Nor is
this all. It is equally a requisite that he,
who would claim the benefits of such a
principle, must have altered his position,
having been so intentionally and
deliberately led to comport himself thus,
by what was declared or what was done
or failed to be done. If thereafter a
litigation arises, the former would not be
allowed to disown such act, declaration
or omission. The principle comes into full
play. It may successfully be relied
upon. A court is to see to it then that
there is no turning back on one's word or
a repudiation of one's act. So it has
been from our earliest decisions. As
Justice Mapa pointed out in the first
case, a 1905 decision, Rodriguez vs.
Martinez,[10] a party should not be
permitted "to go against his own acts to
the prejudice of [another]. Such a
holding would be contrary to the most
rudimentary principles of justice and
law."[11] He is not, in the language of
Justice Torres, in Irlanda vs.
Pitargue,[12] promulgated in 1912,
"allowed to gainsay [his] own acts or
deny rights which [he had] previously
recognized."[13] Some of the later cases
are to the effect that an unqualified and
unconditional acceptance of an
agreement forecloses a claim for interest
not therein provided.[14] Equally so the
circumstance that about a month after
the date of the conveyance, one of the
parties informed the other of his being a
minor, according to Chief Justice Paras,
"is of no moment, because [the former's]
previous misrepresentation had already
estopped him from disavowing the
contract."[15] It is easily understandable
why, under the circumstances disclosed,
estoppel is a frail reed to hang on
to. There was clearly the absence of an
act or omission, as a result of which a
position had been assumed by
petitioner, who if such elements were not
lacking, could not thereafter in law be
prejudiced by his belief in what had
been misrepresented to him.[16] As was
put by Justice Labrador, "a person
claimed to be estopped must have
knowledge of the fact that his voluntary
acts would deprive him of some rights
because said voluntary acts are
inconsistent with said rights."[17] To
recapitulate, there is this
pronouncement not so long ago, from
the pen of Justice Makalintal, who
reaffirmed that estoppel "has its origin in
equity and, being based on moral right
and natural justice, finds applicability
65 | P r o p e r t y C a s e s - P o s s e s s i o n
wherever and whenever the special by extreme poverty. From whatever
circumstances of a case so demand."[18] angle the question is viewed then,
estoppel certainly cannot be justly
How then can petitioner in all seriousness invoked.
assert that his appeal finds support in the
doctrine of estoppel? Neither the WHEREFORE, the decision of the Court of
promptings of equity nor the mandates Appeals of May 19, 1969 is affirmed, with
of moral right and natural justice come costs against petitioner.
to his rescue. He is engaged in a
business where presumably ordinary Concepcion, C.J., Zaldivar, Makasiar,
prudence would manifest itself to Antonio, and Esguerra, JJ., concur.
ascertain whether or not an individual
Castro, J., reserves his vote.
who is offering a jewelry by way of a
pledge is entitled to do so. If no such Makalintal and Barredo, JJ., took no
care be taken, perhaps because of the part.
difficulty of resisting opportunity for profit,
he should be the last to complain if Teehankee, J., see concurring opinion.
thereafter the right of the true owner of
such jewelry should be recognized. The
law for this sound reason accords the
latter protection. So it has always been
since Varela vs. Finnick,[19] a 1907
decision. According to Justice
Torres: "In the present case not only has
the ownership and the origin of the
jewels misappropriated been
unquestionably proven but also that the
accused, acting fraudulently and in bad
faith, disposed of them and pledged
them contrary to agreement, with no
right of ownership, and to the prejudice
of the injured party, who was thereby
illegally deprived of said jewels;
therefore, in accordance with the
provisions of article 464, the owner has
an absolute right to recover the jewels
from the possession of whosoever holds
them, * * *."[20] There have been many
other decisions to the same effect since
then. At least nine may be cited.[21] Nor
could any other outcome be expected,
considering, the civil code provisions
both in the former Spanish
legislation[22] and in the present
Code.[23] Petitioner ought to have been
on his guard before accepting the
pledge in question. Evidently there was
no such precaution availed of. He
therefore, has only himself to blame for
the fix he is now in. It would be to stretch
the concept of estoppel to the breaking
point if his contention were to
prevail. Moreover, there should have
been a realization on his part that courts
are not likely to be impressed with a cry
of distress emanating from one who is in
a business authorized to impose a higher
rate of interest precisely due to the
greater risk assumed by him. A
predicament of this nature then does
not suffice to call for less than
undeviating adherence to the literal
terms of a codal provision. Moreover,
while the activity he is engaged in is no
doubt legal, it is not to be lost sight of
that it thrives on taking advantage of the
necessities precisely of that element of
our population whose lives are blighted
19 Phil.
[ G. R. No. 5741, March 13, 1911 ]
ESTANISLAUA ARENAS ET AL., PLAINTIFFS
AND APPELLEES, VS. FAUSTO 0. RAYMUNDO,
DEFENDANT AND APPELLANT.
DECISION
TORRES, J.:
This is an appear filed by the defendant
from a judgment of conviction rendered by
the Hon. Judge Araullo.
On the date of August 31, 1908, the
attorneys for the plaintiffs, Estanislaua
Arenas and Julian La 0, brought
suit against Fausto 0. Raymundo, alleging,
as a cause of action, that Estanislaua
Arenas was the owner and proprietor of
the jewelry described below with the
respective value thereof:
Two gold tamborin rosaries, without
bow or reliquary at P40P80
each.............................................
One lady's comb for fastening the hair,
made of gold and silver, adorned with
pearls of ordinary size and many small
pearls, one of which is80
missing........................................................
............................
One gold ring set with a diamond of
ordinary
size.............................................................. 00
.......................
One gold bracelet with five small
diamonds and
700
eight brillantitos de almendras.............
............................
One pair of gold picaporte earrings
with two diamonds of ordinary size
and two small1,1
ones............................................................ 00
..............................
The plaintiffs alleged that the said jewelry,
during the last part of April or the
beginning of May, 1908, was delivered to
Elena de Vega to sell on commission, and
that the latter, in turn, delivered it to
Concepcion Perello, likewise to sell on
commission, but that Perello, instead of
fulfilling her trust, pledged the jewelry in the
defendant's pawnshop, situated at No. 33
Calle de Ilaya, Tondo, and appropriated
to her own use the money thereby
obtained; that on July 30, 1908,
Goncepcion Per.elio was prosecuted for
estafa, convicted, and the judgment
became final; that the said jewelry
was then under the control and in the
possession of the defendant, as a result of
the pledge by Perello, and that the former
66 | P r o p e r t y C a s e s - P o s s e s s i o n
46 refused to deliver it to the plaintiffs, the
owners thereof, wherefore counsel for
the plaintiffs asked that judgment be
rendered sentencing the defendant to
make restitution of the said jewelry and to
pay the costs.
In the affidavit presented by the attorney
for the plaintiffs, dated September 2,
1908, after a statement and description of
the jewelry mentioned, it is set forth that the
defendant was retaining it for the reason
given in the complaint, and that it was not
sequestrated for the purpose of satisfying
any tax or fine or by reason of any
attachment issued in compliance with any
judgment rendered against the plaintiffs'
property.
In discharge of the writ of seizure issued for
the said jewelry on the 2d of September,
1908, aforementioned, the sheriff of this city
made the return that he had, on the same
date, delivered one copy of the bond
and another of the said writ to the
defendant personally and, on the petition
and designation of the attorney for the
plaintiffs, proceeded to seize the jewelry
described in the writ, taking it out of the
defendant's control, and held it in his
possession during the five days prescribed
by law.
On the 15th of the same month and year,
five days having elapsed without the
defendant's having given bond before the
court, the sheriff made delivery of all the
jewelry described in the said order to the
attorney for the plaintiff, to the latter's
1,0 entire satisfaction, who with the sheriff
signed the return of the writ.
After the demurrer to the complaint had
been overruled, the defendant answered,
setting forth that he denied each and all of
the allegations thereof which were not
specifically admitted, explained, or
qualified, and as a special defense
alleged that the jewelry, the subject
^matter of the complaint, was pledged in
his pawnshop by Concepcion Perello, the
widow of Pazos, as security for a loan of
P1,524, with the knowledge, consent, and
mediation of Gabriel La O, a son of the
plaintiffs, as their agent, and that, in
consequence thereof, the said plaintiffs
were estopped from disavowing the action
of the said Perello; the defendant therefore
prayed that the complaint be dismissed
and that the jewelry seized at the instance
of the plaintiffs, or the amount of the loan
made thereon, together with the interest
due, be returned to the defendant, with
the costs of the suit against the plaintiffs.
The case came up for hearing on March
17, 1909, and, after the presentation of oral
testimony by both parties, the court, on
June 23 of the same year, rendered
judgment sentencing the defendant to
restore to the plaintiff spouses the jewelry
described in the complaint, the right being
reserved to the defendant to institute his
action against the proper party. The
counsel for the defendant excepted to this
judgment, asked that the same be set
aside, and a new trial granted. This motion
was denied, exception was taken by the
appellant, and the proper bill of exceptions
was duly approved, certified to, and
forwarded to the clerk of this court.
This is an action for the replevin of
certain jewelry delivered by its owner for
sale on commission, and pledged without
his knowledge by Concepcion Perello in
the pawnshop of the defendant, Fausto 0.
Raymundo, who refuses to deliver the said
jewelry unless first redeemed.
The said Coneepcion Perello,
who appropriated to herself the money
derived from the pledging of the jewels
before mentioned, together with others, to
the prejudice of their owner Estanislaua
Arenas, was prosecuted in, the Court of
First Instance of this city in cause No. 3955
and sentenced on July 30, 1908, to the
penalty of one year eight months and
twienty-one days
of prision correccional, to restore to the
offended party the jewelry specified in the
complaint, or to pay the value thereof,
amounting to P8,660, or, in case of
insolvency, to suffer the corresponding
subsidiary imprisonment, and to pay the
costs. This judgment is attested by the
certified copy attached under letter D to
folio 26 of the record of the proceedings in
the case of the same plaintiff against
Antonio Matute - the pledgee of the other
jewelry also appropriated by the said
Concepcion Perello - which record forms
a part of the evidence in this cause.
Perello having pledged the jewelry in
question to the defendant Raymundo,
and not having redeemed it by paying
him the amount received, it follows that
the convicted woman, now serving the
sentence imposed upon her, could not
restore the jewelry as ordered in that
judgment, which has become final by the
defendant's acquiescence.
Article 120 of the Penal Code prescribes:
"The restitution of the thing itself must be
made, if possible, with payment for
deterioration or diminution of value, to be
appraised by the court.
"Restitution shall be made, even though
the thing may be in the possession of a
third person, who had acquired it in a legal
manner, reserving, however, his action
against the proper person.
"This provision is not applicable to a case in
which the third person has acquired the
thing in the manner and with the requisites
established by law to make
it unrecoverable."
The provisions contained in the first two
paragraphs of the preinserted article are
based on the uncontrovertible principle of
justice that the party injured through a
crime has, as against all others, a
preferential right to be indemnified, or to
have restored to him the thing of which
he was unduly deprived by criminal
means.
In view of the harmonious relation between
the different qodes in force in these Islands,
it is natural and logical that the
aforementioned provision of the Penal
Code, based on the rule established in
article 17 of the same, to wit, that every
person criminally liable for a crime or
misdemeanor is also civilly liable, should be
in agreement and accordance with the
provisions of article 464 of the Civil Code
which prescribes:
"The possession of personal property,
acquired in good faith, is equivalent to a
title thereto. However, the person who has
lost personal property or has been illegally
deprived thereof may recover it from
whoever possesses it.
"If the possessor of personal property,
lost or stolen, has acquired it in good faith
at a public sale, the owner can not recover
it without reimbursing the price paid
therefor.
"Neither can the owner of things pledged in
pawnshops, established with the
authorization of the Government, recover
them, whosoever may be the person who
pledged them, without previously
refunding to the institution the amount of
the pledge and the interest due.
"With regard to things acquired on
exchange, or at fairs or markets or from a
merchant legally established and usually
employed in similar dealings, the provisions
of the Code of Commerce shall be
observed."
On January 2, 1908, this court had
occasion to decide, among other cases,
two which were entirely analogous to the
present one. They were No. 3889, Varela vs.
Matute, and No. 3890, Varela vs. Finnick (9
Phil. Rep., 479, 482).
In the decisions in both cases it appears
that Nicolasa Pascual received various
jewels from Josef a Varela to sell on
commission and that,
instead of fulfilling the trust or returning the
jewels to their owner, she pledged some of
them in the pawnshop of Antonio Matute
and others in that of H. J. Finnick
and appropriated to herself the amounts
that she received, to the detriment of the
owner of the jewelry.
Tried for estafa in cause No. 2429, the
said Pascual was convicted
and sentenced to the penalty of
67 | P r o p e r t y C a s e s - P o s s e s s i o n
one year and eleven months of prisidn
correctional, to restore to Varela. tjie
jewelry appropriated, or to pay the value
thereof, and, in case of insolvency, to
subsidiary imprisonment; this judgment
became final, whereupon the defendant
began to serve her sentence. The case just
cited is identical to that of Concepcion
Perello.
Josef a Varela,
in separate incidental proceedings, de
manded the restitution or delivery
of possession of the said jewelry; the
pledgees, the pawnbrokers, refused to
comply with her demand, alleging, among
other reasons, that they were entitled to
possession. The two cases were duly tried,
and the Court of First Instance
pronounced judgment, supporting
the plaintiff's claims in each. Both cases
were appealed by the defendants, Matute
and Finnick, and this court affirmed
the judgments on the same grounds, with
costs, and the decisions on appeal
established the following legal doctrines:
"1. Crimes against property; criminal and
civil liability. - Where, in a proceeding
instituted by reason of a crime committed
against property, the criminal liability of the
accused has been declared, it follows that
he shall also be held civilly liable therefor,
because every person who is criminally
responsible on account of a crime or
misdemeanor is also civilly liable.
"2. Id.; Recovery of property unlawfully in
possession. - Whoever may have been
deprived of his property in consequence
of a crime is entitled to the recovery
thereof, even if such property is in the
possession of a third party who acquired it
by legal means other than those expressly
stated in article 464 of the Civil Code.
"3. Personal property; title by possession. - In
order that the possession of personal
property may be considered as a title
thereto it is indispensable that the same
shall have been acquired in good faith.
"4. Id.; Ownership; prescription. - The
ownership of personal property prescribes
in the manner and within the time fixed by
articles 1955 and 1962, in connection with
article 464, of the Civil Code."
In the cause prosecuted against Perello, as
also in the present suit, it was not proven
that Estanislaua Arenas authorized the
former to pawn the jewelry given to her
by Arenas to sell on commission. Because
of the mere fact of Perello's having been
convicted and sentenced for estafa, and
for the very reason that she is now serving
her sentence, the rest of the dispositive part
of the said sentence must be complied
with, that is, the jewelry misappropriated
must be restored to its owner, inasmuch as
it exists and has not disappeared this
restitution must be made, although the
jewelry is found in the pawnshop of Fausto
0, Raymundo and the latter had acquired
it by legal means. Raymundo however
retains his right to collect the amounts
delivered upon the pledge, by
bringing action against the proper
party. This finding is in accord with the
provisions of the above article 120 of the
Penal Code and the first paragraph of
article 464 of the Civil Code.
The aforementioned decision, No. 3890,
Varela vs. Finnick, recites, among other
considerations, the following:
"The exception contained in paragraph 3
of said article is not applicable to the
present case because a pawnshop does
not enjoy the privilege established
by article 464 of the Civil Code. The owner
of the loan office of Finnick Brothers,
notwithstanding the fact that he acted in
good faith, did not acquire the jewels at a
public sale; it is not a question
of public property, securities, or other
such effects, the transfer, sale, or disposal
of which is subject to.the provisions of the
Code of Commerce. Neither does a
pawnshop enjoy the privilege granted to a
monte de piedad; therefore, Josefa
Varela, who lost said jewels and was
deprived of the same in consequence of a
crime, is entitled to the recovery thereof
from the pawnshop of Finnick
Brothers, where they were pledged; the
latter can not lawfully refuge to comply
with the provisions of article 120 of the
Penal Code, as it is a question of jewels
which have been misappropriated by the
commission of the crime of estafa, and the
execution of the sentence which orders
the restitution of the jewels can not be
avoided because of the good faith
with which the owner of the pawnshop
acquired them, inasmuch as they were
delivered to the accused, who was not the
owner nor authorized to dispose of the
same."
Even supposing that the defendant
Raymundo had acted in good faith in
accepting the pledge of the jewelry in
litigation, even then he would not be
entitled to retain it until the owner thereof
reimburse him for the amount loaned to the
embezzler, since the said owner of the
jewelry, the plaintiff, did not make any
contract with the pledgee, that would
obligate him to pay the amount loaned to
Perello, and the trial record does
not disclose any evidence, even
circumstantial, that the plaintiff Arenas
consented to or had knowledge of the
pledging of her jewelry in the pawnshop of
the defendant.
For this reason, and because Concepcion
Perello was not the legitimate owner of the
jewelry which she pledged to the
defendant Raymundo, for a certain sum
that she received from the latter as a loan,
the contract of pledge entered into by
both is, of course, null and void, and,
consequently the jewelry so pawned can
not serve as security for the payment of the
sum loaned, nor can the latter be collected
out of the value of the said jewelry.
Article 1857 of the Civil Code prescribes as
one of the essential requisites of the
contracts of pledge and of mortgage, that
the thing pledged or mortgaged
must belong to the person who pledges or
mortgages it. This essential requisite for the
contract of pledge between Perello and
the defendant being absent as the former
was not the owner of the jewelry given in
pledge, the contract is as devoid of value
and force as if it had not been made, and
as it was executed with marked violation of
an express provision of the law, it can not
confer upon the defendant any rights in
the pledged jewelry, nor impose any
obligation toward him on the part of the
owner thereof, since the latter was
deprived of her possession by means of the
illegal pledging of the said jewelry, a
criminal act.
Between the supposed good faith of the
defendant Raymundo and the undisputed
good faith of the plaintiff Arenas, the owner
of the jewelry, neither law nor justice permit
that the latter, after being the victim of
embezzlement, should have to choose one
of the two extremes of a dilemma, both of
which, without legal ground or reason, are
injurious and prejudicial to her interests and
rights, that is, she must either lose her
jewelry or pay a large sum received by the
embezzler as a loan from the
defendant, when the plaintiff Arenas is not
related to the latter by any legal or
contractual bond out of which legal
obligations arise.
Is it true that the plaintiffs' son, attorney
Gabriel La 0, intervened and gave his
consent when Concepcion Perello
pawned the jewelry in litigation with
Fausto Raymundo for P1,524? In view of the
evidence offered by the trial record, the
answer is, of course, in the negative.
The parents of the attorney Gabriel La 0
being surprised by the disagreeable news
of the disappearance of various jewels,
amounting in value to more than
P8,600, delivered to Elena Vega for sale on
commission and misappropriated
by Concepcion Perello, who received
them from Vega for the same purpose, it is
natural that the said attorney, acting in
representation of his parents and as an
interested party, should have
(proceeded to ascertain the
whereabouts of the embezzled jewelry and
to enter into negotiations with the
pawnshop of Fausto 0. Raymundo, in
whose possession he had finally learned
were to be found a part of the
embezzled jewels, as he had been
informed by the said Perello herself;
and although, at first, at the
68 | P r o p e r t y C a s e s - P o s s e s s i o n
commencement of his investigations, he
met with opposition on the part of the
pledgee Raymundo, who objected to
showing him the jewels that he desired to
see in order to ascertain whether they were
those embezzled and belonging to his
mother, the plaintiff Arenas, thanks
to the intervention of attorney Chicote
and to the fact that they succeeded in
obtaining from the embezzler, among
other papers, the pawn ticket issued by
Raymundo's pawnshop, Exhibit E, of the
date of May 4, 1908, folio 19 of the record
in the case against Matute, Gabriel La 0
succeeded in getting the defendant to
show him the jewelry described in the said
ticket together with other jewels that did
not belong to La O's mother, that had been
given the defendant by Ambrosia
Capistrano, Perello's agent, in pledge or
security for a loan of P170.
Gabriel La 0, continuing the search for the
other missing jewelry belonging to his
mother, found that Pausto O. Raymundo
was in possession of it and had received it
from the same embezzler as security for a
debt, although the defendant Raymundo
would not exhibit it until he issued the pawn
tickets corresponding to such jewels;
therefore, at Raymundo's request, Perello,
by means of the document Exhibit C,
signed by herself and bearing
date of June 10, 1908, folio 28 of
the record, authorized her son Ramon to
get from the defendant, in her name, the
pawn tickets of the said other jewelry, for
which such tickets had not yet been
issued; Raymundo then wrote out
the tickets - Exhibits L, LL, and M, all dated
June 22, 1908, and found on folios 20, 21,
and 22 of the record of the aforesaid
proceedings against Matute - in the
presence of the attorney Gabriel La 0, who
kept the said three pawn tickets, after he
had made sure that the jewels described
therein and which Raymundo, taking them
out of his cabinet, exhibited to him at the
time, were among those embezzled from
his mother.
So that, when the three aforementioned
pawn tickets, Exhibits L, LL, and M, from the
pawnshop of the defendant, were made
out, the latter already, and for some time
previous, had had in his possession as a
pledge the jewelry described in them, and
the plaintiffs' son, naturally desiring to
recover his parents' jewelry, was satisfied
for the time being with keeping the three
pawn tickets certifying that such jewelry
was pawned to the defendant.
Moreover, the record discloses no proof
that the attorney Gabriel La O consented
to or took any part in the delivery of the
jewelry in question to the defendant as
a pledge, and both the
said defendant, Raymundo, and the
embezzler Perello, averred in their
respective testimony that the said attorney
La O had no knowledge of and
took no part in the pledging of the jewelry,
and Perello further stated that she had
received all the money loaned to her by
the defendant Raymundo. (Folios 13 to 14,
and 76 to 80 of the record in the case
against Matute.)
The business of pawnshops, in exchange
for the high and onerous interest
which constitutes its enormous profits, is
always exposed to the contingency of
receiving in pledge or security for the loans,
jewels and other articles that have been
robbed, stolen, or embezzled from their
legitimate owners; and as the owner of the
pawnshop accepts the pledging of
jewelry from the first bearer who offers the
same and asks for money on it, without
assuring himself whether such bearer is or is
not the owner thereof, he can not, by
such procedure, expect from the
law better and more preferential
protection than the owner of the jewels or
other articles who was deprived thereof by
means of a crime and is entitled to be
excused by the courts.
Antonio Matute, the owner of another
pawnshop, being convinced that he was
wrong, refrained from appealing from the
judgment wherein he was sentenced to
return, without redemption, to the plaintiffs,
another jewel of great value which had
been pledged to him by the same Perello.
He undoubtedly had in mind some of the
previous decisions of this court, one of
which was against himself.
For the foregoing reasons, whereby the
errors attributed to the judgment of the
Court of First Instance have been discussed
and decided upon, and the said judgment
being in harmony with the law, the
evidence and the merits Qf the case, it is
proper, in our opinion, to affirm the same,
as we hereby do, with the costs against the
appellant. So ordered.
Arellano, C. J., and Mapa, J., concur.
Carson, Moreland, and Trent, JJ., concur in
the result.
FIRST DIVISION
[G.R. No. 132518. March 28, 2000]
GAVINA MAGLUCOT-AW, CATALINA
ORCULLO, RICHARD ESTANO, NIDA
MAGLUCOT, MELANIA MAGLUCOT-
CATUBIG, EMILIANO CATUBIG, LADISLAO
SALMA, petitioners, vs. LEOPOLDO
MAGLUCOT, SEVERO MAGLUCOT,
WILFREDA MAGLUCOT-ALEJO and
CONSTANCIO ALEJO, respondents.
DECISION
KAPUNAN, J.:
This petition for review
on certiorari assails the Decision, dated
11 November 1997, of the Court of
Appeals in CA-G.R. CV No. 48816 which
reversed and set aside the Decision,
dated 13 December 1994, of the
Regional Trial Court, Branch 30 of
Dumaguete City, Negros Oriental in an
action for recovery of possession and
damages.
The core issue in this case is whether a
partition of Lot No. 1639 had been
effected in 1952. Petitioners contend
that there was already a partition of said
lot; hence, they are entitled to exclusive
possession and ownership of Lot No.
1639-D, which originally formed part of
Lot No. 1639 until its partition. Private
respondents, upon the other hand,
claim that there was no partition; hence,
they are co-owners of Lot No. 1639-D.
Notably, this case presents a unique
situation where there is an order for
partition but there is no showing that the
sketch/subdivision plan was submitted to
the then Court of First Instance for its
approval or that a decree or order was
registered in the Register of Deeds.
The antecedent facts of the case are as
follows: Korte
Petitioners filed with the RTC a complaint
for recovery of possession and damages
alleging, inter alia, that they are the
owners of Lot No. 1639-D. Said lot was
originally part of Lot No. 1639 which was
covered by Original Certificate Title No.
6775 issued in the names of Hermogenes
Olis, Bartolome Maglucot, Pascual Olis,
Roberto Maglucot, Anselmo Lara and
Tomas Maglucot on 16 August
1927.[1] On 19 April 1952, Tomas
Maglucot, one of the registered owners
and respondents predecessor-in-
interest, filed a petition to subdivide Lot
No. 1639.[2] Consequently, on 13 May
1952, then CFI of Negros Oriental issued
an order[3] directing the parties to
subdivide said lot into six portions as
follows: Rtcspped
69 | P r o p e r t y C a s e s - P o s s e s s i o n
a) Hermogenes Olis - lot 1639-A
b) Pascual Olis - lot 1639-B
c) Bartolome Maglucot - lot 1639-C
d) Roberto (Alberto) - lot 1639-D
Maglucot
e) Anselmo Lara - lot 1639-E
f) Tomas Maglucot - lot 1639-F.[4]
Sometime in 1963, Guillermo Maglucot
rented a portion of Lot No. 1639-D
(subject lot). Subsequently, Leopoldo
and Severo, both surnamed Maglucot,
rented portions of subject lot in 1964 and
1969, respectively, and each paying
rentals therefor. Said respondents built
houses on their corresponding leased
lots. They paid the rental amount of
P100.00 per annum to Mrs. Ruperta
Salma, who represented the heirs of
Roberto Maglucot, petitioners
predecessor-in-interest. In December
1992, however, said respondents
stopped paying rentals claiming
ownership over the subject lot.
Petitioners thus filed the complaint a
quo. Sdaadsc
After trial, the lower court rendered
judgment in favor of petitioners. The RTC
found the existence of tax declarations
in the names of Hermogenes Olis and
Pascual Olis (purported owners of Lot
Nos. 1639-A and 1639-B,
respectively)[5] as indubitable proof that
there was a subdivision of Lot No. 1639. It
likewise found that Tomas Maglucot,
respondents predecessor-in-interest,
took active part in the partition as it was
he, in fact, who commenced the action
for partition.[6] The court a quo cited
Article 1431 of the Civil Code which
states that "[t]hrough estoppel an
admission or representation is rendered
conclusive upon the person making it,
and cannot be denied or disproved as
against the person relying thereon."
Applying said provision of law, it held
that while there was no court order
showing that Lot No. 1639 was
partitioned, its absence could not be
used by Tomas Maglucot, or
respondents as his successors-in-interest,
to deny the existence of an approved
partition against the other co-owners
who claim that there was one.[7] Said
court, likewise, ruled that the tax
declarations[8] over the houses of
respondents, expressly stating that the
same are constructed on the lots of
Roberto Maglucot, constitute a
conclusive admission by them of the
ownership of the subject lot by the
latter.[9]
The dispositive portion of the lower courts
decision reads as follows: Missdaa
WHEREFORE, on the basis of the
foregoing discussion, judgment is hereby
rendered in favor of the plaintiffs against
the defendants ordering the latter:
1. To demolish their houses inside lot
1639-D, vacate the premises thereof and
deliver the possession of the same to
Plaintiffs; Slxmis
2. To jointly and solidarily pay plaintiffs
the sum of P15,000.00 for attorneys fees;
3. To each pay plaintiffs the sum of
P100.00 every year from 1993 for actual
damages representing the amount of
unpaid rentals up to the time they
actually vacate the premises in
question; Sclaw
4. To pay the costs.[10]
On appeal, the CA reversed the
decision of the RTC. The appellate court
ruled that the sketch plan and tax
declarations relied upon by petitioners
are not conclusive evidence of
partition.[11] The CA likewise found that
the prescribed procedure under Rule 69
of the Rules of Court was not followed. It
thus declared that there was no partition
of Lot No. 1639. Slxsc
Petitioners filed this petition for review
on certiorari alleging that the CA
committed the following reversible
errors:
I
IN VIOLATING THE LAW ON ACQUISITIVE
PRESCRIPTION PLAINTIFFS HAVING
POSSESSED LOT 1639-D SINCE 1946;
II
IN VIOLATING THE LAW ON ESTOPPEL; THE
FACT OF PAYMENT OF RENTALS AND
OFFER TO BUY BY THE DEFENDANTS IS
ADMISSION THAT THE AREA IN LOT 1639-
D, HAD LONG BEEN ADJUDICATED TO
PLAINTIFFS;
III
IN DECLARING THAT THERE WAS NO
PRIOR PARTITION, CONTRARY TO THE
FINDINGS OF THE TRIAL COURT, AND
AGAINST THE EVIDENCE ON RECORD, OF
WHICH IF PROPERLY CONSIDERED
WOULD CHANGE THE OUTCOME OF THE
CASE;
IV
IN DECLARING THAT THERE IS NO LAW OR
JURISPRUDENCE APPLICABLE UNDER THE
PREMISES; THIS WOULD ONLY SHOW THAT
THE RECORD OF THE CASE WAS NOT
PROPERLY SCRUTINIZED, AND THE LAW
WAS NOT PROPERLY STUDIED; ESPECIALLY
IN THE CASE AT BENCH THAT THE ORAL
AND MUTUAL PARTITION HAPPENED
DURING THE REGIME OF THE OLD RULES
OF PROCEDURE;[12]
Petitioners maintain that Lot No. 1639
was mutually partitioned and physically
subdivided among the co-owners and
that majority of them participated in the
actual execution of the subdivision.
Further, the co-owners accepted their
designated shares in 1946 as averred by
Tomas Maglucot in his petition for
partition.[13] Petitioners opine that in
1952, Tomas Maglucot himself initiated a
court proceeding for a formal
subdivision of Lot No. 1639. In said
petition, he averred that only
Hermogenes Olis and the heirs of
Pascual Olis were not agreeable to the
partition.[14] Petitioners further contend
that respondents admitted in their tax
declarations covering their respective
houses that they are "constructed on the
land of Roberto Maglucot."[15] Simply
put, petitioners vigorously assert that
respondents are estopped from
claiming to be co-owners of the subject
lot in view of the mutual agreement in
1946, judicial confirmation in 1952, and
respondents acquiescence because
they themselves exclusively exercised
ownership over Lot No. 1639-A beginning
1952 up to the present.[16]
For their part, respondents posit three
points in support of their position. First,
they emphasize that petitioners failed to
show that the interested parties were
apprised or notified of the tentative
subdivision contained in the sketch and
that the CFI subsequently confirmed the
same.[17] Second, they point to the fact
that petitioners were unable to show any
court approval of any partition.[18] Third,
they maintain that Lot No. 1639 remain
undivided since to date, OCT No. 6275 is
still an existing and perfectly valid title,
containing no annotation of any
encumbrance or partition
whatsoever.[19]
After a careful consideration of the
pleadings filed by the parties and the
evidence on record, we find that the
petition is meritorious. As stated earlier,
the core issue in this case is whether
there was a valid partition in 1952. Scslx
Preliminarily, this Court recognizes that
"the jurisdiction of this Court in cases
brought before it from the Court of
Appeals via Rule 45 of the Rules of Court
is limited to reviewing errors of law.
Findings of fact of the latter are
conclusive, except in the following
70 | P r o p e r t y C a s e s - P o s s e s s i o n
instances: (1) when the findings are
grounded entirely on speculation,
surmises, or conjectures; (2) when the
inference made is manifestly mistaken,
absurd, or impossible; (3) when there is
grave abuse of discretion; (4) when the
judgment is based on a "the parties are unable to agree upon
misapprehension of facts; (5) when the
findings of fact are conflicting; (6) when
in making its findings the Court of
Appeals went beyond the issues of the
case, or its findings are contrary to the
admissions of both the appellant and
the appellee; (7) when the findings are
contrary to those of the trial court; (8)
when the findings are conclusions
without citation of specific evidence on
which they are based; (9) when the facts
set forth in the petition as well as in the
petitioners main and reply briefs are not
disputed by the respondent; and (10)
when the findings of fact are premised
on the supposed absence of evidence
and contradicted by the evidence on
record."[20] This case falls under
exceptions (7), (8) and (10) in that the
findings of facts of the CA are in conflict
with that of the RTC, are mere
conclusions without citation of specific
evidence on which they are based and
are premised on absence of evidence
but are contradicted by the evidence
on record. For these reasons, we shall
consider the evidence on record to
determine whether indeed there was
partition. Slx
In this jurisdiction, an action for partition
is comprised of two phases: first, an order
for partition which determines whether a
co-ownership in fact exists, and whether
partition is proper; and, second, a
decision confirming the sketch or
subdivision submitted by the parties or
the commissioners appointed by the
court, as the case may be.[21] The first
phase of a partition and/or accounting
suit is taken up with the determination of
whether or not a co-ownership in fact
exists, (i.e., not otherwise legally
proscribed) and may be made by
voluntary agreement of all the parties
interested in the property. This phase
may end with a declaration that plaintiff
is not entitled to have a partition either
because a co-ownership does not exist,
or partition is legally prohibited. It may
end, upon the other hand, with an
adjudgment that a co-ownership does
in truth exist, partition is proper in the
premises and an accounting of rents
and profits received by the defendant
from the real estate in question is in
order. In the latter case, the parties may,
if they are able to agree, make partition
among themselves by proper
instruments of conveyance, and the
court shall confirm the partition so
agreed upon. In either case i.e., either
the action is dismissed or partition and/or
accounting is decreed the order is a final
one, and may be appealed by any
party aggrieved thereby. The second
phase commences when it appears that
the partition" directed by the court. In that
event, partition shall be done for the parties by
the court with the assistance of not more than
three (3) commissioners. This second stage
may well also deal with the rendition of the
accounting itself and its approval by the court
after the parties have been accorded
opportunity to be heard thereon, and an
award for the recovery by the party or parties
thereto entitled of their just share in the rents
and profits of the real estate in question. Such
an order is, to be sure, final and appealable.[22]
The present rule on the question of finality and
appealability of a decision or order decreeing
partition is that it is final and
appealable.[23] The order of partition is a final
determination of the co-ownership over Lot
No. 1639 by the parties and the propriety of
the partition thereof. Hence, if the present rule
were applied, the order not having been
appealed or questioned by any of the parties
to the case, it has become final and executory
and cannot now be disturbed. Mesm
The true test to ascertain whether or not an
order or a judgment is interlocutory or final is:
Does it leave something to be done in the trial
court with respect to the merits of the case? If
it does, it is interlocutory; if it does not, it is final.
The key test to what is interlocutory is when
there is something more to be done on the
merits of the case.[24] An order for partition is
final and not interlocutory and, hence,
appealable because it decides the rights of
the parties upon the issue submitted.[25]
However, this Court notes that the order of
partition was issued when the ruling
in Fuentebella vs. Carrascoso,[26] which held
that the order of partition is interlocutory, was
controlling. In addition, the reports of the
commissioners not having been confirmed by
the trial court are not binding.[27] In this case,
both the order of partition and the
unconfirmed sketch plan are, thus,
interlocutory. Nevertheless, where parties do
not object to the interlocutory decree, but
show by their conduct that they have
assented thereto, they cannot thereafter
question the decree,[28] especially, where, by
reason of their conduct, considerable
expense has been incurred in the execution of
the commission.[29] Respondents in this case
have occupied their respective lots in
accordance with the sketch/subdivision plan.
They cannot after acquiescing to the order for
more than forty (40) years be allowed to
question the binding effect thereof.
This case is to be distinguished from the order
in the action for partition in Arcenas vs.
Cinco.[30] In that case, the order was clearly
interlocutory since it required the parties " to
submit the corresponding deed of partition to
the Court for its approval." Here, the order
appointed two commissioners and directed
them merely to approve the sketch plan
already existing and tentatively followed by
the parties. Calrky
Under the present rule, the proceedings of the
commissioners without being confirmed by the
court are not binding upon the
parties.[31] However, this rule does not apply in
case where the parties themselves actualized
the supposedly unconfirmed
sketch/subdivision plan. The purpose of court
approval is to give effect to the
sketch/subdivision plan. In this case, the
parties themselves or through their
predecessors-in-interest implemented the
sketch plan made pursuant to a court order for
partition by actually occupying specific
portions of Lot No. 1639 in 1952 and continue
to do so until the present until this case was
filed, clearly, the purpose of the court
approval has been met. This statement is not
to be taken to mean that confirmation of the
commissioners may be dispensed with but only
that the parties herein are estopped from
raising this question by their own acts of
ratification of the supposedly non-binding
sketch/subdivision plan. Kycalr
The records of the case show that sometime in
1946 there was a prior oral agreement to
tentatively partition Lot No. 1639.[32] By virtue of
this agreement, the original co-owners
occupied specific portions of Lot No. 1639.[33] It
was only in 1952 when the petition to subdivide
Lot No. 1639 was filed because two of the co-
owners, namely Hermogenes Olis and heirs of
Pascual Olis, refused to have said lot
subdivided and have separate certificates of
title. Significantly, after the 1952 proceedings,
the parties in this case by themselves and/or
through their predecessors-in-interest
occupied specific portions of Lot No. 1639 in
accordance with the sketch plan. Such
possession remained so until this case arose, or
about forty (40) years later.
From its order in 1952, it can be gleaned that
the CFI took notice of the tentative subdivision
plan by oral partition of the parties therein.
Further, it appears that said court was aware
that the parties therein actually took
possession of the portions in accordance with
the sketch/subdivision plan. With this factual
backdrop, said court ordered the partition
and appointed two (2) commissioners to
approve the tentative sketch/subdivision plan.
It would not be unreasonable to presume that
the parties therein, having occupied specific
portions of Lot No. 1639 in accordance with
the sketch/subdivision plan, were aware that it
was that same sketch/subdivision plan which
would be considered by the commissioners for
approval. There is no showing that
respondents by themselves or through their
predecessors-in-interest raised any objections.
On the contrary, the records show that the
parties continued their possession of the
specific portions of Lot No. 1639 pursuant to
the sketch/subdivision plan. Kyle
It has been previously held that a co-owner,
who, though not a party to a partition accepts
the partition allotted to him, and holds and
conveys the same in severalty, will not be
subsequently permitted to avoid partition.[34] It
follows that a party to a partition is also barred
from avoiding partition when he has received
and held a portion of the subdivided land
especially in this case where respondents
have enjoyed ownership rights over their share
for a long time.
71 | P r o p e r t y C a s e s - P o s s e s s i o n
Parties to a partition proceeding, who elected
to take under partition, and who took
possession of the portion allotted to them, are
estopped to question title to portion allotted to
another party.[35] A person cannot claim both
under and against the same instrument.[36] In
other words, they accepted the lands
awarded them by its provisions, and they
cannot accept the decree in part, and
repudiate it in part. They must accept all or
none.[37] Parties who had received the
property assigned to them are precluded from
subsequently attacking its validity of any part
of it.[38] Here, respondents, by themselves
and/or through their predecessors-in-interest,
already occupied of the lots in accordance
with the sketch plan. This occupation
continued until this action was filed. They
cannot now be heard to question the
possession and ownership of the other co-
owners who took exclusive possession of Lot
1639-D also in accordance with the sketch
plan. Exsm
In technical estoppel, the party to be
estopped must knowingly have acted so as to
mislead his adversary, and the adversary must
have placed reliance on the action and
acted as he would otherwise not have done.
Some authorities, however, hold that what is
tantamount to estoppel may arise without this
reliance on the part of the adversary, and this
is called, ratification or election by
acceptance of benefits, which arises when a
party, knowing that he is not bound by a
defective proceeding, and is free to repudiate
it if he will, upon knowledge, and while under
no disability, chooses to adopt such defective
proceeding as his own.[39] Ratification means
that one under no disability voluntarily adopts
and gives sanction to some unauthorized act
or defective proceeding, which without his
sanction would not be binding on him. It is this
voluntary choice, knowingly made, which
amounts to a ratification of what was
theretofore unauthorized, and becomes the
authorized act of the party so making the
ratification.[40]
The records show that respondents were
paying rent for the use of a portion of Lot No.
1639-D. Had they been of the belief that they
were co-owners of the entire Lot No. 1639 they
would not have paid rent. Respondents
attempted to counter this point by presenting
an uncorroborated testimony of their sole
witness to the effect that the amount so paid
to Roberto Maglucot and, subsequently, to
Ruperta Salma were for the payment of real
property taxes. We are not persuaded. It is
quite improbable that the parties would be
unaware of the difference in their treatment of
their transactions for so long a time. Moreover,
no evidence was ever presented to show that
a tax declaration for the entire Lot No. 1639
has ever been made. Replete in the records
are tax declarations for specific portions of Lot
1639. It is inconceivable that respondents
would not be aware of this. With due diligence
on their part, they could have easily verified
this fact. This they did not do for a period
spanning more than four decades.
The payment of rentals by respondents reveal
that they are mere lessees. As such, the
possession of respondents over Lot No. 1639-D
is that of a holder and not in the concept of an
owner. One who possesses as a mere holder
acknowledges in another a superior right
which he believes to be ownership, whether
his belief be right or wrong.[41] Since the
possession of respondents were found to be
that of lessors of petitioners, it goes without
saying that the latter were in possession of Lot
No. 1639-D in the concept of an owner from
1952 up to the time the present action was
commenced. Msesm
Partition may be inferred from circumstances
sufficiently strong to support the
presumption.[42] Thus, after a long possession in
severalty, a deed of partition may be
presumed.[43] It has been held that recitals in
deeds, possession and occupation of land,
improvements made thereon for a long series
of years, and acquiescence for 60 years,
furnish sufficient evidence that there was an
actual partition of land either by deed or by
proceedings in the probate court, which had
been lost and were not recorded.[44] And
where a tract of land held in common has
been subdivided into lots, and one of the lots
has long been known and called by the name
of one of the tenants in common, and there is
no evidence of any subsequent claim of a
tenancy in common, it may fairly be inferred
that there has been a partition and that such
lot was set off to him whose name it bears.[45]
Respondents insist that the absence of any
annotation in the certificate of title showing
any partition of Lot No. 1639 and that OCT No.
6725 has not been canceled clearly indicate
that no partition took place. The logic of this
argument is that unless partition is shown in the
title of the subject property, there can be no
valid partition or that the annotation in the title
is the sole evidence of partition. Esmso
Again, we are not persuaded. The purpose of
registration is to notify and protect the interests
of strangers to a given transaction, who may
be ignorant thereof, but the non-registration of
the deed evidencing such transaction does
not relieve the parties thereto of their
obligations thereunder.[46] As originally
conceived, registration is merely a species of
notice. The act of registering a document is
never necessary in order to give it legal effect
as between the parties.[47] Requirements for
the recording of the instruments are designed
to prevent frauds and to permit and require
the public to act with the presumption that
recorded instruments exist and are genuine.[48]
It must be noted that there was a prior oral
partition in 1946. Although the oral agreement
was merely tentative, the facts subsequent
thereto all point to the confirmation of said oral
partition. By virtue of that agreement, the
parties took possession of specific portions of
the subject lot. The action for partition was
instituted because some of the co-owners
refused to have separate titles issued in lieu of
the original title. In 1952, an order for partition
was issued by the cadastral court. There is no
evidence that there has been any change in
the possession of the parties. The only
significant fact subsequent to the issuance of
the order of partition in 1952 is that
respondents rented portions of Lot No. 1639-D.
It would be safe to conclude, therefore, that
the oral partition as well as the order of
partition in 1952 were the bases for the finding
of actual partition among the parties. The
legal consequences of the order of partition in
1952 having been discussed separately, we
now deal with oral partition in 1946. Given that
the oral partition was initially tentative, the
actual possession of specific portions of Lot No.
1639 in accordance with the oral partition and
the continuation of such possession for a very
long period indicate the permanency and
ratification of such oral partition. The validity of
an oral partition is already well-settled.
In Espina vs. Abaya,[49] we declared that an
oral partition is valid. In Hernandez vs.
Andal,[50] reiterated in Tan vs. Lim,[51] this Court
has ruled, thus:
On general principle, independent and in
spite of the statute of frauds, courts of equity
have enforce oral partition when it has been
completely or partly performed. Esmmis
Regardless of whether a parol partition or
agreement to partition is valid and
enforceable at law, equity will proper cases
where the parol partition has actually been
consummated by the taking of possession in
severalty and the exercise of ownership by the
parties of the respective portions set off to
each, recognize and enforce such parol
partition and the rights of the parties
thereunder. Thus, it has been held or stated in
a number of cases involving an oral partition
under which the parties went into possession,
exercised acts of ownership, or otherwise
partly performed the partition agreement,
that equity will confirm such partition and in a
proper case decree title in accordance with
the possession in severalty.
In numerous cases it has been held or stated
that parol partition may be sustained on the
ground of estoppel of the parties to assert the
rights of a tenant in common as to parts of
land divided by parol partition as to which
possession in severalty was taken and acts of
individual ownership were exercised. And a
court of equity will recognize the agreement
and decree it to be valid and effectual for the
purpose of concluding the right of the parties
as between each other to hold their
respective parts in severalty.
A parol partition may also be sustained on the
ground that the parties thereto have
acquiesced in and ratified the partition by
taking possession in severalty, exercising acts
of ownership with respect thereto, or otherwise
recognizing the existence of the partition.
A number of cases have specifically applied
the doctrine of part performance, or have
stated that a part performance is necessary,
to take a parol partition out of the operation
of the statute of frauds. It has been held that
where there was a partition in fact between
tenants in common, and a part performance,
a court of equity would have regard to
enforce such partition agreed to by the
parties. Esmsc
Two more points have constrained this Court
to rule against respondents. First, respondents
Wilfreda Maglucot-Alejo and Constancio
Alejo offered to buy the share of Roberto
Maglucot. Second, the tax declarations
contain statements that the houses of
respondents were built on the land owned by
Roberto Maglucot. Esm
72 | P r o p e r t y C a s e s - P o s s e s s i o n
On the first point, petitioners presented Aida researcher in his appeal. Counsel for petitioner
Maglucot who testified that after respondents should be reminded of the elementary rules of
were informed that petitioners were going to the legal profession regarding respect for the
use Lot No. 1639-D belonging to Roberto courts by the use of proper language in its
Maglucot, respondents Wilfreda Maglucot- pleadings and admonished for his improper
Alejo and Constancio Alejo went to the house references to the researcher of the CA in his
of said witness and offered to buy the share of petition. A lawyer shall abstain from
Roberto Maglucot.[52] Aida Maglucot further scandalous, offensive, or menacing language
testified that they refused the offer because or behavior before the courts.[63]
they also intend to use the lot for a residential
purpose.[53] This testimony of Aida Maglucot is WHEREFORE, the petition is GRANTED The
unrebutted by respondents, and the CA did decision of the Court of Appeals is SET ASIDE
not touch upon this finding of fact. Hence, the and the decision of the Regional Trial Court is
offer to buy has been established by the hereby REINSTATED. h Y
unrebutted evidence of the petitioners. Why
would they give such offer if they claim to be SO ORDERED.
at least a co-owner of the said lot? In effect,
Davide, Jr., C.J., (Chairman), Puno,
respondents impliedly admit the title of the
Pardo, and Ynares-Santaigo, JJ., concur.
petitioners and that they are not co-owners,
much less the sole owners, of Lot No. 1639-
D. Chief
On the second point, the existence of Tax
Declaration No. 04-557 in the names of
Constancio Alejo and Godofreda
Maglucot,[54] Tax Declaration No. 04-87-13 in
the names of Leopoldo Maglucot and Regina
Barot,[55] Tax Declaration No. 04-593 in the
names of Severo Maglucot and Samni
Posida[56] showing that the houses of the
above-mentioned persons are constructed on
the land of Roberto Maglucot[57] constitute
incontrovertible evidence of admission by the
same persons of the ownership of the land by
Roberto Maglucot. Tax Declarations are public
documents. Unless their veracity is directly
attacked, the contents therein are presumed
to be true and accurate.[58] The lone testimony
of Severo Maglucot that Roberto Maglucot
was only made to appear as owner of the land
in their respective declarations because he
was the administrator of Lot No. 1639 is
uncorroborated and not supported by any
other evidence. Jksm
No injustice is dealt upon respondents
because they are entitled to occupy a portion
of Lot No. 1639, particularly Lot No. 1639-A, in
their capacity as heirs of Tomas Maglucot, one
of the original co-owners of Lot No. 1639 in
accordance with the sketch plan of said lot
showing the partition into six portions.[59]
Finally, this Court takes notice of the language
utilized by counsel for petitioners in their
petition for review on certiorari. Thrice in the
petition, counsel for petitioners made
reference to the researcher of the CA. First, he
alluded to the lack of scrutiny of the records
and lack of study of the law "by the
researcher."[60] Second, he cited the
researcher of the CA as having "sweepingly
stated without reference to the record"[61] that
"[w]e have scanned the records on hand and
found no evidence of any partition." Finally,
counsel for petitioners assailed the CA
decision, stating that "this will only show that
there was no proper study of the case by the
researcher."[62]
Any court when it renders a decision does so
as an arm of the justice system and as an
institution apart from the persons that
comprise it. Decisions are rendered by the
courts and not the persons or personnel that
may participate therein by virtue of their
office. It is highly improper and unethical for
counsel for petitioners to berate the
[ GR No. 5051, Sep 27, 1910 ]
HEIRS OF JUMERO v. JACINTO LIZARES ET AL.
+ the usufruct until it should be redeemed
DECISION
17 Phil. 112
ARELLANO, C.J.:
Under the name of the heirs of Jumero,
fifteen persons, as the grandchildren and
great grandchildren of Benedicto Jumero,
demand the restitution of a piece of land
which is, and has been for the past forty
years, in the possession of Jacinto
Lizares, This land has an area of five
hectares and sixty ares, and adjoins on the
north, east, and west, the property of
Aniceto Lacson, and on the south, that of
Gregoria Vinco. It is alleged in
the complaint that this land belonged to
Benedicto Jumero, and that he willed it to
his four children, all now deceased as well
as the said Jumero, named Luisa,
Felix, Florentino, and Pedro, and that the
plaintiffs, grandchildren and great
grandchildren, descend from the three
last mentioned. The only descendant of
Luisa, Gregoria Meruegos, is not a party to
the suit and therefore appears as a
defendant together with Jacinto Lizares.
At the conclusion
of the trial, Florentine's children, named
Anatolio, Hilaria, and Felisa, having testified
as witnesses for the defendant, Lizares, in
opposition to the allegations of the
complaint, were likewise therein included
as defendants, by an amendment
authorized by the court. So that, of the
heirs of Benedicto Jumero, the descendant
of one entire branch, Luisa, and three of
those of another branch, that of Florentino,
impugned the complaint and take no part
in the claim for the restitution of the land
of their common predecessor in interest.
The following facts are admitted: First, that
all the heirs named Jumero are actually the
descendants of Benedicto Jumero;
second, that the land, which is the subject
of the suit, passed into the possession of
Jacinto Lizares,. for the sum of 50 pesos,
about forty years before; and third, that the
reason for this transfer was the fact that
Nicolas Jumero, a son of Felix, was drafted
for the army, and to secure His release from
the military service, or to pay the attorney
who was to negotiate the release, the 50
pesos were required.
The whole question involved is whether the
50 pesos were received as a mortgage
loan, as the plaintiffs claim, or as the price
of sale, as maintained from the beginning
by the defendants, Jacinto Lizares
and Gregoria Meruegos, and
subsequently by Anatolio, Hilaria, and Felisa
Jumero, the latter represented by her
73 | P r o p e r t y C a s e s - P o s s e s s i o n
husband, Basilio Alferio. The plaintiffs claim
that the land was delivered under
mortgage in order that Lizares might have
through the payment of the 50 pesos. The
defendants assert that the land was sold
outright to Lizares for the price of 50 pesos.
The Court of First Instance of Occidental
Negros decided the case in favor of the
defendants and absolved them from the
complaint. The plaintiffs appealed.
Having forwarded a bill of exceptions, with
a right to a revision of the evidence, two
errors are alleged in this instance against
the judgment of the lower court.
First. For having admitted, notwithstanding
the objection of the plaintiffs, the
testimony introduced by the appellees
relative to the purchase of the land in
question by Jacinto Lizares.
Second. Because the trial judge
entertained doubt as to the character of
the contract, by virtue of which the
defendant, Jacinto Lizares, possesses the
land in question, and because, by reason
of this doubt, he absolved the
defendants, and did not declare that there
was a preponderance of evidence in favor
of the plaintiff appellants.
With respect to the first assignment of error,
it is alleged that, as the question involves
the purchase of real estate, the testimony
of witnesses is not admissible, and that at
the time the land in question was supposed
to have been purchased, the laws of
the Partidas were in force, and, in
accordance with law 6, title 5, of the
5th Partida, it was necessary for the validity
of the contract that the sale be made by
a public instrument. The law cited provides
that the purchase and sale may be made
in two ways - by a public instrument, and
without one. The first is when the vendee
says to the vendor: "I wish that a document
of sale be made." Such a sale, although
the vendee and the vendor a!gree on the
price, is not completed until the instrument
is made and executed, because, before
that is done, one or the other may
repent. The sale may be made without an
instrument when the vendee and the
vendor both agree upon the price thereof
and exchange the thing for the price,
without mentioning the instrument.
The first assignment of error is therefore
without foundation. In accordance with
the legislation of the Partidas, patterned
after the Roman Law, the contract of
purchase and sale is eminently
consensual and, consequently, only
requires consent for its perfection. In order
that an instrument be necessary, it was
required that this form should also be the
subject of consent and that the validity of
the contract be made dependent
thereon: I wish a bill of sale to be made of
the thing sold, was what the vendee should
say to the vendor, according to the law
cited, in order that he might not be bound
until after the execution of the instrument.
As to the second assignment of error, it is
true that the trial judge while in doubt, and
by reason of his doubt, which still existed
after weighing the
contradictory testimony, decided the
suit in favor of the defendant. In so doing,
he committed no error whatever, but, on
the contrary, complied with the second
paragraph of article 6 of the Civil Code,
which provides:
"When there is no law exactly applicable to
the point in controversy, the customs of the
place shall be observed, and, in the
absence thereof, the general principles of
law."
And it is a general principle of law that, in
case of doubt, the condition of he who
possesses is the better one. The defendant
in whose favor the doubt
was decided is the possessor.
But, in reality, it was not a case of doubt,
neither with respect to the law nor the facts
adduced by the witnesses,
whose testimony, rationally weighed,
does not show an evident preponderance
of proof in favor of the plaintiffs, but all to
the contrary.
By law, in conformity with article 448 of the
Civil Code, this case could not but be
decided in favor of the defendant.
"The possessor by virtue of ownership has in
his favor the legal presumption that
he holds possession by reason of a
sufficient title and he can not
be forced to show it."
The defendant, Lizares,
who has possessed the land in litigation for
forty years, alleges that he is in possession
thereof by virtue of a title of purchase and
sale, which is a title of transfer of ownership;
he is, consequently, the possessor under
title of ownership, and, in conformity with
the law, he has in his favor the legal
presumption that he possesses the land
under sufficient title and he can not be
obliged to produce it. A purchase
verbally made gives a perfect title which,
with the occupation or possession of
the thing, confers ownership upon
the possessor, provided that he holds
himself out as its owner, until it be proved
that he is not. It was incumbent upon the
plaintiffs to prove a character distinct from
that of owner, and only then could they
compel the defendant to prove (rather
than to show, as very properly observes
the learned commentator, Manresa) the
title which actually confers upon him the
status of owner. But the plaintiffs were
unable to prove a character distinct from
that of owner, by due and sufficient proof
of a title under mortgage, or that of
antichresis, which latter was certainly
unknown in the Philippine Islands before
the ¦publication of the Civil Code, except
in exceedingly rare cases of pretorian
pledges judicially established and
approved - and this they were unable to
do, for the reason that, as established at
the trial, no instrument whatever was
executed of the alleged mortgage or of
Such an antichresis; and, at all times, at
least since the promulgation of the Civil
Code, the mortgage and the antichresis,
as restrictions of ownership, must
necessarily be recorded in writing, under
the first paragraph of rule 4 of the transitory
provisions of the Civil Code, in connection
with articles 1875, 1279, and 1280.
On these grounds alone, the
judgment appealed from should be
affirmed. But conceding, for a moment,
some value to the testimony taken, and on
the hypothesis that it were necessary
to consider it critically and reasonably in
order to reach a conviction beyond all
doubt, by a preponderance of evidence
offered by one of the litigating parties,
even then, and in such a case, this
preponderance could not be admitted in
favor of the plaintiffs.
The following witnesses testified for the
plaintiffs: Dionisio Acodo, as to the
delivery of the 50 pesos under security of
the land; Gregoria Vinco, Romualda
Jumero, and Cosme Jumero, to
the effect that, twenty years before,
according to the first two, and two years
before, according to the last,
the defendant, Jacinto Lizares, had
negotiated with their predecessors in
interest, Felix Jumero and Pedro
Jumero, respectively, for the conversion of
the mortgage into a sale; Rufino Brasileno,
with respect to what he had heard
Jacinto Lizares say to Gregoria Vinco
and another woman, that if they had
not sued him, he would have allowed
them to redeem the land; and Aniceto
Lacson, as to his attempt, at the request of
Jacinto Lizares, to buy the land for the
latter.
Examining all this testimony in detail, the
following particular can not but be
criticised:
First. Gregoria Vinco, the adjacent owner
to the south of the land in litigation, testified
that twenty years before Jacinto
Lizares sent for her father-in-law, Felix
Jumero, who went to the house of Jacinto
Lizares in company with his eldest son,
Nicolas, the husband of the witness,
with her husband's sister, Romualda, and
the witness herself, and that there Lizares
told them that, as the land was
mortgaged, he would add 150 pesos more,
in order that the land might be sold to
him. When the witness was asked on
74 | P r o p e r t y C a s e s - P o s s e s s i o n
cross-examination when she had married
her husband, Nicolas, she replied: "Thirty- Gregoria Meruegos, on cross-examination,
eight years ago; that is, two or four years stated that she had on some occasion
after he was chosen as a recruit." said that the land in question was pledged
to Lizares, but that as it had not been
Romualda Jumero testified: redeemed it was the same as though the
latter had acquired it by purchase. "If you
had not sued me, I would have allowed
"When my brother was drafted, it you to redeem the land," are words that the
happened that my father did not have the plaintiffs' witness, Rufino Brasileno,
money to redeem him, and he went and attributes to Lizares. Such are the results
borrowed the sum of 50 pesos from obtained from the oral evidence.
Lieutenant Jacinto Lizares, and gave him
that land as security. With all the testimony of the witnesses, proof
was not adduced of the existence of the
"Q. Who told you that your father and mortgage contract, which, on the other
Jacinto Lizares made that agreement? - hand, would not cause the debtor's
A. I accompanied my father when we land to pass to the control of the creditor.
went to Lizares's house.
It is not irrational to accept as conclusive
"Q. Who was your companion when you the testimony of the defendant's witnesses,
and your father went to Jacinto Lizares's although they were partners-on-shares of,
house? - A. We two, my father and I. or in any other manner dependent on, the
defendant, because they testified against
"Q. Can you tell us when you went their own interest in affirming that the land
with your father to Lizares's house? - A. had been transferred by sale.
About forty years ago.
It is likely, considering the custom of the
"Q. How many times were you in locality, and indeed a general one
Lieutenant Lizares's house to talk about throughout the Islands, that the land was
that land? - A. I only went once." sold with right 6f redemption, and hence
that its redemption should be spoken of
The conclusion is, first, that
as possible or as a mere concession on
Romualda Jumero, contrary to the
the part of the creditor; but, on such a
statement made by Gregoria Vinco, did
hypothesis, it was a redemption which
not go to Jacinto Lizares's house, and did
could not be demanded of the
not hear what is asserted to have been said
vendee, by reason of the prescription
about the conversion of the mortgage into
acquired, whether the time is computed in
a sale; and, second, that this witness
accordance with the previous legislation,
testified in regard to the alleged
or whether, as it is strictly proper, such time
contract of guaranty, made as she herself
limit, already expired, be that specified in
asserted, forty years before and when
the Civil Code; inasmuch as, even
questioned at the beginning of her
admitting that it was stipulated that
testimony, "How old are you?" replied,
the right to repurchase or redeem should
"About forty years, I believe."
last for an indefinite time, such period is
restricted to ten years, under paragraph 2
The following witnesses testified for the
of article 1508 of the Civil Code, and this
defendant: Gregoria Meruegos, Hilaria
period has already elapsed
Jumero, Anatolio Jumero, Basilio Alferio as
since its promulgation. (Art. 1939, Civil
the husband of Felisa Jumero, Simon
Code.)
Lizares, and Francisco Lizares. Of these,
the first four, and the last, averred that the
The judgment appealed from is affirmed,
sale was made by the Jumero family; that
with the costs of this instance against the
is, by the four children of Benedicto
appellants.
Jumero, because of the need
to redeem from the military service a
Torres, Johnson, and Moreland, JJ., concur.
son of Felix Jumero, the husband of
Carson,J., concurs in the result.
Gregoria Vinco who, as aforesaid, is an
adjacent owner of land to the south of the
property in question and the same person
who, according to the testimony of Hilaria
Jumero, built two houses, a large and
a small one, on the land in dispute "and on
account of that the suit began." The
witness Hilaria Jumero testified that Aniceto
Lacson made her an offer to buy the
land in question for 700 pesos, inasmuch as
it had been acquired very cheaply. This
testimony was confirmed by Aniceto
Lacson, in rebuttal, who stated that he had
offered her 400 pesos, but that Hilaria
Jumero replied that Jacinto Lizares had
also made her an offer.
G.R. No. L-35681 October 18, 1932
THE PEOPLE OF THE PHILIPPINE
ISLANDS, plaintiff-appellee,
vs.
TEODORO I. LOCSON, defendant-
appellant.
Juan S. Alvarez and M. H. de Joya for
appellant.
Attorney-General Jaranilla for appellee.
VICKERS, J.:
This is an appeal from a decision of Judge
A. Horrilleno of the Court of First Instance of
Zamboanga finding the defendant guilty of
the crime of qualified theft and sentencing
him to suffer twelve years, ten months, and
twenty days of cadena temporal and the
accessory penalties of the law, to return to
the Bank of the Philippine Islands the sum of
P33,965.45, and to pay the costs. The
defendant and appellant makes the
following assignment of errors:
1. The trial court erred in accepting as more
worthy of belief and consideration the
contradictory and improbable testimony of
the witnesses for the prosecution,
absolutely ignoring the trustworthy
evidence submitted by the unbiased
witnesses that testified for the defense.
2. The trial court also erred in making
conclusion and findings of facts absolutely
unsupported by the evidence presented
during the trial, and in convicting the
accused on the strength of mere
circumstantial evidence, which did not
exclude each and every reasonable
hypothesis consistent with the innocence of
the defendant.
3. The trial court finally erred in holding that
the sum of P33,965.45 in question was not
placed in the box and sack, when it was
brought to the vault on June 7, 1930, and
that the accused took the said money; and
in finding the said accused guilty of the
crime of qualified theft, imposing upon him
the penalty of twelve (12) years, ten (10)
months and twenty (20) days of cadena
temporal, to suffer the accessory penalties
provided by law, and to return to the Bank
of the Philippine Islands the said sum of
P33,965.45, and to pay the costs,
notwithstanding the insufficiency of the
evidence.
The defendant was tried on a plea of not
guilty to the following information:
The undersigned accuses Teodoro I. Locson
of the crime of qualified theft, committed
as follows:1awphil.net
That on or about the 8th day of June, 1930,
and within the jurisdiction of this court, viz.,
in the municipality of Zamboanga,
Province of Zamboanga, P. I., the above
75 | P r o p e r t y C a s e s - P o s s e s s i o n
named defendant, being an employee of the "grill". From the defendant's cage, the
the Bank of the Philippine Islands, cashier returned to his desk and then went
Zamboanga branch, as receiving teller, did to the cage of the paying teller, Mateo
then and there wilfully, unlawfully and Paulino, which adjoins that of the receiving
feloniously, taking advantage of his said teller, to check the silver in the possession of
position as such receiving teller and with the paying teller. The cashier stepped out
serious breach of confidence, take and of the paying teller's cage to take part in a
carry away with intent to gain and without conversation between the defendant and
the consent of said bank, money in the Vicente Guanzon, a clerk in the foreign
total amount of P33,965.45, equivalent to department of the bank, about the
169,827.25 pesetas belonging to the said defendant's coming back to the office to
bank. Contrary to law. work the next morning. The defendant had
gone outside of his cage to talk to
Zamboanga, Zamboanga, October 7, Guanzon. When the cashier was returning
1930. to the paying teller's cage, he saw the
janitor, Alfonso Basilio, followed by the
JOSE EVANGELISTA
defendant, carrying the money box and
Provincial Fiscal
sack to the vault. After completing the
check of the silver, the cashier went back
The defendant was the receiving teller of
to his desk to enter in a book the figures
the Zamboanga branch of the Bank of the
showing the amount of the different items
Philippine Islands. At the close of business
of the "pico". A messenger, Eugenio
on Saturday, June 7, 1930, he had in his
Canseco, followed by the paying teller,
possession the total sum of P48,461.58,
deposited the six trays of silver in the vault.
consisting of currency, pending checks,
Canseco then closed the door to the
and foreign coins as follows:
compartment where the "pico" was kept.
Alfonso Basilio, accompanied by the
In notes of P100 P300.00
cashier, carried a box of documents to the
vault. The cashier then locked the "grill" and
In notes of 50 250.00 the second door of the vault, and closed
the principal door of the vault, which has a
combination lock. The cashier put the key
In notes of 20 10,440.00 to the "grill" in a safe with a combination
lock in the office, closed it, and
accompanied by Basilio left the office at
In notes of 10 9,010.00
5.05 in the afternoon. The defendant, who
was waiting near the employees' entrance
In notes of 5 11,025.00 to the bank, left on his bicycle, after telling
the janitor, Alfonso Basilio, to come to the
bank early the next morning.
In notes of 2 5,276.00
In the conversation between the
In notes of 1 3,456.00 defendant and Guanzon, to which we
have referred, Guanzon told the
defendant that he would not come back
U.S.A. notes 1,634.00 the next day because it was the fiesta of his
barrio; that it was unnecessary for the
defendant to come back, because he
Foreign currencies 47.45
could get from the cashier a book
containing the data he required for
Misc. checks pending 4,501.13 preparing certain statistics and take it
home with him, but the defendant insisted
on coming to the office Sunday morning to
Mutilated bills 1,897.00
use the adding machine. The cashier then
gave the defendant the book, and told
Phil. National Bank bills 165.00 him to send Basilio to get the key to the
office the next morning.
Bank of the P. I. bills 460.00 The janitor, Alfonso Basilio, got the key to
the office from the cashier next morning
and opened the bank about 8 o'clock. He
entered defendant's cage to dust it. When
Basilio was stooping in the act of placing
48,461.58
the cover of the adding machine under the
This sum is referred to in the record as the counter, the defendant arrived and asked
"pico". It appears from the evidence that it him what he was doing. The defendant was
was checked by the cashier about 4.30 in carrying a package wrapped in a
the afternoon of June 7th and found to be newspaper. Three minutes after the
correct. The cashier, Donato de Llana, then defendant arrived, he sent Basilio out to
told the defendant to put the money in a buy ice. Basilio was gone for ten or twelve
money box and a sack and take it to the minutes, and during this time the defendant
third compartment of the vault known as was left alone in the bank. Soon after the
janitor came back, the defendant called
him, and on entering defendant's cage
Basilio saw the defendant wrap a folded
flour sack two inches thick in a rice sack.
Defendant told Basilio to tie this bundle to
defendant's bicycle, and watched him
while he was fixing the bundle on the
bicycle. Defendant gave Basilio some
figures to add on the adding machine, and
told him that he was going to the market to
buy some mangoes. He left the bank on his
bicycle. He came back in about ten
minutes without the sacks, and said he did
not buy any mangoes because they were
too dear. He then gave Basilio some other
work to do. They left the bank about 11
o'clock. Basilio locked the door and
returned the key to the cashier.
From the bank the defendant went to the
market. Near the market he engaged
a calesa driven by Vicente Natividad,
whom the defendant had employed, on
various previous occasions to take fish and
vegetables to his house. They stopped at a
store near the market, and there the
defendant put into the calesa a basket
with a rolled sack on the cover. The
defendant then told the cochero to take
the basket to defendant's house. The
defendant followed the calesa on his
bicycle. When they reached defendant's
house, the defendant himself took the
basket out of the calesa and paid
the cochero 20 centavos.
Early that morning, about 7.15, before
going to the bank, the defendant had
stopped at the office of Marquez, a
stevedoring firm, located across the street
from the bank. He stood inside the door
locking out, as if watching for somebody.
The stevedores were expecting a boat to
be unloaded.
About noon on the same day, Sunday, the
8th of June, the defendant entered the
Indian Bazar as it was about to close and
bought a valise for P5. A little later the
defendant paid all that he owed to Gan
San Lien, amounting to P65, giving him
three twenty-peso bank notes and one
five-peso bank note. The defendant had
been owing this balance since February,
1930.
The next morning, Monday, June 9, 1930,
the defendant, contrary to his usual
practice, was one of the last arrive at the
office. There was already a customer in the
bank, who desired to withdraw some
money, but the paying teller was unable to
wait on her, because the defendant had
not come to deliver to the paying teller the
money for the disbursements for the day,
and the paying teller referred her to the
cashier, who was waiting her when the
defendant arrived. The defendant entered
his cage, sat down and began to read a
newspaper. When the cashier saw him, the
cashier got the key to the "grill", went to the
vault accompanied by the messenger
Canseco, and got the money box and
sack containing the "pico" of June 7th.
76 | P r o p e r t y C a s e s - P o s s e s s i o n
Canseco delivered the money box to the
defendant and sack to the paying teller.
The paying teller poured out the contents
of the sack on his counter. He noticed at
once that the loose bank notes, which
were the first to be counted by him each
morning, were missing. He notified the
defendant immediately. The defendant
then opened the money box, which was on
his counter, as if to look for the loose bank
notes, and exclaimed: "They are not here,
or the bank notes of large denominations
which I put here on the afternoon of June
7th." As the defendant pretended to be
looking for the bank notes in his office and
did not notify the cashier, the paying teller
notified the cashier, who in turn notified the
manager, Victor J. Jimenez.
The manager immediately asked the
defendant where the money was. The
defendant said he had put it in the box and
the bag, adding that he had put P15,000 in
the box in ten-peso and twenty-peso bills
and the rest in the bag. When asked what
had become of it the defendant said he
did not know, that he did not have the keys
to the vault. The manager then checked
the "reserve" in the vault, amounting to
P124,000, and found it intact. He then
checked the money in the box and the
sack, and found the shortage to be
P33.965.45, made up as follows:
In notes of P100 P300.00
In notes of 50 250.00
In notes of 20 10,440.00
In notes of 10 9,010.00
In notes of 5 11,025.00
In notes of 2 76.00
In notes of 1 56.00
U.S.A. notes 1,634.00
Mutilated bills 502.00
Phil. National Bank bills 165.00
Bank of the P.I. bills 460.00
Foreign currencies 47.45
33,965.45
The Constabulary and the police were
immediately notified of this loss. The chief of
police of Zamboanga learned from Alfonso
Basilio about the two sacks the defendant
had taken from the bank. He went to
defendant's house in the afternoon of June
9th and found two sacks in a laundry bag
behind the door in the defendant's
bedroom which Basilio declared to be like
those he had seen in defendant's
possession. The money was never
recovered.
It appears from the evidence that about
the latter part of April, 1930 the defendant,
contrary to the practice of the bank,
began to retain a part of the "pico",
consisting of bank notes of big
denominations, and he persisted in this
course to such a degree that the paying
teller had call his attention to the matter
several times.
The evidence also shows that on Saturday,
June 7th the manager said the "pico" was
too large, and that on Monday he would
pay P30,000 to the Chartered Bank or else
send it to the head office of the Bank of the
Philippine Islands in Manila. The defendant
was present when the manager made this
statement.
The defendant was receiving a salary of
only P90 a month. He had debts amounting
to over a thousand pesos. Two or three
months prior to June 7th, 1930, in
connection with the newspaper reports of
the Wilson case, the defendant asked the
accountant of the bank, Santa Elena, how
long bank notes would last if buried in the
ground, and when the accountant replied
that it would depend on the container, the
defendant inquired how long they would
last if kept in a tightly sealed earthen jar.
On June 13, 1930, Santiago Freixas, auditor
of the Bank of the Philippine Islands,
examined the reserve fund of the
Zamboanga branch. He found it intact, but
on examining the books of the bank he
found a shortage of more than P33,000 in
the "pico" of June 7, 1930.
When the bank was opened on Monday
Morning, June 9, 1930, all the doors of the
bank and the vault were in good condition.
The doors of the vault were found duly
closed. There were no signs of robbery.
Various possibilities have been suggested
to explain how the money might have
been taken from the vault, but they are so
improbable that we do not deem it worth
while to consider more than one of them.
Of course, if it be assumed that the
defendant was honest and all the other
officers of the bank corrupt and in collusion
to loot the bank, it is easy enough to
conclude that the defendant is innocent.
Defendant's attorneys assume that the
cashier had been embezzling the money of
the bank, and that on the afternoon of
June 7th he took the amount in question
from the "pico" and put it in the "reserve" to
cover his peculations. The origin of this
assumption appears to have been the
announcement of the president of the
bank in April that from July, 1930 the
"reserve" should be under the executive
control of the manager. There is not a
particle of evidence to support this
assumption of defendant's attorneys in the
slightest degree. There is no evidence even
remotely tending to show that there was a
shortage in the "reserve". Furthermore, it
appears that it would have been
practically impossible for the cashier to
substitute P33,000 from the "pico" for a like
amount from the "reserve". In the first place
the "reserve" is ordinarily made up of new
bills of the Government of the Philippine
Islands, while the "pico" consists of the
ordinary bills in circulation. On the wrapper
of each bundle of bills in the "reserve"
appear the initials of the person who has
examined it, while the bundles in the "pico"
are held together only with rubber bonds. It
was impossible for the cashier to make the
substitution during the few minutes that he
was in the vault Saturday afternoon and
Monday morning. He could not have
entered the vault in the interim without the
collusion of the accountant and the
manager, as the combination of the lock
on the main door to the vault was known
only to the accountant, and the key to the
grill was in a safe, the combination of which
only the manager knew.
After carefully considering the evidence
and the decision of the trial court and the
arguments of counsel, we are satisfied that
the true explanation of the disappearance
of the money is that the defendant never
sent it to the vault, but concealed it in his
cage instead of putting it in the box and
bag, and removed it the next day. The
facts inevitably lead the mind to that
conclusion. If the defendant had put the
full amount of the "pico" in the vault
Saturday afternoon, it would have been
found there Monday morning. It is a
reasonable inference from the facts that
the defendant went to the bank Sunday
morning to dispose of the money, and for
that purpose sent the janitor out, to buy ice.
The money was taken away from the bank,
and that was the only time when it could
have been disposed of. The defendant
may have put it in the flour sack, or he may
have put part of it in the sack and
concealed the rest of it on his person, or he
may have passed it out to a confederate.
In any event the defendant removed the
money from the bank. Defendant's
subsequent conduct strongly tends to
confirm that conclusion. When he left the
bank that morning about 11 o'clock, he
went to the market and engaged a
public carromata to take his house a
basket that he got from a store near the
market. A flour sack and a rice sack similar
to those the defendant took away from the
bank were found next day in a laundry bag
in defendant's house. About noon that
same day, Sunday, June 8th, the
defendant paid a Chinese merchant P65 in
settlement of an old account, and bought
77 | P r o p e r t y C a s e s - P o s s e s s i o n
a valise for P5. Defendant did not attempt
to explain where this money came from but
denied having any such transactions on
June 8th.
Although the question is not specifically
raised in the assignments of error, the court
has carefully considered the classification
of the crime committed by the defendant
and found it to be correctly classified by
the trial court as qualified theft. The money
was in the possession of the defendant as
receiving teller of the bank, and the
possession of the defendant was the
possession of the bank. When the
defendant, with a grave abuse of
confidence, removed the money and
appropriated it to his own use without the
consent of the bank, there was the taking
or apoderamiento contemplated in the
definition of the crime of theft.
In the case of the United States vs. De Vera
(43 Phil., 1000, 1003), Justice Villamor
speaking for the court said:
The argument advanced in support of the
contention of the defense is that the goods
misappropriated were not taken by the
accused without the consent of the owner
who had delivered them to her voluntarily,
and this element being lacking, it cannot
be the crime of theft.
It is well to remember the essential elements
of the crime of theft, as expounded in the
textbooks, which are as follows: First, the
taking of personal property; second, that
the property belongs to another; third, that
the taking away be done with intent of
gain; fourth, that the taking away be done
without the consent of the owner; and fifth,
that the taking away be accomplished
without violence or intimidation against
persons or force upon things.
The commentators on the Spanish Penal
Code, from which ours was adopted, lay
great stress on the first element, which is the
taking away, that is, getting possession,
laying hold of the thing, so that, as Viada
says, if the thing is not taken away, but
received and then appropriated or
converted without the consent of the
owner, it may be any other crime, that
of estafa for instance, but in no way that of
theft, which consists in the taking away of
the thing, that is, in removing it from the
place where it is kept by the legal owner,
without the latter's consent, that is, without
obtaining for the purpose the consent of
the legitimate owner.
The doctrine of the case as stated in the
syllabus is as follows:
When the delivery of a chattel or cattle has
not the effect of transferring the juridical
possession thereof, or title thereto, it is
presumed that the possession of, and title
to the thing so delivered remains in the
owner; and the act of disposing thereof
with intent of gain and without the consent
of the owner constitutes the crime of theft.
The Supreme Court of Spain in a decision of
June 23, 1886 held that a shepherd, who
takes away and converts to his own use
several head of the sheep under his care, is
guilty of qualified theft. (Viada: Vol. 3, p.
433, 4th ed.)
In a decision of December 30, 1903, the
same court said:
Considerando que el grave abuso de
confianza se determina por el
quebrantamiento de especiales vinculos
de lealtad impuestos, ya por las relaciones
que median entre ofensor y ofendido, o ya
por la naturaleza del encargo que se
desempena: y, en tal concepto, el abuso
que comete un mozo de estacion
sustrayendo objetos encomendados a la
Empresa de que depende no puede
menos de reputarse grave, segun en caso
identico lo ha declarado con anterioridd
esta Sala, puesto que el culpable defrauda
la natural confianza que al publico debe
inspirar y perjudica, no solo al credito de
dicha Empresa, sino tambien sus intereses,
puesto que esta es responsable de los
efectos que se la confian, revistiendo asi el
hecho condiciones de notoria gravedad,
etc. (Viada: Vol. 6, p. 308, 5th ed.) See
also the following cases cited on page 314:
El cobrador y comisionado de apremio,
nombrado y renumerado por el respectivo
recaudador de contribuciones, que
sustrae varios de los recibos que para el
pago de estas existian en la Oficina de
recaudacion, y cobrandolos el mismo de
los contribuyentes, se apropia su importe
sin entregarlo en la Oficina, ¿sera
responsable del delito de estafa, o del de
hurto con grave abuso de confianza? El
Tribunal Supremo ha declarado que esta
ultima y mas grave calificacion es la que le
corresponde.
El Concejal de un Ayuntamiento que
encargado de la inspeccion y direccion
de una rifa benefica, es soprendido en el
acto de sustraer el dinero que se
recaudaba producto de los billetes, ¿sera
responsable del delito de hurto con grave
abuso de confianza, o bien del de
malversacion de caudales, y en su
defecto, del de estafa? El tribunal Supremo
ha declarado lo primero.
For the foregoing reasons, the decision
appealed from is affirmed, with the costs
against the appellant.
Avanceña, C.J., Malcolm, Villamor,
Ostrand, Villa-Real, Abad Santos, Hull and
Imperial, JJ., concur.

SECOND DIVISION
PROGRAMME INCORPORATED, G.R. No. 144635
Petitioner,
Present:
PUNO, J., Chairperson,
- v e r s u s - SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA and
GARCIA, JJ.
PROVINCE OF BATAAN,[1]
Respondent. Promulgated:
June 26, 2006
CORONA, J.:
In this petition filed under Rule 45 of the Rules of
Court, petitioner Programme Incorporated
contests the Court of Appeals (CA) decision[2] and
resolution[3] upholding respondent Province
of Bataans ownership of Piazza Hotel and the land
on which it stands. The assailed decision in CA-
G.R. CV No. 49135 affirmed the decision of the
Regional Trial Court (RTC), Branch
4, Balanga, Bataan in a suit for preliminary
injunction and sum of money filed by petitioner
against Bataan Shipyard and Engineering Co.,
Inc. (BASECO). The case was docketed as Civil
Case No. 129-ML. The dispositive portion of the
trial court decision read:
WHEREFORE, in view of all the foregoing
considerations, judgment is hereby rendered
dismissing the complaint, without pronouncement
as to costs.
Similarly, [BASECOs] counterclaim is dismissed.
On the complaint in intervention, judgment is
hereby rendered ordering [petitioner] to pay
[respondent] the rentals for the leased premises in
question, namely, the Piazza Hotel and
the Mariveles Lodge, situated at
the Bataan Export Processing Zone (BEPZ)
Compound in Mariveles, Bataan, at the rate of six
thousand five hundred pesos (P6,500.00) per
month for both establishments, starting in August
1989 with legal interest at 6% per annum, up to
and until the legal arrearages shall have been fully
paid, and to pay the succeeding
rentals therefor at the same rate.
SO ORDERED.[4]
The controversy arose from the following facts.
BASECO was the owner of Piazza Hotel
and Mariveles Lodge, both located
in Mariveles, Bataan.
On May 14, 1986, BASECO granted petitioner a
contract of lease over Piazza Hotel at a monthly
rental of P6,500 for three years, i.e., from January
1, 1986 to January 1, 1989, subject to renewal by
mutual agreement of the parties. After the
expiration of the three-year lease period,
petitioner was allowed to continue operating the
hotel on monthly extensions of the lease.
In April 1989, however, the Presidential
Commission on Good Government (PCGG) issued
a sequestration order against BASECO pursuant to
Executive Order No. 1 of former President Corazon
C. Aquino.[5] Among the properties provisionally
seized and taken over was the lot on which Piazza
Hotel stood.
On July 19, 1989, however, Piazza Hotel was sold
at a public auction for non-payment of taxes to
respondent Province of Bataan. The title of the
property was transferred to
respondent. BASECOs Transfer Certificate of Title
(TCT) No. T-59631 was cancelled and a new one,
TCT No. T-128456, was issued to the Province
of Bataan.
On July 21, 1989, petitioner filed a complaint for
preliminary injunction and collection of sum of
money against BASECO (Civil Case No. 129-
ML).[6] Respondent, as the new owner of the
property, filed a motion for leave to intervene on
November 22, 1990. After its motion was granted,
78 | P r o p e r t y C a s e s - P o s s e s s i o n
respondent filed a complaint-in-intervention
praying, inter alia, that petitioner be ordered to
vacate Piazza Hotel and Mariveles Lodge for lack
of legal interest.
During the pre-trial of the complaint-in-
intervention, the parties agreed that the
case[7] be tried on the sole issue of whether
respondent province, as complainant-intervenor,
was the legitimate owner of the Piazza Hotel
and Mariveles Lodge.
On February 3, 1995, after trial on the merits, the
trial court rendered judgment in favor of
respondent.
On appeal, the CA addressed the issue of
ownership of Piazza Hotel and Mariveles Lodge as
follows:
[W]e affirm the trial courts ruling that [respondent]
Province of Bataan has established by
preponderance of evidence its claim of
ownership of Piazza Hotel and Mariveles Lodge. In
fact, [petitioner] has not presented evidence
proving its ownership of the said buildings[,
whereas respondent presented] a tax declaration
and certificate of title over the same properties,
over which it now exercises full control and
dominion. The fact that the subject properties
were placed under sequestration is of no moment
for the PCGG is not an owner but a conservator
who can exercise only powers of administration
over property sequestered, frozen or provisionally
taken over. As the owner of said properties,
[respondent-intervenor] is entitled to the payment
of the monthly rental in the sum of P6,500.00 as
ruled by the trial court.[8] (emphasis ours)
We agree with the appellate court.
Time and again, we have ruled that factual
matters are best evaluated by trial courts which
can scrutinize evidence and hear testimony
presented and offered by the parties (in this case,
on the issue of ownership of the subject
property). All the more does this principle ring true
in this petition since such factual determination by
the RTC was upheld by the CA.[9] Only questions of
law are the proper subject of a petition for review
on certiorari in this Court, unless any of the known
exceptions is extant in this case.[10] There is none.
The evidence clearly established respondents
ownership of Piazza Hotel.[11] First, the title of the
land on which Piazza Hotel stands was in the
name of respondent.[12] Second, Tax Declaration
No. 12782 was in the name of respondent as
owner of Piazza Hotel.[13] A note at the back of the
tax declaration read:
Transferred by virtue of a final bill of sale executed
by the Provincial [Treasurer] of Bataan in favor of
the Provincial Government on Feb. 13, 1989[, a]
year after the expiration of the redemption period
from date of auction sale held on Feb. 12, 1988 of
all real property declared in the name of
[BASECO].[14] (emphasis ours)
Third, petitioner was doubtlessly just a lessee. In the
lease contract annexed to the complaint,
petitioner in fact admitted BASECOs(respondents
predecessor-in-interest) ownership then of the
subject property. A stipulation in the contract
read:
WHEREAS, the lessor (BASECO) is the owner of the
building PIAZZA HOTEL and its outlet MARIVELES
LODGE located at
BASECO, Mariveles, Bataanxxx[15] (emphasis ours)
The Rules of Court states that [a]n admission,
verbal or written, made by a party in the course of
the proceedings in the same case, does not
require proof. The admission may be contradicted
only by showing that it was made through
palpable mistake or that no such admission was
made.[16]
[Such admissions] may be made in (a) the
pleadings filed by the parties, (b) in the course of
the trial either by verbal or written manifestations
or stipulations, or (c) in other stages of the judicial
proceeding, as in the pre-trial of the case.
Admissions obtained through depositions, written
interrogatories or requests for admission are also
considered judicial admissions.[17] (emphasis ours)
To be considered as a judicial admission, the
same must be made in the same case in which it
is offered.[18]
In its own complaint[19] for preliminary injunction
and sum of money, petitioner acknowledged that
it was not the owner of the property when it stated
that [BASECO] lease[d] to [petitioner] the building
Piazza Hotel and its outlet Mariveles Lodge xxx for
monthly rentals of P6,500.00.[20] Petitioner could
not possibly be the owner of a building merely
leased to it.[21]
Furthermore, petitioners reference to Article
448[22] of the
Civil Code to justify its supposed rights as possessor
in good faith was erroneous.
The benefits granted to a possessor in good faith
cannot be maintained by the lessee against
the lessor because, such benefits are intended to
apply only to a case where one builds or sows or
plants on land which he believes himself to have
a claim of title and not to lands wherein ones only
interest is that of a tenant under a rental contract,
otherwise, it would always be in the power of a
tenant to improve his landlord out of his
property. Besides, as between lessor and lessee,
the Code applies specific provisions designed to
cover their rights.
Hence, the lessee cannot claim reimbursement,
as a matter of right, for useful improvements he
has made on the property, nor can he assert a
right of retention until reimbursed. His only remedy
is to remove the improvement if the lessor does
not choose to pay its value; but the court cannot
give him the right to buy the land.[23]
Petitioners assertion that Piazza Hotel was
constructed at (its) expense found no support in
the records. Neither did any document or
testimony prove this claim. At best, what was
confirmed was that petitioner managed and
operated the hotel. There was no evidence that
petitioner was the one which spent for the
construction or renovation of the property. And
since petitioners alleged expenditures were never
proven, it could not even seek reimbursement of
one-half of the value of the improvements upon
termination of the lease under Article 1678[24] of
the Civil Code.
Finally, both the trial and appellate courts
declared that the land as well as the
improvement thereon (Piazza Hotel) belonged to
respondent. We find no reason to overturn this
factual conclusion.
Since this petition for review on certiorari was
clearly without legal and factual basis, petitioners
counsel should not have even filed this appeal. It
is obvious that the intention was merely to delay
the disposition of the case.
WHEREFORE, the petition is hereby DENIED. The
decision and resolution of the Court of Appeals in
CA-G.R. CV No. 49135 areAFFIRMED.
Costs against petitioner. Same costs against Atty.
Benito R. Cuesta I, petitioners counsel, for filing this
flimsy appeal, payable within ten (10) days from
finality of this decision.
G.R. No. 157044 October 5, 2005
RODOLFO V. ROSALES, (represented by his
heirs, Rodolfo, Jr., Romeo Allan, Lillian
Rhodora, Roy Victor, Roger Lyle and Alexander
Nicolai, all surnamed Rosales) and LILY
ROSQUETA-ROSALES, Petitioners
vs.
MIGUEL CASTELLTORT, JUDITH CASTELLTORT,
and LINA LOPEZ-VILLEGAS, assisted by her
Attorney-in-Fact, Rene Villegas, Respondents.
DECISION
CARPIO MORALES, J.:
The present petition for review on certiorari
assails the October 2, 2002 Decision1 and
February 6, 2003 Resolution2of the Court of
Appeals (CA) in CA G.R. CV No. 64046 and
seeks to reinstate the April 21, 1999 Decision3 of
the Regional Trial Court (RTC) of Calamba,
Laguna, Branch 34 in Civil Case No. 2229-95-C.
Spouses-petitioners Rodolfo V. Rosales and Lily
Rosqueta-Rosales (petitioners) are the
registered owners of a parcel of land with an
area of approximately 315 square meters,
covered by Transfer Certificate of Title (TCT)
No. 368564 and designated as Lot 17, Block 1
of Subdivision Plan LRC Psd-55244 situated in
Los Baños, Laguna.
On August 16, 1995, petitioners discovered
that a house was being constructed on their
lot, without their knowledge and consent, by
respondent Miguel Castelltort (Castelltort).5
It turned out that respondents Castelltort and
his wife Judith had purchased a lot, Lot 16 of
the same Subdivision Plan, from respondent
Lina Lopez-Villegas (Lina) through her son-
attorney-in-fact Rene Villegas (Villegas) but
that after a survey thereof by geodetic
engineer Augusto Rivera, he pointed to Lot 17
as the Lot 16 the Castelltorts purchased.
Negotiations for the settlement of the case
thus began, with Villegas offering a larger lot
near petitioners’ lot in the same subdivision as
a replacement thereof.6 In the alternative,
Villegas proposed to pay the purchase price
of petitioners’ lot with legal interest.7 Both
proposals were, however, rejected by
petitioners8 whose counsel, by letter9of August
24, 1995, directed Castelltort to stop the
construction of and demolish his house and
any other structure he may have built thereon,
and desist from entering the lot.
Petitioners subsequently filed on September 1,
1995 a complaint10 for recovery of possession
and damages with prayer for the issuance of
a restraining order and preliminary injunction
against spouses-respondents Miguel and
Judith Castelltort before the RTC of Calamba,
Laguna, docketed as Civil Case No. 2229-95-
C.
To the complaint, the Castelltorts claimed in
their Answer with Counterclaim11 that they
were builders in good faith.
Lina, represented by her son-attorney-in-fact
Villegas, soon filed a Motion for
Intervention12 before the RTC which was
granted by Order13 of December 19, 1995.
79 | P r o p e r t y C a s e s - P o s s e s s i o n
In her Answer to the complaint,14 Lina alleged
that the Castelltorts acted in good faith in
constructing the house on petitioners’ lot as
they in fact consulted her before
commencing any construction thereon, they
having relied on the technical description of
the lot sold to them, Lot 16, which was verified
by her officially designated geodetic
engineer.
Nevertheless, Lina proposed to give petitioners
a lot containing an area of 536 square meters
together with the house and duplex structure
built thereon or, if petitioners choose, to
encumber the 536 square meter lot as
collateral "to get immediate cash" through a
financing scheme in order to compensate
them for the lot in question.15
Ruling out good faith, the RTC, by Decision of
April 21, 1999, found for petitioners in this wise:
In the instant case, there is no well-founded
belief of ownership by the defendants of the
land upon which they built their house. The title
or mode of acquisition upon which they based
their belief of such ownership stemmed from a
Contract to Sell (Exhibit "P") of which they were
not even parties, the designated buyer being
Elizabeth Yson Cruz and the sale even
subjected to the judicial reconstitution of the
title. And by their own actions, particularly
defendant Miguel Castelltort, defendants
betrayed this very belief in their ownership
when realizing the inutility of anchoring their
ownership on the basis of the Contract of Sale,
defendant Miguel Castelltort in his testimony
declared Elizabeth Yson Cruz as his wife (tsn,
pp. 7-8, March 24, 1998) despite an admission
in their answer that they are the spouses
named as defendants (tsn, p. 8, January 12,
1998) and which declaration is an utter
falsehood as the Contract to Sell itself
indicates the civil status of said Elizabeth Yson
Cruz to be single.
Even if we are to concede that defendants
built their house in good faith on account of
the representation of attorney-in-fact Rene
Villegas, their failure to comply with the
requirements of the National Building Code,
particularly the procurement of a building
permit, stained such good faith and belief.
xxx
From any and all indications, this deliberate
breach is an unmitigated manifestation of bad
faith. And from the evidence thus adduced,
we hold that defendants and the intervenor
were equally guilty of negligence which led to
the construction of the defendants’ house on
plaintiffs’ property and therefore jointly and
severally liable for all the damages suffered by
the plaintiffs.16 (Underscoring supplied)
The dispositive portion of the trial court’s
Decision reads, quoted verbatim:
ACCORDINGLY, in view of all the foregoing,
judgment is hereby rendered in favor of
plaintiffs and against the defendants, ordering
the latter to surrender the possession of the
property covered by TCT No. 36856 of the
Register of Deeds of Laguna including any and
all improvements built thereon to the plaintiffs.
Defendants and intervenors are likewise jointly
and severally directed to pay to plaintiffs the
following damages:
a) TWO THOUSAND (P2,000.00) PESOS per
month from February 1995 by way of
reasonable compensation for the use of
plaintiffs’ property until the surrender of the
same;
b) FIFTY THOUSAND (P50,000.00) PESOS by way
of moral damages;
c) THIRTY THOUSAND (P30,000.00) PESOS as
exemplary damages;
d) TWENTY THOUSAND (P20,000.00) PESOS as
attorney’s fees and cost of suit.
The counterclaim interposed by the
defendants in their responsive pleading is
hereby dismissed for lack of merit.
SO ORDERED.17
Respondents thereupon filed their respective
appeals with the CA.
Petitioner Rodolfo Rosales, in the meantime,
died on December 7, 2001. His heirs Rodolfo,
Jr., Romeo Allan, Lillian Rhodora, Roy Victor,
Roger Lyle and Alexander Nicolai, all
surnamed Rosales, filed their Appearance18 as
his substitute.
By Decision of October 2, 2002, the CA
granted the appeal and set aside the April 21,
1999 RTC Decision. The dispositive portion of
the Decision reads, quoted verbatim:
WHEREFORE, premises considered, the instant
appeal is hereby GRANTED and the assailed
decision of the court a quo REVERSED AND SET
ASIDE. In accordance with the cases
of Technogas Philippines Manufacturing Corp.
vs. Court of Appeals and Depra vs. Dumlao,
applying Article 448 of the Civil Code, this case
is REMANDED to the Regional Trial Court of
Calamba, Laguna, Branch 34, for further
proceedings, as follows:
1. to determine the present fair price of
appellees’ 315 square meter area of land and
the amount of the expenses actually spent by
the appellants for building the house as of 21
August 1995, which is the time they were
notified of appellees’ rightful claim over Lot 17.
2. to order the appellees to exercise their
option under the law (Article 448, Civil Code),
whether to appropriate the house as their own
by paying to the appellants the amount of the
expenses spent for the house as determined
by the court a quo in accordance with the
limitations as aforestated or to oblige the
appellants to pay the price of the land.
In case the appellees exercise the option to
oblige the appellants to pay the price of the
land but the latter reject such purchase
because, as found by the court, the value of
the land is considerably more than that of the
house, the court shall order the parties to
agree upon the terms of a forced lease, and
give the court a quo a formal written notice of
such agreement and its provisos. If no
agreement is reached by the parties, the court
a quo shall then fix the terms of the forced
lease, provided that the monthly rental to be
fixed by the Court shall not be less that Two
Thousand Pesos (P2,000.00) per month,
payable within the first five (5) days of each
calendar month and the period thereof shall
not be more than two (2) years, counted from
the finality of the judgment.
Upon the expiration of the forced lease, or
upon default by the appellants in the payment
of rentals for two (2) consecutive months, the
appellees shall be entitled to terminate the
forced lease, to recover their land, and to
have the improvement removed by the
appellants at the latter’s expense. The rentals
herein provided shall be tendered by the
appellants to the court for payment to the
appellees, and such tender shall constitute
evidence of whether or not compliance was
made within the period fixed by the court.
In any event, the appellants shall pay the
appellees the amount of Two Thousand Pesos
(P2,000.00) as reasonable compensation for
their occupancy of the encroached property
from the time said appellants’ good faith
cease (sic) to exist until such time the
possession of the property is delivered to the
appellees subject to the reimbursement of the
aforesaid expenses in favor of the appellants
or until such time the payment of the purchase
price of the said lot be made by the
appellants in favor of the appellees in case the
latter opt for the compulsory sale of the same.
SO ORDERED.19 (Emphasis in the original)
In reversing the trial court, the CA held:
xxx
x x x A perusal of the records readily reveals
that said court instead relied on flimsy, if not
immaterial, allegations of the appellees, which
have no direct bearing in the determination of
whether the appellants are builders in bad
faith.
For one, the pivotal issue to be resolved in this
case, i.e. whether appellant Miguel is a builder
in good faith, was ignored by the court a quo.
The instant case does not in any way concern
the personal and property relations of spouses-
appellants and Elizabeth Yson Cruz which is an
altogether different matter that can be
ventilated by the concerned parties through
the institution of a proper action. xxx The court
a quo should have focused on the issue of
whether appellant Miguel built, in good faith,
the subject house without notice of the
adverse claim of the appellees and under the
honest belief that the lot which he used in the
construction belongs to him. xxx
xxx As it is, appellant Miguel relied on the title
which the intervenor showed to him which,
significantly, has no annotation that would
otherwise show a prior adverse claim. Thus, as
far as appellant Miguel is concerned, his title
over the subject lot, as well as the title of the
intervenor thereto, is clean and untainted by
an adverse claim or other irregularities.
For another, the appellants’ failure to secure a
building permit from the Municipal Engineer’s
Office on their construction on Lot 17 does not
impinge on the good faith of the appellants. In
fact, it can be told that a building permit was
actually filed by appellant Miguel with respect
to Lot 16 and it was only due to the confusion
80 | P r o p e r t y C a s e s - P o s s e s s i o n
and misapprehension by the intervenor of the
exact parameters of the property which
caused appellant’s belief that Lot 17 [the
questioned lot], is his. This fact bolsters
appellant Miguel’s good faith in building his
house on appellees’ lot under the mistaken
belief that the same is his property. Otherwise,
he should have secured a building permit on
Lot 17 instead or should not have bothered to
take the necessary measures to obtain a
building permit on Lot 16 in the first place.
By and large, the records show that, as
testified to by Engr. Rebecca T.
Lanuang, appellant Miguel had already
applied for a building permit as early as
February 1994 and was in fact issued a
temporary building permit pending the
completion of the requirements for said
permit. Although the building permit was
belatedly issued in January 1996, this does not
in any way detract from appellant Miguel’s
good faith.
xxx
In holding the appellants as builders in bad
faith, the court a quo defied law and settled
jurisprudence considering that the factual
basis of its findings and the incontrovertible
evidence in support thereof prove that the
appellant Miguel, in good faith, built the house
on appellees’ land without knowledge of an
adverse claim or any other irregularities that
might cast a doubt as to the veracity of the
assurance given to him by the intervenor.
Having been assured by the intervenor that
the stone monuments were purposely placed,
albeit wrongfully, by the land surveyor in said
land to specifically identify the lot and its
inclusive boundaries, the appellants cannot
be faulted for having relied on the expertise of
the land surveyor who is more equipped and
experienced in the field of land surveying.
Although under the Torrens system of land
registration, the appellant is presumed to have
knowledge of the metes and bounds of the
property with which he is dealing, appellant
however, considering that he is a layman not
versed in the technical description of his
property, cannot be faulted in his reliance on
the survey plan that was delivered to him by
the intervenor and the stone monuments that
were placed in the encroached property.
xxx
Peremptorily, contrary to the flawed
pronouncements made by the court a quo
that appellant Miguel is deemed as a builder
in bad faith on the basis of a mere assertion
that he built his house without initially satisfying
himself that he owns the said property, this
Court finds reason to maintain good faith on
the part of the appellant. Admittedly, the
appellants’ house erroneously encroached on
the property of the appellees due to a mistake
in the placement of stone monuments as
indicated in the survey plan, which error is
directly attributable to the fault of the
geodetic engineer who conducted the same.
This fact alone negates bad faith on the part
of appellant Miguel.
xxx
Moreover, it is quite illogical for appellant
Miguel to knowingly build his house on a
property which he knew belongs to another
person. x x x
xxx
In view of the good faith of both parties in this
case, their rights and obligations are to be
governed by Article 448, which has been
applied to improvements or portions of
improvements built by mistaken belief on land
belonging to the adjoining owner. x x x
x x x20 (Emphasis and underscoring supplied)
Petitioners’ Motion for
Reconsideration21 dated October 22, 2002
having been denied by the CA by Resolution
of March 13, 2002, the present petition was
filed raising the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION IN MAKING A FINDING THAT IS
CONTRARY TO THE ADMISSIONS BY THE PARTIES
II.
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS COMMITTED A REVERSIBLE ERROR OF
LAW IN CONCLUDING THAT THE TRIAL COURT,
IN DECIDING THE CASE, RELIED ON FLIMSY, IF
NOT IMMATERIAL, ALLEGATIONS OF THE
PETITIONERS, WHICH HAVE NO DIRECT BEARING
IN THE DETERMINATION OF WHETHER THE
RESPONDENTS ARE BUILDERS IN GOOD FAITH
III.
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS COMMITTED A REVERSIBLE ERROR OF
LAW IN RENDERING A DECISION THAT IS
UNENFORCEABLE AGAINST BOTH RESPONDENT
JUDITH CASTELLTORT AND THIRD-PARTY
ELIZABETH CRUZ22
Petitioners initially hammer against
respondents’ proving that Castelltort and a
certain Elizabeth Cruz are the builders of the
house on the subject property, they faulting
them with estoppel for alleging in their Answer
before the trial court that "they (respondents
Castelltort and Judith) caused the
construction of their house which they bought
from a certain Lina Lopez-Villegas."
Petitioners rely on the following doctrine
established in Elayda v. Court of Appeals:23
"an admission made in the pleadings cannot
be controverted by the party making such
admission and are conclusive as to him and
that all proofs submitted by him contrary
thereto or inconsistent therewith, should be
ignored, whether objection is interposed by
the party or not x x x"
Petitioners’ contention is hardly relevant to the
case at bar. Whether it was Castelltort and
Judith or Castelltort and Elizabeth Cruz who
purchased the property from Lina is not
material to the outcome of the instant
controversy. As found by the CA:
The fact remains that appellant [Castelltort] is
the builder of the house on Lot 17 xxx The court
a quo should have focused on the issue of
whether appellant Miguel built, in good faith,
the subject house without notice of the
adverse claim of the appellees and under the
honest belief that the lot which he used in the
construction belongs to him. xxx it cannot be
gainsaid that appellant Miguel has a title over
the land that was purchased from the
intervenor x x x24
At all events, as this Court held in the case
of Gardner v. Court of Appeals:25
In its Resolution reversing the original Decision,
respondent Court discredited the testimony of
Ariosto SANTOS for being at variance with the
allegations in his Answer. The fact, however,
that the allegations made by Ariosto SANTOS
in his pleadings and in his declarations in open
Court differed will not militate against the
findings herein made nor support the reversal
by respondent Court. As a general rule, facts
alleged in a party’s pleading are deemed
admissions of that party and binding upon it,
but this is not an absolute and inflexible rule.
An Answer is a mere statement of fact which
the party filing it expects to prove, but it is not
evidence. As Ariosto SANTOS himself, in open
Court, had repudiated the defenses he had
raised in his Answer and against his own
interest, his testimony is deserving of weight
and credence.26 (Underscoring supplied)
The issue determinative of the controversy in
the case at bar hinges on whether Castelltort
is a builder in good faith.
A builder in good faith is one who builds with
the belief that the land he is building on is his,
or that by some title one has the right to build
thereon, and is ignorant of any defect or flaw
in his title.27
Article 527 of the Civil Code provides that
good faith is always presumed, and upon him
who alleges bad faith on the part of a
possessor rests the burden of proof.28
In the case at bar, Lot 16 was sold by Lina,
through her attorney-in-fact Villegas, to
Castelltort and a certain Elizabeth Cruz 29 for a
consideration of ₱500,000.00. While prior to the
sale, what Villegas showed Castelltort as
evidence of his mother Lina’s ownership of the
property was only a photocopy of her title TCT
No. (T-42171) T-1855030 he explaining that the
owner’s duplicate of the title was lost and that
judicial reconstitution thereof was ongoing,
Castelltort acted in the manner of a prudent
man and went to the Registry of Deeds of
Laguna to procure a certified true copy of the
TCT.31 The certified true copy bore no
annotation indicating any prior adverse claim
on Lot 16.
The records indicate that at the time
Castelltort began constructing his house on
petitioners’ lot, he believed that it was the Lot
16 he bought and delivered to him by Villegas.
In his cross-examination, Villegas testified:
Q: You said the surveyor placed a mujon along
boundary of the property?
A: Yes.
Q: When were the mujons placed in the
boundary of the property?
81 | P r o p e r t y C a s e s - P o s s e s s i o n
A: These mujons were the basis for my locating
the property in pointing to Mr. Castelltort.
xxx
Q: Is it not a fact that before Miguel Castelltort
started constructing that house he sought your
advice or permission to construct the same
over that particular lot?
A: Yes.
Q: And you gave your consent?
A: Yes, because based on my knowledge also
that that was the lot as pointed by Engr.
Rivera.
xxx
Q: Was there any remarkable difference
between lot 16 and 17 at the time that this
particular lot was sold to Miguel Castelltort and
Elizabeth Cruz?
xxx
A: Both lots 16 and 17 are practically the same.
The (sic) have the same frontage. There is only
a difference of 4 square meters, one is 311
square meters and the other 315 square
meters. Both sides were fenced, as drawn they
were facing the same road. They are
practically the same.
Q: But at the time or immediately before Mr.
Castelltort started the construction of the
house, was there any remarkable distinction
between these two properties?
A: None.32 (Emphasis and underscoring
supplied)
The confusion in the identification of Lot 16 was
eventually traced to the error committed by
geodetic engineer Augusto Rivera’s
employees in placing stone monuments on
petitioners’ property, instead of on Lot 16, the
lot sold to Castelltort, based on the survey
made by the engineer in 1992.
The engineer so testified:
Q: Now, aside from inspecting personally the
site, what else did your men or assistants do?
A: After computing the subdivision lots, they
went back to the field to plant those
subdivision corners with concrete monuments.
Q: Which is (sic) also called as "mohons"?
A: Yes, sir.
Q: Now, can you point to this Honorable Court
where exactly did your men place these
additional mohons and how many?
A: Later on we discovered that they placed
the mohons in the adjoining lot, lot 17.
xxx
Q: x x x when again did you meet Mr. Rene
Villegas or after how many months or year?
A: Maybe after a year, sir.
Q: And you met him again because he had a
problem regarding the property of one Engr.
Rosales?
A: Yes, sir.
Q: And when he confided to you this matter,
did you go to the site of Lot 16 or 17?
A: Yes, sir.
Q: And what did you see there?
A: A house being constructed then I
rechecked the location of the house and it
turned out to be in Lot 17.
xxx
Q: Considering that you found out that a
mistake was actually made by your assistants
Dennis Orencio, Mario Carpio and Sovejano
when you allowed them to proceed on their
own to make this computation, did you
confront these men of yours afterwards?
A: Yes, sir.
Q: In what manner?
A: I actually reprimanded them verbally and
also I dismissed Mario Carpio from my office.
xxx
Q: And did you investigate how your men
committed this mistake of planting these
monuments on another lot when corners 4 & 1
were clearly planted on the ground?
A: I myself rechecked it and found out that
they committed an error.
xxx
Q: And now, you are saying that your men
committed a mistake by placing thereon
monuments by planting these monuments not
on Lot 16 but on Lot 17?
A: When I investigated how did they commit
(sic) a mistake it came to be like this. Before
when we surveyed first this in 1992, at that time
Dante Villegas contracted my services there
was a fence here then when we went back,
the road was already removed so they
committed an error that this point is Lot 19,
they thought that it was Lot 19, the back
portion.
xxx
Q: In this particular case, did you find out how
your men checked the succeeding lots, how
they determine (sic) the exact location of lot
16?
A: They just relied on one side of the
subdivision.
Q: By just counting the number of lots?
A: Yes, sir.
Q: Without making any actual measurement?
A: They made an actual measurement but the
reference point is not the one, the correct one
because they also checked it with the other
corner of the road going back.
xxx
Q: And how did they commit a mistake when
you said they checked the lot at the back of
Lot 16?
A: Because they were quite confident since
we had already relocated the property two
years ago so they thought that they get (sic)
the right lot without checking the other side of
the subdivision.
xxx
Q: Now, you said that when you went to the
place because you heard from Rene Villegas
that there was a mistake you no longer could
find the monuments on lines 1 and 4 and
according to you the reason is that a fence
was already constructed?
A: Yes, sir.
Q: For clarification, is this line 1 & 4 on Lot 16 a
common line 1 &4 on Lot 17?
A: Yes, sir a common line.
Q: In other words, this line 1 &4 devides (sic) Lot
16 & 17?
A: Yes, sir.
Q: So that when these monuments were
placed on lines 1 & 4 somebody could mistake
it for Lot 17 also because there were
monuments now 1 &4 for lot 16 since these are
common lines for
Lot 17 also with Lot 16, it could also be
construed that these are monuments for Lot
17?
A: Yes, sir possible.33 (Underscoring supplied)
As correctly found by the CA, both parties
having acted in good faith at least until August
21, 1995, the applicable provision in this case is
Article 448 of the Civil Code which reads:
Art. 448. The owner of the land on which
anything has been built, sown or planted in
good faith, shall have the right to appropriate
as his own the works, sowing or planting, after
payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who
built or planted to pay the price of the land,
and the one who sowed, the proper rent.
However, the builder or planter cannot be
obliged to buy the land if its value is
considerably more than that of the building or
trees. In such case, he shall pay reasonable
rent, if the owner of the land does not choose
to appropriate the building or trees after
proper indemnity. The parties shall agree upon
the terms of the lease and in case of
disagreement, the court shall fix the terms
thereof.
Under the foregoing provision, the landowner
can choose between appropriating the
building by paying the proper indemnity or
obliging the builder to pay the price of the
land, unless its value is considerably more than
that of the structures, in which case the builder
in good faith shall pay reasonable rent.34 If the
parties cannot come to terms over the
conditions of the lease, the court must fix the
terms thereof.
82 | P r o p e r t y C a s e s - P o s s e s s i o n
The choice belongs to the owner of the land,
a rule that accords with the principle of
accession, i.e., that the accessory follows the
principal and not the other way around. Even
as the option lies with the landowner, the grant
to him, nevertheless, is preclusive.35 The
landowner cannot refuse to exercise either
option and compel instead the owner of the
building to remove it from the land.36
The raison d’etre for this provision has been
enunciated thus:
Where the builder, planter or sower has acted
in good faith, a conflict of rights arises
between the owners, and it becomes
necessary to protect the owner of the
improvements without causing injustice to the
owner of the land. In view of the
impracticability of creating a state of forced
co-ownership, the law has provided a just
solution by giving the owner of the land the
option to acquire the improvements after
payment of the proper indemnity, or to oblige
the builder or planter to pay for the land and
the sower the proper rent. He cannot refuse to
exercise either option. It is the owner of the
land who is authorized to exercise the option,
because his right is older, and because, by the
principle of accession, he is entitled to the
ownership of the accessory thing.37
Possession acquired in good faith does not
lose this character except in the case and
from the moment facts exist which show that
the possessor is not unaware that he possesses
the thing improperly or wrongfully.38 The good
faith ceases or is legally interrupted from the
moment defects in the title are made known
to the possessor, by extraneous evidence or by
suit for recovery of the property by the true
owner.39
In the case at bar, Castelltort’s good faith
ceased on August 21, 1995 when petitioners
personally apprised him of their title over the
questioned lot. As held by the CA, should
petitioners then opt to appropriate the house,
they should only be made to pay for that part
of
the improvement built by Castelltort on the
questioned property at the time good faith still
existed on his part or until August 21, 1995.
The CA, however, failed to qualify that said
part of the improvement should be pegged at
its current fair market value consistent with this
Court’s pronouncement in Pecson v. Court of
Appeals.40
And, as correctly found by the CA, the
commencement of Castelltort’s payment of
reasonable rent should start on August 21, 1995
as well, to be paid until such time that the
possession of the property is delivered to
petitioners, subject to the reimbursement of
expenses, that is, if such option is for petitioners
to appropriate the house.
This Court quotes the CA’s ratiocination with
approval:
x x x Generally, Article 448 of the Civil Code
provides that the payment of reasonable rent
should be made only up to the date appellees
serve notice of their option as provided by law
upon the appellants and the court a quo; that
is, if such option is for appellees to appropriate
the encroaching structure. In such event,
appellants would have a right to retain the
land on which they have built in good faith
until they are reimbursed the expenses
incurred by them. This is so because the right
to retain the improvements while the
corresponding indemnity is not paid implies
the tenancy or possession in fact of the land
on which it is built, planted or sown.
However, considering that appellants had
ceased as builders in good faith at the time
that appellant Miguel was notified of
appellees’ lawful title over the disputed
property, the payment of reasonable rent
should accordingly commence at that time
since he can no longer avail of the rights
provided under the law for builders in good
faith.41
If the option chosen by petitioners is
compulsory sale, however, the payment of
rent should continue up to the actual transfer
of ownership.42
Respecting petitioners’ argument that the
appellate court erred in rendering a decision
that is "unenforceable against Judith who is
not the owner of the house and Elizabeth Cruz
who was found to be a part owner of the
house built on their lot but is not a party to the
case," the same does not lie.
While one who is not a party to a proceeding
shall not be affected or bound43 by a
judgment rendered therein,44 like Elizabeth
Cruz, this does not detract from the validity
and enforceability of the judgment on
petitioners and respondents Castelltorts.
WHEREFORE, the petition is DENIED. The
Decision dated October 2, 2002 and
Resolution dated February 6, 2003 of the Court
of Appeals
are AFFIRMED with MODIFICATION such that
the trial court shall include for determination
the increase in value ("plus value") which
petitioners’ 315 square meter lot may have
acquired by reason of the existence of that
portion of the house built before respondents
Miguel and Judith Castelltort were notified of
petitioners’ rightful claim on said lot, and the
current fair market value of said portion.
SO ORDERED.
G.R. No. 157605 December 13, 2005
SPS. ENRIQUETA RASDAS, and TOMAS RASDAS,
SPS. ESPERANZA A. VILLA, and ERNESTO VILLA,
and LOLITA GALLEN, Petitioners,
vs.
JAIME ESTENOR, Respondent.
Tinga, J.:
The main issue in this Petition for Review under
Rule 45 is whether the complaint below is
barred by res judicata. We find that res
judicata indeed obtains in this case, albeit of
a mode different from that utilized by the trial
court and the Court of Appeals in dismissing
the complaint.
The antecedent facts, as culled from the
assailed Decision1 of the Court of Appeals
Tenth Division, follow.
The dispute centers on a parcel of land with an
area of 703 square meters, situated in Ilagan,
Isabela. On 29 October 1992, respondent as
plaintiff filed a Complaint For Recovery Of
Ownership And Possession With
Damages against petitioners as defendants.
The complaint was docketed as Civil Case No.
673 and tried by the Regional Trial Court (RTC)
of Ilagan, Isabela, Branch 16. In the same
complaint, respondent asserted that he was
the owner of the subject property, which was
then in the possession of petitioners.
On 6 November 1995, the RTC decided Civil
Case No. 673 in favor of petitioners.
Respondent appealed the RTC decision
before the Court of Appeals, and his appeal
was docketed as CA-G.R. No. 52338.
On 25 September 1997, the Court of Appeals
reversed the judgment of the RTC, and
declared respondent as the owner of the
subject property. As a result, petitioners were
ordered to vacate the land. The dispositive
portion of the appellate court’s decision
reads:
WHEREFORE, the Decision of the trial court
dated November 6, 1995 is REVERSED and SET
ASIDE, and a new one is rendered declaring
the plaintiff as the owner of the land in
question; and ordering the defendants-
appellees to vacate the same and jointly and
severally to pay the plaintiff reasonable
compensation of ₱300.00 a month for the use
and enjoyment of the land from June 1991 up
to the time the land is vacated; attorney’s fees
of ₱10,000.00 and litigation expenses of
₱5,000.00.
Costs against the defendants-appellees.
SO ORDERED.2
The decision became final and executory
after a petition for certiorari assailing its validity
was dismissed by this Court.3 Thereafter, a Writ
of Execution and Writ of Demolition was issued
against petitioners, who were ordered to
demolish their houses, structures, and
improvements on the property.
Petitioners as plaintiffs then filed
a Complaint dated 6 July 1999 against
respondent for just compensation and
preliminary injunction with temporary
restraining order. The case was docketed as
83 | P r o p e r t y C a s e s - P o s s e s s i o n
Civil Case No. 1090, and heard by the same
RTC Branch 16 that ruled on the first complaint.
Notwithstanding the earlier pronouncement of
the Court of Appeals, petitioners asserted
therein that they were the lawful owners of the
subject property4 , although they ultimately
conceded the efficacy of the appellate
court’s final and executory decision. Still, they
alleged that they were entitled to just
compensation relating to the value of the
houses they had built on the property, owing
to their purported status as builders in good
faith. They claimed that the Court of Appeals
decision did not declare them as builders in
bad faith, and thus, they were entitled to be
reimbursed of the value of their houses before
these could be demolished.5 They posited that
without such reimbursement, they could not
be ejected from their houses.
Respondent as defendant countered with
a Motion to Dismiss, arguing that petitioners’
complaint was barred by res judicata, owing
to the final and executory judgment of the
Court of Appeals. The Motion to Dismiss was
initially denied by the RTC in an Order dated 4
August 19996 , and pre-trial ensued. However,
before trial proper could begin, respondent
filed a motion for preliminary hearing on the
affirmative defense of lack of jurisdiction
and res judicata.
This motion was resolved in an Order dated 16
February 2000, wherein the RTC declared itself
"constrained to apply the principle of res
judicata," thus reversing its earlier order. In
doing so, the RTC concluded that the earlier
decision of the Court of Appeals had already
effectively settled that petitioners were in fact
builders in bad faith. Citing Mendiola v. Court
of Appeals,7 the RTC held that the causes of
action between the final judgment and the
instant complaint of petitioners were identical,
as it would entail the same evidence that
would support and establish the former and
present causes of action. Accordingly, the RTC
ordered the dismissal of petitioners’ complaint.
The counsel for petitioners was likewise issued
a warning for having violated the prohibition
on forum-shopping on account of the filing of
the complaint barred by res judicata.
The finding of res judicata was affirmed by the
Court of Appeals in its assailed Decision. It is
this finding that is now subject to review by this
Court. Petitioners argue that since
respondents’ Motion to Dismiss on the ground
of res judicata had already been denied, the
consequent preliminary hearing on the special
defenses which precluded the dismissal of the
complaint was null and void.8 Petitioners also
claim that there was no identity of causes of
action in Civil Case No. 673, which concerned
the ownership of the land, and in Civil Case
No. 1090, which pertained to just
compensation under Article 448 of the Civil
Code. Even assuming that res
judicata obtains, petitioners claim that the
said rule may be disregarded if its application
would result in grave injustice.
We observe at the onset that it does appear
that the RTC’s act of staging preliminary
hearing on the affirmative defense of lack of
jurisdiction and res judicata is not in regular
order. Under Section 6, Rule 16 of the 1997
Rules of Civil Procedure, the allowance for a
preliminary hearing, while left in the discretion
of the court, is authorized only if no motion to
dismiss has been filed but any of the grounds
for a motion to dismiss had been pleaded as
an affirmative defense in the answer. In this
case, respondents had filed a motion to
dismiss on the ground of res judicata, but the
same was denied. They thus filed an answer
alleging res judicata as a special affirmative
defense, but later presented a Motion for
Preliminary Hearing which was granted,
leading to the dismissal of the case.
The general rule must be reiterated that the
preliminary hearing contemplated under
Section 6, Rule 16 applies only if no motion to
dismiss has been filed. This is expressly provided
under the rule, which relevantly states "[i]f no
motion to dismiss has been filed, any of the
grounds for dismissal provided for in [Rule 16]
may be pleaded as an affirmative defense in
the answer and, in the discretion of the court,
a preliminary hearing may be had thereon as
if a motion to dismiss had been filed." An
exception was carved out in California and
Hawaiian Sugar Company v. Pioneer
Insurance,9 wherein the Court noted that while
Section 6 disallowed a preliminary hearing of
affirmative defenses once a motion to dismiss
has been filed, such hearing could
nonetheless be had if the trial court had not
categorically resolved the motion to
dismiss.10 Such circumstance does
not obtain in this case, since the trial court had
already categorically denied the motion to
dismiss prior to the filing of the answer and the
motion for preliminary hearing.
We observe in this case that the judge who
had earlier denied the motion to dismiss, Hon.
Teodulo E. Mirasol, was different from the
judge who later authorized the preliminary
hearing,11 Hon. Isaac R. de Alban, a
circumstance that bears some light on why the
RTC eventually changed its mind on the
motion to dismiss. Still, this fact does not
sanction the staging of a preliminary hearing
on affirmative defenses after the denial of the
motion to dismiss. If a judge disagrees with
his/her predecessor’s previous ruling denying a
motion to dismiss, the proper recourse is not to
conduct a preliminary hearing on affirmative
defenses, but to utilize the contested ground
as part of the basis of the decision on the
merits
On the part of the movant whose motion to
dismiss had already been filed and denied,
the proper remedy is to file a motion for
reconsideration of the denial of the motion. If
such motion for reconsideration is denied, the
ground for the dismissal of the complaint may
still be litigated at the trial on the merits.
Clearly, the denial of a motion to dismiss does
not preclude any future reliance on the
grounds relied thereupon. However, nothing in
the rules expressly authorizes a preliminary
hearing of affirmative defenses once a motion
to dismiss has been filed and denied. Thus, the
strict application of Section 6, Rule 16 in this
case should cause us to rule that the RTC erred
in conducting the preliminary hearing.
However, there is an exceptional justification
for us to overlook this procedural error and
nonetheless affirm the dismissal of the
complaint. The complaint in question is so
evidently barred by res judicata, it would
violate the primordial objective of procedural
law to secure a just, speedy and inexpensive
disposition of every action and
proceeding12 should the Court allow this
prohibited complaint from festering in our
judicial system. Indeed, the rule sanctioning
the liberal construction of procedural rules is
tailor-made for a situation such as this, when a
by-the-numbers application of the rule would
lead to absurdity, such as the continued
litigation of an obviously barred complaint.
Why is the subject complaint barred by res
judicata? It is uncontroverted that in the
decision by the Court of Appeals in Civil Case
No. 673, it was observed:
When the occupancy of the lot by Luis
Aggabao which was transmitted to his son
Vivencio Aggabao, and later transmitted to
the latter’s children . . . expired in April 1965,
the late Vivencio Aggabao verbally begged
and pleaded to plaintiff-appellant that he be
allowed to stay on the premises of the land in
question as his children, herein appellees,
were still studying and it would be very hard fro
them to transfer residence at that time. The
plaintiff, out of Christian fellowship and
compassion, allowed the appellees to stay
temporarily on the land in question.
....
In this case, the possession of the land by the
appellees derived from their father Luis
Aggabao from March 31, 1955 to March 31,
1965 was by virtue of a stipulation in the deed
of sale (exh. G), while their possession derived
from their father, Vivencio Aggabao, from
March 31, 1965 to 1982 (the latter died in 1982)
was only by tolerance because of the
pleading of Vivencio Aggabao to the plaintiff-
appellant that he be allowed to stay because
of the children going to school. . . . 13
Evidently, the Court of Appeals had previously
ruled in the first case that as early as 1965, the
father of the petitioners (and their
predecessor-in-interest) had already known
that he did not own the property, and that his
stay therein was merely out of tolerance. Such
conclusion in fact bolstered the eventual
conclusion that respondents were the owners
of the land and that petitioners should vacate
the same.
This fact should be seen in conjunction with the
findings of the RTC and the Court of Appeals
in this case that the structures for which
petitioners sought to be compensated were
constructed in 1989 and 1990, or long after
they had known they were not the owners of
the subject property.
These premises remaining as they are, it is clear
that petitioners are not entitled to the just
compensation they seek through the present
complaint. Under Article 448 of the Civil Code,
the builder in bad faith on the land of another
loses what is built without right to
indemnity.14 Petitioners were in bad faith when
they built the structures as they had known
that the subject property did not belong to
them. Are these conclusions though sufficient
to justify dismissal on the ground of res
judicata?
84 | P r o p e r t y C a s e s - P o s s e s s i o n
The doctrine of res judicata has two
aspects.15 The first, known as "bar by prior
judgment," or "estoppel by verdict," is the
effect of a judgment as a bar to the
prosecution of a second action upon the
same claim, demand or cause of action. The
second, known as "conclusiveness of
judgment" or otherwise known as the rule
of auter action pendant, ordains that issues
actually and directly resolved in a former suit
cannot again be raised in any future case
between the same parties involving a different
cause of action.16 It has the effect of
preclusion of issues only.17
It appears that both the RTC and the Court of
Appeals deemed that the first aspect of res
judicata, "bar by prior judgment," applied in
this case.18 We hold that it is the second kind
of res judicata, "conclusiveness of judgment,"
that barred the instant complaint. As
previously explained by this Court:
[C]onclusiveness of judgment — states that a
fact or question which was in issue in a former
suit and there was judicially passed upon and
determined by a court of competent
jurisdiction, is conclusively settled by the
judgment therein as far as the parties to that
action and persons in privity with them are
concerned and cannot be again litigated in
any future action between such parties or their
privies, in the same court or any other court of
concurrent jurisdiction on either the same or
different cause of action, while the judgment
remains unreversed by proper authority. It has
been held that in order that a judgment in one
action can be conclusive as to a particular
matter in another action between the same
parties or their privies, it is essential that the
issue be identical. If a particular point or
question is in issue in the second action, and
the judgment will depend on the
determination of that particular point or
question, a former judgment between the
same parties or
their privies will be final and conclusive in the
second if that same point or question was in
issue and adjudicated in the first suit. Identity
of cause of action is not required but merely
identity of issues.19
Stated differently, any right, fact, or matter in
issue directly adjudicated or necessarily
involved in the determination of an action
before a competent court in which judgment
is rendered on the merits is conclusively settled
by the judgment therein and cannot again be
litigated between the parties and their privies
whether or not the claim, demand, purpose,
or subject matter of the two actions is the
same.20
Indeed, in cases wherein the doctrine of
"conclusiveness of judgment" is applicable,
there is, as in the two cases subject of this
petition, identity of parties but not of causes of
action. The judgment is conclusive in the
second case, only as to those matters actually
and directly controverted and determined,
and not as to matters merely involved
therein.21 Herein, the fact that petitioners were
in possession in bad faith as early as 1965 was
already determined in the first case. In order
that they could successfully litigate their
second cause of action, petitioners will have
to convince that they were in possession in
good faith at the time they built their
structures, an argument that deviates the
previous determination made in the final
judgment that resolved the first case.
The reasons for establishing the principle of
"conclusiveness of judgment" are founded on
sound public policy, and to grant this petition
would have the effect of unsettling this well-
settled doctrine. It is allowable to reason back
from a judgment to the basis on which it
stands, upon the obvious principle that where
a conclusion is indisputable, and could have
been drawn only from certain premises, the
premises are equally indisputable with the
conclusion.22When a fact has been once
determined in the course of a judicial
proceeding, and a final judgment has been
rendered in accordance therewith, it cannot
be again litigated between the same parties
without virtually impeaching the correctness of
the former decision, which, from motives of
public policy, the law does not permit to be
done.23
Contrary to the holdings of both courts below,
in the case of Mendiola v. Court of
Appeals24 which they relied upon, this Court
observed that the causes of action in the two
cases involved were so glaringly similar that it
had to affirm the dismissal of the second case
by virtue of the "bar of former judgment rule."
One final note. Petitioners, in
their Reply before this Court, raise the
argument that assuming that they were
builders in bad faith, respondents should
likewise be considered as being in bad faith,
as the structures were built with their
knowledge and without their opposition. That
being the case, Article 453 of the Civil Code
would apply to the effect both parties could
thus be deemed as being in good faith.
Accordingly, petitioners would still be entitled
to compensation on the structures they built.
We are disinclined to accord merit to this
argument. For one, it was raised for the first
time in the Reply before this Court. It was not
even raised in the Complaint filed with the
RTC, hence it could not be said that
petitioners’ cause of action is grounded on
Article 453. Issues not previously ventilated
cannot be raised for the first time on appeal 25 ,
much less when first proposed in the reply to
the comment on the petition for review. Even
assuming the issue is properly litigable, the
Court can find no basis to declare that
respondents were in bad faith as a matter of
fact. Certainly, nothing in the first decision of
the Court of Appeals conclusively establishes
that claim, its factual determination being
limited to the finding that petitioners
alonewere had been in possession of the
property in bad faith. We are not wont to
ascribe points of fact in the said decision
which were not expressly established or
affirmed.
WHEREFORE, the petition is DENIED. Costs
against petitioners.
DIVISION annum shall be paid by the mortgage (sic) by Dr. FERNANDO O.
[ GR NO. 123672 & 164489, Dec 14, 2005 VENDEE to the VENDOR within CARRASCOSO, JR. to any bank of his
] a period of three (3) years, as choice as long as the balance on the
FERNANDO CARRASCOSO v. CA + follows: Deed of Sale shall be recognized by Dr.
DECISION FERNANDO O. CARRASCOSO, JR.;
514 Phil. 48 (a) One (1) year from the date
of the signing of this "RESOLVED, FURTHER, that the
agreement, the VENDEE shall corporation authorizes the prefered (sic)
CARPIO MORALES, J.: pay to the VENDOR the sum of claim on the property to be
El Dorado Plantation, Inc. (El Dorado) FIVE HUNDRED NINETEEN subordinated to any mortgage that may
was the registered owner of a parcel of THOUSAND EIGHT HUNDRED be constituted by Dr. FERNANDO O.
land (the property) with an area of THIRTY THREE & CARRASCOSO, JR.;
approximately 1,825 hectares covered 33/100 (P519,833.33) PESOS.
by Transfer Certificate of Title (TCT) No. T- "RESOLVED, FINALLY, that in case of any
93[1] situated in Sablayan, Occidental (b) Two (2) years from the date mortgage on the property, the
Mindoro. of signing of this agreement, corporation waives the preference of
the VENDEE shall pay to the any vendor's lien on the
On February 15, 1972, at a special VENDOR the sum of FIVE property."[5] (Emphasis and
meeting of El Dorado's Board of HUNDRED NINETTEN (sic) underscoring supplied)
Directors, a Resolution[2] was passed THOUSAND EIGHT HUNDRED
authorizing Feliciano Leviste, then AND THIRTY-THREE & 33/100 Feliciano Leviste also executed the
President of El Dorado, to negotiate the (P519,833.33) PESOS. following affidavit on the same day:
sale of the property and sign all
documents and contracts bearing (c) Three (3) years from the 1. That by reason of the sale of
thereon. date of signing of this that parcel of land covered by
agreement, the VENDEE shall Transfer Certificate of Title T-93
On March 23, 1972, by a Deed of Sale of pay to the VENDOR the sum of as evidenced by the Deed of
Real Property,[3] El Dorado, through FIVE Hundred NINETEEN Sale attached hereto as Annex
Feliciano Leviste, sold the property to THOUSAND EIGHT HUNDRED "A" and made an integral part
Fernando O. Carrascoso, Jr. AND THIRTY-THREE & hereof, the El Dorado
(Carrascoso). 33/100 (P519,833.33) PESOS. Plantation, Inc. has no
objection to the
The pertinent provisions of the Deed of 4. The title of the property, subject aforementioned property
Sale read: of this agreement, shall pass being mortgaged by Dr.
and be transferred to the Fernando O. Carrascoso, Jr. to
NOW, THEREFORE, for and in VENDEE who shall have full any bank of his choice, as long
consideration of the sum of ONE MILLION authority to register the same as the payment of the balance
EIGHT HUNDRED THOUSAND and obtain the corresponding due the El Dorado Plantation,
(1,800,000.00) PESOS, Philippine transfer certificate of title in his Inc. under the Deed of Sale,
Currency, the Vendor hereby sells, name. Annex "A" hereof, shall be
cedes, and transfer (sic) unto the herein xxx recognized by the vendee
VENDEE, his heirs, successors and assigns, 6. THE VENDOR certifies and therein, Dr. Fernando O.
the above-described property subject warrants that the property Carrascoso, Jr. though
to the following terms and consitions above-described is not being subordinated to the preferred
(sic): cultivated by any tenant and is claim of the mortgagee bank.
therefore not covered by the
1. Of the said sum of provisions of the Land Reform 2. That in case of any mortgage
P1,800,000.00 which constitutes Code. If, therefore, the on the property, the vendor
the full consideration of this VENDEE becomes liable under hereby waives the preference
sale, P290,000.00 shall be paid, the said law, the VENDOR shall of any vendor's lien on the
as it is hereby paid, to the reimburse the VENDEE for all property, subject matter of the
Philippines (sic) National Bank, expenses and damages he deed of sale.
thereby effecting the release may incur
and cancellation fo (sic) the thereon.[4] (Underscoring 3. That this affidavit is being
present mortgage over the supplied) executed to avoid any
above-described property. From the above-quoted provisions of the question on the authority of Dr.
Deed of Sale, Carrascoso was to pay the Fernando O. Carrascoso, Jr. to
2. That the sum of P210,000.00 full amount of the purchase price on mortgage the property subject
shall be paid, as it is hereby March 23, 1975. of the Deed of Sale, Annex "A"
paid by the VENDEE to the hereof, where the purchase
VENDOR, receipt of which On even date, the Board of Directors of price provided therein has not
amount is hereby El Dorado passed a Resolution reading: been fully paid.
acknowledged by the
VENDOR. "RESOLVED that by reason of the sale of 4. That this affidavit has been
that parcel of land covered by TCT No. executed pursuant to a board
3. The remaining balance of T-93 to Dr. FERNANDO O. CARRASCOSO, resolution of El Dorado
P1,300,000.00 plus interest JR., the corporation interposes Plantation, Inc.[6] (Emphasis
thereon at the rate of 10% per no objection to the property being and underscoring supplied)
85 | P r o p e r t y C a s e s - P o s s e s s i o n
On the following day, March 24, 1972,
Carrascoso and his wife Marlene
executed a Real Estate Mortgage[7] over
the property in favor of Home Savings
Bank (HSB) to secure a loan in the
amount of P1,000,000.00. Of this
amount, P290,000.00 was paid to
Philippine National Bank to release the
mortgage priorly constituted on the
property and P210,000.00 was paid to El
Dorado pursuant to above-quoted
paragraph Nos. 1 and 2 of the terms and
conditions of the Deed of Sale.[8]
The March 23, 1972 Deed of Sale of Real
Property was registered and annotated
on El Dorado's TCT No. T-93 as Entry No.
15240[9] on April 5, 1972. On even date,
TCT No. T-93 covering the property was
cancelled and TCT No. T-6055[10] was in
its stead issued by the Registry of Deeds
of Occidental Mindoro in the name of
Carrascoso on which the real estate
mortgage in favor of HSB was annotated
as Entry No. 15242.[11]
On May 18, 1972, the real estate
mortgage in favor of HSB was amended
to include an additional three year loan
of P70,000.00 as requested by the
spouses Carrascoso.[12] The Amendment
of Real Estate Mortgage was also
annotated on TCT No. T-6055 as Entry No.
15486 on May 24, 1972.[13]
The 3-year period for Carrascoso to fully
pay for the property on March 23, 1975
passed without him having complied
therewith.
In the meantime, on July 11, 1975,
Carrascoso and the Philippine Long
Distance Telephone Company (PLDT),
through its President Ramon Cojuangco,
executed an Agreement to Buy and
Sell[14] whereby the former agreed to sell
1,000 hectares of the property to the
latter at a consideration of P3,000.00 per
hectare or a total of P3,000,000.00.
The July 11, 1975 Agreement to Buy and
Sell was not registered and annotated
on Carrascoso's TCT No. T-6055.
Lauro Leviste (Lauro), a stockholder and
member of the Board of Directors of El
Dorado, through his counsel, Atty.
Benjamin Aquino, by letter[15] dated
December 27, 1976, called the attention
of the Board to Carrascoso's failure to
pay the balance of the purchase price
of the property amounting to
P1,300,000.00. And Lauro's lawyer
manifested that:
Because of the default for a long time of
Mr. Carrascoso to pay the balance of
the consideration of the sale, Don Lauro
86 | P r o p e r t y C a s e s - P o s s e s s i o n
Leviste, in his behalf and in behalf of the
other shareholders similarly situated like
him, want a rescission of the sale made
by the El Dorado Plantation, Inc. to Mr.
Carrascoso. He desires that the Board of
Directors take the corresponding action
for rescission.[16]
Lauro's desire to rescind the sale was
reiterated in two other
letters[17] addressed to the Board dated
January 20, 1977 and March 3, 1977.
Jose P. Leviste, as President of El Dorado,
later sent a letter of February 21,
1977[18] to Carrascoso informing him that
in view of his failure to pay the balance
of the purchase price of the property, El
Dorado was seeking the rescission of the
March 23, 1972 Deed of Sale of Real
Property.
The pertinent portions of the letter read:
xxx
I regret to inform you that the balance of
P1,300,000.00 and the interest thereon
have long been due and payable,
although you have mortgaged said
property with the Home Savings Bank for
P1,000,000.00 on March 24, 1972, which
was subsequently increased to
P1,070,000.00 on May 18, 1972.
You very well know that the El Dorado
Plantation, Inc., is a close family
corporation, owned exclusively by the
members of the Leviste family and I am
one of the co-owners of the land. As
nothing appears to have been done on
your part after our numerous requests for
payment of the said amount of
P1,300,000.00 and the interest of 10% per
annum due thereon, please be advised
that we would like to rescind the
contract of sale of the
land.[19] (Underscoring supplied)
Jose Leviste, by letter[20] dated March 10,
1977, informed Lauro's counsel Atty.
Aquino of his (Jose's) February 21, 1977
letter to Carrascoso, he lamenting that
"Carrascoso has not deemed it fit to give
[his] letter the courtesy of a reply" and
advis[ing] that some of the Directors of
[El Dorado] could not see their way clear
in complying with the demands of your
client [Lauro] and have failed to reach a
consensus to bring the corresponding
action for rescission of the contract
against . . . Carrascoso."[21]
Lauro and El Dorado finally filed on
March 15, 1977 a complaint[22] for
rescission of the March 23, 1972 Deed of
Sale of Real Property between El Dorado
and Carrascoso with damages before
the Court of First Instance (CFI) of
Occidental Mindoro, docketed as Civil
Case No. R-226.
Lauro and El Dorado also sought the
cancellation of TCT No. T-6055 in the
name of Carrascoso and the revival of
TCT No. T-93 in the name of El Dorado,
free from any liens and
encumbrances. Furthermore, the two
prayed for the issuance of an order for
Carrascoso to: (1) reconvey the property
to El Dorado upon return to him of
P500,000.00, (2) secure a discharge of
the real estate mortgage constituted on
the property from HSB, (3) submit an
accounting of the fruits of the property
from March 23, 1972 up to the return of
possession of the land to El Dorado, (4)
turn over said fruits or the equivalent
value thereof to El Dorado and (5) pay
the amount of P100,000.00 for attorney's
fees and other damages.[23]
Also on March 15, 1977, Lauro and El
Dorado caused to be annotated on TCT
No. T-6055 a Notice of Lis Pendens,
inscribed as Entry No. 39737.[24]
In the meantime, Carrascoso, as vendor
and PLDT, as vendee forged on April 6,
1977 a Deed of Absolute Sale[25] over the
1,000 hectare portion of the property
subject of their July 11, 1975 Agreement
to Buy and Sell. The pertinent portions of
the Deed are as follows:
WHEREAS, the VENDOR and the
VENDEE entered into an agreement To
Buy and Sell on July 11, 1975, which is
made a part hereof by reference;
WHEREAS, the VENDOR and the
VENDEE are now decided to execute
the Deed of Absolute Sale referred to in
the aforementioned agreement to Buy
and Sell;
WHEREFORE, for and in consideration of
the foregoing premises and the terms
hereunder stated, the VENDOR and the
VENDEE have agreed as follows:
1. For and in consideration of the
sum of THREE MILLION PESOS
(P3,000,000.00), Philippine
currency, of which ONE
HUNDRED TWENTY THOUSAND
PESOS P120,000.00 have (sic)
already been received by the
VENDOR, the VENDOR hereby
sells, transfers and conveys
unto the VENDEE one thousand
hectares (1,000 has.) of his
parcel of land covered by
T.C.T. No. T-6055 of the Registry
of Deeds of Mindoro,
delineated as Lot No. 3-B-1 in
the subdivision survey plan xxx
 2. The VENDEE shall pay to the
VENDOR upon the signing of
this agreement, the sum of
TWO MILLION FIVE HUNDRED
THOUSAND PESOS
(P2,500,000.00) in the following
manner:
a) The sum of TWO MILLION
THREE HUNDRED THOUSAND
PESOS (P2,300,000.00) to Home
Savings Bank in full payment of
the VENDOR�s mortgaged
obligation therewith;
b) The sum of TWO HUNDRED
THOUSAND PESOS
(P200,000.00) to VENDOR;
The remaining balance of the
purchase price in the sum of
THREE HUNDRED EIGHTY
THOUSAND PESOS
(P380,000.00), less such
expenses which may be
advanced by the VENDEE but
which are for the account of
the VENDOR under Paragraph
6 of the Agreement to Buy and
Sell, shall be paid by the
VENDEE to the VENDOR upon
issuance of title to the
VENDEE.[26] (Underscoring
supplied)
In turn, PLDT, by Deed of Absolute
Sale[27] dated May 30, 1977, conveyed
the aforesaid 1,000 hectare portion of
the property to its subsidiary, PLDT
Agricultural Corporation (PLDTAC), for a
consideration of P3,000,000.00, the
amount of P2,620,000.00 of which was
payable to PLDT upon signing of said
Deed, and P380,000.00 to Carrascoso
upon issuance of title to PLDTAC.
In the meantime, on October 19, 1977,
the El Dorado Board of Directors, by a
special meeting,[28] adopted and
approved a Resolution ratifying and
conferring "the prosecution of Civil Case
No. R-226 of the Court of First Instance of
Occidental Mindoro, entitled "Lauro P.
Leviste vs. Fernando Carascoso (sic),
etc." initiated by stockholder Mr. Lauro P.
Leviste."[29]
In his Answer with Compulsory
Counterclaim,[30] Carrascoso alleged
that: (1) he had not paid his remaining
P1,300,000.00 obligation under the
March 23, 1972 Deed of Sale of Real
Property in view of the extensions of time
to comply therewith granted him by El
Dorado; (2) the complaint suffered from
fatal defects, there being no showing of
compliance with the condition
precedent of exhaustion of intra-
corporate remedies and the
87 | P r o p e r t y C a s e s - P o s s e s s i o n
requirement that a derivative suit 2. Ordering the plaintiffs to pay to the
instituted by a complaining stockholder defendant the sum of P2,980,000.00
as actual and compensatory
be verified under oath; (3) El Dorado
damages, as well as the sum of
committed a gross misrepresentation
P100,000.00 as and for attorneys
when it warranted that the property was fees; provided, however, that the
not being cultivated by any tenant to aforesaid amounts must first be set
take it out of the coverage of the Land off from the latter's unpaid balance
Reform Code; and (4) he suffered to the former;
damages due to the premature filing of
3. Dismissing the defendants-
the complaint for which Lauro and El
intervenors' counterclaim and
Dorado must be held liable.
cross-claim; and
On February 21, 1978, the April 6, 1977 4. Ordering the plaintiffs to pay to (sic)
and May 30, 1977 Deeds of Absolute the costs of suit.
Sale and the respective Articles of
Incorporation of PLDT and PLDTAC were SO ORDERED.[41] (Underscoring
supplied)
annotated on TCT No. T-6055 as Entry
Carrascoso, PLDT and PLDTAC filed their
Nos. 24770,[31] 42774,[32] 42769[33] and
respective appeals to the Court of Appeals.
24772,[34] respectively. On even date,
Carrascoso's TCT No. T-6055 was By Decision[42] of January 31, 1996, the
cancelled and TCT No. T- appellate court reversed the decision of the
12480[35] covering the 1,000 hectare trial court, disposing as follows,
portion of the property was issued in the quoted verbatim:
name of PLDTAC. The March 15, 1977
WHEREFORE, not being meritorious,
Notice of Lis Pendens was carried over
PLDT's/PLDTAC's appeal is hereby DISMISSED
to TCT No. T-12480. and finding El Dorado's appeal to be
impressed with merit, We REVERSE the
On July 31, 1978, PLDT and PLDTAC filed appealed Decision and render the following
an Urgent Motion for judgment:
Intervention[36] which was granted by
1. The Deed of Sale of Real Property
the trial court by Order[37] of September
(Exhibit C) is hereby rescinded and
7, 1978.
TCT No. T-12480 (Exhibit Q) is
cancelled while TCT No. T-93 (Exhibit
PLDT and PLDTAC thereupon filed their A), is reactivated.
Answer In Intervention with Compulsory
Counterclaim and Crossclaim[38] against 2. Fernando Carrascoso, Jr. is
Carrascoso on November 13, 1978, commanded to:
alleging that: (1) when Carrascoso
2.1. return the possession of the 825
executed the April 6, 1977 Deed of
[hectare-] remaining portion of the
Absolute Sale in favor of PLDT, PLDT was land to El Dorado Plantation, Inc.
not aware of any litigation involving the without prejudice to the
1,000 hectare portion of the property or landholdings of legitimate tenants
of any flaw in his title, (2) PLDT is a thereon;
purchaser in good faith and for value; (3)
2.2. return the net fruits of the land
when PLDT executed the May 30, 1977
to El Dorado Plantation, Inc. from
Deed of Absolute Sale in favor of PLDTAC, they
March 23, 1972 to July 11, 1975, and
had no knowledge of any pending litigation
of the 825-hectare-remaining
over the property and neither were they
portion minus the tenants'
aware that a notice of lis pendens had been
landholdings, from July 11, 1975 up
annotated on Carrascoso's title; and (4) Lauro
and El Dorado knew of the sale by Carrascoso
to its delivery to El Dorado
Plantation, Inc. including whatever
to PLDT and PLDT's actual possession of the
he may have received from the
1,000 hectare portion of the property since
tenants if any by way of
June 30, 1975 and of its exercise of exclusive
compensation under the Operation
rights of ownership thereon through
Land Transfer or under any other
agricultural development.[39]
pertinent agrarian law;
By Decision[40] of January 28, 1991, Branch 45
of the San Jose Occidental Mindoro Regional
2.3 Pay El Dorado Plantation, Inc. an
attorney's fee of P20,000.00 and
Trial Court to which the CFI has been renamed,
litigation expenses of P30,000.00;
dismissed the complaint on the ground of
prematurity, disposing as follows,
2.4 Return to Philippine Long
quoted verbatim:
Distance Telephone
Company/PLDT Agricultural
WHEREFORE, in view of all the foregoing
Corporation P3,000,000.00 plus
considerations, judgment is hereby rendered:
legal interest from April 6, 1977 until
fully paid;
1. Dismissing the plaintiffs' complaint
against the defendant on the
3. PLDT Agricultural Corporation is
ground of prematurity;
ordered to surrender the possession
 of the 1000-hectare Farm to El
Dorado Plantation, Inc.;
4. El Dorado Plantation, Inc. is
directed to return the P500,000.00
to Fernando Carrascoso, Jr. plus
legal interest from March 23, 1972
until fully paid. The performance of
this obligation will however await
the full compliance by Fernando
Carrascoso, Jr. of his obligation to
account for and deliver the net
fruits of the land mentioned above
to El Dorado Plantation, Inc.
5. To comply with paragraph 2.2
herein, Carrascoso is directed to
submit in (sic) the court a quo a full
accounting of the fruits of the land
during the period mentioned
above for the latter's approval,
after which the net fruits shall be
delivered to El Dorado, Plantation,
Inc.
6. El Dorado Plantation, Inc. should
inform Philippine Long Distance
Telephone Co. and PLDT
Agricultural Corporation in writing
within ten (10) days after finality of
this decision regarding the exercise
of its option under Art. 448 of the
Civil Code.
SO ORDERED.[43] (Underscoring
supplied)
PLDT and PLDTAC filed on February 22, 1996, a
Motion for Reconsideration[44] of the January
31, 1996 CA Decision, while Carrascoso went
up this Court by filing on March 25, 1996 a
petition for review,[45] docketed as G.R. No.
123672, assailing the January 31, 1996 CA
Decision and seeking the reinstatement of the
January 28, 1991 Decision of the trial court
except with respect to its finding that the
acquisition of PLDT and PLDTAC of the 1,000
hectare portion of the property was subject to
the notice of lis pendens.
Lauro, in the meantime, died, hence, on April
16, 1996, a Motion for Substitution of
Party[46] was filed praying that his heirs,
represented by Conrad C. Leviste, be
substituted as respondents. The Motion was
granted by Resolution[47] of July 10, 1996.
PLDT and PLDTAC filed their Comment[48] to
Carrascoso's petition and prayed that
judgment be rendered finding them to be
purchasers in good faith to thus entitle them to
possession and ownership of the 1,000 hectare
portion of the property, together with all the
improvements they built thereon. Reiterating
that they were not purchasers pendente lite,
they averred that El Dorado and Lauro had
actual knowledge of their interests in the said
portion of the property prior to the annotation
of the notice of lis pendens to thereby render
said notice ineffective.
El Dorado and the heirs of Lauro, both
represented by Conrad C. Leviste, also filed
their Comment[49] to Carrascoso's petition,
praying that it be dismissed for lack of merit
and that paragraph 6 of the dispositive portion
of the January 31, 1996 CA Decision be
88 | P r o p e r t y C a s e s - P o s s e s s i o n
modified to read as follows: REVERSIBLE ERROR IN HOLDING THAT
PETITIONER AND PLTAC (sic) TOOK THEIR RIGHT,
6. El Dorado Plantation, Inc. should INTEREST AND TITLE TO THE FARM SUBJECT TO
inform Philippine Long Distance THE NOTICE OF LIS PENDENS, THE SAME IN
Telephone Co. and PLDT DISREGARD OF THE PROTECTION ACCORDED
Agricultural Corporation in writing THEM UNDER ARTICLES 1181 AND 1187 OF THE
within ten (10) days after finality of NEW CIVIL CODE.
this decision regarding the exercise
of its option under Arts. 449 and 450 II
of the Civil Code, without right to
indemnity on the part of the latter THE COURT OF APPEALS COMMITTED A
should the former decide to keep REVERSIBLE ERROR IN HOLDING THAT
the improvements under Article PETITIONER AND PLDTAC TOOK THEIR RIGHT,
449.[50] (Underscoring supplied) INTEREST AND TITLE TO THE FARM SUBJECT TO
Carrascoso filed on November 13, 1996 his THE NOTICE OF LIS PENDENS, THE SAME IN
Reply[51] to the Comment of El Dorado and the DISREGARD OF THE LEGAL PRINCIPLE THAT
heirs of Lauro. RESPONDENTS EL DORADO ET AL.'s PRIOR,
ACTUAL KNOWLEDGE OF PETITIONER PLDT'S
In the meantime, as the February 22, 1996 AGREEMENT TO BUY AND SELL WITH
Motion for Reconsideration filed by PLDT and RESPONDENT CARRASCOSO RESULTING IN THE
PLDTAC of the CA decision had remained DELIVERY TO, AND POSSESSION, OCCUPATION
unresolved, this Court, by Resolution[52] of June AND DEVELOPMENT BY, SAID PETITIONER OF
30, 2003, directed the appellate court to THE FARM, IS EQUIVALENT TO REGISTRATION OF
resolve the same. SUCH RIGHT, INTEREST AND TITLE AND,
THEREFORE, A PRIOR REGISTRATION NOT
By Resolution[53] of July 8, 2004, the CA denied AFFECTED BY THE LATER NOTICE OF LIS
PLDT and PLDTAC's Motion for Reconsideration PENDENS.[58] (Underscoring supplied)
for lack of merit. Carrascoso posits that in the El Dorado Board
Resolution and the Affidavit of Feliciano
PLDT[54] thereupon filed on September 2, 2004 Leviste, both dated March 23, 1972, no
a petition for review[55] before this Court, objection was interposed to his mortgaging of
docketed as G.R. No. 164489, seeking to the property to any bank provided that the
reverse and set aside the January 31, 1996 balance of the purchase price of the property
Decision and the July 8, 2004 Resolution of the under the March 23, 1972 Deed of Sale of Real
appellate court. It prayed that judgment be Property is recognized, hence, El Dorado
rendered upholding its right, interest and title could collect the unpaid balance of
to the 1,000 hectare portion of the property P1,300,000.00 only after the mortgage in favor
and that it and its successors-in-interest be of HSB is paid in full; and the filing of the
declared owners and legal possessors thereof, complaint for rescission with damages on
together with all improvements built, sown and March 15, 1977 was premature as he fully paid
planted thereon. his obligation to HSB only on April 5, 1977 as
evidenced by the Cancellation of
By Resolution[56] of August 25, 2004, G.R. No. Mortgage[59] signed by HSB President Gregorio
164489 was consolidated with G.R. No. 123672. B. Licaros.
In his petition, Carrascoso faults the CA as Carrascoso further posits that extensions of the
follows: period to pay El Dorado were verbally
accorded him by El Dorado's directors and
I officers, particularly Jose and Angel Leviste.
THE COURT OF APPEALS ACTED WITH GRAVE
ABUSE OF DISCRETION AND COMMITTED Article 1191 of the Civil Code provides:
A MISTAKE OF LAW IN NOT DECLARING THAT
THE ACTION FOR RESCISSION WAS Art. 1191. The power to rescind obligations is
PREMATURELY FILED. implied in reciprocal ones, in case one of the
obligors should not comply with what is
II incumbent upon him.
THE COURT OF APPEALS ACTED WITH GRAVE The injured party may choose between the
ABUSE OF DISCRETION AND COMMITTED fulfillment and the rescission of the obligation,
A MISTAKE OF LAW IN DISREGARDING THE with the payment of damages in either
CRUCIAL SIGNIFICANCE OF THE WARRANTY OF case. He may also seek rescission, even after
NON-TENANCY EXPRESSLY STIPULATED IN THE he has chosen fulfillment, if the latter should
CONTRACT OF SALE. become impossible.
III The court shall decree the rescission claimed,
unless there be just cause authorizing the fixing
THE COURT OF APPEALS ACTED WITH GRAVE of a period.
ABUSE OF DISCRETION IN REVERSING THE
DECISION OF THE TRIAL This is understood to be without prejudice to
COURT.[57] (Underscoring supplied) the rights of third persons who have acquired
the thing, in accordance with Articles 1385
PLDT, on the other hand, faults the CA as and 1388 and the Mortgage Law.
follows: Reciprocal obligations are those which arise
from the same cause, and in which each party
I is a debtor and a creditor of the other, such
that the obligation of one is dependent upon
THE COURT OF APPEALS COMMITTED A the obligation of the other.[60] They are to be
performed simultaneously such that the
performance of one is conditioned upon the
simultaneous fulfillment of the other.[61]
The right of rescission of a party to an
obligation under Article 1191 is predicated on
a breach of faith by the other party who
violates the reciprocity between them.[62]
A contract of sale is a reciprocal
obligation. The seller obligates itself to transfer
the ownership of and deliver a determinate
thing, and the buyer obligates itself to pay
therefor a price certain in money or its
equivalent.[63] The non-payment of the price
by the buyer is a resolutory condition which
extinguishes the transaction that for a time
existed, and discharges the obligations
created thereunder.[64] Such failure to pay the
price in the manner prescribed by the
contract of sale entitles the unpaid seller to sue
for collection or to rescind the contract.[65]
In the case at bar, El Dorado already
performed its obligation through the execution
of the March 23, 1972 Deed of Sale of Real
Property which effectively transferred
ownership of the property to Carrascoso. The
latter, on the other hand, failed to perform his
correlative obligation of paying in full the
contract price in the manner and within the
period agreed upon.
The terms of the Deed are clear and
unequivocal: Carrascoso was to pay the
balance of the purchase price of the property
amounting to P1,300,000.00 plus interest
thereon at the rate of 10% per annum within a
period of three (3) years from the signing of the
contract on March 23, 1972. When Jose
Leviste informed him that El Dorado was
seeking rescission of the contract by letter of
February 21, 1977, the period given to him
within which to fully satisfy his obligation had
long lapsed.
The El Dorado Board Resolution and the
Affidavit of Jose Leviste interposing no
objection to Carrascoso's mortgaging of the
property to any bank did not have the effect
of suspending the period to fully pay the
purchase price, as expressly stipulated in the
Deed, pending full payment of any mortgage
obligation of Carrascoso.
As the CA correctly found:
The adverted resolution (Exhibit 2) does not say
that the obligation of Carrascoso to pay the
balance was extended. Neither can We see
in it anything that can logically infer said
accommodation.
A partially unpaid seller can agree to the
buyer's mortgaging the subject of the sale
without changing the time fixed for the
payment of the balance of the price. The two
agreements are not incompatible with each
other such that when one is to be
implemented, the other has to be
suspended. In the case at bench, there was
no impediment for Carrascoso to pay the
balance of the price after mortgaging the
land.
Also, El Dorado's subordinating its "preferred
claim" or waiving its superior "vendor's lien"
89 | P r o p e r t y C a s e s - P o s s e s s i o n
over the land in favor of the mortgagee of said
property only means that in a situation where
the unpaid price of the Land and loan secured
by the mortgage over the Land both become
due and demandable, the mortgagee shall
have precedence in going after the Land for
the satisfaction of the loan. Such
accommodations do not necessarily imply the
modification of the period fixed in the contract
of sale for the payment by Carrascoso of the
balance.
The palpable purpose of El Dorado in not
raising any objection to Carrascoso's
mortgaging the land was to eliminate any
legal impediment to such a contract. That
was so succinctly expressed in the Affidavit
(Exhibit 2-A) of President Feleciano (sic)
Leviste. El Dorado's yielding its "superior lien"
over the land in favor of the mortgagee was
plainly intended to overcome the natural
reluctance of lending institutions to accept a
land whose price has not yet been fully paid
as collateral of a loan.[66] (Underscoring
supplied)
Respecting Carrascoso's insistence that he
was granted verbal extensions within which to
pay the balance of the purchase price of the
property by El Dorado's directors and officers
Jose and Angel Leviste, this Court finds the
same unsubstantiated by the evidence on
record.
It bears recalling that Jose Leviste wrote
Carrascoso, by letter of February 21, 1977,
calling his attention to his failure to comply,
despite "numerous" requests, with his
obligation to pay the amount of P1,300,000.00
and 10% annual interest thereon, and advising
him that "we would like to rescind the contract
of sale." This letter reiterated the term of
payment agreed upon in the March 23, 1972
Deed of Sale of Real Property and
Carrascosos's non-compliance therewith.
Carrascoso, harping on Jose Leviste's March
10, 1977 letter to Lauro's counsel wherein he
(Jose Leviste) stated that "some of the
Directors of the corporation could not see their
way clear in complying with the demands of
[Lauro] and have failed to reach a consensus
to bring the corresponding action for rescission
of the contract against Dr. Fernando
Carrascoso," argues that the extensions priorly
given to him "no doubt lead to the logical
conclusion on some of the directors' inability to
file suit against him."[67]
The argument is specious. As the CA found,
even if some officers of El Dorado were initially
reluctant to file suit against him, the same
should not be interpreted to mean that this
was brought about by a prior extension of the
period to pay the balance of the purchase
price of the property as such reluctance could
have been due to a myriad of reasons totally
unrelated to the period of payment of the
balance.
The bottomline however is, if El Dorado really
intended to extend the period of payment of
the balance there was absolutely no reason
why it did not do it in writing in clear and
unmistakable terms. That there is no such
writing negates all the speculations of the
court a quo and pretensions of Carrascoso.
xxx
The unalterable fact here remains that on
March 23, 1973, with or without demand, the
obligation of Carrascoso to pay P519,933.33
became due. The same was true on March
23, 1974 and on March 23, 1975 for equal
amounts. Since he did not perform his
obligation under the contract of sale, he,
therefore, breached it. Having breached the
contract, El Dorado's cause of action for
rescission of that contract
arose.[68] (Underscoring supplied)
Carrascoso goes on to argue that the
appellate court erred in ignoring the import of
the warranty of non-tenancy expressly
stipulated in the March 23, 1972 Deed of Sale
of Real Property. He alleges that on March 8,
1972 or two weeks prior to the execution of the
Deed of Sale, he discovered, while inspecting
the property on board a helicopter, that there
were people and cattle in the area; when he
confronted El Dorado about it, he was told
that the occupants were caretakers of cattle
who would soon leave;[69] four months after
the execution of the Deed of Sale, upon
inquiry with the Bureau of Lands and the
Bureau of Soils, he was informed that there
were people claiming to be tenants in certain
portions of the property;[70] and he thus
brought the matter again to El Dorado which
informed him that the occupants were not
tenants but squatters.[71]
Carrascoso now alleges that as a result of
what he concludes to be a breach of the
warranty of non-tenancy committed by El
Dorado, he incurred expenses in the amount
of P2,890,000.00 for which he should be
reimbursed, his unpaid obligation to El Dorado
amounting to P1,300,000.00 to be deducted
therefrom.[72]
The breach of an express warranty makes the
seller liable for damages.[73] The following
requisites must be established in order that
there be an express warranty in a contract of
sale: (1) the express warranty must be an
affirmation of fact or any promise by the seller
relating to the subject matter of the sale; (2)
the natural tendency of such affirmation or
promise is to induce the buyer to purchase the
thing; and (3) the buyer purchases the thing
relying on such affirmation or promise
thereon.[74]
Under the March 23, 1972 Deed of Sale of Real
Property, El Dorado warranted that the
property was not being cultivated by any
tenant and was, and therefore, not covered
by the provisions of the Land Reform Code. If
Carrascoso would become liable under the
said law, he would be reimbursed for all
expenses and damages incurred thereon.
Carrascoso claims to have incurred expenses
in relocating persons found on the property
four months after the execution of the Deed of
Sale. Apart from such bare claim, the records
are bereft of any proof that those persons
were indeed tenants.[75] The fact of
tenancy[76]not having been priorly
established,[77] El Dorado may not be held
liable for actual damages.
Carrascoso further argues that both the trial
and appellate courts erred in holding that the
sale of the 1,000 hectare portion of the
property to PLDT, as well as its subsequent sale
to PLDTAC, is subject to the March 15, 1977
Notice of Lis Pendens.
PLDT additionally argues that the CA
incorrectly ignored the Agreement to Buy and
Sell which it entered into with Carrascoso on
July 11, 1975, positing that the efficacy of its
purchase from Carrascoso, upon his fulfillment
of the condition it imposed resulting in its
decision to formalize their transaction and
execute the April 6, 1977 Deed of Sale,
retroacted to July 11, 1975 or before the
annotation of the Notice of Lis Pendens.[78]
The pertinent portions of the July 11, 1975
Agreement to Buy and Sell between PLDT and
Carrascoso read:
2. That the VENDOR hereby agrees to
sell to the VENDEE and the latter
hereby agrees to purchase from
the former, 1,000 hectares of the
above-described parcel of land as
shown in the map hereto attached
as Annex "A" and made an integral
part hereof and as hereafter to be
more particularly determined by
the survey to be conducted by
Certeza & Co., at the purchase
price of P3,000.00 per hectare or for
a total consideration of Three
Million Pesos (P3,000,000.00)
payable in cash.
3. That this contract shall be
considered rescinded and
cancelled and of no further force
and effect, upon failure of the
VENDOR to clear the
aforementioned 1,000 hectares of
land of all the occupants therein
located, within a period of one (1)
year from the date of execution of
this Agreement. However, the
VENDEE shall have the option to
extend the life of this Agreement by
another six months, during which
period the VENDEE shall definitely
inform the VENDOR of its decision
on whether or not to finalize the
deed of absolute sale for the
aforementioned 1,000 hectares of
land.
The VENDOR agrees that the
amount of P500.00 per family within
the aforementioned 1,000 hectares
of land shall be spent by him for
relocation purposes, which amount
however shall be advanced by the
VENDEE and which shall not
exceed the total amount of
P120,000.00, the same to be
thereafter deducted by the
VENDEE from the aforementioned
purchase price of P3,000,000.00.
The aforementioned advance of
P120,000.00 shall be remitted by the
VENDEE to the VENDOR upon the
signing of this Agreement.
xxx
It is likewise further agreed that the VENDEE
90 | P r o p e r t y C a s e s - P o s s e s s i o n
shall have the right to enter into any part of the
aforementioned 1,000 hectares at any time
within the period of this Agreement for
purposes of commencing the development of
the same.
xxx
5. Title to the aforementioned land
shall also be cleared of all liens or
encumbrances and if there are any
unpaid taxes, existing mortgages,
liens and encumbrances on the
land, the payments to be made by
the VENDEE to the VENDOR of the
purchase price shall first be applied
to liquidate said mortgages, liens
and/or encumbrances, such that
said payments shall be made
directly to the corresponding
creditors. Thus, the balance of the
purchase price will be paid to the
VENDOR after the title to the land is
cleared of all such liens and
encumbrances.
xxx
7. The VENDOR agrees that, during
the existence of this Agreement
and without the previous written
permission from the VENDEE, he
shall not sell, cede, assign and/or
transfer the parcel of land subject
of this Agreement.[79]
A notice of lis pendens is an announcement to
the whole world that a particular real property
is in litigation, and serves as a warning that one
who acquires an interest over said property
does so at his own risk, or that he gambles on
the result of the litigation over said property.[80]
Once a notice of lis pendens has been duly
registered, any cancellation or issuance of title
over the land involved as well as any
subsequent transaction affecting the same
would have to be subject to the outcome of
the suit. In other words, a purchaser who buys
registered land with full notice of the fact that
it is in litigation between the vendor and a third
party stands in the shoes of his vendor and his
title is subject to the incidents and result of the
pending litigation.[81]
x x x Notice of lis pendens has been conceived
and, more often than not, availed of, to
protect the real rights of the registrant while
the case involving such rights is pending
resolution or decision. With the notice of lis
pendens duly recorded, and while it remains
uncancelled, the registrant could rest secure
that he would not lose the property or any part
of it during the litigation.
The filing of a notice of lis pendens in effect (1)
keeps the subject matter of litigation within the
power of the court until the entry of the final
judgment so as to prevent the defeat of the
latter by successive alienations; and (2) binds
a purchaser of the land subject of the litigation
to the judgment or decree that will be
promulgated thereon whether such a
purchaser is a bona fide purchaser or not; but
(3) does not create a non-existent right or lien.
The doctrine of lis pendens is founded upon
reason of public policy and necessity, the
purpose of which is to keep the subject matter
of the litigation within the power of the court
until the judgment or decree shall have been
entered; otherwise by successive alienations
pending the litigation, its judgment or decree
shall be rendered abortive and impossible of
execution. The doctrine of lis pendens is
based on considerations of public policy and
convenience, which forbid a litigant to give
rights to others, pending the litigation, so as to
affect the proceedings of the court then
progressing to enforce those rights, the rule
being necessary to the administration of
justice in order that decisions in pending suits
may be binding and may be given full effect,
by keeping the subject matter in controversy
within the power of the court until final
adjudication, that there may be an end to
litigation, and to preserve the property that
the purpose of the pending suit may not be
defeated by successive alienations and
transfers of title.[82] (Italics in the original)
In ruling against PLDT and PLDTAC, the
appellate court held:
PLDT and PLDTAC argue that in reality the Farm
was bought by the former on July 11, 1975
when Carrascoso and it entered into the
Agreement to Buy and Sell (Exhibit 15). How
can an agreement to buy and sell which is a
preparatory contract be the same as a
contract of sale which is a principal
contract' If PLDT's contention is correct that it
bought the Farm on July 11, 1975, why did it
buy the same property again on April 6,
1977? There is simply no way PLDT and PLDTAC
can extricate themselves from the effects of
said Notice of Lis Pendens. It is admitted that
PLDT took possession of the Farm on July 11,
1975 after the execution of the Agreement to
Buy and Sell but it did so not as owner but as
prospective buyer of the property. As
prospective buyer which had actual on (sic)
constructive notice of the lis pendens, why did
it pursue and go through with the sale if it had
not been willing to gamble with the result of
this case?[83] (Underscoring supplied)
Further, in its July 8, 2004 Resolution, the CA
held:
PLDT cannot shield itself from the notice of lis
pendens because all that it had at the time of
its inscription was an Agreement to Buy and
Sell with CARRASCOSO, which in effect is
a mere contract to sell that did not pass to it
the ownership of the property.
xxx
Ownership was retained by CARRASCOSO
which EL DORADO may very well recover
through its action for rescission.
xxx
PLDT's possession at the time the notice of lis
pendens was registered not being a legal
possession based on ownership but a mere
possession in fact and the Agreement to Buy
and Sell under which it supposedly took
possession not being registered, it is not
protected from an adverse judgment that
may be rendered in the case subject of the
notice of lis pendens.[84] (Underscoring
supplied)
In a contract of sale, the title passes to the
vendee upon the delivery of the thing sold;
whereas in a contract to sell, ownership is not
transferred upon delivery of the property but
upon full payment of the purchase price.[85] In
the former, the vendor has lost and cannot
recover ownership until and unless the
contract is resolved or rescinded; whereas in
the latter, title is retained by the vendor until
the fullpayment of the price, such payment
being a positive suspensive condition and
failure of which is not a breach but an event
that prevents the obligation of the vendor to
convey title from becoming effective.[86]
PLDT argues that the July 11, 1975 Agreement
to Buy and Sell is a conditional contract of sale,
thus calling for the application of Articles
1181[87] and 1187[88] of the Civil Code as held
in Coronel v. Court of Appeals.[89]
The Court is not persuaded.
For in a conditional contract of sale, if the
suspensive condition is fulfilled, the contract of
sale is thereby perfected, such that if there
had already been previous delivery of the
property subject of the sale to the buyer,
ownership thereto automatically transfers to
the buyer by operation of law without any
further act having to be performed by the
seller.[90] Whereas in a contract to sell, upon
fulfillment of the suspensive condition,
ownership will not automatically transfer to the
buyer although the property may have been
previously delivered to him. The prospective
seller still has to convey title to the prospective
buyer by entering into a contract of absolute
sale.[91]
A perusal of the contract[92] adverted to
in Coronel reveals marked differences from
the Agreement to Buy and Sell in the case at
bar. In the Coronel contract, there was a
clear intent on the part of the therein
petitioners-sellers to transfer title to the therein
respondent-buyer. In the July 11, 1975
Agreement to Buy and Sell, PLDT still had to
"definitely inform Carrascoso of its decision on
whether or not to finalize the deed of absolute
sale for the 1,000 hectare portion of the
property," such that in the April 6, 1977 Deed of
Absolute Sale subsequently executed, the
parties declared that they "are now decided
to execute" such deed, indicating that the
Agreement to Buy and Sell was, as the
appellate court held, merely a preparatory
contract in the nature of a contract to sell. In
fact, the parties even had to stipulate in the
said Agreement to Buy and Sell that
Carrascoso, "during the existence of the
Agreement, shall not sell, cede, assign and/or
transfer the parcel of land," which provision this
Court has held to be a typical characteristic of
a contract to sell.[93]
Being a contract to sell, what was vested by
the July 11, 1975 Agreement to Buy and Sell to
PLDT was merely the beneficial title to the
1,000 hectare portion of the property.
The right of Daniel Jovellanos to the property
under the contract [to sell] with Philamlife was
merely an inchoate and expectant right
which would ripen into a vested right only
upon his acquisition of ownership which, as
aforestated, was contingent upon his full
payment of the rentals and compliance with
all his contractual obligations thereunder. A
vested right is an immediate fixed right of
present and future enjoyment. It is to be
91 | P r o p e r t y C a s e s - P o s s e s s i o n
distinguished from a right that is expectant or
contingent. It is a right which is fixed,
unalterable, absolute, complete and
unconditional to the exercise of which no
obstacle exists, and which is perfect in itself
and not dependent upon a was to be rendered in Civil Case No. 6365. xxx
contingency. Thus, for a property right to be
vested, there must be a transition from the
potential or contingent to the actual, and the
proprietary interest must have attached to a
thing; it must have become fixed or
established and is no longer open to doubt or
controversy.[94] (Underscoring supplied)
In the case at bar, the July 11, 1975 Agreement
to Buy and Sell was not registered, which act
of registration is the operative act to convey
and affect the land.
An agreement to sell is a voluntary instrument
as it is a willful act of the registered owner. As
such voluntary instrument, Section 50 of Act
No. 496 [now Section 51 of PD 1529] expressly
provides that the act of registration shall be
the operative act to convey and affect the
land. And Section 55 of the same Act [now
Section 53 of PD 1529] requires the
presentation of the owner's duplicate
certificate of title for the registration of any
deed or voluntary instrument. As the
agreement to sell involves an interest less than
an estate in fee simple, the same should have
been registered by filing it with the Register of
Deeds who, in turn, makes a brief
memorandum thereof upon the original and
owner's duplicate certificate of title. The
reason for requiring the production of the
owner's duplicate certificate in the registration
of a voluntary instrument is that, being a willful
act of the registered owner, it is to be
presumed that he is interested in registering
the instrument and would willingly surrender,
present or produce his duplicate certificate of
title to the Register of Deeds in order to
accomplish such registration. However, where
the owner refuses to surrender the duplicate
certificate for the annotation of the voluntary
instrument, the grantee may file with the
Register of Deeds a statement setting forth his
adverse claim, as provided for in Section 110
of Act No. 496. xxx[95] (Underscoring supplied)
In Valley Golf Club, Inc. v. Salas,[96] where a
Deed of Absolute Sale covering a parcel of
land was executed prior to the annotation of
a notice of lis pendens by the original owner
thereof but which Deed was
registered after such annotation, this Court
held:
The advance payment of P15,000.00 by the
CLUB on October 18, 1960 to ROMERO, and
the additional payment by the CLUB of
P54,887.50 as full payment of the purchase
price on October 26, 1960, also to ROMERO,
cannot be held to be the dates of sale such as
to precede the annotation of the adverse
claim by the SISTERS on October 25, 1960 and
the lis pendens on October 27, 1960. It is basic
that it is the act of registration of the sale that
is the operative act to convey and affect the
land. That registration was not effected by the
CLUB until December 4, 1963, or three (3) years
after it had made full payment to ROMERO.
xxx
xxx
As matters stand, therefore, in view of the prior
annotations of the adverse claim and lis
pendens, the CLUB must be legally held to
have been aware of the flaws in the title. By
virtue of the lis pendens, its acquisition of the
property was subject to whatever judgment
The CLUB's cause of action lies, not against the
SISTERS, to whom the property had been
adjudged by final judgment in Civil Case No.
6365, but against ROMERO who was found to
have had no right to dispose of the
land.[97] (Underscoring supplied)
PLDT further argues that El Dorado's prior,
actual knowledge of the July 11, 1975
Agreement to Buy and Sell is equivalent to
prior registration not affected by the Notice
of Lis Pendens. As such, it concludes that it
was not a purchaser pendente lite nor a
purchaser in bad faith.
PLDT anchors its argument on the testimony of
Lauro and El Dorado's counsel Atty. Aquino
from which it infers that Atty. Aquino filed the
complaint for rescission and caused the notice
of lis pendens to be annotated on
Carrascoso's title only after reading
newspaper reports on the sale to PLDT of the
1,000 hectare portion of the property.
The pertinent portions of Atty. Aquino's
testimony are reproduced hereunder:
Do you know, Atty. Aquino, what you did
Q:after the filing of the complaint in the instant
case of Dr. Carrascoso?
Yes, I asked my associates to go to
Mamburao and had the notice of Lis
A:
Pendens covering the property as a result of
the filing of the instant complaint.
Q:Do you know the notice of Lis Pendens?
Yes, it is evidenced by a [Transfer]
A: Certificate Copy of Title of Dr. Carrascoso
entitled "Notice of Lis Pendens".
As a consequence of the filing of the
Q:complaint which was annotated, you have
known that?
A: Yes.
xxx
After the annotation of the notice of Lis
Q:Pendens, do you know, if any further
transaction was held on the property?
As we have read in the newspaper, that Dr.
A: Carrascoso had sold the property in favor of
the PLDT, Co.
Q:And what did you do?
We verified the portion of the property
having recorded under entry No. 24770 xxx
and we also discovered that the articles
A: incorporated (sic) and other corporate
matters had been organized and
established of the PLDT, Co., and had been
annotated.
xxx
Do you know what happened to the
Q:
property?

It was sold by the PLDT to its sub-PLDT
A: Agitating (sic) Co. when at that time there
was already notice of Lis Pendens.
xxx
In your testimony, you mentioned that you
had come cross-(sic) reading the sale of the
subject litigation (sic) between Dr. Fernando
Q:
Carrascoso, the defendant herein and the
PLDT, one of defendants-intervenor, may I
say when?
I cannot remember now, but it was in the
A: newspaper where it was informed or
mentioned of the sold property to PLDT.
xxx
Will you tell to the Honorable Court what
Q:
newspaper was that?
Well, I cannot remember what is that
newspaper. That is only a means of
[confirming] the transaction. What was
A: [confirmed] to us is whether there was really
transaction (sic) and we found out that
there was in the Register of Deeds and that
was the reason why we obtained the case.
Well, may I say, is there any reason, the
answer is immaterial. The question is as
Q:regard the matter of time when counsel is
being able (sic) to read the newspaper
allegedly (interrupted)
xxx
The idea of the question, your Honor, is to
establish and ask further the notice of [lis
pendens] with regards (sic) to the transfer of
Q:
property to PLDT, would have been
accorded prior to the pendency of the
case.
xxx
A: I cannot remember.[98]
PLDT also relies on the following testimony of
Carrascoso:
You mentioned Doctor a while ago that you
mentioned to the late Governor Feliciano
Leviste regarding your transaction with the
Q:
PLDT in relation to the subject property you
allegedly mention (sic) your intention to sell
with the PLDT?
It was Dr. Jose Leviste and Dr. Angel Leviste
that was constantly in touched (sic) with me
A:
with respect to my transaction with the PLDT,
sir.
Any other officer of the corporation who
Q:knows with instruction aside from Dr. Angel
Leviste and Dr. Jose Leviste?
Yes, sir. It was Trinidad Andaya Leviste and
A:
Assemblyman Expedito Leviste.
xxx
What is the position of Mrs. Trinidad Andaya
Q:
Leviste with the plaintiff-corporation?
92 | P r o p e r t y C a s e s - P o s s e s s i o n
One of the stockholders and director of the
A:
plaintiff-corporation, sir.
Q:Will you please tell us the other officers?
A: Expedito Leviste, sir.
A: Will you tell the position of Expedito Leviste?
A: He was the corporate secretary, sir.
If you know, was Dr. Jose Leviste also a
Q:
director at that time?
A: Yes, sir.[99]
On the other hand, El Dorado asserts that it
had no knowledge of the July 11, 1975
Agreement to Buy and Sell prior to the filing of
the complaint for rescission against
Carrascoso and the annotation of the notice
of lis pendens on his title. It further asserts that
it always acted in good faith:
xxx The contract to sell between the Petitioner
[Carrascoso] and PLDT was executed in July
11, 1975. There is no evidence that El Dorado
was notified of this contract. The property is
located in Mindoro, El Dorado is based in
Manila. The land was planted to rice. This was
not an unusual activity on the land, thus it
could have been the Petitioner who was using
the land. Not having been notified of this sale,
El Dorado could not have stopped PLDT from
developing the land.
The absolute sale of the land to PLDT took
place on April 6, 1977, or AFTER the filing of this
case on March 15, 1977 and the annotation of
a notice of lis pendens on March 16,
1977. Inspite of the notice of lis pendens, PLDT
then PLDTAC persisted not only in buying the
land but also in putting up improvements on
the property such as buildings, roads, irrigation
systems and drainage. This was done during
the pendency of this case, where PLDT and
PLDTAC actively participated as
intervenors. They were not innocent
bystanders. xxx[100]
This Court finds the above-quoted testimony of
Atty. Aquino to be susceptible of conflicting
interpretations. As such, it cannot be the basis
for inferring that El Dorado knew of the July 11,
1975 Agreement to Buy and Sell prior to the
annotation of the notice of lis pendens on
Carrascoso's title.
Respecting Carrascoso's allegation that some
of the directors and officers of El Dorado had
knowledge of his dealings with PLDT, it is true
that knowledge of facts acquired or
possessed by an officer or agent of a
corporation in the course of his employment,
and in relation to matters within the scope of
his authority, is notice to the corporation,
whether he communicates such knowledge or
not.[101] In the case at bar, however, apart
from Carrascoso's claim that he in fact notified
several of the directors about his intention to
sell the 1,000 hectare portion of the property
to PLDT, no evidence was presented to
substantiate his claim. Such self-serving,
uncorroborated assertion is indubitably
inadequate to prove that El Dorado had
notice of the July 11, 1975 Agreement to Buy
and Sell before the annotation of the notice
of lis pendens on his title.
PLDT is, of course, not without recourse. As
held by the CA:
Between Carrascoso and PLDT/PLDTAC, the
former acted in bad faith while the latter
acted in good faith. This is so because it was
Carrascoso's refusal to pay his just debt to El
Dorado that caused PLDT/PLDTAC to suffer
pecuniary losses. Therefore, Carrascoso
should return to PLDT/PLDTAC the
P3,000,000.00 price of the farm plus legal
interest from receipt thereof until
paid.[102] (Underscoring supplied)
The appellate court's decision ordering the
rescission of the March 23, 1972 Deed of Sale
of Real Property between El Dorado and
Carrascoso being in order, mutual restitution
follows to put back the parties to their original
situation prior to the consummation of the
contract.
The exercise of the power to rescind
extinguishes the obligatory relation as if it had
never been created, the extinction having a
retroactive effect. The rescission is equivalent
to invalidating and unmaking the juridical tie,
leaving things in their status before the
celebration of the contract.
Where a contract is rescinded, it is the duty of
the court to require both parties to surrender
that which they have respectively received
and to place each other as far as practicable
in his original situation, the rescission has the
effect of abrogating the contract in all
parts.[103] (Underscoring supplied)
The April 6, 1977 and May 30, 1977 Deeds of
Absolute Sale being subject to the notice of lis
pendens, and as the Court affirms the
declaration by the appellate court of the
rescission of the Deed of Sale executed by El
Dorado in favor of Carrascoso, possession of
the 1,000 hectare portion of the property
should be turned over by PLDT to El Dorado.
As regards the improvements introduced by
PLDT on the 1,000 hectare portion of the
property, a distinction should be made
between those which it built prior to the
annotation of the notice of lis pendens and
those which it introduced subsequent thereto.
When a person builds in good faith on the land
of another, Article 448 of the Civil Code
governs:
Art. 448. The owner of the land on which
anything has been built, sown or planted in
good faith, shall have the right to appropriate
as his own the works, sowing or planting, after
payment of the indemnity provided for in
Articles 546 and 548, or to oblige the one who
built or planted to pay the price of the land,
and the one who sowed, the proper
rent. However, the builder or planter cannot
be obliged to buy the land if its value is
considerably more than that of the building or
trees. In such a case, he shall pay reasonable
rent, if the owner of the land does not choose
to appropriate the building or trees after the
proper indemnity. The parties shall agree
upon the terms of the lease and in case of
disagreement, the court shall fix the terms
thereof.
The above provision covers cases in which the
builders, sowers or planters believe themselves
to be owners of the land or, at least, to have a
claim of title thereto.[104] Good faith is thus
identified by the belief that the land is owned;
or that by some title one has the right to build,
plant, or sow thereon.[105]
The owner of the land on which anything has
been built, sown or planted in good faith shall
have the right to appropriate as his own the
building, planting or sowing, after payment to
the builder, planter or sower of the necessary
and useful expenses,[106] and in the proper
case, expenses for pure luxury or mere
pleasure.[107]
The owner of the land may also oblige the
builder, planter or sower to purchase and pay
the price of the land.
If the owner chooses to sell his land, the
builder, planter or sower must purchase the
land, otherwise the owner may remove the
improvements thereon. The builder, planter or
sower, however, is not obliged to purchase the
land if its value is considerably more than the
building, planting or sowing. In such case, the
builder, planter or sower must pay rent to the
owner of the land.
If the parties cannot come to terms over the
conditions of the lease, the court must fix the
terms thereof.
The right to choose between appropriating
the improvement or selling the land on which
the improvement of the builder, planter or
sower stands, is given to the owner of the
land.[108]
On the other hand, when a person builds in
bad faith on the land of another, Articles 449
and 450 govern:
Art. 449. He who builds, plants or sows in bad
faith on the land of another, loses what is built,
planted or sown without right to indemnity.
Art. 450. The owner of the land on which
anything has been built, planted or sown in
bad faith may demand the demolition of the
work, or that the planting or sowing be
removed, in order to replace things in their
former condition at the expense of the person
who built, planted or sowed; or he may
compel the builder or planter to pay the price
of the land, and the sower the proper rent.
In the case at bar, it is undisputed that PLDT
commenced construction of improvements
on the 1,000 hectare portion of the property
immediately after the execution of the July 11,
1975 Agreement to Buy and Sell with the full
consent of Carrascoso.[109] Thus, until March
15, 1977 when the Notice of Lis Pendens was
annotated on Carrascoso's TCT No. T-6055,
PLDT is deemed to have been in good faith in
introducing improvements on the 1,000
hectare portion of the property.
After March 15, 1977, however, PLDT could no
longer invoke the rights of a builder in good
faith.
Should El Dorado then opt to appropriate the
improvements made by PLDT on the 1,000
hectare portion of the property, it should only
be made to pay for those improvements at the
time good faith existed on the part of PLDT or
until March 15, 1977,[110] to be pegged at its
93 | P r o p e r t y C a s e s - P o s s e s s i o n
current fair market value.[111]
The commencement of PLDT's payment of
reasonable rent should start on March 15, 1977
as well, to be paid until such time that the
possession of the 1,000 hectare portion is
delivered to El Dorado, subject to the
reimbursement of expenses as aforestated,
that is, if El Dorado opts to appropriate the
improvements.[112]
If El Dorado opts for compulsory sale, however,
the payment of rent should continue up to the
actual transfer of ownership.[113]
WHEREFORE, the petitions are DENIED. The
Decision dated January 13, 1996 and
Resolution dated July 8, 2004 of the Court of
Appeals are AFFIRMED with MODIFICATION in
that
1) the Regional Trial Court of San Jose,
Occidental Mindoro, Branch 45 is further
directed to:
a. determine the present fair price of
the 1,000 hectare portion of the
property and the amount of the
expenses actually spent by PLDT for
the improvements thereon as of
March 15, 1977;
b. include for determination the
increase in value ("plus value")
which the 1,000 hectare portion
may have acquired by reason of
the existence of the improvements
built by PLDT before March 15, 1977
and the current fair market value of
said improvements;
2. El Dorado is ordered to exercise its option
under the law, whether to appropriate the
improvements, or to oblige PLDT to pay the
price of the land, and
3) PLDT shall pay El Dorado the amount of Two
Thousand Pesos (P2,000.00) per month as
reasonable compensation for its occupancy
of the 1,000 hectare portion of the property
from the time that its good faith ceased to exist
until such time that possession of the same is
delivered to El Dorado, subject to the
reimbursement of the aforesaid expenses in
favor of PLDT or until such time that the
payment of the purchase price of the 1,000
hectare portion is made by PLDT in favor of El
Dorado in case the latter opts for its
compulsory sale.Costs against petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona and Garcia,
JJ., concur.
Panganiban, (Chairman), J., No part. Former
counsel of a party.
EN BANC
[ GR No. 175605, Aug 28, 2009 ]
PEOPLE v. ARNOLD GARCHITORENA Y CAMBA
A.KA. JUNIOR +
DECISION
614 Phil. 66
LEONARDO-DE CASTRO, J.:
For automatic review is the Decision[1] of the Court
of Appeals (CA) in CA-G.R. CR.-HC No. 00765
which affirmed an earlier Decision[2]of the
Regional Trial Court (RTC) of Binan City, Branch 25
in Criminal Case No.9440-B, finding accused-
appellants Arnold Garchitorena y Gamba, a.k.a.
"Junior," Joey Pamplona, a.k.a. "Nato," and Jessie
Garcia y Adorino guilty beyond reasonable doubt
of murder and sentencing them to suffer the
penalty of death and to indemnify jointly and
severally the heirs of the victim in the amount of
P50,000.00 as civil indemnity, P50,000.00 as moral
damages, P50,000.00 as exemplary damages,
P16,700.00 as actual damages, P408,000.00 for loss
of earning capacity and to pay the costs of the
suit.
The conviction of accused-appellants stemmed
from an Information[3] dated January 22, 1996,
filed with the RTC for the crime of Murder, the
accusatory portion of which reads:
That on or about September 22, 1995, in the
Municipality of Binan, Province of Laguna,
Philippines and within the jurisdiction of this
Honorable Court, accused Arnold Garchitorena y
Gamba, alias "Junior", Joey Pamplona alias "Nato"
and Jessie Garcia y Adorino, conspiring,
confederating together and mutualy helping
each other, with intent to kill, while conveniently
armed with a deadly bladed weapon, with abuse
of superior strength, did then and there willfully,
unlawfully and feloniously attack, assault and stab
one Mauro Biay y Almarinez with the said weapon,
thereby inflicting upon him stab wounds on the
different parts of his body which directly caused
his death, to the damage and prejudice of his
surviving heirs.
That the crime was committed with the qualifying
aggravating circumstance of abuse of superior
strength.
CONTRARY TO LAW.
When arraigned, accused-appellants, duly
assisted by their counsel, pleaded not guilty to the
charge. Thereafter, trial ensued.
The prosecution presented three (3) witnesses;
namely, Dulce Borero, elder sister of the victim
Mauro Biay and eyewitness to the killing of her
brother; Dr. Rolando Poblete, who conducted an
autopsy on the body of the victim and prepared
the post-mortem report; and Amelia Biay, the
victim's widow. The evidence for the prosecution,
as culled from the CA Decision under review, is as
follows:
In the proceedings before the trial court, witness
for the prosecution Dulce Borero testified that on
September 22, 1995, at around 9:00 o'clock in the
evening, she was selling "balut" at Sta. Inez,
Almeda Subdivision, Brgy. Dela Paz, Binan,
Laguna. Her brother, Mauro Biay, also a "balut"
vendor", was also at the area, about seven (7)
arms length away from her when she was called
by accused Jessie Garcia. Borero testified that
when her brother Mauro approached Jessie, the
latter twisted the hand of her brother behind his
back and Jessie's companions- accused Arnold
Garchitorena and Joey Pamplona - began
94 | P r o p e r t y C a s e s - P o s s e s s i o n
stabbing her brother Mauro repeatedly with a
shiny bladed instrument. Joey was at the right side
of the victim and was strangling Mauro from
behind. Witness saw her brother Mauro struggling
to free himself while being stabbed by the three
(3) accused., until her brother slumped facedown
on the ground. Arnold then instructed his two co-
accused to run away. During cross-examination,
Borero claims that she wanted to shout for help
but nothing came out from her mouth. When the
accused had left after the stabbing incident,
witness claimed that she went home to call her
elder brother Teodoro Biay, but when they
returned to the scene, the victim was no longer
there as he had already been brought to the
Perpetual Help Hospital. They learned from the
tricycle driver who brought Mauro top the hospital
that their brother was pronounced dead on
arrival.
Dr. Rolando Poblete, the physician who
conducted an autopsy on victim Mauro Biay and
prepared the post-mortem report, testified that
the victim's death was caused by "hypovolemic
shock secondary to multiple stab wounds."
Witness specified the eight (8) stab wounds
suffered by the victim - one in the neck, two in the
chest, one below the armpit, two on the upper
abdomen, one at the back and one at the left
thigh - and also a laceration at the left forearm of
Mauro. According to the expert witness, the
nature of stab wounds indicate that it may have
been caused by more than one bladed
instrument.
The victim's widow, Amelia Biay, testified that she
incurred burial expenses amounting to P16,700.00
due to the death of her husband. Also, her
husband allegedly earned a minimum of P300.00
a day as a "balut" vendor and P100.00
occasionally as a part-time carpenter.
The accused-appellants denied the charge
against them. Specifically, accused-appellant
Joey Pamplona denied that he participated in
the stabbing of Mauro Bay, accused-appellant
Jessie Garcia interposed the defense of alibi,
while accused-appellant Arnold Garchitorena
interposed the defense of insanity. Succinctly, the
CA Decision summed up their respective
defenses:
On the other hand, accused Joey Pamplona
denied that he participated in the stabbing of
Mauro Biay. Joey Pamplona claims that he was
seated on a bench when co-accused Arnold
came along. Then the "balut" vendor arrived and
Joey saw Arnold stand up, pull something from the
right side of his pocket and stab the "balut" vendor
once before running away. Joey Pamplona
testified that after the stabbing incident, due to
fear that Arnold might also stab him, he also ran
away to the store of a certain Mang Tony, a
barangay official and related the incident to Aling
Bel, the wife of Mang Tony. Joey Pamplona said
that he stayed at Mang Tony's store until his father
arrived and told him to go home.
Danilo Garados testified that on Septemebr 22,
1995, he was at the store of Mang Tony to buy
cigarettes and saw Arnold and Joey seated on
the bench near the artesian well. Arnold and Joey
allegedly called Mauro Biay and he saw Arnold
stabbing Mauro. Jessie Garcia was not there and
Joey allegedly ran away when Arnold stabbed
Mauro.
Clavel Estropegan testified that on September 22,
1995, around 9:00 p.m. Joey Pamplona entered
her store and told her that Junior or Arnold
Garchitorena was stabbing somebody. She did
not hear any commotion outside her house which
is just four houses away from the artesian well.
However, she closed her store for fear that Arnold
will enter her house.
Barangay Captain Alfredo Arcega testified that
he investigated the stabbing incident and,
although he had no personal knowledge, he
found out that it was Arnold Garchitorena who
stabbed Mauro Biay. Upon questioning Arnold,
the latter admitted that he did stab Mauro.
Defense witness Miguelito Gonzalgo testified that
on September 22, 1995, he was in his shoe factory
at his house located at 186 Sta. Teresita Street,
Almeda Subdivision, Binan when he heard Mauro
Biay shouting, and so he went out of his house. He
allegedly saw two persons "embracing" each
other near the artesian well. He recognized these
two persons as Mauro and Arnold. He saw Arnold
pulling out a knife from the body of Mauro and the
latter slowly fell down on his side. After Arnold
washed his hands at the artesian well and walked
away towards the house of his aunt, this witness
approached Mauro and seeing that the victim
was still breathing, went to get a tricycle to bring
Mauro to the hospital. When he got back to the
area, there were many people who helped board
Mauro in the tricycle and they brought him to the
Perpetual Help Hospital in Binan.
The other co-accused Jessie Garcia took the
stand and claimed that on September 22, 1995,
between 8:00 and 9:00 in the evening, he was still
riding a bus from his work in Blumentritt. He arrived
at his home in Binan only at 11:00 p.m. On
September 24, 1995, he was fetched by two (2)
policemen and two (2) Barangay Tanods from his
house and brought to the Binan Police Station for
questioning. Thereafter, he was put in jail and
incarcerated for six (6) months without knowing
the charges against him. He was only informed
that he was one of the suspects in the killing of
Mauro Biay by his mother.
With respect to Arnold Garchitorena, Dr. Evelyn
Belen, Medical Officer III and resident physician of
the National Center for Mental Health, testified
that she examined the accused Arnold and
based on the history of the patient, it was found
that he had been using prohibited drugs like
shabu and marijuana for two (2) years prior to the
stabbing incident in 1995. The patient is allegedly
suffering from schizophrenia, wherein he was
hearing auditory voices, seeing strange things and
is delusional. However, Dr. Belen also testified that
the accused Garchitorena had remissions or
exaservation and understands what he was doing
and was aware of his murder case in court.[4]
On May 9, 2001, the trial court rendered a
Decision,[5] as follows:
WHEREFORE, IN THE LIGHT OF ALL THE FOREGOING
CONSIDERATIONS, the Court finds accused Arnold
Garchitorena y Gamboa alias Junior, Joey
Pamplona alias Nato and Jessie Garcia y
Adorino GUILTY beyond reasonable of the crime
of "MURDER" as defined and penalized under
Article 248 of the Revised Penal Code, as
amended, by Republic Act 7659, (Heinous
Crimes). Accordingly, all of them are hereby
sentenced to suffer the penalty of DEATH.
Furthermore, all of the accused are hereby
ordered to pay jointly and severally Amelia Biay,
widow of the victim Mauro Biay, the following
sums:
a) 50,000.00 - as and for civil indemnity
b) 50,000.00 - as and for moral damages
c) 50,000.00 - as and for exemplary damages
d) 16,700.00 - as and for actual damages
e) 408,000.00 - as and for loss of the earning
capacity of Mauro Biay; and
f) To pay the costs of suit.
Likewise, the Provincial Warden of the Provincial
Jail, Sta. Cruz, Laguna, is hereby ordered to
transfer/commit the three (3) accused to the New
Bilibid Prisons, Muntinlupa City, immediately upon
receipt hereof.
Considering that death penalty was meted
against all of the accused, let the entire records of
the above-entitled case be forwarded to the
Supreme Court for automatic review and
judgment pursuant to Rule 122, Sec.10 of the
Revised Rules of Criminal Procedure.
SO ORDERED.[6]
Accused-appellants appealed to the CA.
Pamplona and Garcia reiterated their denial of
the charge against them. Garchitorena who
never denied his participation in the killing,
insisted, however, insisted that he is exempt from
criminal liability because he was suffering from a
mental disorder before, during and after the
commission of the crime.
On May 31, 2006, the CA rendered the
Decision[7] now under review, affirming RTC's
Decision in toto, thus:
WHEREFORE, based on the foregoing premises,
the instant appeal is DISMISSED. Accordingly, the
appealed March 9, 2001 Decuision of the
Regional Trial Court of Binan, Laguna, Branch 25,
in Criminal Case No. 9440-B finding herein
accused-appellants guilty beyond reasonable
doubt of the crime of murder is AFFIRMED in its
entirety.
SO ORDERED.
In arriving at the assailed Decision, the CA
ratiocinated as follows:
After studying the records of this case, we do not
find any reason to overturn the ruling of the trial
court.
Despite the testimony of defense witnesses that it
was only accused-appellant Arnold Garchitorena
who stabbed the victim Mauro Biay, we find
reason to uphold the trial court's giving credence
to prosecution witness Dulce Borero who testified
as an eyewitness on the circumstances
surrounding the incident and the manner by
which the crime committed.
Defense witness Garados testified that he was at
the store and saw both Arnold and Joey at the
vicinity where the stabbing incident happened,
seated on a bench near the artesian well, when
they called the victim Mauro. Defense witness
Gonzalgo was in his house when he heard the
commotion and went outside to see Arnold and
Mauro "embracing" near the artesian well and the
former pulling a knife from the body of the latter.
On the other hand, prosecution witness Borero
was merely seven arms length away from the
incident and could easily see the victim Mauro
overpowered and attacked by his assailants,
Arnold Garchitorena, Joey Pamplona and Jessie
Garcia. She witnessed the stabbing incident in its
entirely and positively identified the accused and
their criminal acts. It is a well-settled rule that the
evaluation of testimonies of witnesses by the trial
court is received on appeal with the highest
respect because such court has the direct
opportunity to observe the witnesses on the stand
and determine if they are telling the truth or not.
95 | P r o p e r t y C a s e s - P o s s e s s i o n
(People vs. Cardel, 336 SCRA 144)
Evidence presented by the prosecution shows
that the accused conspired to assault the victim
Mauro Biay. Accused Jessie Garcia was the one
who called the victim and prompted the latter to
approach their group near the artesian well.
When the victim was near enough, accused
Jessie Garcia and co-accused Joey Pamplona
restrained Mauro Biay and overpowered him.
Witness Borero then saw the two accused, Jessie
Garcia and Joey Pamplona, together with their
co-accused Arnold Garchitorena instructed his
two co-accused to run. Conspiracy is apparent in
the concerted action of the three accused. There
is conspiracy when two or more persons come to
an agreement concerning the commission of a
felony and decide to commit it (People vs.
Pendatun, 434 SCRA 148). Conspiracy may be
deduced from the mode and manner in which
the offense was perpetrated or inferred from the
acts of the accused which show a joint or
common purpose and design, a concerted
action and community of interest among the
accused (People vs. Sicad, et al., 391 SCRA 19).
Likewise, we affirm the trial court's appreciation of
the aggravating circumstance of abuse of
superior strength to qualify the crime into murder.
"While it is true that superiority in number does not
per se mean superiority in strength, the appellants
in this case did not only enjoy superiority in
number, but were armed with a weapon, while
the victim had no means with which to defend
himself. Thus, there was obvious physical disparity
between the protagonists and abuse of superior
strength attended the killing when the offenders
took advantage of their combined strength in
order to consummate the offense." (People of the
Phils. vs. Parreno, 433 SCRA 591). In the case at
bar, the victim was rendered helpless when he
was assaulted by the three accused. He was
restrained and overpowered by the combined
strength and the weapons used by his assailants.
We do not find improbable Borero's failure to act
or shout for help upon witnessing the stabbing of
her brother Mauro Biay. It is an accepted maxim
that different people react differently to a given
situation or type of situation and there is no
standard form of behavioral response when one is
confronted with a strange or startling experience.
xxx There is no standard form of behavior when
one is confronted by a shocking incident. The
workings of the human mind when placed under
emotional stress are unpredictable. (People of the
Philippines vs. Aspuria, 391 SCRA 404)
Accused-appellant Jessie Garcia's denial of any
involvement cannot prevail over Borero's positive
identification. As ruled by the trial court,
allegations that accused Jessie Garcia was
somewhere else when the crime was committed
is not enough. He must likewise demonstrate that
he could not have been present at the crime
scene, or in its vicinity. He also could have sought
the help of his co-worker, employer or anyone in
the area to support his defense of alibi. Indeed,
we affirm that accused Jessie Garcia's allegation
that he was elsewhere when the crime was
committed is not substantiated by evidence. Alibi
can easily be fabricated. Well-settled is the rule
that alibi is an inherently weak defense which
cannot prevail over the positive identification of
the accused by the victim. (People of the Phils. vs.
Cadampog, 428 SCRA 336)
Finally, the defense of insanity cannot be given
merit when the expert witness herself, Dr. Belen,
attested that accused Arnold Garchitorena was
experiencing remission and was even aware of his
murder case in court. The trial court had basis to
conclude that during the commission of the
crime, Arnold was not totally deprived of reason
and freedom of will. In fact, after the stabbing
incident, accused Arnold Garchitorena instructed
his co-accused to run away from the scene. We
agree that such action demonstrates that Arnold
possessed the intelligence to be aware of his and
his co-accused's criminal acts. A defendant in a
criminal case who interpose the defense of
mental incapacity has the burden of establishing
the fact that he was insane at the very moment
when the crime was committed. There must be
complete deprivation of reason in the commission
of the act, or that the accused acted without
discernment, which must be proven by clear and
positive evidence. The mere abnormality of his
mental faculties does not preclude imputability.
Indeed, a man may act crazy but it does not
necessarily and conclusively prove that he is
legally so. (People of the Philippines vs. Galigao,
395 SCRA 195)
Having found the court a quo's decision to be
supported by the evidence on record, and for
being in accord with prevailing jurisprudence, we
find no reason to set it aside.
WHEREFORE, based on the foregoing premises,
the instant appeal is DISMISSED. Accordingly, the
appealed March 9, 2001 Decision of the Regional
Trial Court of Biñan, Laguna, Branch 25, in Criminal
Case No. 9440-B finding herein accused-
appellants guilty beyond reasonable doubt of the
crime of murder is AFFIRMED in its entirely.
SO ORDERED.
The case was elevated to this Court for automatic
review. The People and the accused-appellants
opted not to file any supplemental brief. The
respective assignments of errors contained in the
briefs that they filed with the CA are set forth
hereunder.
For accused-appellant Pamplona:
I
THE TRIAL COURT ERRED IN GIVING FULL AND TOTAL
CREDENCE TO THE TESTIMONY OF PROSECUTION
WITNESS DULCE BORERO
II
THE TRIAL COURT ERRED IN FAILING TO APPRECIATE
THE EVIDENCE IN FAVOR OF THE APPELLANT
III
THE TRIAL COURT ERRED IN CONVICTING
APPELLANT WHEN HIS GUILT HAS NOT BEEN DULY
PROVEN BEYOND REASONABLE DOUBT
For accused-appellant Garcia:
I
THE TRIAL COURT ERRED IN GIVING UNDUE WEIGHT
AND CREDENCE TO THE ALLEGED EYEWITNESS
ACCOUNT GIVEN BY DULCE BORERO, ELDER SISTER
OF THE VICTIM AND PROSECUTION WITNESS, IN
RESPECT OF THE PARTICIPATION OF THE HEREIN
ACCUSED DESPITE GLARING INCONSISTENCIES,
INHERENT IMPROBABILITIES AND UNRELIABLE
DECLARATION ATTENDING THE SAME; AND, ON THE
OTHERHAND, IN DISREGARDING THE COHERENT,
CONSISTENT AND CREDIBLE EYEWITNESS ACCOUNT
OF DEFENSE WITNESSES - ALL IN CONTRAVENTION
OF THE RULES GOVERNING QUANTUM OF PROOF
IN CRIMINAL CASES AND THE PRESUMPTION OF
INNOCENSE EXISTING IN FAVOR OF ACCUSED We have ruled in People v. Sadiangabay (G.R. Pamplona repeatedly [stabbed] Mauro
GARCIA; No. 87214, March 30, 1993, 220 SCRA 551), that the Biay, do you know these three accused?
circumstance alone that the judge who wrote the A: Yes sir.
decision had not heard the testimonies of the
II prosecution witnesses would not taint his decision. xxx
After all, he had the full record before him,
Will you kindly step down from your seat
THE TRIAL COURT ERRED IN COMPLETELY including the transcript of stenographic notes
and tap the three accused that you have
DISREGARDING THE DEFENSE OF ALIBI INTERPOSED which he could study. The efficacy of a decision is
Q: pointed to us to be the persons who
BY ACCUSED-APPELLANT JESSIE GARCIA WHO not necessarily impaired by the fact that its writer stabbed and killed your brother Mauro
WAS SOMEWHERE ELSE AT THE TIME AS TO RENDER only took over from a colleague who had earlier Biay?
IT PHYSICALLY IMPOSSIBLE FOR HIM TO HAVE BEEN presided at the trial, unless there is a clear showing
AT THE SCENE OF THE CRIME AND EVEN IF THE SAME of a grave abuse of discretion in the factual Court: Police Officer Dionisio will you kindly
IS SUBSTANTIATED BY CLEAR AND CONVINCING findings reached by him.[8] accompany the witness.
EVIDENCE, THAT IS, THE TESTIMONIES OF OITHER P02 Dionisio: Yes sir.
DEFENSE WITNESSES WHO WERE ONE IN SAYING A perusal of the trial court's decision readily shows
THAT HE WAS NOT PRESENT THEREAT; that it was duly based on the evidence presented Fiscal: I would like to manifest Your Honor, that the
during the trial. It is evident that he thoroughly witness was crying when she was pointing to the
examined the testimonial and documentary three accused, uttering that "Sila ang pumatay sa
evidence before him and carefully assessed the aking kapatid!".
III
credibility of the witnesses. This Court finds no
plausible ground to set aside the factual findings xxx
THE LOWER COURT ERRED IN ENTERING A VERDICT
of the trial court, which were sustained by the CA.
OF CONVICTION FOR JESSIE GARCIA INSTEAD OF What is the name of that person wearing
ACQUITTAL WHEN NONE OF THE OTHER ACCUSED, Q:
The eyewitness Dulce Borero's testimony clearly that blue t-shirts?
AFTER HAVING ADMITTED THEIR PARTICIPATION IN established Pamplona and Garcia's participation A: Arnold Gatchitorena sir.
THE CRIME, IMPLICATED HIM; and, consequently, their culpability in the
appalling murder of Mauro Biay:[9] We would like to confirm if he is really
Q: Arnold Gatchitorena pointed to by the
IV witness?
"Fiscal Nofuente (To the witness)
THE LOWER COURT ERRED, IN AWARDING MORAL Interpreter: The person pointed to by the witness
AND EXEMPLARY DAMAGES IN THE ABSENCE OF Madam witness, do you know Mauro wearing blue t-shirts identified himself as Arnold
Q:
Biay? Gatchitorena.
EVIDENCE THEREFOR.
A: Yes sir.
xxx Do you know the name of second person
For accused-appellant Garchitorena: Fiscal: whom you tapped on his side wearing
Do you know likewise the cause of his
Q:
death? white t-shirts?
A: Yes sir. A: Yes sir.
I
Q: What was the cause of his death? Q: What is his name?
THE COURT ERRED IN NOT GIVING WEIGHT AND A: He was repeatedly stabbed sir. A: Jessie Garcia sir.
CREDENCE OVER THE TESTIMONY OF AN EXPERT
WITNESS. You said that Mauro Biay was repeatedly Interpreter: The person pointed to by the witness
Q: stabbed, who stabbed Mauro Biay identified himself as certain Jessie Garcia.
repeatedly?
Arnold Gatchitorena, was stabbing Fiscal: Likewise Madam Witness, do you know the
II A:
repeatedly the victim sir. name of a person in longsleeves polo shirts-
checkered?
THE COURT ERRED IN FINDING ACCUSED ARNOLD
Was Arnold Gatchitorena alone when he A: Yes sir, Joey Pamplona sir.
GARCHITORENA TO HAVE WILLFULLY EXECUTED Q:
stabbed Mauro Biay?
THE ACTS COMPLAINED OF. They were three (3) who were stabbing Interpreter: The person pointed by the witness
A:
Mauro Biay, sir. identified himself as certain Joey Pamplona.
Accused-appellant Pamplona capitalized on
Dulce Borero's inaction at the time when she had You said that they were three who were xxx
supposedly witnessed the slaying of her younger Q: stabbing Mauro Biay, who are the other
brother. He argued that if she really witnessed the two? How far were you from Mauro Biay when
crime, she would have had readily helped her A: Jessie Garcia and Joey Pamplona sir. he was being stabbed by the three
Q:
brother Mauro instead of fleeing. Accused- accused Joey Pamplona, Jessie Garcia,
appellant Garcia anchored his acquittal on his So that when you said three, you are and Arnold Gatchitorena?
Q: referring to Arnold Gatchitorena, Joey A: Seven (7) arms length sir.
defense of alibi, while accused-
Pamplona and Jessie Garcia?
appellant Garchitorena used his alleged mental
A: Yes sir. You said that your brother was stabbed
disorder, specifically, schizophrenia, as a ground
Q: successively by the three accused, how
to free himself from criminal liability. Now, when [did] this stabbing incident did it [happen] Madam Witness?
Q:
[happen]? A: They called him sir.
The core issues raised by the both accused- A: On September 22, 1995 sir.
appellants Pamplona and Garcia are factual in Q: Who was called?
nature and delve on the credibility of the Do you know what was [the] time when A: Mauro Biay sir.
witnesses. Q: this incident happened on September 22,
1995? Q: Who called Mauro Biay?
Since the accused-appellants raise factual issues, A: 9:00 o'clock in the evening sir. A: It was Jessie who called sir.
they must use cogent and convincing arguments
to show that the trial court erred in appreciating Q: Where [did] this stabbing [happen]? When you said Jessie, are you referring to
At Sta. Inez, Almeda Subdivision, dela Paz, Q: Jessie Garcia, one of the accused in this
the evidence. They, however, have failed to do A:
Biñan, Laguna sir. case?
so.
A: Yes sir.
Could you tell Madam Witness, where in
Accused-appellant Pamplona contends that the particular place in Sta. Inez, Almeda When Mauro Biay was called by Jessie
trial court's decision was rendered by a judge Q:
Subdivision this stabbing incident Q: Garcia, what was [M]auro Biay doing
other than the one who conducted trial. Hence, happened? there?
the judge who decided the case failed to observe A: In the street near the artesian well sir. A: Mauro Biay approached sir.
the demeanor of the witnesses on the stand so as
to gauge their credibility. This argument does not Q: Do you know where is that street? By the way Madam Witness, do you know
convince the Court for the reason it has Sta Inez St., Almeda Subdivision, dela Paz, Q: why Mauro Biay was in that place where
A:
consistently maintained, to wit: Biñan, Laguna sir. the incident happened?
A: Yes sir.
You said a while ago that accused Arnold
Q:
Gatchitorena, Jessie Garcia, Joey Atty. Witness would be incompetent Your
Pajares:Honor.

96 | P r o p e r t y C a s e s - P o s s e s s i o n

Court: Witness may answer.
Fiscal: Why was he there?
A: He was selling "balot" sir.
xxx
When Mauro Biay approached Jessie
Fiscal:
Garcia, what [did] Mauro Biay do, if any?
Jessie Garcia twisted the hand of my
A: brother and placed the hand at his back
sir.
Who were the companions of Jessie
Q:
Garcia when he called [M]auro Biay?
A: Joey Pamplona and Jr. Gatchitorena sir.
When you said Jr. Gatchitorena are you
Q:
referring to Arnold Gatchitorena?
A: Yes sir.
So that when Jessie Garcia called Mauro
Q: Biay, he was together with Arnold
Gatchitorena and Joey Pamplona?
A: Yes sir.
If you know Madam Witness, what did
Joey Pamplona and Arnold Gatchitorena
Q:
do after Jessie Garcia twisted the arm of
Mauro Biay on his back?
Arnold Gatchitorena repeatedly stabbed
A: [M]auro Biay at his back and also Jessie
Garcia also stabbed my brother sir.
xxx
Were you able to know the weapon used
Q:
to stab Mauro Biay?
A: It was like a shiny bladed instrument sir.
Now, what was the position of Mauro Biay
Q: when being stabbed by the three
accused?
A: He was struggling to free himself sir.
You said that he was struggling to free
Q: himself, why did you say that he was
struggling to free himself?
A: Because I could see sir.
Q: You see what?
Because that three were repeatedly
A:
stabbing Mauro Biay sir.
Aside from stabbing Mauro Biay, what was
Q: Joey Pamplona doing to Mauro Biay, if
you can still remember?
He was also repeatedly stabbing my
A:
brother sir.
Aside from that stabbing, what else if any
Q:
Joey Pamplona was doing to Mauro Biay?
Aside from stabbing Mauro Biay Joey
A: Pamplona was also struggling [strangling]
the neck of Mauro Biay sir.
You said that Mauro Biay was stabbed by
Q: the three accused successively, was
Mauro Biay hit by these stabbing?
A: Yes sir.
Why do you know that he was hit by
Q:
stabbing of the three?
Because I saw the blood oozing from the
A:
part of his body sir.
Now, what happened to Mauro Biay,
when he was stabbed and hit by the
Q:
successive stabbing of the three
accused?
The victim Mauro Biay was suddenly
A:
slumped face down on the ground sir.
xxx
What did you learn if any when you went
Q: to the hospital to see your brother [M]auro
Biay?
A: He was already dead sir.
97 | P r o p e r t y C a s e s - P o s s e s s i o n
Even under cross-examination, Dulce Borero was
unwavering, straightforward, categorical and
spontaneous in her narration of how the killing of
her brother Mauro took place.[10] Notably, her
testimony as to the identification of Garchitorena
as the one who stabbed Mauro Biay was even
corroborated by defense witness Miguelito
Gonzalgo,[11] thus:
From the time you saw these two persons
Q: near the artesian well, what happened after
that, mr. witness?
Mauro Biay slumped on the floor and I saw
Junior stabbed once more the victim but I
A:
am not sure if the victim was hit at the back,
ma'am.
How far were you from the two when you saw
Q:
the incident, mr. witness?
A: More or less 7 to 8 meters, ma'am.
Were there anything blocking your sight from
Q: the place where you were standing to the
place of incident, mr. witness?
A: None, ma'am.
Absent any showing of ill motive on the part of
Borero, we sustain the lower court in giving her
testimony full faith and credence. Moreover, the
prosecution's version is supported by the physical
evidence.[12] Borero's testimony that the victim
was successively stabbed several times conforms
with the autopsy report that the latter suffered
multiple stab wounds.[13]
Accused-appellant Pamplona's argument that
there were inconsistencies in the testimony of
prosecution witnesses Borero is not convincing. He
specifically points out that in the direct
examination of Borero, she stated that it was Jessie
Garcia who twisted the hand of Mauro Biay
backwards when the latter approached the
former.[14] In the cross-examination, she stated
that it was Joey Pamplona who strangled the
victim when the latter approached Jessie Garcia.
The seeming inconsistencies between her direct
testimony and her cross-examination testimonies
are not sufficient ground to disregard them.
In People v. Alberto Restoles y Tuyo, Roldan Noel y
Molet and Jimmy Alayon y De la Cruz,[15] we ruled
that:
...minor inconsistencies do not affect the
credibility of witnesses, as they may even tend to
strengthen rather than weaken their credibility.
Inconsistencies in the testimony of prosecution
witnesses with respect to minor details and
collateral matters do not affect either the
substance of their declaration, their veracity, or
the weight of their testimony. Such minor flaws
may even enhance the worth of a testimony, for
they guard against memorized falsities.
Moreover, such inconsistencies did not contradict
the credibility of Borero or her narration of the
incident. On the contrary, they showed that her
account was the entire truth. In fact, her narration
was in harmony with the account of defense
witness Gonzalgo. We note further that both the
Sworn Statement[16] of Borero and her testimony
before the lower court[17] were in complete
congruence.
Undoubtedly, accused-appellants' identities as
the perpetrators were established by the
prosecution. The prosecution witness was able to
observe the entire incident, because she was
there. Thus, we find no reason to differ with the trial
court's appreciation of her testimony. Positive
identification, where categorical and consistent,
and not attended by any showing of ill motive on
the part of the eyewitnesses on the matter,
prevails over alibi and denial.[18]
Accused-appellant Garcia's alibi has no leg to
stand on. In People v. Desalisa,[19] this Court ruled
that:
...for the defense of alibi to prosper, the accused
must prove not only that he was at some other
place when the crime was committed, but also
that it was physically impossible for him to be at
the scene of the crime or its immediate vicinity
through clear and convincing evidence.
Here, the crime was committed at Binan, Laguna.
Although Garcia testified that he was still riding a
bus from his work in Blumentritt and arrived in Binan
only at 11:00 P.M. or two hours after the killing
incident, still, he failed to prove that it was
physically impossible for him to be at the place of
the crime or its immediate vicinity. His alibi must
fail.
Accused-appellant Garchitorena's defense of
insanity has also no merit. Unlike other jurisdictions,
Philippine courts have established a more
stringent criterion for the acceptance of insanity
as an exempting circumstance.[20] As aptly
argued by the Solicitor General, insanity is a
defense in the nature of confession and
avoidance. As such, it must be adequately
proved, and accused-appellant Garchitorena
utterly failed to do so. We agree with both the CA
and the trial court that he was not totally deprived
of reason and freedom of will during and after the
stabbing incident, as he even instructed his co-
accused-appellants to run away from the scene
of the crime.
Accused-appellant Garcia also argues that there
was no conspiracy, as "there was no evidence
whatsoever that he aided the other two accused-
appellants or that he participated in their criminal
designs."[21] We are not persuaded. In People v.
Maldo,[22] we stated:
"Conspiracy exists when two or more persons
come to an agreement concerning the
commission of a felony and decide to commit
it. Direct proof is not essential, for conspiracy may
be inferred from the acts of the accused prior to,
during or subsequent to the incident. Such acts
must point to a joint purpose, concert of action or
community of interest. Hence, the victim need not
be actually hit by each of the conspirators for the
act of one of them is deemed the act of all."
(citations omitted, emphasis ours)
In this case, conspiracy was shown because
accused-appellants were together in performing
the concerted acts in pursuit of their common
objective. Garcia grabbed the victim's hands and
twisted his arms; in turn, Pamplona, together with
Garchitorena, strangled him and straddled him on
the ground, then stabbed him. The victim was
trying to free himself from them, but they were too
strong. All means through which the victim could
escape were blocked by them until he fell to the
ground and expired. The three accused-
appellants' prior act of waiting for the victim
outside affirms the existence of conspiracy, for it
speaks of a common design and purpose.
Where there is conspiracy, as here, evidence as to
who among the accused rendered the fatal blow
is not necessary. All conspirators are liable as co-
principals regardless of the intent and the
character of their participation, because the act
of one is the act of all.[23]

The aggravating circumstance of superior
strength should be appreciated against the
accused-appellants. Abuse of superior strength is
present whenever there is inequality of forces
between the victim and the aggressor,
considering that a situation of superiority of
strength is notoriously advantageous for the
aggressor and is selected or taken advantage of
by him in the commission of the crime.[24] This
circumstance was alleged in the Information and
was proved during the trial. In the case at bar, the
victim certainly could not defend himself in any
way. The accused-appellants, armed with a
deadly weapon, immobilized the victim and
stabbed him successively using the same deadly
weapon.
All told, the trial court correctly convicted the
accused-appellants of murder, considering the
qualifying circumstance of abuse of superior
strength. Since an aggravating circumstance of
abuse of superior strength attended the
commission of the crime, each of the accused-
appellants should be sentenced to suffer the
penalty of death in accordance with Article
63[25] of the Revised Penal Code. Murder, under
Article 248[26] of the Revised Penal Code, is
punishable by reclusion perpetua to death.
Following Article 63 of the same code, the higher
penalty of death shall be applied.
In view, however, of the passage of R.A. No.
9346,[27] otherwise known as the Anti-Death
Penalty Law, which prohibits the imposition of the
death penalty, reclusion perpetua without
eligibility for parole should instead be imposed.
Accordingly, accused-appellants shall be
sentenced to reclusion perpetua without eligibility
for parole in lieu of the penalty of death.
While the new law prohibits the imposition of the
death penalty, the penalty provided for by law for
a heinous offense is still death and the offense is
still heinous.[28] Consequently, the civil indemnity
for the victim is still P75,000.00. In People v.
Quiachon,[29] we explained that even if the
penalty of death was not to be imposed on
appellant because of the prohibition in Republic
Act No. 9346, the civil indemnity of P75,000.00 was
still proper. Following the ratiocination in People v.
Victor,[30] the said award is not dependent on the
actual imposition of the death penalty, but on the
fact that qualifying circumstances warranting the
imposition of the death penalty attended the
commission of the crime.
Hence, we modify the award of civil indemnity by
the trial court from P50,000.00 to P75,000.00. Civil
indemnity is mandatory and granted to the heirs
of the victim without need of proof other than the
commission of the crime. Likewise the award of
P50,000.00 for moral damages is modified and
increased to P75,000.00, consistent with recent
jurisprudence[31] on heinous crimes where the
imposable penalty is death, it is reduced
to reclusion perpetua pursuant to R.A. 9346. The
award of moral damages does not require
allegation and proof of the emotional suffering of
the heirs, since the emotional wounds from the
vicious killing of the victim cannot be
denied.[32] The trial court's award of exemplary
damages in the amount of P50,000.00 shall,
however, be reduced to P30,000.00, also pursuant
to the latest jurisprudence on the matter.[33]
As to the award of actual damages amounting to
P16,700.00, we modify the same. In People v.
Villanueva,[34] this Court declared that "...when
actual damages proven by receipts during the
trial amount to less than P25,000.00, as in this case,
the award of temperate damages for P25,000.00
is justified in lieu of actual damages of a lesser
98 | P r o p e r t y C a s e s - P o s s e s s i o n
amount." In the light of such ruling, the victim's
heirs in the present case should, therefore, be
awarded temperate damages in the amount of
P25,000.00.
The award of P408,000.00 for loss of earning
capacity is justified. As a rule, documentary
evidence should be presented to substantiate the
claim for damages for loss of earning capacity. By
way of exception, damages for loss of earning
capacity may be awarded despite the absence
of documentary evidence when (1) the
deceased is self-employed and earning less than
the minimum wage under current labor laws, in
which case judicial notice may be taken of the
fact that in the deceased's line of work no
documentary evidence is available; or (2) the
deceased is employed as a daily wage worker
earning less than the minimum wage under
current labor laws.[35] It cannot be disputed that
the victim, at the time of his death, was self-
employed and earning less than the minimum
wage under current labor laws. The computation
arrived at by the trial court was in accordance
with the formula for computing the award for loss
of earning capacity.[36]Thus,
Award for
= 2/3 [80-age at time of death] x [gross
lost
annual income - 50% (GAI)]
earnings
= 2/3 [80-29] x P24,000.00 - P12,000.00
= (34) x (P12,000.00)
= P408,000.00
WHEREFORE, the appealed decision of the CA in
CA-G.R. CR HC No. 00765, finding the three-
accused appellants guilty beyond reasonable
doubt of murder is hereby AFFIRMED WITH the
following MODIFICATIONS: (1) the penalty of
death imposed on accused-appellants is
REDUCED to RECLUSION PERPETUA without
eligibility for parole pursuant to RA 9346; (2) the
monetary awards to be paid jointly and severally
by the accused-appellants to the heirs of the
victim are as follows: P75,000.00 as civil indemnity,
P75,000.00 as moral damages, P30,000.00 as
exemplary damages, and P25,000.00 as
temperate damages in lieu of actual damages;
(3) P408,000.00 for loss of earning capacity; and
(4) interest is imposed on all the damages
awarded at the legal rate of 6% from this date until
fully paid.[37]